Century Plyboards is looking at double-digit growth this fiscal even as it expects to maintain margins at FY19 levels. The company will balance its portfolio between premium and mass offerings, and increase its distribution presence.

In FY19, the company had an operating profit margin of over 13 per cent, declining from 16 per cent a year ago.

For the first three months of FY20, its operating profit margin (excluding other income) stood at 14.96 per cent (16.11 per cent in Q1 FY19), while the consolidated net profit saw a 4 per cent decline YoY.

“We are looking to maintain margins at FY19 levels. Plywood is a little muted. But laminates, particleboards and MDF (medium density fibre-board) should do well with double-digit margins,” Keshav Bhajanka, Executive Director, told BusinessLine .

Navigating slowdown

According to him, the plywood business, which continues to be among the topline and bottomline drivers, has “been under a bit of strain”. Weak consumer sentiments and a general slowdown meant “muted growth”. Dealers had a conservative approach to stocking.

The company worked on its branding strategy and increased the distribution reach including that of its mass brand ‘Sainik’. Now, the focus is on expanding its presence in weaker markets like Karnataka. Apart from Sainik, the eponymous brand ‘Century’ remains its primary offering in the premium segment.

Laminates have been “doing quite well” and Bhajanka expects “double-digit margins” in the category. The entry into new offerings with higher volumes has also gone well.

MDF and particleboard are among the better performing segments. The company recently brought on stream its MDF facility at Hoshiarpur in Punjab. “Margins are expected to be around 20 per cent in MDF while they are likely to be in the 10 per cent range for plyboards,” he said.

The demand for plywood, MDF and particle-board is expected to improve with recovery in the real estate sector, industry observers said.

New investments

Century Ply plans to invest in a new MDF unit in Uttar Pradesh. Details on capacity and investments are being finalised. “By December, plans should be finalised,” he said.

Around ₹20-25 crore is being invested in Gabon in Africa for sourcing veneers. Till recently, the Indian plywood industry was dependent on Asian countries (Myanmar, Indonesia or Laos) for its face veneer requirement. But with Asian nations restricting exports, the industry is turning to new sources in Africa.

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