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Edited Transcript of FINPIPE.NSE earnings conference call or presentation 13-Nov-19 5:30am GMT

Q2 2020 Finolex Industries Ltd Earnings Call

Pune Nov 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Finolex Industries Ltd earnings conference call or presentation Wednesday, November 13, 2019 at 5:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anil V. Whabi

Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director

* S. Krishnamoorthy

Finolex Industries Limited - General Manager of Accounts & Finance

* Sanjay S. Math

Finolex Industries Limited - MD & Whole-Time Director

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Conference Call Participants

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* Anupam Goswami

Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst

* Bhargav Buddhadev

Kotak Mahindra Asset Management Company Limited - Research Analyst

* Debanjana Chatterjee

HDFC Securities Limited, Research Division - Fundamental Research Analyst

* Devansh Nigotia

Securities Investment Management Pvt Ltd - Research Analyst

* Haresh Mehta;BNP Paribas;Analyst

* Kunal Lakhan

Axis Capital Limited, Research Division - VP of Realty and Aviation

* Praveen Sahay

Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst

* Ravi Mehta;Deep Financial Consultants;Analyst

* Ritesh Shah

Investec Bank plc, Research Division - Analyst

* Rohan Gupta

Edelweiss Securities Ltd., Research Division - Research Analyst

* Sonali Salgaonkar

Jefferies LLC, Research Division - Equity Analyst

* Srinath V.

Bellwether, Inc. - Equity Research Analyst

* Suparna Das;ICICI Bank;Analyst

* Umesh Patel;TCG Asset Management;Analyst

* Vipul Shah;Sumangal Investments;Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q2 FY '20 Earnings Conference Call of Finolex Industries Limited hosted by Investec Capital Services. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Ritesh Shah from Investec Capital Services. Thank you, and over to you, Mr. Shah.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [2]

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Thanks, Margaret. Ladies and gentlemen, thanks for joining Finolex Q2 FY '20 Conference Call. We have with us Mr. Sanjay Math, Managing Director; and Mr. Anil Whabi, the Director of Finance and Chief Financial Officer; and we have also Mr. Krishnamoorthy.

Over to you, sir, for the comments, and then we can have a Q&A session post that. Thank you.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [3]

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Thank you, Ritesh. Good morning to all of you. I welcome all of you on behalf of Finolex Industries to this investor conference call. We're happy to talk about the second quarter results FY '20 along with my colleagues here.

To start with, let me start with the Pipe business. The sales volume for PVC Pipes & Fittings was about 48,000 metric tonnes, higher by 6.1% against the quarter last year, 45,000 tonnes. So it is 6.1% higher. On the PVC sector, the sales volume for PVC Resin has been a little lower at 4.7% at 41,000 metric tonnes against 43,000 last year.

On the top line, the revenue was INR 5,767 million for this quarter, which is about 6.3% higher than the revenue last year, which was INR 5,426 million. [Again] the bottom line, the profit after tax is INR 1,027 million, which is higher by 34.4% against the last year quarter, which was at INR 764 million. This is because of the change in the income tax rules.

In the PVC segment, lower PVC/EDC delta due to lower PVC price and higher EDC price has reduced our margins on year-on-year basis at the level of 28% to 15% from year-on-year, while on the quarter-to-quarter, there is an increase and the margins have improved from 7% to 15%, whereas the Pipes segment, the volume growth is only 6% due to the heavy rains during this monsoon. And as you know, every year, the monsoon period, we see that the volumes are lower. But this year, it is 6% higher than the last year volumes. In spite of lower [EBIT and PAT] is higher due to a revision in tax provision and the tax laws amendment.

I think we give these numbers, and we throw open the floor for any questions, and we will be happy to answer you. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is from the line of Devansh Nigotia from SIMPL.

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Devansh Nigotia, Securities Investment Management Pvt Ltd - Research Analyst [2]

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Sir, I'm new to this company, so a few question might be too basic. I just wanted to get a handle on the growth trajectory of the company. So when we look at the history and I go through the volume number, so March 2006 to '13 was a really high growth period and then there -- which was around 18% CAGR, and then there was a moderation to 7% CAGR from thereon. So I mean, how -- why is the growth trajectory change? What factor would you attribute it to?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [3]

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I think on the Pipe segment, we are still having about 8% to 9% CAGR for last 4 years. There are been years, which are showing lower growth but subsequent years, there has been higher growth. So the overall CAGR has been about 9%. I think we are taking the target to around 12% to 14% this year. Hopefully, we will be able to achieve that.

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Devansh Nigotia, Securities Investment Management Pvt Ltd - Research Analyst [4]

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Sir, because main reason for this question was that I wanted to understand currently, I mean, are we done through the cycle where PVC pipe was replacing metal pipes? Or -- I mean where are we in that process?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [5]

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I think PVC pipes market is still growing at the rate of double-digit. I can't say whether it is 10% or 14%. But double-digit growth in PVC pipes market is [easily on track]. I think the present market size is about 2 million tonnes, and this year, it could touch about 2.2 to 2.3 million tonnes. So we don't see that, really speaking, PVC is being challenged by any other material so far.

Overall, plastic pipe market is something like INR 28,000 crores to 30,000 crores. And out of that, PVC itself is about INR 20,000 crores. There are substitutes which are there, but PVC is the leader among the plastic pipes, whether it will replace the DI pipes in the long run. DI pipe has its own specialty, and it will still continue to operate. But the substitution on the scale of -- in the large number may not happen. So we see that PVC will grow, and DI pipes will have a smaller (inaudible) a smaller play, which is there already. (inaudible) PPR and the other plastic products, they are growing, but all the plastic pipes products are growing equally good. So more or less, they are growing equally at double-digit growth. So I think the substitution within the plastics is not very, very dynamically seen so far.

