Rushil Decor Limited (NSE: RUSHIL) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Karan Bhatelia — Analyst
Rushil Thakkar — Managing Director
Hiren Padhya — Chief Financial Officer
Keyur Gajjar — Chief Executive Officer
Analysts:
Kaustav Bubna — Analyst
Ankit Gogia — Analyst
Mithun Aswath — Analyst
Rishikesh Oza — Analyst
Resha Mehta — Analyst
Keshav Lahoti — Analyst
Mudit Minocha — Analyst
Rishab Bothra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Rushil Decor Q3 FY ’25 Earnings Conference Call, hosted by Asian Market Securities Private Limited. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Karan Bhatelia from Asian Market Securities Private Limited. Thank you, and over to you, Mr. Karan.
Karan Bhatelia — Analyst
A very good afternoon, and welcome all to the Rushil Decor Q3 FY ’25 Earnings Conference Call hosted by Asian Market Securities.
From the management side, we have with us Mr. Rushil Thakkar, who is the Managing Director; Mr. Keyur Gajjar, who is CEO; and Mr. Hiren Padhya, our CFO.
I now hand over the call to Rushil bhai for his opening remarks. Thank you, and over to you, sir.
Rushil Thakkar — Managing Director
Good afternoon, ladies and gentlemen. Thank you for joining Rushil Decor Limited’s earning conference call for the 3rd-quarter ended 31 December, 2024.
I would like to extend my gratitude to Asian Market Securities for organizing this call and to all participants for joining us. Today, along with me, our CEO, Mr. Chief Executive Officer; and our CFO, Mr. Hiren Padhya, are present.
We have shared and uploaded the earnings presentations on the exchanges and we hope you have reviewed the material. Let me begin with an overview of our performance during the quarter. In MDF business, total volumes was 64,800 cubic meters in-quarter three financial year ’25, reflecting a decline of 10% quarter-over-quarter and 1.7% year-over-year. This reduction was influenced by a planned maintenance shutdown at one of our facilities and a slowdown in the domestic demand during the Diwali holiday season.
Export volume, however, increased by 15.6% quarter-over-quarter and 38.2% year-over-year. Supported by strong demand in the international markets. Blended utilization for MDF remained stable and our focus on value-added products continue to yield the result with these products now accounting for 54% of the MDF business revenue in-quarter three financial year ’25.
On the operational front, the capacity utilization for MDF was optimized at 87% during the quarter. Additionally, the Andhra Pradesh facility operated at 91% capacity utilization and is steadily progressing towards optimizing capacity utilization levels, which will further strengthen the output and the operational efficiency. Furthermore, we are also seeing the benefits from the implementation of DIA certification standards, which are helping reduce imports.
Turning to laminate segment, total volume was 768,409 sheets, reflecting a growth of 2.2% quarter-over-quarter and 4.3% year-over-year. Export volumes showed a strong increase of 20.5% quarter-over-quarter and 13.8% year-over-year. However, domestic laminate volumes saw some pressure during the quarter and capacity utilization was 83%. On the strategic front, the Jumbo laminate expansion project in Gandhi is on-track with operations expected to commence by the end-of-quarter four financial year ’25.
This facility with an annual production capacity of 2.8 million sheet is designed to cater the preliminary to export markets such as USA, Europe, Australia, etc., where we continue to see strong demand. Our ongoing efforts to expand our distribution network have resulted in addition of over 50 new retail distributors during this quarter. Further strengthening the company’s presence in the domestic market. Additionally, participation in the global exhibitions and targeted customer engagement has led a strong foundation for expanding our geographic footprint and the revenue base.
Looking ahead, we are focused on further improving the operational efficiencies, scaling our export footprint and enhancing the product mix to align with the market demands. We remain confident in capitalizing on global opportunities and delivering sustainable value to our stakeholders.
I will now hand over the call to our CFO, Mr. Hiren Padhya to provide the overview of our financial performance.
Hiren Padhya — Chief Financial Officer
Good afternoon, everyone. Thank you, Mr. Rushil, and a warm welcome to all participants.
I’m pleased to present an overview of our company’s financial performance for the 3rd-quarter of and nine months ending, 31, 2024. For Q3 FY ’25, revenue from operations was INR2,117 million, a decline of 0.7% year-on-year and 8.1% quarter-on-quarter. EBITDA for the quarter was INR273 million with an EBITDA margin of 12.9%. Profit-after-tax was INR115 million with a margin of 5.4%. For the nine months FY ’25, the revenue from operation was INR6,672 million, a growth of 9.3% year-on-year. EBITDA for the period was INR827 million with an EBITDA margin of 12.4% and profit-after-tax was INR353 million with a margin of 5.3%.
