Analyst Meet / AGM     06-May-13
Conference Call
Finolex Industries
Expects to produce 210000 tonne PVC pipes in FY'14
Finolex Industries held a conference call to discuss the financial results for the quarter and year ended March 2013 and future prospects of the company. Mr. Prakash P Chhabria,- Executive Chairman, Mr. S.S. Dhanorkar- Managing Director and Mr. P. Subramaniam- Asst. MD & CFO of the company were present in the conference call.

Highlights of the Concall

  • The company reported 6% increase in topline to Rs 624.18 crore in Q4FY'13 compared to Q4FY'12 while net profit rose 41% to Rs 79.35 crore over the same period. For FY'13 topline rose 2% to Rs 2124.26 crore compared to previous year while net profit rose 81% to Rs 136.14 crore.
  • The company sees strong demand for PVC resins and PVC pipe and fittings on the back of steep rise in allocation for rural water management and irrigation in the 12th five year plan. 12th Plan envisages investment of approx. Rs.2.3 trillion (USD 43 billion) for water management. Irrigation sector allocation is expected to be approx. Rs.5 trillion (USD 92 billion) in the 12th plan. Also Government targeting 65 million hectares land under irrigation by 2020
  • The company has recently commissioned a green field plant for manufacture of PVC pipes at Masar, District Vadodara in the state of Gujarat. The current capacity of this plant is 30000 tonne per annum which will be scaled up to 50000 tonne per annum during 2013-14.This plant shall cater to the ever increasing demand from North India region. With this total pipe processing capacity has become 210000 tonne per annum for the company- 1 lakh tonne per annum capacity is at Ratnagiri, Maharashtra and 80000 tonne per annum capacity is at Pune.
  • The company is the largest PVC pipe manufacturer in India. PVC pipes & fittings is used for diverse applications in Agriculture, Housing, Building & Construction and Telecom Industry
  • Around 45% of total domestic PVC pipes are used in irrigation sector followed by 29% in water supply, 12% in sewerage, 10% in plumbing and 4% others.
  • The company has a market share of more than 25% in the organized PVC Pipes market
  • Finolex Industries is the 2nd largest producer of PVC resin in India with manufacturing capacity of 2.70 lakh tonne of PVC Resin.
  • Domestic PVC resin capacity in 1.3 million metric tonne (MMT) at the end of FY'13 growing at 12% while domestic consumption is 2.22 MMT and imports are1 MMT for FY'13 up by 0.2 MMT from FY'12.
  • Global PVC resin capacity in 53.9 MMT at the end of FY'13 while demand is 37.5 MMT growing at 1.9%. Capacity added in FY'13 was 3 MMT out of which 80% was in China.
  • Domestic Demand for PVC resins to grow at double digit
  • The company has recently completed an expansion of the Emulsion PVC resin capacity from 10000 tonne to 20000 tonne. E-PVC is specialty grade used in various applications like artificial leather clot, footwear, flooring etc.
  • The company's 43 MW power plant at Ratnagiri is fully operational. Efficiency improvement, easing of fuel cost and cost saving measures taken during the year has led to improvement in margins. The company sold around 16-17 MW of power to the grid with a realisation of around of Rs 4 per unit.
  • The company produced 176000 tonne of PVC pipes while it produced 250000 tonne of PVC resins in FY'13. Merchant sales of PVC resins were 60000-70000 tonne.
  • The company expects to produce 210000 tonne PVC pipes in FY'14 i.e. 100% capacity utilization.
  • The company expects a capex of Rs 30 crore in FY'14.
  • Because of shale gas energy prices are moderating. As a result the company expects raw material prices to ease out.
  • The company expects PVC prices to remain firm due to strong domestic demand.
  • From FY'12 The company has reduced its total debt level by around Rs 300 crore at the end of FY'13 to Rs 710.63 crore. It further expects to reduce debt to Rs 500 crore by FY'15
  • The company has no plans to monetize its land bank.
  • The company produces PVC resins through two routes. First one is they import EDC and Ethylene and make VCM and then produce PACT resins. The second one is they directly import VCM to produce PVC resins. Both share 50:50 of total PVC resins capacity.
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