Plywood industry- A deep insight
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The plywood industry in India has grown significantly in the last 75 years, with a market valued at approximately ₹12,000 crores, primarily dominated by the unorganized sector. The industry expects a 25% growth this year, driven by a shift in consumer preferences towards branded products and a diverse product offering including commercial and waterproof plywood. Key challenges include rising competition from Chinese imports and the monopolization of essential raw materials, which affects profitability.
Plywood industry- A deep insight
- 1. PLYWOOD INDUSTRY IN INDIA By : Vikram Dahiya For: GloobDecor
- 2. WHAT IS PLYWOOD ? Panels comprising of at least three layers (or ‘plies’) of thin wood bonded together with an adhesive. Each ply is usually orientated at a right angle to the adjacent layer in order to improve strength and reduce the probability of shrinkage. The outer layers of the board are commonly referred to as the ‘face’ and ‘back’ and are graded based on quality. The intermediate layers are collectively known as the ‘core’. Plywood glue is graded for suitability for internal or external use. Plywood is a manufactured wood panel made from thin sheets of wood veneer. It is one of the most widely used wood products. It is flexible, inexpensive, workable, and re-usable, and usually can be manufactured locally. Plywood is used instead of plain wood because of plywood's resistance to cracking, shrinkage, splitting, and twisting/warping, and because of its generally high strength.
- 3. INDUSTRY OVERVIEW (1/2) The history of plywood industry in India is recent about 75 years ago. Plywood 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. Plywood industries is the major consumption of composite wood in India.
- 4. INDUSTRY OVERVIEW (2/2) The market for plywood and allied products in India is estimated to be about Rs 12000cr. (USD 2.50 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 Uttarakhand Plywood Manufacturing Association (UPMA) believes that the industry will grow 25 per cent this year compared to last year.
- 5. MARKET RESEARCH • Estimated turnover Rs13000cr. • Future growth rate at 10% p.a. Indian Infrastructure Industry
- 6. THERE IS A SHIFTING TRENDS IN CONSUMERS CHOICES FROM NON BRANDED TO BRANDED PLYWOOD.
- 7. PLYWOOD COMPANIES AND BRANDS IN INDIA While the top selling plywood companies form the bulk of the plywood market in India in the organized sector, this business also has an equally large unorganized sector that consists of several manufacturers who make and sell locally made plywood brands. The price-points of local brands is quite low compared to the cost of plywood sheets manufactured by the bigger companies, however at very low price-points there is a chance that the quality may have got compromised. From the point of view of a customer, it is very difficult to know the quality of any plywood sheet just by looking at it. And hence for those who want to be assured of quality, the best plywood brands to choose from, will be those that have an legitimate ISI mark, which is a symbol of trust for quality. IS specification numbers are also printed on the boards just above the ISI mark. e.g. IS: 710 means Marine plywood and IS:303 means MR and BWR grade plywood.
- 8. SOME OF THE BIGGER PLYWOOD COMPANIES IN INDIA AND THE BRAND NAMES OF THEIR PLYWOOD ARE LISTED (IN RANDOM ORDER) IN THE TABLE BELOW. Company Major Brands Company Information Kitply Industries Ltd. Kitply Gold, Kitply Curvy, Swastik MR grade, Vista (MR and BWR grade) Kitply is a one of more famous plywood brand in India. The company started its operations in 1982. Other than plywood the company also manufactures blockboards, decorative laminates, and it's 'KitCol' brand of wood adhesive. Century Plyboards (India) Ltd. Century Ply The company also manufactures blockboards, veneers, laminates, MDF and Prelaminated Particle boards. GreenPly Industries Ltd. Greenply plywood, 'Green Club Premium Ply, it's 'GreenLam' brand of decorative laminates and others. GreenPly is a multi-national interior infrastructure company and has operations in several coutries. The company also makes blockboards, laminates, and decorative veneers, and MDF. National Plywood Industries Ltd. Brand name: 'National plywood' The company manufactures plywood as well as laminates. Sarda Plywood Industries Ltd. DuroPly, DuroFlex, Duro-PumaPly as well as several other brands. The company manufactures plywood, decorative plywood, blockboards and flush doors etc. Mayur Plywood Mayur ply The company has a Pan-India presence and also makes decorative plywood, veneers and doors.
