Rushil Decor Limited has informed the Exchange about Transcript of Concall held on January 29, 2025
RDL/124/2024-25 Date: 05.02.2025
To, National Stock Exchange of India Ltd. Exchange Plaza, Bandra - Kurla Complex, Bandra (E), Mumbai - 400 051 NSE EQUITY SYMBOL: RUSHIL
••• ••• ••• RUSHIL
DECOR LIMITED
WE'LL MAKE IT
To, BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001 SCRIPT CODE: 533470
Dear Sir/Madam,
ISIN: INE573K01025
Sub: Transcript of the conference call for Unaudited Standalone and Consolidated Financial Results for the third quarter/nine months ended 31st December, 2024
With reference to our earlier intimation No. RDU115/2024-25 dated January 21, 2025 and in terms of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing herewith the transcript of the conference call with Investors and analysts held on Wednesday, January 29, 2025 in respect of the Unaudited Standalone and Consolidated Financial Results for the third quarter/nine months ended December 31, 2024.
The same will also be available on the website of the Company at www.rushil.com.
This is for your information and record.
Thanking you,
Yours faithfully,
For Rushil Decor Limited
Hasmukh K. Modi Company Secretary
Encl.: a/a
••• RUSH IL DECOR LTD .. RUSHIL HOUSE, NEAR NEELKANTH GREEN BUNGALOW,
OFF. SINDHU BHAVAN ROAD, SHILAJ, AHMEDABAD-380058. GUJARAT, INDIA.
REGD. OFFiCE: S. NO. 125, NEAR KALYANPURA PATIA, VILLAGE ITLA, GANDHINAGAR-MANSA ROAD, TA. KALOL, DIST. GANDHINAGAR-382845, GUJARAT, INDIA. I CIN: L252D9GJ1993PLC019532
PH: +91-79-61400400 I FAX: +91-79-61400401
I EMAIL: INFO@RUSHIL.COM
I WWW.RUSHIL.COM
“Rushil Decor Q3 FY25 Earnings Conference Call”
January 29, 2025
MANAGEMENT: MR. RUSHIL THAKKAR - MANAGING DIRECTOR,
RUSHIL DÉCOR LIMITED MR. KEYUR GAJJAR – CEO, RUSHIL DÉCOR LIMITED MR. HIREN PADHYA – CFO, RUSHIL DÉCOR LIMITED MODERATORS: MR. KARAN BHATELIA – ASIAN MARKET SECURITIES
PRIVATE LIMITED
Page 1 of 17
Moderator:
Ladies and gentlemen, good day and welcome to Rushil Decor Q3 FY25 earnings conference
call hosted by Asian Market Securities Private Limited.
Rushil Décor Limited January 29, 2025
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 “*” then “0” on your touchtone
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:
A very good afternoon and welcome all to the Rushil Decor Q3 FY25 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 who is CFO.
I now hand over the call to Rushil Bhai for his opening remarks. Thank you and over to you, sir.
Rushil Thakkar:
Good afternoon, ladies and gentlemen. Thank you for joining Rushil Decor Limited's earning
conference call for the 3rd Quarter ended 31st 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. Keyur Gajjar 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 were 64,800 cubic meters in Quarter 3 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
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 realization for MDF remained stable and our focus on value-
added products continued to yield the result, with this product now accounting for 54% of the
MDF business revenue in Quarter 3 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
Page 2 of 17
Rushil Décor Limited January 29, 2025
efficiency. Furthermore, we are also seeing the benefits from the implementation of BIS
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 volume showed a strong increase of
20.5% quarter-over-quarter and 13.8% year-over-year. However, domestic laminate volume saw
some pressure during the quarter and capacity utilization was 83%.
On the strategic front, the Jumbo Laminate Expansion project in Gandhinagar 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 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 call to our CFO – Mr. Hiren Padhya to provide the “Overview” of our
“Financial Performance”.
Hiren Padhya:
Good afternoon, everyone. Thank you, Mr. Rushil. And a warm welcome to all participants. I
am pleased to present an Overview of our Company's Financial Performance for the 3rd Quarter
and nine-month ending December 31, 2024.
