Century Plyboard keeps its UP plans on hold

Century Plyboard keeps its UP plans on hold

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Century Plyboard, a leading plywood and MDF manufacturer, has decided to keep its capex plans in UP on hold for the time being. Earlier the company was planning to invest Rs 400-500 crore in Uttar Pradesh in wood based industry. However, the company now has decided to wait till the disposal of the PIL filed before green bench regarding all wood based licences issued by UP Government. The company will be awaiting the outcome of the PIL for which hearing is scheduled in February 2020.

PIL had complained that the state government’s permission to set up new wood based units in the state may lead to clandestine cutting of trees on large scale. Last year the UP government had issued provisional licences for establishment of new wood based industries to about 1350 units.

Last year Century Ply had decided against expanding the capacity of its Hoshiarpur unit in Punjab and instead set up a greenfield MDF manufacturing unit in Uttar Pradesh. Earlier the company was contemplating an expansion of MDF capacity from 600 CBM to 1000 CBM in Hoshiarpur by spending Rs 150 crore to meet the anticipated growth in the demand for MDF.

Company instead planned to invest Rs400-500 crore for building fungible capacity of MDF (600 CBM per day) and particle board (900 CBM per day) in UP. The proposed plant would have taken 15-16 months for commissioning (post clearance from the green bench). There are also certain benefits in setting up units in UP like a tax holiday by the state government and low transportation cost in the region. In addition to this, there is huge market available in the state.

In the near term, the company is now working on enhancing production from existing capacity in MDF by increasing capacity utilization to 115-120% and brownfield capex for particle board plant by increasing capacity by 20-25% by investing Rs4-5 crore in capex.