Perturbed over high input costs due to the depreciation of the rupee against the US dollar, Haryana's plywood manufacturers have decided to increase prices by seven per cent. Industrialists said that, besides high input costs, the increased cost of diesel, electricity and freight has hit their bottom lines and the only option left with them was to increase the price of the commodity, as their counterparts have done in Punjab and Gujarat.
In Haryana, the plywood industry is concentrated in Yamunanagar city, which caters to 50-55 per cent of India's plywood needs. Industrialists said there were over 600 small and medium wood-based units in Yamunanagar. The industry generates an annual turnover of Rs 1,000 crore and employs over 50,000 workers. These units manufacture plywood, ply board and door frames.
J K Bihani, general secretary, Haryana Plywood Manufacturers Association, said, "The increasing input cost due to depreciation of the Indian currency by about 20 per cent in the last three months and increased cost of diesel, electricity and increased freight, became difficult to absorb. So, we have decided to partly transfer the burden to consumers. Taking a step in this direction, we have increased the prices of all plywood and wood products by 7 per cent."
The industry needs industrial chemicals like methanol used for preparation of formaldehyde, phenol and other chemicals, which it imports from southern Africa, Europe, Iran and China. In addition, pine timber is also imported.
Viney Verma, managing director, Jyoti Plwood Industries, said, "A significant portion of the raw material like pine timber, face veneer, which provides support and finishing to the plywood, are imported from various countries. So minor fluctuations in the dollar affects the input cost."
These imported items constitute 30 per cent of the total raw material used in manufacturing. The recent appreciation in the dollar has not only impacted their bottom lines but the SMEs have also been finding it tough to compete in the domestic market.
In view of rising input costs, Punjab's plywood manufacturers (who also import chemicals) have already increased prices of plywood and plyboard by 10 per cent across all product categories. Punjab has about 200 plywood manufacturers, with total production valued at Rs 500 crore per annum.
Bihani and Verma added that appreciation in input costs has come as a double blow to the industry, which is already in difficulties due to the downturn in the real estate sector. Therefore, the industry has started exploring export options.
Asked about the export market, Bihani added, "Since the real estate market in Arabian countries is on the revival path, we are contemplating restarting export to these countries as it has very good potential and makes sense for Indian exporters."
The industry was earlier exporting plywood to these countries but in the wake of the recession in the real estate sector in these countries in 2008, exports from India dried up.
