In the series of Brand Buzz, Ply Reporter has interacted with many brand heads about how they have established their brand and obtained growth overcoming the challenges before them. We interacted with business heads of Orient Bell Tiles, Century Ply, Austin Ply, Dorby Mica and many more. On 24th January, Ply Reporter interacted with Mr Shekhar Sati, President (Sales), MDF & Flooring Division, Greenpanel Industries Ltd, an MBA with 25+ years of work experience in building material trade. He has worked with companies like Jaquar & Company, Orient Bell Ceramics, Simpolo Ceramics and Welspun Group (National Sales Head India and SAARC countries for flooring) at senior lever positions prior to joining Greenpanel Industries Ltd as President Sales MDF and flooring business. He has a history of turning around the businesses to achieve exponential growth. Excellent rapport in market with dealers, trade people and investor, successfully building and managing an excellent deliverable large team is one among his many competencies.
He has been associated with Greenpanel for the last 16 months. During this tenure he did a lot of strategic changes which helped MDF division, Greenpanel achieve more than double the growth, both in value and volume.
You came from other segment of building material industry sectors, that was basically organized but the wood panel industry is largely unorganized in perception as well as observation. How do you feel after entering into this industry?
Coming to this industry is altogether a new experience for me. I was in the building material trade only since I started my career formally from 2009. In sales one thing is common everywhere; that is the sales person has to be ready and capable to sell anything which is given to him. No matter either it is Plywood, MDF, Tiles, Faucets, Sanitaryware, Bathroom equipment, or the entire building material product etc except FMCG. So, the sales mantra is to have consistent habit and keep your focus clear towards being customer centricity.
This sector is being organizes a bit different, there are a few organized companies in plywood. In MDF also there are three to four brands that believe in branding and quality. The market is also evolving now, so the challenges are everywhere.
In wood panel industry, I traveled extensively across the country and visited almost every timber market like Delhi, Punjab, Gujarat, Rajasthan, etc and observed that theI traveled extensively across the country and visited almost every timber market like Delhi, Punjab, Gujarat, Rajasthan, etc and observed that the working with timber is different where showcasing the product does not have much importance. Now, Plywood and MDF are considered to be organized sectors. People understand the category and the dealers’ mindsets are also changing now.
Greenpanel is India’s largest manufacturer of wood panels and has state-ofart manufacturing plants in Uttarakhand and Andhra Pradesh that produce MDF, Plywood, Block Board, Veneers, Floorings and Doors. The MDF manufacturing capacity at Greenpanel is 5.5 lakh cbm/ annum. It is complimented with their robust distribution network of over 3000 dealers across the country.
working with timber is different where showcasing the product does not have much importance. Now, Plywood and MDF are considered to be organized sectors. People understand the category and the dealers’ mindsets are also changing now. Pros and cons are everywhere so I am enjoying this journey with having better understanding of the market.
A year ago MDF segment was going through over production and low sales volume but in last three months it has become the fastest growing segment, the capacity has almost exhausted now. What is the reason that everyone is growing currently?
The potential lies with all products and the market is huge as well. What is required is the right strategy, approach, thought, customer centricity as well as service oriented mindset. When I joined in October 2019, we were selling 8000 CBM in volume and expectation was to double it by March 2020. To achieve our goal, we had internal discussion about manpower resources, production capacity and market potential. I visited the plants, conducted market surveys and travelled extensively across the country to meet the dealers.
The structural correction was going on since the beginning of October 2019. You would be surprised to TERVIEW 92 know that in March 2020 itself we were able to sell 90% of our 21500 CBM production capacity from both the plants. Things were progressing as per the plan however the plans were temporarily derailed due to COVID-19. After the market re-opened, MDF sales witnessed an exponential growth due to many reasons. We had to be planned, prepared and strategize things accordingly.
What drove the sudden growth, post covid and how did you achieve it?
There are a few positive moves that have happened post COVID that drove the sudden growth. Anti-China sentiment made India the preferred seller. This led to many export queries. Our production capacity supported not just the domestic market but also exports. The government’s thrust to push local products, ‘Vocal for Local’ and ‘Make in India’ needs gaining momentum and the change in the mindset of the people, are some of the other factors that contributed to the growth of MDF. The dealers, distributors, OEMs and direct buyers, everyone is supporting the local industry that is why the economy is reviving so fast.
