0.92 MM Category in Decorative Laminates: Is It a Gain or a Bigger Pain?

person access_time   10 Min Read

Oversupply and clutter in decorative laminates market is leading to new strategies, new price segments and substandard quality gimmicks to grab market share. The laminate industry is busy scripting many new ideas and efforts to have more sales so that they can sustain in the industry. With entry of 100 plus new entrepreneurs in manufacturing of HPL during past 8 - 9 years, there have been arrival of various products like digital laminates, color core, anti finger print, exterior grade, MR tuff, Sparkle, apart from innovative textures in Veneer, stones, SF, Gloss and Synchro categories. The product differentiation between cheap and pricy or good quality and cheap quality are often getting blurred due to unhealthy competition. In HPL, people want to grow nationwide within a year but the product is accepted according to Indian diverse culture, liking and affordability of different classes of people. Hence there are various cases of miscalculated plans and products that looks good in short term but act as a loss maker for a company in long term.

A similar act is popular now a days that can be called as a BACK DOOR entry to 1.0 mm segment largely known as '92 folder' category. This '0.92 mm laminate is around up to 20 to 30 percent cheaper than average brand 1 mm price levels. As per Ply Reporter's findings, 0.92 folders have been a fast growing category among mid segment and unorganized players who are desperate to sell anything above 0.8 mm or does not want to produce liner because it does not allow them to earn. So far, there are around 50 folders and uncountable Nonfolder brands in this category in different market. With around 7.0 lakhs sheets per month volume '92mm folders' are the talk of trade just because it allows the new comers to place their feet on a non - sticky wicket.

The Ply Reporter Presents You an Overview in Detail with Industry Orientation on Its Present Status and Future Prospects.

0.92 MM Decorative Laminate: the Present Scenario

According to the industry people, the of 0.92 mm decorative laminate is selling due to over competitive market condition where the dealers asked for lower price products from manufacturers.

Market sources say that the retailers are happy as they can get double benefit from it, on purchase as well as sales. Laminate is largely a market segment where endusers involvement and knowledge about the product is negligible, and the retailers are getting the benefit of lack of knowledge and awareness among customers and they offer 0.92mm in the name of 1mm, so they are largely promoting this segment.

The distributors are confused with penetration of 0.92mm decorative laminates. The conventional market segment of 0.8mm and 1.0 mm, both have a new category in middle that neither can be ignored nor can be liked. In fact it has disturbed the inventories, price range benefits and hit the brand image. With small size 125 to 160 chips folder, the distributors are selling it to retailers and the retailers sale it to their customers saying it 1.0 mm so the sales on 1.0 mm is silently been shifted to .92 where as the innocent customers still has a different perception.

On the other hand, the manufacturers are also facing trouble with fluctuation of rates of raw material as due to competition they are somehow sub-standardized the product to 0.92mm but the processing, material cost, marketing and display in folder is just equal to 1mm. In this way their margin has decreased and in case of a little fluctuation of raw material cost their manufacturing cost increases a lot, ultimately this whole operation is hitting the industry very hard.

“A distributor of decorative laminates Mr Sunil Nahata, Shivshakti Laminates, Surat says that the good showroom owners do not like 0.92mm as they want to maintain their goodwill. Architects and interior designers are also not entertaining it, but the retailers and small shop owners are happy with 0.92mm”

In the wood panel Industry, the share of retail base is huge (nearly 70%) so the volumes are increasing by adding new markets every day. Some of the distributors opined that if they do not opt for 0.92mm they are losing some market share at some extent hence it has become a forced product despite of our unwillingness. The new distributors are not hesitant for ‘92 category’ and are happily doing it as the retailers and customers are also not technically aware and do not differentiate in both the thicknesses. “Since the rate of 0.92mm is comparatively less than 1mm the factory owners dealing with 0.92mm at lower margin and this is not a bad deal for distributors’ network,” adds Mr. Sunil Nahata.

The basic reason for cheap 0.92 folder is said to be a level of compromise with quality of raw materials. A reputed laminate brand manufacturer comments that B grade craft paper, mix of Urea resin and substandard design paper like a '1st or 2nd copy of the original paper' brings down the cost which will dent the retailers goodwill but it can be only gauged in next 3 to 5 years.

An Ahmedabad based raw material supplier expressed to the Ply Reporter that 'low quality materials are being used frequently by many players in '92 segment' that is produced in North and Morbi at larger quantity. The unfortunate part is 'Quality is being not much focused in 92 categories just because it is created with intent of a cheap copy of 1.0 mm and sold for profit not to offer a quality material of 1.0 mm standard. It is not an issue at present but down the line it may be an issue with market revival and customers' awareness.