For Q3 FY25, revenue from operations was INR 2,117 million, a decline of 0.7% year-on-year
and 8.1% quarter-on-quarter. EBITDA for the quarter was INR 273 million with an EBITDA
margin of 12.9%. Profit after tax was INR 115 million with a margin of 5.4%. For the nine
months FY25, revenue from operations was INR 6,672 million, a growth of 9.3% year-on-year.
EBITDA for the period was INR 827 million with an EBITDA margin of 12.4% and profit after
tax was INR 353 million with a margin of 5.3%.
Coming to MDF business:
Page 3 of 17
Rushil Décor Limited January 29, 2025
In Q3 FY25, the MDF business revenue was INR 1,540 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 INR 234 million with an improved EBITDA margin
of 15.2% in Q3 FY25. For nine months FY25, MDF revenue grew 8.9% year-on-year to INR
4,949 million with an EBITDA margin of 13.5%.
Now coming to laminate:
In Q3 FY25, the laminate business revenue was INR 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
9 months, FY25, laminate revenue grew 4.3% year-on-year to INR 1,460 million and EBITDA
grew 5.2% year-on-year to INR 145 million with a margin of 9.9%. Furthermore, the net debt to
equity ratio as of 9 months FY25 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 now open the floor for
questions and answers.
Moderator:
We have a first question from the line of Kaustav Bubna from BMSPL Capital. Please go ahead.
Kaustav Bubna:
Hi. Could you just give a summary of the total capacity for MDF in 2024 calendar year end and
what is the expected capacity as you come in 2025? And if you could split that between
organized and unorganized, that's my only question. Thanks.
Keyur Gajjar:
I think you were talking about industry capacity, right?
Kaustav Bubna:
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 unorganized, rather I would say Continuous Press and Static Press. So,
it will be around 2.2 million capacity will be from Continuous Press and balance from the Static
Press. So, we can say around 60% capacity is still from the Continuous Press 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% increased capacity in this year. Correct?
Page 4 of 17
Rushil Décor Limited January 29, 2025
Keyur Gajjar:
20% - 30%, I guess.
Kaustav Bubna:
Okay, thank you so much. Thank you.
Moderator:
We have our next question from the line of Ankit Guglia from Guglia Capitals. Please go ahead.
Ankit Guglia:
Hi, 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.
Hiren Padhya:
You are asking for Rushil or you would like to understand the overall market scenario in terms
of our industry?
Ankit Guglia:
I am asking specifically for Rushil in light to the overall industry, but it is specifically to Rushil
only.
Hiren Padhya:
Okay. So, compared to last quarter, the overall margin has decreased by around 1.5% this time.
So, as we said, there are a couple of reasons. First is like the MDF quantity is already down by
10%. And along with that, the value is also down by 10% where the reasons mainly are as already
given by Mr. Rushil in his opening remarks. First is overall market position is already affected.
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 the plant remained closed. So, both these had already
affected the overall business volume, as well as 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 have already crossed the breakeven point and any further increase in terms of
capacity utilization will give better margin and vice versa. So, here this quarter, there is a slight
reduction in terms of capacity utilization. So, because of this reason, mainly this has affected.
And so far as overall scenario, which what we are thinking is a reduction in terms of margin this
particular quarter, next quarter, that is Q4 FY25, 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 guidance in terms of overall margin. Rushil Décor as a whole, we have given overall
margin guidance of 12% to 14%, which we will definitely achieve. In terms of MDF, we had
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 8%. But if you see
the last three quarters overall margin, which is in the range of 10%, so there is a small plus and
minus starting from 8% to 12%. So, overall, we will definitely maintain the margins which we
had given as guidance. Secondly, if you consider this particular quarter, then I think this is what
we are going to achieve. But if you are asking for the next couple of quarters means the next
Page 5 of 17
Rushil Décor Limited January 29, 2025
financial year, then there are a couple of things which is definitely positive. First is like capacity
utilization wise, we will definitely improve than what we have achieved so far. So, additional
capacity 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 value-added 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%. Third, BIS standard now Government is already
committed. So, we are very much hopeful that this will be implemented as early as possible. So,
this will also have a positive impact. Fourth is, if you consider next financial year, so our new
project of laminate, that is Jumbo size, this we are targeting to 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 these four aspects, 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 whatever we achieve this financial year.
