Greenpanel Industries Ltd (GREENPANEL) Q3 FY23 Earnings Concall Transcript

Greenpanel Industries Ltd (NSE:GREENPANEL) Q3 FY23 Earnings Concall dated Jan. 31, 2023.

Corporate Participants:

Shobhan Mittal — Managing Director

V. Venkatramani — Chief Financial Officer

Analysts:

Rishab Barar — CDR India — Analyst

Sandesh Barmecha — Haitong Securities — Analyst

Harsh Shah — Dalal and Broacha Stock Broking — Analyst

Achal Lohade — JM Financial — Analyst

Karan Bhatelia — Asian Market Securities — Analyst

Nikhil Gada — Abakkus AMC — Analyst

Praveen Sahay — Prabhudas Lilladher — Analyst

Udit Gajiwala — YES Securities — Analyst

Keshav Lahoti — HDFC Securities — Analyst

Jignesh Kamani — GMO — Analyst

Abhishek Khaitan — Alpha Invesco — Analyst

Parth Bhavsar — Investec India — Analyst

Senthilkumar — Joindre Capital Services — Analyst

Nikhil Agrawal — VT Capital — Analyst

Neeraj — Arihant Capital — Analyst

Hasmukh Vishariya — SUD Life — Analyst

Avesh Bagadia — Piper Serica — Analyst

Ashish Kumar — Infinity Alternatives — Analyst

Shubham Thorat — Perpetual Investment Advisors — Analyst

Senthilnathan KR — NAFA Asset Managers — Analyst

Arun Baid — ICICI Securities — Analyst

Viral Shah — PhillipCapital — Analyst

Hena — DAM Capital — Analyst

Dipanshu — Shivanssh Holdings LLP — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q3 and Nine Months FY ’23 Earnings Conference Call of Greenpanel Industries Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you and over to you.

Rishab Barar — CDR India — Analyst

Good day, everyone, and thank you for joining us on the Greenpanel Industries Q3 and nine months FY ’23 conference call. We have with us today Mr. Shobhan Mittal, Managing Director; and Mr. V. Venkatramani, CFO.

Before we begin, I would like to state that some statements made in today’s discussion may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the results presentation that was sent to you earlier. I would now like to invite Mr. Shobhan Mittal to begin the proceedings of the call. Thank you, and over to you, sir.

Shobhan Mittal — Managing Director

Thank you, Rishab. Good afternoon, everyone, and thank you for joining us to discuss Greenpanel’s operating and financial performance for quarter three FY 2023. We had revenue growth of 3.2% in MDF, degrowth of 14% in Plywood. Overall revenue growth was flat. MDF export volumes grew 24%. Domestic volumes were down by 7%. Overall MDF volumes were down by 2%. MDF gross margins improved by 123 basis points. Plywood gross margins fell by 237 basis points. Overall gross margins increased by 115 basis points to 58.2%.

EBITDA margins adjusted for Forex loss and gain were down by 319 basis points quarter-on-quarter at 23% due to lower domestic volumes in MDF, reduction in MDF export realizations and fallen Plywood volumes.

Post-tax profits were lower by 40% due to fall in EBITDA and currency losses of INR17.29 crores. Net working capital at 23 days has shown a reduction of one day quarter-on-quarter. Net debt has reduced by INR86 crores during the quarter and stands at negative INR145 crores as on 31st December 2022.

We paid INR8 crores towards MDF expansion process during quarter three aggregating to INR39 crores during the year-to-date. We are pleased to announce that Greenpanel will be principal sponsors of Delhi Capitals in the IPL cricket tournament for the next three years, starting from current calendar year 2023. This will significantly enhance Greenpanel’s brand visibility. We will also be principal sponsors for Pretoria Capitals for the SA20 League.

Mr. Venkatramani will now run you through the financials in greater detail, post which we will have a question-and-answer session. Thank you.

V. Venkatramani — Chief Financial Officer

Good afternoon, everyone, and thank you for joining us to discuss the quarter three financial performance of Greenpanel Industries. Net sales during quarter three was INR419.10 crores compared to INR417.43 crores during the year-on-year quarter. MDF sales grew by 3.2% at INR361.57 crores and contributed 86% of the top line.

MDF export volumes grew by 24% at 25,410 cubic meters. Domestic volumes were down 7% at 92,809 cubic meters. And overall MDF volumes were down by 2% at 1,18,218 cubic meters. MDF domestic revenue was INR314.20 crores, while export contributed INR47.37 crores.

Domestic realizations were up by 10.5% at INR33,854 per cubic meter, while export realizations were lower by 11.4% at INR18,643 per cubic meter. Blended MDF realizations were up by 5.4% at INR30,585 per cubic meter. Uttarakhand MDF operated at 81% and AP plant operated at 73% with blended capacity utilization up 36% on enhanced capacity of 6,60,000 cubic meters.

Plywood sales had a degrowth of 14.2% at INR57.53 crores. Plywood sales volumes were lower by 19.4% at 1.99 million square meters. And the unit operated at 66% during the quarter. Plywood sales realizations were up by 6.3% at INR289 per square meter.

In quarter three, gross margin increased by 115 basis points year-on year at 58.2%. Gross profit increased by 2.4% at INR243.84 crores. EBITDA margins adjusted for Forex [Indecipherable] were down by 383 [Phonetic] basis points at 23% due to fall in MDF domestic volumes, reduction in export realizations and fall in Plywood volume.

MDF export realizations were lower by 20% quarter-on-quarter due to price cuts of 12% and 8% due to [Indecipherable] FOB with new customer. EBITDA adjusted for Forex stood at INR96.50 crores due to [Technical Issues] itself. PAT was lower by 40% due to fall in EBITDA and currently loss of INR17.29 crores.

I’ll now update you on the performance details for the year-to-date. Net sales grew by 18.9% at INR13 crores — INR37.97 crores [Phonetic]. MDF sales increased by 22.2% at INR1,148.56 crores while Plywood sales grew by 2.1% at INR189.41 crores.

Gross margins were up by 293 [Phonetic] basis points at 59.5%. Gross margin in value terms was up by 24.9% at INR796.21 crores. EBITDA margins adjusted for Forex loss aggregate [Phonetic] was flat at 26.3%. EBITDA in value terms adjusted for Forex loss aggregate increased by 19% at INR351.41 crores.

Post-tax profits were up by 17% at INR187.59 crores. Overall MDF sales volumes were 3,69,479 cubic meters with blended capacity utilization of the two plants at 77% of enhanced capacity compared to 90% in the year-earlier period.

Dispatches for Plywood were lower by 4.2% at 6.55 million square meters with capacity utilization at 74%compared to 80% in the corresponding period. Gross debt-to-equity now stands at 0.17 as of 31st December 2022 compared to 0.31 as on 31st December 2021.

Net debt reduced during the nine-month period to negative INR145 crores as on 31st December 2022.

That concludes my presentation. Please open the floor for the Q&A session. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions]. We have our first question from the line of Sandesh Barmecha from Haitong Securities. Please go ahead.

Sandesh Barmecha — Haitong Securities — Analyst

Thank you for the opportunity. What is the reason for muted demand scenario for December quarter, sir? And has the scenario improved in January, sir? First question.

Shobhan Mittal — Managing Director

We will say that the demand scenario is muted, demand continues to be reasonably good, it’s just that imports have increased significantly during the quarter, which have had an impact on our domestic volume. So, yes, as far as the near-term is concerned, I think there will be better domestic volumes. So, we are increasing the target for the export volume.

Sandesh Barmecha — Haitong Securities — Analyst

Okay. Sir, what would be the reason for sharp increase in interest expenses despite our debt going down and sir — and what is the reason for other income also going down sharply on quarter-on-quarter basis, sir?

