Few Marketing Policies in laminate is Hurting distributors

What is the situation in the market these days?

The market is improving upward since the beginning of 2024. Although this is not to our expectation, but the situation is much better than the immediate past two years. There is every possibility of this trend to be continued in the coming days due to the increase in the government expenditure.

Although it is a hard fact that due to increased competition, our expenses have increased immensely and margins are reduced. But this has also given us time and opportunity to look over our personal working system and prepare strategies for the future.

Do everything is going well?

Some laminate companies are practicing direct marketing also along with appointing distributors. It resulted in unprofitable surplus stock. This is a matter of concern for the distributors. As the companies are growing, they are completely commercialized. In this concept, the distributor and top dealers are being ignored. Most of the companies are no longer distributor friendly. Companies now prefers to operate in a corporate way. But our business still depends on relationships. This basic foundation is being ignored in their marketing principles.

Companies are raising targets for distributors to increase their sales, as well as they also sell goods directly to small dealers at same rates. These companies do not hesitate in supplying goods to anyone from its depot. Especially big companies are doing this. The problem here is that what additional attraction the distributor will have for the retailer. So, keeping huge stock is going to become a loss-making deal. Apart from this, companies often pressureise to supply to anyone to meet their targets. It is not checked whether the payment is secured or not. These days we are facing such problems in selling laminates.

Since when you are facing such problem?

This trend has been changed for almost a year. Outlets are increasing. Therefore, now we are trying to form an all India association of distributors. So, that we can convey our message properly to the companies A meeting is to be held in Delhi shortly regarding this.

What do you think is the reason behind this?

In the last few years, the production capacity in the industry has been increased a lot. Many new plants have come up and old ones have expanded their capacity. But the market is very sluggish since Covid. Production is more than the sales in the market. Sales targets are very high. There is a lot of pressure on sales. There is no assurance of timely recovery from the market. Whereas, cheques are taken from us in advance. No matter how much careful the distributors are, this kind of haste only leads to losses. Rates are falling in MDF too. Because production has increased.

How can everyone by easy?

There is hope that the situation can improve only after the QCO. However, there is much time in it. In the present political scenario, it seems that the government is also on the back foot. Tough decisions are unlikely to be materialized. If there is opposition from anywhere regarding QCO, especially from small units, then the government can allow it more time. If any neighbouring country puts pressure and we issue licenses to them easily, then perhaps the basic spirit of this QCO will be hurt.

How do you see the rule of payment within 45 days?

There was no need for this rule. This has made things difficult instead of making things easier. Paper formalities have increased. For example, goods worth ten lakhs are bought and sold for 12 lakhs. If one lakh is not paid, then the purchase will be considered to be of nine lakhs instead of ten. This will increase the profit in the books. However, it will be removed from the books next year. But this will increase the expenses of the CA and the paperwork.

However, the MSME organizations have objected to this to the government, after which the Finance Minister assured that if there is a demand to change this rule, then it will be taken back. But everyone in MSME are not unanimous about its implications. Some companies are putting MSME certificates on hold. At present, neither the debtors are happy with this rule nor the creditors. On the other hand, this rule is basically fine. This rule will improve the cash flow for once. But there is suspicion for next time.

Impact of goods from Kerala and Nepal on your market?

There is very little impact of Nepal’s products in Maharashtra. Many manufacturers in Kerala are producing good quality plywood. These products are also a bit cheaper than the goods from North India. That’s why the demand is increasing in the markets. If we purchase goods from Kerala, then it costs us Rs 40, but if it is procured through the company, then the same goods cost us Rs 80. Many big companies are marketing Kerala products in their brand name.

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