August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 1 of 18
Before reading this report, you must refer to the disclaimer on the last page.
Century Plyboards Ltd. Absolute : LONG
Relative : Overweight
Annual Report Analysis Regular Coverage
Building blocks for future growth Building Materials
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Rating Information
Price (Rs) 259
Target Price (Rs) 333
Target Date 30th Sep'18
Target Set On -
Implied yrs of growth (DCF) -
Fair Value (DCF) -
Fair Value (DDM) -
Ind Benchmark BSETCD
Model Portfolio Position NA
Stock Information
Market Cap (Rs Mn) 57,587
52.61 % 28.0%
52 Wk H/L (Rs) 314/154.45
Avg Daily Volume (1yr) 300,223
Avg Daily Value (Rs Mn) 71.4
Equity Cap (Rs Mn) 222
Face Value (Rs) 1
Bloomberg Code CPBI IN
Ownership Recent 3M 12M
Promoters 72.0% 0.00% -1.34%
DII 3.6% -0.39% -0.77%
FII 13.2% 0.38% 1.41%
Public 11.2% 0.01% 0.70%
Price % 1M 3M 12M
Absolute -13.3% -0.2% 16.6%
vs. Industry -12.9% -7.4% -0.9%
Greenply 1.6% -5.4% 1.9%
Greenlam -3.8% 15.3% 25.7%
Consolidated Quarterly EPS forecast
Rs/Share 1Q 2Q 3Q 4Q
EPS (17A) 1.9 2.3 1.8 2.6
EPS (18E) 1.5 1.9 2.4 3.2
We analysed Century Plyboards’ (CPBI) FY17 Annual Report and key takeaways are:
CPBI posted revenue/EBITDA/PAT growth of 11%/13%/13% for FY17 led by higher
contribution from commercial veneer and laminate divisions, even as the
plywood division posted flat growth due to demonetization and subdued real
estate activity during FY17.
Plywood sale volumes/revenues have grown at a 7%/10% CAGR over FY13-FY17
while laminate sale volumes/revenues at a 16%/18% CAGR over the same period.
Average capacity utilization for the plywood division in FY17 stood at 84% vs. 94%
in FY16 due to capacity expansion at the company’s Guwahati unit. Average
capacity utilization for the laminates division improved from 89% in FY16 to 103%
in FY17.
GST implementation is expected to reduce the pricing differential between
branded and unbranded plywood products by 10-20%. In laminates, the pricing
differential has reduced by ~10% due to a lower tax rate (18% under GST vs. 28%
earlier).
Company currently has 1,800 dealers across India. About 90% of CPBI’s sales are
derived through nation-wide retail channels.
CPBI has incurred Rs 759mn (4.7% of sales) on Advertisement & Promotions in
FY17 vs. Rs 629mn (4.3% of sales) in FY16.
CPBI’s new MDF plant in Punjab is expected to start commercial operations by
1HFY18-end. Management expects the plant to operate at 60% utilization in
FY18. The new particle board plant has already stated operations in FY17 and
generated revenues of Rs 165mn during the year.
CPBI has lined up a capex of Rs 2.9bn over the next two years, which includes
increasing its laminate capacity by 50% in FY18. We expect CPBI to post revenue/EBITDA CAGR of 21%/21% over FY17-FY20E with revenue
ramp-up coming from the new MDF and laminate capacities. We currently have a LONG
rating on the stock with Sep’18 TP of Rs 333.
Change in Estimates
No change in estimates
Consolidated Financials
Rs. Mn FY17A FY18E FY19E FY20E
Sales 18,187 21,567 27,419 32,225
EBITDA 3,321 3,670 4,865 5,838
Depreciation 593 778 1,010 1,058
Interest Expense
302 421 475 389
Other Income 25 125 151 158
Reported PAT 1,881 2,098 2,871 3,271
Recurring PAT 1,905 2,104 2,871 3,271
Total Equity 7,149 8,845 11,181 13,782
Gross Debt 6,114 7,832 6,812 5,258
Cash 672 387 450 282
Rs Per Share FY17A FY18E FY19E FY20E
Earnings 8.6 9.5 12.9 14.7
Book Value 32 40 50 62
Dividends 1.0 1.5 2.0 2.5
FCFF -2.7 -5.9 9.1 10.6
P/E (x) 31.0 28.0 20.5 18.0
P/B (x) 8.2 6.7 5.3 4.3
EV/EBITDA (x) 20.0 18.7 13.9 11.3
ROE (%) 31% 26% 29% 26%
Core ROIC (%) 19% 16% 18% 18%
EBITDA Margin (%) 18% 17% 18% 18%
Net Margin (%) 10% 10% 10% 10%
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 2 of 18
Chairman’s message – key takeaways
During FY17, CPBI encountered downstream sluggishness marked by poor offtake
from the country’s real estate sector, and the impact of demonetization that
pushed back purchases by one quarter. Additionally, a number of unorganized
manufacturers in the country priced their products approximately 40% lower
than CPBI products, by the virtue of being largely outside the tax net.
