Century Plyboards (India) Ltd, which saw margins coming under pressure in the third quarter of this fiscal on the back of higher raw material prices, expects profitability to improve in Q4 and the subsequent quarters supported by an expansion of capacity both in MDF and laminate businesses.
The company has invested close to Rs 250 crore so far on the expansion of MDF (medium density fibre) plant at Hoshiarpur and commercial production is likely to begin, Mr Keshav Bhajanka, Executive Director, Century Ply said.
There is a very good demand for MDF in India at present but the company was not able to grow as its capacity did not come into production. However, with the current capacity addition coming on stream, it expects the segment to contribute to a good growth moving forward.
The company has also planned capacity addition in the laminate segment and is expecting a good growth coming in from the segment moving forward. The laminate Greenfield project in Andhra Pradesh is also expected to come on stream in Q2FY24.
The company is working on multiple offerings on the laminates front. The larger size press will be commissioned by Q2 of next fiscal and will add to the overall growth in top line. It is also contemplating on other products in the segment but nothing has been finalized as yet, he said. The laminate greenfield project in Andhra Pradesh is also expected to come on stream in Q2FY24.
With the sustained input cost pressure in timber prices, in particular, the company’s overall growth margins were adversely impacted by 310 basis points on a year-onyear basis and 90 basis points on a sequential basis to 32 per cent. Timber prices continue to remain at elevated levels and are expected to trend higher over the next quarter. Chemical prices, particularly phenol, melamine and UF resin have softened a bit in last threeto-four months and are likely to further soften over the next two-to-three months, the company said in the earnings call transcript.