Good day, everyone, and thank you for joining us on the Greenpanel Industries Limited Q3 & 9M FY26 earnings conference call. We have with us today Mr.

Shobhan Mittal, Managing Director, and Mr. Himanshu Jindal, 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, which was shared with you earlier.

I would now like to invite Mr. Shobhan Mittal to begin the proceedings of the call.

Over to you, sir. Thank you.

Thank you. Good evening, ladies and gentlemen, and welcome to our Quarter 3 FY26 earnings call.

While the retail markets were a little tepid post the Diwali festivities, we continue our renewed focus on channel engagement with more sales and marketing investments to support volume growth during Quarter 3. The quarter began with the announcement of a new foreign travel scheme and ended with the launch of the country's strongest, toughest, and heaviest boiling waterproof MDF to supplement our existing product offerings to the customers.

This, along with the other ATL and BTL initiatives about which I enumerated in more details in our last earnings call, will go a long way to assist and create a more sustainable volume growth strategy for Greenpanel over the next 3 to 5 years. Our domestic MDF volumes grew by 19% year-on-year, and the export volumes were higher by 8.3% year-on-year.

Total MDF volumes growth thus being 17.1% for Quarter 3. While domestic pricing was unchanged from Quarter 2 levels initially, discounting pressures from relevant peers came back into play post Diwali, and we too had no option but to offer more discounts between November and December.

Much more to the OEMs where pricing is key. As a result, the domestic realization was lower by 1.4% sequentially.

Some portion of this was also on account of the change in product-wise sales post addition of the new plant at AP and increase in overall proportion to OEM sales. Plywood business is yet to revive meaningfully, and we are already working on possible next steps to scale up this business.

Maybe I'll be able to share more on this over the next few quarters. Counting the exports and plywood sales as well, total revenues for the quarter grew by 11.4% year-on-year to ₹398.8 crores.

Given our renewed focus on cost optimization, our gross margins and the operating EBITDA margins were higher both on a year-on-year and also on a sequential basis. Given our strong performance in Q3 amidst a more challenging market, the revised guidance that I shared with you on our last call for the full year of FY26 remains unchanged.

We continue to target a high teen growth in MDF volumes with operating EBITDA, excluding FX and one-offs, of high single-digit to early double-digit average for the full year. With this, I request our CFO, Mr.

Himanshu Jindal, for the financial and other updates. Thank you.

Hi. Thank you, Shobhan ji.

Good evening, all. Since Shobhan ji has already covered the revenues, I'll try and give you more insights on the cost and margin front.

On the cost side, timber costs, which were gradually receding with improved supplies till early November, were a bit more volatile thereafter with the onset of severe winter conditions in north and heavy rainfalls in south. We've again started witnessing some bit of cost reduction from January onwards.

Cost of chemicals has also come off from the peaks in Quarter 2 over the last 2 to 3 months, which is also supporting margins now. More from a cost of production point of view, we were almost flat sequentially.

The savings on raw materials, which led to expansion of our gross margins to almost 50%, were partially negated by the higher fuel and power costs, which were caused by a seasonal spike on account of the severe winter conditions in the north. We also invested a bit more on the sales and marketing bit to build sell-ins, both in terms of people and pure sales promotion expenses.

As a result, our operating EBITDA, excluding the impact of currency movement on the long-term euro borrowing for the new plant, was ₹44.3 crores or 11.2% of our revenues, with MDF at 11.9% and plywood at 1.4%. The above also includes the impact of recognition of the balance approved but not yet accounted power subsidy of ₹8.5 crores for the old line at Andhra post the partial receipt of ₹19.3 crores from the state government in October 2025.

For clarity, because this is something which may come up as a question during the course of the call, for clarity, out of the total blessed state government subsidy for the old line of ₹96 crores, 68 was capital subsidy and 28 was pure revenue subsidy. Out of this, in the past, we had already recognized ₹15 crores of capital subsidy, which was adjusted against the carrying cost of the asset.

