Medium Density Fiber Report

Techno-Economic Feasibility report of Mott MacDonald Medium Density Fibre Board Rushil Dcor Pvt Ltd.

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

1, Krinkal Apartment, Mahalaxmi Society, Paldi Ahmedabad Gujarat 380007

Techno-Economic Feasibility Report of

Medium Density Fibre Board

January 2007

Mott MacDonald 501, Sakar II Ellisbridge Ahmedabad, Gujarat India 380001 Tel: +91-79-26575550



Techno-Economic Feasibility Report of

Medium Density Fibre Board

This document has been prepared for the titled project or named part thereof and should not be relied upon or used for any other project without an independent check being carried out as to its suitability and prior written authority of Mott MacDonald being obtained. Mott MacDonald accepts no responsibility or liability for the consequence of this document being used for a purpose other than the purposes for which it was commissioned. Any person using or relying on the document for such other purpose agrees, and will by such use or reliance be taken to confirm his agreement to indemnify Mott MacDonald for all loss or damage resulting therefrom. Mott MacDonald accepts no responsibility or liability for this document to any party other than the person by whom it was commissioned.

To the extent that this report is based on information supplied by other parties, Mott MacDonald accepts no liability for any loss or damage suffered by the client, whether contractual or tortious, stemming from any conclusions based on data supplied by parties other than Mott MacDonald and used by Mott MacDonald in preparing this report.



List of Contents Page

Executive Summary

Chapters and Appendices

1 Introduction 1

1.1 Study Background 1

1.2 Project Description 1

1.3 Background of the Firm 2

1.4 About the Promoters & Management 3

1.5 Consultants Background 4

1.6 The Scope of Work 6

1.7 Approach and Methodology 6

1.8 Caveats 9

2 Product Description 10

2.1 Medium Density Fibreboard 10

2.2 Prelam MDF Board 13

2.3 Laminate Flooring 14

2.4 Description of Substitutes 14

3 Market Study 20

3.1 Global Scenario for MDF 20

3.2 Laminate Flooring Market 24

3.3 Indian Market 27

3.4 Indian Scenario on Furniture 38

3.5 Other Relevant Issues 46

4 Raw Material Assessment 50

4.1 Raw material Types 50

4.2 Cotton Production 50

4.3 Cotton stalk 55

4.4 Bagasse as Alternate Raw Material 61

5 Technological Aspects 64

5.2 Manufacturing Process of Prelam Boards: 67



5.3 Manufacturing process of Laminated Flooring 67

5.4 Location Aspects 68

5.5 Machinery Details 71

6 Strategic Analysis of the Firm 77

6.1 SWOT Analysis 77

6.2 Five-Force Model Analysis 79

7 Marketing Strategy 82

7.1 Present Marketing Set Up 82

7.2 Formulation of Marketing Strategy 85

8 Financial Modelling & Analysis 88

8.1 Estimation of Capital Cost 88

8.2 Means of Finance 92

8.3 Assumptions 93

8.4 Cash flows& Profitability Statement 97

8.5 Financial Indicators- NPV, IRR, DSCR, Pay back 101

8.6 Sensitivity Analysis 101

9 Conclusion and Recommendations 102

Appendix A: Fixed Cost Allocation of Contingency and POP expenses 103

Appendix B: Working Capital Statement 104

Appendix C: Term Loan - Repayment & Interest 105

Appendix D: Unsecured Loan - Interest 106

Appendix E: SLM Depreciation 107

Appendix F: WDV Depreciation 108

Appendix G: Tax Statement 109

Appendix H: Debt Service Coverage Ratio 110

Appendix I: Pay Back Period & Internal Rate of Return 111

Appendix J: Availability of Bagasse 113



List of Figures

Figure 1.1: Approach and Methodology 8 Figure 2.1: Substitutes of MDF 15 Figure 3.1: MDF Consumption in China 21 Figure 3.2: Global MDF Demand Supply Balance 23 Figure 3.3: Global Particleboard Demand Supply Balance 23 Figure 3.4: World Production of Laminate Flooring 24 Figure 3.5: Production of Laminate Flooring in Europe 25 Figure 3.6: Market Volumes of Laminate Flooring in North America 26 Figure 3.7: Market Volumes of Laminate Flooring in Asia Pacific 26 Figure 3.8: Furniture Productions in Billion Euros 39 Figure 3.9: Raw material used in furniture 39 Figure 3.10: Furniture Production Break up 40 Figure 3.11: Import Export of Furniture in India 41 Figure 3.12: Country wise break up of export of Indian furniture 41 Figure 3.13: Product wise break up of Indian furniture export 42 Figure 3.14: Country wise break up of imported furniture in India 42 Figure 3.15: Product wise break up of imported furniture in India 43 Figure 3.16: Break up of the round wood consumption in India 44 Figure 3.17: Imports of Veneer & plywood in India (In US $ 000) 45 Figure 3.18: Import of MDF/HDF & Particle Board in India (In US $ 000) 46 Figure 4.1: Cotton Production area and yields of India and U.S. 50 Figure 4.2: Indias Cotton Production and Production area 51 Figure 4.3: Indias Cotton Production Yield 52 Figure 4.4: Gujarats Cotton Production Yield 53 Figure 4.5: CCS Centre Mechanism 60 Figure 5.1: Techno Economic parameter for machinery selection 71 Figure 6.1: SWOT Analysis 77 Figure 6.2: Wood Products & competitors life cycles 78 Figure 6.3: Five Force Model 79 Figure 7.1: Present Marketing Set up 82



List of Tables

Table 2.1: Classification of Board based on Density 10 Table 2.2: IS Specification of MDF Board 11 Table 2.3: Wood& Agro-based products and their application 17 Table 2.4: Characteristics comparison of different products 18 Table 3.1: Region wise MDF production 20 Table 3.2: Production and trade of MDF in the Middle East 22 Table 3.3: Indian log production, imports & apparent consumption, 2003 43 Table 3.4: Demand supply gap of wood 44 Table 3.5: Indian imports of wood products, 2002 -2003 44 Table 4.1: Cotton production 52 Table 4.2: District wise cotton production in Gujarat 54 Table 4.3: Cotton Productions in Surendranagar District 55 Table 4.4: Cotton Production in different talukas of Surendranagar 58 Table 4.5: CCS Centre locations 59 Table 4.6: Sugarcane Productions in Gujarat 62 Table 5.1: List of Imported Machinery 72 Table 5.2: List of Indigenous Machinery 72 Table 5.3: List of other plant and machinery 72 Table 7.1: The present marketing zones of RDPL in India 83 Table 7.2: The present marketing network of RDPL in world 84 Table 8.1: Building and Civil Work 88 Table 8.2: List of imported Machinery 89 Table 8.3: List of Indigenous machinery 89 Table 8.4: list of other plant and machinery 90 Table 8.5: Preoperative and Preliminary cost break up 91 Table 8.6: Inventory norms 91 Table 8.7: Total Cost of Project 92 Table 8.8: Means of finance 92 Table 8.9: Capacity Utilisation in phase 1 93 Table 8.10: Capacity Utilisation in phase 2 93 Table 8.11: Operating norms for Fibre Board manufacturing 95 Table 8.12: Operating norms for Prelam MDF Board manufacturing 95 Table 8.13: Operating Norms for Laminated HDF Flooring Manufacturing 95 Table 8.14: Repayment of Long Term Loan 96 Table 8.15: Profitability Statement 97 Table 8.16: Cash flow Statement 99 Table 8.17: Financial Indicators 101 Table 8.18: Sensitivity Analysis 101



Executive Summary

Rushil Group (herein after referred to as client or RDPL) has a well established market in

the decorative laminate business in India and abroad. They are planning to make forays

into the manufacturing of MDF (Medium Density Fibreboard), laminate flooring and prelam

boards. This related diversification drive not only offers synergy in operation but also

provides a sea of opportunities in terms of value addition, import substitution, promotion

of rural economy, preservation of forests and employment generation.