V. Venkatramani — Chief Financial Officer

Yes. The reasons for both are due to currency losses, both dollar and euro appreciated significantly during the quarter versus the rupee. So in aggregate, we had currency losses of INR17.22 crores during the quarter, of which INR8.45 crores was above EBITDA and INR8.77 crores is included in finance costs. Now, there was forex gains during the first two quarters of the current year. And since we had significant currency losses in the third quarter, the currency gains of the first two quarters were reversed. So, that’s the reason will see a negative other income for the third quarter.

Sandesh Barmecha — Haitong Securities — Analyst

Okay, sir last one, sir. Sir, how much capex has been done in nine-month FY ’23 and what will be outlook for FY ’23, ’24 and ’25, sir?

V. Venkatramani — Chief Financial Officer

Okay. The total planned outlay is INR600 crores of which we expect to spend about 10% in FY ’23, about 80% in FY ’24 and the balance 10% in FY ’25.

Sandesh Barmecha — Haitong Securities — Analyst

Great, sir. Thank you so much, sir.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Harsh Shah from Dalal and Broacha Stock Broking. Please go ahead.

Harsh Shah — Dalal and Broacha Stock Broking — Analyst

Thanks for the opportunity. A couple of questions from my side. Firstly on the imports, I believe that the December volume has come down a bit compared to the previous month. So what would you attribute this slowdown in imports to and has the downward trend even continued in January? That’s my first question.

V. Venkatramani — Chief Financial Officer

Okay. See, it is very difficult to state how important will because that will depend upon developments in the international market. The reason why the imports have increased, during the past six months, is primarily because there has been a slowdown in furniture demand in U.S. and Europe. And countries like Vietnam and Indonesia, which were exporting furniture to those countries, have been impacted. So, now instead of furniture, they are exporting their MDF boards. So it will to some extent depend on how fast demand improves in those countries and also how [Technical Issues] rates behave. So all these factors will influence imports, so it’s very difficult to say how imports will behave over the next 12 to 18 months. But we are increasing the focus on the export profits with the anticipation that imports will continue to — we offer similar volumes for the next couple of quarters. So while our focus on the domestic markets continuously remains strong, we are also increasing the focus on the export markets.

Harsh Shah — Dalal and Broacha Stock Broking — Analyst

Okay, and secondly, any short-term volume at the company level, operating margin guidance for FY ’24 and ’25?

V. Venkatramani — Chief Financial Officer

See. As far as FY ’24 is concerned, we would be looking at volume growth of 10% to 12% and margins around 23% to 25%. And we would not like to give any guidance for FY ’25 at this point of time because that’s like [Indecipherable] at this point of time. So now, we’ll probably look at that — maybe after the first half of FY ’24 [Technical Issues].

Harsh Shah — Dalal and Broacha Stock Broking — Analyst

Okay, okay. Thank you. That’s it from my side.

Operator

Thank you. We have our next question from the line of Achal Lohade from JM Financial. Please go ahead.

Achal Lohade — JM Financial — Analyst

Yes, thank you for the opportunity, sir. Can you clarify about the impairment or the investment write-off? What has driven this, any particular event? And is there any more write-off, which are expected?

V. Venkatramani — Chief Financial Officer

No, it’s a one-time write-off. So, there will not be any future write-off. So this was primarily — you look we started export business when the Uttarakhand unit was in [Technical Issues] and at that time, the export volume was very low because domestic freights from Uttarakhand plant to Mumbai port were very significant, it was almost 25% of selling price.

So at the time, we were doing very low volumes, primarily to maintain a presence in the export markets, because we knew we would require those market and the Andhra unit started to operate. But we were maintaining the infrastructure of the export sales team at Singapore. And since the export volumes were very low, losses were heavy in the initial years. And the situation had improved post the commencement of the Andhra plant. I think we had profits for the Singapore subsidiary over the past two years. But the view is now with export realizations coming down, we would not see any significant improvement in profits of the Singapore subsidiary. So we decided to take the impairment on the investment in the seller — Singapore subsidiary, which is related to the past losses.

Achal Lohade — JM Financial — Analyst

I’m a bit confused here. So you’re saying you will not increase the focus on the export. At the same time, you’re saying you’re not seeing it is profitable and hence write-off. Can you please just help me understand?

V. Venkatramani — Chief Financial Officer

Yeah. The reason why we are increasing focus on export in the near-term is primarily because of the increase in imports in the domestic market. So that’s the reason we are increasing the focus on export primarily to have a better capacity utilization of our existing plants. But the reason we have taken the impairment is because while the volume of exports will increase, no, it will not be a very profitable operation. And we do not see a significant reversal of the past losses of the Singapore subsidiary over the next couple of years. So that’s why we decided to take the impairment.

Achal Lohade — JM Financial — Analyst

Okay, okay, so you’re saying basically the past losses got basically written off now in terms of the impairment. If I [Speech Overlap].

V. Venkatramani — Chief Financial Officer

See it was already reflected in the account as far as the consolidated accounts were considered. It’s only — the impairment is reflected only in the standalone amounts.

Achal Lohade — JM Financial — Analyst

Is there any tax benefit of this, sir, by any chance?

V. Venkatramani — Chief Financial Officer

There might be. I would like to comment on that currently. But I believe there could be some tax benefit provided we get the RBI approval for the write-off.

Achal Lohade — JM Financial — Analyst

Understood. Now, my next question was in terms of the domestic market. While we have seen a decline of 7%, how has the domestic industry growth been according to you for the quarter? And in terms of import volume, what is the mix? And I presume it will be more in the South market. So how much of the South market at present is catered by imports?

V. Venkatramani — Chief Financial Officer

Okay, it is a part of the volume base coming to the Southern market, I would say at least 70% of the volumes are coming from the South market. And I think the markets are still growing at a good pace because while imports in this quarter were to the tune of about 50,000 cubic meters, we have seen only [Indecipherable] cubic meters on our domestic models. So I think the market continues to grow and it continues to replace the key Plywood segment. But yes, in the short term, imports have taken some market share away from domestic manufacturers.

Achal Lohade — JM Financial — Analyst

Of the South market, how much would be imports, sir?

V. Venkatramani — Chief Financial Officer

Somewhere between 70% to 80%.

Achal Lohade — JM Financial — Analyst

No, of the imports, you’re saying [Speech Overlap].

Shobhan Mittal — Managing Director

And the balance will be Western India.

Achal Lohade — JM Financial — Analyst

No, I am asking in terms of the total size of the domestic size of Southern market, of that, how much is imports?

V. Venkatramani — Chief Financial Officer

See approximately 45% of India’s volume comes from Southern India. So if we take — that the current — as of FY ’22 actually the volume was around 1.8 million cubic meters, so 45% of that would be about 8 lakh cubic meters. And looking at the current run rate, let’s say about 2 lakh cubic meters is coming from imports, so roughly 25% of the Southern markets is being [Technical Issues] by imports.

Achal Lohade — JM Financial — Analyst

Okay, understood. If I may ask a follow-up question, sir, in terms of the — any number you can talk about in terms of the price difference between our selling price in South versus the import of [Technical Issues] MDF in both the segments, please?

V. Venkatramani — Chief Financial Officer

Yeah, the price difference currently will be about 25% between our pricing and import pricing.

Achal Lohade — JM Financial — Analyst

In both categories, sir?

V. Venkatramani — Chief Financial Officer

Yeah, in both [Technical Issues] category.

Achal Lohade — JM Financial — Analyst

Okay.

Shobhan Mittal — Managing Director

I’d like to add something to this, though. This pricing difference, what Mr. Venkat is mentioning, is when an importer is bringing the material directly to his warehouse at the port location, the moment a larger importer in turn is trying to sell it further to smaller retailers, [Technical Issues] transport it further inland, then the costs obviously get inflated and the price gets reduced.

