‘Those Who Are Smart Enough to Maintain the Capital Inflow Will Sustain, as the Demand on Credit Is Increasing in the Market’
Bangalore based Shreesh Impex Pvt. Ltd. is a group company of leading wholesale firm Shyam Plywood. They have been consistently taking the top rank of the highest sellers of Greenply in pan India since last 5 years. The Ply Reporter talked to the promoter of Shreesh Impex Pvt. Ltd. Mr. Dhananjay Poddar on present market trend and future of wholesale business.
Q. How do you see the sale growth of branded plywood segment?
A. People who are considered as upper middle class have interests in brands just to feel proud by using it. Branded segment should be much stronger as brand awareness is increasing and purchasing power of consumer is also increasing. The improving income of middle class is helping brand sale growth. Without brand they are not satisfied.
Q. How is your growth in this segment?
A. Definitely increasing and every year we are witnessing considerably good growth. We exclusively deal in entire products of Greenply, and we are proud to say that we have been
maintaining the highest seller rank of Greenply products all over India since last 5 years. Although it is fact that Brand never helps wholesalers, it helps companies.
Q. You mean for the big brands, there is no role of wholesalers?
A. For the big brands, wholesalers' role is definitely there. Those who are established brand can work with them. One will not promote those brands which are coming up in changing market scenario after GST.
Q. The importance of wholesalers is not much relevant in present scenario. What is your take on this?
A. In my opinion, India is a market which has product value range with huge difference. Whether there is difference, the role of wholesalers are much Important. Earlier the wholesalers were less and margin was greater with less competition. Now the mid segment retailers are also moving on to adopt wholesale route.
In laminate segment there are a large number of distributors are there. In Bangalore also there must be 200 distributors at least. Those who have turnover of over 5 crore annually are able to take laminate distribution. They cannot approach wholesalers as we have our fixed expenses in offices, staff and the fixed margin on investment. The small wholesalers are sustaining in the market with different approach of working as a parasite of manufacturers. We are not affected of that because we are facilitators and with strong base and strong capital strength we can do better at every extent without getting affected with them. If the small wholesalers and distributors say competition is much more, they are also right on their level.
Q. Do you think that some wholesalers are facing tough situation now?
A. Everyone wants to be a business conglomerate like Ambani, Adani, Birla, TATA, but it is not possible for all. They must have extraordinary efforts and approach, mind games or implementation of their thoughts. Everybody starting to the same thought but do not sustain for long in stiff competition, due to which they have to face failure.
Q. Do you witness growth in the segment, you were in five years before?
A. That segment is huge and is considered as nearly 70 % and the other segment is just 15 to 20 percent in India. There is scope of growth in other segment. That segment is so huge and those demands will never come down. In that segment also we are having good growth. While you travel across the country, you must have observed that every home, whether it is asbestos roofed must have a bed, a TV set and a wardrobe. In that segment also the use of particle board is very less. We have with the mentality to re - use the furniture by repairing and joining the broken parts, but do not throw it into garbage in just five years
Q. For a distributor like Shyam Plywood, how much challenging is the economical brands of big companies?
A. What product is sold at Shyam Plywood is lower in price by Rs 10 to the product offerings economical brands of big companies, because the big establishments need higher margin. Besides, their transportation cost is double due to product manufacturing at one place and branding at different place.
Q. Some small dealers are procuring material directly from the company, what should be done with them?
A. They will put the manufacturers in trouble, as their approach is to make payment after their product is sold. This is very difficult time now with this increasing trend. Everyone in manufacturing fraternity is approaching them with ready stock in offer. Especially in South India the brand awareness is high and competition is tough in comparison to North, East and West. In every product range the brand awareness is high in South.
Q. There is an observation that a lot of wholesalers are coming up with retail space and showrooms, why?
A. It is just an expansion of their venture with different approach. The investment required for wholesale, one can get same benefit with less investment so they are coming up with showrooms. Secondly, by this approach they explore different region as well. In the same city or place there cannot be two different entities for same offerings. So, they are moving on to different regions. We are doing different products with different brands and expanding but, it is to a certain extent.
Q. Have you planned to spread out of Karnataka as well?
A. We have plan for expansion this year. We are starting from Bangalore itself with retail and architects in Decorative segment, but not in showroom. We are looking for space. We are meeting them, who are in this trade.
Q. Do you think that any brand can play a greater role in veneer? How do you see the challenge from laminate to veneer?
A. We are selling veneer. We have stock and it is sold. It is a work like you once invest in it and fix it to a certain level with number of dealers it will be sold automatically. We do Teak and Recon veneer and sale it at different price range according to the customers' requirement. There is no challenge from Laminate to veneer. Again it is a matter of purchase capacity of customers.
Q. At present time, what is the mantra of Sustainability in business?
A. The growth in the market has come down to 8 to 10 % which was at over 15 % in 2014 - 15. That time everyone worked well and the capacity utilisation was maximum at the factory level. Whenever there is capacity expansion in the market, the growth of industry has come down. Those who are smart enough to maintain the capital inflow will sustain, as the demand on credit is increasing in the market. Those who are coming from factories to offer their ready product then the market will definitely go for credit. The market tendency is to commit for sixty days and consider it for 90 days. Despite that there is tendency to move it forward by saying it is not possible as the market situation is not good.
Q. Bangalore is known as IT city hub, and people here use Modular or readymade furniture made with Particle Boards and MDF, so how do you see plywood market future here?
A. I believe, Non - IT sector people are huge here. There are number of sectors in which people are also earning good. India is a huge country and it has a lot of segments from lower to upper class. Only from middle to upper class there are nearly 10 segments. The Indian's mentality is that furniture must be long lasting, whether they are living in bungalows or in a two BHK small houses. For a small house one has to be capable to spend 40 lakh rupees and this is not a small amount. They require durable furniture and one cannot expect longevity from MDF and particle board made furniture. In IT sector those who have attained huge growth and earning very well in just a few years, may think to change their furniture frequently, but a normal person does not want to change their furniture in just five years. People definitely care for money.
Q. Hence, the major sales of Prelam are in which segment?
A. The major sales are in projects. We do not consider home or offices with small manpower capacity as a project, only commercial establishments having larger manpower (nearly 500) deployment is considered as project.