The Ply Reporter spoke to Mr. Devender Chawla, President, All India Plywood Manufacturers Association ( AIPMA) to know the industry view on rising raw material prices and possibility of plywood price increase. Mr. Chawla who has been active in plywood industry needs and welfare time to time expressed an urgent need of meeting on curtailing down production volumes an announcing Price Increase as soon as possible. Read the interaction in detail…
The big brands who are buying, outsourcing plywood and getting stamped and then offering on a cheaper price is nothing but an orchestred plan for pushing small industry towards NO SURVIVAL point. This painful and destructive plan for small plywood units is actually going to cause problem for distributors and dealers too because they will have to loose margins too. Hence, manufacturers and dealers both need to think twice before falling in this trap.
Q. The Poplar prices have increased by 35-40 percent, what are the reasons?
A. Undoubtedly the poplar prices have jumped by 35 to 40 % during last 3 month. The reason behind rising prices of timber is largely due to increased production, more units of wood panel manufacturing products hence increased demand of wood. Additionally, the poplar log supply shortage due to erratic and heavy rains in Northern region has also added oil in the fire.
Q. Can you please tell, how there is sudden increase in production?
A. The plywood plants which normally run on a 12 to 16 hours shift in entire northern belts have increased their production feeling a pressure from new and big size plants. Even the new plants that have come during the last one year are producing Day & Night, following which many units have become aggressive and increased productivity. The “competing environment’ on the basis of production volumes, is a big reason behind in price rise of Poplar logs apart from rain.
Q. Despite of jump in Timber, Veneer and Chemical prices, we hear about too much pressure on plywood manufacturers, but finished goods prices are not increasing, why?
A. In April the prices were announced to increase by 6 %, but after a while, the price rise of plywood could not sustain the momentum. The rise in competition due to increased production volumes by old as well as new factories created pressure and prices came down again. With temporary ease in log prices, manufacturers were able to bear for 8-10 days but after that prices jumped again and now there is tremendous pressure on the price increase. The manufacturing cost has gone up sharply hence a genuine price increase should have been prevailed for betterment of the industry and trade. Not only Poplar, the prices of our 2-3 raw material products like phenol, formaldehyde and others have also increased. Face veneer is another area that is causing fluctuation and cost rise to plywood. The demand and supply gap widening, which is the reason for disturbed payment schedule. There is pain everywhere in payment due to excess supply of finished goods and this has to be controlled jointly for which we are having meetings to reach to an acceptable solution so that industry and trade can work in a healthy way. There are a few Face Veneer option that could be explored and developed within India. I believe in time to come, we would be working to develop an indigenous option for face veneer and will save on cost as well forex exchange. We are going to discuss the matter and take necessary step for developing face.
There are many factories that are on the brink of closure and many will fall in this more. There is too much production against less demand hence reduce the gap between demand supply which is too worrisome, the association ‘All Indian Plywood Manufacturers Association’ would help people to find the common acceptable ways to reduce their production.
Q. What is AIPMA next step now?
A. AIPMA is determined to help all reaching to a conclusion of price rise and curtailing unwanted production soon. There are many factories that are on the brink of closure and many will fall in this more. There is too much production against less demand hence reduce the gap between demand supply which is too worrisome, the association ‘All Indian Plywood Manufacturers Association’ would help people to find the common acceptable ways to reduce their production. I believe that whenever some meetings happen 60 to 80 percent people participate and follow the decision and it is for their own betterment. We have planned for an AIPMA meeting in the 1st half of September month which shall bring some results and relief if members agree and implement the decision together.
Q. How has been the GST impact on the plywood industry so far?
A. Old and established plants, bigger and medium sized units have been benefitted after GST implementation. GST has certainly helped the mid sized brands to gain better market because of lower gap with highly unorganised players. The formal work culture has increased but many small players are yet to adopt. GST is surely helping the industries and has brought ease in working. AIPMA and its members worked really hard for GST reduction from 28 % to 18 % and it has been a big boon for the plywood industry on the whole. In future we
hope that, In GST, when 12 and 18 percent slab will be clubbed together to a lower around 15 % slab, it will give a huge boost to the industry again.
Q. Branded and Big companies market share is increasing after GST, what is your opinion?
A. The growth of few big brands on rise in their market is nothing but a reason blamed to ourselves. The big brands who are buying, outsourcing plywood and getting stamped and then offering on a cheaper price is nothing but an orchestred plan for pushing small industry towards NO SURVIVAL point. This painful and destructive plan for small plywood units is actually going to cause problem for distributors and dealers too because they will have to loose margins too. Hence, manufacturers and dealers both need to think twice before falling in this trap.
Q. As an AIPMA president, what would you like to express?
A. The change in coming time is inevitable for all and industries must adopt to organise working with adequate capital. Increasing volumes on the basis of huge loans or just to compete with others will push towards forced selling, payment issues and ultimately closure. Join AIPMA meetings, support each other in implementing decision of AIPMA and safeguard your margins and payments instead of falling in payment and debt trap.