Achal Lohade — JM Financial — Analyst

How much should that impact be, let’s say, if he wants to do in option too [Phonetic]?

Shobhan Mittal — Managing Director

Depending on, let’s say, I mean, depending on the distance of the transportation or also, that is margins, I would say it would add another 5% to 7% to that.

Achal Lohade — JM Financial — Analyst

Okay. Okay. And any development, any thoughts on this anti-dumping duty, if the industry has re-presented, if the government is evaluating anything?

Shobhan Mittal — Managing Director

It is ongoing. Previously, what happened was that the Commerce Ministry had recommended this implementation of anti-dumping. But unfortunately, the Finance Ministry had not passed the decision and there is a rule, which said that if you don’t have a final decision from the Finance Ministry within 90 days and this is deemed to be, let’s say, rejected. However, multiple industries have approached the High Court, us including, where we have requested that a decision be taken and it simply cannot be [Technical Issues] and the High Court has suggested that the Finance Ministry has to take a decision, it cannot been silent on this. So the matter is [Technical Issues] we are still hopeful that a decision would come and hopefully a positive decision would come in this matter.

Operator

Thank you. [Operator Instructions]. We have a next question from the line of Karan Bhatelia from Asian Market Securities. Please go ahead.

Karan Bhatelia — Asian Market Securities — Analyst

Hi, sir. Thank you for the opportunity. Sir, how are the margins in the domestic market versus that of the export market and how has that shaped in last one year?

V. Venkatramani — Chief Financial Officer

See. I would say the margins that you see in the MDF segment are entirely from the domestic markets, considering the steep fall in export realization, the export margins are probably in low single digits right now.

Karan Bhatelia — Asian Market Securities — Analyst

Right. Right. And sir, our channels have suggested that competition has resorted to price decline, even in the third quarter, while the industry leaders have not gone for a price decline in the domestic market. So till when can we hold on to the domestic pricing since the delta you mentioned is about 20%?

V. Venkatramani — Chief Financial Officer

See, we would like to maintain the prices as long as possible. I’m not suggesting that we will be maintaining the prices if the volume of import doubles or goes up significantly beyond that. So, our effort is to maintain the pricing at current levels provided the volume of imports remains stable or comes down. But if imports continue to rise significantly [Technical Issues] or any other development happens due to competition intensity, we might be forced to take a relook at prices, but for the current, we continue to hold on to our prices because the difference is the — difference between our prices and imports is so significant it could take minor price that would not really contribute to any improvement in volumes.

Karan Bhatelia — Asian Market Securities — Analyst

Right, sir. That was helpful. And then will we shifting to the new tax regime anytime soon?

V. Venkatramani — Chief Financial Officer

Yeah, I think probably we will be shifting to the new tax regime from FY ’24.

Karan Bhatelia — Asian Market Securities — Analyst

Thank you. That’s it from my end.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Nikhil Gada from Abakkus AMC. Please go ahead.

Nikhil Gada — Abakkus AMC — Analyst

Excuse me. Yeah, hi, sir, thanks for the opportunity. Sir, when you mention that we are now focusing more on the exports market in terms of driving volumes and while you mention that margins for like low-single digits in exports, we see currently the share of export is closer to 21%, 22% of the overall mix, how much higher will this go in the quest for better volumes that you are suggesting?

V. Venkatramani — Chief Financial Officer

See, it’s very difficult to give a breakup between domestic and exports for the next [Technical Issues] would also depend on how imports continue to behave in future. So as always, our primary focus will be on the domestic market. But for the intermediate, the volume of imports are high, we will increase focus on the export markets.

Nikhil Gada — Abakkus AMC — Analyst

And just a follow-up on this, in exports, we are not selling any of our value-added products, right, we are largely selling the Plain MDF?

V. Venkatramani — Chief Financial Officer

That’s correct. I would say almost 98% from the Plain MDF.

Nikhil Gada — Abakkus AMC — Analyst

So then — and just regards to the margin front, can you help us understand if you can break this up that we were at 30% EBITDA margin in 1Q, 2Q, 30% plus, and they have gone down to closer to 25%, 26%. So there is a 4% fall, while the gross margins still look to be positive, we have seen an improvement. So how much would it be because of lower utilization because the mix of exports still remain the same. If I see 1Q, 2Q, 3Q, it was still at 21 odd percent [Phonetic] so are we trying to say that there was such a sharp fall in exports margin from 2Q to 3Q that has driven this, or is there something else [Speech Overlap]?

V. Venkatramani — Chief Financial Officer

Yeah, that’s correct. Like I mentioned, there has been a 12% price cut in exports in the current quarter. So when overall margins were around 30%, domestic margins were around 34%, and export volumes and — export margins were around 18%. That’s how we got that mix of 30%. So, while domestic margins continue to be maintained at close to this level, although there has been some impact because of higher power cost because of increase in rates by state electricity boards, so domestic margins continue to be good, but yes, due to the 12% price cut, export margins have taken a big hit.

Nikhil Gada — Abakkus AMC — Analyst

Got it, sir. I have few more questions. I’ll come back in the queue.

V. Venkatramani — Chief Financial Officer

Sure.

Operator

Thank you. We have our next question from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.

Praveen Sahay — Prabhudas Lilladher — Analyst

Yeah. Thank you for taking my question. Sir, my first question is related to the utilization. Can you give the North and South plant utilization?

V. Venkatramani — Chief Financial Officer

Yeah. So during this quarter, North plant operated at 81% and South plant operated at 73% and blended capacity utilization was 76%.

Praveen Sahay — Prabhudas Lilladher — Analyst

Sir, just on the export side, realization on the sequential basis, if I look at it, is down 18%, 19%. Sir, do you see this realization to go down further from here?

V. Venkatramani — Chief Financial Officer

It’s difficult to forecast because again countries to which we export have also been impacted by higher volumes coming from countries like Thailand, Indonesia, and Vietnam because of [Indecipherable] in furniture demand. So yes, we are seeing competition intensity increasing in the export markets also. So at this point of time, yeah, I think we’ll continue to say that while our primary focus will be on the export market — on the domestic market, we will continue — we will increase focus on the export markets currently.

Praveen Sahay — Prabhudas Lilladher — Analyst

So basically, we are still above pre-COVID level of the realization. So do you believe we will go back to that level?

V. Venkatramani — Chief Financial Officer

It’s very difficult question to answer. See, like I mentioned, as far as domestic realizations are concerned, those continue to remain stable and we’ll continue to hold on to those realizations because we believe that any price cut would not contribute significantly in volume terms.

Praveen Sahay — Prabhudas Lilladher — Analyst

Thank you, sir. Thank you.

Operator

Thank you. We have our next question from the line of Udit Gajiwala from YES Securities. Please go ahead.

Udit Gajiwala — YES Securities — Analyst

Yeah. Thank you for taking up my question, sir. Sir, firstly, like we mentioned multiple times, we are focusing on exports. So — and given that domestic is impacted largely due to imports coming in, sir, what do you think that Q4 numbers would look like in volume terms?

V. Venkatramani — Chief Financial Officer

At the moment, we are targeting somewhere between 1,35,000 cubic meters to 1,40,000 cubic meters in Q4.

Udit Gajiwala — YES Securities — Analyst

Okay, sir. And sir, on like 10% to 12% is the volume growth that you have said. And 23% to 25% margin is for blended or only for MDF?

V. Venkatramani — Chief Financial Officer

Only for MDF.

Udit Gajiwala — YES Securities — Analyst

Okay, sir, and sir, in previous question, you said that in exports, we are facing competitive intensity. Sir, what would be the price difference in those markets in our product versus…

Shobhan Mittal — Managing Director

There would not be any price difference in the export markets. So we would be exporting at similar prices as manufacturers from countries like Thailand, Vietnam, Indonesia, etc.

