Gujarat also referred to as the Manchester of laminate industry in India and is credited for the evolution for designs in this product category. With time the industry expanded to different countries giving Gujarat state a good presence in the exports of laminates from India. Quality and good design is the backbone of a good laminate. However, as the industry sprung up, it witnessed mushrooming huge number of manufacturers leading to oversupply in the market. Correspondingly the quality and designs are taking a back seat and price is becoming important.
The Ply Reporter alongside powered by partner Match Graphics recently organized a webinar on “Gujarat Laminate Industry: Quality, Design or Price: What matters the most?” on August 9, 2020 which received wide success with over 20,000 viewership online on different social media channels. Here are excerpts from the webinar, what various experts think and spoke about the issues related to the Gujarat Laminate industry and where it is headed. Read below.
EFFECT ON SALES NUMBERS AFTER INTRODUCTION OF INNOVATIVE DESIGNS
MR VISHAL AGARWAL, DIRECTOR, HERITAGE LAMINATE: I agree, introduction of new designs reflects in our sales growth. Because we have been always offering good designs, we are able to charge price. When we do something good, we always get appreciated. As time goes and sales decline, again we have to come up with new designs without compromising the quality. So, in my opinion price is prime but the design definitely should be there with constant improvement.
MR VISHAL DOKANIA, DIRECTOR, CEDAR DÉCOR, PVT LTD (DURIAN LAMINATES): Laminate industry is growing more in volume. In 2nd and 3rd tear cities the growth is visible due to increasing affordability of customers, the distribution penetration by all companies, the availability of good quality and low price designs. So, when we talk about innovation, it reflects in equal manner in all thicknesses. Earlier 1mm was made with European plates and designs, so few people were able to buy those material. I don’t think 1mm is dropping but thinner material definitely going up in volume with good quality designs.
MR RAJIV AGARWAL, DIRECTOR, PEGESUS PANELS PVT LTD: When we present anything, its response comes in three ways, yes, no or wow! Any company who goes for 1mm, should go for the WOW feeling, otherwise selling laminate is rat race. Many of us come with different innovation, but making it reach to the targeted clients is important. Selecting right projects, architects or customers is much more important for the product which it has been made for. Bringing many designs without putting the required efforts to make it reach the target segment is of no use. We have to think on it. If we have to bring design for the customers in Bihar, the study should be made on that basis.
MR PRAVIN PATEL, MD, AIROLAM LTD: Quality and designs are the key factors that make the company sustainable along with excellent service and strong distribution network. We have obtained growth of 10% every year in volume.
ON REDUCING THICKNESSES OF LAMINATE FROM THE STANDARD THICKNESSES OF 1MM AND 0.8 MM
MR VISHAL AGARWAL: It is not so that 1mm is not cost effective or cheaper. It is only us who say 1mm is good as we like it. 1mm is the only thickness with which we can charge a higher price, and with the rest of thicknesses there is no concern and makes it inferior and sell at cheaper price. So, if the customers cost comes down at some point of time what is wrong with it?
MR KANTI PATEL: Through the small folders especially in 0.92 mm category, the manufacturers are giving tough competition to 1 mm. By this, they are harming to the industry. In my opinion 0.92mm should not be manufactured, with this we are destroying the trend. Laminate is the cheapest raw material for furniture. No one says that furniture is getting costlier due to laminate. It is not the case that the laminate sales are increasing by making it cheaper.
MR RAMESH RITA: International market is different from the Indian market, because there, the use of technology is prevailing more than that of India while in India both the labors, skilled and un-skilled are working. In our factory and furniture industry, the carpenters were very skilled but the second generation laborers are not so good so in every thickness level there will be difference with every sheet if we measure it.
