CenturyPly plans sustainable growth with largescale product investments, innovative products and industry expertise
On consolidated basis, the revenue from operations grew by 15% over FY18
Kolkata, 4th September 2019: CenturyPly, the largest seller of multi-use plywood and decorative veneers in the Indian organized plywood market and a frontrunner in applying innovation at work, today conducted its 38th Annual General Meeting. During the meeting, the investors were taken through some of the major developments in the Group.
Some of the developments are listed below:
The slowdown that the Indian economy experienced in the last financial year was unexpected, starting with something completely unrelated to the Indian interior infrastructure sector. The result was a liquidity paralysis within the Indian economy, impacting the real estate sector, which, in turn, affected the offtake of interior infrastructure products from our industry. Besides, the Company suffered setbacks in terms of raw material sourcing as Laos and Myanmar banned the export of face veneers, affecting the manufacturing facilities in those countries.
Through prudent responsiveness, CenturyPly overcame the challenge to not only retain market share but grew revenue by 15% from H1967.22 crore in FY2017-18 to H2263.83 crore in FY2018-19. EBITDA decrease to H306.43 crore in FY2018-19 compared to H312.72 crore in FY2017-18. Profit after tax increased by 1% from H156.64 crore in FY2017-18 to H158.76 crore in FY2018-19. Gross profit margin decrease by 105 bps from 33.52 % in FY2017- 18 to 32.47 % in FY2018-19. Depreciation and amortisation stood at H49.99 crore in FY2018- 19 compared to H81.04 crore in FY2017-18.
During the last five years, the Company made capex investments of around 800 crores. In FY19, the Company consolidated its various businesses and focused on enhancing capacity utilisation and related efficiencies. This was done with the objective of protective competitiveness and retain its position as a premier and profitable industry player.
CenturyPly recognises that the key to sustainable competitiveness in India’s plywood sector will come from the ability to secure raw material requirements over the long-term. The company is investing nearly H30 crore to set up a face veneer unit in Gabon with initial capacity of ~2500 CBM per month, based on a careful evaluation of sustainable timber sourcing and the management of logistics issues. The long-term competitiveness of the initiative was secured by the okume species of timber from Gabon that was almost 35% cheaper than the timber from Myanmar. As a result, the final delivered cost of timber from its origin is expected to account for only 5% of the total cost of plywood for the Company. The unit is expected to be operational by the end of Q3FY20, addressing the raw material needs for its mass brands like Sainik and Bond while the veneer sourced from Myanmar (which resumed) will address the manufacture of our premium brands.
The company reported 17% growth over the previous year and it strengthened product innovation in the laminates sector. CenturyLaminates introduced Silk Tuff laminates providing the look and feel of solid surfaces. The company has increased exposure to the kitchen segment with Lucida and Silk Tuff laminates and this segment accounted for 15% of the overall laminate revenues. CenturyLaminates is also engaged in the pan-India launch of StarLine (0.8mm laminates category).
A key growth driver of our performance during the year under review was our MDF business. From the start of operations in the second half of FY18, we achieved a capacity utilisation of 65% in FY19, which translated into a 161.11% increase in revenue from H113.11 crore in FY18 to H295.35 crore in FY19.
Kolkata Port, where CenturyPly accounts for ~50% of the container freight, reported its highest cargo and container throughput in FY19. The growth in cargo volume helped CenturyPly report a 4% growth in revenues from this business during the year under review.
Competitiveness CenturyPly’s competitiveness is derived from 100% digitalisation of operations, providing real-time information to customers. The Company’s forward-looking initiative to install GPS in all trailers resulted in higher fleet accountability. The business enjoys a 10-year tax benefit under Section 80IA of the Income Tax Act, which is due to expire in FY2021.
To service the growing demand for panel products in the country, CenturyPly consistently invested in manufacturing capacity. The Company’s plywood capacity of 239000 CBM across seven (including one subsidiary) manufacturing units. This translated into a 25% share of the organised market in India. Besides, the 61.68 lac sheets (with five lines operational) laminates capacity positioned Centuryply as the country’s third-largest player with a collection comprising premium 1 mm laminates. The Company also extended itself to manufacture MDF and particle boards. The quality MDF manufactured by the Company is customised according to consumer needs. The result is that the Company emerged as on of the key MDF players in the country. This MDF is also utilised in the manufacture of pre-engineered doors. The Company’s particle board capacity operated at more than 100% in 2018-19, owing to rising product demand.
Based on encouraging long-term prospects, the Company is contemplating a greenfield MDF & particle board unit in Uttar Pradesh that is expected to further strengthen the Company’s particle board capacity.
CenturyPly introduced a range of products across price points. The Company’s plywood range comprised premium to mid-priced to economically priced products. This extensive pricing empowered the Company to address demand from diverse income groups, provide products around varied applications and provide an aspiration migration journey with successive increases in spending power.
Plywood: The turnover from the plywood segment stood at H1278.09 crore during FY2018-19 compared to H1268.94 crore during the preceding financial year. The Company maintained its market share despite a sectoral stasis owing to decelerated growth in the downstream sectors and a convergence of a number of macroeconomic disruptions. Laminates: The turnover from laminates segment stood at H439.00 crore during FY2018-19 compared to H377.98 crore during the preceding financial year. The Company has successfully managed to maintain the sales momentum of laminates by adopting new strategies. Particle boards: The Company reported a 107% capacity utilisation during the year under review and reported revenues worth H97.47 crore during FY2018-19 compared to H72.93 crore during the preceding financial year. MDF: The Company reported a 65% capacity utilisation during the year under review and reported revenues worth H295.35 crore during FY2018-19 compared to H113.11 crore during the preceding financial year. Logistics: The logistics business of the Company reported a 4% growth in terms of net revenues to reach H102.99 crore during FY2018-19 compared to H99.44 crore during the preceding financial year.