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Devansh Nigotia, Securities Investment Management Pvt Ltd - Research Analyst [6]

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Okay. Okay. Sir, but -- I mean -- so the new demand that we are seeing for the volume, I mean, would you attribute it to the replacement demand for our existing pipes? Or is it that it is for the pipes which are being shifted from GI pipes to PVC pipes? Or is it that because of new irrigation projects, we are getting the demand? So that is where -- directionally, I wanted to understand that where is the new demand coming from?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [7]

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I think the 2 sectors, which are still the growth drivers for PVC pipes industry, one is the irrigation or the agricultural sector, and the other one is the construction real estate sector. I think both these sectors are still not fully covered.

As the organization grow, there are cities which are growing. The population is growing. The aspirational quotient is growing, and that is why the housing sector is growing. And in that sector, particularly GI pipes or any other metal pipes are not the preferred products. These are lightweight. These are corrosion resistant, and heat stability-wise, they are good. And so they are easy to fit also. And that is why the pipes market is still going to capture the market for real estate and construction.

And on the agricultural side, [anyway] irrigation purposes, GI pipes are not the preferred ones. Plastic is definitely a better material. So we don't see that it is a replacement market from the ductile iron.

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Operator [8]

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The next question's from the line of Bhargav Buddhadev from Kotak Mutual Fund.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [9]

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Sir, is it possible to know the degree of crop damage done in your key catchment areas? And whether the present muted sort of volume growth should be extrapolated? The reason I'm asking this is typically cash crops can come back quickly, but other crops like cotton, wheat, where the damage has done can take some more time.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [10]

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I think we are also equally eager to know about how much is the crop damage that has happened. Monsoon got delayed. There were 2 cyclones recently in October, which have hit on the Western coast also, and that is why Gujarat, Maharashtra as well as in the Southern Peninsula of India, there were rains, maybe post-monsoon rains, you can say. Monsoon withdrawal has still not completed, and there is a lot of moisture in the weather.

Given that fact, we are not the ones who can give you the data on where -- how much is the crop damage that has happened. I think the government has already instituted the authorities to go into this because there will be lot of crop insurance details that will come as well as on this. But the concern is still there, you know, that -- equally, we are concerned that whether this will delay the demand for the pipes.

Presently, the pipe demand is very, very subdued. And how long it will take to pick up is a question mark. But as the monsoon has withdrawn and possibly, there won't be any further cyclones that can come. So in another 2 to 3 weeks' time, possibly the demand should pick up, and we should see a moment in our sales also. Have I answered you?

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [11]

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Yes, yes, sir. Very, very helpful. Secondly, sir, how has been the volume growth in CPVC, possibly it could be much, much better than the overall pipe growth given the imposition of anti-dumping duty, and if you can sort of quantify what has been the price increase in CPVC since the time the anti-dumping duty has been imposed.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [12]

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See, the volume growth in CPVC for this quarter, we have grown at about 11% in terms of volume. And over the 6 months ended September, the volume growth has been about 22% in volume terms. And value terms, it is higher. It's about 28% for the quarter, and for 6 months, it's about 39%.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [13]

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And regarding the anti-dumping, since it has not affected us, prices have been increased with the market, nothing to do with the anti-dumping duty.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [14]

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So sir, can you quantify what has been the price increase?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [15]

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It has marginally increased. It is not significant.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [16]

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Okay. And lastly sir, the response to the ACETECH exhibition was quite muted with sort of lots of big names missing. What could be the reason for that, sir?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [17]

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Which exhibition you said?

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [18]

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ACETECH exhibition, which happens in Mumbai?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [19]

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No, we normally don't participate in those type of exhibitions.

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Operator [20]

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The next question is from the line of Praveen Sahay from Edelweiss.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [21]

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As you had already given the volume -- growth number for the [PVC Pipes & Fittings]. So can you give the number exactly how much of a revenue you did for the Q2?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [22]

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Yes. For CPVC, revenue was INR 68 crores.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [23]

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And the volume was?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [24]

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Volume was 2,280 tonnes.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [25]

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Okay. And similarly for the column [as well] column pipe?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [26]

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Yes, column pipes, we have done for the quarter 458 tonnes, and the revenue is INR 5 crores, 60 lakhs.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [27]

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Okay. And also can you give the average PVC/EDC spread for the quarter?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [28]

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Yes, PVC/EDC spread for the quarter was USD 583.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [29]

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And that spread is improving? Like, as per your presentation, that seems improving in the coming...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [30]

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(inaudible), it was less than $500 in last quarter. It was at $490. Slowly it has picked up. This spread will be basically PVC prices remained in about -- less than $900, whereas the EDC prices were at $400 plus. And so the delta was...

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [31]

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How is the current scenario, sir?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [32]

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[Why it has picked up now] EDC is coming down, and so it is $583. I think, presently, it is about $590.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [33]

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Okay. And secondly, as the custom duty changes on the EDC and the PVC Resin as well so -- but that's not reflecting in our numbers so far for the first quarter. So is it expected to give some benefit in the coming quarters as well? What's your take on that?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [34]

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I think the budget was presented in July, and this quarter, it is yet to reflect [on the] second quarter as such, our volumes on PVC also are low. So it may not appear so much. Our quantum also was low. And we don't operate our jetty during monsoon, so our imported materials also did not see that kind of a change. I think when the monsoon has stopped now, and we are opening the jetty in October. And now the new imports have started. So there will be a reflection of whatever changes of duty that we have seen, I think they will reflect in quarter 3 and then quarter 4 also.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [35]

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Okay. Lastly, sir, on the fitting volumes, in the fitting volume also, we are not picking up in the numbers. This quarter, we had seen [another] 3% of growth [just]. So can you give some guidelines like how we are seeing this fitting numbers the way forward as our CPVC numbers is also moving quite strongly? So why the fitting is at the same level?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [36]

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See, while we are focusing now, in order to answer your question, what we have done is we are focusing on the non-agri segment where the fitting volumes are more compared to the agri segment. See, this quarter, as you know, is a monsoon quarter. So generally, the volumes are a bit low. But then, while our focus is there to improve, going ahead, we will definitely see some traction in the fitting business.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [37]

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But as long as the agri remains to be 70% or more, obviously, the fittings volume will continue to be in that range, 6% to 7% and will -- may marginally go up as we extend the SKU ranges.