CPBI recognized that when the competitive environment became increasingly
challenging, it would be impossible to pass on cost increases. Hence, it decided
to improve profits internally by (a) investing in process engineering that brought
down costs and enhanced per person productivity, (b) commissioning
manufacturing facilities in tax-efficient locations, (c) commissioning peeling
facilities in international geographies to reduce costs, and (d) launching
premium products that resulted in faster cash generation.
The company’s tax rate currently remains one of the lowest in India’s interior
infrastructure products sector, while its capacity utilization (including some of
its oldest facilities) is amongst the highest in the sector.
Demonetization catalyzed the shift of transactions from cash to the digital mode
and from weak brands to established ones. GST rollout from Jul’17 is expected
to accelerate the shift from unorganized to organized brands. CPBI is
attractively placed to capitalize on this shift because it (a) possesses one of the
widest portfolios of interior infrastructure products, ranging from mid-priced to
premium across application types, (b) has capacities that provide attractive
economies of scale, (c) has a pan-India manufacturing footprint, and
(iv)possesses an aggressive product pipeline across the foreseeable future.
CPBI expects to generate incremental revenues of Rs 7bn-10bn during FY18 and
additional Rs 5bn in FY19.
GST to lead to a paradigm shift in India’s organized panel product market
Currently, India’s interior infrastructure products industry comprises more than
3,300 plywood units, of which >2,500 are exempt from duties and more than 700
units are partially exempt.
Before GST, products manufactured by India’s organized plywood brands were
subject to VAT, excise duty and CST, making them costlier than the unorganized
sector. After GST implementation, organized manufacturers would be able to
undertake brownfield expansions more readily, offer superior products at even
more affordable prices and optimize logistics costs arising out of a reshuffling of
warehouses.
Pre-GST, the excise duty turnover exemption limit was Rs 15mn, and a majority
of unorganized players kept their turnover lower than this limit to avoid excise
duty payments. Under GST, the exemption limit has been reduced to Rs 2mn,
brining almost all smaller unorganized players under the tax net. This implies
that the price differential between organized and unorganized players should
decline by 10-20%, accelerating the shift to organized players. Prices of cheap
plywood prices are likely to rise by 5-7%, bringing them at par with MDF prices;
this in turn would increase MDF penetration and benefit all branded players.
With exemption limits declining, unorganized players will need to rely solely on
bank financing and would no longer be able to access credit for purchasing
plantation timber. As costs rise, a number of inefficient plants could shut
operations. On the other hand, idle capacities of organized players could
progressively come on-stream to address emerging demand.
To capitalize on this shift, the company is strengthening its trade relationships
and commissioning warehousing hubs in Guwahati (to service North Eastern
India), Kolkata (to service Eastern India), Chennai (to service Southern India),
Roorkee, Karnal (to service Northern India) and Nagpur (to service Western
India), enhancing logistical effectiveness.
Wood panel industry
Consumption of Indian panel products has grown at a 15-20% CAGR for the
organized segment as compared to overall industry growth of 5-7% over the past
few years.
Plywood division
Currently, plywood constitutes almost Rs 180-185bn or ~63% of the entire wood
panel market. Organized players account for 25% of the plywood segment.
Over the last 5 years, the plywood industry has posted a CAGR of 6-7%.
Organized players have grown at above 12-13% as they continued to gain market
share from unorganized players.