GUJARAT vs NORTH INDIA IN VOLUME BASED APPROACH
MR AMRIT PATEL, SIGNATURE LAMINATES PVT LTD, AHMEDABAD: North is definitely more aggressive, but Gujarat has also learnt from the north with time, and now has started to focus on volume. Gujarat was continuing with tradition to have a press and its volume. Today volume is important but it does not mean to reduce the quality. By sticking with quality, Gujarat can find more markets across the country. Secondly, Gujarat was primarily focusing on the Southern market. Now their focus has diversified to other parts of the country like UP, Bihar, Odisha, Punjab, also. Initially in South 1mm was more popular but the lower thicknesses are also dominating there these days. So, in lower thicknesses also Gujarat has to maintain quality and go for volume to beat the competition. Earlier, there was no option other than European plates, but now a lot of Chinese and other options are there, so it has become an open game for all and Gujarat has to adopt the change.
In lower thicknesses also Gujarat has to maintain quality and go for volume to beat the competition. Earlier, there was no option other than European plates, but now a lot of Chinese and other options are there, so it has become an open game for all and Gujarat has to adopt the change.
MR SHASHIKANT GUPTA, CHAIRMAN, SUNDEK INDIA LTD: Change is universal, so everyone has to change voluntarily or non-voluntarily. People are changing their principle, strategy and need. In my opinion Gujarat did not go into volume game instead majority players diversified to elite products.
MR KANTI PATEL, DIRECTOR, RANGOLI LAMINATES, PVT LTD, MORBI, GUJARAT: If the folder presentation is good with good design collections, the sale is definitely there. The top sellers definitely approach Gujarat when they require exclusive designs. Some of the markets like Bihar and Southern parts, we have to focus on other ranges such as 0.8mm along with 1mm due to price competition and market evolving in that direction with the volume game started in North India.
MR RAMESH RITA, METRO LAMINATES, MUMBAI: The after sales service is definitely better in Gujarat. It is also true that their focus has changed from laminate to other products so the sale has dropped in 1mm
MR VISHAL DOKANIA, DIRECTOR, CEDAR DÉCOR, PVT LTD (DURIAN LAMINATES): Due to the tough competition, the supply is higher than demand right now. The basic microeconomics says if supply is greater than the demand the price gets affected. In the last 13 years, since we started in this industry, the prices of laminates remained nearly constant. If you see the inflation the cost of raw material and overhead is going higher, but the price of the product remained same. It definitely indicates that the margin is shrinking. This is the reason the volume game started, as with it the overhead gets divided.
ON MULTI-BRAND DISTRIBUTION SYSTEM AFTER COVID
MR VISHAL DOKANIA: There is a price range in every category. In 1mm, there are several price ranges starting from Rs 800 to Rs 2000 per sheet. If a large distributor deals in a wide network, one catalogue is not the right solution for everybody. So, how much market you want to capture, accordingly you have to keep different product segments to acquire greater sales numbers. If you want to sell certain volume, one catalogue is fine. But, here is ample opportunity, and every major city has nearly 1000 dealers, the same catalogue cannot be kept at the shops adjacent to each other
MR SHASHIKANT GUPTA: They are definitely facing difficulties as taking care of multiple babies is a bit difficult, this is a basic logic. The design which is really innovative and different from the rest of the designs available is absent from the market. Today, survival is possible for everybody in their own capacity. Those will be successful who will have unseen designs because the customer always asks for something different and unique.
MR AMRIT PATEL: Multi-brand is essential for different types of markets, for example in rural areas more costeffective product is preferred, but in urban areas, there must be innovative designs. So, maintaining two brands is essential, having said, managing multiple brands is quite difficult too. At present, the factories as well as the distributors are going through difficult situation with more number of brands in their kitty.
MR VISHAL AGARWAL: Selling multiple brands in same price range in different category is a difficult situation these days in terms of maintaining inventory, stock and service. A few of our distributors are maintaining two brands of Chinese products and they are doing justice to both of them and obtaining considerably good sales. But, one formula cannot be applied to the entire industry as well as the distributors. It has to be checked how much one is capable to manage the inventory and the distribution of catalogue.