On the revenue side, the entire impact was taken into P&L, ₹20 crores. The balance portion, which was blessed but not accounted for, which is the capital subsidy of ₹54 crores, has now been adjusted against the carrying cost of assets.

Also the balance 8.5, like I mentioned above, has also been brought into P&L via adding it to the other operating income as a one-off. Again, in Quarter 3, we were impacted by the continued volatility on the exchange rate on our outstanding long-term euro-denominated borrowings.

This impact is ₹3 crores during the last quarter, and cumulatively this year only on the borrowing, the impact is ₹43 crores. Bulk of this was obviously unrealized mark-to-market non-cash loss.

Apart from this, there is also an impact of ₹10 crores per quarter, which is in form of the incremental interest and depreciation on account of the capitalization of the new plant at AP. Counting these, the PBT was ₹11.4 crores positive, and the PAT was plus ₹10.2 crores for Quarter 3.

On the balance sheet side, we did increase inventories to support sales for second half, improve availability. Despite this, our core cash conversion cycle was still maintained at 32 days.

The leverage has also stayed very comfortable for us. Our net debt is ₹163 crores.

If we count out the non-cash FX exchange, the actual net reduction has been ₹40 crores during 9 months, and almost ₹85 crores from the peak that we saw on 30th of June. On that note, I think we can open the floor for questions and answers, please.

Thank you.

Good evening and congrats for the recovery that we have seen. If you could throw some light on the import scenario and how we are seeing it play out for the rest of the year, please, to begin with.

Imports are still quite muted, to be honest with you. A few companies have received the BIS certification.

However, with the current pricing situation in the OEM segments where imports were more prominent, the current pricing from the domestic producers itself is quite competitive to allow any additional imports coming in at this point of time. There are certain specific applications because of raw material characteristics where domestic material is not suitable.

In those applications, imports are coming in. These are limited to, specific applications where thin panel is used, laser cutting, etc.

Otherwise, barring that, there is not any immediate or foreseeable threat from imports at the current price points.

This will also be supplemented by an incremental QCO which you spoke about last quarter, Shobhan ji. Could give us any update on that?

The new QCO standards have been implemented. In fact, we are now ourselves in the process of rebranding and calibrating our own specifications through the new QCO standards.

Of course, these end up being more stringent than they were previously, in the BIS standards, and they should further restrict imports coming in and compliance for with BIS.

Thank you. Question to Himanshu ji on the raw material side, especially on the urea.

If you could give us some more color on, in terms of how you see this playing out and whether the worst is over?

See, we don't buy urea directly. We buy only resins, right?

These are manufactured by someone else, our vendors, and we buy them on competitive basis, right? For us, I think the consequence is how much do we buy at the chemicals end of the day.

I think we did see a spike, like I mentioned earlier on the two calls, during Quarter 2. Thereafter the prices are coming down with increase supplies.

I think today where we are, I think the prices pricing environment per se is pretty stable now. It's already come down.

Okay.

Thank you so much. I'll get back in the queue.

Yeah. Hi.

Good evening, sir. My first question is on the MDF segment.

If we see our domestic MDF revenue has remained stable on a Q-on-Q basis, but our margin has slightly improved. Can you please specify what is the reason for the margin improvement in December quarter?

What would be our MDF EBITDA margin guidance for FY27? Himanshu, would you like to take that?

No problem. I can.

You're right, sequentially the volumes have been flattish on the retail side, on the domestic front, right? Yes, we've sold more of exports, right?

When you sell more, obviously operating leverages also play out, and this is why you see operating margins going up. Otherwise.

Sir,

our

understanding is export commands pretty significantly lower margin compared to the domestic volume. I think it should actually pull down the margin, but it has actually--

No, no, no. No, no, no.

No, no, no. Please try and appreciate, even in the last quarter, my fixed costs were already absorbed.

Now with additional volumes coming into play, see, every cubic meter that I sell, I get more and more contribution. Even exports make money for me, not that they don't, at a contribution-level basis, right?

It's only recovery of fixed costs that I'm working on via exports. If the domestic markets are a little challenging and there is an opportunity on the export front, I still go ahead and sell.

