Extremely slow payment recovery is the biggest negative at present that unorganized wood panel industry is going through reports Ply Reporter correspondents from the market. Payment recovery and collection has become a challenge, and it is already exceeding 90 days as an average credit limit for at least half of the trade. The hands to mouth companies are choking and are unable to run their business thus loosing the supply chain. There are reports that every city has 2 defaulters or half a dozen disputes arising just because there is inability to pay at committed time.
The Retailers don’t have adequate fund in books to pay their suppliers. Even Mid and Small producers and distributors also have been lacking capital flow in accounts. The market slowdown, struggling and withheld projects, weak demand is persisting since the crisis in banking finance are being heard. The momentum in upper price bracket products is poor where as cheap furniture segment is moving but struggling because of severe fund crunch. The real estate is yet to come out of combined impact of “DEMO, GST and RERA” thus fresh demands are not matching to supplies and competition. The ground report suggests that dealers are not earning as needed sales are far lesser than viable volumes per shops.
The Ply Reporter findings reflect that during October, the payment cycle barometer as ‘cash discount’ is being offered up to 21 days that was once considered within a week. The organized segment companies are able to collect their payments within 30 to 45 days but the mid-segment companies are struggling to get even within 75 to 90 days.
The interest cost and heavy competition is affecting around 90 to 100 companies who may have to sell their business or shut shop in coming months, if the payment cycle and market scenario does not improve. These companies belong to Plywood, Laminate, Particle Board and PVC board segment. With almost 30 plants in Yamuna Nagar, Two dozen Laminate producing plants and many others in rest of the country, Payment and capital will be crucial for their existence during next six months. The bottom line is ‘supply to credible players with strict payment terms or become a victim of the circumstances.