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Praveen Sahay, Edelweiss Securities Ltd., Research Division - Assistant VP of Equity Research & Research Analyst [38]

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Okay. And the second half volume guidance, if any?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [39]

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See, we've been saying it's roughly about 12% to 14% for the year. So we -- hopefully, we should achieve that. And half year, if you see, it is 13.6% so far. Hopefully, the market will pick up, and we should be able to achieve that target, [similarly] in half year or so.

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Operator [40]

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The next question is from the line of Sonali Salgaonkar from Jefferies.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [41]

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Sir, my first question is regarding the raw material prices. Could you please tell us what were the prices for EDC, ethylene and VCM this quarter versus Q2 FY '19?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [42]

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See, EDC price was $317 for the quarter September -- this September, and ethylene was $780. VCM was $735.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [43]

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Sir, PVC?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [44]

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PVC was $900.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [45]

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Sir, as compared to Q2 FY '19?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [46]

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Q2 FY '19, I'll tell you, PVC, $973; EDC, $332; ethylene, $1,242; and VCM $733. So the PVC/EDC delta was $641, and PVC/VCM data also was $240.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [47]

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Got it, sir. Sir, second question is regarding the CapEx. Do we maintain our CapEx guidance that we set out at the start of the year, to be precise, adding almost 30,000 to 40,000 metric tonnes at the CapEx of INR 1 billion this year?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [48]

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Yes, CapEx will be about INR 1 billion. See, what we have done is we are adding more SKUs in the fitting range. So molds, we are adding. On pipes, by the year-end, I do not know whether the new capacity will be up, but roughly about INR 1 billion of CapEx will be incurred, yes.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [49]

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Got it. Sir, and currently, your pipes capacity is 370,000 metric tonnes?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [50]

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You're right.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [51]

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And roughly at the utilization of 65% to 70%.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [52]

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You're right. Yes.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [53]

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Got it. Sir, and my last question is in CPVC pipes and column pipes, can we have the volume and value numbers for Q2 FY '19 as well, so you gave us the numbers for this quarter but the similar quarter last year.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [54]

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Yes, for Q2 FY '19, CPVC was 2,065 metric tonnes, and the value is INR 53 crores. And for column pipes, it is 476 metric tonnes, and values is INR 5 crores, 60 lakhs.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [55]

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Okay, so almost flattish year-on-year for the column pipes?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [56]

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Yes.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [57]

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Got it. Sir, my last question is how many SKUs do we have at present in the PVC range and in the CPVC range?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [58]

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I think, on the PVC, we have 400 SKUs in pipes and about 1,000 SKUs in fittings, whereas on the CPVC side, we have 37 SKUs on pipes and about 175 on the fitting side.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [59]

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Got it. Sir, and do we still envisage that over the medium term, we will lower our dependence on agriculture to, say, about 50-50% in plumbing versus agriculture, say, over the next 5 to 7 years?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [60]

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I think, presently, we are more skewed on agriculture. Our present market segment is 70% agriculture, 30% non agriculture. And we are hoping and we are trying our best to cross over line that we will be increasing our non-agri portfolio, by increasing the portfolio with giving more products as well as making efforts in market to improve our market share on non agri. So we hope that we should be increasing it more than 30%.

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Operator [61]

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The next question's from the line of Kunal Lakhan from Axis Capital.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [62]

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Sir, I missed it, you said that Pipes & Fitting (sic) [Pipes & Fittings] guidance -- volume guidance is in the range of 6% to 7%?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [63]

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No, we said it will be 12% to 14% for the whole year.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [64]

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Yes, okay, and the PVC volume guidance is 6% to 7%.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [65]

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PVC, it's capacity is limited by the design and all that. So we will be running full out. So we should be able to run about 250,000 tonnes at the end of the year.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [66]

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Sure. Sure. But the fact that you even mentioned that the industry keeps growing in double-digit, there's an opportunity...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [67]

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[No] PVC in volume side will be always in a flat out on the operation and capacity utilization. We run somewhere around 95% to 98% capacity utilization on PVC, whereas PVC pipes market is more on the market side, we will have to see, and we produce as the market demand goes up. So there, there can be a guidance coming on how we can meet the market demand. We are not selling PVC Resin anyway.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [68]

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Sure, sure. In terms of EBIT margins for pipes in this quarter, there was a sequential decline versus Q1 despite the overall realizations being slightly higher. Anything that I missed out on?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [69]

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[No] it is because of lower volumes that we do in Q2, the margins will always traditionally find lower in Q2 for Pipes & Fittings.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [70]

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Okay, seasonality, basically.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [71]

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Yes.

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Operator [72]

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The next question's from the line of Umesh Patel from TCG Asset Management.

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Umesh Patel;TCG Asset Management;Analyst, [73]

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Most of my questions have been answered. Only one thing that is from my side is, I mean, the monsoon is over normal, water reservoirs are at record high, then -- and the Kharif crop have already been failed for this season. So do you think that the volume guidance that you have given, though you've achieved 13.6%, but the way the industry has been, and there is liquidity crunch kind of thing, Kharif crop has already been failed, so Rabi and summer crop season, there will be more installation of pipes that will boost your volume. I just wanted to understand industry dynamic, how it will work.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [74]

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I think there have been a lot of governmental programs which are also there. Crop insurance will also support whatever losses have happened on the agricultural crop sector. And there are demands coming from most of the governments to support the farmers, and most of the governments will also support them. So whatever losses have happened, possibly they will be replenished by the government schemes. We expect that the Rabi crop will be very strong, and that is why Rabi crop comes somewhere around Holi time. And beyond that, the demand goes up to June. So there is going to be upsurge in piping demand for the agriculture sector, that we envisage it will grow through winter and peak out in summer. That is what we expect.