Every year, MDF worth US$ 67.5 million are being imported to India which meets almost

75-80% of the total domestic demand. Based on market information, the market for MDF is

growing at an impressive rate of 20-25% p.a. There are only two players in the domestic

market that manufactures MDF. In the light of the above facts, Rushil can look forward to

reap the benefits of early mover advantage. Further to this, a well-established distribution

channel will help the firm to push their new products into the market in a cost effective

way.

Manufacturing MDF from cotton stalks will be the first of its kind in India that will offer

cost advantages in terms of production. RDPL is planning to set up manufacturing unit at

Surendranagar, which is famous for cotton cultivation. Also the surrounding areas are

cotton-abundant. Alternatively, bagasse is being considered as the raw material for MDF

production; which can be easily procured from South Gujarat and Saurashtra.

The client also plans to grow ailanthus excelsa or other kind of soft wood tree near the

factory premises in a vast expanse of land so that the wood from the same can be used as

raw material for MDF. Ideally 850 to 870 saplings can be planted per acre of land and will

be ready for felling in a span of 4 years. The typical yield is 100 tons per hectare. On an

average, 1.55 tons of trees are needed to produce 1 cubic metre of MDF.

The technology and major machinery will be sourced from Germany and China. Parameters

such as contemporariness of technology, energy efficiency, post-sales customer support,

scalability, etc had been taken into account while choosing the technology.

The long-term relationship the client enjoys with many dealers in India and around the

globe, especially in Europe can be leveraged further to sell/export the products from

India. In this respect, the cost-competitiveness and the established brand equity will play a

vital role. RDPL is envisaged to export nearly 60% of the product to favourable market



destinations around the globe. The international marketing network of the RDPL is spread

in 34 countries including Canada, USA, Venezuela, Europe, Far East countries, Australia,

and Gulf countries with the strong brand name of Rushil Dcor.


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1 Introduction

1.1 Study Background

Since its inception in 1992, the Rushil Group of companies have created a niche for

themselves in the laminates business in India. Being a visionary company, it has tapped the

right opportunities so far in increasing the market share and the export volume, thereby

increasing the profits for the firm. At the same time, they have been continuously

innovating themselves in terms of product quality and services to the customers

worldwide, creating value for its stakeholders.

Indias impressive economic growth rate and the thrust on infrastructure development are

potential growth drivers for the construction materials in general and laminate in

particular. Rushil Group (herein after referred to as client or RDPL) is planning to make

forays into the manufacturing of MDF (Medium Density Fibreboard), laminate flooring and

prelam boards. This offers a sea of opportunities in terms of value addition, import

substitution, promotion of rural economy, preservation of forests, employment generation,

etc.

In the clients endeavour for related diversification into MDF manufacturing, Mott

MacDonald (herein after referred to as the consultant) would prepare a detailed techno-

economic feasibility report for the project. This study will focus on the issues of market

demand, raw material sourcing, technology selection, supply chain management, means of

finance, revenue modelling, risk management and strategy formulation.

1.2 Project Description

RDPL is planning to set up manufacturing unit of MDF and HDF board and their downstream

products like Prelam MDF board and Laminated HDF flooring.

The location identified for the project is Navalgarh village in Dhangadhra taluka of

Surendranagar district. The land acquisition process is finalized and RDPL has purchased 67

acres of land. RDPL has also finalized major machinery suppliers and purchase order has

been placed for MDF manufacturing plant, short cycle press, impregnation line and resin

plant. By considering the expertise of manufacturing machinery, quality and price

competitiveness, RDPL has selected foreign machinery suppliers for their requirement.


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The project will be implemented in two phases. In first phase, RDPL will manufacture

laminated flooring with imported High Density Fibre (HDF) board and in the second phase,

RDPL will manufacture Prelam MDF board and HDF laminated flooring with in-house

manufactured MDF and HDF board. The first phase will commence from October 2007,

while second phase is expected to be commissioned in October 2008.

The project has certain advantages due to its location and raw material used for

manufacturing Fibre board. The raw material selected for the project is agro waste like

cotton stalk and bagasse. RDPL is also considering social forestry route to meet its future

requirement of raw material. Due to the raw material selection, project come under the

agro industry and become eligible to get incentives from the Government of Gujarat.

1.3 Background of the Firm

Rushil Group of companies commenced operations in 1992, when Indian laminate industry

started serving to the global markets. Vir Laminate from the stable of Rushil Group is

one of best known brand in the laminate space and the company is one of Indias leading

decorative laminate manufacturing companies. Vir is a favourable brand for Indian

architects and interior designers. A large number of private & public sector corporate

companies spread across the length and breadth of the country are customers of the group.

Rushil pioneered Indian laminate industry into export market through the adoption of the

flexible global business practices that today enable the company to operate more

efficiently and to produce more value to its stakeholders. With a well-known product brand

Rushil dcor premium laminate, almost 34 countries are being served by our

comprehensive range of products as well as services.

The firm produces laminated sheets, prelam boards and door skins in their state-of-the-art

facilities at Mansa of Gandinagar District. The plant is capable of churning out 4.8 million

sheets per annum.

Milestones 1992 Rushil dcor Pvt. Ltd. (1st laminate manufacturing facility) established by

Mr. Ghanshyam Thakkar & his son Mr. Krupesh Thakkar

1992 - annual turnover of Rs. 2.5 crores in the first year

1993 - 100% increase in sales compared to the previous year

1994 companys first export to Bangladesh


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1997 - Rushil International established for export business

1998 - Groups sales graph on the upswing by export & domestic sales

1999 - Mica Rushil Pvt. Ltd. (2nd laminate manufacturing facility) established.

2003 - Rushil H.P.L. (3rd laminate manufacturing facility) established.

2003 Production capacity of 300000 sheets per month.

2003 Companys export reached to 34 countries.

2004 Laxmi Pandit & Samir Khan as brand ambassadors.

2005 Erection of short cycle laminates plant (1st prelam manufacturing facility).

2005 - Production of Vir Prelam boards started.

2005 Sridevi as a brand ambassador for Vir Laminate.

2006 (4th laminate manufacturing facility) established.

2006 production capacity reaches 4,00,000 sheets per month

2007- 2nd manufacturing facility for prelam started (Vertex Laminate Private Ltd,

Mumbai).

2007 Reorganisation of management structure

1.4 About the Promoters & Management

The promoters of the firm are Mr. Krupeshbhai G. Thakkar and Mr. Ghanshyam Thakkar

who possess indomitable spirit of entrepreneurship. The former has nearly 20 years of

experience in laminate manufacturing industry by working in areas of production, product

and project development, exports and sales. Mr. Ghanshyam Thakkar is the founder of the

company who has 46 years of experience in plywood trading and 20 years of experience in

laminate manufacturing business. They are very upbeat about the laminate and flooring

business and are ready to tap the huge potential in this segment that will come as a

consequence of economic boom and the concomitant increased activities in infrastructure

(construction of shopping malls, multiplex, IT parks, offices, etc).