Coming to MDF business, in Q3 FY ’25, the MDF business revenue was INR1,540 million, a decline of 2.5% year-on-year and 10.3% quarter-on-quarter. Export revenue in this business showcased strong growth rising 50.9% year-on-year and 16.2% quarter-on-quarter, which is driven by a strong demand in international market. MDF EBITDA was INR234 million with an improved EBITDA margin of 15.2% in Q3 FY ’25. For nine months FY ’25, MDF revenue grew 8.9% year-on-year to INR4,949 million with an EBITDA margin of 13.5%.
Now turning to laminate. In Q3 FY ’25, the laminate business revenue was $486 million, a decline of 1.7% year-on-year and 3.4% quarter-on-quarter, while export revenue increased by 3.2% year-on-year and 17.5% quarter-on-quarter. The EBITDA margin for laminate was 7.7% during the quarter. For nine months FY ’25, laminate revenue grew 4.3% year-on-year to INR1,460 million and EBITDA grew 5.2% year-on-year to INR145 million with a margin of 9.9%. Furthermore, the net-debt to equity ratio as of nine months FY ’25 stood at 0.44, which is reflecting our commitment to maintaining financial stability and disciplined capital management.
Thank you for your attention. That concludes my remarks. I would like to now open the floor for questions-and-answers.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wish to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. I repeat if you wish to ask a question you may press star and one.
We have a first question from the line of Kaustav Bubna from BMSPL Capital. Please go-ahead.
Kaustav Bubna
Yeah, hi. Could you just give a summary of the total capacity for MDF in 2024 calendar — calendar year end and what is the expected capacities will come in 2025? And if you could split that between organized and unorganized? That’s my only question. Thanks.
Keyur Gajjar
So I think you’re talking about industry capacity, right?
Kaustav Bubna
Yes, yes, yes.
Keyur Gajjar
So looks like by this financial year end, it will be around 4.2 million CBM. And as such there is no, I think organized and urbanized rather I would say and static waste. So it will be around 2.2 million capacity will be from quantifest and balance from the static — static. So, we can sell around 60% capacity still from the continuous place production.
Kaustav Bubna
Okay. So you said 4.2 million cubic meters this year in 2025, what was it in 2024?
Keyur Gajjar
I think it was somewhere between 3 million, 3.4 million.
Kaustav Bubna
Okay. So about a 35% increase capacity in this year. Correct?
Keyur Gajjar
20% to 30%, I guess.
Kaustav Bubna
Okay. Thank you so much, Keyur ji. Thank you.
Keyur Gajjar
Okay. Welcome.
Operator
Thank you. A reminder for all participants, you may press star and one to ask a question. We have our next question from the line of Ankit Gogia from Gogia Capital. Please go-ahead.
Ankit Gogia
Yeah, hi. Thank you for giving me this opportunity. Just wanted to understand that overall the complete industry is facing some operating margins as a pressure. What is your view in terms of a broad perspective of the industry, whether the operating margins in the coming quarters can improve from here or are they going to be more or so in this range only? Thank you.
Keyur Gajjar
See, you’re asking for Rushil or you would like to understand the overall market scenario in terms of our industry?
