FASTEST GROWING Wood and Wood Product COMPANIES IN INDIA
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FASTEST GROWING Wood and Wood Product COMPANIES IN INDIA

The plywood and laminates industry is one of the oldest in India. However, it still comprises a large number of unorganised players. With factors like clustered manufacturing facilities and environmental factors impacting the manufacturing process, there are very few large players in the sector...

The plywood and laminates industry is one of the oldest in India. However, it still comprises a large number of unorganised players. With factors like clustered manufacturing facilities and environmental factors impacting the manufacturing process, there are very few large players in the sector. Today, the industry is valued around Rs.22,500 crore but this is largely contributed by unorganised players. A few brands are available but these are mainly focused on urban areas. The impact of unorganised players and the cutthroat competition in the industry can be understood by the fact that there are 2,800 manufacturing units in the industry; however, capacity addition over the past two years has resulted in similar units having the capacity for around 4,000 units. This clearly indicates that the sector is going through a supply glut. That said, there are long-term growth drivers in place. Rapid urbanisation, a growing number of nuclear families and improved standard of living will make sure that the growth in the sector is sustainable.The Indian plywood and laminates industry manufactures various engineered woods like plywood, laminates, MDF and veneers. Plywood is the product most in demand, followed by laminates. MDF, on the other hand, still constitutes a small segment. The market can be divided on the basis of distribution channels where the unorganised market accounts for the major share. However, with changing consumer preferences, the market has seen a shift towards the organised segment owing to increased demand for good quality and branded products. The share of organised players in the industry is expected to rise further in the years to come. This shift is taking place primarily because of urbanisation and more disposable income.The market for plywood and laminates is mainly driven by increasing demand from the housing market. The demand has increased owing to the growing significance of the new construction industry. Plywood and laminates have become an indispensable part of big and evolving markets like the real-estate, furniture, modular kitchen and flooring markets. Increased demand in these markets triggers demand in the plywood and laminates market. Apart from this, increasing urban population, rising per-capita income and a gradual shift towards the non-food industry are other key factors driving the growth of plywood and laminates in India. Further, the implementation of the Goods and Services Tax (GST) will provide an impetus to the industry.Because of slow real-estate growth in India and lack of liquidity owing to the COVID-19 pandemic, the Indian laminates sector was affected in FY2020-21. However, leading branded players recognised this as an opportunity and launched a few new variants of upgraded laminates. As a result, the leaders in the industry, despite a weakness in the market in the H1FY21, reported positive cash flows, which helped enhance their market share. Going ahead, the country’s growing population and the proportion of individuals in the economically active age bracket of 25-45 will further contribute to the growth of the laminates sector. The Indian decorative veneer market was valued at `2,000 crore in 2020, of which organised players accounted for 60 per cent market share. The growth driver of the segment was demand from the residential, high-net-worth individual and hospitality segments.

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