Ply Reporter organised an e-Conclave on 'क D;k dgrk gS cktkj! - Discussion on Price Hike and Present Scenario' on 13 June, 2021 which was powered by 'DURIAN - Since 1985'. In the conclave the panellists were Mr. Ritesh Singhvi, Vishal Ply, Bangalore; Mr. Bhavesh Jain, Jain Timply LLP, Chennai; Mr. Sanjay Agarwal, Sai Laminart, Hyderabad; Mr. Valji Patel, Prince Ply, Mumbai; Mr. Pradip Karnany, Mangalam Decors, Delhi; Mr. Jitendra Sadhwani, Sadhwani Wood Products, Kota; Mr. Alay Nagori, President, ATMA, Ahmedabad; Mr. Yogesh Bang, President, VPMA
Nagpur; Mr. Sanjay Agarwal, President, PHTAB (Ply & Hardware Trade Association of Bihar); Mr. Vijay Patel, President, RPTA, Raipur; Mr. Rajiv Parashar, Editor, Ply Reporter and Mr. Pragath Dvivedi, Founder, Ply Reporter
ON MARKET MOVEMENT, DEMAND AND SUPPLY BEYOND SECOND WAVE
Mr. Alay Nagori: The retailers are having problems with the fluctuating price of wood panel products. Secondly there is a material issue everywhere so there is financial crunch in the entire supply chain.
Mr. Valji Patel: I think after August the market will pick up faster. Financial activities are irregular so who is to work will have to invest their money into business and move ahead. In Jan, Feb and March over one lakh flats had been sold in Mumbai so definitely there would be a demand spike.
Mr. Yogesh Bang: The price hike is now an international scenario so no one can control it. Earlier there was a checkpoint from China that is closed today so the price of the product is going high. The manufacturers have taken its benefit and the product price has increased by over 25 to 30% in six months. Due to the unstable price of raw material the finished products price also changes frequently and the dealing comes on stress. So, the manufacturers should also support their channel partners.
Mr. Vijay Patel: The price hike of raw material is a testing time for the entire trade and industry. The entire supply chains, from manufacturers to retailers, as well as ongoing projects are in stress with rising costs. In my opinion the retailers are facing much more resistance from their clients and projects in terms of price rise. So, the entire trade should handle it with prudence having proper communication with all in the supply chain, because if the manufacturers all of a sudden increase the price the suppliers to the project’s liability come to an end.
Mr. Pradip Karnany: I hope in the coming days the sales will be much better than before and by July the demand will be there in continuation. In terms of price every item whether it is food items, petrol, or in our products related to building materials has become costlier. But, the plywood price did not see that hike despite the raw materials like phenol, formaldehyde, veneer and timber price have gone up sharply. I would say the price should increase but amicably at a slow pace. It will facilitate a roadmap to fulfil their commitments in trade.
Mr. Jitendra Sadhwani: With opening lockdown we are having very good demand from the market and the sentiment is very positive. New orders are being generated from hold on projects and the old running projects are better functioning as labour reverse migration was also not much more this time. The price hike is imminent but it should be with prior information for at least 15 days like what is happening in MDF. It helps the traders to manage their commitments and take new orders with a new price list. In Rajasthan there was no issue of payments with all functions at a comfortable pace.
Mr. Sanjay Agarwal: For growth of any sector communication is the most important tool and in this pandemic Ply Reporter has facilitated the same for the entire wood panel industry and trade across the country. With the help of it we are resolving many issues before us. The industry scenario was active in Bihar and payment was also there in continuation with material supply from companies and release of stock in funds with retailers and traders. The demand is picking up in the market just after opening lockdown. The issue is high rising prices as in a few months there is a system developed for the same, but the industry and its stakeholders are not able to increase the price of their products in that capacity. The middle in the chain like dealers and distributors are working as shock absorbers. I hope with rising demand things will go back to normal.
For growth of any sector communication is the most important tool and in this pandemic Ply Reporter has facilitated the same for the entire wood panel industry and trade across the country. With the help of it we are resolving many issues before us.