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Umesh Patel;TCG Asset Management;Analyst, [75]

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Yes. So with -- the 12% to 14% guidance is probably what you are looking for? So...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [76]

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Actually, our agri is strong. But at the same time, we are growing quite aggressively in non agri also.

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Umesh Patel;TCG Asset Management;Analyst, [77]

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Yes, that is the basic...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [78]

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The average growth rate is 13% on the present level, whereas the non-agri growth is more than 13%. So we will also compensate part of the loss on agri by non agri. That is what we are expecting.

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Umesh Patel;TCG Asset Management;Analyst, [79]

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Right, so if I look at the pricing, raw material prices, in last 1 month, PVC prices per kg has been fallen by around 3% to 5%, right?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [80]

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Right.

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Umesh Patel;TCG Asset Management;Analyst, [81]

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So there is scope for another inventory loss in this quarter both in PVC Resin and...

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [82]

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There were prices falls, that is evident. It will happen, yes.

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Operator [83]

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The next question's from the line of Ritesh Shah from Investec Capital Services.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [84]

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Sir, I have a few questions. Sir, first is did we have any new product launches, say, in last 3 to 6 months?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [85]

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We have increased our Fittings segment. We also have introduced ball valves on the CPVC sector. And we are also looking at ball valves for UPVC sector. So these are some of the launches we have done. They are yet to take off and break even, but we have already started that.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [86]

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Sir, what is the application for this ball valves? Is it something to do with the agri sector, sir? Or is it non agri?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [87]

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It is in the plumbing sector and -- so it is for the indoor piping in the real estate and construction.

On the agri sector, there are -- the Fittings portfolio is small because the length of the pipes are more than the fittings. And that is why you will always find that fitting-to-pipes ratio on agri is low. Same thing on the valve segment also. The agri pipes are long distance and don't require so many valves as compared to the indoor real estate housing sector where you have more number of fittings compared to the pipes, okay?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [88]

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Sir, what is the fitting-to-piping ratio for agri and non agri? A broad number will also do fine.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [89]

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In agri, it will be somewhere around 7% to 7.5%, whereas in the non agri, it could be 15% in value, no -- on value terms.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [90]

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Okay. And sir, any new product launches planned over next 6 to 12 months? Anything more on the Fittings side or any other segment that we are looking at or any product extensions?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [91]

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We are most likely to increase our CPVC SKU portfolio by another 60 to 70 SKUs. That is one part we are doing. And similarly, on the UPVC fittings, we are also enlarging this [110%].

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [92]

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Great. Sir, the column pipes ramp up hasn't been on the expected line. I think it was -- we had a productive approach to increase volumes on the column pipes. Sir, how are we looking at this market? Will this be only a function of monsoons, or is it something else so that we should be aware of?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [93]

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I think this year, we have degrowth on column pipes, but column pipes is definitely we entered little late. So the market penetration for us has taken some time. I think we are aggressively looking at it. That -- particularly, the market is for South India. And there are already established players, so we are trying to penetrate that market somehow.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [94]

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But sir, if one say the same thing for CPVC, I think we have done phenomenally well over here, but we don't see a similar ramp up on column pipes. So is it like we are giving credit on CPVC, not giving on column pipes, is that a reason of -- or the competitive intensity in the marketplace is different because of pricing or discounts?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [95]

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I think CPVC is in housing sector and is well distributed all across India. And we are also growing quite well in CPVC sector, whereas in column pipes is more focused on where there is a drought-prone area or the rain-shadow area where it is going for ground water. And this is mostly in the Deccan plateau as well as on the South -- Southern part of India. And where we have been a little late on starting this particular product segment. I think we will be catching up soon. We are [trying to catch up on].

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [96]

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But sir, are you referring to the market growth rates being lower in this particular segment, or is it a saturated market as compared to CPVC?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [97]

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I won't call that column, or the borewell sector will go down. India needs water, and there is hardly any surface water available. So groundwater is the main irrigation supply and water source, and it will remain. But the groundwater table is going down and down, and it is going up to 700 feet to 750 feet in some places in South India. And so there is definitely harvesting also along with that is required. We see that this segment will still grow, that Indian population is growing, need for agriculture is also growing, and water is depleting. So this sector should be growing. I think we should be able to capture on this opportunity.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [98]

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Right. Sir, my second question is, have you heard anything incrementally from Nal se Jal program of the government because it did make headlines, but we haven't heard anything specific.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [99]

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We have also heard the headlines. The headlines are yet to get converted into actual on-the-ground level. And there are some schemes which are being developed by the state government as well as by the municipal corporations for water supply as well as sanitation. So it has yet to take shape in terms of tenders as well as on the ground, it has not taken off so far. I think it started only about a few months back. We'll see as it unfolds how this particularly gets converted and monetized in terms of the demand for the plastic pipes (inaudible) PVC pipes.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [100]

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Right. Sir, just a question, revenue, EBITDA and PAT numbers for Finolex Plasson, that is one. And secondly, the pricing trend for PVC and CPVC from 1st of October onwards?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [101]

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Can you repeat the question? Your voice was breaking up.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [102]

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Sir, numbers for Finolex Plasson, revenue, EBITDA and PAT for the quarter?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [103]

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For the quarter? Yes, sir. Just a second.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [104]

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And second question was how have the PVC and EDC prices trended from 1st of October?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [105]

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I think on the PVC side, the prices are almost bottomed out. In the long-term average, if you see, PVC $900 plus is the even. It had reached $1,000 at one time last year, but then it came down now to about $860, $870. So this is more or less a bottom price. I don't -- we don't see that the international prices will be going down further. The present guidance by most of the suppliers either from Taiwan or from Korea and all that is around $860, $870.