They have a highly competent and forward looking team of professionals manning different

levels and functions. International Business Development is a thrust area that will help

RDPL to tide over any slack in domestic demand that may arise in future. Similarly it has an


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IT-enabled office environment that continuously monitor the work flow in vital functions

such as Accounting& Finance, Sales, Production, Purchase& Inventory, etc.

The firm boasts of Sales& Marketing Offices spread throughout the country and an

extremely networked trade set up that export products to 34 countries worldwide.

The Organogram is given below:

Director

CEO

______________________________________________________________

Account Costing Finance Export Marketing & Project & Sales Development

Production HR Purchase IT

1.5 Consultants Background

Mott MacDonald Private Limited (IMM) is a leading multi-disciplinary management and

engineering consultancy based in India, with offices nationwide.

As part of the global Mott MacDonald Group headquartered in U.K., IMM is able to draw on

world-class technical and managerial resources comprising over 5000 staff in more than 50

strategic centres world-wide. IMM is engaged in planning and development touching many

aspects of everyday life from water, energy, industry, environment and transport to

building, healthcare, tourism and social development. Across these sectors IMM works for

national and local governments, public and private utilities, industrial and commercial

companies, investors, developers, banks and financial institutions, international and

bilateral funding agencies and private entrepreneurs. IMMs strengths enable our clients to

realize their projects optimally from concept to commissioning. With 750 professionals, we


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take care of the entire process including providing advice on the best procurement route

and the optimum approach for maintaining the project once it enters service.

1.5.1 Services

(i) Management Consultancy IMM provides business planning and project management for a wide spectrum of clients in

industry, infrastructure and social development, including international development banks

and funding agencies. DMM also help clients such as accountancy practices, financial

institutions and industrial companies in making a realistic appraisal of their fixed assets,

and in preparing for disinvestment, mergers or de-mergers, acquisitions, takeovers,

insurance or liquidation, collaborations and joint ventures.

(ii) Social Solutions IMM has undertaken numerous studies and advisory roles for leading development banks

and funding agencies. Projects range from implementing vital AIDS eradication programmes

and pro-poor initiatives to studies for institutional strengthening, sector reform and impact

evaluation. DMM also offers specialist expertise in assisting with public consultation.

(iii) Engineering Services IMMs range of engineering services enables clients to realise optimal implementation of

projects. DMM takes care of every stage site evaluation, basic and detailed engineering,

contract preparation, project management, procurement, equipment inspection and

testing, site supervision and commissioning.

(iv) Infrastructure One of the key strengths of IMM lies in large-scale integrated urban infrastructure

development, encompassing water supply, drainage, solid waste, roads, sanitation, and

community buildings. Here our services range from planning and advisory assistance to

detailed engineering and construction management.


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(v) Industry IMMs skills and experience have earned it a leading reputation especially in chemicals,

textiles, oil and gas, agri& food processing and life sciences, as well as bulk drugs,

pharmaceuticals and biotechnology. DMM is known particularly for its expertise in process

engineering and licensing for speciality chemical production based on laboratory/pilot

plant know-how developed by R&D centres.

(vi) Buildings IMMs business covers all sectors from commercial and leisure to industry, education and

healthcare. DMM provides the full range of architectural, structural, mechanical and

electrical design skills, along with planning and project management expertise. Building

services are a special capability, notably building management systems, vertical

transportation, telecommunications and security.

1.6 The Scope of Work

The scope of work (SOW) includes-

Assessment of raw material availability to ensure sustained operation of the

plant.

Market assessment to justify project rationale from the market point of view.

Technology Evaluation.

Plant location analysis.

Assessment of project cost, operating cost and revenue estimates.

Working out detailed financial analysis as desired by the financial institutions.

Sensitivity analysis to identify factors crucial for the commercial viability of the

project.

1.7 Approach and Methodology

The entire work (study) will be broken down into individual sets of mutually-exclusive and

collectively-exhaustible issues addressing market demand, availability of raw material,

technology, location aspects, economic and financial feasibility, etc.

Market study will broadly cover the demand- supply scenario prevailing globally and locally

for MDF, its competing products (substitutes), end use pattern, drivers that could spur the


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demand, etc. We would utilise our data bank and also refer to authentic and published

materials/literature etc for the purpose of collecting information on industry structure,

international demand-supply scenario, domestic and international prices and trends

thereof, price elasticity, past imports and exports from India, destinations and prices etc.

The availability and suitability of raw material (cotton stalk) for the production of MDF,

the sourcing of the same and related logistic issues will be covered in the next section.

Also contingency plans for alternative raw material (say, ailanthus and celsa) and the steps

to ensure hassle-free availability of the same will also be discussed.

Location Study will look into issues such as raw material availability, proximity to market,

availability of power, water, etc; and a host of other relevant issues like land, labour,

transportation, storage, etc.

Technology will cover the brief description of the process along with features such as

contemporariness of technology, local availability of plant and machinery, energy

efficiency of the process, ease of operation, modularity, scalability and flexibility in

technology/ operation, etc. The endeavour is to source the best available option in terms

of reliability and superiority of technology / plant and machinery.

The marketing strategy will look into the existing sales and marketing set up, need for re-

configuration if any, and addressing the issues holistically that goes beyond 4Ps.

The detailed revenue modelling will cover the means of finance, optimal debt-equity

structure, revenue streams, calculation of projected cash flows and the estimation of NPV,

IRR and debt service coverage ratio.

In addition, elaboration on certain strategic issues pertaining to the business will be

provided. This will throw light into the competitive landscape, the forces that act within

and outside, threats and opportunities, etc. Also specific strategies will be recommended

to tide over the challenges and surge ahead successfully.


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Figure 1.1: Approach and Methodology

Source: MM Analysis

Market Study Demand vs. Supply

Growth Drivers

Substitutes

End Uses

Raw Material Assessment Major Raw Material Procurement

Contingency Options

Other Issues

Technological Aspects Track Record

Ease of Operation

Scalability/Modularity

Energy Efficiency

Flexible Line of Operation

Marketing Strategy Existing Setup

Distribution Channel

4Ps and Beyond

Revenue Models Means of Finance& Capital Structure

Revenue Streams& Cash Flow

Proj. Balance Sheet& Income Summary

NPV, IRR, DSCR, etc. Site Selection Proximity to RM/Market

Availability of Water, Power, etc

Logistics& Distribution Issues

Strategic Insights 5-Force Analysis

Competitive Strategy.


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1.8 Caveats

Since MDF market is a bit unorganised, it is very difficult to capture the exact under

currents in the market. Also a lot of these activities are not properly recorded. This poses

a lot of challenges for the consultant and the client alike. A judicious mix of desk research,

filed visits, interviewing of key personnel in the MDF/ related business and using some

clever conjectures based on our own experience was the method adopted to address this

issue.


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2 Product Description

2.1 Medium Density Fibreboard

Fibreboards are classified into low density, medium density and high density fibreboards

according to the density profile as shown below:

Table 2.1: Classification of Board based on Density

Fibreboard Typical Density Range (Kg/m3)

LDF (Low Density Fibreboard) 160-450

MDF (Medium Density Fibreboard) 500-800

HDF (High Density Fibreboard) 800& above

MDF is a panel product manufactured from lignocellulosic fibres combined with a synthetic

resin or other binders. The specific gravity varies from 0.5 to 0.88. MDF has a homogeneous

structure with no identifiable grain or no variations in surface hardness. It can easily be

edge-machined to into many different profiles ready for subsequent direct finishing due to

its relatively uniform thickness density profile. MDF has a good capacity to hold screws and

nails on surfaces and edges.

2.1.1 Features of MDF MDF is resistant to warping and compression. It has excellent screw-holding ability and

edge-finishing characteristics.

