Our Dealers’ Business Will Grow in Sync With Greenpanel Growth, Hence Be With Us- Mr. Shekhar Chandra Sati

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Greenpanel has India’s largest stateof-the-art wood panel manufacturing plants at Uttarakhand and Andhra Pradesh that produce MDF, Plywood, Block Boards, Veneers, Flooring and Doors. Their manufacturing plants have a combined annual capacity of more than 5 lakh 88 thousand CBM MDF, this is complemented with their robust distribution network of more than 3000 retailers and 24 branches spread across the country. Here is a brief on the discussion with Mr Shekhar Chandra Sati talking to Mr Pragath Dvivedi, Editor in Chief, Ply Reporter.

The growth in MDF has been considerably faster in all aspects with increasing interest from distributors since last year, what is the reason behind it?

Lot of changes have happened along with the growth. If we see, after the first wave of covid, the market was slow, imports were not happening, and it was a great advantage for domestic companies. As the demand was taking shape, although there was a second wave of covid lot of domestic players (7 to 8 players strongly came up and started their production) emerged and almost similar capacity of material were produced. So, more or less the gap created has been filled up well. So, demand is there but the competition is also there.

You say that the market is competitive but why is there a supply crunch as the pendency of material is almost 20 days at present which was even to 50 days earlier?

In MDF things are changing quickly, the market is sluggish since the last two months, although we did well; we made a lot of structural changes, working hard. I will say that the demand is consistently growing but not the market as the supply is increasing with a lot of domestic players who want to grab the market share. So, the situation is changing very fast and the observation done two months before may not be there now. The market being competitive is not a fear. I extend my welcome to the companies who are coming into this because the increasing competition helps the category more popularise into the market.

For a retailer, how important is MDF today?   

Yes, I will say to the retailers that this is the right time to start, because still the share of MDF in panel market be it plywood, MDF or any other is 6 to 7% (last year it was 5 to 6%). When the enormous potential gap is there in the market, chances are always to grow. If the product's awareness rises, MDF is also getting awareness in the retail fraternity also. It is also growing among OEMs, Carpenters and Kitchen segment. Now the architects are also recommending, government departments are getting it because they are now aware about its advantage. Although a lot of work has to be done, the retailers should not hesitate to keep it with them. It has a fair chance to go at that level to which other panel products like plywood are at. That will be a wise step for retailers to have it with them. If they do not there will be a business loss for them.

In the last two years the high density high moisture resistant – green board concept arose very fast. What is the concept behind it?

The more the product goes into the residential sector; as compared to OEMs and furniture makers normally people are more quality conscious. When a product starts to go into residential projects, the high density product will go up, this is the reason Greenpanel’s Club grade HDWR, Exterior grade, Carb P2 Grade, Pre-laminated MDF, Veneered MDF are picking up.

In North market, HDWR has picked up well. In the south where people prefer MDF for door making also so exterior and club grade both are picking up well. Pre-lam is also picking up well as it gives a lot of ease to buyers being a readymade product. It can be applied easily. So, again pre-lam is a premium product for retail because the users as well as carpenters save a lot of time. The Club grade is going into the kitchen making sector also it has grown by more than 50% for us also.

Why the sudden change in dynamics and the customers are asking for value added MDF?

This is not a sudden change, regularly things evolve. People are aware about it and are also focused towards it. You remember in our previous talk we were running after the volume first and adding to our capacity. We are having the largest plant in India, so the first target was to reach our capacity. Once we obtained our capacity, the question arose: how to get the values? We need growth, the business cannot be stagnant, and so the next was to upgrade the product mix. When the focus is there as a company as well as team that goes down the line within the network, to the market and the end user also. We did a lot of promotional campaigns to promote our product.

In North market, HDWR has picked up well. In the south where people prefer MDF for door making also so exterior and club grade both are picking up well. Prelam is also picking up well as it gives a lot of ease to buyers being a readymade product. It can be applied easily. So, again pre-lam is a premium product for retail because the users as well as carpenters save a lot of time.

How much share of plywood has been taken by Club grade HDWR?

This is a very early stage to say how much share has been taken in plywood. Plywood buyers are in different segments in terms of price band as they are taking 120/ sq ft (for branded segment). While Clube grade HDWR – 18mm is nearly Rs 100/- sqft. So, we are cheaper to them. They are having a small share of the market; the majority is still with local buyers with medium size corpus. So, competing plywood and pitching plywood is not a very wise statement to say. I do not want myself to be projected as a replacement for plywood. We want to create and establish a separate category in the market. A buyer segment which is buying a ply of Rs 60 is not going to give you a product which costs Rs 100/-. That should be understood very well even by my people, me and my dealers also. The dealers are trying to convert expected sales into MDF, they use to compare club as economical as compared to 18mm ply. It is going but the quality of club grade MDF cannot be compared with local plywood

What are the properties of club HDWR?

It is completely a melamine product; the density is very high, which remains 850 to 880 in lower thicknesses. It goes up to 900 also. It is resistant to termite, fungus, borer, water and the major component is use of melamine. Because of this now the market is flooded with green colour material. The customers will have to understand this.

How can the customers understand the differences among them?

