The price rise in PVC/WPC panel has brought a discussion among the stake holders to find ways for this crisis management. For manufacturing of PVC/WPC, the price of raw materials shooting up since last 6 months has put the industry players and traders into trouble as there is price rise of 12 to 20% in boards. But Board manufacturers are confident that this is temporary phenomena, and the situation will be normal in couple of months. The producers clearly put their views for the betterment of industry, and are hopeful that this product market will sustain and register fantastic growth in future because of its numerous benefits and applications. A report…
The Ply Reporter brought the leaders of PVC/WPC industry at a platform by organising an E-conclave on the subject ‘PVC/WPC market: Despite Price Hike, Demand Rising’ on November 08, 2020 and tried to find out a solution for present crisis in this industry due high price rise of this product. The powered by partner for the event was Advance PVC Laminates. The panellist for discussion included Rakesh Agarwal, Managing Director,Amulya Mica WPC; B L Bengani, Managing Director, Indowud NFC; Deepanker Garg, Director, Alstone Industries; Vinay Agarwal, Director, Floresta; Rajendra Shah, Business Head, New Age Product,- Century Ply (India) Ltd; Subir Palit, Country Head, Greenply; Rahul Garg, Director, Black Cobra Group and Pragath Dvivedi, Founder & Chief Editor, Ply Reporter magazine.
The event begin with the introduction of the panellist by Mr Rajiv Parashar, Editor; Ply Reporter. Welcoming the panellists he briefed about the industry and said people in the industry is very curious to know new things, that is being proved by having huge number of viewers presence in all webinar organised by the Ply Reporter. Today the panel industry in India is worth over Rs 40,000 crore. Among them PVC/WPC started its journey in 2012 has reached to nearly Rs 2000 crore. The players have worked tirelessly for the growth of PVC/WPC and increasing awareness of the product by innovating and investing a lot for it.
THE EVOLUTION OF PVC/WPC
Various industry players expressed their thought and believe how their journey of growth started and how they reached to the present level overcoming their challenges. Many of them also suggested for the sustainable growth of the industry.
Rajendra Shah, Business Head, New Age Product,- Century Ply (India) Ltd: “In last three-four years I observed that what growth of PVC/ WPC should be there have not been achieved. I would like to say that with value addition, this product needs to be promoted innovatively, which is what we are trying. We have organised over 1000 carpenters’ meet especially for this product. Our approach is to observe concept based selling and make this category bigger. As of now we are trading in this segment but very soon we are going to start its manufacturing at Gandhidham, Gujarat.
Deepanker Garg, Director, Alstone Industries: After facing lot of issues of borer, termite and water with plywood in our home furniture, we first experienced with WPC in 2008, and it gave excellent result in all aspects. Having observation for two years, we realised it is a perfect panel product for various applications and ventured into it with small volume of production by installing two machines that is how the journey begins. Slowly it created its own space giving solution to such difficulties (borer, termite and water) with plywood and its sales boost on later stage. Today we have six lines of production and the demand is also increasing slowly.
WPC definitely has made a space in the hearts of architects, interior designers and consumers, but the acceptance from those have greater who have somewhere or sometime felt difficulty with plywood. WPC is good product for application where there is a need of it like areas that is water and borer/termite affected. With these applications it is definitely created a space, but where there is no need people do not look for it due to price issue.
Subir Palit, Country Head, Greenply: Today at the floor level like carpenters are very well aware about its availability, quality and the demand is being generated despite the fact that the consumers (end users) are not even much aware about it. This is very good sign for this product category. So, I feel that this product has made its place in the country and there is huge opportunity for this product category. I expect that this product will grow with 10% of CAGR as this product is being used at ample uses like for borer proof, termite proof, water resistance, durability, high strength, high gloss, back balancing, etc. It has reached to the consumers with its requirement and can be a better option for plywood, but we have still miles to go.