Same with OEMs. If retail markets are great, I'll try and push in more and more on retail, right?

I think there is definitely some advantage which flows in, not only on my operating leverage, but also otherwise on my direct expenses, on my power, fuel, on the, on the quality of the product also, one way or another way, when I run my lines more sustainably. This is what you are seeing in my margins now flowing in.

Okay. Sir, given rupee has weakened quite a lot, I just wanted to know from your strategy perspective whether you would be planning to take any price hike in near future, or you would target to quickly ramp up the South plant by keeping the prices relatively stable for the next few quarters?

On the pricing,

Shobhan,

yeah. When you say price--

Please, Shobhan. Yeah.

I didn't understand. When you're saying price hike, are you talking about in the export segment or the domestic segment?

The domestic market, sir. No.

Like I mentioned earlier, that at the moment we don't foresee any major threat coming in from exports. My understanding is what you are referring to is that exports will become more expensive, imports will become more expensive in rupee terms.

Is that right? That's what you mean.

Yes, sir.

Like I mentioned, imports are not really a threat at this point of time because domestic price pricing itself is at a at a price point where we are already very competitive. Today in the segments where imports were being consumed, the real competition is from the domestic players.

It's not from imports, to be honest with you. Because of the domestic competition and pricing pressures, I don't foresee we'll be able to factor in the, the rupee devaluation into our pricing into to to the customers.

Okay. Got it, sir.

Sir, lastly, sir, on the subsidy part, if you can kindly help me how much EPCG benefit we have recognized in December quarter? If you can also specify the subsidy amount which we have mentioned in the footnote, ₹8.5 crore you have already mentioned that it has been recognized as part of operating income.

₹19.3 crore which we have received, where it has been recognized? The ₹53.7 crore which is yet to be received, where we have recognized, in the P&L or in the balance sheet, sir?

If you can specify this

subsidy. Let me try and answer this.

EPCG is on exports. If we export more, we recognize more EPCG.

In the last three quarters, I'll give you all the figures so that you get all the figures for the current fiscal. In Quarter 1, we had ₹5 crores EPCG.

In Quarter 2, we had 6. This quarter, we have 8.

That's EPCG, which is there as part of your other operating income. Every quarter we are getting, more or less between ₹5 to ₹8 crores.

Yeah? Now your second question is on subsidies.

As I mentioned in my opening remarks, anticipating this question will obviously come in. For you to know, there was ₹96 crores that I have to receive from the government of Andhra Pradesh for the old line.

A large part of this was capital subsidy, which was ₹68 crores. There was the balance was basically power subsidy, which is revenue in nature, ₹28 crores.

Now, in the past, the company had recognized already ₹15 crores of capital subsidy and ₹20 crores of revenue subsidy in books, which means 35 was already accounted for, money not received. This was the status till 30th September.

Since I received money in October, which was ₹19 crores against these receivables, I brought down my receivables from 35 minus 19. That's the receivable that I was carrying in a way.

Then, because money is flowing in already, there is 20% of the money which has come in, based on our assessments and based on the discussions with the auditors and otherwise, we said we will recognize the balance unaccounted but approved subsidies in our books. Now what have we done in this quarter?

Out of the balance unaccounted capital subsidy, which is ₹54 crores, that has been adjusted against the carrying cost of the assets, the fixed assets. This is why my fixed asset block has come down to that extent, ₹54 crores.

On which, obviously going forward, the depreciation expense is going to be lower based on the remaining life of the asset. The revenue subsidy, which was approved but not accounted for, was only 8.5, which has now been brought into books via the P&L, getting it added to the operating income.

Does this simplify or answer what you wanted to know?

Yeah. It is pretty clear.

Sir, lastly, how much EPCG benefit balance is left which we can accrue in the coming quarters?

So 51 was the opening. You remember the opening figure actually or, before we started recognizing EPCG was 86.

Last year, last fiscal, in Quarter 4, we had accounted for 35, which meant opening figure this fiscal was 51. I explained to you, 5, 6, 8, ₹19 crores almost has been accounted for in this fiscal.

