Key highlights

• The Company Net Sales down by 0.3% to Rs. 446.58 crore for Q4FY17. Plywood revenue was down by 3.9% to Rs. 306.40 crore, contributing 68.6% of net sales. MDF revenue was up by 8.4% to Rs 137.69 crore, contributing 30.8% to net sales. Wallpaper sales stood at Rs 2.49 crores, contributing 0.6% to net sales.

• The Company gross margins expand 470 bps to 47.9%, led by better product mix, improvement in yield and fall in raw material prices. EBITDA margin was up by 60 bps to 16.8% primarily due to increase of MDF in product mix. PAT was up by 0.5% to Rs. 41.87 crore.

• The Company Ad expenditure to sales was stood at 5.1% in Q4FY17 compared to 2.5% corresponding previous year. The company continues to invest in building strong brand, maintain Ad spends at around 3% of net sales.

• Plywood: (A) Plywood production inclined by 1% to 8.93 million square meters (million sqm). (B) Average capacity utilisations stood at 110% as compared 109% corresponding previous quarter. Sales volumes decreased by 1.9% to 13.15 million sqm. (C) Average net realisation of Plywood decreased to Rs 231 per sqm from Rs 238 per sqm corresponding previous quarter. (D) EBITDA Margin rose to 12.1% from 11.4% corresponding previous quarter. For FY 2017, A) Plywood production inclined by 7.1% to 34.93 million sqm. (B) Average capacity utilisations stood at 108% as compared 101% corresponding previous year. Sales volumes increased 4.2% to 50.3 million sqm. (C) Average net realisation of Plywood decreased to Rs 229 per sqm from Rs 239 per sqm corresponding previous year. (D) EBITDA Margin rose to 11.2% from 9.4% corresponding previous year.

• MDF: (A) MDF production inclined 13% to 50,954 cubic metres. (B) Average capacity utilisations were at 113% as compared 100% corresponding previous quarter. Sales volumes rose 12.7% to 53,479 cubic metres. (C) Average net realisation of MDF reduced to Rs 25,737 per cubic metres from Rs 26,673 corresponding previous quarter. For FY 2017, (A) MDF production inclined 6.6% to 1,89,171 cubic metres. (B) Average capacity utilisations were at 105% as compared 99% corresponding previous year. Sales volumes rose 3.9% to 1,84,905 cubic metres. (C) Average net realisation of MDF reduced to Rs 25,764 per cubic metres from Rs 26,723 corresponding previous year.

• The Company working capital cycle improved by 9 days to 40 days. Net debt to equity at 0.48 as on 31 December 2017 as compared to 0.4 as on 31 December 2016.

• The Company net debt to equity at 0.48 (0.33 after excluding borrowings for expansion projects) as on 31st March, 2017 as compared to 0.38 as on 31st March, 2016. Debt includes Rs 189.93 crores on account of new MDF plant.

• The Company New plant for MDF at Andhra Pradesh has seen an investment of ~ Rs393 in FY17 and is likely to have another round of cap ex of Rs 350 crore majorly in FY18, funded through debt as well as internal accrual. Average cost of interest is 7.5-8%. Of the Rs 393 crore of capex in this plant in FY17 ~Rs190 crore was through debt and rest through internal accruals.

• The Company work on the new MDF plant is progressing as per schedule and endeavor would be to start commercial production before the official date of September / October 2018.

• The Company announced the expansion plans in the plywood space. The company is expanding its existing facility in Gujarat for decorative plywood or Decorative Venners at a cost of Rs 40-45 crore. This plant will take care of Western region and Rs 125-130 crore of revenue is expected from this unit. The company intends to invest Rs 115 crore in FY18 in UP. This unit can contribute a topline of ~Rs 300-325 crore when fully ramped up.

• The Company expects GST to benefit the organised players. It is expected that the price gap between organised and unorganised which is at 15-20% currently will come down to 5-75% post GST.

• The Company expects 5-7% topline growth in FY 2018 and a 40-50 basis points improvement in operating margins. The tax rate for FY18 is expected to be at 29%.