Udit Gajiwala — YES Securities — Analyst

Got it, and sir, any further price cuts we have taken for those markets specifically since Q4 or going…

V. Venkatramani — Chief Financial Officer

We have not taken any price cuts in January.

Udit Gajiwala — YES Securities — Analyst

Got it, sir, and sir, what would be our big debt in the gross level if we see for next year ’24 and ’25?

V. Venkatramani — Chief Financial Officer

So, at the end of 31st December. Gross debts were about INR195 crores and I think we would be repaying approximately about INR45 crores to INR50 crores per annum.

Udit Gajiwala — YES Securities — Analyst

Okay, sir. I’ll come up and thank you.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Keshav Lahoti from HDFC Securities. Please go ahead.

Keshav Lahoti — HDFC Securities — Analyst

[Technical Issues] opportunity. I just wanted to understand one thing, the import, which was 10% cheaper a quarter ago, now it is 25% cheaper. So what is leading to that import prices going down [Technical Issues] prices, raw material prices have reduced in their region or they are selling at a lower margin?

Shobhan Mittal — Managing Director

No I don’t think this is a function of raw material prices. It’s a function of demand and I mean, demand and supply purely, so basically when the lucrative markets, for these countries, the demand is mellow, then [Speech Overlap] supplying to the markets that they can find in our outlet too. It’s a very similar model to honestly, to what we do as on export as well when the domestic market for us is lukewarm, while the demand is not keeping up, then we would like to utilize capacity by supplying to the export market at the international pricing.

Keshav Lahoti — HDFC Securities — Analyst

Okay. Is it a fair understanding that the imports coming from Vietnam, Indonesia [Technical Issues] are also making a single-digit margin?

Shobhan Mittal — Managing Director

I didn’t hear the last part of your question. Can you repeat that? The imports coming from Vietnam, Indonesia…

Keshav Lahoti — HDFC Securities — Analyst

So, the imports coming from Vietnam and Indonesia, so such players also making single-digit margin. Is it a fair understanding?

Shobhan Mittal — Managing Director

Absolutely, yes.

Keshav Lahoti — HDFC Securities — Analyst

Okay. And how has been your value-added [Technical Issues] in volume terms and value for this quarter?

V. Venkatramani — Chief Financial Officer

[Speech Overlap] In volume terms, mix of value-added products was 51% and in value terms, it was 62%. 51% and 62%.

Keshav Lahoti — HDFC Securities — Analyst

[Speech Overlap] Got it. Thank you. That’s it from my side.

Operator

Thank you, We have our next question from the line of Jignesh Kamani from GMO. Please go ahead.

Jignesh Kamani — GMO — Analyst

Hi, Shobhan ji. Hi, Venkat, ji. Just on the import side, [Technical Issues] MDF segment [Technical Issues] value-added segment, both volume and the margins are also getting impacted on account of import? [Speech Overlap] is the value added segment also getting impacted by it?

Shobhan Mittal — Managing Director

No, there is not much imports coming into the value added segment.

Jignesh Kamani — GMO — Analyst

But people are importing their MDF and doing value added separately [Technical Issues] or do you think that they continue to remain with large player in [Speech Overlap].

Shobhan Mittal — Managing Director

[Speech Overlap] actually coming in from the point of value addition only. So, large-format OEMs, who have short cycles, etc., or large-format [Speech Overlap] are the ones who are importing in large volumes. because, like I said earlier, that imports coming in, being imported by an individual and then further selling it then makes it uncompetitive as well for that. So where instead of the imports are competitive or let’s say substantially price — lower in price costing, are these large-format consumers who are able to buy in bulk and who are consuming at their own end by adding some consuming for value addition.

Jignesh Kamani — GMO — Analyst

Understood. So, if you take [Technical Issues] our volume decline in domestic market, it is more on the [Technical Issues] using the value added volume also decline in this quarter?

V. Venkatramani — Chief Financial Officer

On the [Technical Issues]. See, our value-added products, [Technical Issues] to be stable or have seen an improvement both year-on-year and quarter-on-quarter. So whatever [Technical Issues] we have taken [Technical Issues] on the plain industrial MDF segment.

Jignesh Kamani — GMO — Analyst

Understood. And on the anti-dumping duty you mentioned that now you can say, hearing is good [Technical Issues] Finance Ministry [Technical Issues] Commerce Ministry, timeline has been less. So any clarity by when we will hear anything on the anti-dumping duty, whether it is passed or no? Or is there any timeline or it will continue to hang for long time?

V. Venkatramani — Chief Financial Officer

No, we don’t have any timeline [Technical Issues].

Jignesh Kamani — GMO — Analyst

Understood and on the anti-dumping duties, the moment [Technical Issues] on the demand side, whenever the US, Europe demand improves, do you think the Vietnam and Indonesian player will again go back to this market and dumping [Phonetic] in India will reduce or do you think it will remain a structured program going forward?

V. Venkatramani — Chief Financial Officer

No, no, it will definitely reduce because they are not making any margins by selling MDF to India. So as soon as the furniture demand starts to pick up in those studies, they will reduce MDF exports and concentrate on value-added exports.

Jignesh Kamani — GMO — Analyst

Understood. And we will see that multiple new capacity will come on the stream by the various competitors, six months to one year down the line and we are also seeing that import is you can say now coming back. So in that case, how will be the — I can say pricing and the margin will [Technical Issues] focus on the you can say utilizing capacity where people will try to focus on the reasonable profitability and won’t mind you can say compromising volume?

V. Venkatramani — Chief Financial Officer

See, I don’t think we will see any significant increase in capacity happening in the next financial year. so, I think probably a majority of those capacities will come in the last quarter of FY ’24 or the first half of FY ’25. So that’s the reason, I think we feel that demand would continue to be stable and we will not see any significant impact on realizations in FY ’24.

Operator

Thank you. We have our next question from the line of Abhishek Khaitan from Alpha Invesco. Please go ahead.

Abhishek Khaitan — Alpha Invesco — Analyst

Yeah, thank you for the opportunity. Am I audible, sir?

V. Venkatramani — Chief Financial Officer

Yeah, please go head.

Abhishek Khaitan — Alpha Invesco — Analyst

Yeah, sir. our current MDF market domestically is roughly around INR4,500 crores. So out of that, how much would it be B2C and how much will be the OEM and for us also, how would that split look like? Just some ball park colors.

V. Venkatramani — Chief Financial Officer

Yeah. I won’t be able to give you numbers for the industry as a whole because some parts of the industry are unorganized, some are unlisted entities, so I do not have numbers for the industry as a whole. But if we look at our mix, approximately about 88% of our volume comes from the dealer segment and about 12% from the OEM segment.

Abhishek Khaitan — Alpha Invesco — Analyst

Understood. Okay. Sir, and also when this load of capacities sort of come on line, so is the bigger picture that a lot of the capacities will move to supply towards OEM players or it will be both markets? I mean through dealers and OEMs both mixture. Or is it like panel based furniture sales [Technical Issues] in India and most of it is absorbed by the OEM guys?

V. Venkatramani — Chief Financial Officer

Yeah. I think you are correct. I think new capacities will focus on all three segments of the market, but I think the initial focus will be on the OEMs, because they can give you large volumes in short periods of time whereas building the network will take a couple of years, because dealers typically will start with low volumes and then scale up over a period of time. So yes, the immediate focus for new capacities will be the OEM segment and export market.

Abhishek Khaitan — Alpha Invesco — Analyst

Okay, Okay. Sir, last question, sir. So, sir, on the timber supply, timber pricing, channels just suggest that in North, timber prices may start coming down from Q4 onwards in North and in South, plantations are still lagging, so we still might see a spike in timber. So, how — I mean, how much is that correct and how would that impact us?