Today good companies are coming in like Greenply, Century, etc with application products like doors, window frames, etc. The way I look into it is investing in new tools, new product lines – complimenting the existing ones will be the key for growth in future. So, this gives an opportunity for the companies who are hungry for growth. We have added a new product category called hollow doors for tier 2-3 cities for kitchen and toilets. So, this is all different applications on PVC boards. We can do categorisation of the product like ISI 710 in plywood. The major challenge is not having categorisation and certification offered by the government. It has to be brought as fast as possible, otherwise the customers will start upsetting so will be the brands.
Rakesh Agarwal, Managing Director, Amulya Mica WPC: As a part of diversification and expansion from what we have speciality to offer termite proof, borer proof, water proof plywood, we opted WPC/PVC after an extensive research and observing that this product is very promising for future growth. The industry conglomerates pushed us ahead and today we are at the production level of 325 tonne boards per month. It has created its own market, but not being very much capital intensive segment of the industry, hence many small players ventured into it and on the basis of only price and weight they tried to sell their products only without making any efforts for product promotion and consumer awareness initiative.
We are doing lot of research in product development and its promotion. Till date we have spent crores of rupees and have interacted with over 22000 carpenters face to face and in mass interaction we talked to architects and interior designers. We are also exporting it to Turkey, South Africa, and Israel etc. The product has reached to the customers but I would like to request to the players to create a budget for its awareness programme at their own capacity. This product is being unjustified by the non-serious players by way of offering its low quality at low price. With the industry effort a reasonable standard must be maintained for survival.
Vinay Agarwal, Director, Floresta: I was not in this industry but for diversification and bring out something good to the market, we researched for it and found that PVC/WPC can be a demanding product in future. Three to four years before only PVC white board was there in the market. After doing lot of research we decided to bring out latest and fine quality technology for this product category that helped us to bring WPC. Initially we had to face two challenges one is to convert from PVC to WPC and create a market for this new product category, secondly convince the plywood consumers that it is good for many cause. Today we are doing well with good brand awareness in WPC. With this, what we are serving to the market is a solution to a problem that is termite, borer and water affected. If we sell it as cosmetic then we all will be happy but if opting as trading with quality deteriorating this product will definitely have to face setback or suffer in coming time.
WPC/PVC category is growing and if a retailer/dealer does not give space in his shops are losing a great opportunity for margin. With different brands and quality there are lot of categories and all having their own customers’ base. PVC board was selling in India previously and Floresta brought a new category WPC and alter Indowud by BL Bengani has come up with another new product category NFC.
B L Bengani, Managing Director, Indowud NFC: During early days of my career while serving different companies, I was much vigilant to bring something so good every time that is best for the industry. Later I ventured into panel industry with own setup and brought NFC (Natural Fibre Composite) – a new panel product after having extensive research on ‘Relwood’ by Reliance Industries and interactions with many scientists and industry conglomerates.
NFC is wood free product in which rice husk is used. Rice husk very good raw material which increases the hardness of the product. It has been a year now and we have reached to many markets in the country. We are getting good demand from Gujarat, Rajasthan, Maharashtra, Chhattisgarh, Kerala, Tamilnadu etc. NFC density comes nearly 750 to 800 which is generally found in Gurjan Plywood. It looks like plywood and also work like it facilitating all applications if plywood. It can also be mould into different shape by Thermoforming. Despite that there is no deterioration in its strength. It has all benefits like termite proof, borer proof, fire retardant, etc and is best for exterior also. With lot of applications in interiors like wardrobe, furniture, panelling, kitchen etc. we are very happy with this product. It can be a complete replacement of plywood.
PRICE RISE ISSUES AND STANDARDAISATION
Price is not a barrier for the customers, the quality and innovation lead the way to the heart of consumes. Ply Reporter suggests the dealers and retailers to opt the right product after observing the purchasing capacity of people in your market area. But those who are operating in metros and emerging tier 2 cities, you must opt for quality product because your customers’ base can be architects and interior designers. If you are functioning in rural area you should go with starting category of PVC/WPC.
Rahul Garg, Director, Black Cobra Group: WPC solves the pain point of customers so there is no price barrier for customers if they get solutions to their problems. The price rise is genuine as the main chemical used in this product is Poly Vinyl chloride which price has increased by over 80% till date. But I would like to say that sudden jump in ready product for the dealers is not good, and the manufacturers should observe it in phase manner. According to the constituents used in the product the price of WPC should have increased by 40% but the product price rise is nearly 10 to 15%. The customers are hesitant despite that the sales have not be affected as this is basically application based use where there it is much needed. If the manufacturers do not increase the price of the product it is not viable for them to survive in current shooting up situation of raw material costs.
