In 2019-20 India reported its slowest GDP growth in 11 years.
India's real estate sector remained subdued. Consumer spending was muted. Commercialoffice activity could have been stronger.
Despite these challenges Centuryply reported revenue growth of 1% and protected itsPAT even as margins declined.
Towards the close of the financial year under review our performance was affected bythe nationwide lockdown on account of the Covid-19 pandemic the effects of which extendedinto the current financial year.
The only safeguard employed by our Company in this uncertain environment was awillingness to transform and adapt with agility.
A number of years ago we broad-based our product platform from an excessive dependenceon plywood to adjacent product categories. The result is that during the year underreview we possessed a wide and deep presence across plywood laminates medium densityfibre and particle boards.
This platform reinforced our positioning as an interior infrastructure player providingconsumers with choice room to upgrade and a portfolio to suit every budget.
This positioning stood the Company in good stead during the year under review. Even asdemand from new home buyers and real estate projects remained weak translating into aweaker plywood offtake across our premium brands our affordable Sainik range reportedattractive traction. The result is that our price-sensitive market warriors grewattractively.
Century's laminates generated a respected recall in India's organised laminatessegment. The Company emerged as a prominent player in the 1 mm laminate segment. In justfive years the Company increased its laminates capacity 60% a validation of its growingacceptance. Despite the prevailing headwinds during the year under review the Company'slaminates business reported over 5% revenue growth during the year under review.
The last couple of years were challenging for the Indian MDF sector. This was onaccount of cheaper imports domestic oversupply and weaker realisations. Despite thesechallenging realities our MDF business reported a capacity utilisation of around 82%among the highest in India's competitive MDF sector. The business leveraged the Centurybrand to carve out a sizable OEM presence the principal MDF demand driver. We believethat these OEM relationships should translate into multi-year revenues. Our particle boardunit operated at 116% of its capacity and the Company intends to invest in a green fieldunit in Uttar Pradesh.
The Company's CFS business continued to perform creditably despite headwinds in globaltrade. The Kolkata Port reported another busy year in 2019-20; our business delivered morethan 38% capacity utilisation. The CFS business is margins-accretive and profitable.During the year under review our CFS business reported revenues of I 86.5 crore andEBITDA of I 29.22 crore; our 33.8% EBITDA margin compared favourably with 32.4% in2018-19.
Centuryply ended 2019-20 with a strong Balance Sheet. Despite over I835 crore incapital expenditure in five years long-term debt on the Company's books stood at lessthan I53 crore corresponding to a total debt-equity ratio of 0.18 and long-term debtequity ratio of 0.05. Our inventory optimisation initiatives helped moderate workingcapital and corresponding limits from bankers. We continued to widen and deepen ourpan-India distribution network. The result is that Centuryply was rightly-sized in themiddle of a prevailing slowdown and lockdown to stay viable and liquid through thischallenging economic phase.
I must add here that as our Laos plant discontinued operations on account of impairedviability the management took a conscious decision to make a one-time write-off thatimpacted our profitability in 2019-20. We have been engaged in discussions with a localLaos partner to commence operations and restore viability.
A lockdown was imposed across India starting the last week of March 2020 whichextended into the first quarter of the current financial year. Our operations werediscontinued immediately; we resumed operations across all our plants from May 2020 andreported a 35% capacity utilisation for May 2020 and 60% for June 2020.
The year 2020-21 will be challenging on account of the prevailing uncertainty.Apartment sales hit a multi-year low; new commercial office signings could remain subdued;interiors revamp may not be a priority during the current financial year. The declininglabour availability is expected to affect interior construction and fit-outs whichlargely influence the offtake of our products.
At Centuryply we expect that the recovery could be faster for segments like MDF andparticle boards which find application in factory-made furniture utilising a lowerproportion of manual labour. Besides we expect that the demand for ready-made furniturewill continue to grow driven by the changing preference of Indian consumers who seek easeof purchase. With online retail growing rapidly the furniture retail momentum is likelyto sustain.
Despite the prevailing headwinds India's economic fundamentals remain strong. Therelief package announced by the Indian government is expected to revive the economy acrossthe medium-term coupled with the government's focus on affordable housing. We expect thatplywood will grow for the affordability availability and accessibility of customisedfurniture. At Centuryply we will deepen our distribution network to restore sales topre-Covid levels. Besides our sales force automation is directed to enhance employeeproductivity. We strengthened our environment sustainability through the installation ofrooftop solar panels across our manufacturing units.
NOTE OF THANKS
I must assure our stakeholders that we have built our business with the long-termobjective to emerge as Sarvada Sarvottam (The best always). This should empower us toremain the last person standing during a business trough and be the first off the blocksduring a revival. We believe that this desired positioning will be validated during achallenging 2020-21. As soon as growth returns we expect to start enhancing value in anattractive way once again.