‘Slow Payment and Hope for GST Reduction’ Force down Trade Orders

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The market scenario and inputs gathered during July and August is clearly showing a weak second quarter (July-September) for the wood panel industry. It is visible that very few Plywood panel, timber, laminate or related product manufacturing company is able to gather smooth run and in position to achieve their revenue target. The wood panel decorative industry and marketing houses are very skeptic about profits this year because of dent on the demands and balance sheets. The situation can be understood by looking at sales figures which is hinting “the dispatches in entire wood panel décor product category has dropped below by half in July and August month” due to absence of customers in the market. Market reports indicate that the new work sites/project are going very slow or halted temporarily because they are recalculating the GST led impacts and cost profit equations.

Apart from doubts and confusion regarding GST Compliances, the poor payment recovery is affecting the stocking and lifting of materials. The pressure is added due to unorganized and unreported work culture that is leading to capital crunch in books. Industry sources reveal that slow payment situation is major cause of present slowdown after GST and it will take at least 6 to 8 months to recover.

Festive time, Heavy rain and flood are another reason of slowdown in demand. Bihar, Assam, Gujarat, Mumbai, Rajasthan and UP are adversely affected due to heavy rain and flood and are still undergoing through logistic disturbances in many of its geographical areas hitting rural market to the lowest. Transit of materials is still affected due to heavy rain and water logging on roads and highways. According to The Ply Reporter market will lift up from mid-September and give some breath during November-December this year.

The biggest cause for a forced halt on orders is “The strong hope of GST coming down on plywood in next GST council meet on 9th September” which has prevented people and motivating them to wait till 10th September. Dealers are cautious about GST slab change announcement and hence very hesitant in giving orders. Almost 90 percent of the producers have passed on the complete GST to next level that has created a sudden load of 28 percent extra as immediate effect that has further added pressure on drop in demand and ply board consumption.

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