Mr Hasmukh Sah, Surface Concept, Mumbai said, “There is high production in laminate but the demand is nearly half. The scenario is getting much competitive which is ultimately lowering the margin for all channel partners. This is a product segment which is impacting both 1mm and 0.8 mm with the ratio of 7:3. Only the retailers are getting benefited in future. We have not yet started selling 0.92mm but with rainy season we will definitely start with three four brands. We were not intended but witnessing the huge demand we are bound to go for it. I think the future in ‘92 segment’ is imminent as it is replacing 0.8mm and 1mm both.”

Mr. Rajesh Sah, Metro Laminate, Mumbai says, "Currently the laminate market is slow and the demand is less in every segment but in different area different products are doing well. In tier2 or big cities, 0.92mm is getting more supply but less in demand. We are not satisfied with its movement as there is much more inventory cost and lesser margins. Secondly, the product quality is also being somehow compromised. In this segment manufacturers are least benefited plus their brand image is also hit. Its future is not good on the whole and with increasing awareness among customers its demand will eventually remain limited" 

Smaller towns and rural area are target market for this product offering. Its future is uncertain but the lower price market segment is huge, which are attracting towards this segment so, its demand and market may expand. Mr Shankar Kanoi of ACE Mica said that being similar to 1mm offering in terms of textures, colours and designs, 0.92 mm is picking up and hitting the market of 1mm. Today it is becoming standard and with ISI norms which allow 10 % variation it is already as a standard thickness to 1mm. The states of Maharashtra, MP and South Indian states are opting for this thickness. North market is not very much affected as 0.8mm is more acceptable in this region."

Those who are in this segment are definitely selling volumes these days but this segment is much more price sensitive due to which there is certainly compromise on quality. Mr Varun Khemka of Safe Decor said, “People are manipulating and getting volumes in sales. The market is definitely growing. But, today the market is not like earlier days when any textures or design papers were being used, instead importance of design papers has grown with more focus on quality so cost has gone up. Besides, some of the 0.8mm brands have uplifted their catalogue and they are offering very attractive collection which is certainly going to compete with 0.92mm in future."

"This is not a wise decision for manufacturers, but since it is there and dealers are asking for it hence the manufacturers are producing despite of difficulties and very low margin. Mr Kanji Patel of Rebecca Laminates, Morbi, Gujarat says, "In coming time it will increase much more confusion and there will much more fighting and disputes with dealers / distributors. If the chemical price continues for six month above Rs 120, there will a big loss to the manufacturers. 1mm sales have dropped to 50 percent at present in some regions and they are not going to sustain with this slow movement. And they are offering schemes and other perks to dealers / distributors."

He added, "The manufacturers who have come up with 0.92mm are axing their own brand image and pulling down their quality product sales. If they want to sustain in the industry must skip this for betterment of industry as well as their own prosperity. If this is being sold against 1mm, the customers will not compromise with quality. The manufactures are in pressure not to compromise with quality but the margin is less. We have lost the retail segment also in competition as we are already on the edge for margin with 0.8mm, liner grade in projects. With this 0.92 mm segment, the future is not good as by the next two years this product will be out of the market and the industry is going to loss a huge amount."

Mr. Darshan Patel, Sales Director, Suntouch Laminate Pvt. Ltd says that the industry is changing and the cost cutting is going on at every level due to competition. 0.92mm is market requirement on behalf of distributors and dealers, it is not a need. As the manufacturers are doing it unwillingly it cannot be said as a wise decision. But, the industry is changing and cost cutting at every level due to competition.

"As of now nearly 30 percent market in west has faced disturbance due to 0.92mm folders. Today 0.92 mm is dominating and this thickness cannot be considered as standard the dealers / distributors are promoting it and the market forces are compelling the manufacturers to offer this thickness as well" said Mr Patel.

Today the scenario is changing, as the dealers are becoming distributors. New distributors are promoting it with small folders. In the channel, the retailers are benefited as the customers are un - aware about technicality and raw material used during manufacturing. The study conducted by The Ply Reporter also indicate that 0.92mm will move ahead with price conscious market forces and new emerging distributors in HPL segment who will ultimately force distributors to opt for this. The Ply Reporter found that laminate manufacturers readiness for 0.92 folder is there but largely out of no choice left. The margins are at bottom but investments and risk of future remains high because it limits the scope of creativity due to stiff competition.

Mr Shankar Kanoi added, “It is moving on the track of liner laminates but the difference is that it has to bear the inventory and promotional cost and burden of discontinuation unlike liner grade which is without folder and is sold in bulk.” Customers are not much educated technically so whatever the retailers say they have to believe. Mr Rajeev Agarwal, Director, Ideal Laminates said that in projects also, the products uses are ‘under thickness’ with the pressure of bringing the rates down make this as a wise offering.

