After seeing poor numbers in the third quarter, Century Ply hopes it would not end up flat this year. There will be growth, says Century’s MD and CEO Sanjay Agarwal.
"From a flat guidance earlier, we could see growth in the top line in FY16," he says. He expects growth to be around 5 percent. Plywood contributes a larger chunk of the company’s revenue and net-profit.
Its new plant in Chennai may start production in April, and by May will hit the market. The company had invested Rs 60 crore in the Chennai plant. In the first year, the company expects Rs 75 crore in revenue from this plant. In year two, it should be Rs 100 crore in sales, says Agarwal.
The company will be financing its expenditure through internal accruals and debt, says Sanjay.
Agarwal is hopeful of medium-density fibreboard (MDF) doing well in future.Below is the verbatim transcript of Sanjay Agarwal's interview with Ekta Batra & Mangalam Maloo on CNBC-TV18. Mangalam: Usually your second half is stronger than the first half and you did allude to that even before but your last quarter numbers were also very weak and you did indicate that FY16 topline is going to be flat. How is the demand looking, is there any improvement in the scenario, any outlook that you are getting for the Q4 or greenshoots that you are seeing in FY17? A: I can see that there is demand now. I cannot say that there is overwhelming demand or the demand is like we use to have some time in 2009 or 2010 but yes, it is not like push sale right now. Whenever we speak to people, we find that order books are not totally filled in but there is a flow. So that tells that something somewhere has changed, of course it is not very considerable or very highly noticeable but I hope it continuous and if this continues maybe Q1 will be better and this year it seems that we will not end up flat. It seems that there will be some growth now. Ekta: You feel as though from a flat guidance earlier, you could eke out growth in FY16 on the topline? Could you quantify for us, for example 1 to 5 percent growth, 5 to 10 percent growth above 10 percent? A: It should be in 5 percent range. Of course our laminate has grown. Laminate has grown more than 17-18-19 percent but plywood was the main, the large chunk of our topline and bottomline. So there was some sluggishness for H1 and Q3 but now looking at it we find that we will have some growth and the growth maybe within 1-5 percent but there is growth otherwise we were absolutely feeling bad about it. Mangalam: You are looking at the MDF business closely. So could you then clarify few points for us - 1) when does the plant gets commissioned 2) what capacity utilisation do you expect it to function at in the first year of its operations? A: There are two things. One, prelam and particle board plant that we are coming up with in Chennai. The plant is absolutely ready and getting the finishing touch but some delay as far as electricity connection is required and there is some technical hitches; local problems, etc, but we expect to start the trial production within April and by May we will be in the market. We have not invested much of money there, about Rs 60 crore is the investment there and in the very first year we expect the topline growth of Rs 75 crore due to that plant and in the second year it should give us Rs 100 crore topline from that plant. The MDF plant is coming up at Hoshiarpur. We have already acquired the land, we have put up all the orders for most of the machines etc, the site development is on and by July 2017 we should be in production. Our internal calculations are much earlier and we expect that next year we will announce that we have started the plant a bit ahead of schedule that was decided. The investment we are incurring there is about Rs 400 crore.
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