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 3 of 18
The shift from the unorganized to organized is expected to continue as: (a)
organized players continue to invest in brand building (2.5-3% of revenue) and
create awareness on product quality, (b) organized players have volume and
supply chain advantages, and offer product innovation, a wider choice and
warranty, (c) the price differential between organized and unorganized players
is expected to drop post GST implementation, thereby inducing customers to buy
branded products at a slight premium, and (d) GST would ease the movement of
goods for organized players (as they comply with all interstate regulations) and
reduce lead time to markets considerably.
Over the past decade, increase in real estate prices (cost of ownership of a
house) has far outstripped the rise in retail prices of plywood. Thus, the cost of
plywood or MDF is now less than 1% the cost of a house, compared with 2-3% a
decade ago, making them more affordable.
Currently, 15-16% of overall plywood demand in India is replacement demand,
which is lower than 35-40% in developed countries. The company expects
replacement demand to contribute ~20% of overall plywood demand by FY20.
As per industry sources, Indian plywood makers have begun to import logs from
Papua New Guinea, Solomon Island, Malaysia, Vietnam, Cambodia, Gabon,
Liberia and Cameroon in the face of increasingly stringent environmental
regulations.
According to ITTO’ s Sep’16 Tropical Timber Market Report, more than four
Indian plywood companies are considering setting up plants for the production of
veneer in Gabon, which has become an attractive investment destination for the
wood industry in recent years.
Exhibit 1: Market size of various wood panel products (Rs bn)
Particulars 2011 2012 2013 2014 2015 2016 2017
Plywood 96 107 120 132 150 180 180
Decorative Veneers 11 12 13 14 16 18 20
Laminate 36 39 41 44 46 48 50
MDF 9 11 12 13 14 15 16
Particleboard 16 18 21 23 26 27 29
Source: Company Annual reports & various industry reports
Laminates division
Total market size of laminates and decorative veneer in India is Rs 70bn.
Unorganized players formed about 30% of the market in 2015 vs. 40% in 2013,
reflecting a clear and gradual shift towards the organized market.
In FY17, growth of the laminate market in India remained <10% while the
company‘s laminates business registered a volume/value growth of around
16%/14%. Value-added and premium quality products drove business in this
segment.
Unorganized players offer lower-priced laminate products in the range of
0.6-0.8mm thickness and are used as liners inside furniture items.
There is a huge export market for Indian laminate manufacturers. Exports
contributed 5% to CPBI’s revenues in FY17.
CPBI is a market leader in the lucrative 1.0mm laminate category with >60% of
the company’s capacity addressing this segment.
The company was the first to introduce deep-texture laminates with 1mm width
to provide a wood-like finish. It is also one of the market leaders in the niche
gloss laminates market, where it commands a premium over regular laminates.
CPBI is increasing its capacity by 50% in FY18 at a capex of Rs 625mn.
CPBI is among a handful of players offering textured (up to 1mm) laminates and
high gloss laminates. The company has 650+ design SKUs.
CFS division
FY17 saw traffic congestion at the Kolkata port owing to geopolitical tensions
between India and Nepal. This resulted in diversion of the Kolkata-bound cargo
to Haldia. The port authority took time to divert the cargo to CFS, which slowed
cargo movement to and from the port.
The company consciously decided to curtail cargo handling to service its existing
clients better, enabling it to report a 3.7% growth in revenues.
CPBI has also introduced a software to facilitate 100% digitization that would
provide real-time information to customers. It installed GPS devices to track
trailer movements, and provided handheld devices to team members to access
data remotely from any location at any point.
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 4 of 18
The company is executing an expansion project on surplus land available at its
existing facility.
The Kolkata dock system reported steady growth in cargo volumes during FY17.
In Mar’17, container throughput crossed 600,000 twenty-foot equivalent units –
an all-time high. In FY16, the port had handled ~578,000 twenty-foot equivalent
units. Kolkata Port Trust (KoPT) rose to the sixth position in FY17 vs. seventh
position in FY16 in terms of cargo handling among India’s major ports.
Cargo handling in FY18 is set to touch 636,000 twenty-foot equivalent units.
MDF industry
MDF demand is driven by increasing preference for ready-made modular
furniture, modular kitchens and ready-to-move offices/retail outlets, among
others. MDFs can also be used in shelves, decorative moldings, doors, furniture
and laminated flooring.
The market size of the Indian MDF segment has been pegged at Rs 16bn.
