In addition to the disruptions caused by demonetisation and introduction of RERA and GST, mattress manufacturers in the country have to cope with another problem, that is, higher raw material price. TDI (Tolylene di-isocyanate) is the main raw material used by the foam (used in furniture and bedding) manufacturers and the price of the same has nearly trebled during last two years. For example, price of TDI was Rs 118/kg in April 2016 which has now touched Rs 325- Rs 335/kg level. Poor demand scenario has not allowed the mattress manufacturers to pass on the entire cost hike to the consumers.
Upward trend in price of TDI in recent years is mainly due to tight supply situation which again is due to closure of some manufacturing units around the world in the aftermath of 2009 financial crisis. Supply disruptions also happened last year when BASF announced suspension of supply temporarily due to some quality issues which coincided with plant shutdown by some other manufacturers for maintenance. In India, the biggest plant of GNFC Dahej had gas leakage problem because of which it shutdown TDI facility which in turn disrupted the supply.
However, good news for the TDI consumers is that Sadara Chemical Company (Sadara), the largest chemical complex ever built in a single phase, announced the commercial start-up of its TDI facility in the fourth quarter of last year. Quality of the product supplied by the company is also good according to the consumers. Once the new plant stabilises the production, price of raw material is expected to come down which will bring much needed relief to the foam manufacturers. However, that may happen only towards the end of the first quarter of next financial year.