The Ply Reporter was keen to know the present scenario on HPL segment from an experience leader who has an open view on organised as well unorganised sector of the HPL segment. The most suitable name for the one to one interaction came to the mind was Mr Surinder Arora. The leading laminate brand in India, VIRGO has a journey close to 20 years in HPL segment. The VIRGO brand has scaled a gradual height in terms of volume and brand image during last 7-8 years due to tireless approach of the all Virgo Group members under leadership of Mr Surinder Arora, MD, Virgo Industries Ltd and his entire team. This interview represents a general perspective of an experienced person who has made VIRGO brand grow in terms of volume, value and range and still growing. Read and learn from the expertise….
Q:- What is the present HPL manufacturing capacity of Virgo Laminate group?
A:- Virgo group is now producing laminates from 4 different facilities located in Barwala, Punjab; Dera Bassi near Chandigarh, Punjab; Himachal Pradesh and Bhiwadi, Rajasthan. With 3 presses on each location, we have a manufacturing capacity of 13.5 lac sheet every month. Each of the units has a separate brand entity and each has a separate market share in India at present. We are in process of merging all the decorative laminate manufacturing units under one company as Virgo Laminates ltd.
Q:- We have heard about expansion plans of Virgo in Gujarat. Can you elaborate about your vision and future manufacturing expansion plans for HPL or new products if any?
A:- Yes, we are going ahead with expansion in HPL manufacturing capacity now. We have identified land in Ahmedabad, Gujrat for ACP and HPL manufacturing. In Gujarat, we aim to add large size presses apart from regular ones and enable this facility for exporting to whole Asia & the World.
Q:- Are you coming up with Aluminium Composite Panel manufacturing on the same location?
A:- Yes, in fact Ahmedabad plant will begin operation of manufacturing Aluminium Composite Panels and in second phase we will produce HPL. The ACP production shall commence in beginning of next financial year. We will produce all variety of top quality ACP for domestic and exports markets including Fire grade or A2 grade. After starting the Aluminium Composite Panels, in another six months we will be ready with decorative laminate production in Gujarat plant. We also aim to expand the ‘Aluminium rolling unit’ operations. We already have an Aluminium Rolling manufacturing plant in Himachal Pradesh and now we will be adding another in Gujarat. We will add rolling mill and other allied machineries for Aluminium rolling products and aim to double our present capacity.
Q:- What is the present ‘Laminate Industry and Trade’ scenario?
A:- Despite of little weakness which is temporary, I will call it good for all. Laminate consumption is steadily growing in India and we all get more clarity through Ply Reporter’s survey reports time to time. Of course, there are now more options available for dealers because many new manufacturers have entered in HPL manufacturing but it also requires regular efforts and knowledge of markets and trends. This is the time when people shall be cautious in dealings on the basis of ‘credit behaviour’ and ‘working style of people’ before making commitments. Laminate manufacturing is not just a plant based work, it is a full time involving work.
Q:- Many new plants are reportedly being added and majority of them keep talking about expansions. What about new laminate industries and HPL future in the country in long term?
A:- Industries are always established keeping long term view not on the basis of present scenario. If you observe, MDF lines are also growing in India which will bring major change after 6-7 years. In developed countries 80 percent of wood panel needs are fulfilled by MDF not plywood but in India, this ratio is reverse. Once the demand for MDF will grow, there would be a trend of declining demand for HPL. Hence, in long term perspective, too many plants would not be in position to sustain. If there will be too much of MDF availability then there might be a gradual shift from plywood to MDF and that may halt the growth of HPL too. And this might change with time hence laminate demand growth may turn to declining side after 5-6 years.
Q:- Now you seem to switch from distributor model to company warehousing driven distribution in the country? Is it planned or just due to competition?
A:- In majority of states, the distributor driven marketing is not feasible in present competitive scenario. There are various limitations like many unexplored areas, margin issues, payments etc. And when a company look for volume growth then monopolistic working with limited sales is not a win-win situation for both the sides. The better is to develop logistics and warehousing in such manner that supply and service can reach to every corner within a day. Virgo group has already established 18 Go-downs across the country and supplying to the regional stockist in every possible area.