MDF is available in two grades, namely, interior grade and exterior grade and are available

in thicknesses ranging from 4mm to 50mm.The IS specifications are reproduced below:


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Table 2.2: IS Specification of MDF Board

Sr.

No. Specifications Unit Interior Grade Exterior Grade

1 Water Absorption

a) After 2 hours soaking % 9 6

b) After 24 hours soaking 18 12

2 Density Kg/m3 500-900 500-900

3 Moisture Content % 5.15 5.15

4 Linear Expansion (24

hours soaking)

a) General Absorption %

Thickness 7 4

Length 0.4 0.3

Width 0.4 0.3

5 Modulus of Rupture N/mm2

Upto 20mm 28 28

>20mm 25 25

6 Tensile Strength N/mm2

Upto 20mm 0.7 0.8

>20mm 0.6 0.7

7 Screw Withdrawal

Strength

N

Face 1500 1500

Edge 1250 1250

8 Dimensional Tolerance Mm

Length 3

Width 3

Thickness 0.3

MDF offers better quality than particle board. It has lower tendency compared to particle

board for fibre pop which comes from larger particles in the surface that swell more

than adjacent particles. Fibre pop occurs when the board is exposed to high humidity.

MDF has better strength and stability than veneered particle board. The internal bond

strength of MDF is about 50% higher than the corresponding value for veneered particle


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board. MDF with a highly homogeneous construction and uniform density gradient does not

require a veneer overlay.

The distinct advantages of MDF are outlined below:

a) It does not delaminate

b) Excellent moulding abilities

c) It can be joined, riveted, tongued and grooved.

d) It can be calibrated and sanded on both sides.

e) Lathe work can be done easily.

f) It is free from overlays and gaps.

g) It possesses homogeneous strength.

h) It is free from knots and cracks.

i) Humidity-resistant.

j) It has low formaldehyde content.

k) Very good screw-holding and edge-finishing properties.

l) It needs no special tools or work methods.

m) All kinds of paints, lacquers, stains and varnishes can be used on MDF.

n) It is insect-resistant.

2.1.2 Applications MDF is being used in residential, commercial buildings for partitions, panelling, false

ceilings and furniture.

Thin MDF has applications in beds, cabinets, chairs, panelling, drawer bottoms and centre

panels in framed doors. It can also be used as skins for flush doors, partitioning, office

screens, lightweight doors and exhibition paneling.

Novel application avenues are in shoe making, motor vehicle interior parts, toys, printed

circuit board production and blades for electric fans. Due to its excellent acoustic

properties, MDF is also being successfully used in Hi-Fi equipment.

Moisture-resistant varieties are being developed that can be used for exterior applications.


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Thick MDF boards can be used in buildings as columns and archways in place of solid wood

where the warp resistance, torsional stability, screw holding strength and edge finishing

characteristics are important. Thick MDF can be as a core substrate material for paneling

with veneers, printed surfaces, vinyl and low pressure laminates due to its dimensional

stability and smoothness. Thick MDF is also widely used as a base material for laminated

and veneered wood products for flooring and wall paneling and for foil wrapped mouldings.

It can also be used for a wide range of furniture such as tables, cabinets, windows, doors,

frames, handicraft items, display or exhibition stands and signs, ceiling, toys, carving,

partitions, maritime applications and educational equipment.

The entire versatility of MDF is yet to be utilised in a host of applications. In short, the

product has the potential to replace plastic, metals and wood in a wide variety of

applications which is only limited by our imagination.

2.2 Prelam MDF Board

To improve the aesthetic look and applicability, laminate paper is applied or fixed on the

fibre board with the help of a press. This board is known as pre laminated board or

prelam board. The prelam board has more than one paper on its surface like base paper

or balancing paper, decorative paper and other protective film. These papers help to

improve resistance to abrasion, temperature and water. As the prelam board is an

improved version of the MDF board, the specification of the Prelam board is completely

depend on the properties of the MDF board.

Prelam MDF board has certain distinct advantages, which are mentioned below:

Resistance to steam and stains

High abrasion resistance

Better strength for durability

Resistance to warping and sagging

Surface counter balanced for greater stability

Strong enough for load bearing applications

Termite, fungus & borer proof

Standard screw holding capacity


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Prelam MDF board used to manufacture the products mention below:

Cupboards, shutters & wardrobes.

Shelves

Table tops

Cabinets

Household & office furniture.

Computer furniture.

Panels in panel doors.

Beaded doors.

Partitions.

Precautions

2.3 Laminate Flooring

Laminate flooring is composed of several layers of impregnated paper and raw fibre board.

Papers are forming the surface layer of a core layer which stabilizes the floor. Flooring is

available in smaller size of planks. High density fibre board is preferred for core board of

the flooring as it has to bear the load. The basic properties of the laminate flooring are

depend on the properties of the HDF board and laminated papers.

The flooring can withstand with the normal load and provide good aesthetic load. It is not

100 % water-proof and scratch-proof but by using high grade quality paper water

absorption and scratch ability can be minimized to a great extent. Laminate flooring can

withstand the temperature variation and can be installed on any flooring like wood,

ceramic, concrete, particle board, vinyl, linoleum, etc.

2.4 Description of Substitutes

MDF closely competes with other product like plywood, hardboard, particle board and

plastic panels in a variety of applications. Apart from these products, chemically treated

wood, plantation timber, rubber wood, log wood and sawn wood find similar applications.


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Figure 2.1: Substitutes of MDF

Source: MM analysis

Chosen Material

Wood or Wood Base Non Wood

Wood Based Panels

Timber

Timber Base Panels Reconstd Wood Panels

Ply Wood Block Board Particles Board MDF Fibre Board

Steel / Aluminium

Gyp-board

PVC Acrylic / Fibre glass etc.

Agro Waste Base


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Table 2.3: Wood& Agro-based products and their application

Wood Product Major Uses Substitute

(Wood& Agro waste

Types)

Substitute

(Non-wood Types)

Plywood& Veneer Construction-walls,

doors, decorative

panelling.

Packaging- crates,

boxes, tea chests.

Furniture.

Vehicles-boats,

caravans.

Misc.- Toys, etc.

Particle board

Fibreboard

Paper Overlay-

panelling& packaging.

Sawn wood.

Plastics (furniture&

packaging).

Fibreglass, concrete,

polyester overlay.

Sawn Wood Construction-flooring, walls, joinery, panelling& lining.

Engineering- railway sleepers, piling, wharves, bridges, mining timbers.

Furniture

Packaging-boxes, crates, pallets, etc.

Vehicles

Plywood, veneer, & MDF- panelling, furniture.

Fibreboard-packaging

Particle board.

Plastics (furniture& packaging).

Paper & paperboard (packaging).

Concrete, bricks, steel, aluminium.

Particle Board Construction-flooring, walls, under floor, panelling& building elements.

Plywood, veneer, & sawn wood- packaging, construction& furniture.

Fibreboard.

Steel& aluminium (furniture);


MDF Furniture, packaging, construction

(Flooring, walls, panelling, etc.)

Plywood, veneer, particle board& sawn wood.

Steel& aluminium (furniture);


Source: MM Analysis


18


Table 2.4: Characteristics comparison of different products

Sr.

No.