Rajendra Shah: We have already increased the price by 10 % according to the range and thicknesses and hopefully by end of December one more price rise would be witnessed as we have no option but to increase because the import cost have increased despite the material price rise in international market. Any industry cannot survive without margin, so price rise is eminent.
Deepanker Garg, Director, Alstone Industries: Ten years before when we had started its manufacturing there was constituent ration of 70:30 of polymer and filler but it has been observed that some of the players have reversed it now. If the ratio would have been same the price rise must be constant for everyone, but the scenario is different that’s why there is difference in price rise. Those who are mixing more filler are less increasing the price. We have already increased by 16% and soon going to increased nearly by 8% as we have to maintain the quality of the product.
We are leaving no stone unturned for obtaining IS standard for this product category and some of the industry players are whole heartedly helping us for it. The best part of this industry is that India is the first countries which have get it included into CPWD list of products. Besides, we have obtained the government specifications for it. And I assure you all that with standardisation, which is very soon be a reality this product category will have common interests and offerings to serve the targeted customers better with trust and commitment. With this development the quality manufacturers will once again move ahead.
Rakesh Agarwal: We have lead free WPC listed into the CPWD, and commitment with them. One thing I would like to bring into the knowledge of all that many of the players in this category do not have testing labs. Amulya Mica WPC has one of the best laboratory and international standard apparatus for its testing having assistance of two full-time technicians and consultants. We need to use the resources forming a cluster of players. If we cheat our customers the product category would not obtain sustainability in long run.
Ply Reporter suggests all that to make efforts for obtaining IS standards by making a group of players. If there is no standardisation, there is no used of earning money. Sooner or later when standardisation come the players who are not focussing on quality would have to lose their market.
Vinay Agarwal: The manufacturers have not increased the price according to the price rise in raw materials. Secondly, WPC is a marketing product not for trading. The concept selling is going on so even after 20% price rise the manufactures are compromising their margin as the raw material prices have increased by nearly doubles to it. By increasing the price we are sustaining the quality. One thing I would like to warn you that if we compromise with the quality it will harm to the product segment in long run.
Subir Palit: In wood panel industry with branded players the establishment of 2 to 4% price rise takes at least 45 days, but if we talk about PVC/WPC boards, the price rise is painful to us also as we are at growth stage and at this level it can be fatal. But, never the less there is no option with us. The only point of view for retailers is that there is no other option left. Cheap importers who were importing from China and Taiwan will also get affected due to conflict. Their prices are also increasing. A bigger factory in Taiwan is getting shutdown that is also affecting the supply.
TIPS BY SUBIR PALIT
- Right price does not mean the lowest price. Don’t sacrifice on the margins, as we cannot do like E-commerce giants to sell the product at low margin. We have to realise it and do value addition in product sales. We fear that retailers can start undercutting their margins with increase in price of the product. So, don’t undercut margins, better you do the value addition with the product. Today most important is point of discussion. What we are discussing here is to be discussed with customers. It will be very good for all, the industry, retailers, manufacturers as well as the customers.
- Standardisation is the basic issue as without it the manufacturers get differed. So, it is up to the domestic manufacturers to hold the standardisation to create basic differentiation in terms of quality like in Gold without hallmark. That will change the face of the industry, in the moment if standardisation comes and it will gain respect in the market.
- This is not a capital intensive industry and by investing 20 to 25 crores a manufacturing unit can be established and lot of people have that money, so, there is no entry barrier. But, if the standardisation comes there will be some blockage for this type of fly by nine operators.
- Coming two years are very crucial for this industry that will decide that it will reach to the level of MDF and Plywood standards or be remains like this.