On CPVC, definitely, the anti-dumping duty has raised the prices higher for the cheaper sources from China and Korea. And everybody otherwise is also at par with whatever duties that have been levied. So this price is almost like unviable if it goes higher because then it cannot be borne by the producer, it has to go to the customer. I think there will be a backlash on this. So we see that CPVC will remain stagnant, whereas [SPVC] or the UPVC prices should go up from here.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [106]

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Finolex Plasson figures for the quarter, the revenue is about -- for the quarter, September '19 revenue is about INR 95 crores compared to INR 100 crores in September 2018. The half year is about INR 176 crores this September '19 against INR 179 crores in September 2018. PAT is INR 5 crores this quarter, yes, INR 5 crores compared with INR 4 crores in the previous quarter. For the 6 months -- with 6 months, it is INR 7.5 crores to INR 6.5 crores in the previous year -- half year.

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Operator [107]

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The next question is from the line of Srinath V. from Bellwether Capital.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [108]

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Sir, just wanted to understand what will be the -- what is the broad impact of the CPVC anti-dumping duty? And what part of the market is it, Chinese and the Koreans? And given that they will vacate the market, do you see a substantial market share gain for us? And so could you just give us a broad understanding and outlook?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [109]

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I think the broader market for CPVC at present is somewhere around 150,000 to 180,000 tonnes. Put together, this is the demand for CPVC Pipes & Fittings. On the supply side, there are only 3 suppliers worldwide, major suppliers: 2 Japanese and 1 U.S. and 1 European. So 4 suppliers are there. Chinese and Korean supplies were somewhere around 30% to 40% of the total market, was being supplied through these 2 new countries. Given this size, that means something like 40,000 tonnes, you can say, was coming from China and Korea. So this has to be replenished or supplied by the other players who were already there. Now this possibly is -- suddenly, it cannot happen. So there is some kind of a tough situation on CPVC supply side.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [110]

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Sir, are we facing supply constraints because our volume growth numbers at 11% given...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [111]

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No, we have long-term contract with Lubrizol.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [112]

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Okay, so there's no supply issues for us.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [113]

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Yes, so we don't have any issues on CPVC supplies. We are on...

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Srinath V., Bellwether, Inc. - Equity Research Analyst [114]

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Then why is volume growth only 11%, sir, if 30%, 35% of the market is vacating? Wouldn't volume growth be significantly higher?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [115]

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I think the market is not vacating. The market is getting growth because some of the small players might have got out. So we can't say whether market is diminishing. Market segment is remaining strong. I think, more or less, all organized players on CPVC are growing fast.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [116]

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Okay, okay. And has Lubrizol increased price of the CPVC compound post this anti-dumping duty?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [117]

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I think it is a long-term contract. It is a price formula base. It is not like any anti-dumping duty is there on their supplies.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [118]

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So they not moved on price?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [119]

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Their supplies are not from China or from Korea, and that is what we think that they have not raised any prices for us. They are still the same prices that we have offered.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [120]

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Okay. So the raw material prices is -- has been rather constant, and we've got kind of a significant increase in the product price. Fair assumption, sir?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [121]

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It is an annual pricing contract. So whatever revision happens, it happens at the beginning of year.

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Srinath V., Bellwether, Inc. - Equity Research Analyst [122]

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Of the calendar year? So we'll know by Jan, Feb.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [123]

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[Right].

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Operator [124]

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The next question is from the line of Anupam Goswami from Stewart & Mackertich.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [125]

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Sir, what kind of growth are we targeting in the CPVC segment?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [126]

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CPVC?

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [127]

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Yes, sir.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [128]

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CPVC should be more than about normal UPVC. UPVC, we are targeting about 12% to 14%. CPVC is definitely more than 20%. At present, we have been growing more than 20%, and we hope that we should be touching about 25% at least this year. Last 2 years, we have grown more, but as the base increases, the growth rate a little bit will slow down. So we are targeting 25% growth.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [129]

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And sir, you mentioned that...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [130]

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For example, last year, we made 8,000 tonnes. We will definitely cross 10,000 this year.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [131]

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Okay, okay. And sir, you mentioned that the market share is around 150,000 to 180,000. So where are we and other's competitor organized are placed in the market share pie?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [132]

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I think there are 2 major players there already. Everybody, I think, you may be knowing more. Ashirvad and Astral are the other 2 leading CPVC. And Supreme, the third one. We are not only first top of the line player in this. We are only 8,000 to 10,000 tonnes, whereas these 2 players maybe 30,000 to 40,000 tonnes. So these are the 2 major players. Our market share is low. I think we are just about 6% to 8%. And we hope that we [have] to catch up, and we will definitely be taking up our CPVC portfolio to 20,000 tonnes in next 3 years.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [133]

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Okay. And sir, if you could guide us, what kind of margin we will be making in the PVC Pipes & Fittings compared to PVC?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [134]

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Obviously, CPVC is slightly more. While PVC (inaudible) EBIT margins for the total PVC Pipes & Fittings is about -- in a normal period is about close to 8%. CPVC is double-digits.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [135]

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CPVC is double-digit. Double-digit as in like early double-digit or as 12%, 14%, like that?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [136]

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Yes, around 12% (inaudible).