The future of 0.92mm laminate folders cannot be considered as bright because somewhere, the consumers are being cheated and it cannot go on. Only the retail segment is supportive to its growth but the projects, architects, interior designers are not opting for it as a genuine product. In coming days the competition will increase to further level which will put the industry in more difficulties and may led to further compromise in thickness and imitation.

The views on ’92 category’ has been quite against from manufacturers and distributors perspective but few have different opinion. Mr Janak Vyas, VP (sales & marketing), Cedar Decor Pvt Ltd said “Today 0.92 mm decorative laminate market is growing due to its reasonable price against 1mm. Secondly, in 0.8mm everybody were using Indian print but in 92 mm largely use of China or Indian premium papers are being used that makes it an improved product. Also since 0.8mm is not produced in full thickness during last three years, hence this segment is getting more complaint in applications. He added, “Today the price difference between 0.8mm and 0.92mm is less than 0.92 and 1mm so people are opting for 0.92mm in place of 0.8mm and feeling proud to using premium range as 1mm.”

It is seen that new catalogues in 0.92mm HPL are rising and factories are offering then with small catalogue hence its stocking and availability is better than 1.0 mm. This basic reason has promoted this category in smaller towns. Mr Janak is of view that 'With 92 folders the distributors are able to increase the sales point with different dealers in same cities and they are able to operate to multiple sales point at same investment as of 1.0 mm and this is the biggest reason that new entrant distributor are asking for 0.92mm thickness.'

If asked it is not a standard thickness of product, Mr Janak reasoned that 30 years before when 1mm was introduced against the standard 1.5mm, the same situation has arisen and people talked on same notes. So, in coming time this thickness will be an acceptable range, because the number folders floating in the market in 0.92mm is much more than that of 1mm.

On the contrary Mr Jagdish Ahuja, Director, AICA Laminates said, “This is a kind of cheating in laminate industry. There is no such product in the market which can be termed as standard. Just to gain some profit the traders, dealers/distributors are playing trick for better margin. In this game the manufacturers are also in panic situation but the market forces are compelling them to opt for this thickness.” 

Mr Anil Kejriwal of Oum Lamitech Private Limited said, “ I do not see it will last for longer period because a designer product wants customer awareness and branding and in 0.92mm no one is moving on with branding due to very less margin. For example as we are doing 0.72mm against 0.8mm but it has not replaced 0.8mm till now. 30 years before there was no other option for thickness other than 1.5 mm and also the industry was not technologically advanced. Today 0.92mm demand in western region is much more but in other parts is less because every distributor is trying to maintain its position in the market and it gives them quick space. It is impacting other thicknesses only in western regions. With increasing awareness its sales will be going down.”

While, Mr Janak Vyas believes that It's an industrial change which has revived the industry with a number of small distributors. It is also true that the brand with higher sales have comes down in competition. But, one has to observe that the same brand has been divided into several parts and attracted the sales of same strength altogether. The difference is that the number of catalogue as well as the range of product has increased. Earlier the distributor had to invest three times more amounts for being operational in laminate business.

“Today the good small retail counters are becoming distributors these days and operating in different regions with less investment and the market is expanding. The remote customers are also benefited and the industry reach is also expanding. This will impact the top brands in 1mm in urban markets but the rural market will be happy to get quality products at reasonable price at their door stapes. People are observing it as an up gradation of 0.8mm in terms of price difference,” said Mr Vyas.

CONCLUSIVE NOTE: The new comer laminate producers discussed the price pressure with raw material supplier from where the motivation for “lesser thickness 1.0 mm kind folder in 10 % lesser thickness” was born. As the idea was benefitting raw material seller, Laminate producer and extra margin for retailer, it became a short cut road to success for new or struggling laminate manufacturers. Many of them accepted the proposal and began as experiment basis. The only looser is the end customer who has a different perception. Some of the industry players introduced it as an option to the requirement. Today the market is driving its demand with interest of retailers. But now the manufacturers have understood the cost and lost the ground for the company due to 0.92 folder.

There are many who are manufacturing and offering but surely it was a short term trick, when not many were in the game. Once every one has the same 0.92 thickness folder is available as an option, the distributors margins are noticing the drop and disappearing sales of 1.0 mm from their kitty. At the end , conclusion is, distributors are offering but in the chain everyone knows, they have lost something. '92 category' laminates are here to exist because almost 50 factories have launched catalogues in this segment. But for next five years their 1.0 mm and their dream of becoming a brand is certainly at stake.

92 is a necessary evil which is needed for an aspirant company but it is not an established product category for an ethical brand that is operating in premium laminate segment. The choice depends on will power and capital power.

shareShare article

Post Your Comment