Ply Reporter e-Conclave on 'क्या कहता हैं इंडिया – Scope Ahead in Plywood Sector in Present Time' Powered by 'KRIDHA - The Best Decorative Panel' was organized on 5 June, 2021. It was live on the Ply Reporter FB Page. The plywood manufacturers from across the country were present on this forum who discussed the market scenario post covid 2.0.
THE SCOPES IN PLYWOOD INDUSTRY IN PANDEMIC TIME
Mr. VISHAL JUNEJA, Director, Vidhata Industries Pvt Ltd: I would like to quote Winston Churchill that ‘Never Let A Good Crisis Go To Waste’ and you proved it right keeping all the industry associates binding together by using digital technology and providing them an extreme value in this unprecedented time of covid pandemic.
For future prospects we have to think two ways. First, what is ahead for industry and second, what opportunity will be there for the medium term? In my opinion, observing prolonged economic crises across the globe as well as India, the government will have to increase spending, because infrastructure is the only way to grow the economy. Its two planks like public spending (like roads, bridges, hospitals, etc) and private spending (infrastructure developed by people of their own or for the public like housing, malls, etc) has to speed up. During covid period the government has formed nearly 20 trillion dollar inflow in terms of quantitative easing in the last one and half years by the route of the equity market, real estate market, etc. Resultantly we are witnessing the mood change and equity market as well as real estate is growing despite covid.
So, in the coming time this will take an inflow towards the housing sector. The wood panel & decorative industry along with other similar kinds of industry will be beneficiary of it. In the immediate term we are seeing that he graded opening has already started almost across the country after a lockdown of over 50 days. With it the order flow in the wood panel industry and trade has started. I hope the recovery will be faster as the inventory level at the dealers/distributors level is very low so there will be pent-up demand towards the wood panel and decorative industry manufacturing sector.
This time every dealer, distributor and channel partners have supported us tremendously because when the industry was completely shut down they wholeheartedly supported us with every means. In June we are seeing better recovery and from July onwards everything should be regularized. Rest of the months in this financial year will cover up the jerk in April –May but with strong caveat that the industry, government and people would not get complacent in that way when they were after the first wave of covid and the second wave turned fatal for us. If the government goes for rapid vaccination there is very less chance of a third wave.
What impact would there be on its quality after the change in perception as after the first wave the particle board and MDF industry have gained better opportunity in terms of market reach, consumption and quality seekers because the import is costlier with rising shipping cost. Similarly in plywood also the calibrated plywood was imported in good quantity, which was sold at higher price in Indian market saying it is a good quality imported material that’s volume is also affected as the demand of indigenous calibrated plywood has increased considerably.
Mr. ALOK AGRAWAL, CMD, Realply Industries (P) Ltd: We hope that we will come out of this crisis very soon. In the coming time the plywood market is going to divide in two ways, one, the quality market and the other is the regular market so there is no way the demand for plywood is going down. Today there is demand in the market and good quality demand is much more. The furniture manufacturers are developing much more and they are installing sophisticated machines. Their production comes faster with good quality calibrated plywood, edge banding, lamination and veneer applications with machines. So, in my opinion plywood demand will be much better than before. By the month of June the industry will reach its 80% operation and in July by 100 percent or even better.
Mr. MAKHAN GATTANI, Managing Director, Gattani Industries: India market is huge with a population of over 135 crores. Today India is importing plywood despite a lot of production, so; I don’t think that there is scarcity in sales of plywood in the India market. If you are making good quality plywood and working with a network of good dealers, there is no issue in sales. In my career of 25 years in plywood I never saw such a spike in demand as we have seen after the first wave of covid. We were flooded with orders as it was delayed around 40 days. Everyone had a similar situation. No doubt currently one or two months are difficult due to lockdown as several states are still under lockdown, but definitely with unlocking there should not be demand scarcity in the market. I hope with the unlock process the response would be good in the market.
Mr. AJIT MINDA, Director, Longhorn Industries (Siam Ply): We have covered 90% market in May also in terms of production as well as sales; still there is no shortage of orders. I think the market will be good because as of now we are having supply for 45 days. There is good scope for quality materials.
Mr. AMIT AGARWAL, Director, Marchland & Sons Group: We hope after August the recovery will be 80 to 100 percent. The plywood imported from other countries is quality products only so we have the opportunity to promote this segment of market by Indian Manufacturing and replace them whether it is MDF, Particle Board or Plywood.