Hiren Padhya
I am asking specifically for Rushil in light to the overall industry, but it is specifically to Rushi only. Okay. Okay. So compared to last quarter, the overall margin has decreased by around 1.5% this time. So as we said, there is a couple of reasons. First is like the MDF quantity is already down by 10% and along with that value is also down by 10%. Where the reasons mainly as already given by Rushal in his opening remarks, first is like overall market position is already affected. And secondly, the shutdown which we have planned. And third is the seasonal effect of Diwali. Similarly, in terms of laminate also, our plant is situated in Gujarat, where the Diwali is the main festival. So practically, I think two weeks plant remains closed. So both this had already affected the overall, I mean the business volume as well as that has affected the margin also. If you just understand the present capacity utilization in terms of all these segments are in the range of 85% to 90% as of now. When we are already — already crossed the breakeven point and any further, I mean, increase in terms of capacity utilization will give better margin and vice-versa. So here this quarter, there’s a slight reduction in terms of capacity utilization. So because of this reason, mainly, I think this has affected. And so-far as the overall scenario, which what we are thinking is like though there is a reduction in terms of margin this particular quarter, our next quarter that is the Q4 FY ’25, we are very much hopeful in terms of better performance both way in terms of overall volume and the margin also. Last-time we had already given the guidance in terms of overall margin, as a whole, we have given overall margin guidance of 12% to 14%, which we will definitely achieve. In terms of MDF, we have given the guidance of 13% to 14% and in case of laminate, it was 10% to 12%. Now coming to laminate, again, if you see this quarter specifically, the margins are around, I mean, mean 8%. But if you see the last 3/4 overall margin, which is in the range of 10%. So there is a small — I mean plus and minus starting from 8% to 12%. So overall, we will definitely maintain the margins which we had given as a guidance. Secondly, if you consider this particular quarter, then I think this is what we are going to achieve. But if you’re asking for the next couple of quarters means next financial year, then there are couple of things which is definitely positive. For us is like capacity utilized wise, we will definitely improve than what we have achieved so far. So additional capex utilization will definitely give us a better margin. Second, the value-added product, again, we are slowly but firmly increasing the volume and in terms of value also. So, our target in terms of diluted was 50% and 55% in terms of quantity and value. In terms of value, we have already achieved 54% as of now. Quantity, again, it is in the range of 44% 45% as of now, which we would like to achieve 50%. So third, standard now government is already committed. So we are very much hopeful that I think this will be implemented as early as possible. So this will also have positive impact that I think you can understand. Fourth and fifth is the — if you consider next financial year, so our new project of laminate that is size, this we are targeting to, I mean, start production in the month of March, then the margin for this particular product is better than what is existing margin, that is around 10% to 11%. Here the new project margin would be in the range of 14% to 15%. So after considering all this four, five aspect, we are — first, we would like to maintain whatever guidance we have given for this financial year. And so-far as next year is concerned, definitely we will improve than whatever we achieved this financial year.
Ankit Gogia
Right. Thank you so much.
Operator
Thank you. A reminder to all participants, you may press star and want to ask a question.
The next question is from the line of Mithun Aswath from Kivah Advisors. Please go-ahead.
Mithun Aswath
Yeah. Sir, I just wanted to understand this quarter the MDF per margins have improved, right, quarter-on-quarter. I just wanted to understand, is there less pressure from imports and because of the BI standards getting implemented, I think from Feb 1, are we not seeing any more imports flooding into the market? And number two was on the raw-material cost. I think there was quite a lot of pressure because of the increase in raw-material the last few quarters. Has that stabilized and what is your view for the next year? And any revenue kind of growth number or guidance for FY ’26 that you would be having?
Keyur Gajjar
I just want to answer the first query about the imports. As such we don’t see significant volume of imports because of freight issue as well as anticipating their standard implementations. So very — I mean marginal import was there in this quarter.
Rushil Thakkar
I will talk about the raw-material. The raw-material prices for this quarter was stable for us and we also see stable raw-material prices for this quarter as well. And talking about the next financial year, yes, our new plant will be up on the roll by the end of Q4 2025. So, we expect the revenues of more than INR100 crores to INR125 crores out of that new plant, from laminate and it will be all a specialized products. So, we see a better margin of 12% to 14% in that as well.
Hiren Padhya
And coming to the first part, which you were asking the question that the margin for this quarter in terms of MD was better than the last quarter, right? So yes, it is almost 1.5% to 2% higher than the last quarter. So there are — as Rushal has already said, we could maintain the raw-material cost. So there is no specific increment in terms of the wood cost. Secondly, now our plant is established both the plants. So, we are just having a very good efficiency in terms of the usage of material also. So that way we are having this better efficiency that has impacted the margin positively.
Secondly, in the current year’s figures, we have got a small figure of around INR2 crores in terms of the — I mean, incentive, which is accrued from the local government that is Andhra Pradesh. And third is the export. The terms of export also, if you see the last 3/4 export, the overall margin in terms of export has already improved. And I think the way we are seeing the, I think future of export in terms of MDF specifically and the new project of laminate, I think it will further improve.
Keyur Gajjar
So going forward to this answer, I would address that the last financial year end, we had a domestic — the export obligation going on, which we have completed last year only. And now our strategy is really simple to focus both on value addition products more to export as well. So our margins on that front will keep on improving that way.
