Published on 14/11/2017 4:00:56 PM | Source: Dion Global Solutions Ltd
Organised plywood sector to grow 25% year-on-year
With rationalisation of Goods and Services Tax (GST) from 28 per cent to 18 per cent on plywood, organised industry players of this sector are hopeful of increasing their marketshare, reported PTI. The average growth rate of the industry which was about five per cent till now was expected to grow at least by 25 per cent year-on-year, industry sources said. Century Plyboard MD Sanjay Agarwal said, at the same time it would be "wrong to believe" that the players of the unorganised plywood sector will be "washed out" with the revised GST rate effective from tomorrow, It was perceived that the unorganised plywood sector, which accounts for 70-80 per cent of the estimated Rs 20,000 crore industry, would bear the brunt in the GST regime. Agarwal told PTI, "GST rate rationalisation will bring massive change for the organised sector of the industry which account for just 20-30 per cent of the estimated Rs 20,000 crore market. "But, it would be wrong to believe that the unorganised sector will be washed out with the reduction of 10 per cent in GST rate from 28 per cent." Post rationalisation of tax, the industry would grow at least 25 per cent year-on-year, Agarwal hopes. The plywood associations had been demanding a reduction in the GST ever since the new tax regime had been introduced. The GST Council on November 10 decided to lower the tax rate on 178 items, leaving just 50 items in the top 28 per cent rate slab under the Goods and Services Tax. Agarwal pointed that the price gap between organised and unorganised playboards will get squeezed to about 20 per cent down from 30-35 per cent, helping large plyboard makers to grab larger marketshare.
Tax avoidance was the major reason for competitiveness in the industry dominated by the unorganised players. Greenply, Century Plyboards, Kitply, National Plywood and Uniply are the major players in the organised sector. The items in wood panel industry are plywood, block board, decorative ply, medium density fiber board (MDF), particle board that will be benefitted. Agarwal hoped that old stock would not be a major hurdle for retail customers to get benefit of the tax rationalisation with effect from November 15.