Comparison

characteristics Plywood Particle Board MDF

1 Insects & Borers Attracts wood

borers

Does not attract

borers

Totally borer proof,

as only wood fibers

are bonded together

2 Machining, carving &

post forming Not Suitable

Suitable to a limited

extent

Highly suitable

3 Density of the Board Medium Low Medium and high

4 Edge cutting &

trimming

Suitable to a

limited extent

Suitable to a limited

extent Highly suitable

5 Nail & Screw holding

capacity Medium Low to Medium High

6 Board strength &

internal bond Medium Medium High

7 Structural strength

Low due to

wood layer

bonding

Low due to particle

bonding

High due to fiber

bonding

8 Moulding Not possible Not possible Excellent

9 Joining & riveting Not possible Suitable to a limited

extent Highly suitable

10 Surface finish Medium Low Excellent

11 Tensile strength Medium Low High

12 Raw materials 100% wood Agrowaste/wood Agrowaste/wood

13 Environmental

aspects

Dangerous to

forest

resources of

country

Boon for building

material industry due

to versatility of raw

materials usage like

agro waste & wood

waste.

Eco friendly product

Boon for building

material industry due

to versatility of raw

materials usage like

agro waste & wood

waste.

Eco friendly product

14 Value added products Plywood only Prelam boards, Prelam boards,


19


modular furniture modular furniture,

embossed doors,

carved surface doors,

painted boards

15 Product Specification G1 grade G2 grade G3 grade


20


3 Market Study

3.1 Global Scenario for MDF

In 2005, the global MDF production reached about 41 million m3, compared to 39 million in

2004. Large scale production facilities are concentrated in Asia, Europe and North

America.

Table 3.1: Region wise MDF production Region Production (000 m3)

Asia 18936

North America 5297.6

Europe 13300

Oceania (Australia and New Zealand) 1656

South America 1758

Total 40947.6 Source: Food and Agriculture Organization (FAO) stats

The table explains the regional production in 2005. China has grown to become a dominant

producer (14.66 million m3), followed by Europe. Production in Europe rose to 13.3 million

m3, showing a growth of 7% as compared to 2004. The total consumption also rose by 7.6%

to 12 million m3.

From 2004 to 2005, North American MDF production rose from 5.1 to 5.3 million m3, with

70% of the production concentrated in the United States. MDF production in the U.S.

increased from 3.6 to 3.7 million m3, while the Canadian production increased from 1.5 to

1.6 million m3 in the above period. MDF imports to North America (procurement sources:

Brazil, Argentina, Chile and Venezuela and Oceania) declined by 10% in 2005, to 1.7 million

m3.

MDF production in New Zealand increased to 861000 m3 in 2005. The country also has the

highest per capita consumption of the product.

MDF consumption since the past decade has well penetrated markets other than furniture

industry. But, owing to an earlier establishment of particleboard as a product, its

consumption in most countries was more than MDF before.


21


In countries like Japan and Korea, manufacturers are replacing particleboard; particularly

where MDF properties like smoothness of surface is required. This is expected to spread

worldwide, as furniture manufacturers seek cost effective methods of production.

However, with huge capacity inclusions in China, MDF consumption rose to 16 million m3,

driven by furniture industry growth (2004), compared to particleboard consumption of 4

million m3.

The figure below highlights the MDF consumption break up by segment in China:

Figure 3.1: MDF Consumption in China

Furniture78%

Decoration12%

Other10%

Source: China Academy of Forestry, China Wood

Continued innovations to customers need and to solve their problems, and the

development of Engineered Wood products lead to newer developments. Products like

Sawn wood and plywood are well past their prime, owing to these reasons.

Moreover, these products also compete with steel and other useful materials, widely used

in construction industry and furniture.

MDF Board Market in the Middle East The Middle East regions comprise of developing countries like Algeria, Bahrain, Egypt, Iran,

etc. with growing young population, which point towards growing consumption of wood

based panels.


22


The major constraint to growth in MDF industry in the Middle East is the scarcity of raw

material. Almost 70% of the total production in the region in 2005 (54000 m3) was from

Iran. Trade statistics point towards the fact that majority of the consumption is met

through imports.

With growing demand of MDF in the region, the imports have risen from a mere 332,611 m3

in 2000 to about 2.2 million m3 in 2005.

Table 3.2: Production and trade of MDF in the Middle East

Year Production (m3) Import (m3) Export (m3)

2000 53000 279663 52

2001 14000 422631 139

2002 14000 566531 336

2003 14000 762661 144

2004 40300 1514209 913

2005 54000 2186581 1000 Source: Dieffenbacher Report

As evident from trade statistics, the export potential to Middle East region appears to be worth exploring.

Future Outlook

The Commonwealth Scientific and Industrial Organization (Australia) predicts global MDF

demand to increase by 10% till 2010.

As per Jaakko Poyry Information Service, the demand for MDF in U.S., Europe, and Asian

countries (mainly China and South Korea) is expected to exceed the supply, driven by its

popularity in construction industry and furniture manufacturing in recent years. The figure

below shows region wise forecast of MDF surplus/deficits:


23


Figure 3.2: Global MDF Demand Supply Balance

Source: Jaakko Poyry Information Service

Figure 3.3: Global Particleboard Demand Supply Balance

As evident from the figure above, particleboard deficits are anticipated in Europe, whereas

Asia, Oceania, South America are expected to have surplus capacities.

Global Particleboard Demand-Supply Balance

-7000

-6000

-5000

-4000

-3000

-2000

-1000

0

1000

2000

1990 1995 2000 2005 2010 (F) 2015 (F)

Years

(1000 m3) North AmericaEurope AsiaOceaniaSouth AmericaAfrica

1990 1995 2000 2005 2010 (F) 2015 (F)

Global MDF Demand-Supply Balance

-3500

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2000

1990 1995 2000 2005 2010 (F) 2015 (F)

Years

(1000 m3) North AmericaEurope AsiaOceaniaSouth AmericaAfrica

1990 1995 2000 2005 2010 (F) 2015 (F)


24


Growth Drivers:

The demand of MDF is expected to show an upward trend, considering the following

macroeconomic factors:

1. Rapid economic growth at the world level (GDP growth rate - 4% till 2010).

2. Population growth and urbanization.

3. Trade and foreign investment deregulation.

4. Expanding wood processing capacity.

5. Anticipated growth in construction investment, furniture and decoration industry.

6. Increasing exterior use of wood based panels in European and American countries,

attributing to the suitability of climatic factors.

3.2 Laminate Flooring Market

The global production of laminate flooring from year 1990 to 2005 is depicted below.

Figure 3.4: World Production of Laminate Flooring

Source: Munksjo Paper The production of laminate flooring has steadily grown at a rate of 34.09 % CAGR in the

last 15 years and has reached 815 million m2 in the year 2005.

Europe is the major producer of laminate flooring in the world and is a net exporter for the

last 15 years. Europe accounts for 65 % of total production of laminate flooring in the

world (year 2005).

0

100

200

300

400

500

600

700

800

900

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Production in million m2


25


The production of laminate flooring in Europe is mentioned in the figure below:

Figure 3.5: Production of Laminate Flooring in Europe

0

100

200

300

400

500

600

in m

illio

n m

2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Production for Europe Production for Exports

Source: Munksjo Paper Germany is the biggest producer of the laminate flooring and account for 28 to 33 % of

world production of laminate flooring in last 5 years. Other leading laminate flooring

manufacturing countries in Europe are France, Austria, Belgium, Poland, Switzerland, and

Great Britain.

In terms of import, North America is the leading continent to import the laminate flooring.

With the import, production of laminate flooring in America has also risen in the last 10

years.


26


Figure 3.6: Market Volumes of Laminate Flooring in North America

0

20

40

60

80100

120

140

160in

m

illio

n m

2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Import Domestic Production

Source: Munksjo Paper The production of laminate flooring in Asia is constantly rising for the last 10 years until it

became net exporter in the year 2005.