For growth, the work done by our team is commendable. We worked day-in day-out to achieve this growth, though in May 2020 when we reopened there was almost no business. In the Q1 we were at Rs 30 Cr sales that reached Rs 100 Cr in Q3. With all positivity and demand from furniture segment and other factors, MDF has become a hot selling product now.
Do you think that its benefit will go to other similar products in wood panel industry like laminate, veneer, plywood, etc, as you are catering a similar kind of product?
To some extent - yes, as we are also in that segment and doing Pre-lam MDF of ourselves. After March, we were selling 25,000 sheets of laminates from Rudrapur and similar number from South as well. Since last six months we are continuously selling 85,000 sheets from Rudrapur, apart from flooring and nearly 75,000 sheets from South as well. We also launched other products like veneered MDF, although there are many issues in raw material procurement, but that has also started very well. So, definitely it is benefitting all similar or family products. In other segment of wood panel industry like tiles all the companies in Gujarat are overloaded with export orders.
MDF growth after COVID has also affected its price, it went up by 10 to 15%. Will it go down or the demand will be softening in the next FY 2021-22?
The price hike happening now is just a co-incident. There are several reasons, like cost of raw materials (timber, chemicals like resin; formaldehyde, etc) have escalated by 35 to 40%. The price of Bagasse based particle board rose from Rs 18/sq ft to Rs 29/sq ft – almost 54% hike. So, despite having our own raw material base for wood, our own initiative of plantation, we are facing scarcity of wood. Despite a substantial price rise in raw materials, our product price hike wasn’t that steep. MDF as an industry has observed just 7% price hike in two phases. This is not the opportunity for making money; actually, it is minimum cost hike that has been passed on to the customers. So, everything has been very realistic and thoughtfully done.
Has the demand rise impacted the price or the other factors are responsible for it?
This is not a profit making game. The price rise is happening across the building material sectors, genuinely due to rise in raw material cost for the particular product. We deferred the price hike for quite some time. This was inevitable, since four years there was no price correction in the trade. No industry, factory, manpower, can run without price escalation. As we are aware there were logistic issues after COVID, which constrained the availability of raw materials supply that aggravated the situation further.
Our plants are at both the locations. We are present in almost all states now and in last one year we have appointed 400 new dealers and also touched that area where we didn’t have a presence till date.
Will the MDF demand sustain with IKEA and other readymade furniture players are growing rapidly?
MDF demand will definitely grow as the readymade furniture market is growing rapidly. We have still not touched E-commerce business segment and that is growing quickly. Apart from that people are now going to ‘B2C’ business category instead of just ‘B2B’. I have met a lot of people during my recent trip to South who are into E-commerce business. Today a lot of E-commerce players have come into furniture business like Homelane, Wakefit, Livespace, Pepperfry, Fabfurnish, Urbanladder, etc. IKEA is coming up in a big way with one more store in Bangalore and other areas like NOIDA, Gurugram are also in pipeline. They will also need MDF in large volume as MDF is good in quality and lasts longer. They will prefer something which is made in India only. There is an old saying “When the number of players are more, the competition increases”, but in my observation with more companies, the demand generation increases and the market flourishes. So, all MDF manufacturers should come together do something to promote MDF as a product category, since many people even do not know about MDF. In fact, before joining Greenpanel, even I was not aware of the wide applications of MDF.
Which part of the country is your favorite region that supports your business well?
Our plants are at both the locations. Our customers are everywhere from North to South, East to West and everywhere we are doing great! We are present in almost all states now and in last one year we have appointed 400 new dealers and also touched that area where we didn’t have a presence till date. That is another key for success. We have advantage that our plants are at North as well as South. There is potential in both the markets, but if I compare the teams, I think South is very organized and aggressive, as a result we were able to reach our full production capacity by March 2020 itself.
MDF market is very small, of the total market of panel industry, so there is a lot of room left for MDF companies to grow. Selling Rs 4000 Cr is not a great deal. We should reach at least 10% of the total market to make an impression
For West, Central and South market, we supply from South plant. We were able to do business of nearly 13,000 CBM earlier but last month we achieved 20,000 CBM. It is 40% growth in just three months time. This is due to inspiration to the team, we generated interest in them, we created healthy competition and rewarded the winning performers.