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [137]

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Okay, okay. And sir, my last question would be like, you mentioned about adding capacities in the PVC pipes. So -- and -- but we are -- on the resin capacity, we are running at around 95%, 98%. So as and when the pipes volumes increase, should we -- are we looking to close our external sales of PVC Resin or completely focus on captive consumption?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [138]

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I think we are, at present, also focusing on captive consumption. Slowly, we will be running out of any resin for merchant sale outside in the domestic market, so we'll sell it insider, or we will consume it inside only. And the days are not far away that we may have to buy from outside.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [139]

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But we won't be looking to adding capacity in the resin?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [140]

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Resin capacity addition has different dynamics than the pipes. It is not -- it is very high capital intensive and is feedstock dependent. The feedstocks ability, particularly EDC and ethylene, are the ones which are holding us back. I think we -- our efforts are on to find out how we can tie up for such type of supply chain, then only we can take a call on this.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [141]

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Okay, okay. And sir -- and my last question would be how -- what is the price hike lag that you guys take if the PVC or the ethylene, EDC prices increases? So if the spread decreases, what's the lag of price hike taken in the pipes?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [142]

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No, see, once -- PVC Resin prices are not dependent upon EDC, ethylene prices. Of course, I mean, while it has an impact, PVC Resin, PVC ethylene, they all have their own supply-demand dynamics. And PVC price in India are at import parity because more than 50% of the PVC Resin is imported. And demand for -- the demand is so that the -- more than 50% is being imported. So any change in the PVC Resin price is immediately passed on to the PVC Pipes & Fittings. And while the EDC and ethylene prices may not change, it can change in different time period.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [143]

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No, my question was like if the spread decreases for us, so should we increase our prices? Do we look into that function? Or it's a completely different dynamics on the market supply demand?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [144]

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If the spread decreases in PVC segment, it remains there. There is no effect on the Pipes segment.

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Anupam Goswami, Stewart & Mackertich Wealth Management Ltd., Research Division - Research Analyst [145]

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Okay, okay. And sir, my last question is that on FY '20, are we looking to any price hike, or have we taken price hike in this year?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [146]

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We had -- of course, we had. Any change in the PVC Resin price is immediately passed onto the PVC Pipes & Fittings. And going ahead also, the price dynamic continues to be that. Any change in the PVC Resin prices will have a change in the PVC Pipe price.

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Operator [147]

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The next question's from the line of Vipul Shah from Sumangal Investments.

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Vipul Shah;Sumangal Investments;Analyst, [148]

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Sir, what was the delta for VCM this quarter?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [149]

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VCM, PVC VCM?

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Vipul Shah;Sumangal Investments;Analyst, [150]

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Yes.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [151]

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I think PVC VCM this quarter has been $165.

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Vipul Shah;Sumangal Investments;Analyst, [152]

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And what was the same last year, same quarter?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [153]

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It was $240.

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Vipul Shah;Sumangal Investments;Analyst, [154]

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$240. It has come down to $165.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [155]

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Yes.

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Vipul Shah;Sumangal Investments;Analyst, [156]

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And sir, in your presentation, Slide #8, this EDC prices have bottomed around April and it has -- sorry, EDC, previously, delta has bottomed out around April, and it has been steadily moving up. So still why profitability has been impacted adversely in the PVC segment?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [157]

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See, in the monsoon month, what we do is we stock up EDC in the month of May. So what happens is one reflects the [chart we] -- the chart that we show is the current market scenario.

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Vipul Shah;Sumangal Investments;Analyst, [158]

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So is that inventory loss?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [159]

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For us, when we stock -- we have about 2 months stock with us. During monsoon, we have 4 months stock with us. So the [flat] price that we have indicated in the chart may not actually reflect what is our delta.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [160]

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And if you check sequentially, the margins have improved in PVC segment.

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Operator [161]

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The next question's from the line of Sneha Talreja from Edelweiss.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [162]

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Sir, Rohan here. Sir, first question is on this agri market so -- though we have reported some volume growth in PVC segment as well, but we understand that our competitor, and overall, there have been some market share loss for some of the leading players in the market because of credit crisis, companies like Kisan and Jain have been losing market in agri in first half. Given that, I mean, have we not been able to gain market share in PVC pipe or especially agri pipe segment, despite we have a very strong presence in agri?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [163]

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We don't know about the competitor's actual agri versus non-agri split. Whatever is the claim, I think [you may be knowing better]. We have made 6.1% higher in this quarter, whereas non agri, we have grown faster. I think many of the players are more on non agri whom you are maybe comparing. So possibly their growth rates are reflecting non-agri growth, which we also have [1-tier] growth. We don't see that we have lost any market share on our agri products.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [164]

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But sir, do you see that some of the leading players in the market who are very strong in agri side, once again referring some competitors names like Jain and Kisan and even some other players in Southwest market, they have been having -- losing market in first half because of various issues which these companies are facing. In light of that, I just wanted to understand that almost 70% of our business comes from agri business itself. We must have -- we should have seen a very strong 18% to 20% sort of growth probably in agri side.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [165]

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Basically, that could have been the reason for 18% growth in Q1.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [166]

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But sir, first -- but sir, I think that entire first half, probably we could have seen a higher growth. That's what my question was. Have we not gained the market share?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [167]

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I think the whole market contracted because the monsoon was very strong after mid-July, August, September and even late October. So the market contracted. I don't see that market share is lost by Finolex.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [168]

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Okay. Sir, just asking the same question again, so do you see that by the end of the year, and do you see that there are -- these companies or some of the competitors are facing challenges in the market, and that's where you may see a probably higher growth in agri segment itself, or our focus itself is not there too much and we are still focusing too much on non agri, and that's why you may not see the significant volume growth in second half as well? In agri pipes, I'm talking about.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [169]

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No, I think we expect that our growth guidance will remain. It will be double-digit. That much we are definitely hopeful. At present, our overall growth is more than 13%. So we should be able to maintain that momentum. Compared to both agri and non agri together, we should be able to make 12% to 14%.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [170]

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So your target was 12%?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [171]

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[We are not] losing focus on agri. So agri continues to be our focus area.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [172]

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Okay, I was just trying to understand is there any chances that we may see high growth in UPVC segment. You mentioned 12% in UPVC and 20% in CPVC. So given that some competitors are getting out of the business, so can we see high growth in the UPVC segment? That's what my question was.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [173]

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You see, not...