Ankit Guglia:
Thank you so much.
Moderator:
The next question is from the line of Mithun Aswath from Kivah Advisors. Please go ahead.
Mithun Aswath:
Yes, I just wanted to understand, this quarter the MDF margins have improved, quarter-on-
quarter. I just wanted to understand is there less pressure from imports and because of the BIS
standards getting implemented, I think from Feb 1st, 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 in 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 FY26 that you would be having?
Keyur Gajjar:
I just want to answer one of the first query about the imports. As such we don't see significant
volume of imports because of freight issue as well as anticipating BIS standard implementations,
so very marginal import was there in this quarter.
Rushil Thakkar:
I will talk about the raw material. The raw material prices for this quarter were 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 INR 100 to INR 125 crores out of that new plant from laminate and it will be all a
specialized product. So, we see a better margin of 12% to 14% in that as well.
Hiren Padhya:
And coming to the first part, you were asking the question that the margin for this quarter in
terms of MDF was better than the last quarter, right? So, yes, it is almost 1.5% to 2% higher than
Page 6 of 17
Rushil Décor Limited January 29, 2025
the last quarter. So, as Mr. Rushil 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. That way we are having just better efficiency that has impacted the margin positively.
Secondly, in the current year’s figures, we have got a small figure of around INR 2 crores in
terms of the incentive which is approved from the local Government, that is Andhra Pradesh.
And third is in terms of export also, if you see the last three quarters export, the overall margin
in terms of export has already improved. And the way we are seeing the future of export in terms
of MDF specifically and the new project of laminate, it will further improve.
Rushil Thakkar:
So, going forward to this answer, I would address that last financial year end we had export
obligations going on, which we have completed last year only. And now our strategy is really
simple to focus both on value-addition products and more to export as well. So, our margins on
that front will keep on improving that way.
Mithun Aswath:
Okay. So, I remember there was some talk of raw material availability being an issue. So, you
don't see that kind of being there? On the MDF side?
Rushil Thakkar:
Yes, 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. We will be focusing on the strategy to make it stabilized, like
we'll keep it stagnant.
Mithun Aswath:
Okay. And what about the demand in India for MDF, has that started to pick up? Last quarter
was not great, right? 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 a few parts of Africa.
Keyur Gajjar:
For the domestic market after the Lohri and other festive season, now the market is picking up,
demand is there.
Mithun Aswath:
Demand is good, sir?
Keyur Gajjar:
Yes, it is slowly gradually moving on.
Mithun Aswath:
Thank you.
Moderator:
Thank you. We have our next question from the line of Rishikesh from RoboCapital. Please go
ahead.
Page 7 of 17
Rushil Décor Limited January 29, 2025
Rishikesh:
Thank you for the opportunity. So, my question is with respect to the value added product, so
what are we guiding for FY26? Are we maintaining our volume contribution guidance on value-
added product to 65% for FY26?
Keyur Gajjar:
I think in our last call we said that we will maintain 60% for 2025-26.
Rishikesh:
Okay, and what can be our MDF capacity utilization for FY26?
Rushil Thakkar:
So, we'll obviously try to maintain above 90% for the next year, the overall blended capacity.
So, currently we are at somewhere standing around 89% in this quarter. And our target is to
maintain it above 90% for upcoming quarters as well.
Rishikesh:
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 INR
500 crores next year?
Rushil Thakkar:
Approximately yes.
Rishikesh:
Okay. And for FY26, so basically FY26 will be new plant INR 100 crores, existing laminates
might remain flat and MDF revenues can grow 20%, would it be fair?
Rushil Thakkar:
Can you just repeat the question because the voice got cracked?
Rishikesh:
Sure. So, I was asking if FY26, the new plant might contribute around INR 100 crores and
laminate is expected to flat the existing capacity and the MDF revenue segment can be expected
to grow at 20% plus?