Figure 3.7: Market Volumes of Laminate Flooring in Asia Pacific

0

50

100

150

200

250

in m

illio

n m

2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Domestic Production Net Import Net Export

Source: Munksjo Paper The continuous increasing production of laminate flooring in China is the major reason

behind the spurt in Asian production of laminate flooring. From 11 % of production share of

total world production of laminate flooring in year 2001, China reached at 23 % of

production share in the year 2005, which is next to Germany only.


27


3.3 Indian Market

3.3.1 Market Survey

The market study was carried out in various segments which influence the demand for

MDF. They were divided on the basis of similarity in response pattern and the factors

affecting the demand for MDF.

Competitors (including substitute products), institutional buyers, architects & interior

decorators, industrial buyers & converters and wholesalers & distributors were contacted

during the survey. Additionally, some actual users of MDF were also contacted. The study

was conducted in Ahmedabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Jaipur and

Kochi.

a) Competitors:

They are the manufacturers of MDF and its substitutes. The substitutes are plywood,

particle board, hard board, etc. The regional offices and head offices of these

manufacturers were contacted during the survey.

(b) Institutional Buyers:

They are the large buyers of MDF and its substitutes, with having fairly uniform application

areas and the quantity used being substantial. For example CPWD, where the requirement

is mainly of doors & windows but quantity being used is substantial. Large construction

companies also fit into this category. These are bodies where procedures for introducing a

new product are elaborate but volume of sales justifies it.

(c) Architects & Interior Decorators:

This category represents the users of these products for a variety of applications. They are

also the innovators in finding new application areas for various products. This segment do

not form big market by them but help it grow.

(d) Industrial Buyers / Converters:

This segment consists of the converters who use MDF and its substitutes for large scale

manufacture of end use products. They may be T.V. cabinet makers, flush door and knock-

ed down furniture makers etc. Users of this segment have specific requirement and use


28


various substitute products according to the requirement of end product and the cost of

alternative products.

(e) Wholesalers / Distributors:

This is the most significant segment as they form a link between manufacturing company

and the actual end users. They are the members of distribution channel for various

substitute products (like plywood, particle boards etc.) and very often influence the end

users decision.

(f) End users:

They are both actual buyers and users of MDF. They have used MDF in a particular

application and were contacted to know their views on MDF.

3.3.2 Summary of Findings

(i) Plywood and Block board Plywood and Block board collectively constitute a major segment of wood panel

market.

Plywood possesses good strength and mechanical properties, as well as firm,

easy nailing/screwing ability has given the product very good market

acceptance over the years.

Small scale manufacturers in unorganised sector constitute the major chunk of

the total plywood manufacturing. As these units do not pay any excise duty and

evade other local taxes, they give a tough fight to organised sector plywood

manufacturers.

This industry uses premium timber log veneers as input, which is in short supply.

Construction, furniture and packaging industries are the biggest end-users of

this product.

Plywood is considered first choice for the household furniture in India, but in

foreign countries where ready made and flexible furniture demand is increased


29


in last decade, there preference gradually moves to other available alternate

products.

Plywood and Block board are available with phenol & urea formaldehyde

bonding for exterior and internal application.

Block boards are available in a density of 750 - 900kg/m3 and thickness varies

from 10 mm to 40mm.

Plywood offers several superior properties like bending, termite resistance,

ability to withstand varying conditions, etc. which makes it non-substitutable by

other wood panel products for some applications.

Most of the sale is on credit. The credit period varies between 30 - 60 days

Source: Capital Market

Marketing of these products is generally through the normal distribution channel

of company -> wholesalers/stockists -> dealers -> consumer. However,

sometimes the dealers purchase directly from the company.

Typically the Plywood is available in panel lengths of 5, 6, 7 & 8 ft., width of 3

and 4 ft. and thickness of 4, 6, 9 and 16 mm.

Fast moving size of Plywood and Block board is 8'x4'.

Prices of plywood have moved upwards at a rate of 10-15% in the last few years.

This can be primarily attributed to increased prices of raw materials.

Some plywood companies are also offering panel doors, flush doors, ceiling tiles

and Plywood with very distinctive and unorthodox surface veneers.

Plywood shuttering is preferred over wooden or steel shuttering because it is

lighter to handle, can be bent and finish is smooth, thus saving plastering cost.

Manufacturer Installed capacity Unit

Greenply Industries (plywood/particle board) 1,18,50,000 M3

Kitply industries (plywood and boards) 14,750,000 M2

National Plywood Industries (plywood / block

board) 4 mm basis 11,350,000 M2

Century ply boards (plywood) 25200 M3


30


Particle Board

The market size for PB in India is roughly US$110 million, with a year-on-year

growth rate of 20%. Almost 90% of the demand is met by domestic production

and the rest is imported. Imports are chiefly from Nepal, Bhutan and Sri Lanka.

Particle boards are mainly used for partition/panelling and in the manufacture

of doors (as inserts in frame) and rarely used for table tops. Ready made

furniture manufacturer prefer particle board as main raw material.

PB suffers from the poor edge machinability, poor tensile strength and poor

screw/nail holding strength.

A substantial portion of particle board (around 65%) being marketed is

laminated and the remaining 35% are in the form of plain& veneer boards.

Industry uses a variety of raw material for the manufacture of particle board,

such as bagasse, wood chips, rice husk, etc. Wood accounts for 87% of the raw

material used in the manufacture of PB.

Standard sizes of particle board panels are 8' x 4', 9' x 4' & 10' x 4' and the

thickness ranging from 9 mm to 35 mm. 12 mm thickness particle board is used

as inserts in door frames, 18mm for modular furniture. The other sizes

commonly used are 15 and 25 mm sheets.

At present there are 15-16 players of particle board and the demand for the

same is nearly 2.55 lakh tons per annum.

Bhutan Board unit in Bhutan with an installed capacity of 21000 TPA has been

performing at 70% capacity utilisation. The unit is located in Bhutan. It markets

around 50% of its production in India.

Novopan is the market leader of particle board followed by Bhutan Board.

Novopan has two manufacturing units with capacities of 50,000 and 75,000

cubic m/year respectively.

Ecoboard, Vision Boards, Aurobindo Laminates and Trimurti used to

manufacture particle board using bagasse as raw material.

Nepal Boards, Bhutan Boards, Mysore Chip Boards, Uro, Decoboard (Bakelite


31


Hylam) and Novopan manufactures PB from wood.

Medium Density Fibre (MDF) Board

MDF worth US$ 67.5 million are being imported to India every year that meets

almost 75-80% of the total domestic demand. Based on market information, the

market for MDF is growing at an impressive rate of 20-25% p.a.

There are two manufacturers of MDF in India. These are Mangalam Timber

Products Ltd. and Nuchem Ltd. The trade name of Mangalam's product is "DURA

TUFF" and that of Nuchem Ltd. is "NUWUD".

The plant capacity of Mangalam Timber is 57000 cubic m/year and that of

Nuchem Ltd. is 60000 cubic m/year (45,000 MTPA).

Duratuff is available in interior and exterior grade and also in pre-laminated

form whereas NUWUD does not have pre laminated boards.

Plywood is considered first choice for the household furniture in India, but in

foreign countries where ready made and flexible furniture demand is increased

in last decade, there preference gradually moves to other available alternate

products.

Pre-laminated boards of DURATUFF are preferred in the Southern and Western

regions, whereas the plain boards are dominant in Northern India. MDF market

in the Eastern region is negligible because of the easier & cheaper availability of

non-teak wood.