Mithun Aswath
Okay. So because I remember there was some talk of raw material availability being an issue. So you don’t see that kind of being there. So I’m just trying to say and the margins continue on the MDF side.
Rushil Thakkar
Yeah, in the South, currently, we don’t see a pressure over the wood prices or RMC prices, we are very much stable with the prices and we will be focusing on the strategy to make it stabilize like we’ll keep it stagnant.
Mithun Aswath
Okay. Okay. And what about the demand in India for MDF? Has that started to pick-up? Last quarter was not great, right? So — and also wanted to understand this exports to which countries are you doing this?
Rushil Thakkar
I will answer the question for exports first. For typically MDF, we are exporting to countries majorly in the Gulf, then Israel, then few parts of Africa.
Keyur Gajjar
For the domestic market after the lowery and other festive season, now that market is picking-up. I mean, demand is there.
Mithun Aswath
Demand is good, sir.
Keyur Gajjar
Yeah, it is slowly gradually moving on.
Mithun Aswath
Okay, okay thank you.
Operator
Thank you. We have our next question from the line of Rishikesh from RoboCapital. Please go ahead.
Rishikesh Oza
Hi. Thank you for the opportunity. Sir, my question is with respect to the value-added product. So what are we guiding for FY ’26? Are we maintaining our volume contribution guidance from value-added product to 65% for?
Keyur Gajjar
I think in our last call, we said that we will maintain 60% for 2025, ’26.
Rishikesh Oza
Okay. And what can be our MDF capacity utilization for FY ’26?
Rushil Thakkar
So we will obviously try to maintain above 90% for the next year. In terms of the overall blended capacity. So currently, we are at somewhere standing around at 89% in this quarter and our target is to maintain it about 90% for upcoming quarters as well.
Rishikesh Oza
So if we are to do 60% volume contribution and assuming similar realization and around 90% capacity utilization, would it be fair to say that our value-added revenues can be upwards of INR500 crores next year?
Rushil Thakkar
Approximately yes.
Rishikesh Oza
Okay, okay. Okay. And of — for FY ’26, so basically FY ’26 would be new plant INR100 crores, existing laminates might remain flat and MDF revenues can grow 20%, would that be fair?
Rushil Thakkar
Can you just repeat the question because the voice got cracked?
Rishikesh Oza
So, I was asking if FY’26 the new plant might contribute around INR100 crores and laminates is expected to flood the existing capacity and the MDF revenue segment can be expected to grow at 20% plus.
Rushil Thakkar
Yeah. So typically, first we go on the new plant, as I rightly said that our expected revenue is more than INR100 crores to INR125 crores from the new plant. Laminate plant is — will be the quantity what we already have will remain stagnant, but the product mix always changes. So we have always a better opportunity to change the product mix and get some more additional revenues out of it. And third is MDFs, yes, we will be doing the 60% of value addition next year. So accordingly, the margins and the realization will improve that way. And also we consider that after BIS implementation is done, we will have a chance to make a price hike on that as well.
Rishikesh Oza
Okay. And lastly, you said the new plant can do 14% 15% EBITDA margin. So is that possible from the post year itself that is FY ’26 from the new plan?
Rushil Thakkar
So first year, initially for the first two quarters, it will be more on the trial and error basis. So we’ll be taking out some products on the trial basis also will be optimizing the capacity slowly, slowly. So first year, the margin should be around 10% to 12%, but for first two quarters, but later on the second-half of the year, yes, we can expect the 12% to 14% margin.
Rishikesh Oza
Got. Thank you very much.
Operator
Thank you. We have our next question from the line of Resha Mehta from GreenEdge Wealth. Please go ahead.
Resha Mehta
Yeah. Thank you for the opportunity. So fairly new to the company. I’m not sure if you’ve already covered in your opening remarks, but just if you could comment on why has there been a volume degrowth of 14% in MDF in the Indian market and also a 11% degrowth in Indian market for laminate. So what’s the reason for such high-volume degrowth in the Indian market for both MDF and laminates?
Rushil Thakkar
So first of all, for MDF, we speak, we have always seen this degrowth during the Diwali season and the festival seasons because rather people would enter into their new-home or they will be just seeking for their raw-material after the good day starts. So it is always — this has been a trend of the Indian market. So we don’t see any kind of abnormality for this. And at the same point of time during the quarter when the Diwali is over, we see a spike in our sales as well. So this is a counter effect. It’s not something which has not been observed throughout the industry. So this is a nominal impact. And talking about the laminate, yes, the same reason follows that as well because when in Gujarat, the Diwali is considered to be a bigger festival. So our plants are also down for 15 days. That is the only reason. But market degrowth, we don’t see. We have a good amount of order books getting filled now after the Diwali and the inquiries are now getting converted into orders as well.
