See 6-7% volume growth in Q3: Century Plyboard

Order inflows and price hike will aid growth in coming quarters, Sanjay Agarwal, Managing Director (MD) and Chief Financial Officer (CFO) of Century Plyboard said.

Agarwal, in an interview with CNBC-TV18, said there has been inflow of orders in August. He expects volume growth of 6-7 percent in the third quarter of this year.

The company has announced a price hike of 3 to 3.5 percent, effective from September, he said. New catalogue and better distributing network will lead to higher sales in coming quarters, Agarwal said.  

He expects low raw material cost to boost margins in short term period. “Margins will not be sustainable in the long term,” he said.Below is the transcript of Sanjay Agarwal’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Reema: The last time when we spoke you sounded a bit somber about demand. You indicated that it will be difficult to achieve last year’s revenue growth of 18 percent in FY16 and you have ended Q1 with just a tepid topline growth of two percent. How is the demand situation when can we expect a recovery and now what do you think will growth in FY16 be in single digits for the company?A: Till now, the last year Century Ply has actually done an excellent growth in Q1. For us, this year to match last year’s figure has been tough. Even if we grow a little bit that could be only as some kind of a solace we can take for our self. Recently, we see a little movement this month - some orders are coming in without any kind of a pressure or any problems. We are sure one thing that even if the market do not grow or do not get into the jumping mode, by the Q2 or by Q3, we will be able to do much better over the last year because the last year Q2 was okay, Q3 was not that good. This year we will be able to because we have done a very robust number in Q1 last year to jump them this year was difficult. By the time we end the year, we will be able to do well that we are clear. If the economy does well I am sure we will reach our projections.Reema: Let me talk a bit about your plyboard business. There the revenues fell by nearly 6 percent in Q1 and that you would attribute it to the price cut taken by peers in response to the raw material price correction. How is the plyboard business performing in Q2, Q3 and what can we expect in the coming few quarters? A: The first month was not so good - the month of July. However, in August we are seeing that orders are coming in without much pressure. I am quite hopeful that by the end of Q2, we will be able to catch up with last year quantity and maybe a little bit grow on the value. Q3 we are looking forward because last year Q3 was not good so that gives us some space for absorption. If we keep on whatever we are doing right now also then we will be growing in terms of value and in terms of volume both in Q3.Nigel: Could you tell us about your margins. For this quarter itself, it looked quite good on a year-on-year basis. Though on a sequential basis there was a bit of a dip on the plywood business in fact. It is looking good as well as on the laminates business there was a big improvement over there so could you give us some guidance about the margins going ahead? A: What has happened is that costs have gone down and because we are a branded player, we have been able to sustain our prices. I can say that a Century Plywood is selling even higher than anybody else in the country; even Century laminate, which we are a very late incomer in. Still, we are now getting the highest price in the country. It should have taken a beating on our quantum, but because of the laminate business, our base is low we have grown very well in the Q1. Even Q2 the growth is very good. The reason can be - that we have come up with some new designs and a new catalogue has been given in the market. Every time a new catalogue comes in the market, it pushes sales to a much higher level. Our distribution network has also grown every month, every quarter. That is also making a difference.Due to the lowering of the cost and we not reducing the price, we are able to sustain the price and that is the reason the profit is growing. However maybe in the long-term this may not be sustainable at this level but it is okay. For the moment we are doing well. As far as our plywood is concerned, we are the only ones presently who have our raw material sources in Myanmar and we have started our unit in Laos. So, our raw material costs have gone down rather and for everybody else it is much high; that is also adding to our bottomline at the moment.