Laminate-maker Greenlam Industries is hopeful of improving margins going forward as raw material costs cool down.

According to CFO Ashok Sharma, more price hikes are unlikely in the ongoing fiscal, as most of the costlier raw materials have been consumed between April-June and July-September quarters. Hence, cost benefits and margin improvements are expected to be visible from Q3. The company has a three-month moving stock position.

“Raw material costs were peaking in Q4 FY22, and partly into Q1 FY23. However, there has been some cooling down, later half of Q1 onwards. So costlier raw materials that we had, are either consumed or in the process of being used,” he told BusinessLine.

Greenlam took its last round of price hikes, between 3 and 5 per cent for laminates sold in both international and domestic markets, in Q1. Nearly 50 per cent of the company’s turnover comes from export markets and the remaining from domestic ones.

Capex on course

Sharma said the company’s ₹1,000-crore capex plans — spread out over a two-year period — continues to be on course, and this includes capacity expansion towards laminate-making, and a foray into plywood and particle-board segments, through organic and inorganic routes.

The upcoming 3.5-million sheet plywood unit in Andhra Pradesh is expected to be on stream by Q4. De-bottlenecking and ramping up capacity at the recently acquired Gujarat unit – to 5.4 million sheet – is likely to be through around Q4 as well, Sharma said.

“We are already at 100 per cent capacity utilisation for laminate. By the end of this fiscal, our capacity should be up to 24.52 million sheet. This would enable us to tap additional demand in domestic and international markets,” he said.

The company has already invested ₹100 crore of the announced capex. It is now tapping into ECA (export credit agency) loans and is in talks with banks to fund around ₹650 crore. The remaining investments are to be through internal accruals.

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