Greenply, one of the major players in plywood, particle board and decorative

veneer board manufacturer, is also entering in MDF market with pre laminated

boards, branded as Greenlam. Although Greenply not manufacturing MDF

board at present, it purchases MDF from outside and get it laminated in its unit.

Majority of sale is of 8 ft x 4 ft. panels and thickness prefer-red are 6, 12 and 18

mm.

MDF initially was not accepted positively by traditional carpenter because of

slightly different work practices requirement. However, at present the

carpenters find it easy to work with MDF.


32


MDF manufacturers are trying to push the product directly to the institutional

buyers who are the large consumers. Company plays a promotional role only.

Manufacturers of MDF claimed that they are making exterior grade conforming

to international MDF specifications. They use Phenol Formaldehyde resins for

making exterior grade MDF.

MDF has been accepted by institutions like IOC, CPWD, DDA, HVDCO, IAAI, ITC

Ltd., Ministry of External Affairs, State Housing Boards, State PWDs, Taj Group

of Hotel, etc.

The major demand of MDF board in recent years created by the new emerged

industries in India like software, BPO, retail and banking. Corporate sector

prefers MDF because it provides good aesthetic look and fast erection of

furniture in office.

Plywood is considered first choice for the household furniture in India, but

gradually this preference is shifting towards ready made and flexible furniture,

which is made up of MDF board. The furniture industry, valued at almost INR

30,000 crores, is expected to witness a robust growth in the wade of upswing of

purchasing power of more than 400 million middle class populations.

The growth in furniture consumption has been attributed mainly to

unprecedented growth witnessed in construction and residential real estate

markets. The short term growth is anticipated at 7% - 8%.

Much of the domestic demand for furniture (65%) is from ten major cities viz.

Mumbai, New Delhi, Bangalore, Chennai, Hyderabad, Ahmedabad, Pune, Surat,

Kanpur and Jaipur.

With the rising income of middle class and willingness to change furniture often,

will also perk up the demand for MDF board.

Poor awareness about MDF board has been a deterrent, but this can overcome

by educating carpenters and the end user.

MDF is also being sold to original equipment manufacturers like Videocon, BPL &

Philips. These companies use MDF in the manufacture of speaker cabinets.


33


Nuchem has a variety of downstream products of MDF like doors, windows,

mouldings, etc. These downstream products are manufactured by Nuchem on

contractual basis.

However, most people related to MDF expect it to perform better in panels and

doors compared to furniture. This is in contradiction with the international

trend, where majority of MDF is being used in furniture making only.

Manufacturers are quite optimistic about increase in share of MDF in the total

panel product markets and particularly plywood. Moreover, they expect it to

perform same function of timber in the manufacture of doors. They expect a

penetration level of over 30% of total panel product market in the future.

Others (Plastic Panels, Cement Bonded Particle Boards, etc.)

The plastic panels are made of PVC which is relatively costlier vis--vis the

other panel products. Thus, the acceptance level is low.

Sintex, the largest manufacturer of PVC panels, are focussing on direct

marketing to the end-users. Marketing through architects was not very

successful because of their high price.

These panels look very attractive, but over a period they fade due to

environmental effects.

Gujarat Synthwood claims to be making a scratch resistant product with integral

skin and appearance similar to wood.

The plastic panels are not very strong, thus, not suitable for use in external uses

like doors & windows.

Uses of plastic panels are limited to door & window frames, doors, windows and

partitions in commercial buildings.

Because of excellent water resistance properties these panels surpass all the

other similar products in performance. These products need no painting,

polishing, varnishing etc. because they are pre-finished on both the surfaces.


34


Doors of PVC panels do not find easy acceptance because of psychological

preference for wooden door. Customer accepts frames and windows of material

other than timber more readily but customers still prefer wood or something

similar in appearance and texture.

The manufacturing companies have focussed on institutional markets where

volume is high and product requirement is standardised.

Gujarat Synthwood is trying to promote the product in household and residential

applications to expand the market. Because of its high price & preference for

wood or something similar to wood for doors and windows the penetration of

PVC panels in the total panel product market is quite low.

These products are also relatively new and are still trying to carve out a market

niche for themselves.

The major manufacturers of PVC panels are Sintex, Uniplas, Gujarat Synthwood,

Caprihans & Fixopan Industries. Jain Group manufactures polystyrene (trade

name "TIMBRON") 'based panel products.

Cement bonded particle boards are mainly used for flooring, ceilings and

partitions. The market for these is slowly developing. Cement bonded

particleboard at present is manufactured by NCL Industries (Bison Panel) in

India.

Laminated Flooring

Laminated flooring is widely used in household, corporate offices, restaurant,

hotels, and entertainment complexes. But still granite, marble, kota and

ceramics are the most preferred flooring for house flooring market in India.

Wooden flooring also getting acceptance slowly in Indian houses because of the

availability of the laminated wooden flooring.

Laminate floors are made up of a thin, transparent upper crust that is resistant

to wear and tear, and of high density fibre board inside. Laminate floor cheaper

than the real and hard wooden floor. Laminate floors available at Rs 200-300

per sq feet.


35


Laminated floor provides good aesthetic look. It is available in different colours

and designs, which depends on the paper used in the surface of the wooden

floor.

At present, demand of the wooden flooring in India is 90 % met by import only.

More than 20 brands are selling in the Indian market presently. A large number

of these are importers. Amongst the well-known brands, there are Pergo (a

Swedish brand), Krono (a German brand), Eggar, Floormaster, etc.

Laminated floor can be installed on existing flooring of wood, ceramic,

concrete, particle board, vinyl, linoleum, etc.

The surface layer of laminate flooring is hard, compact and autistatic, so dirt

and dust do not adhere to it easily. It makes floor cleaning easy.

Laminate floor are less vulnerable than pure wooden flooring from water and

dust, but they also require great care to maintain sustainable life. Due to

improvement in technology, laminated flooring is available in market with the

warranty up to 50 years.

Technology has change laminate flooring from glue joints to mechanical click

joints; almost all laminate floors are glue-free today.

The Indian flooring market has witnessed a lot of changes in the last 50 years.

From the traditional stone flooring, people have moved to granite, ceramic,

marble and now its laminates flooring.

3.3.3 Institutional Buyers for MDF

A SHIPPING INDUSTRY

MDF / Particle board can be used in the manufacture of furniture in ships for which at

present plywood is used. Currently marine plywood is used in this application.

B. RAILWAYS

Research Design & Standards Organization (RDSO) is the research wing of Railways. They


36


promote the use of newer materials in coach building. New class of material is tested and

certified by them. This is communicated to all the nine zones of Railways so that field staff

can use them.

The two major coach factories namely Integral Coach Factory (ICF), Perambur and Railway

Coach Factory (RCF), Kapurthala opined that approval of RDSO is needed for using any new

material. At present MDF is not used in such building.

c. SURFACE TRANSPORT

(i) Presently wood, plywood and block board are being used in bus and truck body

building.

(ii) Some bus/truck body manufacturers said that they do not know anything about MDF

and nobody has approached them for such a product.

(iii) Gujarat State Road Transport Corporation tried MDF for passenger seats by

replacing plywood which was being used earlier. But the results of this experiment were

not satisfactory. However, the trials are still on.

D. STATE AGENCIES

(i) Central Public Works Department (CPWD) is quite favourable to the product. Their

Technology Application & Development Cell (TADC) has approved the material and they are

still conducting some tests on the product. For experimentation/trial purpose they have

used it in some of the construction and are observing its performance.

