The Delhi governments finance minister, Mr A K Walia unveiled a budget on 22nd march that hiked taxes on 32 products to get additional revenue generation of Rs.850 crore. Many wood based products including wood and furniture got an added percentage that rose from 5% to 12.5%. The proposed increase on VAT from 5% to 12.5 % on wood, plywood, laminated boards, household plastic goods, locks, furniture, door & window fittings, fibre & plastic boards, wire & metal mesh is going to make things trickier for the wood and panel trade in Delhi and will also affect the manufacturers working style with Delhi.
Earlier the VAT was 4 % on various items except decorative laminates which was at 12.5 % vat. Delhi enterprise and traders
Steep hike of Raw material compelled Film Faced Plywood manufacturers to announce 7% increase in price in a meeting of Haryana Plywood Mfd. Association (HPMA) held in Yamuna Nagar on 12th March 2010.
During our Reporter's short trip to YamunaPLYnagar, interactions happened with many manufacturers. Some of their views are as follows:
Shiv Jindal (S.R Jindal)
As per Mr. Jindal YamunaPLYnagar Industries is not going smooth & will take at least 2 years to recover. Shortage of raw material increases the Price daily. Production going down 50%. Kerala market low rates effects on YamunaPLYnagar. No rebate on taxes like other states.
Sanjeev Aggarwal (Unique wood industries)
Major Problem for industries is labour due to labour shortage & cold weather Production going down. Electricity is also Increase Production cost as there is 8 to 10 hour daily Power cut in YamunaPLYnagar. As per him Govt should make incentive plan for Plantation of poplar & Safeda. Govt or YamunaPLYnagar association should aware YamunaPLYnagar farmers to Plant more Safeda poplar on their land as they plant 200 to 250 /acre & one of the farmer in dist. Jind Planting 500 to 600 /acre.
Vikas Rekhan (Pooja Decoratives)
Kerala market low rates are effecting YamunaPLYnagar market but We have to aware everybody about YamunaPLYnagar Product quality.
Narender Bansal (Alloy Steel)
Agriculture wood based Industries should be excise duty free. Govt & panchayti land should be used for Safeda & poplar crop so that raw material easily available & import will stop. General ply sale is going down due to Kerala market. Haryana Govt going to apply NREGA scheme due to this local labour Problem will Increase.
Amit Goel (GMG Plywood)
Due to weather condition 20 to 30% moisture in wood Increases Production cost. Labour could not work proper so Production is less. Timber Prices is very high. Resin cost touches Peak. Quality of raw material is low. YamunaPLYnagar wood Industries is in crisis.
Devendra Chawala (EMM DEE Plywood)
Timber Prices raised 15% in Last few month. 20-30 % moisture in wood Increasing Production cost. Due to cold efficiency of Labour going down due to this 40% effect on Production. Overall 10 % Rate will Increase very soon.
Vipin Gupta (Metro Plywood Pvt. Ltd)
High Rates of Plantation timber is good for Plywood Industries as Farmer will not get good Price of these Plantation they will plant other crop and Industry will face More shortage of Raw Material. Kerala Industry is also effecting on YamunaPLYnagar Plywood.
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An unexpected jump in poplar log prices has shocked veneer and ply producers. Within a week log prices registered a jump of Rs 125 making viability tougher for north based plywood producers. Core veneer producers stopped taking orders due to sharp rise in log rates. Sources from Yamuna Nagar mandi blames short supply from western Uttar Pradesh belt. The under sokhta log rates have also registered a price jump of approximately Rs 60 that is making board and door manufacturing costlier. With the winter setting in, moisture present in wood cause increase in weight add to the timber cost.
Rising raw material prices is putting film face manufacturing back on fire. The unviable economics of producing film face plywood are mounting pressure on producers to announce price increase at least by 4%. During November the phenol prices have taken a high by 15% which will add at least 3% increase in cost of production. Formaldehyde prices are also adding points for price hike. The price effect is expected to be announced by most of the producers during December first week.
Speaking to ply reporter many film face suppliers confirmed the minimum price raise of 5% in a couple of days. Few markets of east and south have already started accepting new rates in 30 kg film face segment. Buyers from UP, Bihar, Jharkhand and West Bengal have given orders on new rates, reports ply reporter correspondent from Patna.
Sighting prospects of a costly buying wholesale market has become active in placing orders on old rates that may hang the market balance for quite some time.Although, the demand scenario has not improved much due to slow recovery in construction sector says bulk buyers from Mumbai and Bangalore. Distributors admit many builders are yet to start their activity full stream on construction sites as buying sentiments are not being converted to sales.
The prices of logs and core veneers have increased and about to put manufacturers in rate demanding mode. It is expected that rise in face veneer and battens prices shall add fuel to the plywood market. The manufacturers of Yamunanagar has started quoting the new rates, and demanding 4 to 5 % increase in finished goods prices. Our correspondent from Yamunanagar reported that Plywood and Blockboard prices are increasing by approximately 5% in different markets.
Surjewala said that after 2010 at least one unit of thermal plant would be commissioned every year for next four years keeping in view the progress made in construction of various thermal power houses.He said that the first unit of Jhajhar thermal plant is likely to be commissioned in December 2009 and the second unit in March 2010.
Surjewala said the government had given priority to the development of power sector with a view to bridging the gap between demand and supply of power. He said the government was planning to set up a nuclear power plant at Kumharia village in Fatehabad district.
Wood consumption in Indian is growing fast and although the country has over 250 commercial timbers (including some of the most highly prized tropical hardwoods like Teak, Rosewood, Padouk, Red Sanders, Sandalwood) a strict conservation policy limits harvesting. This means India is a net importer of wood and wood-based panel products. Indian industrial demand for wood jumped from 58 million cubic meters in 2000 to 85 million cu.m in 2008 and expected to cross 150 million cu.m by 2018.
India manufacturers prefer to import timber in log form to feed the domestic industries. Imports are mostly from Malaysia, Myanmar, Indonesia, Nigeria, Ivory Coast, Ghana, Togo, Gabon, Brazil, Panama, Costa Rica, Ecuador and New Zealand. The major ports used for imports are Kandla, Mumbai, Mangalore, Tuticorin, Chennai Vishakhapatnam and Kolkata as well as many internal container depots.
Requirement for logs for the panel industry is met largely from plantations, Agro-forestry sources and natural forests. The concept of industry owned plantations of Eucalyptus, Poplar, Casuarinas and Acacia mangium is gaining popularity and this helps a lot in preventing illegal fellings from state forests. Teak harvesting is handled by the government Forestry Agencies and sales are made by auction at forest depots. Even the private logs are brought to the official depots for sale by auctions.
With the Indian Rupee at 46.22 to one US dollar there has been a surge of 14% in the dollar from its record low of Rs.52.20 reached in March. This jump has put exporters in difficult spot and in October there was a drop of almost 12% in exports according to official figures.
China is one of the key competitors for Indian exporters along with Vietnam, Bangladesh and Sri Lanka. Nevertheless demand for hardwood products continues to be good and the slightly lower prices seen for logs from Myanmar and other sources has helped exporters adjust to the dollar strengthening.