Around 70% share of this market is accounted for by organized players and 30%
by imports. Globally, MDF constitutes ~65% of total panel products compared to
~4% in India, with plywood constituting the rest.
Key highlights for FY17
CPBI currently has a market share of 25% in India’s organized plywood market.
The company currently has 31 marketing offices covering over 630 cities and
townships, addressing 1,800 dealers and nearly 16,500 retailers. It also has 40
depots spread across the country.
In plywood, CPBI has increased its plywood capacity by 42% to 2.1mn cbm over
the last six years. Its existing capacity is ~60% higher than its closest rival and
capacity utilization was at ~85% in FY17. It is commissioning another facility in
Punjab to address any incremental demand.
In laminates, CPBI is the third-largest player in India’s organized segment. The
company is scaling up its existing capacity of 4.8mn sheets by 50% in FY18. It
currently has 650 SKUs and adds around 100 designs every year, thereby
addressing both the largest segment (1.0 mm laminates) and value-added
segments (textured and exterior laminates).
In FY17, CPBI commissioned its 54,000cbm particle board manufacturing facility
at a capex of Rs 600mn at Chennai; ~50% of the raw material requirement was
accessed from a captive unit in the plant’s vicinity and the rest from third-party
units located in the hinterland. The plant can generate Rs 1bn of revenues at
peak capacity utilization.
CPBI is in the process of commissioning India’s largest MDF unit in Punjab with a
capacity of 0.198mn cbm. The plant is expected to start commercial production
by H1FY18. Management expects to generate revenues of Rs 1.5bn by FY18-end.
On the marketing side, CPBI has established displays across retail outlets, a
critical influencing factor when the consumer is faced with me-too products. It
has also strengthened product showcasing through in-shop/out-shop activities.
In laminates, offtake is catalyzed by the frequency of catalogue renewal. While
the industry practice is to introduce new catalogues every second year, CPBI has
started introducing four catalogues a year, which have been well received by
dealers.
The company has launched new products like fiber cement boards and PVC
boards to create a presence in the non-wooden segment. These products find
applications in wall cladding, outdoor decking, creating mezzanine floors and
external wall decoration, among others. The fiber cement building products
comprise around 20% of India’s building material market. The company reported
revenues of Rs 150mn from both these products, and has also launched molded
panel doors.
Currently, the fiber cement boards and PVC boards are imported but once the
company achieves critical mass, it will move to direct manufacturing.
Working capital turnover improved from 70 days in FY16 to 65 days in FY17.
CPBI achieved a capacity utilization of 103% in Laminates in FY17 vs. 89 % in
FY16 while in Plywood, capacity utilization stood at 84% vs. 90% in FY16.
About 90% of CPBI’s sales are derived through nation-wide retail channels. It has
a widespread portfolio catering to 78% of demand from the plywood market.
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 5 of 18
Total capex incurred for the MDF plant till FY17-end was Rs 2.8bn. Management
expects the plant to reach 60% capacity utilization in FY18 itself, given that
almost 40% of India’s MDF requirement is still imported. Going forward, the
company will use its MDF produce to make doors, pre-laminated boards and
wooden flooring.
Average increase in salary of non-managerial employees was 11% while the
average increase in salary of managerial employees was 117%.
Currently, CPBI sources 5% of its veneer from Myanmar and Laos. It is now
looking for other alternative species of plywood like Beech from Europe, MLH
(Mixed Light Hardwood) from Solomon Islands and Papua (New Guinea).
