The Ply Reporter organized seminar on the subject line “Moving Forward >> Bouncing Back” after the second wave of Covid pandemic in association with Shah International on May 20, 2021. The seminar was graced by three strong voices of thought-leaders from the industry Mr Sajjan Bhajanka, Chairman, Century Plyboards India Ltd; Mr Prakash Lohia, MD, Merino Industries Ltd and Mr Rajesh Mittal, Chairman, Greenply Industry Ltd. During the seminar Mr Pragath Dvivedi, Founder Editor, Ply Reporter talked about the way forward in business of wood panel industry in India. Excerpt of discussion…..
ON MENTAL AND EMOTIONAL BALANCE IN THE TOUGH TIMES
Mr Sajjan Bhajanka: The God has given us a unique strength of adoptability, so in every situation people adopt them slowly. People survived even in continuous wars for over 10 years in many of countries. In my opinion after opening lockdown Indian wood panel industry has seen all time best and Q4 was one of the best quarters for the entire industry as the demand was very good.
Mr Prakash Lohia: Being a front line fighter I was connected with the flow and was more comfortable on the field. This is the first time to remain precisely at home for four weeks and two days, so you can understand counting to the days. So, after a long time I found this spare time to think and read to my own interests and enrich myself to face the problems which have been posed by covid and the similar problems coming to us in future
Mr Rajesh Mittal: I believe the things will improve further as the life never stops. If there is Covid we have to live with it. The tough time make us alert and show numerous ideas to convert it into opportunity. If we develop this skill to see blessing in disguise, I think the life will be very easy.
ON WOOD PANEL BUSINESS IN APRIL AND MAY
Mr Prakash Lohia: This time the domestic market is badly affected, exports are doing well. The domestic market gets affected in phase wise lockdown imposed by state governments. It brought an uncertainty and we got emotionally affected that was visible in the market also.
Mr Rajesh Mittal: We are operating totally on domestic market and observe that April was quite normal across the country except some of the areas like North and West which was disturbed due to spike in Covid cases. In May the situation is bad, although 10 to 15 % market is moving on, so we can’t say it is completely washed out but the sentiment is badly affected
Mr Sajjan Bhajanka: I think the situation will improve quickly. This time also we are expecting for V shape recovery. By the end of June, we will come out of this situation considerably well. The next quarter will be good and the country will grow fast forward with shooting up demand in the market.
ON INVESTMENT, EXPANSION AND FUTURE IN THIS UNCERTAIN TIME
Mr Sajjan Bhajanka: I think either we go up or down, stagnation is not possible at any cost, so if you don’t want to go down you will go up. If you don’t want to stop you have to expand and do something new and indulge new skill set of people and maintain the momentum of positivity. The situation and industry continuously change so we have to adopt the change continuously. Once we were dependent on veneer, for it we were involved in timber procurement, making of veneer and selling. And we used to make plywood from the remaining veneer after sales. In later days veneer process closed-in then we installed veneer units outside the country. There also veneer production stopped. So, industry activity is a continuous process and situation changes frequently, but with every change our working and profitability improved. So, we should not stop, as with every tough time we should look for opportunity ahead.
I personally feel that India has to grow a lot. Our nearest rival is China, to whom we can clearly see their growth. The ground reality of India matches with them as we are close to their population and demography. In last 40 years China has obtain growth very fast and their per capita plywood consumption today is 50 sqm while in India it is 2 sqm. Today we have 12.5 million cbm of panel production and China is producing 300 million cbm. So, the situation will change in India also as the next thrust of growth of people will be housing. With rising prosperity people wish to have their own home so in next ten years India will see a revolution in housing sector. Wood panel industry is associated with them, so plywood industry will grow with the growth of housing and infrastructure. India also have to scale up to meet the requirement and to fill the gap, new players should come. At present in plywood the third player is not more than 20% of Greenply or Century ply. So, I am very optimistic for the growth of Indian wood panel industry.
Today we have 12.5 million cbm of panel production and China is producing 300 million cbm. So, the situation will change in India also as the next thrust of growth of people will be housing. With rising prosperity people wish to have their own home so in next ten years India will see a revolution in housing sector. Wood panel industry is associated with them, so plywood industry will grow with the growth of housing and infrastructure.
Mr Prakash Lohia: The universal scale of the disaster, helplessness facing the unknown and the scaring anticipation of the third wave is looming large. All these are indicating the need to change in thought process in the scale of paradigm shift. This is my humble suggestion to the industry leaders and people that only strategy may not be adequate. It deeper dive into policy, vision and ultimate mission of our business is the need of the hour.
We have to face few questions boldly and honestly with due humility with the backdrop of globalised interconnection through communication and physical movement. In this backdrop we have to ask our self few questions. Is it growth or sustainable growth we are looking for? It is just economy or the economy with harmony we are looking for? Is it effectiveness or efficiency we are looking for? Is it only shareholders or all stakeholders we are responsible as business leaders? Is business done with only head and hands, or cold escalation or merciless education or a harmony of head and hands, or filled with empathy lead with head and hands? We are fortunate that we are Indians as our forefathers researched these question thousands of years. So stick to the basics and try to understand the message of BASUDHAIB KUTUMBHKAM. So, find these answers before you make will.
Economics started with theories and then progressed into mathematics but today it is greatly based on psychology. The raw material prices are again phenomena of globally linked situation. Like, if the price of Melamine increases in China, India gets affected. Let us prepare for the next challenge. So, we have to be alert and ready with the preventive maintenance of the new challenges.