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [174]

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We definitely want to -- we want to have a higher growth. The target is double-digit, like the M.D. said, between 12% to 14%. And keeping that in mind, if we achieve higher than that, yes, it's always welcome.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [175]

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Okay. So we are not capacity constrained in UPVC segment and -- which can restrict this growth, isn't it?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [176]

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I think we have a capacity of 3,70,000 tonnes of pipes. And the volume is still around 3,00,000 tonnes. So you can see what we have. We have excess capacity at present.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [177]

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Okay. Sir, second question is on this, you mentioned that Lubrizol have yet not increased any prices despite almost 30,000, 40,000 tonnes supplies which were coming from China, Korea has already gone off the market. So while we understand that other markets like -- especially Europe and Japanese market have already increased the prices to the Indian players. So I mean when do you see that Lubrizol also going to probably increase the prices? And will there be possibility for you to pass on this impact on the CPVC end consumer, or there may be some sort of margin pressure which you have...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [178]

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Actually, we will take a call when it really happens. We are on formula base. So it is not like what we will see. It is not necessarily that some anti-dumping on some other countries are there. So all other countries will also follow that and will do it. We don't see that there will be a very high change on the pricing on the PVC.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [179]

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Okay. Sir, just third question and I come back in queue again. Sir, what -- can you give us some sense that what is our capital employed in Fittings only? And then what kind of revenues we are having in Fittings?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [180]

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No, we don't have that number, EBIT number, for Fittings only.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [181]

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Okay. And the current INR 100 crores in the current year is all going into Pipes, or it includes even further investment in Fittings?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [182]

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No, it includes Fittings also. It includes some replacement assets in PVC segment as well.

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Operator [183]

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The next question is from the line of Aasim Bharde from IDFC.

Due to no response, we will move to the next question, which is from the line of [Ashish] from IDFC.

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Unidentified Analyst, [184]

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Sir, just one question on the broader industry level. Sir, can you talk about competitive intensity by other larger players on the plumbing pipe side? Sir, have they turned more aggressive in the market to capture market share, or is it still status quo as earlier? Sir, what are your comments on that?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [185]

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We are looking at our own growth rate. The market is growing on plumbing side because of the more urbanization and real estate sector growing. So we will look at our own market share, how we can really increase our own market. I think the growth rate as compared to the 4 verticals, like agricultural, column, and borewell, which is agricultural base. On the other hand, the SWR and sewage and then the plumbing. These are the real estate [side]. Real estate side may be growing faster than the agricultural [side.] So we are also growing more in the non-agri sector as we have also seen our numbers.

I can't talk about competitors, how they are growing and how they aren't. There is no separate data that we have in terms of their plumbing volumes and our plumbing volumes.

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Unidentified Analyst, [186]

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Okay, sure. Sir, just to understand, this 6% volume growth that you reported this time around, could you be able to break that up between plumbing and agri?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [187]

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Plumbing and agri, we will say like this, that in Q2, the agri growth was only 3.1%, whereas non-agri growth was 12.5%, average 6.1%. So you can see, agri growth was lower. Even though the total volume was 6.1% higher, the agri growth was 3.1%, whereas the non-agri growth was 12.5%. So that shows that how non agri is growing faster than this. So most of the other players are more -- are non agri. Their growth rates are higher than us because our portfolio is 70% on agri.

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Unidentified Analyst, [188]

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Okay. And just to understand, this non-agri growth of 12.5%, has that slowed down in recent as -- at a slower rate in Q2 versus your previous 4 quarters?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [189]

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No, I will say only about the first half. First half, we have grown in agri 12.4% and in non agri 18%, and making the overall growth at 13.6% in the first half.

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Unidentified Analyst, [190]

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Okay. And sir, just one -- just last question, are we exploring any of these other pipe segments like PPR, not now but for the future?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [191]

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We always keep our eyes open and keep on exploring. The rest [critical mass] to enter into it. But the investments must be balanced by the market size that we can capture. There are various other pipes which are there that we can -- we are actively looking at. At right time, we will enter.

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Operator [192]

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The next question is from the line of Ravi Mehta from Deep Financial Consultants.

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Ravi Mehta;Deep Financial Consultants;Analyst, [193]

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I just wanted to -- want a clarification on the PVC/EDC spread. So as per the Slide #8 in the presentation, the spreads are close to around $650, and we mentioned we are around $590. Is it because of the inventory we were sitting because the jetty was closed?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [194]

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The $650 that you are talking of is probably on a particular day. The average for the quarter is $583. So the $650 -- today, if you see that $583 average has gone up to [$590] as of around 6th of November. What you are looking, probably $650 is on a particular date.

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Ravi Mehta;Deep Financial Consultants;Analyst, [195]

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Yes, so probably September...

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [196]

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September, yes.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [197]

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That's right. But the average for the quarter is $583.

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Ravi Mehta;Deep Financial Consultants;Analyst, [198]

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Okay. And now, like October, November would have been around?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [199]

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Average post 30th September is...

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [200]

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Actually as on today, it is $590.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [201]

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Yes.

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Ravi Mehta;Deep Financial Consultants;Analyst, [202]

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Okay. And now that we would be importing because, I think, the jetty opens in September.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [203]

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October, yes.

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Ravi Mehta;Deep Financial Consultants;Analyst, [204]

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October, okay. So we are seeing this close to $600 kind of spread maintainable at the current prices.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [205]

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Hopefully. We do not know how the prices move.

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Operator [206]

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The next question's from the line of Sonali Salgaonkar from Jefferies.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [207]

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Sir, just one question, on the tax part, there has been a deferred tax write-back. Is it anything to do apart from the corporate tax cuts that we have seen in the last quarter because H1 tax rate is well below the 26% new corporate tax rate.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [208]

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Right. It is only because in the first quarter, full was provided. And on deferred tax, since we had this liability at the old rate, so that also has been corrected in this quarter.