Mr. Ritesh Singhvi: The construction activities were allowed but the payment holding is also there with their end taking benefit of lockdown. But after opening lockdown their registration will start and fund flow will also be there, so I hope after easing up scenario the market will bang on. The retailers are supporting wholesalers and they are supporting builders and the entire chain is supporting one another and the work is going on. This year midsegment non branded companies have started to follow what the branded companies have done last year. So, we as suppliers need to adopt the system. At the payment front we brought 50 to 60 percent additional investment, not by having payment from retailers that brought a comfortable situation to factories. The price hike directly impacts the suppliers and indirectly to the customers and retailers. The trouble guy is wholesales so we have to bring the payment system in control by reducing the credit into the market. The fear of having reduced margin with no credit is worthless like branded companies having done their collection and the channel partners picking their goods also.
Mr. Bhavesh Jain: During lockdown the dispatches were going on at a slow pace. I hope it will be back to normal in the coming days as after the opening lockdown we could feel the “India will fight back” attitude among people.
Mr. Sanjay Agarwal: The entire chain is to support each other to keep running the cycle. In the future we have to have trade terms for everyone whether it is retailer, wholesaler or any other. In terms of price rise the entire world is volatile, for example the birch ply has increased by 2.4 times.
ON PAYMENT SCENARIO
Mr. Pradip Karnany: After opening lockdown again we are getting good payment flow from retailers. This time we entertained only good parties so there is no such credit scenario with us.
Mr. Vijay Patel: Every wholesaler has increased their investment where it is self infused stock money or having procurement from banks. At least 25% investment has increased from last year. We have to accept that the wholesalers’ 99% money doesn’t sink dealing with retailers but definitely gets late.
Mr. Valji Patel: Due to lockdown our investment has increased. In fact if you are not getting proper payment it doesn’t mean we don’t have the right to hold the factory owners. We have to infuse money to run our business.
Mr. Ritesh Singhvi: The same trend is in our case and we are there as a soft corner with both the manufacturers and dealers/retailers so we need to draw a line. The distributors are sandwiched as they are paying to the companies without getting support from retailers, but in fact the distributors had come to existence with the same concept as a financer.
Mr. Jitendra Sadhwani: After discussion, the retailers segregated the parties in different categories after lockdown. And accordingly the credit ratio and profit margin has been fixed for them. We have been following the same for 8 to 10 months, so I don’t think after this lockdown any distributor was having payment issues. So, if you go with the norm with filtered parties (except the special cases) resolving your issues you will not have any problem in future.
Mr Sanjay Agarwal: Now a new generation came into business without having trading or business background investing their earned money or money in hands into property and other personal things like cars and other luxury etc. We plan but do not execute so quickly and with coming up demand in the market we just indulge into recovering backlog and rest planning turned backburner.
CAN THE DISTRIBUTORS BE THE MASTER OF ALL?
Mr Sanjay Agarwal: Definitely not, because the product limitation is compulsory, with more products the procurement will be troublesome and the distribution will also be hazy with unsterilized pricing. With less number of products they can avoid these issues and work comfortably with right procurement and distribution as well. With it the after sales service will also remain intact.
Mr. Pradip Karnany: Yes they can do more than 5 products as their job is to maintain a stock and give proper after sales service.
The positive side and most important point is that the traders are aware that if raw material price is increasing the product prices will definitely increase and the cost of running the project will also increase. The imported product available in India is at the lowest price from across the world. Still Indian Plywood, laminate, particle board, MDF are available at genuine rate in India. So, that is not the case that the manufacturers are taking advantage with decreasing imports or not having checkpoints from China.
CONCLUSION
The conclusion is that those who will pay will get their material. Price hike is inevitable whether its acceptance is slow or faster. The demand was there and with the opening lockdown it is improving and by July ends there is a hope that it will be in good position.
With discussion it is clear that on an average in May there was nearly 30 percent business operation across the county and in June they are expecting to 60% and by July 80%. Payments are the burning issues today and the first priority is to arrange it for sure to sustain in the business. The distributors’ pain point is that the payment is not coming from retailers.
The filtration in wood panel trade has started but the process is not so easy. The retailers must understand that they need to invest money, because the distributors invest thrice to increase their sales and they need more margin because their investment is three times. So, the retailers who wish to do business with reasonable good margins must stick to the parties and invest at least one and half times to the sales. Be alert and try to not be on the list of defaulter parties. Rate is increasing and it will continue without any hesitation as there is no control over it because it is an international scenario now. Market is recovering and will take a pace in coming days.