Q:- After a long wait for GST, the time has come when approximately 60 percent of the laminate companies are making genuine efforts to work in organised manner. Visionary laminate manufacturers have changed their approach towards business practices hence they are adopting transparency and cleaner practices. Slowly I think everyone will be with the system.
Q:- What is the present growth rate of Virgo group’ HPL and the growth during last 3 years?
A:- Virgo HPL segment put together is growing at approximately 12 percent annual growth rate. This is just an estimated figure on the basis of our volumes, because I do not have value wise growth record at present. I believe we have grown very well after GST when there is a level playing field for organised and unorganised players in the trade. We are confident that our growth will sustain in years to come because we have been focusing on domestic so far but it is the exports for which we are going on full steam now.
Q:- What is your view on present reaction of Laminate Industry &Trade after GST?
A:- After a long wait for GST, the time has come when approximately 60 percent of the laminate companies are making genuine efforts to work in organised manner. Visionary laminate manufacturers have changed their approach towards business practices hence they are adopting transparency and cleaner practices. Slowly I think everyone will be with the system. There may be few players who think they can manage the old ways but it is not going to last for long. There are approximately 40 percent people who are failing to recognize the opportunity of getting organized at such a lower 18 % slab and they will regret it for sure. I believe, overall organised working has increased and transparency in working chain is coming slowly.
Q:- What is the present volume you achieve at Virgo every month?
A:- Virgo laminates is able to sell around 10.50 lakh sheet every month in the market. Calculating the market share is difficult for us but I think Ply Reporter has the better numbers. I think we have 7.0 % of market share in domestic market. It is just an approximate estimation.
Q:- All Laminates have decorative paper, textures and price, and every one’s folder has many common designs then what is so unique in basics you are talking about?
A:- Decor paper is not same at all. The organised sector spend on R&D and choose a genuine quality supplier where as unorganised players worry for price and hence compromise on paper quality. They do chemical mixing but we don’t do. There are many who use low quality ‘C’ grade craft where as we use
‘A’ grade craft paper with all phenolic treatment. Cheap and inconsistent quality laminates do not use tissue paper but we are very particular about these things and selecting on plates, we buy from Europe and excellent finish providers in China or Korea. We are a laminate brand who offers high quality on decent affordable price.
Q:- Virgo has gradually gained a decent brand status in most of the places where as you did not do any big TV ad or mass advertising?
A:- We have been different compared to those companies who have gained brand status during last 25 years. We have been relying on the basis of our product Quality, Price and Quick Service. All these three strengths have been very good, in fact better than majority of good brands around. We have made and kept on adding satisfied customers and they have made us brand. Our team, distributors and stockist have been very much as a family and they have made us a brand and hence all those who contributed are now getting fruits for their contribution. I think ‘A good team and right approach to the trade makes a good and successful brand.’
Q:- So, what is the target of Virgo Laminates in next 3 years?
A:- We will continue to grow and that is why we are adding more capacity and infrastructure. We aim to increase our decorative laminate sales to 2 million sheets every month. In crisp, The Virgo group aims to achieve an annual sale of 24 million sheets every year in India and exports within next 3 years time. We also have a vacant export market and we are going to explore those market in coming time for which our Ahmedabad facility is getting ready very soon.
Q:- Do you think this target can be achieved in such a short period of 2-3 years?
A:- I believe we (Virgo) have been very lucky to have team of so many good people who are working with us since decades or more than 7-8 years and helping to build Virgo as a bigger brand. The right team is adding right people every day. I would like to say that ‘with so many good people in production, marketing and sales who work day and night, travel 24x7 and making huge efforts to satisfy each dealer and stockist in person are the real heroes for the success of Virgo brand. As a company we have given them freedom to work, making right choices, selecting honest stock points and that’s what every one of them has done. My right approach means ‘to give every stake holder a fair chance to perform, with right products at right market price that is neither highly priced nor loss making for the company. With all this, I do not have any doubt that we will achieve the target of 20 lakh sheet every month by 2020-21.