Indian wood and decorative panel sector is very prone to payment defaults because there is debt business culture in this trade. 30 to 45 days are minimum debit period and every trade people consider this practice as a fundamental right during purchase of wood and decorative panel product. It is a fact that due to oversupply scenario of plywood, laminates, decorative veneers, etc, the due period has crossed to more than 75 days and in many cases it has touched to 100 days. The lockdown scenario has further extended the due period to by a few days, which has becoming a challenging scenario for entire industry and trade.
Wood panel trade is known to be built on basis of trust and relation but the report coming from market is alarming. During a recent talk with many leading distributors of plywood and laminates, it was found that more than 60% of dealers and retailers were not picking phone,when approached for payments. They also shared that many dealers came up with a variety of reasons, viz, left cheque book in office, no online payment transfer facility, payment pending with contractors, household projects, etc, and that payments would be arranged upon getting the same from the market.
Further, extending the lockdown by 19 days has created more fear among companies, distributors and retailers because further delay of payments would malign the image and defaulters number may emerge in large scale. Experts say that the companies and marketing houses having high debt and low margin would be in for more difficulties once the lockdown gets over. They will be unable to give payments, thereby leading to an increase in number of defaulters in the wood and decorative panel industry and trade.
Organised wood panel brands have been working on ‘Channel Financing’ system to save their payments and customers. However, the unorganized sector are praying, chanting and waiting for better days ahead after COVID- 19 pandemic.