After a year of economic slump, the plywood industry is rising like a phoenix from the ashes — stronger, smarter and more powerful. The gradual easing of Covid restrictions and a fast-paced vaccination drive are helping businesses buffer the effects of the pandemic on the supply chain and resume normal production.
The second wave may have disrupted the momentum in the first quarter of the current fiscal, but the industry is finally following a steady growth path, courtesy high real estate sales.
Manoj Tulsian, CEO & joint MD of Greenply Industries, listed the macro-economic factors behind the significant turnaround. “The pandemic-induced home ownership sentiment, the work-from-home culture, a rapid growth in the IT sector and the record-low home loan rates have come together to boost the residential realty sector. Mortgage rates also continue to trend at their lowest in 15 years, leading to reduced EMIs and better affordability. All these positive macro-economic factors are acting like catalysts in the performance of the plywood industry in general,” he said.
For Greenply, the net sale was up 96.7% in the first quarter of FY22. The national player raked in Rs 260.1 crore in Q1 of FY22 compared to Rs 132.2 crore in Q1 of FY21. In the second quarter of FY22, the business growth was 46.2%, with the net sale at Rs 430.8 crore against Rs 294.6 crore in Q2 of FY21.
In the fourth quarter of FY21, the company had recorded sales worth Rs 396 crore. “We are optimistic that the numbers will be better in Q4 of FY22, as the country has crossed the 100-crore vaccination milestone while logistics and transportation issues are gradually getting resolved,” Tulsian said. He added that the waterproof/marine grade plywood with ‘Virashield’ protection, which met zero-emission norms, had recorded the highest sales since the pandemic hit because consumer preference saw a paradigm shift towards home interiors that took care of their health too.
The market size of the plywood industry is approximately Rs 22,500 crore, in which the unorganised sector has a share of 75%. In stark contrast to the organised sector, the margin has been minimal for the unorganised sector owing to consumer affinity for durable and branded products. An increase in the cost of raw materials further worsened the situation.
According to Akhilesh Chitlangia, the president and third-generation promoter of Duroply Industries, the current upward trajectory in the plywood industry is expected to continue for the next four-five years because of the pandemic-induced housing market boom and the government’s push for growth of infrastructure in the country.
For DURO (the brand name for the company’s range of plywood), sales in Q1 and Q2 of FY22 were approximately 70% higher as compared to the corresponding period in FY21. The demand in Q3 of FY22 has been 30% higher against Q3 of FY21.
“We expect Q4 to be better; by around 20% over last year,” Chitlangia said, adding that the premium plywood category was recording the highest sales since Covid because consumers were no longer willing to compromise on the quality of materials for their homes. Duroply Industries has launched a bunch of new products, including fire-resistant plywood and a 10ft variety, following a survey.
Director of Kitply Industries Sandip Sawalka believes the plywood sector hit the recovery road in July 2021. However, having faced zero-revenue months and constant pressure to meet fixed/overhead expenses, he concedes that the biggest challenge for the industry is to maintain regular cash flow. “To meet monthly expenses such as salaries, rent, etc., we are trying to work with associates/channel partners whose payments are faster,” Sawalka said.
Kitply is the only lumber company in India to have forestry of its own, developed on a wasteland. It has been awarded the highest corporate honour — the Indira Gandhi Vrikshamitra Puraskar — by the Indian government in recognition of its pioneering role in wasteland development and contribution to forest conservation.
In Q2 of FY22, Century Plyboards India (CPIL) saw the
highest-ever volume and revenue in the company’s history. While plywood revenue
in Q1 of FY22 grew 126% year-on-year (YoY), revenue in Q2 was up 66% YoY. “The
true barometer is that Q2 of FY22 is already at 10% growth compared to Q4 of
FY21, which recorded a plywood revenue to the tune of Rs 399 crore,” said
Nikita Bansal, CPIL’s executive director. “Despite the high base, we expect it
to grow in double digits in Q4 of FY22,” she added.
According to Bansal, the company’s fast recovery can be
attributed to its innovations in the plywood segment since the pandemic
started. “We have embedded three new technologies into our plywood products to
drive strong volume growth in times to come. These are ‘Virokill’, a
nanotechnology-driven feature to kill surface viruses; ‘Firewall’ to provide a
three-ring protection from fire in compliance with Indian, British and American
standards; and ‘Century Promise’, an app that allows customers to scan QR codes
and verify a product’s authenticity,” she said.
For CPIL, two of its major products — Club Prime and Sainik
710 — have contributed to more than 60% of the company’s overall sales since
the Covid outbreak. While Club Prime is waterproof plywood that comes with 25
years of warranty against termites, Sainik 710 is an in-house manufactured
waterproof plywood that offers eight years of warranty and is priced at the
range of unbranded plywood to shift consumer preference. Courtesy: www.timesofindia.indiatimes.com