Exhibit 2: Plywood division performance
Volume (in ‘000 cbm) 2013 2014 2015 2016 2017
Plywood 150 172 192 189 197
Commercial Veneer 35 44 36 44 45
Deco Ply 5 5 6 9 9
Sales (Rs mn)
Plywood 6,653 7,600 9,216 9,028 9,581
Commercial Veneer 950 1,314 1,372 1,569 1,844
Deco Ply 658 734 883 1,138 1,185
Avg. Realization (Rs/cbm)
Plywood 44,327 44,070 47,938 47,738 48,518
Commercial Veneer 27,112 30,190 38,611 35,602 40,536
Deco Ply 141,747 136,457 141,949 130,475 135,302
Exhibit 3: Laminate division performance
Particulars 2014 2015 2016 2017
Laminates Volume (in mn sheets) 2,913 3,601 4,260 4,925
Pre-laminates (in mn sqm) 1,090 1,302 1,031 904
Exteria Grade Laminates (nos.) 2,692 11,274 7,693 9,781
Sales (in Rs mn)
Laminates 1,863 2,446 2,930 3,242
Pre-laminates 488 420 371 333
Exteria Grade Laminates 17 69 52 61
Avg. Realization
Laminates (Rs/sheet) 639 679 688 658
Pre-laminates (Rs/sqm) 447 323 360 369
Exteria Grade Laminates (Rs/sheet) 6,166 6,103 6,759 6,247
Exhibit 4: CFS division performance
CFS 2014 2015 2016 2017
Volume (in TEUs) 53 73 82 80
Revenues (Rs mn) 543 703 837 876
Average realization (Rs/TEU) 10,262 9,694 10,204 10,930
Exhibit 5: Capacity utilization across the 3 divisions
Capacity Utilization 2014 2015 2016 2017
Plywood 82% 92% 94% 84%
Laminates 81% 75% 89% 103%
CFS 34% 46% 53% 51%
Exhibit 6: CPBI has been steadily increasing its sales force and dealer base to enhance
penetration in tier 2/3 cities
1,106 1,204
1,424 1,505
1,600
1,800
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2012 2013 2014 2015 2016 2017
Dealer Base
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 6 of 18
Exhibit 7: Share of laminates in the overall revenue & EBITDA mix has been steadily
rising as the company continues to focus aggressively on this segment
Exhibit 8: A&P as a percentage of sales has been increasing as the company continues
to focus on brand development and increasing visibility
289
445
705
789 822 841
0
100
200
300
400
500
600
700
800
900
2012 2013 2014 2015 2016 2017
Sales Force Nos.
79% 79% 77% 73% 76% 74% 71% 72%
16% 16% 18% 19% 19% 19% 20% 21%
3% 4% 5% 5% 4% 5% 5% 5%
2% 1% 1% 3% 2% 3% 3% 2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017
Plywood & Allied Products Laminate & Allied Products CFS Others
65% 61% 62% 56%
75% 75% 69% 70%
19% 19% 19%
21%
10% 13% 18% 19%
16% 20% 19% 23% 14% 12% 13% 11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017
Plywood & Allied Products Laminate & Allied Products CFS
199 301 329
484
339
658 663
792
2.9%
3.6%
3.1%
4.5%
2.8%
4.4% 4.3%
4.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0
200
400
600
800
2010 2011 2012 2013 2014 2015 2016 2017
Advertisement & Promotion (Rs mn) as % of Sales
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 7 of 18
Exhibit 9: WC cycle has improved since last 2 years due to an increase in payable days
55 57 60 63 69
71 82 76 66 60
43 35 27 38
57
84
104 110
91
72
0
20
40
60
80
100
120
0
50
100
150
200
250
300
2013 2014 2015 2016 2017
Receivable Days Inventory Days Payable Days Cash Conversion Cycle
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 8 of 18
Exhibit10: Segmental Breakup
Segment Info 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue 7,382 8,238 9,621 12,204 12,267 13,851 16,821 17,733 19,291
