Cash crunch cripples plywood industry

January 03, 2017 08:28 am | Updated 08:28 am IST - KOCHI:

The demonetisation drive has hit the cash-dependent plywood industry at Perumbavoor, Kothamangalam, and Muvattupuzha hard.

Around 30 per cent of plywood units had downed shutters after the Centre scrapped ₹500 and ₹1,000 currency notes. Estimates by the Sawmill and Plywood Manufacturers Association showed that nearly 20 per cent of migrant workers employed in around 1,500 units left Perumbavoor, Kothamangalam, and Muvattupuzha following currency crunch.

“We depend on local farmers to procure rubber wood and soft wood, the raw materials used in plywood industry. Most of them are yet to open bank accounts. Majority of transactions is in cash. Naturally, the sales and purchase of raw materials have declined by around 50 per cent compared to the pre-demonetisation period,” said Azees Pandiyarpilly, general secretary of the association.

Getting ready for GST

Maintaining that the crisis has come at a time when the plywood industry was getting ready to switch over to the GST regime, Mr. Azees said the association had taken a decision to bill 100 per cent of the product value in tune with the proposed tax structure.

“But demonetisation has upset our immediate plans as business has slowed down considerably. The mode of switching to bank payments among local farmers is yet to pick up,” he said.

Payment of salaries had come to a halt forcing migrant workers to leave for their home towns or other States. The cap of ₹24,000 a week on bank withdrawals came as a heavy blow to the plywood industry. Most units pay salaries on a weekly basis, with an average staff strength of around 60 employees at a production unit.

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