Balance is still to be, still to be recognized. There is 32 EPCG, which is shown as liabilities in my book, which the moment I export more and more, I'll keep recognizing.

To your question, how much would be recognized in this fiscal, the run rates are already there with you. If I get an opportunity to export more, I'll recognize more this year.

The balance will obviously flow through in the next year. Maybe in the next 4 to 6 quarters, this entire amount will come into books.

Got it, sir. Thanks a lot, sir.

Most welcome.

Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant and rejoin the question queue.

We take the next question from the line of Keshav Vijayratan Lahoti from HDFC Securities. Please go ahead.

Sir, as you highlighted, ₹8.5 crore power subsidy which you recognized this quarter, this MDF margin which is coming around 12% includes that subsidy also considering one-off in nature. A fair assessment?

Yes, it does.

Got it. One last question from my side.

How are the timber prices moved in this quarter and what is the outlook for the same?

Timber cost-- Resin cost side also. I tried covering it, as part of my speech and also as part of the answer that I gave just now.

What I said Keshav was the timber prices month-on-month sequentially were dropping, and this continued to be the trend till November, mid-November. Then you saw winter setting in north, and you saw heavy rainfall in Tamil Nadu or Andhra.

Therefore there was a bit of a spike which came into play. Now for the last, since January beginning, we are seeing again prices coming down.

I think we should also remember there was a play of the timber recipes or the way we mix timber at our end now to produce MDF. I think all of that is playing together.

Sequentially every single quarter we're getting savings. I think between Quarter 2, Quarter 3, largely counting in everything in, we were more or less at par, right?

Now to your questions on resins or chemicals, generally, there were some supply challenges in Quarter 2 because of which the prices had hardened. From there, every single month we are seeing prices come off.

so they've I think the peak was sometime in October, November, early November, and thereafter the prices have continued to come down. Today, we are pretty stable.

Okay. Got it.

Thank you so much.

Hi, team. Thank you for taking my question and congratulation on good set of numbers.

Like you already alluded, you took the price hit of, I think, 1.4%. I wanted to understand specifically for the South plant, what was our price change, what was the decline specifically for the South plant?

We don't look at it like South and North anymore, to be honest, because we, end of the day, see the same plants are being used to service all locations. There are certain lines are today fungible.

Markets are again can be fed from both the plants. Wherever we can produce something at the best economics, we go ahead and produce that product and supply to the market, right?

It's very difficult to specify what is the price for a particular plant today in the current context. Prices are the same wherever they come from, whichever plant.

The end of the day, the customer should get it at the same price.

Got it. Second, 1.4 was due to price realization decline and other was due to product mix change.

Was it because of the test production we did in our new plant or it is structurally, consciously we are taking the call to cater to more OEM because of the market scenarios?

If you look at my domestic realization, it was down 1 and a 1.4. If you look at my export realization, it was also down incidentally by the same proportion sequentially, right?

When you see my exports going up, automatically the blended realization appears to be 2, 2.5% lower, right? I think that should answer you.

More importantly, again between retail and OEM on the domestic front, as Shobhan ji mentioned, OEM is what, has, there has been a volume upsurge for sure, right? That's in a way So retail markets, the discounts may not be in line with whatever we are giving to OEM, OEMs command a higher discount.

This is purely a function of demand, to answer your question. Today, we are not in a position to pick and choose what we sell and who we sell to.

At the moment, the focus because of surplus capacity both at the company level and in the market is to capture any demand that is available, irrelevant of the product mix that it's offering.

Understood. One last follow-up, if you can help me the channel mix Q3 FY25 and what is right now in Q3 FY26 between OEM and other channels?

OEM is roughly 25% of the MDF domestic that we sell. Balance 75 is retail.

If you compare it versus sequentially, it was more or less similar. Last year, I think 2, 3% here or there.

Retail, I think last year was 77, 77% odd, and this year, like I said, it's already 75.

Got it. Thank you.

Hi. Good evening, team, and thanks a lot for the opportunity.

