Yamunanagar based Star Laminates group has registered fantastic growth in its laminate business and they keep expanding its capacity year on year. Recently, they have added 1 lakh sheets more capacity with installing new machines and plan to install 2 more presses in 2023. With a conversation with Ply Reporter, Mr. Sumit Mangal, Director, Star laminates has shared his vision about laminate business and further growth plan.
Q: - How has been the year 2021-22 for Star Mica laminate business?
It was a fantastic year, and we updated our 0.8 mm and 1 mm folders with the most recent collections in terms of designs and textures. No doubt, our distributors across the country have gained considerable goodwill with us and improved their sales. According to an estimate, they have gained over 20% more sales compared to their last year’s sales. So, we are happy that we are serving good products, with excellent quality and designs.
Q: - Has Star Mica gone for capacity expansion in recent years?
We couldn't do much capacity expansion because we didn't have the infrastructure or space for it, so we're stuck at 3 lakh sheets of production, as we were before. But, yes, we have acquired 7 acres of land for this purpose, and in coming times, the production would double within a year. Then we would be able to promote our distributors with much better offerings and efforts for that.
Q: - Is there any plan to install additional machines?
As of now, with our existing unit, we are able to run at a capacity of 60 to 70%. So, in the first stage, we are improving to gain better capacity utilization, which will help us increase production up to 1 lakh sheets. And, in coming times, we are going to install two more presses that will help us achieve the target of doubling the capacity by having additional production of 2.5 to 3 lakh sheets in 2023.
Q: - Star Mica offers 0.8mm and 1mm. Where do you see the most growth?
We are gaining good traction in the 0.8 mm segment because the distributors associated with it have a better hold in tier two and three cities than metros. We have also achieved good sales of 1 mm also across the country with our 30 distributors who specialise in selling 1 mm. Besides, we have 45 distributors who are selling 0.8 mm, so in this segment we are observing good volume sales.
Our 1 mm sales are also growing year on year, but a bit slower than 0.8mm sales. The reason could be the introduction of the 0.92 mm segment in the market. It initially affected 1 mm sales because people were willing to try it once. I think it’s over now, and if more is ahead, it would be no longer than a year, as 1 mm sales are coming back to their old estate and people are shifting their choices to 1 mm and 0.8mm.
Q: - Why do you think that 0.92mm segment will not last longer than a year?
The segment did not do much to support the manufacturers, as the rate they asked for was not realised even after a long time, and people used to compare 0.92 mm to 0.8 mm. If we only increase the price, for example, if 0.8mm is sold for Rs 500 and 0.92mm is sold for Rs 550, it will be considered 0.8mm only. The customers used to ask for 1 mm in 0.92 mm with similar features. How is this possible when the price of just paper for 1 mm is double at 0.8mm? Besides, the quality match is difficult, as 1 mm premium Kraft paper is used, and for the high-end segment, its rejection is high. So, with high costs, no manufacturer can offer 0.92 mm at a low price. So, it’s easy to think, but while doing so, the manufacturers are definitely making losses.
Q: - You mean to say 0.92mm is a version of 0.8mm!
Definitely, in a nutshell, when 0.92 mm started, the manufacturers used to include quality papers of 1 mm, but when they realised no profit in net sales, they left this segment to entertain, and it started to come in Indian printer papers. Today, those papers are coming in 0.8 mm as well, with some changes in designs and textures, and people like to choose 0.8 mm instead of 0.92 mm. In that way, the seller’s margin comes to nothing.
The thickness of sheets is not mentioned in 0.92 mm folders because the distributors instruct the manufacturers not to mention the thickness. It gives the retailer an advantage to cheat their customers. For a short period of time, the process of making fools continues, after which there is no choice but to lose ground; this is what is happening with manufacturers of 0.92 mm. In this process, only the retailers are making profit; neither the factory owners nor the distributors are gaining anything. In terms of selling 0.92 mm, I believe retailers are now also losing ground.
Star Mica is coming up with a 1 mm premium segment, too. Its planning has been completed, and hopefully within three to four months it will be launched. Its specialty will be separate presentations of various ranges of offerings, such as wooden, solids, abstracts, textures, and so on.
Q: - Do you believe the situation is helping 1 mm and that this segment is regaining its position?
Definitely, the 1 mm segment will attain its position within six months. Many brands or companies that kept themselves safe by not venturing into 0.92 mm are doing extremely well.
Q: - What is your observation on the 1 mm premium segment laminates?
The premium segment of 1 mm is going very well. It will take some extra effort to sell, but there is no doubt that there is a vacuum that must be filled. It is difficult for those who do not innovate in terms of production and sales and do not make extra efforts for that. It requires a process of searching for customers and having them bring out a good range of products by taking all responsibility at a personal level.
Star Mica is coming up with a 1 mm premium segment, too. Its planning has been completed, and hopefully within three to four months it will be launched. Its specialty will be separate presentations of various ranges of offerings, such as wooden, solids, abstracts, textures, and so on. It will show totally premium products, and its offering will be totally different from the general offering in the folders available in the market.
Q: - What is your opinion about the forthcoming expansion happening in the industry?
We cannot say anything as everyone has their own vision. Seeing the plywood scenario, People see better in laminate business, and they may try it, but I think in trials 90% of people limit themselves to liners and only 10% move ahead to range. If they wish to explore the industry, they will have to go for a range if they are venturing into laminate manufacturing.