V. Venkatramani — Chief Financial Officer

Yeah, as far as the South is concerned, I don’t think plantations are lagging because we ourselves have provided almost about 12 million saplings during the last 10 months to farmers for plantation. So I don’t think plantations are lagging in the South. And as far as price behavior in the North is concerned, I think the prices are probably close to peak. But I’m not able to give you an immediate reply on whether we see prices coming down in Q4.

Abhishek Khaitan — Alpha Invesco — Analyst

Okay, thank you sir.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Parth Bhavsar from Investec India. Please go ahead.

Parth Bhavsar — Investec India — Analyst

Hi, sir. Sir, thank you for the opportunity. Just wanted to [Technical Issues].

V. Venkatramani — Chief Financial Officer

Can you please speak louder?

Parth Bhavsar — Investec India — Analyst

Yeah, sir, you can hear me now?

V. Venkatramani — Chief Financial Officer

Yeah. I can hear you.

Parth Bhavsar — Investec India — Analyst

Yeah. Sir, just I didn’t catch exports in domestic volume numbers. So can you help me with that?

V. Venkatramani — Chief Financial Officer

For the current quarter?

Parth Bhavsar — Investec India — Analyst

Quarter, quarter. Yeah. Quarter, Q3, yeah.

V. Venkatramani — Chief Financial Officer

Okay, the total volume for this quarter was 1,18,218 cubic meters. That’s the total volume. Domestic contributed 92,809 cubic meters and export contributed 25,409 cubic meters.

Parth Bhavsar — Investec India — Analyst

Okay, Sir, when we guide that, we’ll make 25% EBITDA margins. And you also said that you will be focusing on exports going ahead over the next few months or quarters. So do we factor lower EBITDA margins for domestic for exports, when we say 25%?

V. Venkatramani — Chief Financial Officer

Yeah, obviously [Technical Issues] margins will be lower than the blended figure of 23% to 25%. So while we may not see any significant improvement in domestic margins, increase in capacity utilization will probably provide that leverage to maintain or improve the margin.

Parth Bhavsar — Investec India — Analyst

Okay. Okay. And, sir, like for how long do you — currently you see the imports trend going down because we don’t see freight cost going down. So we expect it to continue for some time now. So how is…

V. Venkatramani — Chief Financial Officer

Like I mentioned, it’s difficult to forecast how imports will behave over the next 12 months because it is also linked to two or three different factors. So, yes, I agree with you that we can’t forecast import volumes at this point of time.

Parth Bhavsar — Investec India — Analyst

Okay, okay. Thank you so much, sir. That’s it from my side.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Senthilkumar from Joindre Capital Services. Please go ahead.

Senthilkumar — Joindre Capital Services — Analyst

Hi, sir, thanks for the opportunity. I have a couple of questions. First one is, may I know what is the company’s rationale behind the sponsors for South Africa T20 League? Is South Africa big export market for the Company? Because I just want to understand the opportunity [Technical Issues].

V. Venkatramani — Chief Financial Officer

No, actually. This was — let’s say, this was a bonus that came along with the package of the sponsorship of the Delhi Capitals deal. We did not seek this out independently, but it was part of the the package because Pretoria Capitals is owned by the Delhi Capitals team.

Senthilkumar — Joindre Capital Services — Analyst

Okay, okay, I understand that. Okay. Okay. Thank you, sir. And my second question is, can you give a breakup of MDF volume in terms of domestic and exports for the nine months of this year and previous year, sir? Nine-month volume.

V. Venkatramani — Chief Financial Officer

Yeah, so domestic volumes were 2,90,731 cubic meters for the current nine months.

Senthilkumar — Joindre Capital Services — Analyst

Okay, sir. Okay.

V. Venkatramani — Chief Financial Officer

And for last year nine months, it was 2,70,696 cubic meters.

Senthilkumar — Joindre Capital Services — Analyst

Okay. Okay. Export?

V. Venkatramani — Chief Financial Officer

And export. Current year, 78,747 cubic meters. Last year, 99,807 cubic meters.

Senthilkumar — Joindre Capital Services — Analyst

Okay, okay. Thank you sir. That’s it from my side. Thank you.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Nikhil Agrawal from VT Capital. Please go ahead.

Nikhil Agrawal — VT Capital — Analyst

Good evening, sir, and thank you for the opportunity. Sir, just a general question, like I had spoken to some carpenters and I got to know that like they are kind of reluctant to use MDF because they say that that they need machines to use that — I mean to cut it into parts and like in Plywood where they can do it normally, so like Greenpanel, our company, as the market leader, what is it — is it taking any steps to solve this problem and improve the adaptability?

Shobhan Mittal — Managing Director

Yes. I mean, we are always promoting among carpenters. In fact, that is one of our biggest sort of marketing activity spends. It’s training and education of the carpenters segment. We are holding carpenter meets across countries on a very regular basis. And basically, teaching them how this can be adapted, instead of using a hand saw,, all they need is the rotary saw and instead of using screwdriver, they need — instead of using a hammer, they need a screwdriver. [Technical Issues] the principal difference is. At the same time, educating the carpenters of the benefits of MDF where turnaround time is much faster. If you use a prelaminated MDF, where they as opposed to Plywood where they have to stick a laminate and wait for three days for it [Technical Issues] prelaminated MDF reduces that time drastically. So they are able to take on more projects and increase their own income. So, this is always an ongoing — and if you see many areas the carpenters have very well warmed up to the idea and adopted MDF as a preferred material. It’s a slow process, but obviously, it’s ongoing.

Nikhil Agrawal — VT Capital — Analyst

Okay. Got it. Great, sir. And sir, just wanted to know like, the imports, like. I just wanted a clarification because in January have the imports started slowing down a bit in the last ten days in the middle of January or something?

V. Venkatramani — Chief Financial Officer

We don’t yet have the data for January. So we may not — we don’t want to comment on that yet till we have the confirmed data.

Nikhil Agrawal — VT Capital — Analyst

Okay, sir. No issues. And sir, just one last question. I wanted to know if it’s possible for you to disclose the advertisement cost for the IPL branding that you have signed?

Shobhan Mittal — Managing Director

We would prefer not to disclose this in this forum.

Operator

Thank you. We have our next question from the line of Neeraj from Arihant Capital. Please go ahead.

Neeraj — Arihant Capital — Analyst

Hi, thank you for taking my question. I had one basic question. Sir, wanted to understand the capex which you talked about earlier about INR600 crores. Where are we spending this, in which capacity are we increasing? Just wanted to know that. That is my first question.

Shobhan Mittal — Managing Director

This is being spent purely on the new MDF line that we are installing as the brownfield expansion in our Andhra Pradesh site in Srikalahasti. So we are adding another 28 meter press with a capacity of about 230,000 cubic meters.

Neeraj — Arihant Capital — Analyst

Understood, okay. And my second question would be, sir, seeing the demand scenario, currently the market scenario [Technical Issues] with imports. Would you have any thoughts on revisiting that idea for capex or are you still going ahead with it?

Shobhan Mittal — Managing Director

No, you see, we I mean, what we’d like to do of course is that by the time this new line comes on, which will be in the middle of FY ’25, we’ll have full capacity in both our existing lines. One other thing, of course, which is a silverlining is that this new line that we are setting up would primarily be focused on — specialized to produce in MDF. And today our Andhra facility is not well equipped to produce in MDF. In fact, certain products which are very, very important, we don’t produce at all. So the idea would be both for export and domestic markets, to specialize — focus on producing thin MDF on the new line and continue producing thick MDF on the current line in order to enhance efficiency within the plant. So we’ll be able to enter the product segment, which we are currently not really strongly existing in the South of India.

