Finolex Industries conducted conference call to discuss results for the quarter ended June 2015 and way forward. Senior Management of the company addressed the call.

• Net sales decreased 4.4% on a y-o-y basis to Rs 633.4 crore for Q1FY'16 while EBITDA before exceptional items increased 1.3% to Rs 12.74 crore. EBITDA after exceptional items increased 16.6% to Rs 12.74 crore. PBT was up 42.5% to Rs 10.19 crore. PAT increased 40% to Rs 7.03 crore.

• The sales volumes for PVC resins improved by 13% to YoY to 63030 tonnes and PVC pipes and fittings was almost flat at 57967 tonne in Q1FY16.

• Average PVC resins realizations fell 11.1% to Rs 65831 per tonne in Q1FY'16 compared to Q1FY'15 while average PVC pipes and fitting realizations fell 5.6% to Rs 87892 per tonne. Realizations were lower on the back of fall in market prices.

• Raw material cost as a percentage to sales is lower by 300 bps YoY to 65%.

• EBITDA margin of the company was up to 20.11% in Q1FY'16 compared to 18.98% in Q1FY'15 and 9.74% in Q4FY'15. Margins improvement was led by focus on increasing sales of higher margins products viz. fittings, column pipes CPVC pipes.

• The company is taking initiatives to scale up share of fittings in sales mix to over 10% from 6-7% currently.

• The company is increasing installed capacities of PVC pipes and fittings to 280000 tonne in FY'16 and 310000 tonne in FY'16 from 250000 tonne in FY'16. No capacity expansion is likely to take place in PVC resins.

• The company expects that share of organized players to rise further with GST implementation.

• The company added 97 dealers pan India during the quarter. Management plans to further ramp-up its existing distribution network. At present, their distribution network consists of 15,000 dealers, along with the recently established three new warehouses in Cuttack, Noida and Indore. The management plans to add four more warehouses in FY16.

• The company expects double-digit volume growth in pipes and fittings in FY16. CPVC pipes registered positive growth, but on a lower base

• Inventory gains were to the tune of Rs 15 crore in 1QFY16. The company benefitted from low-cost inventory carried forward from 4QFY15.

• The management expects a debt reduction of Rs 100-200 crore in FY16

• Power and fuel cost declined in 1QFY16 due to lower naphtha prices