Rushil Thakkar:
Yes, so typically first we go on the new plant as I rightly said that our expected revenue is more
than INR 100 to INR 125 crores from the new plant. Laminate plant is with 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 MDF CS, 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:
Okay and lastly you said the new plant can do 14% - 15% EBITDA margin. So, is that possible
from the first year itself that is FY26 from the new plant?
Rushil Thakkar:
So, first year initially for the first two quarters it will be more on the trial and error basis so we
will be taking out some products on the trial basis also, we will be optimizing the capacity
Page 8 of 17
slowly. So, first year the margin should be around 10%-12% for the first two quarters, but later
on the second half of the year, yes, we can expect the 12% to 14% margin.
Rushil Décor Limited January 29, 2025
Rishikesh:
Got it. Thank you very much.
Moderator:
Thank you. We have our next question from the line of Resha Mehta from GreenEdge Wealth.
Please go ahead.
Resha Mehta:
Yes, thank you for the opportunity. So, fairly new to the Company. I am 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 11% degrowth in Indian
market for laminates. 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 days start. 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 Diwali is over, we see a spike in our sales as well. So, this is a
counter effect. It's not something which is not being observed throughout the industry. So, this
is our nominal impact. And talking about the laminate, yes, the same reason follows there 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 are saying that Diwali is typically a slow quarter for
us, then that would generally tend to be true for all Quarter 3s, right? So, we are doing a YoY
comparison. 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 of quantity, it's more or less same volume.
Like total volume was around 1.4 lakh, and export was 45. So, altogether, it was 1.85 Lacs CBM.
Sorry, I am 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?
Page 9 of 17
Rushil Décor Limited January 29, 2025
Rushil Thakkar:
So, roughly estimated value of 4000 CBM, approximately around INR 11 crores.
Resha Mehta:
Okay. And how do you see the demand for both these segments, MDF as well as the laminates
currently in the market? Do you think it has slowed down over the last 2-3 quarters? Or is it
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 I also would like to add a 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 800 cubic meter plant coming into the
market, it is rightly absorbed in the market. And it takes hardly 1 or 2 years to stabilize
everything. But this is not a big effect what we see.
Keyur Gajjar:
And even if you see our 9 months MDF sales, it was 75% last quarter of our capacity last nine
months. And these nine months, it's almost 85%.
Resha Mehta:
Okay, and the other thing, so while we're saying that 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 BIS kicks in, we would be able to raise prices?
Keyur Gajjar:
Definitely like in the last quarter, we take some hike around 2% to 3% average, and it is 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 Indian capacities 4.2 million and secondly after implementation of BIS, I am sure there will
be the importance of brand and other value-added products and for that I am sure there will be
some further price increase.
Resha Mehta:
Currently for MDF, would it be right to say that the challenge is definitely the high supply, that
the new capacity 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, like last year, we almost achieved 75% of our capacity. 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 seen a degrowth of around 9% and even for nine months that's
Page 10 of 17
seen a degrowth of 7%. So, any particular reason over here that we are seeing a decline in price
realizations in export markets for laminates?
Rushil Décor Limited January 29, 2025
Keyur Gajjar:
Usually, it's all about 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 this kind of things.
Resha Mehta:
So, it is purely product mix and got nothing to do with demand or increased competition in the
export market?
Keyur Gajjar:
No. In fact, we are now, once we have a new laminate size, then we will be able to have better
realizations.
Resha Mehta:
Got it. Alright. Thank you so much. All the best.
Moderator:
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 the sense on MDF price? How has been this in
Q3 and what is the outlook?
Keyur Gajjar:
Can you repeat the question again, please?
Keshav Lahoti:
How has the MDF prices been in last quarter and what is the outlook for the same because you
know margins are still sub 15% while we talk about MDF margin to be normalized margin like
25%. So, what is the outlook when we will 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. We are still maintaining that pricing.
Keshav Lahoti:
Okay, understood. Last question on the laminate side, we see there is a sequential fall in
laminates EBITDA margin and sharp fall. What is the reason for the same?