Neeraj — Arihant Capital — Analyst

Understood. And would there be any other players in the thin MDF side or how the scenario on thin MDF side? Currently, it would be — the prospects would be looking good right now?

Shobhan Mittal — Managing Director

No, sure. I mean, for example, in — today, pretty much all producers including us in the North are producing thin MDF. Rushil is producing some thin MDF in the South of India. Imports are coming up — coming in a big way, so prominent, I would say 30% to 45% of the total MDF market consists of thin MDF category.

Operator

Thank you. We have our next question from the line of Hasmukh Vishariya from SUD Life. Please go ahead.

Hasmukh Vishariya — SUD Life — Analyst

Yeah, thanks for the opportunity. Two questions from my side. Sir, firstly, you mentioned about low-single-digit margins for players of Vietnam and Indonesia. So is it fair to assume that, let’s say, decline in import realizations will be capped at this level, at the level of — basically, these guys are able to make positive margins?

Shobhan Mittal — Managing Director

You mean to say for the importers or for the companies that are exporting to India?

Hasmukh Vishariya — SUD Life — Analyst

Yes. Yes. Yes. Yes. Yes.

Shobhan Mittal — Managing Director

Well. You see, a lot of it boils down to their own in raw material cost as well as their currency against the dollar. But. I mean, if I look at the historical numbers, I would say you’re already at like rock bottom levels with the import pricing.

Hasmukh Vishariya — SUD Life — Analyst

Okay, okay. So that means import realizations or import prices will not go down much from this level. So the gap between…

Shobhan Mittal — Managing Director

Unless we have a very strong depreciation of the country against — of the currency against the dollar, I don’t foresee that happening.

Hasmukh Vishariya — SUD Life — Analyst

Okay, so the gap between our prices and theirs will not lets say move from 25% much now?

Shobhan Mittal — Managing Director

Will not widen further. Yes.

Hasmukh Vishariya — SUD Life — Analyst

Okay. Okay, fine. And secondly, just a bookkeeping question from the presentation. Let’s say, on Slide 30, if I look at your, let’s say graph of annual demand. So that is 9.3% CAGR from let’s say FY ’21 to ’26 in terms of demand revenue. And if I look at Slide number 33, there you have given 20%, 25% production capacity expansion. So how do these two number let’s say match or it is an error or something?

Shobhan Mittal — Managing Director

Could you mention the Slid Number for the first one?

Hasmukh Vishariya — SUD Life — Analyst

Slide Number 30.

Shobhan Mittal — Managing Director

30?

Hasmukh Vishariya — SUD Life — Analyst

29. Yeah, 29 of the presentation.

Shobhan Mittal — Managing Director

Okay.

Hasmukh Vishariya — SUD Life — Analyst

Where you have given the a size of the MDF market from INR3,200 crores to INR5,000 crores.

Shobhan Mittal — Managing Director

Okay.

Hasmukh Vishariya — SUD Life — Analyst

And second is the Slide Number 32, where you have written that further it is expected to witness CAGR of 20%, 25% for the period from ’21 to ’26 in terms of capacity expansion or production expansion.

Shobhan Mittal — Managing Director

I’ll just check on that and revert.

Hasmukh Vishariya — SUD Life — Analyst

Okay, okay, fine. Okay. Thank you. That’s it from my side. Thank you.

Shobhan Mittal — Managing Director

Please give me a call [Technical Issues].

Hasmukh Vishariya — SUD Life — Analyst

Okay, sure, sure. Okay, thank you.

Shobhan Mittal — Managing Director

Thank you.

Operator

Thank you. We have our next question from the line of Avesh Bagadia from Piper Serica. Please go ahead.

Avesh Bagadia — Piper Serica — Analyst

Sorry, my answer has been — already answered. Thank you.

Operator

Thank you. We have our next question from the line of Ashish Kumar from Infinity Alternatives. Please go ahead.

Ashish Kumar — Infinity Alternatives — Analyst

Thank you sir. Sir, I had one question in relation to the industry. There are two plants which are expected to become operational, one in this quarter century [Phonetic] and another one in the first quarter of FY ’24. Do you think that can put pressure on the domestic margins or how do you see that scenario playing itself out or do you believe the demand is robust enough to take care of it?

Shobhan Mittal — Managing Director

You see. I don’t see that there will be any substantial price reductions especially on account of new capacities coming in, because I think all domestic producers have learned the hard way that reduction of pricing is not the solution to increase volumes. And I think if you looked at past couple of years, you must have noticed that there has been no significant price reductions even in times of demand pressure or surplus supply, which is also the prevailing situation today. So, I don’t see a challenge in terms of margins reducing. Yes, there will a fight for market share happening. But I don’t see a challenge for realization dropping.

Ashish Kumar — Infinity Alternatives — Analyst

Yeah, but then when it comes to price for market share, then you would might see other things like your dealer commissions or your dealer incentives in terms of working capital kind of go up. Do you see that as a risk or do you see that the growth is still 15%, 20% because the two capacities together will probably add around 15-odd percent to the industry capacity. Do you see that can get absorbed?

V. Venkatramani — Chief Financial Officer

I don’t — I don’t think — I don’t see that would be a — that could be a challenge. I think we will be okay. We don’t foresee that to be a challenge in terms of margins.

Ashish Kumar — Infinity Alternatives — Analyst

Okay. And second thing is in terms of the fact that now the export prices have kind of or — the important markets have opened up and the export pressures have come down, do you see some of the unorganized sector still wanted to get into MDF or do you see them kind of taking a little bit of a back seat?

Shobhan Mittal — Managing Director

See, unorganized sector has a significant debt in terms of capacity, but in terms of market share, they have a much lower debt. So, I think they will cut into — in the current form, where I would say probably the market share is around 15%, 16%. But we don’t expect to see any significant increase in the market share in future.

Ashish Kumar — Infinity Alternatives — Analyst

So you are saying that the new plants which are potentially coming up, the new plants may not come up in — over the next one to two years?

V. Venkatramani — Chief Financial Officer

Yeah, the major expansions are happening on the site of the organized players.

Ashish Kumar — Infinity Alternatives — Analyst

Okay. Okay. Thanks and wish you all the best.

V. Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions]. We have a question from the line of Shubham Thorat from Perpetual Investment Advisors. Please go ahead.

Shubham Thorat — Perpetual Investment Advisors — Analyst

Hello. Thank you for the opportunity. Am I audible, sir?

V. Venkatramani — Chief Financial Officer

Yeah, please go ahead.

Shubham Thorat — Perpetual Investment Advisors — Analyst

Yeah. I have couple of questions. Before that, just one clarification. You have mentioned that the imports are largely from Plain MDF side and not the value-added segment. So can you give the reasoning for that, why is it so?

V. Venkatramani — Chief Financial Officer

See, I can’t tell you what the reason is, they might — it could possibly be because of the fact that we did not produce much of the value-added products. So even if you look in India, there are some manufacturers who do not — who have a very low share of the value-added segment. So, I can’t give you any reason why that is so. But if you look at our share of value-added products, it continued to remain stable this year, so it was about 49% in volume terms and 60% in value terms in Q1, 50% and 61% in Q2 and 51% and 62% in Q3. So the fact that we have been able to maintain a share of value-added products, [Technical Issues] that imports are not focusing on the value-added segment because OEMs do not purchase much of the value-added products, they primary focus on the plain industrial products. So if you want to [Technical Issues] more of the value-added products, you have to have a deep penetration in the dealer network. So that’s only the reason why imports are focused primarily on the plain industrial MDF.

Shubham Thorat — Perpetual Investment Advisors — Analyst

Okay. Clear enough. Thank you for that. And my first question would be, you had mentioned that your primary focus will be on increasing the domestic volumes. So how do you plan on to maintain these current domestic volumes or if not to increase in light of increased imports and the differential, the price differential from our pricing point of view?

