The Voice from South India – Kya Kahata Hai Kerala?

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While north India is known as driver of wood and panel business in India, the South is complimenting to them. Today India is facing second wave of covid, the Ply Reporter thinks it is important to reach out to the voices of South India. The e-conclave THE VOICE FROM SOUTH INDIA – KYA KAHATA HAI KERALA? by Ply Reporter, powered by Star Plywood Machinery was live on Ply Reporter Faceoook on 30 May, 2021. During this webinar by Ply Reporter there was a successful and engaging discussion on what South India feels with the voices of south India.

Kerala having more than 400 plywood manufacturing establishments which produces mainly economical grade plywood, along with that there having 4 particle boards manufacturing units, thousands of saw mill units. Kerala based plywood and panel production reaches to entire south India market along with Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh markets.

The panel speakers in the e-conclave included: Mr M M Mujeeb Rahman, President, AKPBMA, Kerala; President of SOPMA and member of Board of Directors of IPIRTI; Mr G. Vishnu Prasad, Director, Krishna Group with 30 years of experience in the industry have developed two factories in the region; Mr Jose Chacko, MD, Delta Plywood and Boards; Mr T K Salim, MD, Greenland Particle Boards Pvt Ltd; Mr Muhammed Faisal V, MD, Ozone LYF Pvt Ltd; Mr Ibrahim K M, Chairman, KBoard Ply; the manufacture all kinds of plywoods, PVC foamboard, laminated particle board, laminated MDF and also they have trading division in laminate K-lam, with K-board they are leading plywood manufacturers in India, they also export panel products to GCC country. And Mr Maideen Hameed, MD, Positive Chip Boards India Pvt Ltd. – he is in plywood manufacturing for over 22 years, and he is privileged to grow along with the plywood industry in Perambaboor area. He actively participates in social work and helped numerous people in covid pandemic.

The wood panel industry based at Kerala is struggling a lot for over five years, but the spirit of the players did not do down and continuously growing beating all odds and overcoming every difficulty before them. In 2016 there was demonetization, 2017 GST implementation, 2018 Kerala had flood that disturbed majority of the manufacturers, 2019 again there was flood that devastated many of the manufacturers in Kerala especially Perambaboor region, and 2020 we had Covid and 2021 it witnessed the second wave of Covid. Now they are struggling to bounce back. In today’s discussion their problems and its probable solutions, their expectation from the market, trade and dealers and rest of the industry have been discussed. Excerpts.

HOW HAS BEEN THE SCENARIO IN APRIL – MAY MONTHS, DESPITE ALL CHALLENGES BEFORE YOU?

Mr Ibrahim K M: In April, there was not much problem as the lockdown started from May 1, 2021 and since then we are in trouble, as after lockdown announcement over 50% labor went to home and our production got badly hit which is almost closed. In covid situation there is no support from the government side. Our expenses with ESI, PF, Electricity, are continue.

Mr Maideen Hameed: In Ernakulum district there are situation like triple lockdown and total industrial operations has stopped. There is no wood cutting, but the plywood and Particle board factories still have hold the labor forces at their own expenses. After the first covid we are facing bank issues, as there was moratorium but not the waver of interests. The issues are aggravating with second lockdown because the expenses are continued. In plywood and particle board the situation is similar. Particle boards are dependent on residue of plywood manufacturing and if plywood manufacturing is stop the particle board also gets affected.

Mr G. Vishnu Prasad: Even though government is saying that construction work can go forward but it is not like that. The actual scenario is that it is not functioning due to non-availability of labor. It is like a complete lockdown and minor work nearly 2% is going on. April was okay, and we think that June will also go in vain as the lockdown has been extended till May 7. I think we are not in a position to recovery till July as the cost of production is increasing with increasing raw material costs.