Mr Rajesh Mittal: Whatever business we do it should be sustainable for every stake holder not only shareholders. In terms of expansion dilemma, I would like to say that definitely it will have a V shape recovery so we have to move forward. I see it will be good for the industry in the short and medium term also, so there is no need to sit back.
Mr Sajjan Bhajanka: We are working for the development of the country, the shareholders, people who are associated with us and ultimately all the stakeholders from the society. So we are a self trusty with lot of responsibility. In terms of business growth, we can see that China was once dependent on exports only and 50% of their production were being exported, but now their tables are also turning and they are growing with their own consumptions and their exports has dropped drastically. We are fortunate that we have a huge consumer base and that is an advantage for us as well as the traders and manufacturers that can get its benefit in the times to come.
Mr Prakash Lohia: The businessman has to do business, the only we have to redefine it, re-structure which we were doing earlier to the future business. The business has to move forward and bouncing back is the nature of human being. It is not a choice but being adoptable is intent for the existence. Covid will not derail and deter our determination to move forward.
ON EXPORT POSSIBILITY IN PLYWOOD
Mr Rajesh Mittal: Quality of the product and its cost is most important for exports. If we see quality, then there is possibility that we can export to other market, but the question comes about cost, as the timber price is not at that level compared to China or Vietnam that we can do much to have exports in better way. As an industry we can plan for plantation and sustainable availability of timer at constant price then in coming years there is much possibility for exports.
Mr Sajjan Bhajanka: I don’t think that Europe and USA will opt us for their plywood requirement much more. Secondly, our own consumption will increase very fast, so in my opinion we need to import plywood, particle board and MDF also in coming two or three years.
ON RISING RAW MATERIAL PRICES
Mr Rajesh Mittal: Timber prices are important in plywood industry. Chemical price also impact the production. Till now in the history generally we pass on the higher input cost to the customers. So, if the prices hike a bit more we will pass it on to them after observing a bit, but I don’t think it will affect the recovery.
Mr Prakash Lohia: Economics started with theories and then progressed into mathematics but today it is greatly based on psychology. The raw material prices are again phenomena of globally linked situation. Like, if the price of Melamine increases in China, India gets affected. Let us prepare for the next challenge. So, we have to be alert and ready with the preventive maintenance of the new challenges.
Mr Sajjan Bhajanka: Industry does not function like commodity as, if the price of wheat increase the floor price will also increase. The organized brand functions according to the price lists. If the price of raw material increased, that point of time the manufacturers has to bear the cost for some extent. But, if it goes for long then slowly it is passed on to customers. So, with increasing price the exports price will increase and in domestic market is will be passed on in a month or two, and the industry will be back to their margin. Similarly, if the prices drop the industry get benefited because the price does not drop immediately. The scarcity in raw material was due to channel disturbance, so the import based products will again be disturbed. In terms of melamine we are not able to understand the cause as it is witnessing global shortage. In terms of phenol we are more or less self sufficient after Deepak Phenolics’ production. I don’t think the increased price will go down quickly. In terms of veneer also there is a disruption due to closed operation from Burma and the disturbed shipping is also posing challenge in smooth supply of Okoume from Gabon
I think the price should go up to some extent, as if the core price goes up, timber price will also go up and farmers will be paid better so they will be encouraged to have more plantations. The country will move ahead towards plantation from cash crops. At present the cash crop is surplus in comparison to agro forestry. The agro forestry also has numerous benefits like environment protection and reduction in carbon foot prints in the country
THE FACTORS THAT GIVE THE ENERGY TO WORK TIRELESSLY
Mr Sajjan Bhajanka: Working for the industry as well as trade, is one type of addiction or we can say habit. The earned money and goodwill will help the country and the society to flourish further.
Mr Rajesh Mittal: If we do not continue with the same energy the life will stop. This is like a habit, and I would like to say that don’t stop and continuously move forward working well. This is not for the self, but the industry also gets benefited with it, and will continue in future as well. So, we should continue our journey with hard work and total dedication.
Mr Prakash Lohia: Expansion is nature; even science says that universe is expanding. So, who is dynamic is by nature expands. They cannot stop themselves from expansion, and your dynamism put it into creating an institution. As an individual you have to go from different stages. So, if we make an institution with a strong base then only we can contribute to the society and my desire to help the society will be fulfilled.
Quality of the product and its cost is most important for exports. If we see quality, then there is possibility that we can export to other market, but the question comes about cost, as the timber price is not at that level compared to China or Vietnam that we can do much to have exports in better way.
CONCLUSION
After the second wave there was expectation that the industry will have ease from the higher prices, but the situation is different and now the prices are again going up. It seems that to some extent it will affect the price of the product also according to their varying input costs.
If the price goes up and down, some of the product loses its relevance, like economical grade plywood become costlier and MDF filled the gap. If the veneer becomes costlier, there is also another product.
Whether the third wave of covid comes or not we have to learn from the past experiences and prepare for the next challenge. We have to move forward and prepare for that because dynamism is natural and expansion is its outcome that is eminent.
Workaholics are those who work not for the self but for the betterment of society. So, adopt a holistic approach into your work having a mental and emotional balancing taking care of your health and wealth.
The panelists were was at a point that the recovery will bounce back with the multiplying effect of the demand because for the supply funnel there is no big inventory of material in the market. India growth story will be there in continuation.