Resha Mehta
But from a seasonality standpoint, if you’re saying that Diwali is typically a slow quarter for us, then that would generally tend to be true for all quarter threes, right? So we are doing a Y-o-Y comparison. So if — so Diwali last year would have also been subdued, right? So just not able to reconcile this.
Keyur Gajjar
So if you see our last year’s MDF sales also in terms — in terms of quantity, it’s more or less same same volume like total volume was around 1.4 lakh and export was 45. So altogether, it was 1.85 cpm, 1,85,000. Sorry, I’m talking about nine months. So if I talk about last quarter, it was 65,895 CBM. And this year same quarter, it is 64,800. Second thing, there was some maintenance at the plant. These are the two major reasons.
Resha Mehta
So maintenance at the plant would have lost you how much of volume? Would we have a quantification there?
Rushil Thakkar
So roughly estimated value of 10 — 4,000 CBM approximately around INR11 crores.
Resha Mehta
Okay, okay. And how do you see the demand for both these segments, MDF as well as laminate currently in the market, do we — do you think it has slowed down over the last two, 3/4? Or it’s getting even worse?
Keyur Gajjar
I think it’s — as I said earlier, that after 15 January now we can see pulse in market. So it’s improving also in export market too.
Rushil Thakkar
And also would like to add few things that whenever the new capacities in the market come, they come with a slightly challenge for the old players. So anyways, some of the capacities are also absorbed by the peer competitors as well. So this is not a very big challenge for us because MDF has a CAGR of 20% and every year if we see a 800 cubic meter plant coming into the market, it is rightly absorbed in the market and it takes hardly one or two years to stabilize everything, but this is not a big effect what we see.
Keyur Gajjar
And even if you see our nine months MDF sales, it was 75% last quarter of our capacity last year and the last nine months. And these nine months it’s almost 85%.
Resha Mehta
Okay. And the other thing, so while you’re saying that you know MDF imports have greatly reduced or they are not a big number to the overall MDF demand in India now. So then what gives us the confidence that, let’s see, once BIF kicks-in, we would be able to raise prices?
Keyur Gajjar
Definitely like in last quarter, we take some tike around 2% to 3% average and it’s still maintained. So we don’t see any problem even import is also expensive nowadays and you know import is completely negligible because it’s not even 4,000, 5,000 CBM a month. So if we look at it Indian capacity it’s 4.2 million and secondly, after implementation of BIS, I’m sure there will be the importance of brand and other value-added products. And for that, I’m sure there will be some, you know further price increase.
Resha Mehta
So currently for MDF, would it be right to say that the challenge is definitely the high supply that the new capacities that have come in and also the subdued demand?
Keyur Gajjar
Yes, I agree. Capacity is coming up and demand is also growing at good pace but as I said last-time for like last year we almost achieved 75% of our capacity and this year we have achieved 85% and we want to go further.
Resha Mehta
Right. And just the last one, laminates, if you look at the price realizations of the export market, those have come down, that’s — that’s seen a degrowth of around 9%. And even for nine months, that’s seen a degrowth of 7%. So any particular reason over here that we are seeing a decline in price realizations in export market for laminates? And would you…
Keyur Gajjar
Usually it’s all about product price and — product mix. In fact, we didn’t see any price reduction or price increase in last quarter. Even freight were consistent. So it’s just about the product mix only. So change of product mix may lead to these kind of things.
Resha Mehta
And so it’s purely product mix and got nothing to do with demand or increased competition in the export market.
Keyur Gajjar
In fact, we are now once we have a new laminate size, then we’ll be able to have better realizations.
Resha Mehta
Got it. Got it. All right. Thank you so much. All the best.
Operator
Thank you. We have our next question from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Keshav Lahoti
Hi, thank you for the opportunity. Sir, what is your sense now on MDF pricing? How has been this in Q3 and what is the outlook?
Keyur Gajjar
Can you repeat the question again, please?
Keshav Lahoti
Hi, sir, what is the — how has been the MDF prices in last quarter and what is the outlook for the same because margins are still sub 15% while we talk about MDF margin to be normalized margin like 25%. So what is the outlook when we’ll go to that number?