- 9. TYPES OF PLY PLY COMMERCI AL PLY SEMI- WATER PROOF PLY WATER PROOF PLY
- 10. COMMERCIAL PLY It is the lower ranged ply for general purposes, glued by the U.F. bonded i.e. Urea Formaldehyde Bonded ply resin. It is not water proof in nature and the durability of the plywood is considerably lower than other water-proof plywood. This type of plies would be suited best for interior locations only.
- 11. SEMI-WATER PROOF PLY It is the medium ranged type of plywood for the interior locations and furnishings. It is glued by M.R. Grade i.e. Melamine Urea Formaldehyde resin. It possess the better water resistance properties compared to U.F. resins. It can bear the optimum temperature which makes it best for interior furnishings.
- 12. WATER PROOF PLY It is the higher ranged plywood used for interior as well as exterior uses for furnishings It is glued by P.F. bonded i.e. Phenol Formaldehyde resin. It is the best resin used as a glue line for plies and woods. It gives the best qualities of water resistance, durability, long lasting gluing effect, unbreakablility for quiet a few years.
- 13. BUSINESS MODEL
- 14. PLYWOOD MANUFACTURERS IN THE WOOD INDUSTRY VALUE CHAIN Forestry Sawmills Wood Processing (Plywood Manufacturers) Buyers (Furniture Manufacturers) Consumers Timber Chemicals (SyntheticRes in,Urea ,Phenol)
- 15. PRODUCT OFFERINGS Major demand for tea chests plywood, marine and aircraft plywood. Apart from these there are specific demand for the following articles from the consumers:- 1. Shuttering Plywood 2. Packaging Plywood 3. Plywood drums 4. Flush doors 5. Commercial & Decorative Plywood 6. Block Boards 7. Moulded Plywood furnitures and chair seats 8. Laminated picking sticks for cotton and jute textile industry 9. Sliced decorative veneers of walnut, teak, rosewood etc. 10. Compregnated wood veneers required for heavy chemical industry and electrified railways.
- 16. DISTRIBUTION CHANNELS Carpenter/ Architect channel Retail Stores channel Government Offices channel Corporate channel Real State / Builders channels
- 17. SAMPLE DISTRIBUTION CHANNEL Here I have used Greenply (as a brand) and Bihar (as a state) to study sample distribution channel in Plywood industry.
- 18. MARKET ANALYSIS There are total 206 Dealers are available in Bihar region, in which 80 are Direct Dealers. In respect of Bihar, there are 8 to 10 Distributor offices present which gives a considerable amount of returns compared to others. There are around 3 Dealers are working strongly in Muzaffarpur(Patna 2) and alone Shree Ram Sales gives 23% of sales over total amount of sales overall and rest amount is covered by other dealers. There are total 80 counters in Bihar in which 55 counters are from RSD (Rural Sales Distribution) or Rural area. There are total 6 factories in all over India which manufactures different product lines of Greenply Industries. In Patna 50% of sales are Apartment based and in Muzaffarpur 75% are Carpenter based sales.
- 19. DISTRIBUTION LEVELS There are total three levels of Distribution Channel which works for ply industries. I. 0 Level Distribution : KAT Builders / Real State (KAT = Key Account Team) II. Wholesale Distribution : Company Wholesaler Outskirt Retailers Customer III. Dealers Distribution : Company Dealers Carpenters Customers
- 21. ARCHITECT’S VIEWS According to an Architect, things which they look forward to are: I. Quality of the product II. Durability period of the product III. After-Sales Services provided by the company IV. Price of the product. V. Company’s initiatives.
- 22. CUSTOMERS DEMAND There are different categories of customers, who seeks different variety of products: I. Top Customers : These customers are not price sensitive about the products. They follows the quality features/benefits of the products. They consults the Interior Decorators and Architects for the selection of products. They seeks longer durability period in the products. The return from this segment of customers are considerable for company and for the customers as well.
