It’s been a month since demonetisation and the cash crunch has severely crippled the whole building materials industry. Retail sales are almost 50% low, manufacturing in numerous sectors have become marginal or completely come to a halt. Many projects have got delayed due to lack of resources and labour, as companies are struggling to pay daily cash wages and logistics firms are unable to pay for transport.
Notwithstanding this, during our conversation with players from the industry, one surprising facet came to the fore.
Many projects in the metros & sub-urban areas, also Tier 2 and 3 cities which were due to commence execution in February or March have been approved by some clients for immediate execution. Naturally, a lot of work for the small contractors spiralled down to buying of building materials for the projects, resulting in the spike in sales.
On conditions of anonymity some sellers and designers pointed out how sales of certain materials had in fact surged during the first & second week of the demonetisation move.
This has benefitted a lot of small contractors, carpenters and even dealers in the interim. Not just larger residential homes, even smaller homes owners who had been putting off renovations or still trying to close in on the right pricing and time for buying / renovating some household furniture and interiors, have gone ahead and utilised the available cash at hand wherever people have accepted the old notes. Current reports confirm that the rush is over as everyone eagerly awaits the true revival of the markets in the next few months. If they are to survive in the long run, it is important to understand that the only way is through transparent mode of transactions and getting into the mainstream organised market.