The simple exercise is that customers can take one sample and do a water dipping test at home for 84 hours, if the product that is observing maximum water is not a good one. The second option is to check the density of the product immediately. To check the density there is a simple formula that is length multiplied by width and height divided by one thousand. Then simply weigh it. And weight is divided by volume and the density is obtained. In this way ideally for an 18mm MDF, the weight is around 30 kg. After calculation the density is around 830 to 900.

Is MDF all about substrate, and does the brand play any important role?   

The difference from the organised and unorganised players’ product is approximately 10 to 12%. I am not talking about a situation when they offer a substandard product. MDF is still new although there is a potential in the market. Market is looking for something new because the entire market is of plywood so the team needs to give a proper explanation, presentation even to the architect. They are surprised to learn something new because they are also not fully aware about the uses, applications and quality because the initiative was not taken by the MDF companies in the past. And we have started now working on that with our BDM teams. With this initiative the retail sales will go up and the product will take a new strength in the market with its growth. This is the reason the HDWR is getting accepted in the market. If the company wishes to grow, it should adopt fair practices.

The stockist says there is no margin in MDF, what is your comment on it?

See if local companies sell lower quality green boards that are also sold at lower price with low margin also. Now, if they sell our high value quality products where we as a company are putting a lot of effort into increasing sales like brand building, promotion, PR campaign and also supporting them. If they are selling at Rs 100 at 10% margin, but if they will be selling quality products at 150/. With high density products they will be getting 15% margin. So, their margin in terms of rupees as well as percentage also provided they will have to be honest and accept it. It is the traders’ responsibility also to offer the fair product to the customers. If the customers get cheated the product gets defamed and it is very difficult to come out of that and the entire product category gets affected.

In flooring we are doing very well, if I talk about the numbers the sales are almost double to last year. Earlier we were selling nearly 2.25 lakh sq ft flooring every month that has become 6 lakh sq ft this year. The turnover has reached to Rs 30 cr from Rs 12 cr earlier.

How do you see the journey of MDF in next three years?

We are quite optimistic despite it getting competitive. We welcome the newcomers but I want to request them that if they really want to grow, they should adopt the fair practices. The things which actually compromise their image and they will not be able to grow. We have heard that tax adjustments are also going on that we had never heard of in MDF. That will not take them longer to run and the companies will be finished. You cannot grow in unorganised way if you go with all these practices. So, the future is very good as there is great potential with excellent market conditions that will go up to 20% share from the current level of 6 %, still I request them to promote MDF as a category in the market. If we create a bigger market for MDF, I think getting shares will not be a big thing. Probably my share at present is nearly 35% which may go down but if this year we have closed Rs. 1150 crore that will go up to Rs. 2000 crore next year. With fair chances for every company, business will grow in value and volume that is for sure but everyone has to work to promote the category.

What about decorative surfaces application of MDF and other products like flooring etc what are in the bucket of Greenpanel?

In flooring we are doing very well, if I talk about the numbers the sales are almost double to last year. Earlier we were selling nearly 2.25 lakh sq ft flooring every month that has become 6 lakh sq ft this year. The turnover has reached to Rs 30 cr from Rs 12 cr earlier. The imports are not happening and scope is there for quality products. If we give the value for money product they will buy.

For decorative surfaces we are doing a lot of things. Apart from that we are doing Veneers for that and offering veneer on MDF also just to make it competitive. We have again created a commercial product by offering Okoume, Akasia, Mango Sheesham veneer on MDF. We are going to create a different market also but the things have somehow stuck because there was pressure on demand.  We will be giving value propositions as well as different products also.

If you have power to change something in this wood panel trade at marketing the trade front, what would be that you wish to change?

The paint part of trade, I would like to convert to organised business because in un-organised practices, companies as well as dealers are doing adjustment. Together we will bring that chain and at least people understand the advantage of being organised. 

HIGHLIGHTS

  • Support the branded companies’ initiative with honest practices.
  • Go for the good product quality and compare it with quality to quality.
  •  ROI is guided by the pressure of selling the product.
  • Selling a branded or organised product gives an ease of doing business.
  • While with local companies there could be a bit greater margin but no ease of doing business is there.
  • Do not promote unethical practices.
  • The sales professionals should analyse the work and performance and find out where you are lacking behind. The issues with companies will automatically be removed.
  • MDF as a product category is very important for retailers so go for quality products.
  • The industry professionals understand the product now so it has grown very well.
  • The competition will increase with more players coming in, but the real game will start only then and that will be interesting.
  • Greenpanel has done a turnover of Rs 1150 cr that is why the performance is good in all aspects be it share price, production, revenue, plant etc.
  • The ROI for dealers/stockists is always good if they add some value of ease of doing business, peace of mind and your reputation offering your product.

What would be your suggestion to the sales people?

My only suggestion to them would be to be honest to themselves first because being an individual only we know that our capability is more than anybody else to change the self and understand that are our weaknesses and strengths. Then only they will work on it. We have communicated to the entire marketing team to be humble and kind and become problem solvers. Be as a sales consultant rather than asking for orders. The brand Greenpanel is always there with you and assure you that with our turnover increasing to Rs 3000 crore in three years, your business will also be three times more to the present level so be with us and keep faith in the brand Greenpanel.  

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