Keyur Gajjar
Margin 20% because we are always saying that we are trying — we’ll try to manage our 14% to 16% margin for MDF. And I think we are quite near to that margin, I believe. As long as price is concerned, I think last quarter we took hike and we are still maintaining that price rate.
Keshav Lahoti
Okay, understood. Last question on the laminate side, we see there is a sequentially fall in laminates EBITDA margin, a sharp fall. What is the reason for the same?
Hiren Padhya
I think you are comparing with last quarter only. If you say — see the margins before one or two years, it was in the range of 6% to 7%. Now if you really compare the last three, four quarters, I think now the — and even simple, you just see the margin for last nine months, it is in the range of 10%. As against the last two, three years, I think it has already improved. Only for this particular quarter, instead of 10%, 11% last quarter, it has gone to around 8%, but that is mainly because of reasons which has mentioned the normally in-quarter three margins are generally, I mean, in pressure. But considering the fact that this — I mean this particular — the current quarter, it will definitely improve. And thirdly, the — after having the new project, I think we will have even better than this margin in the coming financial year.
Keshav Lahoti
Understood. Got it. That is helpful. Thank you.
Operator
Thank you. We have our next question from the line of Mudit Minocha from M3 Investments. Please go-ahead.
Mudit Minocha
Hi. Thanks for the opportunity. I’m fairly new to the company. So…
Operator
Sorry to interrupt. Please be a little louder.
Mudit Minocha
Yeah, am I audible now?
Operator
Yes.
Keyur Gajjar
Yes.
Mudit Minocha
Yeah, yeah. So my first question was, why is the Indian market realization for NDF for you are much lower than the peers means when I compare it with other state players, they are in the range of 29,000 IN 30,000. So and similar for the laminates as well. Could you shed light on that?
Keyur Gajjar
Yeah, actually we said that in last quarter, there was a plant shutdown was there. And because of that, there was a shortfall of 4,000 CGM volume. That’s major reason.
Mudit Minocha
Right, I understand.
Keyur Gajjar
And otherwise, otherwise you can see even in last quarter, it was a 53,000 CBM.
Mudit Minocha
So I was inferring to the realization per cubic meter means your realization is around INR25,000. I wanted to understand why is there a gap with the other listed players means? Do we sell, say, for competitive product, branded product are funded, what is our selling price vis-a-vis…
Rushil Thakkar
The selling price is more or less similar, but the strategy what we use in terms of our peers is slightly different. We see the future in our OEM market. So we try to supply and balance the supply between our OEMs as well as the retail channel. So that’s the only difference which we see in our competitors and us as the price difference always in — is between 2% to 1% in all areas.
Keyur Gajjar
Coming to, I think, as we inform, considering the product which we are into, it is a small-sized laminate sheet and maybe you may be comparing with other competitors where we — they are already into the bigger size. Now we have already been implemented almost in the verge of, I mean, completion of this project. So once we have this new project, I think our margins will be again comparable with them, that is for sure.
Mudit Minocha
Right, right. So again, coming back to the competitive intensity, as we know in South India, there has been a couple of new players coming in and the total installed capacity now at 4.2 million versus the demand of 2.6 million, 2.8 million. So do you see the pressure to sustain in realization when the new players would try to get the utilization higher?
Keyur Gajjar
In fact, in last quarter only, we took the price hike of almost ever at 2% to 3%, 3%.
Mudit Minocha
Okay. Was that secular all the players or it’s becoming…
Keyur Gajjar
More or less at least as far as I know, it’s almost four or five player they increase the price.
Mudit Minocha
Understand. So the peak pressure — pricing pressure is behind us, is what you imply?
Keyur Gajjar
The pricing is okay, but then you know this value-added segment is not very sensitive enough for all-the-time like we talk about price and all. We have certain sort of loyal distributors and network, right? So we are quite — we are doing really good in that part.
Mudit Minocha
Understandable. Understandable. Also could you guide us with the capex plan and the cash flows, how would they match in next two, three, five years. And what’s the implied ROE that you are envisaging for that business for both the businesses. Sorry, it’s a very elaborate question, but if you can guide us.
