The Plywood Trade in India is Mostly Driven through Traders who procure the material from various Manufacturer’s operating in there Region through a series of Middlemen, Brokers & Distributors and Sell the Material to Consumers. The Trade of Plywood involves large Credit Cycles which inflates the cost of the product by almost 20% which is ultimately paid by the end consumer who purchases material on Immediate Payment Basis.
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Currently, Tradologie.com services close to 50 orders of Plywood on a Daily basis and sells all leading brands such as GreenPly, Sonear, Duro, Century, Regal and BhutanTuff etc. for the complete range of Plywood, Blockboard, Flushdoor, MDF Board, Particle Board & MDF Ply.
Despite these growth avenues, the industry is still grappling with some acute challenges. Resource insecurity is one of the major barriers for the industry. Myanmar, which has one of the largest forested regions in Asia, implemented a ban on log exports recently. This has hugely impacted the sector. Rising land cost is another major challenge before the industry. Land acquisition is likely to cost 3-3.5 times more, and the rehabilitation and resettlement costs are also likely to triple, according to CII. This could affect prospects for plywood companies who are intending to expand. The delayed introduction of the Goods & Services Tax has also affected the ability of the organised sector to carve out a bigger market share.
Rising population, growing aspirations and rapid urbanisation have strengthened the demand for residential property in India. Demand for housing units is expected to register a significant growth of more than 50% by the end of 2015. Keeping this trend in mind, the plywood industry is poised to receive huge orders from hospitality, healthcare, office and real estate sectors. Besides, the government’s ambitious schemes such as Swachh Bharat Mission and 100 Smart Cities are also likely to give this sector a major boost.
India’s plywood sector is dominated by the unorganised sector, accounting for 75% of the total market size. Evidently, the inequitable indirect duty structure in favour of unorganised players provides a price advantage over organised manufacturers. Following the proposed implementation of GST, it is expected that this large indirect tax differential will narrow, bringing organised and unorganised players on an even tax platform. This potential game changer could give plywood manufacturers an opportunity to tap into the unorganised market, whose size is 3x the organised market. Besides, this game changer can accelerate a consumption shift from unorganised players to the branded organised market. This, in turn, can catalyse the growth for players like Greenply and Century Plyboards.
The history of plywood industry in India is recent about 75 years ago.Industry claims bright future like other manufacturing industries in the country.The industry is producing more plywood than they have in the last 20 years. A plywood industry is the major consumption of composite wood in India. India’s plywood market is pegged at over Rs 20,000 crores with both the branded and un-branded players vying for a larger share of the pie. The average industry growth rate of 5-7% is creating an annual incremental opportunity worth Rs 1,000 crores. There has been a significant transition in the nature of plywood consumption over the last two decades. Earlier, plywood accounted for 50% of investments in interiors but nowadays it accounts for only 10%, indicating that the cost of plywood is no longer a deterrent. In India, demand for panel products is estimated at 8 million cbm against the current production of 3.4 million cbm, of which 85% is plywood as against the world average of 20%. The industry is highly fragmented, with a major chunk of production coming from small manufacturers, many of whom do not even possess a license to produce. However, the market is driven by a few large companies who have plants at multiple locations, invest heavily in brand building, offer ISI-marked products, and constitute around 30% of the industry revenue. During the period 2008-12, these players registered a CAGR of over 22%, and increased their combined market share to 28%. Not only did industry majors consolidate their market position but also focused on new markets and market entry strategy. Their strategies in capex, brand building and retail network not only notched up their sales figure, but also gave a direction to the industry. The industry witnessed massive investments in capacity expansion and manufacturing. The most significant development was the tilt towards producing a new genre of engineered product – medium density fiberboard (MDF). Besides being eco-friendly and eligible for LEED credit, MDF is suitable for varied applications ranging from cabinetry to molding as it is smooth, uniform and doesn’t warp. Indian particle board and plywood industry have large producers who accounts for 15% of the total production, producing some 30 million sqm of plywood and blackboards. The Indian market for particle board and plywood is estimated in value terms, at over Rs 17billion. Of the total market, particle board accounts for over 30% of the market with the rest over 70% accounted by plywood segments. Western India has emerged as the leader in the particle board segment. A relatively new product in the industry is medium density fiber board (MDF board). The Indian plywood and laminates industry manufactures various engineered woods like plywood, laminates, MDF and veneers. Plywood is the most demanded product of this industry followed by laminates. MDF on the other hand is a small segment of the Indian industry. The market for plywood and allied products in India is estimated to be about Rs 23500cr. (USD 3.80 bn.) with 70% dominated by a multitude of mutely players in unorganized sector, the organized sector has been growing at between 25% and 30%.
The market could be segmented on the basis of distribution channels where the unorganized market accounts for the major share. However with changing consumer preferences the market has seen a shift towards the organized segment due to increased demand for good quality and branded products. The share of organized players in the industry is expected is rise further in the years to come. This shift is taking place primarily due to urbanization and more disposable income.
Greenply performed creditably and topped the chart, especially in a challenging year which witnessed currency fluctuations, sluggish demand and consumer downtrading. Its net sales grew by 10.33% from Rs 940 crore to Rs 1,037 crore, accounting for 48% of its revenues. Plywood sales got strengthened to 44.51 million sqm as against 41.54 million sqm in the previous year.
The second in the list is CenturyPly, which is reported to have a 7.5% share of the national plywood market. However, the plywood manufacturer was able to manage a net sale of Rs 880 crore, as against Rs 903 crore in the last fiscal. The company increased sales volume by 13.88% – from 1,54,733 cbm in 2012-13 to 1,76,211 cbm in 2013-14.
Among the medium scale manufacturers, Archidply seems to have done comparatively well with a turnover of Rs 227 crore. In 2012-13, the company’s net turnover was Rs 202 crore. The net sales of Archidply grew by 12.20% over the last year. While Uniply of Chennai has achieved a net turnover of Rs 146 crore at a growth of 19.27%, higher input cost and higher rate of interest gravely affected the profitability of the Sarda Plywood. This Kolkata-based manufacturer’s total revenue in fiscal 2013-14 was Rs 183 crore, as against the Rs 187 crore in the preceding year
The market for plywood and laminates is mainly driven by increasing demand from housing market. The demand has increased due to growing significance of new construction industry. Plywood and laminates have become an indispensable part of big and evolving markets like real-estate market, furniture market, modular kitchen market as well as the flooring market. The increased demand in these markets triggers the demand in the plywood and laminates market. Apart from this, increasing urban population, rising per capita income . Further, the implementation of Goods and services Tax (GST) in the near future will provide an impetus to plywood and laminate industry.