Ajit Venkataraman, MD, Finolex Industries, said the company has several projects in the pipeline for capacity expansion, which will be in the pipes and fittings segment. The company is working on improving the pipe and fittings product mix.
In the pipes and fittings business, around 60% of the business comes from the high-volume low-value agri segment. The company is aiming for an 80:20 share in favour of the higher margin pipes and fittings business focused on the plumbing and sanitation segment. This segment enjoys higher margins and is growing at a faster pace, he said.
The pipes and fittings segment grew by 7% to Rs 857 crore though volumes fell 6% to 62,914 million tonne. The agri pipe segment had seen a 6% drop in volumes during the second quarter of FY23. The second quarter has traditionally seen a decline in volumes because of monsoon, which makes it difficult to lay pipelines.
The agri offtake was also impacted with the market expecting a drop in polyvinyl chloride (PVC) prices. In anticipation of a price decline, the agri segment buyers postponed their buying decision, Venkataraman said. However, given the moderate rainfall in the country, the company is expecting higher demand in the second half and improved offtake. Falling PVC prices would be boosting demand for pipes and fittings going ahead, he said.
Revenues from resin declined 38% during the second quarter to Rs 297 crore and volumes were down 30.61% to 37,516 MT. The company reported a 6.16% drop in total income to Rs 883.15 crore for the September quarter. The company’s Ebitda stood at Rs 102.98 crore during Q2FY24 against the Ebitda loss of Rs 142.67 crore for Q2FY23. Profit after tax was at Rs 93.78 crore in Q2FY24 against the loss of Rs 93.92 crore in Q2FY23.
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