V. Venkatramani — Chief Financial Officer

Though we are taking some steps to reduce the impact of imports, I would not like to clarify at point of time what those steps are. But we are taking steps to increase our focus on the domestic markets.

Shubham Thorat — Perpetual Investment Advisors — Analyst

Okay. Okay. Thank you. And my last question would be, so if you can give some clarity on what was the raw material pricing scenario in the quarter three and how is it behaving into quarter four as we are already a month past in the Q4?

V. Venkatramani — Chief Financial Officer

See, importantly, wood prices were quite stable and we had seen some reduction in the resin side. In January, we had seen some increase in resin prices, but we’ll have to look at the next couple of quarters to understand whether it’s for the short-term or the medium-term or the long-term. Now since it’s been there for just a few days, probably about 15 days in this month, so we’ll have to look at the future before I can give a realistic idea of how raw material prices will behave in the future.

Shubham Thorat — Perpetual Investment Advisors — Analyst

Okay. Okay. Great. Thank you and wish you all the best.

V. Venkatramani — Chief Financial Officer

Thank you very much.

Operator

Thank you. We have our next question from the line of Senthilnathan KR from NAFA Asset Managers. Please go ahead.

Senthilnathan KR — NAFA Asset Managers — Analyst

Thank you for the opportunity, sir. Sir, how our working capital days will be going forward, because when we start focusing more on the exports going incrementally? Will it be same or will it be increasing slightly?

V. Venkatramani — Chief Financial Officer

No, it won’t increase. We’re focused on working capital whether it’s the domestic segment or the export market. So we continue to remain focused on the working capital days. So we did not extend any additional periods, whether it be the domestic markets or the export markets.

Senthilnathan KR — NAFA Asset Managers — Analyst

Okay. And next question is like, how much is our dealer network as of last quarter and vis-a-vis last year?

V. Venkatramani — Chief Financial Officer

Okay. I have not checked the figures of this quarter. So I’ll probably give that number after the March quarter.

Senthilnathan KR — NAFA Asset Managers — Analyst

Sure. And sir, I just wanted to understand on the Forex part, is it arising because of our Forex loan or it’s also because of our exports revenue as well? We are booking the invoice and then when are receiving it, we are booking the currency loss or currency gain.

V. Venkatramani — Chief Financial Officer

Yeah, it’s mix of both. So the major part of it is happening because of the foreign currency borrowing. If you look at, I think it’s note number three of the results, we have given data for Forex losses on the International currency borrowings. But that’s not the entire part of Forex losses. So we also had some losses on account of exports or imports or even against [Technical Issues] taken against [Technical Issues] imports which we had done for the expansion last year.

Operator

Thank you. We have our next question from the line of Arun Baid from ICICI Securities. Please go ahead.

Arun Baid — ICICI Securities — Analyst

Hi. Just one clarification, sir. Like from our strategy perspective, do we think that branding and distribution is the key going ahead for our perspective to counter the imports?

V. Venkatramani — Chief Financial Officer

Going forward that will definitely make a difference, you see, when we move away from commodity segment to a branded product segment. That will — if you see how plywood has panned out historically, although imports of plywood is abundantly available since it’s been de-commoditized and become a branded product segment, imports are not really a prevailing fact [Phonetic]. So going forward, we’ll see a lot of value in creating brand for this because so far, we’ve been trying to educate people about the category, but I think now we are at a position where people are fairly aware of what MDF is and it will be a good time to enter into this activity of creating a brand and decommoditizing our product from the others.

Arun Baid — ICICI Securities — Analyst

And just one more clarification. Somewhere in the call, I heard that your guidance for next year in the margin front, it is 20% to 25%, which looks a bit low because even in this quarter when your domestic volumes degrew and exports grew significantly, [Technical Issues] for the quarter, your margins were 25.6%. Am I missing something or that is [Speech Overlap].

V. Venkatramani — Chief Financial Officer

I think we will be somewhere in the range of 25% to 26% going forward in that, we should be able to maintain that.

Arun Baid — ICICI Securities — Analyst

Thanks. Thanks for that. Thank you.

Operator

Thank you. We have our next question from the line of Viral Shah from PhillipCapital. Please go ahead.

Viral Shah — PhillipCapital — Analyst

Yeah, good afternoon, sir. Thanks for the opportunity. Sir, if you can quantify how much degrowth we have seen in the lower industrial grade MDF segment that you have talked about earlier?

V. Venkatramani — Chief Financial Officer

Yeah. See, our share of value-added products has been stable, so whatever degrowth has happened has happened in the sales segment only.

Viral Shah — PhillipCapital — Analyst

Okay. So entire degrowth came from the Industrial segment?

V. Venkatramani — Chief Financial Officer

That’s it.

Viral Shah — PhillipCapital — Analyst

Okay. And sir, what is your sense on the import that will it remain at the current level or will it increase looking at the stable demand scenario at least in India?

V. Venkatramani — Chief Financial Officer

It’s difficult to give a reply because this is dependent on, I would say mix of three factors, how furniture demand improves in U.S. and Europe, international freight prices, diesel price, — I’m sorry, crude price movements. So, it’s a mix of various factors. So it’s difficult to give a view on how imports will behave in the short, medium or long term.

Viral Shah — PhillipCapital — Analyst

Okay and sir, lastly sir, what is the rationale for the 12% price cut in the export segment, sir. Is it due to the fall in the raw material environment or is it is a function of low demand scenario?

V. Venkatramani — Chief Financial Officer

Basically we have to match prices with exporters from Thailand, Vietnam and Indonesia, with whom we’re competing in the international markets.

Viral Shah — PhillipCapital — Analyst

Exactly. So my point was that only sort of import coming at the lower price. So what is benefiting them?

Shobhan Mittal — Managing Director

I’m sorry, I didn’t understand your question.

Viral Shah — PhillipCapital — Analyst

Sir, if imports [Technical Issues] players from Thailand, Indonesia, Vietnam, they are selling at a cheaper price. So, what is benefiting them, sir?

Shobhan Mittal — Managing Director

No. We are talking here that we have to match prices in the markets we are exporting to with the prices of suppliers from Thailand, Malaysia, to those countries as well. So as you see, overall export international market pricing has gone down. It is the same thing that you see in India as well where imports have become cheaper. The same thing is happening for the UAE market or other Middle East countries. And we have to match — we have to be competitive with them, hence the reduction in our export pricing.

Operator

Thank you. We have our next question from the line of Hena from DAM Capital. Please go ahead.

Hena — DAM Capital — Analyst

Yeah, hi. I just wanted to understand on the MDF OEM side, especially in the South and West, to that extent, are OEMs or consumers in the coastal regions — do they just happen to shift between domestic and import just because the cost makes sense or there OEMs or consumers in the South that we have a fighting chance?

Shobhan Mittal — Managing Director

So, it is purely a function of pricing, especially for the large-format OEMs. However, there are certain OEMs who are using value-added products. But — and there are certain OEMs, whose consumption may not be to the tune where exports let’s say they are happier to pay a premium for our domestic product as opposed to going through the process of importing in large volume, having LC facilities, having the risk of foreign exchange fluctuations. So there is a mix. However, the large-format OEMs which are big, big consumers are obviously very, very price conscious and the choice between domestic and exports is easily swayed based on the pricing difference.

Hena — DAM Capital — Analyst

Okay. So, as a percentage, how much would these smaller OEMs or the more — value-added OEMs be.

Shobhan Mittal — Managing Director

It’s hard to put a number to that, but I would say, I mean, almost 60%, 70% of OEMs are — fall in that large-format category, because you see the other challenge we have in tracking this is when it’s a smaller-sized OEMs, our company may not necessarily service them directly, but route the sales through our dealer network and we don’t have that secondary sales data from the dealer network.

