Sunil Chhabra has been in the timber processing business for over two decades rather comfortably, but the ongoing economic slowdown has put his business skills to a litmus test, which his ancestors had fortunately bypassed for three generations. “I have never faced such mass downturn in my 20 years of business life,” he says.
His small timber processing unit has gradually started to show a pall of gloom, due to recent cancellation of orders from Jaipur, Udaipur and other exporters based in Rajasthan. “We have registered a decline of around 40 per cent in the production and sale in the past two months,” laments Chhabra.
The city is home to some 150 timber merchants and suppliers, who procure their raw material from the neighbouring rural areas. Over 40 per cent of the demand for processed timber in the neighbouring 10 districts is supplied from here. But this year, even the local demand fell by around 20 per cent despite the ongoing marriage season.
“Last year we had sold around 50 tonnes of processed lumber, while it seems hard to sell even 35 tonnes this year,” said Chhabra. At least 15 of these traders have declared themselves bankrupt and have created a hole of around Rs 10 crore in the trade. Another dozen or so are expected to follow. They are expected to suck out another Rs 5 crore.
Currently, the traders are busy clearing the payments on their credit notes under pressure of the middlemen, deferring on new purchases in the absence of buyers.
When asked about his ways to cope with the downturn, Chhabra has a terse reply— to cut down production. “Cutting down the production implies retrenchment and cost reduction. We have now switched from using electricity to firewood to power our machines,” he adds.
More From This Section
“Job uncertainty and the meltdown have wiped out consumer appetite this season, which, otherwise, is the peak season for timber sales,” added Ravi Shankar, president of the Kanpur Timber Merchants Association.
He however, does not want to put all his eggs in one basket. He is currently desperate to obtain funds to diversify into wooden toy business to offset the losses in current trade. “Although the demand for wooden toys has reduced in face of cheap, attractive and automatic electronic toys, the rural market still has enough market potential to help us sail through the crisis,” said Chhabra.
He proposes to outsource the toy manufacturing process to local artisans who are struggling to earn a living. However, “Banks are not willing to fund our business,”said Chhabra, who recently cut down production by more than 50 percent. He does not expect the market to recuperate soon. “We have no option but to wait till the market catches up and we get financial support from banks and other financial institutions,”Chhabra said.
Most of the units were unable to provide, forcing them to adapt cost-cutting measures like downsizing their workforce and slowing down production. Jagdish, another contractor, had 12 to 13 workers,” The retrenched workers have gone away to Surat and Mumbai in search of jobs or are sitting idle at home.”
“Job uncertainty and the meltdown have wiped out consumer appetite this season, which, otherwise, is the peak season for timber sales,” added Ravi Shankar, president of the Kanpur Timber Merchants Association.
According to an insider, many timber-makers have closed their business as export orders, which account for more than 65 per cent of the business. Chhabra confirmed that export orders worth at least Rs 30 crore have been cancelled in the past few weeks.