Just a couple of questions. One, in November and December, you observed incremental discounts coming up and that's where you had to increase discounting.

Any signs that we are seeing for price increase happening in MDF? If not now, when would we potentially see it?

Sneha, this would be purely speculation if I have to answer this question, to be honest with you. As of now, if you ask me, do I foresee any price increases coming in?

Answer would be probably not.

Understood. Secondly, for FY27 as a whole, of course, you've given guidance for this year, FY27 as a whole, given the current pricing, what's the kind of volume growth that you are likely to see and any margin guidance there with the current pricing?

I think we will want to wait to see how Quarter 4 pans out before giving a guidance.

Understood, sir. Thanks.

Thanks a lot. That was about from my end.

All the best, team. Thank you.

Thank you.

Hello. Hi, sir.

Sir, thank you for the opportunity. Sir, I just wanted one clarification to start with.

If I heard it right, there was a EPCG benefit of ₹8 crores in Q3, and besides this, we also booked a power subsidy of ₹8.5 crore, which was in our favor, which is part of EBIT EBITDA for MDF, right?

Yes.

Perfect. That was my question.

Thank you.

Hello, sir. Am I audible?

Yes, please. Yes.

What is the volume growth target for Q4 FY FY26 and FY27?

For Q4, as we said, on an average we should have a mid to high teens volume growth on an annual basis. For FY27, we'd like to refrain from giving any projections till the Quarter 4 numbers are out, please.

Okay. What would be our MDF EBITDA margin guidance for FY27?

That would again be dependent on the volume growth. As mentioned earlier, we'd like to refrain from mentioning that at this point of time.

Okay. Whether the margin on exports has become lucrative due to weak rupee?

It's improved. There's not been a I would say any material price reduction on the export side.

Yes, because of a higher rupee value against the dollar, it's improved slightly, yes.

Okay. Also, can you specify what would be the sustainable EBITDA margin for MDF?

In my opinion, with proper utilization, proper product mix, high teens is very much possible, up to 20%.

Okay. Sir, last question.

What is the export margin in Q2, Q3 and how it is likely to be in the coming quarter?

Himanshu, do you have that data?

See, I think, Anu, you need to realize that we look at exports as a filler, right, to do more volumes and a more consistent, just to ensure that my capacities are running optimally, right? Yes, we produce contribution, which is what I look at, sales price minus the variable.

Do I make money or not? Then obviously there's an upside in terms of early recognition of EPCG, right?

I think these are the advantages which exports offer, and this is something that we monitor. That's I think that's something that we can say.

Okay?

Okay. Thank you.

Thank you so much.

Thank you for the opportunity. I have a couple of questions.

Firstly, the new plant coming up, utilizations have dropped quite a bit at a company level, and

what level would the plant be operationally EBITDA positive, and where are we today in terms of utilization at the new plant?

I'll take that, Shobhan ji. So--

Please.

The utilization same time last year, Patanjali, were roughly 66% without the new capacity coming into play, right? You are right, with this new capacity, even on a holistic basis, all the three plants put together, my capacity utilizations have been almost similar, right?

We've done 63, 64% capacity utilizations in this quarter on a production basis. Now, are we absorbing all the fixed costs already?

We are. The new line is running very well.

All the three lines put together, like I mentioned, we are already 63, 64, and the new line is also more or less similar, right? We are already making money, positive EBITDAs on all the three lines.

Okay. You didn't mention about what the utilization levels would be at the plant.

I missed. Yeah.

The utilization level will be at the new plant?

The new plant is already operating at a 60% capacity, no problem. All the three lines, like I mentioned to you, are round about the same.

Today we are agnostic, any demand which comes in, we look at which line can produce and feed the demand at the right economics, right? Wherever we can feed, whichever way, we feed, looking at overall economics.

Just just for everyone's understanding, basically barring very thin panels, all three lines are capable of producing all the SKUs that we offer to the market. Looking at the plant efficiency, looking at our production planning, looking at the freight economics, we we choose on a there is a lot of variability on what we produce on on which line at any given point of time.

