Moneycontrol
Last Updated : Jan 28, 2016 04:25 PM IST | Source: CNBC-TV18

FY16 rev, operational efficiency to be flat: Century Plyboards

Speaking to CNBC-TV18, Sajjan Bhajanka, Chairman of the company says that FY16 revenue and earnings before interest, tax, depreciation and amortization (EBITDA) is likely to remain flat.

Century Plyboards reported a one percent growth in total income to Rs 386 crore and profit after tax (PAT) remained flat at Rs 41.4 crore. However, the company’s margins contracted to 17.8 percent in the quarter ended December 2015.

Speaking to CNBC-TV18, Sajjan Bhajanka, Chairman of the company says that FY16 revenue and earnings before interest, tax, depreciation and amortization (EBITDA) is likely to remain flat.

Below is the verbatim transcript of Sajjan Bhajanka's interview with Ekta Batra & Mangalam Maloo on CNBC-TV18.

Mangalam: The topline growth if we look has been muted. Is that because of weak demand environment and what is your expectation going forward for FY17 then?

A: Exactly for that reason, demand is weak because there is big hit in the realty sector and that is the sector which gives demand to our sector. However, we could maintain our last year’s figure and raw material prices have come down so we are able to maintain profit also. There may be 2-3 percent jump in the topline but profit is similar to last year. However, we can maintain it but like many other companies, they are suffering.

Mangalam: If we look at your main business, the plywood business, margins have contracted sharply out there while the laminates and allied products have seen an EBIT expansion of close to 100 percent. So, what do you think will lead growth going forward for the company itself, will the margins in the plywood business continue to be under pressure?

A: One particular segment in plywood that is the veneer, so, that was like big revenue grosser for us and even the profit was good in veneer division. Due to the ban of timber from the other countries, so, now we are now generating that business in our subsidiaries in Myanmar and Laos.  However, those subsidiary rates are not consolidated here, so, that we shall be doing at the end of the year. So, that will improve the figures and that veneer has gone out from our balance sheet.

Ekta: What was your operational performance like this quarter, if you could take us through that, your EBITDA, your EBITDA margins and what kind of guidance you have on the same?

A: During the last interview also I predicted, this year is likely to reflect and we have maintained all the figures at almost the same rate. EBITDA margin and everything is similar to last year, last corresponding quarter, so that is being maintained. In our sector this year we are also investing in future. We are likely to complete our particle board plant in Chennai, we have restarted constructing Medium Density Fibre (MDF) plant in Punjab, Hoshiarpur. So, these are going on in full swing.

So, a lot of our resources are spent in the new investments and which will bring revenue as well as profit to the company in future. So, that is one thing. We are consolidating our presence in Myanmar by increasing the capacity, Laos we are putting more units, Indonesia we have signed one agreement with one largest company there putting up a veener unit.

Mangalam: Considering the fact that you are constantly increasing capacities and marry that data point with the fact that you are seeing demand outlook continues to remain weak, won’t that effect your operational performance going forward as well because even if you look at your current EBITDA, it is actually been aided by a Rs 3 crore worth forex gain itself. So, can you give us a sense of what your margins are likely to be in FY17 as well as going forward?

A: We were anticipating implementation of goods and services tax (GST) so that is a big bet we had taken and GST is very vital for us because as such plywood growth is muted. In the absence of the demand from the realty sector and the other panels like MDF, particle board they are picking up. So, I foresee more demand in those sectors.

So we are preparing ourselves for that because we can commission our particle board plant in March. So, next year that will give us revenue.
First Published on Jan 28, 2016 03:38 pm
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