Housing sector revival is going to play an important role and the government needs to give a major boost to the real estate sector, Keshav Bhajanka, executive director, Century Plyboards, told during a candid chat with Dimpy Kalra.
The real estate sector has not got the needed thrust yet, and I think the government will provide the needed thrust during the Budget. Housing sector revival is going to play an important role in providing a double-digit or high single-digit growth to the economy. For instance, the boom in the real estate sector has helped the Chinese economy to grow 8-9% for so many years. So, the government in its upcoming Budget should announce several incentives - like availability of loans and availability of cheaper loans to home buyers - to provide the required thrust to the housing sector. In fact, the housing sector is not doing good and I feel the sector will not be able to perform under the ongoing market conditions.
You need cheap products in the economy today because plywood becomes a bit expensive for affordable houses. So, we have launched two products, namely particle board and MDF, and they have performed well, in terms of growth, in the recent past. So, I think these two products will perform and continue to grow well. Plywood is showing moderate growth but as discussed earlier, the segment will not be able to perform well in the absence of bullishness in the housing sector. Laminate is another segment that is growing at a moderate rate, but we can’t see rapid growth in it.
The capex will be used in two sectors and they are medium density fibre-board (MDF) and particle board segments. Currently, we have a 600-cubic-metre capacity of MDF in Hoshiarpur, Punjab and the same capacity will be expanded by 450 cubic meters at a capital cost of around Rs150 crore. The previous 600-cubic-meter plant was established at an expense of Rs 350 crore but at the time of commissioning it, we left provisions to make sure that we must not face difficulties while expanding it. This is the reason that we will be able to expand 3/4th of the capacity by investing at just 40% cost. Thus, the first expansion will be made there.
The second expansion will be made in Uttar Pradesh, where we have received a license in recent past to set-up a particle board and an MDF unit. Particle board is a product that is providing good returns in the South and its EBITDA is more than 20% and we are using 100% capacity of the plant.
― Zee Media Newsroom