If you are making good quality plywood and working with a network of good dealers, there is no issue in sales. In my career of 25 years in plywood I never saw such a spike in demand as we have seen after the first wave of covid. We were flooded with orders as it was delayed around 40 days. Everyone had a similar situation.
Dr. PRASHANT, Director, AK Plywood: In my opinion the quality plywood is core composed plywood, double pressing and calibrated plywood. But, in India we have a problem: the core composer machines available in India are more expensive. Ours’ machines are 80% more expensive than what China uses. So, the machine manufacturers should make available that one which China is using. They are using basic sanding machines and saw mills and their costing comes down. We will have a huge scope in the US with the tag of quality plywood manufacturers and pre-laminated plywood.
Currently, there is no lab to test CARB. The nearest lab available for it is in China or Hong Kong, and those who are taking certification from there are exporting to the US also. So, we have to do this. With it we can even export furniture to the US as the company needs FSC and CARB. We have to tap this in the same way 15 years back we were having 15 years old timber that is now 7 years old. So, material availability is no problem, population is huge and its market as well. So, we have to have the right policy so that we will be at the right place at the right time.
Mr. SAKET GARG, Director, Solid Ply Pvt Ltd: The standard of living is increasing in India and every one wish to have a good environment at the place where they live and work. It will continue driving the demand for many years for the entire plywood and panel industry. We started at a small scale and today have a good network, because we could build the network with quality offerings. If your policy and principal is clear, you can have good growth with an efficient team, as there is good demand for quality products. Due to lockdown and disturbance in logistics availability our dispatch was hampered. Despite that we could maintain up to 65% in May and by July we will cover it. It was not a financial or material loss but a bit of emotional loss was definitely there.
Mr. JAI GOPAL GUPTA, MD, Kriday Plywood India Pvt Ltd: The future will be good. If you are making quality plywood there is no issue in sales. Production has dropped but it will be covered up in the coming time. That is not a big issue.
ON CALIBRATED PLYWOOD DEMAND
Mr. ALOK AGRAWAL: The market will for both the materials. Our mindset is different in that we have to sell in an organized way so we would not go into traditional manufacturing and focus on calibrated but the market will for both. The traditional way will also remain there, because for calibration there is a cost, process time and investment as well.
Mr. MAKHAN GATTANI: Being situated in this region has plus or minus points both; we are still using German Technology. But, if there is a difference in price due to German still using it, which depends on the demand and the objective behind it is to offer better quality. If you wish to go with a brand you have to maintain A grade product else your existence is not possible. For me the demand for calibrated ply is from the Southern region for kitchen cabinet like uses.
Mr. VISHAL JUNEJA: We had set up 11 years before and that was ahead of time. Later we realized that the calibrated plywood demand was not much more that time. Today both the products co-exist; if we shift our operation 100% to calibrate that will not be viable for me. We have to stand by those dealers/distributors together that are coming along with us for a long time. I think urban-rural, OEM - non-OEM are observed and both the products will definitely exist. In the coming time technology up gradation, innovations are imperative and we have decided to move ahead with both the product together. In the coming time the dealers interest towards calibrated may move by 50% from the current 20% adoption, but both the products will be existing in future.
Mr. AMIT AGARWAL: There is no comparison between plywood and particle board. Both have different market segments and different customers’ networks, and different uses. So, our interest still is in both. The purpose is to sell the products and the company should earn margin. Earlier for a phase of time the particle board was a need of the time but in coming days its demand will be increasing because the required OEM facilities being installed now and the required quality of Particle Board and MDF are being produced at the facilities now. IKEA also has tie-ups with numerous Indian OEMs for their material requirement. So, a quality product is the need of the hour, whether it is plywood, MDF, Particle Board etc. Its demand will always be there. Calibration will be a kind of norm in future. I remember in the year 2000, taking ISO certification was luxury. Today ISI and ISO have become a general trend. Similarly the calibrated plywood is being pushed in the market as a different category today.
Dr. PRASHANT: If you see world wide the plywood means calibrated, and the thickness of laminate is 0.6mm. But, in India the thickness of laminate is 1 mm till recently. Slowly the market is changing and the carpentry segment is coming to 0.8mm. But we have OEMs who are already mature and they have reached 0.7mm. So, if you have to reach to the 0.7mm you require a clean surface that’s why they ask calibrated. So, we have to go a long way and reach 0.6mm to meet the global trend. They can directly polish the surface like birch plywood as the grains are good.
