V Venkatramani, CFO, Greenpanel Industries, said that the company has not taken any price increase in plywood in the current quarter but would consider that in the next quarter.
According to a JM Financial report, recovery has been seen across geographies. Cost pressures are mainly seen by the unorganised or the smaller players because of which there could be market share gains for the organised player.
CNBC-TV18 caught up with Venkatramani to understand more about this shift in demand from unorganised market to organised market and all about price increases.
He said they have been taking price increases to sustain the margins because raw material costs have been going up relentlessly, especially on the chemical resin side.
The price increases did help them sustain the margins, said Venkatramani, adding that the unorganised segment of medium-density fibreboard (MDF) is small but was a real competition. However, now with invoicing practices, the completion has come down.
“We took price increases of around 4 percent in the first quarter as well as the current quarter and future price hikes would depend on hikes and raw material prices,” he said.
So, the prices in the MDF vertical have gone up by roughly around 8 percent in the first half of the fiscal, said Venkatramani, adding that they have also taken some price corrections in the original equipment manufacturer (OEM) segment, which will help improve the realisations in the margins.
On capacity utilisation, he said MDF currently would be NEARLY 95 percent and plywood nearly 80 percent.
The exports for the company increased to 31 percent versus 13 percent in the fourth quarter of FY21. When asked about realisations for the export segment, he said, “The realisations have gone up in the current quarter and will go up in this quarter as well.”
The company faced logistics issues on the export side, which came in the way of 100 percent capacity utilisation but it was a blessing in disguise because it helped them improve the overall margins, he said.
For this quarter, exports would probably be nearly 25 to 30 percent of the total MDF volumes and could have been higher had they not faced logistics issues, said Venkatramani. Export margins have also seen significant improvement from 8 percent to 10 percent.
For the full interview, watch video