By Mrinmoy Bhattacharjee
Panel board major Greenply Industries Ltd (GIL) is betting big on the burgeoning domestic MDF market. The Rs 1,655-crore interior infrastructure company is expanding its MDF business by setting up ‘Asia’s largest MDF manufacturing facility’ in Andhra Pradesh. Its marketing head Amit Oberoi speaks to SH about the ambitious project, explains the state of the MDF panel-based furniture industry, reflects on GST implications, and more…
Setting up Asia’s Largest MDF Plant
We are expanding our MDF business operations by setting up another state-of-the-art facility at Routhusurmala village in Thottambedu Mandal in Chittoor, Andhra Pradesh. The plant, with an annual capacity of 3,60,000 CBM, will be the largest MDF plant in Asia.
The plant is equipped with state-of-the-art German machinery, and will use the best quality timber in the manufacturing process to deliver high quality MDF under the Green Panelmax brand. Moreover, the plant will manufacture MDF boards with the widest range of thickness and sizes.
Our plant is the largest and most technologically-advanced MDF plant in Asia. It is made with the best of European technology. The facility has the latest machinery for forming, press and raw board handling from market leader Dieffenbacher. We have installed Grecon Dieffensor for scanning of fibre mat to produce uniform density panel. Moreover, we will use Grecon Stenograph for inline monitoring of density profile. Our plant will also have a 14-head sanding machine from Steinemann for better finished surface, and has the ability to manufacture up to 12-feet long finished panels.
The project is environment-friendly and would help in reduction of biotic pressure on natural forests. The plant also has the finest technology for treatment of industrial waste water and a multi-fuel hybrid energy generation plant from Thermax (India). Green Panelmax MDF is the only manufacturer in India to possess through-panel density testing technology.
The new plant shall substantially increase the nation’s existing capacity to produce MDF and would result in substituting imports with domestic production. The plant will also generate substantial commercial activity to contribute both directly and indirectly to the state of Andhra Pradesh. The project shall provide direct as well as indirect employment opportunities to a number of people both skilled and unskilled.
The project is based on short rotation, fast growing plantation crops. Wood species such as Eucalyptus, Subabul, Casuarina, Prosopis and Acacia that are required in the manufacturing process are grown by local farmers, and therefore provide them a direct source of income. As such, this project will support plantation activities to the extent of 8,000 to 10,000 hectares per annum. It has been estimated that this plant will generate indirect employment to the tune of four million man-days annually, while an amount of Rs 1,500 crore is estimated to roll in the rural economy in each cycle of five years.
Further, setting up of the MDF board facility in Andhra Pradesh would also encourage and support development of various ancillary industries like furniture, panel, transport, artisans, etc which in turn would lead to significant employment opportunities.
State of the MDF Panel-based Furniture Industry
Of the total wood-based substrate industry in India, the MDF market currently accounts for a mere 7%, as compared to 80% globally. The domestic MDF market has been growing at 15-20% CAGR over the last five years. Looking at the existing scenario in the panel industry in India today, almost 80% of the market share belongs to plywood as opposed to 20% for engineered panel products like MDF. However, with increasing urbanisation, India is witnessing a sea change in the building and construction segment with the interiors and furniture industry being one of the fastest growing.
In the furniture segment specially, demand for readymade furniture made with engineered panels like MDF is rapidly growing, as people increasingly find is inconvenient to get customised furniture made by carpenters. Also, furniture made with MDF is more suited for an upwardly-mobile middle-class which is looking for smart and high quality interiors at reasonable prices.
One of the biggest advantages of using MDF is that it is a better product as compared to plywood and can be carved and moulded to one’s liking. Fast developing urban centres are also giving an important boost to demand in this industry. Affordable housing and the culture of ready-to-move-in offices and retail outlets, with low-cost modular furniture which are comparatively new to India, are fast gaining popularity. Time constraints on projects and shorter completion schedules due to high cost of finance have also led to a preference for machine-made furniture made using engineered panels like MDF.
Eventually the usage of engineered panel products in India is bound to increase, more so because of the increasing gap between demand and supply of plywood due to the ban on felling of trees.
We use educative collaterals such as posters, catalogues, leaflets and ads in trade magazines for the promotion of MDF usage. The company organises meets to engage with carpenters and educate them about the advantages of Green Panelmax MDF over other alternatives like local plywood. We deploy educative posters on MDF explaining benefits like strength, ease-of-application, faster turn-around time, price with respect to local plywood, etc at strategic locations across trade channels and carpenter workshops.
We use shade cards with physical samples to provide a touch-and-feel experience of the products. Our programmes, centered around carpenters and contractors, are implemented to engage with the influencers.
Anti-Dumping will Boost ‘Make in India’
The Finance Ministry has imposed a definitive anti-dumping duty on Plain Medium Density Fibre board (MDF) imports from Vietnam and Indonesia. Anti-dumping duty on Plain MDF board will be levied on boards having a thickness of 6mm or above, and will be valid for a period of five years. The move is aimed at protecting the local industry from cheap in-bound shipments and to promote products made in India, thereby supporting the ‘Make in India’ campaign.
GST is Economy-positive
We recently witnessed the single biggest tax reform post-independence, the Goods & Services Tax (GST), which makes our nation amongst the progressive economies that have adopted a unified tax structure. Its rollout has generated a lot of interest and response from the industry with reactions pouring in from across the country. We see it as a positive step and feel that GST will have a positive impact on the organised sector of MDF. However, we also feel that MDF should have been placed in the 18% tax slab instead of 28%, and this is a disadvantage for the discerning customer.
GST will essentially simplify trade, boost the economy and generate jobs. It is a commendable effort on the part of our government to bring all states and various parties together to implement this historic initiative.
We strongly believe that GST will stimulate our economy, will -help in increasing GDP growth, will enable ease of doing business, and would provide a boost to the Indian manufacturing industry. With the joint effort of the trade, legislature and bureaucracy, GST will eventually evolve in a direction which would put the country on the path of greater economic strength.