I am sure, that we are In top 10 brands In wood panel Industry and trade, -Says Mr Surendra Kumar Agarwal, Managing Director, Austin Plywood
Austin Plywood has entered into wood panel industry with manufacturing of a commodity product – Commercial Face Veneer for plywood but with passion of making good quality products, organised work culture and proper marketing system they have established their brand ‘Austin Plywood’ in top quality bracket in one decade. During one 2 one interaction with The Ply Reporter, Mr Surendra Kumar Agarwal, Managing Director, Austin Plywood is confident that in next decade he will have more new products and focused marketing and branding strategy to benefit the entire ‘Austin brand’ partner. Here is a brief on the interaction which would be very helpful for other emerging industry players.
Q. How is the market of plywood? When the demand will improve?
A. It's a changing time for wood panel industry. People are hesitant in spending because they are having more money in banks which is accounted so it has become precious. Now compared to earlier habits, money in your account has become very crucial so people are not spending that freely but slowly it will happen after they get use to. In India, people have been spending with currency but demonetisation and GST has changed that. People are taking time to adjust with their account money spending. Slowly when the working system will become more organised and accounting based, people will come out and spend again. I think, it may take one or two years.
Q. Who do you think have stopped spending, salaried class or business and trade people?
A. See, the salaried class is also changing but that impact is little. It is the higher earning people who were spending more with liquid cash, but now they have seized their expenditure and organising their systems as per new organised ways and rules. They are the actual spenders but are currently on hold. That is why markets are expressing some slowdown noise, but In fact it is just a changing phase in India. It also added due to some banking tightness but gradually things are going to improve.
Q. Your brand Austin Ply is upper price bracket plywood, is the sales of Austin ply has seen any impact in this period?
A. There is certainly a change in demand. Earlier we were able to sell our entire production volume very easily but now we have to work hard to achieve our target volumes. Thankfully we are able to manage our volumes as earlier thanks to our brand position, market focus and quality. Now the competition is tough hence we are working harder.
Q. Despite of competition, it is evident that you have achieved a decent growth. Can you brief us with some numbers?
A. Yes, we have indeed grown during last 4 years. We have been growing approximately 18 to 20 percent every year during last 4-5 years. We are aiming to grow by 15 to 20 percent this year as well and we are very focused in our product and markets hence we will certainly achieve that.
Q. You have base in Kolkata but when opportunity came, you went to Guwahati, Myanmar. Is there any plan for putting up a plant in North India or elsewhere?
A. We are studying few options nothing finalised now.
I am very sure that even a small 2 presses plywood plant of North India can do very well, if they focus on factory management; keep proper account of every raw material and pieces dispatched with entire market outstanding reflected in organised way.
Q. If the benefits are there, then why North based factories have not been able to sell plywood the way Kolkata companies do?
A. Simply because they don't spend on marketing, team, branding and they don't dare to market themselves. We use lot of material from North India in our factories here but we focus on quality, systems and marketing, but there, people have not really worked on organised and brand pattern instead they have done only price competition, that is why no one in Plywood segment has been able do big despite of every favourable points there.
Q. How do you see, plywood demand coming from OEM and furniture making segment in India?
A. I am not very optimistic about OEMs buying because they prefer to use mostly cheap product. Even if they are buying calibrated plywood but that is not actually calibrated instead it has huge thickness variation. So for us, the OEM segment is a competitive sector mostly seeking economical product line. There, MDF is also a preferred product because it has lower cost.
Q. What is your view on MDF replacing plywood panel in the country?
A. The MDF is certainly changing some market scene but it is mostly in cheap product segment. The lower end plywood product is being taken by MDF specially the thin plywood like 4mm, 6mm and 8 mm. The panelling where lot of 6 mm and 8 mm were being used is now preferred to be MDF instead of plywood. Some furniture manufacturers who were manufacturing from plywood are also using MDF now to bring down the cost and better polish.
Q. Will you plan to enter in MDF segment in near future?
A. No, we will not enter in MDF because it is already too crowded and saturated with production capacity.
Q. Where do you think AUSTIN brand is ranked at, in today’s times?
A. I am sure, that we are in top 10 brands in wood panel industry and trade. Rest I am not in any race or I also do not have any support data that where our brand stand in rank. On the basis of quality, price, volumes and respect for brand, we find ourselves well placed above any midlevel competition. We are not in competition with cheaper segment, instead our material is sold and accepted with confidence and pride by the dealers across country.
Q. How do you see the face veneer market in India? Your comment on Okoume uses?
A. Okoume has been a great boost for plywood industry. We are using 100 percent Okoume's high quality grade face veneer and every buyer is happy with this change. We don't use Gurjan face veneer anymore. The face veneer trend is no more revolving around Gurjan, in fact people are happy with right thickness and good quality material. At Austin ply, we are using the best quality Okoume face material with over thickness of 0.4 mm plus.
Q. Your brand has a strong presence in BWR plywood segments which is getting notoriously attacked by ‘dipping grade duplicate Marine grade plywood material. Don’t you face problem with this cheap product from dealers and buyers?
A. don't think so instead we think otherwise. Quality customers are growing in market and there are many such customers in South - and East who are educated and visit to their site on Sundays, check the quality of material and enquire about it from the market. Austin plywood has won the trust of many such customers and dealers and hence despite of being priced in premium category material our sales are growing in every state.
Q. After GST, what are the implication that you notice in wood panel industry and trade?
A. After GST, there is tremendous pressure on informal business people. Customer always bargains and plywood companies have become habitual of accepting pressure to sell material on lower price hence they have been saving that on tax manipulations. Why to take risk and pass that benefit to market ? I think if you sell any plywood at a fix rate without any manipulation, the buyers will accept. Earlier total tax was between 29 % to 35 % that included Excise, VAT, Octroi, Surcharge etc. where as today it is just 18 % . So why to fight competition by manipulating with tax, instead the companies must opt for good work, fearless work and charge genuine what one should do for growth ? Even if you sell less volume initially, it will grow slowly for sure.
We have indeed grown during last 4 years. We have been growing approximately 18 to 20 percent every year during last 4-5 years.
Q. Do you think, small plywood industries will sustain the present market pressure changes in tax regime?
A. I am very sure that even a small 2 presses plywood plant of North India can do very well, if they focus on factory management; keep proper account of every raw material and pieces dispatched with entire market outstanding reflected in organised way. Because a small plywood plant is easier to be monitored by the owner themselves but they have to do it sincerely and in proper books so that they just don't loose their money to defaulters and plant leakage.
In India, plywood is sold at Rs 35 and at Rs 120 also and both have their quality and market acceptance and respective segment. A simple thing to understand here is, if a material is selling at Rs 35, then the same can sell at 39 also if they want to sell but there has to be acceptance of this fact among producers and traders. If the small plant owners focus on their strength, quality and personalised approach, they will do very well in coming future. It wrong for them all to fight within each other and sell on reduced price under pressure. If everyone performs well in organised formal way then GST will further reduce from 18% to 12%. Small factories have to understand that selling cheap or saving on tax will harm them instead they must work towards transparent and profit.
Q. How has been your journey with Austin plywood manufacturing so far?
A. It has been a very good experience where we have come from a commodity product of Face veneering to Branded Plywood. We have established our brand in top quality bracket in one decade which is a pride for entire Austin Plywood family. I thank and congratulate all team members and stockiest and retail partners of our Austin plywood. I am confident that in next decade we will have more new products and focused marketing and branding strategy to benefit the entire 'Austin brand' partner.