Mr T K Salim: In Kerala, May was under lockdown and is increasing by one week. The local state government has allowed for manufacturing but the availability of raw material is a problem because wood logs are not available as the cutting of tree is not happening. I hope when the cutting of tree starts, we will be a

Due to covid and disturbance in international logistics the raw material availability is also disturbed. Till date the logistic has not become smooth, so that imported good input cost has increased. Nearly 40% price increase is there in Face Veneer and Resin. Timber prices have increased by 25% and labor charges has increased by 30%. Similarly the 30% production cost has increased in plywood and Particle board manufacturing.

bit comfortable for plywood as well as particle board industry. Hopefully by next week we will start getting some. In between, the medical and globs industry has bought the rubber wood for their boilers at doubles the price. So, the prices of wood have jumped to double the price to its normal. With the government intervention for price regulation to keep the prices of medical accessories at lower level now the price of rubber wood has come down. Hopefully, in a week days the availability would be normal. Of course we are getting few orders from Maharashtra and for exports, hopefully that would be fulfilled in coming weeks. But, overall June end should come into normal.

I think there would be a bit slowdown in Particle board scenario in the market if the lockdown opens because during the first lockdown the import was less but now after second wave the import is increasing despite the increasing fright rate. Secondly, this time India is under lockdown, but the other country is open to production. Also the southern region is suffering more with lockdown.

In Kerala the industry is dependent on neighboring states and they are under lockdown. But the scenario is different and north India is producing 30 to 35% and few of the companies who are doing very well at almost 80 to 90 percent.

THE CHALLENGES AHEAD

Mr T K Salim: Last time nobody had any stock and all of a sudden entire thing was opened up, it was a nationwide opening so that bounce back was eminent. But, now the situation is different, north India people might be having stock plus small activities are taking place in north. Maharashtra is almost opened up. In our case, we are fully closed.

Mr Muhammed Faisal V: Many of the plywood shops are not open in Kerala, Karnataka and Tamilnadu. A few are open under strict government rules. So even if the factory runs, we are not able to sell. So, there is no point of running them even though labor and raw material are available. Once the dealers are open then only we can run our production units.

Mr G. Vishnu Prasad: The lockdown in south is very strict, so the construction company is not able to run due to non availability of labour and other things also. Secondly we have daily market and we purchase and store timber only for one or two days. So, obviously we are not able to run the factory in non-availability of timer.

Mr M M Mujeeb Rahman: All workers are here because the factory owners said that they will take care of them. We are giving them all expenses. There is no issue for payment and order for plywood. In future also we are expecting orders from the market but we can’t run the factory properly because we are facing raw material shortage. Due to covid and disturbance in international logistics the raw material availability is also disturbed. Till date the logistic has not become smooth, so that imported good input cost has increased. Nearly 40% price increase is there in Face Veneer and Resin. Timber prices have increased by 25% and labor charges has increased by 30%. Similarly the 30% production cost has increased in plywood and Particle board manufacturing. So the price of product has to be increased by 30% to survive and then only we can run the factory without loss. The order is there but we cannot increase the price to that level this is the problem. Monsoon started here so again the timber price will increase.

Mr Jose Chacko: Phenol and Formalin prices have gone up. Face veneers rates have increased to the level of 3 to 4 rupees per sq m. In the same way there is acute shortage of face veneer and labor.

Mr Maideen Hameed. I think there would be a bit slowdown in Particle board scenario in the market if the lockdown opens because during the first lockdown the import was less but now after second wave the import is increasing despite the increasing fright rate. Secondly, this time India is under lockdown, but the other country is open to production. Also the southern region is suffering more with lockdown.

Mr Muhammed Faisal V: Definitely, Kerala income is majorly based upon NRIs and they are also badly affected in this covid scenario because it is not just hit India but Middle East and Europe as well. So, people are very much afraid to invest at this moment. Many of them had to spend lot of money to hospitals. This is not like any natural calamity and divested everything all of a sudden, so there is a change of bouncing back with good demand of the product to complete the project whatever spending is there. But I personally feel that this is going to affect after one year as the steel and cement price is at its highest level. So, at this moment the construction may be getting slow and after one year our product is going to be used.

KERALA IS KNOWN FOR AFFORDABLE PLYWOOD MANUFACTURING, SO WHAT IS YOUR EXPECTATION FROM THE MARKET IF THE INPUT COST IS INCREASING?

 

Mr M M Mujeeb Rahman: We are not expecting much but there should be at least 30% increase in product price, otherwise one by one every plywood industry will closed down. If the scenario is going like this only then definitely it will affect the industry. I think for next six months or one year we will struggle again.

