Plywood industry hit by real estate slump

The Indian plywood industry has estimated annual revenues of Rs 25,000-30,000 cr, and is dominated by unorganised players

The plywood industry has been hit by the slump in the real estate industry, which is a significant source of demand for plywood. The industry is also having a hard time holding its own against cheap imports from China.

The Indian plywood industry has estimated annual revenues of Rs 25,000-30,000 crore, and is dominated by unorganised players.

Sajjan Bhajanka, president of the Federation of India Plywood and Panel Industry, said the invasion of the Indian market by Chinese plywood products was a matter of concern, especially for small and unorganised players. Naresh Tiwari, president of the North India Plywood Manufacturer Association (NIPMA), endorsed this view.

Plywood manufacturers say that although this year has seen lower imports from China owing to quality issues, they fear that once China starts flooding the Indian market with quality products, the domestic industry – especially the unorganised segment – could be in for big trouble.

Tiwari pointed out that in China the government supported wood-based and allied industries, enabling them to flourish. However, in India, even though the wood-based industry – especially in Punjab and Haryana – is located near raw material sources (wood), it is unable to find its feet in the absence of support from the government.

NIPMA estimates the annual revenues of the northern region’s plywood industry to be about Rs 5,000 crore. Its growth rate, earlier eight to 10 per cent per year, has now come down to five per cent, said Tiwari.

The slowdown in real estate, lack of support from the government, and the invasion of the Indian market by Chinese products, Tiwari said, are stifling the growth of the industry.

A senior official of the Kolkata-based diversified group, Mayur Industries, had said in an earlier interaction with Business Standard that the real estate slowdown had especially hurt panel product manufacturers.

As against 40 per cent growth in the first two quarters of calendar year 2012, Mayur Plywood has subsequently grown by 20-25 per cent, primarily owing to the slump in the real estate sector, the official had said.

Devender Chawla, president of the Haryana Plywood Manufacturers’ Association, said labour shortage was another problem the industry was grappling with.