Rushil Thakkar
I understand. See, overall, as we have informed earlier that we are just targeting our turnover of around INR2,500 crores in the next five years. So internally, we have already — I mean a plan for the expansion, etc., because considering the today’s capacity, I think it is not possible to achieve this target. So there are at least two to three projects which is already in the process. And as of now, I won’t be able to give you the further details, but a couple of things I would like to make it very clear. For us is like we would be, I mean, targeting within the wood panel industry, that is first point. Whatever product we are just planning, it will be within this industry.
Secondly, the means of finance for this particular new project would consist of practically all three aspects, one is like debt, second is internal accrual. Third is the fundraising part. So in the whole process, we would like to ensure two things which we have been telling every time. For us, it’s like even though we will increase our debt, but then overall debt-equity ratio, we would like to maintain within one. And secondly, in terms of promoters dilution, we will not go beyond 50% unless there is a very, I mean, good opportunity or excellent synergy between the — I mean new product or something like that. As of now, we are not in the process of any bigger, I mean acquisition, etc. So considering the three aspects, we are already working on it. And at right time, we will definitely inform to the community.
Keyur Gajjar
And just to update you that last quarter, if you compare now, we almost reached 53,000 CVM in domestic market. At that time also more or less same capacity was there. And as we mentioned in our opening remarks, there was almost like a 10 12 days plant shutdown was there and due to Diwali and all this season, you can see this for the. I hope I have answered your question.
Mudit Minocha
Right. Just I think if you could guide us also on the ROEs, what are the expected ROEs at your peak utilizations?
Hiren Padhya
You’re trying to ask for this future or as of now you’re saying, I mean for this financial year or for a bigger expansion?
Mudit Minocha
Achieve 95% peak utilization in both the capital.
Hiren Padhya
As of now, it is in the range of 10%, which will definitely improve once we achieve this 95% or 100% because considering the technology available, we can go beyond also. So it will definitely improve.
Mudit Minocha
Understandable. Thanks. That’s all from my side.
Operator
Thank you. The next question is from the line of Rishab Bothra from Anand Rathi Shares and Brokers. Please go-ahead.
Rishab Bothra
Yeah. Good afternoon, sir. A few queries which I have. Firstly, are other than MDF and laminate business 5% of the overall revenue, that is plywood and other businesses. So where do we see these businesses in next three to five years?
Rushil Thakkar
So plywood, yes, we have already started the expansion as when we took this plant, it was a really small plant. The machineries has already been ordered and slow — once the delivery starts, we’ll start expanding on the plywood also. And our target is to take this — the first target for this business is to take it to INR100 crores turnover. Talking about the other business that is WPVC, we have already started one more line that is the third line, which we now installed by the end of Q3. Yeah. So now we are also think — we are also thinking of expanding that business to the revenues of INR50 crores to INR80 crores by next year.
Rishab Bothra
So in percentage terms, these two businesses, can they reach 15% 20% in next three to five years?
Rushil Thakkar
It is difficult for one-product, but we are together both the business can reach.
Rishab Bothra
Okay. And another thing, since these products are into nascent stage, I mean growing phase, a lot of front-loading of cost will be there. So there could be margin compression on account of these products?
Rushil Thakkar
So currently for PVC, it’s — the margin is really low because of the learning phase going on. But now we — as we are doing in this industry, we have already started the higher realization products like we do in MDF. We have started making in value addition products in that also. Coming back to plywood, currently the margin is as per the capacity and as per the industry. So we don’t see a pressure of margin over there in plywood industry.
Rishab Bothra
Got it. And with respect to MDF, sir, there is a concern both overcapacity in domestic market as well as import threat. So at one-side, we are exporting MDF on another side, there is a lot of imports. So I don’t get the rationale what is being exported. Is it value-added product and what is being imported? Is it plain MDF? And how are we going to — I mean, the industry itself, domestic industry itself going to protect through this down-cycle.
Rushil Thakkar
So first of all, the government has already implemented the BIA certification standards, which will be done in the mid-February. So the threat of import will be vanished for certain years till the time the other countries plants are not getting the BIA standards. So that is the local protection of the industry. Okay. Now coming back to the other question about the imports, the currently imports are of the plain MDF, which are the basic commodity, which are not the value-added products and we have to fight against the normal basic category of the MDF. That too a specifically of a thinner MDF, not on the thicker side of MDF.
Rishab Bothra
Okay.
Rushil Thakkar
So the imports now will be lowering down, which will be resulting us to increase our realization in terms of value addition also in the commodity integer grade product also. Now going back to the third point of why we are exporting, we have a very simple calculation that rather putting the pricing pressure on the domestic market, rather we will sell the excess capacity to the markets or in the other regions where we don’t need to have a pressure of the pressure of the competition over there. So this is the strategy what we have internally decided and we’ll be following the same strategy.