Visibility and presence across the markets is very important. Secondly, ease of business is also extremely important like resolving pending issues, providing customers great service and addressing their concerns. Sometimes they need our management’s support also. Last year we appointed 400 dealers. If we do mathematical calculation, if a dealer is doing four-five lakh billing per month, with 400 new dealers, we are doing additional 20 crore sales!
Greenpanel’s another product is Laminated Flooring which once appeared/launched but it is not very much visible. Why it so?
In flooring we are doing well, but only thing is that the capacity is limited that is restricting us. Previously, we were doing nearly 3.5 lakh sqft flooring every month that is considered as a sizable flooring business. That has gone up now to 5 to 6 lakh sq ft per month. I do have ideas about flooring business but if I put more focus on flooring, I will have to sacrifice MDF business because both are produced in the same factory. So, we can either sell flooring more or focus more on selling pre-lam MDF.
Is MDF replacing Plywood, or the recently introduced water resistant MDF is impacting sales of Plywood?
MDF market is very small, of the total market of panel industry, so there is a lot of room left for MDF companies to grow. Selling Rs 4000 Cr is not a great deal. We should reach at least 10% of the total market to make an impression. And to achieve this goal another 5 to 6 companies will have to establish in the market and companies will have to promote this product. To some extent it can replace plywood and the future is very good, but at present the industry needs to create a significant market. The knowledge of customers is increasing with the good excess of internet, global trends, DIY (Do it yourself) concept.
What is the difference between Greenpanel HDWR and others’ water resistant MDF offerings, how one can differentiate with them?
The basic concept is high density water resistant. Some companies have named it according to their choice. The advantage with it is that the durability of this product is more, because the density is high. If the density of any product is high then its screw holding capacity would be better as compared to other products and this product can be used in Kitchen, even for bathroom vanity. Sofa, bed, furniture made of high density MDF would be used anywhere where the product is long lasting, dense and has good water resistance capacity. Apart from that it is accredited against termite, borer, fungus, etc. Buying this product would be smart buying for a customer!
Secondly, Greenpanel is having a reputed history of 10 years now. They are known as product innovators in India so that trust is there. Green color does not guarantee genuine water resistance MDF. The dealers need to check the quality, based on brand history and company’s technical expertise. Opting for low grade product, the dealers will not benefit and the customers will also not get a genuine product
The dealers complain that selling MDF do not give margin. Is it true, how do you convince them?
MDF is very good business to start with even for new comers. The investment is very low and you do not have to put huge amount like 50 lakh or 1 crore. It can be started by ordering for Rs 5 to 10 lakh only, see the trend and continue further. Any dealer is easily able to make a margin of at least 10%. The retailers further get a margin of 10%. Isn’t it a decent margin?
MDF would be used anywhere where the product is long lasting, dense and has good water resistance capacity. Apart from that it is accredited against termite, borer, fungus, etc. Buying this product would be smart buying for a customer!
Secondly, it’s a commodity product now. If the dealers direct it to the party from the company itself they earn 3 to 4% margin. So, MDF despite being a commodity product brings fantastic result in terms of earning for not only distributors and dealers but it is also a win-win proposition for trade and industry both.
Is any other plant coming up for MDF in Greenpanel?
At present there is no such plan, but we are dedicatedly working for capacity expansion as the demand is growing. I think you will see another capacity enhancement of 6000 to 7000 CBM by September–October 2021.
What would you like to say about Ply Reporter?
Ply Reporter is a highly professional company and is doing a great job by bringing the entire industry together, to share the information and get benefited from it. This is a great initiative! I wish with Greenpanel, Ply Reporter also grows.
Greenpanel with a history of 10 years has a proven streaming growth not only in last one year but they have been working consistently since last 10 years. They are the first movers in MDF with uniquely positioned plants in North and South regions. Greenpanel is utilizing almost entire capacity today and also looking forward to growth with coming opportunity of readymade furniture, online E-commerce penetration in furniture industry as well as DIY which may be a reality in future in India also.”