ON CREDIT SYSTEM IN PLYWOOD MARKET
Mr. JAI GOPAL GUPTA: The biggest drawback is the credit system that hinders its growth. In this business the bad debts are much more so for this reason I see the plywood business is not growing faster. In the minds of dealers/distributors there is no respect.
Dr. PRASHANT: This is one subject that all industries should come together and address the issue. The credit is increasing day by day. If you expand the business again it is increasing.
Mr. MAKHAN GATTANI: I disagree, and always say that you should deal with good dealers because if there are no sales in business we say the product is at the wrong place. In my case we have not lost even a Rupee, because our principle is to give only one person in a city and he sells with our brand.
Mr. ALOK AGRAWAL: Under invoicing is the main reason that stops the growth of the industry. This is not the case that if you are making it cheaper any one will come to buy your product. The selling model of calibrated plywood is different from the traditional method. You have to approach the customer and you should have strength to reach them.
Mr. AMIT AGARWAL: The payment cutting occurs if the manufacturers do not observe the dealer. Today the material is dumped to any dealer under pressure without observation you cannot blame the overall market. If anyone gives the wrong quality they themselves get deducted their payment. The payment is a rare case of the dealer not having to remain in business. In my 35 years experience the money does not stick, it comes sooner or later.
Mr. AJIT MINDA: In plywood business under invoicing is a biggest challenge for its growth. If it reduces, that will be good for this sector in future.
Mr. VISHAL JUNEJA: The plywood industry is growing and continuously innovating for many years but we as manufacturers have to think and act towards that we can save it by becoming a commodity as with being more as commodity product our margin will be thinner. There is only way for it that is innovative, whether it is glue that we have to bring to E0 or E1, the introduction of calibration, etc.
with value addition and providing better value for money product then only we can achieve growth, retain its image and protect from being a commodity. And in transaction everyone will be at a profitable stage with it.
Mr. MAKHAN GATTANI: The volume at Indian manufacturing is nothing in comparison to the overseas players with large volume sophisticated technology. So, the cost at Indian manufacturing is much more in comparison to them. Especially for North – East players the major challenge is transportation cost and thirdly we are not in the export market because there are very less number of units at ports. China and Indonesia are getting better benefits of it and are enjoying the curtain on transportation costs.
Dr. PRASHANT, Director: We have to go into automation with multiple reasons not only to save labor cost in not there. To increase the quality and volume also need automation. The machinery access that India has is very expensive. We should bring down the cost. We all are running high end machines, in place of that we should use that which is being used in China then we will be at affordable level and we will have volume with us as their machines are totally for calibrated and running at low cost and with that we can look west and others as with it we will have opportunity. When America put 64% duty on China they went to Vietnam. We should come together and work for it to arrange a testing facility and arrange all major facilities then at least the port base company starts exporting.
Mr. SAKET GARG: For basic manufacturing India has to look at China, so if this segment gains momentum and offers better quality it will benefit the industry as a whole.
Mr. ALOK AGRAWAL: Whether it is a dealer or manufacturer they have to focus on what they have to make whether it is calibrated or non-calibrated, cheaper or costlier so that one can achieve that economy of scale and bring it to a large scale then only we can bring down the cost.
Mr. JAI GOPAL GUPTA: If the credit system in the market comes down that will benefit the entire industry.
Mr. AJIT MINDA: scope is good and in terms of payment it varies dealers to dealers. We have not faced such a situation.
HOW QUALITY CAN BE DEFINED?
Mr Pragath Dvivedi: In dealers mind the quality means what? It is the colors of the face or recounting of the core inside? So, for different people, there are different parameters for plywood in terms of thickness, weight, colour, etc. For A, B and C grade counters the definition for good quality plywood is different. For an established counter that is having good will of age contribution to the trade and has been selling heavier plywood of 42 kg so their quality will be matching with that parameter. Similarly those who have started 10 – 15 years back will have another parameter that was of middle grade because that time they saw that quality. And the C grade for those who started their shop 7 to 8 years back.
But for a customer the quality plywood is that which does not warp, twist after laminate application. The screw holding capacity is good, no face chipping while cutting, no steam pocket and most importantly there is no overlap or under thickness. Calibrated is different, in fact the conventional plywood can also be good if there is no over gap so that the bonding is good. So there are few important things: a straight core, good bonding, and perfect compression.