MR RAMESH RITA:The working style of a distributor and his vision and approach is very important. In my opinion less than five percent people are able to manage the multi-brand precuts in same category with same price band
MR RAJIV AGARWAL: When a distributor adds a new brand thinking that the existing brand has become old and out dated and continues with this every passing year, they often don’t think about its market at that time. They don’t have a planning or strategy for it and just out of passion or pipeline suddenly include a new brand, usually they realize their mistake after three four years. It is the duty of the manufacturers to observe the capacity of the distributors when they appoint them. This is a trap for distributors and ultimately the burden goes to the manufacturers.
MR KANTI PATEL: For every distributor it is not good, only those who are doing justice to the multi-brand is good. After COVID if they are not able to do so they should reduce their folder.
PANELISTS SUGGESTIONS AND THEIR CONCLUDING REMARKS
MR RAMESH RITA: How we make our customers and traders feel, if we cordially maintain our relationships with fair trade, future is very good.
MR VISHAL DOKANIA: Even with COVID and three months gone in vain, we are still looking at top line growth this year. Our target was 15% but now I think realistically we are going to achieve 5 to 7% growth. I credit this growth only to one reason; listen to your dealers, distributors. End of the day they are not against you. So, our strategy moves with them in terms of design and even for pricing we talk to our distributors. We walk backwards according to their needs. The distributors and dealers are your partners and till the time they are not getting healthy margins, the manufacturers are not going to move ahead. We need to listen to their pain points, as at the end of the day they are your franchise.
MR AMRIT PATEL: Manufacturers should stick to their quality and the distributors should maintain mutual relations cordially.
MR PRAVIN PATEL: Only design and quality will not win the game. We will have to make a combination of economy ranges and also invest a lot in networking to disseminate the material to the target customers. The quality and thickness must be mentioned on the sheets and with the association of ILMA, we should come up with guidelines in this regards.
MR SHASHIKANT GUPTA: Thickness is not determiner of quality as in laminate, the surface bearing resistance, thickness does not count. I guarantee that Sundek 0.7mm will last longer than the 1mm of others and we have seen the customers’ feedback. The company should be truthful about what is being given to the customer. I support the standardization and the direction that with the support of ILMA we should go for it. Sundek always mentions what we are selling and what is the thickness etc. but most of the people not even mentioning the thickness in the folders and that’s why there is variation.
MR RAJIV AGARWAL: These days, in Gujarat people advice making small folders with not more than 100 sheets. If we make very small folder we cannot do our marketing.
An architect or interior designer needs everything in the folder because they have to deal with different purposes such as Homes, Hospitals, and Institutions, etc. In the short term, small folders can work but for a long term strategy we should have complete range. For that complete range we need to have warehouse at different places.
Distributors should understand that if there is high cost in order to maintain the quality, they must convey it to dealers that those players who are using better material, their cost will definitely go up. In this way, in the long term everyone is going to get the benefit out of it.
MR VISHAL AGARWAL: We should always be there for the customers and support the channel partners. We must provide all support to them. The manufacturers should help with solutions so that the distributors can compete with the competition before them with other brand or thicknesses.
KEY POINTS IN NUTSHELL
Gujarat was tired and stagnant and now again ready to move ahead, faster, work harder and lead the market. To obtain growth in the market only bringing new design is not sufficient and for that we have to develop complete eco-system. Besides, your material as well as the folders must be equally distributed to the target customers.
In terms of thickness, individuals must decide what suits them but it must be conveyed to the customers - what is the thickness and the quality of material. Making a wrong commitment makes the whole industry, manufacturers as well as the distributors suffer in the long run.
Standardization is mandatory, and if ISI allow it, there must be someone who can make it reach them that this ambiguity must be at least narrowed down. Secondly, if a product is sold to any customer, he must know what he is buying, that would be in the interest of our product category. The distributors have to think if they are going to play with multiple brands or play safe with a just 2 brands since the coming months may be tough.