Century Plyboards is looking to triple its MDF (medium density fiberboard) capacity to 1,800 cu.mt from the current 600 cu.mt per day by way of both greenfield and brownfield projects at a total estimated investment of around ₹850 crore.
The company is also mulling setting up a greenfield plant for manufacturing plywood in Punjab at an estimated investment of around ₹200 crore.
Sajjan Bhajanka, Chairman, Century Plyboards, said the proposed plant is likely to be the largest plywood unit in the country with a total capacity of 1 lakh sq m per day. “It will come up in two phases; in the first phase we will have 50,000 sq.mt a day and in the second phase, we will add another 50,000 sq.mt a day. We are in the process of purchasing land for the plant,” Bhajanka told BusinessLine.
MDF expansion
The greenfield plant for MDF at Andhra Pradesh is expected to commence operations by September 2023, while the brownfield project at its existing unit at Hoshiarpur in Punjab would be operational by September-October this year.
“We have procured the land and machinery for our greenfield plant in Andhra Pradesh which is likely to entail an investment of around ₹600 crore. This is likely to come up by September 2023. We are also expanding our existing MDF unit at Hoshiapur by around 60 per cent from 600 cu.mt per day to 1,000 cu.mt per day at an investment of ₹250 crore,” he said.
This apart, the company is also in the process of optimising capacity of the existing plants. It had already augmented capacity of all its plants by more than 20 per cent in the last one year.
“As far as MDF is concerned whatever capacity till now has come has been absorbed very well by Indian consumer,” the company said in its recent investor presentation highlighting the strong demand for the product in India.
Rise in consumption
Consumption of MDF in the country is likely to increase further as a number of furniture parks are expected to come up in the near future, it said. Century Ply’s MDF and particle board segments delivered highest ever EBITDA margin till date with MDF and particle board reporting margins of 32 per cent and 29 per cent respectively during fourth quarter ended March 31, 2022. This was driven by demand across both the categories.
Despite the sustained input cost pressure in core segment of plywood and laminate, the company has been able to mitigate a large part of its gross margin pressure by taking corresponding price increases, though with some time lag and also through its operating leverage, it said.
“We took three-to-four price hikes last year and the total price hike was close to 8 per cent. This year also we are looking at a similar price increase,” he said.