Rishab Bothra
Okay. So two things follow-up on the MDF only. If you are saying that we can sell-in other markets, whoever is dumping in India can dump in those countries as well? And secondly, our margin — realization in domestic MDF is better-off than export MDF. So what are we selling in export MDF? Is it value-added product in exports or is it plain MDF?
Rushil Thakkar
So it’s a combination. So we have — the combination of around this quarter is around 60-40 where 40% is value-added and 60% is the commodity.
Rishab Bothra
So this is you are referring to export market or the combined company-level right?
Rushil Thakkar
No, I am talking about the export market because now we don’t have any kind of — the export obligation, we can easily talk about the value-addition product — value-added products so that our margins improve in that way. Now coming back to the domestic realization, yes, it’s always better to have a domestic product because the realization of domestic market is standing somewhere around INR31,000 per cubic meter. So we try to sell maximum as much as we can to the domestic market, but the excess capacity will be always sold to the export markets to make sure our expenses are rightly distributed and our overheads are always low.
Rishab Bothra
Okay. And just to understand the client profiling in terms of your MDF, is it OEMs of large furniture manufacturers or something else? And in respect to laminates, how are the products sold in the export market? Is it large consignment agents or who are those who are securing the laminates?
Rushil Thakkar
So first, answering to your questions for export laminates, every country has a different strategy in which we deal with it. We directly don’t deal with in few countries to the OEMs. We directly have our channel partners who have started their channels over there and we are supplying them in a handsome volumes. And this is the strategy we take-over the call — we take the call on the country-to-country basis. Like currently, we have taken a call expanding to our subsidiary in Singapore to serve the Far East market in a proper manner with a better service so that our margins what we are currently having can start improving by this kind of small services what we give them. And that’s all done through our brand only.
Now coming back to your other question for MDL OEMs, all kind of big, small OEMs are our customer, but our strategy is fixed. The volumes are fixed, how much to sell to OEMs and how much for retail channels. So that we do not exceed in any — any way to maintain our realization. But we see a good future seeing the Western countries — and we Indians adapting the Western countries culture, we see a bright future with the OEMs as well.
Rishab Bothra
Got it. And lastly, sir, what would be our ad spend in terms of as a percentage of revenues and which segment will require a lot of promotion? Is it MDF, plywood or laminate?
Rushil Thakkar
So currently we are the capacity in the plywood segment is not so high. So we are currently just utilizing it without any promotions and the requirement. Our majority of the promotion will be going on the MDF and laminate business.
Rishab Bothra
Okay. But MDF, I guess it’s not B2B. I think advertisement spends where B2B is high requires spending. MDF is more so OEMs related.
Keyur Gajjar
That’s not completely 100% OEM business. I would say we are doing around 60% retail channel business.
Rishab Bothra
Okay. Okay.
Keyur Gajjar
Area of BTL activities too.
Rishab Bothra
Okay, sir. Wish you all the best. I hope the worst is behind in MBF space and we improve on the margins further.
Keyur Gajjar
Thank you very much.
Operator
Thank you. A reminder to all participants, you may press star and want to ask questions a reminder to all participants you may press star and want to ask questions.
We have our next question from the line of Rishikesh from RoboCapital. Please go-ahead.
Rishikesh Oza
Hi, thank you for the follow-up. To your previous participant, you mentioned that we have taken around 3% price hike in last quarter. Would you ask you if there are any more price hikes that you as well as the industry have taken in this quarter or would be taking going ahead?
Keyur Gajjar
This quarter so-far, we have not decided any price increase that we will see once the BIS part is implemented, we’ll definitely try to implement new one.
Rishikesh Oza
Okay, thank you.
Keyur Gajjar
Thank you.
Operator
Thank you. Ladies and gentlemen, that would be our last question for today. And I now hand the conference over to the management for closing comments. Over to you, sir.
Keyur Gajjar
Thank you. Thank you all for taking the time to join us today for your continued interest in Decor. As we continue to navigate opportunities ahead, we remain committed to achieving our strategic opportunities and delivering consistent value to our stakeholders. For any further questions, please reach-out to our Investor Relations team at Churchgate Partners. Thank you once again.
Operator
Thank you. On behalf of Asian Market Securities Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.