Hiren Padhya:
I think you are comparing with last quarter only. If you see the margins before 1 or 2 years, it
was in the range of 6% to 7%. Now if you really compare the last 3, 4 quarters, the margin for
last 9 months, it is in the range of 10%. As against the last 2-3 years, 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 the reasons which were already mentioned in the earlier questions.
Normally in Quarter 3, margins are in pressure. But considering the fact that particularly for the
Page 11 of 17
current quarter, it will definitely improve. And thirdly, after having the new project, we will have
even better than this margin in the coming financial year.
Rushil Décor Limited January 29, 2025
Keshav Lahoti:
Understood, Mr. Padhya. That is helpful. Thank you.
Moderator:
Thank you. We have our next question from the line of Mudit Minocha from M3 Investments.
Please go ahead.
Mudit Minocha:
So, my first question was, why is the Indian market realization for MDF for you much lower
than the peers, when I compare it with other street players, they are in the range of 29,000 -
30,000. So, and similarly for the laminates as well. Could you share light on that?
Keyur Gajjar:
Yes, 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 CBM volume, that is the major reason.
Mudit Minocha:
Right, I understand.
Keyur Gajjar:
And otherwise, you can see when 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 25,000. I
wanted to understand why there a gap with the other listed players, means we sell, say for a
competitive product, branded product, funded, what is our selling price?
Rushil Thakkar:
No, so 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 channels. So, that is the only difference which
we see in our competitors and us else the price difference always is between 2% to 1% in all
areas.
Hiren Padhya:
And coming to I think laminate as we informed, considering the today's product which we are
into, it is a small size laminate sheet and maybe you may be comparing with other competitors
where they are already into the bigger size. Now we have already implemented almost in the
verge of 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. So, again, coming back to the competitive intensity, as we know in South India, there
have been a couple of new players coming in, and the total installed capacity now is 4.2 million
versus the demand of 2.6 to 2.8 million. So, do you see the pressure to sustain in realization
when the new players would try to get utilization?
Keyur Gajjar:
In fact, in last quarter only we took the price hike of almost average 2% to 3%.
Page 12 of 17
Rushil Décor Limited January 29, 2025
Mudit Minocha:
Was that secular for all the players?
Keyur Gajjar:
More or less, at least as far as I know, it's almost 4 or 5 players they increased the price.
Mudit Minocha:
So, the peak pricing pressure is behind us, is what you imply?
Keyur Gajjar:
The pricing is okay, but then this value-added segment is not very sensitive enough for all the
time like we talk about price and all. We have sort of loyal distributors and network. So, we are
doing really good in that part.
Mudit Minocha:
Understandable. Also, could you guide us with the CAPEX plan and the cash flows? How would
they match in the next two, three, five years? And what's the implied ROE that you are
envisaging for that business, both the businesses? Sorry, it's a very elaborate question, but if you
can guide us?
Hiren Padhya:
I understand. See overall, as we have informed earlier, that we are just targeting our turnover of
around INR 2,500 crores in the next five years. So, internally, we have already planned for the
expansion etc. because considering 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. As of now, I
won't be able to give you further details, but couple of things I would like to make it very clear.
First is like, we would be 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 the 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. First is like, even though we will
increase our debt, but then overall debt equity ratio we would like to maintain within one. And
thirdly, in terms of promoters dilution, we will not go beyond 50% unless there is a very good
opportunity or excellent synergy between the new product or something like that. As of now, we
are not in the process of any bigger acquisition etc. So, considering these three aspects, we are
already working on it. And at right time, we will definitely inform to the community.
Keyur Gajjar:
Just to update you, that last quarter, if you compare, we almost reached 53,000 CBM in the
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 10 - 12 days plant shutdown was there and due to
Diwali and all these reasons, you can see this volume. I hope I have answered your question.
Mudit Minocha:
Right. Just I think if you could guide us also on the ROE, what are the expected ROE at your
peak utilization?
Page 13 of 17
Rushil Décor Limited January 29, 2025
Hiren Padhya:
You are trying to ask for the future or as of now, you are saying? I mean, for this financial year
or for bigger expansion.
Mudit Minocha:
When you achieved 95% peak utilization in both.
