With an improvement in demand in the post-Covid era, Century Plyboards is planning a Rs 650 crore capital expenditure (capex), its largest in recent times, over the next two years.

The company will add a greenfield plant, medium-density fibreboard (MDF) unit in South India at an estimated cost of Rs 450 crore. The unit is expected to be operational by financial year (FY) 2023. Details of the state where the unit would come up and its capacity are yet to be finalised.

The other aspect is related to brownfield expansion. The company is ramping up capacities at its MDF plant at Hoshiarpur in Punjab by 67% (from 600 cu m per day to 1,000 cu m per day) at an estimated cost of Rs 200 crore. Commercial production will start in the next 12 months.

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According to the company, nearly 80% of the capex will be funded through internal accruals, and 20% would be through debt.

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Currently, the company’s plywood and laminate units operate at over 90% capacities, while MDF units are at 100%. The particleboard unit is operating at 110% capacity. Some improvements in the particleboard units were made recently, the benefits of which are expected to be visible in Q4 results of Century Ply.

The plywood manufacturer has already hiked the prices across categories like plywood and laminates, MDF and particle board on the back of increased raw material costs–chemicals and timber–as well as higher shipping and freight charges. Hikes vary between 2% to 10%, depending on categories.

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