If there is just one sentence through which I could communicate what I have in mind itwould be this: if Centuryply could have performed the way it did during one of the mostchallenging of years and if the Company could have grown the way it has against extensivesectoral odds in the last few years then we have a lot to be optimistic about across theforeseeable future.
Consider the short-term and long-term realities that we encountered. During the lastfinancial year Centuryply encountered downstream sluggishness marked by poor offtake fromthe country's real estate sector; if this were not enough the sector was affected bydemonetisation that induced consumers to postpone purchases for the good part of oneentire quarter.
Or consider the extensive of sectoral challenges across the last number of years: anumber of unorganised manufacturers in the country priced their products approximately 40%lower than Centuryply's products by the virtue of being largely outside the tax net.
Having provided this contextual landscape permit me to present our performance: wegrew our revenues 9% and profit after tax 9.3% during the last financial year; ourrevenues and profits grew at a CAGR of 9.69% and 25.30% respectively across
We possess one of the widest portfolios of interior infrastructure products rangingfrom the mid-priced to the premium across application types; we possess capacities thatprovide us with attractive economies of scale. the five years ending 2016-17. The bigquestion: how did Centuryply address medium-term and shortterm challenges and growregardless?
My answer is that the greater the challenge the stronger was our resolve.
We recognised that when the competitive environment became increasingly challenging itwould be virtually impossible to pass cost increases to customers; rather than seek priceincreases from the outside Centuryply selected to seek profits from within. The companyengaged in frugal engineering; it invested in process engineering that moderated costs andenhanced per person productivity to among the highest standards within our sector; weselected to commission manufacturing facilities in tax-efficient locations; we sought tocommission peeling facilities in international geographies that would make it possible tomoderate costs; we launched premium products that brought cash in faster.
I am pleased to report that this compulsive obsession with cost moderation hastranslated into competitive advantages: Centuryply's tax rate is among the lowest inIndia's interior infrastructure products sector; the Company's debt cost is among thelowest; the Company's assets are well- depreciated; the Company's capacity utilisation(including some of its oldest facilities) is among the highest in the sector.
This competitiveness is evident in the numbers: our fixed assets of Rs.533.63 cr as on31st March 2017 compared favourably with C708.60 cr in net worth. The Rs.27 cr of landvalue on our books has appreciated significantly over the years. Even though we are amature multi-decade company we had a tangible net block of only C248.69 cr by the closeof the last financial year. Even as we are at the lower end of the sectoral cycle weenjoyed an interest cover in excess of 6x. Our margins and profit quantum are among thehighest in India's interior infrastructure sector.
What excites me is that Centuryply is at the cusp of a dramatic moment in itsexistence. For years (even decades) the unorganised sector carved into the market shareof the organised brands; there was a time when the proportion of unorganised playersmoderated the share of the organised brands which was contrary to what was transpiring inthe other sectors of the country; the time has come for the imbalance to correct.
The correction is coming from two realities: the demonetisation catalysed the shift oftransactions from the cash to the digital and from the weak brands to the established; theimplementation of GST from July 2017 will accelerate the shift from the unorganised toorganised brands.
At Centuryply we are attractively placed to address the transition. We possess one ofthe widest portfolios of interior infrastructure products ranging from the mid-priced tothe premium across application types; we possess capacities that provide attractiveeconomies of scale; we possess a pan-India manufacturing footprint that makes it possibleto address every demand upturn; more than 50% of our plywood sheets can be classified aspremium; we possess an aggressive product pipeline across the foreseeable future.
I believe that Centuryply stands attractively placed to capitalise on the next growthlevel: we expect to generate incremental revenues of Rs.700 to Rs.1000 cr during thecurrent financial year with another C500 cr of revenues in 2018-19. This indicates thateven as we took nearly 20 years to climb to revenues of C500 cr we can potentiallyreplicate this growth in just the next two years.
It is this optimism that I intend to extend to our stakeholders. All that we achievedin the last decade was in the face of sectoral and tax challenges; what we are now likelyto achieve is with the tailwind of systemic support.
And that could make all the difference.