Whenever I travel around India, it is common to hear news about upcoming factories of Plywood, Laminate, PB, MDF, WPC, Doors etc or expansion of existing plants. On interaction, I find most of the players confident about the market. Many even claim to have appointed distributors and all seem to be doing well. You will agree to the fact that in last two years almost every product category has seen whopping capacity increase, some category even expanding to double to the industry’s set demand pattern.
Contrary to this, observed data on housing growth, new offices or infra work doesn’t add up to a great demand scenario. Frankly, the generation of genuine consumption in present scenario looks greatly out of sync with capacity built-up. The whole demand-supply equation does not seemingly support the capacity growth yet most of the stake holders are leading towards more capacity creation. Moreover, we can see other products like Glass, Tiles, and more products eyeing for the same space.
I am quite eager to understand this riddle. “Is the so called growth in production/ volumes resulting into primary stocking somewhere else by someone?An important observation pushes me to think “Is Payment cycle healthy enough or is it just creation of material/ demand bubble?”
Frankly, the generation of genuine consumption in present scenario looks greatly out of sync with capacity built-up. The whole demand supply equation does not seemingly support the capacity growth yet most of the stake holders are leading towards more capacity creation. Moreover, we can see other products like Glass, Tiles, and more products eyeying for the same space.
It must be taken care of by ambitious manufacturing houses that increasing volume in production and reducing realisation on per piece of product will not be able to hold the sustained margins for manufacturers, distributors and even dealers and ultimately it may suffocate all towards idle capacities and lack of funds.
Today there is competition among companies to offer very economical product with a certain manipulation/ compromise on quality but they do not have cushion to create system for secondary sales generation if the competition compel them to act on that level. I believe the above points are worth brain storming within your core team members and look forward to a matured & consolidated brand positioning in this crowded space.
On initial levels, India has always been a difficult market for creating brands. It is a confusing yet growing, price sensitive yet greatly profit making and crowded yet only few national level brands that stand out! One must take a clear stand before jumping on expansion spree.
The Ply Reporter is visiting Interzum and Ligna to be held in Germany during May. With an objective of giving wonderful updates and fresh developments in design and machines, we will be back with Product & Technology update from next month. See you at Interzum Germany from 16-19th May 2017!