Hena — DAM Capital — Analyst

Sure. And…

Shobhan Mittal — Managing Director

So, that will reflect in our regular retail sales.

Operator

Thank you. We have our next question from the line of Dipanshu from Shivanssh Holdings LLP. Please go ahead.

Dipanshu — Shivanssh Holdings LLP — Analyst

Hi, sir. Congratulations for the results. I just wanted to understand, in your initial comments, you mentioned that you would be focusing on about 1.35 lakhs to 1.4 lakh CBM for the fourth quarter, so are we trying to say that this full year would be a muted growth of 5% [Phonetic] kind of? [Speech Overlap]. And in that case, how do we see FY ’24 panning out with all these imports coming out? Do we plan to do a double-digit volume growth?

V. Venkatramani — Chief Financial Officer

Yeah, we are looking at a double-digit volume growth in FY ’24.

Dipanshu — Shivanssh Holdings LLP — Analyst

Okay, sir, I also wanted to understand [Technical Issues] calculation, what you are trying to do on the new capital expenditure. It says INR600 crores [Phonetic] capital expenditure, what we are doing. And as the margins are coming down, so how we see this impacting our budgeting and planning for FY ’25 and FY ’26 because the payback periods would start to increase accordingly?

V. Venkatramani — Chief Financial Officer

Sorry, please repeat that again.

Dipanshu — Shivanssh Holdings LLP — Analyst

Yeah, so, I wanted to understand that with EBITDA margins coming down comparatively because of imports, so how do we see — are we trying to rethink about our entire expansion plan of INR600 crores because already almost a payback period is [Speech Overlap].

Shobhan Mittal — Managing Director

We are not going to rethink that. As I mentioned earlier that we’d like to be at full capacity at both our existing production facilities by the time this comes online in the middle of FY ’25. Also, as I mentioned that with this product, we will be able to cater to a segment where we are currently not very prevalent in, which is the thin MDF segment. So that would allow us to take a much — take a market share at a much faster pace because we are currently not really very strong in that segment of the Company.

Dipanshu — Shivanssh Holdings LLP — Analyst

Okay, then. So one other another question what I have on the current situation, so as we are participating in IPL and we are trying to go towards the higher amount of advertisement expenditure, in your last con call, you mentioned that you would be increasing your advertisement, etc., towards about say 2%, 2.5%. So do you see this benefiting us in our value-added products and are you increasing on the products mix over there, are you increasing more SKUs in your value-added products?

Shobhan Mittal — Managing Director

So, we recently launched a few value-added products, we launched fire-retardant MDFBut the whole objective of this branding exercise, like I mentioned earlier as well is to also basically try to de-commoditize our company and our products from the competition and create a brand recall where across all product segments, there can be a premium that can be commanded based on the brand recall and the brand value. Hence, the activity of and I think the brand value is being undertaken. So we feel that not just on value-added products, but across all products, we will get some benefit from the spending.

Operator

Thank you. We have a follow-up question from the line of Jignesh Kamani from GMO. Please go ahead.

Jignesh Kamani — GMO — Analyst

Hi, Venkat ji. In the North, you mentioned that close to [Indecipherable] and other subsidy, we were supposed to receive from the state government. However, we have not received and hence we have not [Technical Issues]. Any reason why status is not, you can say provided despite the approval from the state?

Shobhan Mittal — Managing Director

Are you talking about the subsidy here?

Jignesh Kamani — GMO — Analyst

Yes, yes, so [Technical Issues], you mentioned that close to [Indecipherable] subsidy was approved by the state, but we have not received yet and hence we have not provided in the book [Speech Overlap]. So while have we not received despite the approval from the state?

V. Venkatramani — Chief Financial Officer

[Speech Overlap] See, basically there are two stages of the subsidies Okay, we are entitled to receive to the tune of INR60 crores, INR65 crores [Phonetic], like you said; however, that is firstly divided into two parts; one is the capital subsidy on account of the new investments we made and the other is the electricity subsidy which the state government has promised to us at the rate of INR1 per unit. Okay, out of this, part of the capital subsidy has only been sanctioned so far where a government order has actually been issued. So — and the balance is still in process, but the government order has not been issued. Hence, we are not in a position to recognize that till the government order is officially issued. [Speech Overlap].

Jignesh Kamani — GMO — Analyst

Sir, is there any probability that we will receive or I think there is no problem with your [Technical Issues] of debt?

V. Venkatramani — Chief Financial Officer

Sorry.

Jignesh Kamani — GMO — Analyst

[Speech Overlap] is very difficult to comment on that part.

Shobhan Mittal — Managing Director

I mean you’ll see. I mean. I am quite sure that the government will stand to its commitment, question is when and In what time frame. Because this technically is statutory or a legal obligation on the state governments part, which has been committed to us. So, I’m pretty sure that we will eventually receive it, but it’s a matter of time.

Jignesh Kamani — GMO — Analyst

It was till December ’22, right? After that, there is no — all the benefit has been lapsed, right, as you know from December ’22 onwards, right?

Shobhan Mittal — Managing Director

No. These subsidies. I mean these are old subsidies which are due to us.

Jignesh Kamani — GMO — Analyst

And I am saying from January onwards, Is there any subsidiary which is due or all the subsidiary has been over from December ’22?

Shobhan Mittal — Managing Director

No. On — the recurring subsidy was only on account of electricity at the rate of INR1 per unit, which is still ongoing.

Jignesh Kamani — GMO — Analyst

Understood. So, as of now, we are not booking anything because of the — we have not received it.

Shobhan Mittal — Managing Director

Because we have not received and we are not sure when we will receive it.

Jignesh Kamani — GMO — Analyst

Understood. Sure. Thanks a lot.

Shobhan Mittal — Managing Director

Yeah.

Operator

Thank you. We have our next question from the line of Senthilkumar from Joindre Capital Services. Please go ahead.

Senthilkumar — Joindre Capital Services — Analyst

Thanks for the opportunity again, sir. My question is regarding this domestic MDF volume. The last con call, management has guided for a 12% domestic MDF volume growth. As per my calculation, in the nine months of FY ’23, we have registered 7.40% growth in MDF volume. So I just wanted to understand from the management, is it now — we still stick to this 12% guidance for FY ’23 because [Speech Overlap].

Shobhan Mittal — Managing Director

FY ’23, I don’t think the 12% is achievable. However, going forward next year, I think we would like to give a broader range of 10% to 15% growth in terms of volume for the next year.

Senthilkumar — Joindre Capital Services — Analyst

Okay, sir. Okay. Thank you. Thank you. That’s it from my side.

Operator

Thank you. We have our next question from the line of Nikhil Agrawal from VT Capital. Please go ahead.

Nikhil Agrawal — VT Capital — Analyst

Yeah. Thank you for the opportunity. Sir, I just wanted to understand the Q4 volume that you have given — mentioned, 1,35,240 cubic meters, so is this largely led by exports or is it the domestic market that you’re being optimistic on?

Shobhan Mittal — Managing Director

[Technical Issues] I would say in this number about 35,000 cubic meters to 40,000 cubic meters would be exports.

Nikhil Agrawal — VT Capital — Analyst

Okay, 35,000 cubic meters to 40,000 cubic meters?

Shobhan Mittal — Managing Director

Yeah.

Nikhil Agrawal — VT Capital — Analyst

Okay, great. That’s it from me. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Over to you, sir.

Shobhan Mittal — Managing Director

We thank everyone for joining this call. If anyone has further questions, please feel free to reach out to us and we look forward to speaking to you again at the end of the next quarter and the financial year. Thank you, everyone, and good bye.

V. Venkatramani — Chief Financial Officer

Thank you and have a good day.

Operator

[Operator Closing Remarks].