-Plywood & Veneer 4,945 5,923 6,577 8,551 9,045 10,495 12,458 12,615 13,561
-Laminates 1,276 1,207 1,392 1,973 2,316 2,587 3,213 3,623 4,123
-Logistics 12 204 338 547 592 547 708 860 884
-Others including Adhesives 171 130 111 129 315 223 442 564 438
-MDF 71 34
-Plain Particle Board 0 252
EBIT 352 663 797 1,118 994 1,273 2,286 2,567 2,822
-Plywood & Veneer 37 362 373 691 615 1,069 1,867 1,830 2,144
-Laminates 54 101 111 210 192 81 230 442 519
-Logistics -14 78 76 189 216 155 218 278 235
-Others including Adhesives 19 8 15 20 -29 -32 -28 17 -77
-MDF 4 -2
-Plain Particle Board 0 -69
EBITM (%) 5% 8% 8% 9% 8% 9% 14% 14% 15%
-Plywood & Veneer 1% 6% 6% 8% 7% 10% 15% 15% 16%
-Laminates 4% 8% 8% 11% 8% 3% 7% 12% 13%
-Logistics -117% 38% 22% 35% 36% 28% 31% 32% 27%
-Others including Adhesives 11% 6% 13% 16% -9% -14% -6% 3% -18%
-MDF 6% -5%
-Plain Particle Board -28%
Segment Assets 4,288 5,330 6,291 7,824 8,382 9,171 10,465 11,419 15,547
-Plywood & Veneer 1,896 2,484 2,786 3,800 4,372 5,473 6,469 6,191 6,923
-Laminates 722 772 973 1,314 1,649 1,804 1,903 1,835 2,015
-Logistics 372 725 822 788 749 665 635 633 579
-Others including Adhesives 66 54 32 63 157 140 80 154 121
-MDF 0 428 2,887
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 9 of 18
-Plain Particle Board 0 528 586
-Unallocated 596 708 1,046 1,161 1,455 1,090 1,378 1,651 2,436
Segment Liabilities 2,600 3,042 3,507 4,692 5,885 6,257 6,292 6,169 8,461
-Plywood & Veneer 415 805 718 595 868 772 891 1,199 1,526
-Laminates 99 92 258 396 185 182 202 267 412
-Logistics 4 39 49 48 58 45 50 56 84
-Others including Adhesives 24 10 14 16 2 39 49 36 66
-MDF 0 0 241
-Plain Particle Board 0 17 18
-Unallocated 2,043 2,061 2,380 3,570 4,771 5,220 5,100 4,593 6,113
Capex 380 438 419 613 709 442 487 1,120 2,972
-Plywood & Veneer 65 94 135 299 444 313 284 304 270
-Laminates 14 13 80 156 216 119 69 87 98
-Logistics 294 328 160 53 49 10 54 92 64
-Others including Adhesives 0 0 1 0 0 0 0 0 0
-MDF 0 192 2,258
-Plain Particle Board 0 443 150
-Unallocated 81 3 131
Depreciation 169 189 242 265 267 332 448 437 523
-Plywood & Veneer 70 80 93 95 105 142 200 221 189
-Laminates 36 32 34 44 83 109 134 110 102
-Logistics 10 32 73 81 76 75 106 101 109
-Others including Adhesives 0 0 0 0 3 5 8 6 2
-MDF 0 0
-Plain Particle Board 0 121
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 10 of 18
Exhibit 11A: Raw-material breakup at standalone level
Particulars (Rs mn) 2010 2011 2012 2013 2014 2015 2016 2017
Sales 7,079 8,771 11,183 11,312 12,840 15,648 16,357 17,825
Raw Material Cost 3,481 4,569 5,688 5,951 6,388 7,019 6,338 6,010
y/y growth
31% 24% 5% 7% 10% -10% -5%
% of Sales 49% 52% 51% 53% 50% 45% 39% 34%
Timber Log 1,815 2,105 2,310 2,745 2,916 2,658 2,325 1,179
y/y growth
16% 10% 19% 6% -9% -13% -49%
% of Sales 26% 24% 21% 24% 23% 17% 14% 13%
Veneer 707 1,019 1,634 1,452 1,551 1,943 1,766 2,216
y/y growth
44% 60% -11% 7% 25% -9% 25%
% of Sales 10% 12% 15% 13% 12% 12% 11% 10%
Chemicals 424 678 775 810 924 1,211 994 1,122
y/y growth
60% 14% 5% 14% 31% -18% 13%
% of Sales 6% 8% 7% 7% 7% 8% 6% 5%
Paper 362 436 538 688 758 1,001 1,081 1,250
y/y growth
21% 23% 28% 10% 32% 8% 16%
% of Sales 5% 5% 5% 6% 6% 6% 7% 6%
Particle Board 59 104 208 255 240 206 172 188
y/y growth
76% 101% 22% -6% -14% -16% 9%
% of Sales 1% 1% 2% 2% 2% 1% 1% 1%
