Phenol & Dollar Prices Are Painful yet Eye Opening Opportunity to Recheck Your Strength

person access_time   3 Min Read

The month of October extended an opportunity to plywood industries of Yamuna Nagar that if a Rs 100 per quintal price rise in timber can’t be passed on to the market, then what will be the scenario when 200 new peeling machines and units will come up in Uttar Pradesh in 2019 once new licenses are allotted? Eventually new industries in Uttar Pradesh will be choking the timber supply to the North based largest plywood cluster thus increasing their raw material cost to unprecedented levels.

The month of October and the previous one had various odds that riddled the wood panel and decorative laminate and veneer industry. Price of each major raw material sharply escalated that led to losses, panic and posed important questions about industry’s viability. There was no match between ‘sales and cost price’ specially when taxes paid in forms of income tax, GST (buying from sellers under composite tax) and cost of other compliance are genuinely calculated. The biggest jolt was felt to those laminate producing companies, who were happily producing 0.6/0.7/0.85/0/9 mm and cheap liner sheets. The phenol & dollar debacle presented a painful yet eye opening opportunity to such companies who somewhat realized the false calculation and price structure they were living with. Despite some price rise in HPL, majority of companies are still not at ease, because they somewhere deep inside know that ‘their business model is unviable.’

October witnessed sharp rise in Phenol + Formalin + Timber and equally sharp fall in payment collection. The month of October extended an opportunity to plywood industries of Yamuna Nagar that if a Rs 100 per quintal price rise in timber can’t be passed on to the market, then what will be the scenario when 200 new peeling machines and units will come up in Uttar Pradesh in 2019 once new licenses are allotted? Eventually new industries in Uttar Pradesh will be choking the timber supply to the North based largest plywood cluster thus increasing their raw material cost to unprecedented levels. Doesn’t the upcoming manufacturers in such locations need an analysis check? Working blindly will only create more chaos.

The on-going weak demand and phenol crisis is certainly an unwanted trouble, but it has offered an opportunity to recheck profitability cushion, fund strength and dealer’s behavior. It has extended a chance to find gaps with clue to choose the right price, a direction to choose a right channel partner and an urgent need to formulate right strategy for marketing and team building. In my opinion, the October crisis has offered a glimpse of the future that is filled with competition, compliance of law and cost analysis. It offered an opportunity to get a clue, whether your company can absorb, sustain and go on or come to a halt due to such jolts in business by 2020 and onwards?

The companies with brand, clear terms, right pricing (that includes cost + profit + taxes + interest) and have system for strict vigil on payment collections were silently smiling. They know, they have the solid footing, good enough to grow better, 2019 onwards.

Enjoy reading The Ply Reporter
Pragat Dvivedi

Founder Editor
Mail to “dpragat@gmail.com”, ( M) 9310612991.

shareShare article

Post Your Comment