Expect to maintain EBITDA margin at 17%: Century Plyboard

A: Basically our primary segment plywood has done well and on all fronts there was ample growth, improvement in the EBITDA margin, improvement in profit after tax (PAT) margin.

Senthil: Who are your customers who are buying, you have got 26 percent jump which is extremely good. So, what segments in plywood and where is this buying coming from?

A: This is all over the country. All our regions have done well and region wise also there is an all-round growth.

Senthil: So who are the end users?

A: Basically it goes to home sector; new flats, new interiors, renovation of the old and then the institutions, hotels, schools. Basically wherever they need panel they use our products.

Senthil: Has your industry done as well as this or have you outperformed your industry?

A: Maybe, little bit we have outperformed our industry.

Sonia: Your margins have come in at 18 percent this time around. This is higher than your own target of 15-16 percent. Is this a margin level that is sustainable for this calendar year or is this just an aberration?

A: We have started lot of new exercises to cut the cost, to improve the margin, to concentrate on more profitable products and as our overseas units are giving us low cost raw material like Myanmar unit. So, that is also contributing to decrease in the cost of raw material, because earlier we were importing timber. Now we are processing itself in Myanmar and processed goods come. So, the logistics costs have reduced greatly.

Sonia: Now that your costs have gone down can you tell us what the margins will be in the next one year. Do you see your profitability go up considerably or do you see it within this range itself?

A: Yes we hope to maintain, say, 17 percent around EBITDA and this year it was coupled with the foreign exchange scenario and other things. So, that way every factor was favourable to us. So, this time it was around 19 percent but we target 16-17 percent EBITDA margin and PAT margin also accordingly increases.

Sonia: Tell us a little bit about the laminate business. I am looking at your segment wise performance, Rs 72 crore is what you have done in your laminate business versus about Rs 52 crore same time last year, so that is a big jump. How is that business shaping up and what kind of growth rates do you think you can sustain there?

A: During last year we expanded our capacity. We added two more lines, so that is now fully productive. So, all the four lines are working 24 hours. So, that has improved our total contribution from the laminates and accordingly this year you might have noticed we have launched a big campaign. So far we are never doing it exclusively for laminate. It was part of the total overall marketing campaign covering all the segments but this time we are doing for plywood separately or for laminate separately. So, we have made a new TVC taking some good actors and that is also doing well and augmenting our sales.

Sonia: So, you had indicated that you are planning one more laminate unit in western India. When will that come up and will that further augment your revenues?

A: Yes, because at the moment our entire capacity is adjusted and there is more demand for our products. So now we have to curtail on the exports to feed the domestic market, but export is again very remunerative. So, in future we may have to add because all the four lines are in eastern India. So, we shall plan next line in western India and Gujarat, Ahmadabad and that area is the hub of laminate industry. So, maybe we shall put one unit there in the next financial year.

Sonia: How much will you be investing into this new unit in western India and also for your revenues you had indicated that you will see a 25 percent growth in this fiscal. What about next fiscal, will you be able to repeat this growth or would it be higher?

A: Traditionally from last 17 years we have been maintaining 25 percent growth. This is our very sacrosanct target and we try out best. So, by either new acquisition or by the expansion of the capacity in the existing unit or by starting new units, so, around 15 percent is our target to enhance our volume and minimum 10 percent is value addition by way of better products.

Senthil: How long will it take for a new unit to go on stream if invested in India?

A: This is at the very initial stage. So, we shall start from the beginning and today in board meeting we have approved another project that is particle board plant at our Chennai factory. That will be 180 tonne cubic metre capacity per day particle board plant. That we have finalised and that will be commissioned within the next year.