A STUDY ON CAPITAL BUDGETING TECHNIQUES TO IMPROVE FINANCIAL PERFORMANCE AT CENTURY PLYBOARDS (INDIA)LTD

This study has examined the application of capital budgeting techniques at Century Plyboards (India) Limited across a five-year period (2021–2025), employing PBP, ARR, NPV, IRR, and PI as analytical instruments. The primary conclusion is that while aggregate investment viability is confirmed by a positive NPV and a comfortably positive IRR, the temporal trajectory of annual efficiency metrics signals a meaningful and sustained decline in the marginal productivity of capital. The company's investment programme, while strategically necessary in the context of industry growth, has been accompanied by an escalation in capital costs and a compression in cash flow returns per unit of investment that demands managerial attention. On the basis of these findings, the following recommendations are advanced: •       Capital Structure Optimisation: The firm should review its financing strategy to reduce reliance on short-term borrowings for long-term investments, seeking to match asset and liability tenors more effectively. •       Post-Completion Audits: Systematic post-completion project audits should be institutionalised to benchmark actual cash flows against projected estimates, enabling continuous improvement in appraisal accuracy. •       Scenario and Sensitivity Analysis: Sensitivity analysis examining the effect of ±10–20% changes in key variables (revenue growth, discount rate, raw material costs) should be incorporated as a standard component of every investment appraisal. •       Working Capital Management: Tighter control over receivables and inventory — consistent with the observed increases in trade receivables and inventories — would improve operating cash conversion and reduce the gap between accounting profit and free cash flow. •       ESG Integration: In alignment with emerging regulatory requirements and investor expectations, the company should begin integrating environmental and sustainability metrics into its long-term capital planning processes. Future research may extend this analysis through a comparative multi-firm study across the Indian wood panel sector, or by employing stochastic modelling techniques such as Monte Carlo simulation to account explicitly for uncertainty in cash flow projections. Incorporating qualitative data from managerial interviews would further enrich understanding of how capital budgeting decisions are made in practice at firms of this type.

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