Turning Points of 2019 - North Based Plywood Industry Witnessed Closures

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The North Indian Plywood Industry faced the worst phase of their journey in 2019. The manufacturers were fighting on multiple fronts this entire year. Rising timber prices, quality of logs, drop in orders, poor payment recovery and lack of good and efficient team members were few of the vital weak spots that North India based units faced. On top of that, costlier admin and marketing cost, billing and taxation compliance and negligible banking support led to tough times for many partnerships-driven firms that run on low capital and low margins. The scenario was so tricky that many of the units in the North were looking for ways to stay afloat by bringing in partners or offering units for sale.

The scenario in Yamuna Nagar was reported to be on similar lines because there is the maximum number of units who do their cost & profit analysis in the Financial Year-end. According to local sources and timber merchants, around 70 units were facing uncertainty on their survival whereas a dozen of rent based plants had already handed over the key to the principals. The plywood units suffered because the operating margins for the plants dipped to minus levels due to the rise in raw material cost and unfavourable response from the market. It was reported that the capacity utilization had dropped to an average 55 percent in the year 2019 due to weaker demand scenario, whereas the Payment recovery cycle was reported to have extended up to 120 days following banking tightness and other liquidity issues in 2019. The Ply Reporter estimate that despite demand scarcity and liquidity crunch, the Plywood market size has reached 30,000 crores this year of which unorganized and mid segments players have around 85 % of market share.

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