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:
Understand, thanks, that is all from my side.
Moderator:
Thank you. The next question is from the line of Rishab Bothra from Anand Rathi Shares and
Brokers. Please go ahead.
Rishab Bothra:
Yes, 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 the 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 machinery has already been ordered. And 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 INR 100 crore turnover. Talking about the other business, that is WPVC,
we have already started one more line. That is the third line, which we have now installed by the
end of Q3. So, we are also thinking of expanding that business to the revenues of INR 50 to INR
80 crores by next year.
Rishab Bothra:
So, in percentage term, these two businesses, can they reach 15%, 20% in next three to five
years?
Rushil Thakkar:
It is difficult for one product, but together both the businesses 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, the margin is really low because of the learning phase going on, but now
as we are growing in this industry, we have already started the higher realization products like
we do in MDF. We have started making 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 the plywood industry.
Page 14 of 17
Rushil Décor Limited January 29, 2025
Rishab Bothra:
With respect to MDF, sir, there's 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 a value-added product? And what is
being imported? Is it plain MDF? And how are we going to, I mean, the industry itself, the
domestic industry itself, going to protect through this down cycle?
Rushil Thakkar:
So, first of all, the Government has already implemented the BIS 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 BIS standards. So, that is the local
protection of the industry. Now coming back to the other question about the imports, 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
specifically of a thinner MDF, not on the thicker side of MDF. So, the imports now will be
lowering down, which will be resulting us to increase our realization in terms of value addition
also and in the commodity interior 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 in the other regions
where we don't need to have pressure of the competition over there. So, this is the strategy what
we have internally decided, and we will be following the same strategy.
Rishab Bothra:
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 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:
It's a combination. So, we have the combination 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?
Rushil Thakkar:
No, I am talking about the export market because now we don't have any kind of export
obligation. We can easily talk about the value-added product 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 INR 31,000
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 market to make sure our expenses are rightly
distributed, and our overheads are always low.
Rishab Bothra:
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
Page 15 of 17
export market? Is it large consignment agents or who are those players who are securing the
laminates?
Rushil Décor Limited January 29, 2025
Rushil Thakkar:
First, answering to your questions for export laminates, every country has a different strategy in
which we deal with. We directly do not deal in few countries to the OEMs. We have our channel
partners who have started their channels over there and we are supplying them in handsome
volumes. And this is the strategy 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 the better service so that the margins what we are currently having can start
improving by this kind of small services what we give and that's all done through our Rushil
brand only. Now coming back to your other question for MDF OEMs, yes, all kind of big small
OEMs are our customer, but our strategy is fixed. The volumes are fixed, how much to sell to
OEM, how much for retail channels. So that we do not exceed in 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 promotions, is it MDF, plywood or laminate?
Rushil Thakkar:
So, currently the capacity in the plywood segment is not so high. So, we are currently just
utilizing it without any promotion is 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:
It's not completely 100% OEM business. I would say we are doing around 60% retail chain
business. And we need to carry out BTL activities too.
Rishab Bothra:
Wish you all the best. I hope the worst is behind in MDF space, and we improve on the margins
further.
Keyur Gajjar:
Thank you very much.
Moderator:
We have our next question from the line of Rishikesh from RoboCapital. Please go ahead.
Rishikesh:
Hi, thank you for the follow-up. Your previous participant mentioned that we have taken around
3% price hike in last quarter, if there are any more price hikes that you as well as the industry
has taken in this quarter or would be taking going ahead?
Page 16 of 17
Rushil Décor Limited January 29, 2025
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:
Thank you.
Moderator:
Thank you. Ladies and gentlemen, that will be our last question for today. And I now hand the
conference over to the management for closing comments. Over to you, sir.
Rushil Thakkar:
Thank you all for taking the time to join us today for your continued interest in Rushil 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.
Moderator:
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.
Notes:
1. This transcript has been edited for readability and does not purport to be a verbatim record of
the proceedings
2. Figures have been rounded off for convenience and ease of reference
3. No part of this publication may be reproduced or transmitted in any form or by any means
without the prior written consent of Rushil Decor Limited
Page 17 of 17