- 23. II. Middle Customers : These customers wants a blend of quality with a affordable prices which should be matching there standards. These customers requires quality with affordable prices and higher durability period of the products. In this category of customers, the products offered by the company have more varieties and ranges. These customers generally prefers the Water-Proof and Semi- Proof plywoods. III. Lower (Economical) Customers : • These customers generally seeks the low price range of products. • These customers are price sensitive in nature and quality is the secondary factor for them. • These customers are generally found in rural areas of India. • For these type of customers, company offers the economic range (Ecotec) commercial plywoods, which provides lower quality range of plywoods with affordable prices.
- 24. LIMITATION OF CUTOMERS I. Preference of Vastu-Sashtra over Functionality. II. Lack of awareness III. Limited Spending Power IV. Taste difference V. Snop Effect (Copying Mentality) VI. Culture differnce VII. Lack of initiatives and individuality.
- 25. SUGGESTIONS These are the suggestions given by the Architect : I. Ask for Consultancy. II. Better market exposure III. Companies initiatives IV. Culture growth V. Growth of infrastructure VI. Change in buying behavior of customer.
- 26. CHANGES IN THE BUSINESS ENVIRONMENT Following changes in the business environment can lead to changes in operating environment of plywood manufacturers Renewable wood as raw material on the rise Wood construction has a positive impact in terms of climate and environment. The increasing popularity of ecological construction promotes the use of wood and wood products. Research on the climatic impact of using renewable wood is in its early steps. The use of higher value-added wood products, such as LVL, in building and the use of veneer-faced products and plywood in interior decoration are on the rise. All this contributes to a high demand for wood products technology. Higher environmental awareness and tightening regulations Consumers and customers require end products that are manufactured in an environmentally friendly manner, cause a minimal load on the environment, generate low levels of emissions and make efficient use of renewable raw materials. The traceability of raw materials and end products requires standardizing of production processes. Higher quality demands placed on manufacturing create new business opportunities for the suppliers of wood products technology and related services. More cost-efficient manufacturing methods necessary to face tightening competition The demand for wood products is on the increase. They are manufactured in larger mills whose competitiveness is based on a more efficient use of raw materials and lower unit costs than ever before. The toughening competition between plywood suppliers leads to investments in new, efficient production processes. Energy prices up The price of energy needed for the manufacturing of wood products will reach new heights, and customers will demand energy-efficient solutions for their production processes. The environmental impacts of the raw materials, such as glue and coating agents, are minimized and attempts are made to better utilize the streams of by-product generated. Emerging markets to play a greater role The increasing prosperity of the emerging markets will boost construction volumes. As the
- 27. ANALYSIS OF THE BUSINESS MODEL
- 28. STRENGTHS OF THE BUSINESS MODEL Easy Sourcing of raw materials: India has huge forest cover and well developed chemical industry leading to easy availability. Few players have a vertically integrated supply chain (they own plantations as well) which helps them procure best quality timber Marketing efforts focus on strengthening relationships with network through relationship building programs help retain distributors Focus on key influencers by mapping their performance (namely architects, interior designers, carpenters and contractors) and rewards for their performance Continuous innovation in product offerings: Innovations like Engineered wood flooring and MFC(Melamine faced chip board) help them stay competent in the international market Capacity utilization has improved significantly during last few years which has improved profitability
- 29. THREATS TO THE BUSINESS MODEL Major challenge being faced by the plywood industry is the monopolisation of certain critical inputs for plywood manufacturing. Face veneer, which provides support and finishing to the plywood, is one such product. Prepared from gurgan and kuring woods imported from Burma and Malaysia, it is a monopoly item Another threat is invasion of Indian market by Chinese plywood products Threats from wood substitutes made from agro wastes such as bagasse, rice husk and cotton stalk or from wood that cannot be used as timber, such as twigs and small branches Low operational efficiency in Indian plywood industry leads to low profitability Competition has lead to increase in the bargaining power of customers making pricing cut throat