Mr Muhammed Faisal V: We are paying higher bank interest, so naturally very fatty people are also suffering. Secondly, we are paying wages without productivity. We are paying ESI and PF and there is no support from Govt. So, on this forum of The Ply Reporter, we request to the government to support us in terms of wages, ESI & PF, GST and bank interests. If we get it there will be some chances for revival.

We are finding acute labor shortage now a days and having to pay more for the situation so we need to go for technological up gradation by installing modern equipments and machineries. The challenge for us is to get the permission from the government departments. There are many limitations for that so at the association level definitely we have to talk to the Government.

Mr Maideen Hameed: This is not the case that only affordable plywood is made in Kerala. The quality has improved a lot in Perambaboor. We are continuously facing the problems, so, if we do not get the increase in price of product with higher input cost by 40% we would not survive.

Mr Jose Chacko: We are finding acute labor shortage now a days and having to pay more for the situation so we need to go for technological up gradation by installing modern equipments and machineries. The challenge for us is to get the permission from the government departments. There are many limitations for that so at the association level definitely we have to talk to the Government. Then we will be in a position to compete other states. We have raised the issue many times at association level.

Till date we are having credit facility, but now they are asking for advance or they look for zero credit policy. Now we are not in a position to give too much to our suppliers, so the dealers must come forward and support us in this critical situation especially in the current situation.

DESPITE ALL CHALLENGES, IS THERE ANY HOPE FROM KERALA PLYWOOD INDUSTRY?

Mr Jose Chacko: Covid is going to continue for next three or four years that is what the prediction says, there are several waves will be coming time to time. So, we have to explore the new ways to tackle the situation. I would like to congratulate Ply Reporter for organizing this wonderful event.

Mr T K Salim, MD, Greenland Particle Boards Pvt Ltd: We believe that we are very adaptable to the situation so we have fought back to all those floods and now with different waves of covid. So, we will keep on fighting, let’s see how many waves comes up. I think there is definitely bright future.

Mr Ibrahim K M: With increasing input cost our survival is going to be difficult. The coming three to six months are very tough. We would like to request to the government to give moratorium and wave the interest for that period.

Mr G. Vishnu Prasad: The houses where our plywood is used will shift to readymade furniture because now they don’t want any carpenter to enter into their house. How we are going to tackle this that is also going to costing us much.

CONCLUSION

Kerala has eased up lockdown and there is a hope that soon the demand will increase and situation will improve. In Kerala labor is available, and capital availability is also there but the lockdown has stuck the manufacturing operation. The monsoon has also arrived in Kerala that is another challenge after lockdown that will surely impact the production of wood panel industry after lockdown is removed. In that case the Particle board production will get affected if the plywood manufacturing gets disturbed in anyway. So Kerala is definitely staring towards uncertainty. It is apparent that when the market opens the price of manufactured goods will increase the cash and carry will be the prevailing scenario in trade

Kerala always remain working well even with small setup. The main timber is rubber wood and ucaly also and then they have been importing different materials from different countries. Despite of all odds the industry cluster has flourished from 150 units to 400 units. There are lots of possibilities but the challenges are also before them a lot.

In terms of consumer demand covid has disturbed many of the family so there would be uncertainty for that. Not only that the third wave is looming over that it may come in July – August or in December so at the earliest possible solution is the vaccination to every citizen. In coming days Kerala will definitely do well as they previously have done good in film face sector also and improved the quality. But, for few months their difficulties have increased. Those who purchase from Kerala, will definitely support them understanding their costing and difficulties.

With increasing input cost our survival is going to be difficult. The coming three to six months are very tough. We would like to request to the government to give moratorium and wave the interest for that period.

The inputs from the panels was that the industry is not in a position to survive its own and they seek support from the trade to move forward otherwise there is no possibility for capacity addition, technology up gradation, etc. To have relief from the government side the association has to play considerable role in association with other industry bodies like FIPPI, AIPMA etc.

The one side when north was talking positively, the big players were talking to bounce back and faster recovery, the situation of Kerala looks gloomy. But, Kerala has tremendous contribution to Indian medical sector with numerous health professionals that is making the country stand together in this crisis time of covid. The objective for the today’s webinar is to convey the industry the real situation in Kerala and move forward together.

 

 

 

 

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