If the line, in Andhra Pradesh, line 2 is occupied with a certain product, we may choose to produce a line 2 product on a line 3 just to service it faster. If there is restrictions for the North plant, we can produce those products in the South and still supply if the economics work out.

There's a lot of, that's a flexibility now that we have in our production process. It's not, fair to look at one line's capacity alone because we may intentionally produce that line's product in on another line if it's giving us better economics.

Got it, sir. Okay.

I just have one more question. I think couple of quarters back, we had indicated about margins improving because we'll see deflation in raw material cost, and timber-related issues were there because of a previous 4-5 year back period where things were not great in terms of there's a delay in terms of availability of wood and all of that.

That will all ease towards Q3. Can you tell me like how much of it has translated, because I do get a sense that you mentioned that by December there was a decrease in cost, but there's an increase in cost because of some seasonality and now it's again falling.

Would we see like a fair bit of decrease here in terms of cost and also what would be your raw mat mix between resin cost and timber cost?

See, I think, Patanjali, the, margins, are a mix of or a derivative of two things. One is how do we behave, or how competition more importantly behaves in the market, apart from the supply-demand economics on pricing.

I think, maybe a few quarters back pricing was not such a big, or let me say we were disciplined. Today we are behaving the way competition wants us or allows us to behave.

Therefore you're seeing some price reductions coming into play to ensure that we have enough volume, we sell enough volume, we produce and sell enough volume. The second piece is on cost.

I did mention seasonality, but like I also mentioned, my cost of production sequentially was more or less similar between Quarter 2 and Quarter 3. If the cost environment also becomes more conducive, I am sure that is a margin that we can keep with us, right, unless the market becomes more aggressive and they start discounting.

I think for now, I think the the conclusion is my gross margins today are at 50%. I think, in this quarter, I think, it's a little difficult for us to preempt, but costs remaining where they are, pricing remaining where they are, at least we should be able to do whatever margins we have been doing.

I wanted split between resin cost and timber cost. Yeah.

It's a

So I would say chemicals, and I'm saying chemicals and timber of my of my raw mat cost would be roughly 50-50 today.

Got it. Okay.

Sure. Thank you so much.

Hi, sir. Thank you for opportunity.

The first question is related to the volume, and this quarter, the 17% of a volume as a whole or 19% into domestic, and especially in the domestic 19%, last year the commercial grade volume were also, accounted, and if I exclude that, the growth into domestic is nearly around 45%. For a fourth quarter, why we are guiding for a mid-teens kind of a growth, whereas second quarter and third quarter we had seen ex of a commercial grade, growth has been very good?

I think, what Shobhan ji mentioned was for the full FY 2026 number, right, Praveen? He said, I think if I heard him correctly, he said mid, medium to high teen growth in MDF volumes overall.

This is what we we said. Please to remember, in Quarter 1, my volume, there was a de-growth which happened.

We're counting that in and saying that overall for the full year, the revised guidance what what we shared in October, November holds to do today as well. This is what we meant.

Okay. Okay.

That's clearly indicate that the higher growth in the fourth quarter. Is that understanding right, sir?

I spelled it out for you. I said yeah, yeah.

Second thing, sir, on the margin. Because in the presentation, we had mentioned MDF margin of 11.9%, and which is excluding one-off.

You have one-off this the the power subsidy also one-off in that? Or that is included in 11.49?

No, no, other operating income includes the impact of this 8.5, right? This was always power.

It was related to power. It was always accounted for in the past periods in that way.

Till the time we were accounting. It is already there, right?

One-offs essentially mean FX, if I were to ask if I were to answer this, FX has been a bigger consequence for us this year as a whole, right? That's the larger one-off which has been excluded when I say operating EBITDA.

Okay. Got it, sir.

That was my questions. Thank you, and all the best.

Yes, thank you.

We thank everyone for joining this call, and we look forward to speaking to everyone at the end of next quarter and the financial year. If anyone has any further questions, please do not hesitate to reach out to us.

Thank you very much, and have a good evening.

Thank you.