Finolex Industries planning to capacity expansion in the pipeline

The company is working on many initiatives to expand its capacity in the pipes and fittings market, according to Ajit Venkataraman, MD of Finolex Industries. The organization is attempting to enhance the product mix for pipes and fittings.

Approximately 60% of the business in the pipes and fittings industry originates from the low-value, high-volume agro sector. The company’s goal is to have an 80:20 share in the plumbing and sanitation segment, which is a better margin business, over the other segments. According to him, this market is expanding more quickly and has larger margins.

The company has a 48,000 tonne fittings capacity, of which 12,000 tonne is produced internally and the remaining 20,000 tonne is contracted out to captive vendors. During the company’s investor call, Venkataraman stated that the non-agri pipes and fittings segment would have faster growth in FY24.

Despite a 6% decline in volume to 62,914 million tonnes, the pipes and fittings market saw growth of 7% to Rs.857 crore. Volumes in the agro pipe segment had decreased by 6% in the second quarter of FY23. Because it is challenging to install pipes during the monsoon, the second quarter often sees a drop in throughput.

The market’s expectation of a decline in the price of polyvinyl chloride (PVC) had an impact on the agro offtake as well. Venkataraman stated that buyers in the agri segment delayed their purchase decisions due to their expectation of a price reduction. Nonetheless, the business anticipates better offtake and increased demand in the second half given the nation’s modest rainfall. According to him, future demand for pipes and fittings would be increased by declining PVC prices.

Resin revenues fell 38% to Rs.297 crore in the second quarter, while volumes decreased 30.61% to 37,516 MT. For the September quarter, the company recorded a 6.16% decrease in total income to Rs.883.15 crore.

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