The price of good quality commercial plywood (unbranded) is reaching to BWR plywood levels as seen couple of years ago. On an average, 15% increase has already happened from 2020 level. I expect, general commercial ply to reach Rs 60 sq ft by end of this FY. Shuttering plywood and doors are on the same line.
What’s going on in the price front in every material is pressing the panic button. People are adding to working capital employed in distribution while pressure is mounting on margins of traders which is continuously falling due to supply issues. Next two years are tough for traders hence caution is very much needed.
Expansions/adding stock points are not wise ideas until you have the capacity to invest. If you are not an over leveraged and over trading company, the time is very good for opening new areas, adding up warehouses and to bring up new branded companies/mindset in your folio. This is the time when many young brands are taking wise steps to grow and follow the organised way that offers fine opportunity for wise distributors who remain updated.
Actually the anatomy of a successful distributor revolves around knowledge, financial backup and the strength of his community of dealers. But majority of them focus only on tight purchasing. When worldwide inflation is going above the roof, suppliers do not give much heed to such buyers and hence margins fall for traders. To make up the margins, many move towards retailing or showrooms. This trend can be easily understood from the example of few distribution companies, who were once a market force but later became retailers.
Distributors entering in retail have various benefits in mind, but not all are able to steer the counters to their desired goals. Retailing by distributors is an easy way to create profit centers. Many of them are may seem like enjoying good fame and money, however, after a few years of operation, proper assessment can be done. Until there is focus with an able person in the driving seat, it is just a show. Case studies by us reveal that trading companies, who keep investing majority of their profits back in wholesale business, keep thriving. But if they move to property accumulation or multiple partnerships, multi business model, they reach nowhere and finally become a sidelined trader.
The present times are pressing for traders. At the same time, this is also the time for opportunities for the deserving, daring and capable ones. Add the speed and grab the share. Wish you all a very prosperous New Financial Year! Thanking you
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