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Kolkata-based Century Plyboards, which is looking at a 20 to 25 per cent growth in turnover YoY in FY23, is planning to bring on-stream capex worth ₹1,000 crore over the next couple of years across units in Punjab and Andhra Pradesh.
Nearly ₹700 crore of investments across MDF units are expected – brownfield expansion in Hoshiarpur (Punjab) by October and another greenfield project in Andhra by December 2023. ₹200 crore of investment in the laminate facility – another greenfield project also at Andhra –is likely to be on-stream by September next year, Keshav Bhajanka, ED, Century Plyboards said.
Another ₹100 core of investments are expected to be made in plywood. However, investments in this case “are not yet frozen”. A substantial part of the proposed investments are expected to be made from internal accruals, with the company generating anticipating cash profit generations to be in the tune of ₹500 to 600 crore, every year.
“For the year, we see a 20 to 25 per cent growth in turnover, while keeping the Q1 run rate intact. Indications are Q2 will have a similar run rate as the previous quarter. We see good demand on the ground. And with a new unit coming into operations in October. And other investments are on track as per schedule,” he told BusinessLine.
War chest
In Q1 FY23 , the company reported a turnover of ₹882 crore, up 96 per cent YoY, while EBITDA was around ₹151 crore. Margins (Earnings before interest, tax, depreciation and amortisation) increased to 17.2 per cent, versus 14.7 per cent YoY.
The company said in its investor presentation that it has further tightened the balance sheet in Q1 FY23 by virtue of prudent working capital management (improvement by five days compared to the last fiscal), augmenting its war chest for future capex.
Net cash on books as on June 30, 2022 was ₹184 crore.
“The Return on Average Capital Employed (ROACE) is expected at 20 to 25 per cent and upwards. So with the investments we are making, cash profits would improve. A chunk of these would be re-deployed as capital,” Bhajanka said. For Q1, the ROACE was 29.36 per cent.
The shift from the unorganised sector to the organised sector is happening, leading to strong growth for the bigger players, he said, adding that the company’s focus continues to be a turnover of ₹5,000 crore in three years.
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