When you started your journey in the business, how has the trend changed since then? How are you seeing in terms of the difference that has come in in the industry since then as well?
I think that there has been a sea change in the industry from the point when I joined to now. I think that the scales have changed massively. And earlier when you talk about the wood panel industry, there was always this thought about limitation about how the industry is small, how the industry is unlikely to become to the scale of what it could be in other countries and so on so forth. Now, the mindset has changed rampantly. Today, as the leading wood panel manufacturer in the country, we believe that the opportunity in front of us is tremendous and we are barely at the tip of the iceberg. So, I think in terms of scale when I joined I think a thousand crore used to be an aspirational turnover and today we are talking about doing a 12,000 crore turnover by the year 2031.
Absolutely, that was one of my questions as well, but 12,000 crores, what are the factors do you think that is going to be driving that? By 2031 what is going to be the key factor that is going to be driving this growth? Yes, we are seeing that real estate boom. We are seeing the growth overall in infra side as well. What else do you think is going to be driving the growth for the company?
I think you have hit the nail on the head. The real estate sector has finally recovered after I would say a decade in a weak position. Now, that the cycle has changed, all building material products are going to benefit and I believe as market leaders in our category we are going to see a substantial benefit out of the same. Alongside that, the proliferation of products in our industry, earlier it was limited to plywood, mainly plywood, today you have plywood, you have laminates, you have MDF, you have particle board, each of which has created a niche for themselves in the market, each of which has become scalable in itself. And considering that we are the only company that is present in all four and growing in all four, I think that we have an opportunity that is somewhat unparallel. Absolutely, and what has been interesting also is that Century has always been at the forefront in terms of innovation that you all have come out with. In the plywood segment, you are much ahead in terms of a lot of innovation that was there. Is this the key to success or is that the key to be there as well?
I think that definitely that has been one of the keys to success, but one important point is that we are a company that is not afraid to adapt. We are a company that is not afraid to change. If you look at it in the plywood industry, we would be one of the newer companies. There are a lot of legacy companies that were there in the market before us and that were doing substantially well.
But with every change that happened whether it is in the industry, whether it is in the country, we were able to actually keep up pace and perhaps accelerate.
In the year 1996 the Supreme Court had banned the felling of trees of natural forestry in the country. While a lot of the industry died out because of that, we were able to pivot to imported timber very soon and as a result of that we actually grew stronger.
Then from the benefits that we got, we invested that in innovation and in brand building which at that point in time most Calcutta based businesses would not have taken up in a similar manner. So, I think that the biggest advantage for us is the ability to think, the ability to think different and innovation of course becomes a key part of the same.
Absolutely, and now what is it that you think that requires innovation, which segment where are you seeing that something new is a possibility that one could see coming now?
In all our segments.
That is going to be interesting. So, I should watch out for a lot of innovation then in the next couple of years from you?
Definitely, because we believe in Kaizen, all these disruptions are good but the disruption by definition only takes place once in a while. We believe that continuous improvement is required and each of the product categories we are working on something different, something new, something a little better.
Some of these will work out, some of these may not work out but that effort goes into every single category and I would say that it sounds funny but it goes into it every single day, unless you are ideating, unless you are thinking, you are not going to be able to encash on that opportunity.
There is one thing that China has a lot of in terms of scale you could say and the way they manufacture. So, do you think that India could reach that level anytime soon or we have a long way still to reach that scale?
I think that in China there are inherent advantages and there are inherent disadvantages. For instance, the ingenuity that an Indian organisation or Indian entrepreneur has I think China perhaps will not be able to match the same. We have grown up in very different circumstances that being a more regulated country whereas India being a more free market economy, the way in which our entrepreneurs behave and the way that we think is very different to perhaps what Chinese entrepreneurs do.
I think that gives us a big inherent advantage. Secondly, in terms of the size of the opportunity, China’s opportunity was huge but today India’s opportunity is perhaps the biggest in the world.
Lastly, the cost of manpower, any product like plywood or laminate, which is manpower intensive India has an inherent advantage in having a much-much cheaper labour force, a much cheaper cost of human capital and that I think holds us in good stead.
What about that ready-made furniture, the imports over there from China has reduced, so that is already that we are seeing the basis of a bit of a benefit there. Do you think there is a lot of opportunity there and for the company, how do you see that segment?
I think there is massive opportunity there as you very correctly pointed out. The only thing that I feel is that these shifts they do not happen overnight. The ecosystem starts to develop and then once the ecosystem is ready, you see an exponential change.
I think that ecosystem has started to develop. Over time we will have that exponential change. Over time we will see the industry doubling, tripling, quadrupling in terms of ready-made furniture from India being sold in India as well as around the world.
The starting blocks are there and this opportunity perhaps over the course of next decade is going to be something that is going to be very interesting.
What is your thought about exports? How do you see that growing? FY23 number that I am going to be taking, it was around 4% for your total revenues. Moving forward, where do you see if I say a FY28, for five years down the line? What is it that one could expect from the export side given that we have such a big opportunity, then are we looking at a bigger chunk from that side?
Two caveats to that. The first being that even though the export turnover is going to double, triple by FY28 and we are fairly certain of that, the domestic turnover is going to increase as well that makes the percentage part a little difficult to quantify.
Having said that, the export opportunity is massive. You see even if the furniture manufacturers who we are selling our products to, they start exporting on a larger scale, for us the sale might reflect as domestic but the demand is being created by a demand for exports out of India. It is difficult to quantify it but it is definitely going to take place.
But what about overall when you say for Century MDF segment, how do you see that moving going forward? Plywood is the biggest part right now, but do we see that changing? Over the years we have seen that mix coming to that change but do you think MDF is something that will boom in India?
The way that I look at it, I would say that our plywood category is likely to grow at 10% plus per annum. Our laminate category is expected to grow at 15% plus per annum. But our MDF and particle board category will grow at 20% plus per annum. So, there will be a slight shift. However, having said that, all the segments that we are in are growing and I can see a big room for growth across these segments in the future as well.