Others 114 227 223 - - - - 54
% of Sales 2% 3% 2% 0% 0% 0% 0% 0%
Exhibit 11B: Raw-material breakup at consolidated level
Particulars (Rs mn) 2011 2012 2013 2014 2015 2016 2017
Sales 13,601 16,674 11,817 13,477 15,884 16,409 18,187
Raw Material Cost 4,710 6,762 6,368 6,952 7,281 6,855 7,037
Timber Log 2,241 2,521 2,950 3,166 2,658 3,087 1,179
y/y growth
12% 17% 7% -16% 16% -62%
% of Sales 16% 15% 25% 23% 17% 19% 6%
Veneer 1,194 1,753 1,608 1,754 2,142 1,463 3,244
y/y growth
47% -8% 9% 22% -32% 122%
% of Sales 9% 11% 14% 13% 13% 9% 18%
Chemicals 734 820 868 991 1,274 1,053 1,122
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 11 of 18
y/y growth
12% 6% 14% 29% -17% 7%
% of Sales 5% 5% 7% 7% 8% 6% 6%
Paper 436 538 688 758 1,001 1,081 1,250
y/y growth
23% 28% 10% 32% 8% 16%
% of Sales 3% 3% 6% 6% 6% 7% 7%
Particle Board 104 208 255 240 206 172 188
y/y growth
101% 22% -6% -14% -16% 9%
% of Sales 1% 1% 2% 2% 1% 1% 1%
Others - 921 - 44 - - 54
% of Sales 0% 0% 0% 0% 0% 0% 0%
Exhibit 12A: Breakup of other expenses at standalone level
Particulars (Rs mn) 2010 2011 2012 2013 2014 2015 2016 2017
Power & Fuel 334 422 515 243 270 311 301 374
y/y growth
26% 22% -53% 11% 15% -3% 24%
% of Sales 5% 5% 5% 2% 2% 2% 2% 2%
Transport and Freight 223 304 404 405 515 602 642 707
y/y growth
36% 33% 0% 27% 17% 7% 10%
% of Sales 3% 3% 4% 4% 4% 4% 4% 4%
Sales Commission 25 45 64 75 72 106 116 111
y/y growth
77% 43% 17% -4% 47% 10% -4%
% of Sales 0% 1% 1% 1% 1% 1% 1% 1%
AD, Promotion + Communication Exp. 199 301 329 484 339 658 663 792
y/y growth
51% 9% 47% -30% 94% 1% 19%
% of Sales 3% 3% 3% 4% 3% 4% 4% 4%
Rent Rates and Taxes 62 77 112 129 160 165 165 192
y/y growth
24% 45% 15% 24% 3% 0% 16%
% of Sales 1% 1% 1% 1% 1% 1% 1% 1%
Repairs &Maintenance 86 96 111 112 135 135 145 128
y/y growth
11% 16% 1% 20% 0% 8% -12%
% of Sales 1% 1% 1% 1% 1% 1% 1% 1%
Others 712 1,008 452 469 730 728 779 852
y/y growth
42% -55% 4% 56% 0% 7% 9%
% of Sales 10% 11% 4% 4% 6% 5% 5% 5%
Total 1,643 2,255 1,989 1,917 2,221 2,706 2,811 3,156
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 12 of 18
y/y growth
37% -12% -4% 16% 22% 4% 12%
% of Sales 23% 26% 18% 17% 17% 17% 17% 18%
Exhibit 12B: Breakup of other expenses at consolidated level
Particulars (Rs mn) 2013 2014 2015 2016 2017
Power & Fuel 269 312 353 345 427
y/y growth
16% 13% -2% 24%
% of Sales 2% 2% 2% 2% 2%
Transport and Freight 409 522 602 645 720
y/y growth
28% 15% 7% 12%
% of Sales 3% 4% 4% 4% 4%
Sales Commission 75 72 106 116 119
y/y growth
-4% 47% 10% 3%
% of Sales 1% 1% 1% 1% 1%
AD, Promotion + Communication Exp. 508 372 693 668 799
y/y growth
-27% 87% -4% 20%
% of Sales 4% 3% 4% 4% 4%
Rent Rates and Taxes 134 185 191 186 217
y/y growth
38% 3% -3% 17%
% of Sales 1% 1% 1% 1% 1%
Repairs & Maintenance 115 142 146 161 145
y/y growth
23% 2% 10% -10%
% of Sales 1% 1% 1% 1% 1%
Others 488 849 800 841 959
y/y growth
74% -6% 5% 14%
% of Sales 4% 6% 5% 5% 5%
Total 2,000 2,455 2,891 2,961 3,386
y/y growth
23% 18% 2% 14%
% of Sales 17% 18% 18% 18% 19%
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 13 of 18
Exhibit 13: Major revenue derived from domestic market
Geographical Segment 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue
India 6,122 7,154 7,806 9,019 11,564 11,722 13,284 16,132 16,753 18,306
Exports 213 228 241 302 341 512 542 660 949 898