Rahul Garg, Director, Black Cobra Group: Our production growth has been 80% in last three months despite we have increased the price by 15 to 20% minimum. The reason for it may be the disrupted manufacturing by small and unorganised manufacturers and increasing demand for organised players. When we talk about consumers, among them the acceptance of this product is better compared to last few months. People are aware that the good quality WPC is actual WPC so the product manufactured by local unorganised players is not solving the purpose. Due to which the customers are diverting towards organised players in faith. At present the standardisation is missing but with industry efforts that will also be true. I don’t think that with price difference the demand has been affected as the customers do not see the price if they get solved their problems of termite, borers and water. And demand in fact will increase until we reach to the last customers who are facing this problem.
BL Bengani: I clearly believe that quality wins at the end of the day, this is a history. India has been market for every type of customers. So, there is no big gap of price as there is even dearer product as well as economical products in the market and that are also being sold according to the needs and price are being determined according to the quality. Quality products give confidence to the customers and for that prices are not the criteria.
SUGGESTION AND CONCLUSION
Vinay Agarwal, Director, Floresta: This is an exclusive product that gives solutions to many problems. The cost of WPC is not very much in a furniture manufacturing but it solves your problems. We should maintain quality standardisation. The current price increase is for short time and in coming days when the price of raw material drops we will definitely pass on that benefit to the customers. So, we should discuss about the quality, service and solutions.
Rajendra Shah: Every product has its own place as we were thinking that MDF and PB will take space of plywood but that did not fulfil the purpose. With standardisation of the product marketing should also be aligned to make aware of the consumers and applicators. We should plan for application based selling. Rather to fight for the market share, we should increase the market pie and we should decide that which application based products have to be marketed together and align our marketing strategy that will help us increase the market and industry will grow. For dealers this product category does not contribute much in sales until the sales of plywood in bulk, so they should not put their margin on stake for this small share. So, stick to quality and brand as by selling its low quality product at cheaper price will ultimately harm your sales of 90% products and reputation. The current price will settle down to 10% down the line so don’t do panic buying and maintain your sales rotation.
Deepankar Garg: This is hard time for us as till October it was all good and we were doing well. But with this sudden price rise November is going tough for sales due to price gap with WPC and other alternative products. It definitely affects the sales as 20% price rise is too much. Till March we don’t see the situation is going to improve because the supply chain is disturbed from all over either from China, Taiwan, USA etc. So, the point of discussion is the only solution to move forward and we are going to adopt it for sure. The dealers need to understand its importance and make their customers trusted towards quality and the reason for this price rise. Together we will solve the problems and pass on this difficult phase of four months. Later on there is bright side of the situation then we will move faster.
We all are focusing on boards, but besides that there are Chaukhat, doors, flooring, lamination, mica, high gloss effect like many things are being made. I would request you all that use this time for value addition as these markets are also very good. The manufactures who have diversified in these products can balance the profit margin which we are losing at boards manufacturing.
Rakesh Agarwal: I would like to say to material suppliers to take it positive that where in the international market the price rise is 35% but the domestic players and importers have increased it by 55%, due to which the industry is in trouble now a days. I would like to say that there should be sustainability for all. The suppliers do not destroy the industry for their profit margin. Also I would like to suggest the dealers and retailers that this is very good product but for which company you are working please investigate thoroughly for the quality and check their certificated as well. I also urge to the manufacturers to make quality and for this with quality material, equipments the mindset for making it is most import. It can have very big market with decking to flooring etc along with the current demand for purpose solutions. The new comers should also do promotions and keep patience at least for three years the market will definitely increase and widened with new applications of this product
TAKE AWAYS
- Don’t destroy the industry just for profit booking – A clear message for raw material suppliers
- The material suppliers should not cut their branches on which they are sitting..
- PVC has every category of buyers but as it is getting cheaper by adding more filler. As its amount goes up and quality of board deteriorate. Don’t think they are not getting equal margin.
- If there is no standardisation the customers are getting cheated. The industry and trade both should or have to make efforts to get it standardised soon, so that the level playing can emerge.
- The price rise is temporary, so in this period the dealers and retailers must discuss it with customers and get their trust maintained.
- This product category is not taking other’s pie but has made its own place solving the problems of the customers.
- This product category is going to expand to various application based uses. So, manufacturers must diversify to other value added products.