(ii) Main use for CPWD is in door shutters followed by windows and frames. But the

Department is quite stringent on the Boiling Water Proof (BWP) grade product. They would

also prefer a pigmented exterior grade for easier identification.

(iii) They find that exterior grade MDF is not easily available in the market

(iv) Housing & Urban Development Corporation (HUDCO) another central government

body in housing is also giving MDF a trial by using it in some of the construction activity.

HUDCO has used MDF in its Type IV flats at Khelgaon Marg, New Delhi for joinery and

various interior


37


E. PRIVATE BUILDERS

(i) Private Builders see a great possibility of MDF application in door shutters. For

frames, steel or aluminium is used and in windows steel, aluminium and PVC are preferred.

Door shutters traditionally have been of wood and they would continue to be made up of

similar material.

(ii) Price-wise MDF is either on a bit higher side or equivalent to other material in their

assessment.

(iii) Users have found availability of MDF as a constraint.

Points (ii) & (iii) are not weaknesses per se, but opportunities. RDPL can look forward to

leveraging the advantages arising out of domestic production at economies of scale.

3.3.4 Architects & Interior Decorators

(i) Positive attitude about the product is reflected by various architects & interior decorators contacted.

(ii) MDF is recommended in the furniture which is painted for use. However, in the

cases where polishing arid teak ply lamination is required, MDF is not preferred

because of its poor adhesive properties compared to plywood and blockboard.

(iii) Modular furniture is a new concept. It will be preferred by the people who want

economical stuff but for the class which believes in exclusiveness it is a preferred

material.

(iv) Short supply of MDF especially NUWUD has also been reported by few.

(v) MDF is preferred because of its appearance, price and versatility. Higher use of MDF

and other panel products is reported in the western and southern India.

(vi) According to majority of respondents in this category, MDF is a success abroad and

in India direct marketing and promotion through architects is required. But

carpenters or workmen need to be educated about the product for better

penetration.

(vii) Availability of larger sizes of MDF like 8'x6' (which is available in particle board) is

desired by some interior decorators.

(viii) Everybody agrees that price, performance and awareness about the product will

influence the choice of customer and the penetration is expected to increase in the

future to over 30 to 35% of the panel product market.


38


3.3.5 Industrial Buyers/Converters

(i) Respondents of this group have been using plywood and particle board till now.

(ii) As the modular furniture in India is not very popular, the use of MDF is very less.

(iii) Until now furniture manufacturers have been using other panel products like

plywood, blackboard etc. Although MDF is cheaper than plywood, most furniture

makers have not given it a try as it, is a relatively new product. However, in places

like Muzaffarnagar, U.P., which is known for its furniture made from Sheesham

wood, demand for NUWUD based furniture, is picking up. Furniture (from NUWUD

includes tables, chairs, cabinets, 0 wardrobes, racks with very good design creativity.

Cost of MDF is less than sheesham and teak wood.

(iv) Handrails and margins (mouldings) made from MDF in a wide variety of designs are

gaining popularity. These are traditionally made from teak wood. A few furniture

makers, who have replaced particle board with MDF find this uneconomical.

However, the cost-benefit is not weighed in terms of MDF's durability, strength etc.

(v) For simpler applications like TV trolleys, cabinets etc., particle board being a

cheaper product, is preferred. Also acoustic properties of particle board fit into the

requirement.

(vi) In furniture making, requirement of moulded/carved edges can be easily met with

MDF, but users have minor worries about screwing properties on the edges of MDF.

(vii) MDF is being used by ancillary units of some audio/video electronic equipments

manufacturing companies.

Some of regular users have complained about poor availability, which is forcing them to

use other panel products again. They make products on time bound order, so cannot afford

to wait.

3.4 Indian Scenario on Furniture

The Indian furniture industry is fragmented and 85 % of the furniture produced is by

handicraft. The contribution of the sector to the GDP is approximately 0.5 % only.

The furniture production trend in India is depicted below:


39


Figure 3.8: Furniture Productions in Billion Euros

Source: European Furniture Manufacturer Federation The industry grew almost 3% per annum annual growth rate in year 1996 to 1999 and then

slowed down by 10 % in year 1999. The slow down was the result of the cyclical situation of

the economy. Furniture sector recovered from the 1999 crisis and attained a 3 % growth

rate in the year 2000 and 2001.

The wood-based furniture ruled the Indian furniture industry with 65 % share, while metal

is accounted for 25% and plastic is accounted for 10 %.

Figure 3.9: Raw material used in furniture

Source: European Furniture Manufacturer Federation

1998 2000

2016

2067

2130

1913

1986 2026

1800 1850

1900 1950

2000 2050

2100 2150

1996 1997 1999 2001

65%

10%

25%Wood

Metal

Plastic


40


The household furniture is the major segment of the total furniture production, which

accounts for 65% of the production value.

Figure 3.10: Furniture Production Break up

Source: European Furniture Manufacturer Federation The household segment covers the upholstered furniture, bedroom, kitchen, and dining

rooms furniture. The upholstered furniture accounts for the 30 %, bedroom 20 %, and

kitchen and dining rooms furniture for the 7.5 % each. The second major segments in the

furniture industry are corporate/office and hotel furniture with the share of 15 % each.

Other furniture holds remaining 5 % share.

The office furniture segment is the one that boasts the most important companies, both

from the point of view of size and of the technological innovation of the production.

Import Export

The import and export of the furniture is given as exhibit below:

8% 8%5%

15%

15% 29%

20%

Upholstery Bedroom Furniture Dining room Furniture Kitchen Furniture

Other Furniture Corporate/Office Hotel/contract


41


Figure 3.11: Import Export of Furniture in India

020406080

100120140160

1996 1997 1998 1999 2000

in m

illio

n Eu

ros

Import Export

Source: European Furniture Manufacturer Federation The exports of Indian furniture are ten times higher than imports of the furniture in India.

The exports are more in the form of cheap varieties at affordable costs whereas the

imports cater to the elite class who wants to own the best brands available in the market.

Export of Indian furniture

The United States is the biggest consumer of the Indian furniture outside India and

accounts for 24% of total export of the Indian furniture. After US, United Kingdom and

Germany are the biggest export destinations for the furniture with 14% share each.

Figure 3.12: Country wise break up of export of Indian furniture

4%

2%

24%

14%

14%5%

2%

15%

5% 10%

5%

United States Germany United kingdom FranceItaly Denmark Canada Greeceothers Belgium Netherlands



42


The indicative break up of export share of the furniture products is given below:

Figure 3.13: Product wise break up of Indian furniture export

1%

1%

8%

4%

5%8%

31%

42%

Other Wooden Furniture Office Furniture other Furniture & PartsKitchen Furniture Seating & Parts Plastic FurnitureOther Metal Furniture Bedrooms


Import of the furniture

Indian consumer prefers stylish and western furniture. The biggest import source of

furniture in India is Germany which account for the 16 % of total import of the furniture.

Germany followed by the Italy with 12 % and Korea with 10 % of import share.

Figure 3.14: Country wise break up of imported furniture in India

Source: European Furniture Manufacturer Federation The indicative break up of import share of the furniture products is given below:

20% 3% 16%12%

7%

9%

4% 5% 7%7%

10%

GermanyItalyKorea United KingdomUnited StatesIrish RepublicFranceJapan Poland others Switzerland


43


Figure 3.15: Product wise break up of imported furniture in India


Indian wood scenario

India meets its wood required by natural production, plantatio

Medium Density Fiber Report

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Transcript of Medium Density Fiber Report