GST regime may benefit organised plywood industry

Century PlyBoards (India) sees the implementation of the GST-regime as a game-changer for the plywood industry, where the unorganised sector enjoys an 80 per cent marketshare.

However, the company is hopeful that the 18 per cent rate applies to the industry.

18% rate

“We are hopeful that, being a product for masses, plywood should be in the 18 per cent bracket,” Sajjan Bhajanka chairman of Century PlyBoards (India) said. “Ninety per cent of our raw material base is plantation timber, which is grown in India on agro-forestry basis. Treating plywood at par with luxury goods or white goods is not justified as it is an intermediate product, mostly used for making furniture and house-interiors.” He saw the possibility of migration of good quantity material from the unorganised sector.

Level-playing field

The rate notwithstanding, GST will create a level-playing field for the sector as the exemption limit is restricted to Rs.20 lakhs pushing most small units out of the exemptions net, he said.

Sanjay Agarwal, Managing Director, said that while the two major players in the organised plywood industry — Century Ply and Greenply — pay 30 per cent taxes, the unorganised players hardly pay any taxes enabling them to offer their products at cheaper prices. “We expect this scenario to change with the implementation of GST,” Mr. Agarwal said.

CenturyPly is exploring the possibility of entering the Africa market though it is a “challenging proposition,” Mr. Agarwal added. “It is a challenging proposition with huge timber resources but also major law and order and logistic problems, with some locations being 1,000 kms from the nearest port.”