Segment Assets
India 3,788 3,682 4,566 5,205 6,607 6,797 7,986 8,941 9,523 12,901
Exports 20 10 57 41 56 130 95 146 245 210
Exhibit 14: Domestic vs. imported mix in raw material & purchases
Particulars (in %) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Imported 60% 71% 71% 61% 50% 67% 73% 65% 71% 65%
Domestic 40% 29% 29% 39% 50% 33% 27% 35% 29% 35%
Exhibit 15: Foreign exchange outgo
FX Outgo (Rs mn) 2010 2011 2012 2013 2014 2015 2016 2017
Raw Material 2,040 2,513 3,193 3,903 4,417 3,745 3,662 2,868
Purchases 60 45 224 430 294 785 851 1,055
Fixed Assets 62 16 26 112 59 44 333 1,212
Stores & Spares 7 10 6 30 7 5 6 48
Travelling Expenses 3 3 4 4 7 18 8 12
Others 33 42 72 104 93 56 53 276
Total 2,204 2,629 3,524 4,583 4,877 4,653 4,914 5,471
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 14 of 18
Exhibit 16: Non-cash working capital breakup at a consolidated level- higher payable days led to improved cash conversion cycle
Particulars 2010 2011 2012 2013 2014 2015 2016 2017
Receivable Days 55 50 54 55 57 60 63 69
Inventory Days 77 71 64 71 82 76 66 60
Payable Days 69 64 47 43 35 27 38 57
Cash Conversion Cycle 62 57 72 84 104 110 91 72
Exhibit 17: Breakup of consolidated cash-flows – OCF remained flat yoy due to muted operational performance
Particulars (Rs mn) 2010 2011 2012 2013 2014 2015 2016 2017
Operating cash flow before WC change 2,631 2,917 2,823 1,309 1,623 2,701 3,052 3,170
Tax Paid 335 363 365 105 117 337 468 429
Changes in Working Capital -310 -701 -1,239 -600 -1,168 -877 344 -536
Operating Cash Flow 1,986 1,853 1,219 604 338 1,488 2,928 2,205
Capex -1,455 -3,144 -4,466 -1,570 -644 68 -1,498 -3,047
Others -223 -54 296 -10 -62 60 109 3
Investing Cash Flow -1,678 -3,198 -4,169 -1,581 -706 128 -1,389 -3,044
Change in debt 152 1,651 4,641 1,967 372 -650 -461 1,409
Change in Equity 0 0 0 -5 0 0 20 15
Others -474 -334 -1,306 -419 -653 -927 -1,084 -302
Financing Cash Flow -323 1,317 3,335 1,543 -281 -1,577 -1,525 1,122
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 15 of 18
Exhibit 18: Particulars of forward contract entered against unhedged foreign currency exposures
Particulars (Rs mn) 2010 2011 2012 2013 2014 2015 2016 2017
Foreign Currency Term Loans 271 45 665 791 730 559 610 931
Buyer's Credit 930 1,424 2,277 2,788 2,139 1,538 1,819 2,134
Trade Receivables 57 41 56 130 95 148 235 199
Trade Payables 544 471 407 281 170 198 219 365
Trade Advances - - - - - 292 551 693
Exhibit 19: Contingent liabilities breakup
Commitments & Contingent Liabilities 2010 2011 2012 2013 2014 2015 2016 2017
BG & Bill discounted 93 126 57 191 262 128 146 166
Letter of Credits 95 209 310 592 563 387 414 626
Export Obligation against EPCG License Scheme 6 2 7 11 13 32 39 32
Claims 69 117 103 156 260 174 199 302
Capital Contracts 89 27 140 49 30 874 1,606 1,142
Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 16 of 18
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Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 17 of 18
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Century Plyboards Annual Report Analysis Absolute – LONG Relative – Overweight
August 27, 2017 Analyst: Pranav Mehta (+91-7574885494)/Dhaval Dama (+91-8128694102) Page 18 of 18
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