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Operator [209]

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The next question's from the line of Debanjana Chatterjee from HDFC Securities.

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Debanjana Chatterjee, HDFC Securities Limited, Research Division - Fundamental Research Analyst [210]

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Yes, I just have 2 questions. First is your borrowings have dropped significantly, the short-term borrowings, which always remains at around INR 90 crores, INR 95 crores. So is it going to maintain or, are you -- is it going to add into second half? What is your borrowings guidance for the full year?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [211]

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No, no. Borrowings have come down because imports were not there during this quarter. So that is why the borrowings have come down.

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Debanjana Chatterjee, HDFC Securities Limited, Research Division - Fundamental Research Analyst [212]

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Okay. And what is the guidance for the full year in the second half?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [213]

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This is need base. So as we import, we generally resort to buyer's credit because that allows us to have this natural hedge working for us also.

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Debanjana Chatterjee, HDFC Securities Limited, Research Division - Fundamental Research Analyst [214]

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Okay. And your tangible assets, their net has also like gone up by 7%.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [215]

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Sorry?

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Debanjana Chatterjee, HDFC Securities Limited, Research Division - Fundamental Research Analyst [216]

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Your tangible assets, it has gone up by 7%. So what are the components, main components?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [217]

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No, which assets did you mention?

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Debanjana Chatterjee, HDFC Securities Limited, Research Division - Fundamental Research Analyst [218]

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Tangible.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [219]

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Fixed assets?

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Debanjana Chatterjee, HDFC Securities Limited, Research Division - Fundamental Research Analyst [220]

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Yes.

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [221]

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No, so -- with the CapEx that we are incurring, it obviously would go up.

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Operator [222]

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The next question is from the line of Suparna Das from ICICI Bank.

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Suparna Das;ICICI Bank;Analyst, [223]

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Could you please repeat the prices for EDC and ethylene for the current quarter and same quarter last year?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [224]

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See, for the Q2 FY '20?

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Suparna Das;ICICI Bank;Analyst, [225]

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Yes.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [226]

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You want all the prices, PVC also?

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Suparna Das;ICICI Bank;Analyst, [227]

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No, just EDC and ethylene.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [228]

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EDC was $317 and ethylene $780.

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Suparna Das;ICICI Bank;Analyst, [229]

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Versus last year?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [230]

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Last year, Q2 FY '19, it was -- EDC was $332 and ethylene was $1,242.

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Suparna Das;ICICI Bank;Analyst, [231]

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$1,242. Apart from this, in non agri, what was the growth for H1 FY '20? H1 FY '20, non-agri growth percentage?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [232]

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H1 FY '20...

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [233]

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(inaudible) 18%.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [234]

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Non agri grew by 18%.

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Suparna Das;ICICI Bank;Analyst, [235]

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And agri was?

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Sanjay S. Math, Finolex Industries Limited - MD & Whole-Time Director [236]

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12.4%, H1.

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Suparna Das;ICICI Bank;Analyst, [237]

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12.4%. Just one last question, you mentioned CPVC volume, it was -- last year, it was INR 53 crores.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [238]

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CPVC?

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Suparna Das;ICICI Bank;Analyst, [239]

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The revenue was INR 53 crores.

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [240]

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Yes, value-wise, INR 53 crores.

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Suparna Das;ICICI Bank;Analyst, [241]

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INR 53 crores. And H1 growth was 22%?

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S. Krishnamoorthy, Finolex Industries Limited - General Manager of Accounts & Finance [242]

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Yes, H1 volume growth was 22%, yes.

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Operator [243]

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The next question is from the line of Haresh Mehta from BNP Paribas.

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Haresh Mehta;BNP Paribas;Analyst, [244]

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I have a very general question. I just want to understand if you can share some light over here regarding this Swachh Bharat Mission (Gramin) Yojana launched by the government to cover the sanitation coverage in the rural area. So far, the 98% division in the month of June, July. So just want to know how much is your contribution -- our contribution in terms of revenue? How much it has contributed over the last 5 years since the scheme has been launched? Around 9.16 crore toilets have been constructed till February.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [245]

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I can't give you this answer because we don't have such kind of numbers that how the market -- how the retailers take our product and what purpose they are using. Whether it goes for Swachh Bharat or for their own normal sanitation or for their indoor piping, I think we don't have such kind of a data.

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Haresh Mehta;BNP Paribas;Analyst, [246]

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You don't have any coverage on this kind of thing?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [247]

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No, no. Such type of data is not there.

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Haresh Mehta;BNP Paribas;Analyst, [248]

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Okay, okay.

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [249]

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Particularly, on a particular scheme, tomorrow, say, Nal se Jal, whether we will be able to portion any growth rate that comes out to only Nal se Jal, or it is the general market. So those types of classifications of growth rates and the drivers that take the growth rate, we have not been able to get that kind of a data.

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Haresh Mehta;BNP Paribas;Analyst, [250]

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Okay because according to the -- the numbers were very big. The maximum fund...

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [251]

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You are right. We also see that there are many such programs: Pradhan Mantri Krishi Sinchayee Yojana; Pradhan Mantri Awas Yojana - Gramin; Pradhan Mantri Awas Yojana (Rural) -- sorry, (Urban); then we have AMRUT; then we have Swachh Bharat; then now we have Nal se Jal. Now every program has some kind of government support coming in terms of allocation, and this allocation comes from state governments as well as from the central government in different, different forms. And finally, it takes shape into some projects. How far that demand is taken up and how we classify this into individual government support program, I think such data is difficult for us to get. We are not concentrating on that kind of a data acquisition. We depend upon the MI reports and other reports which are there published. So from there we take some guidance.

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Operator [252]

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As there are no further questions from the participants, I now hand the conference over to Mr. Ritesh Shah for closing comments.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [253]

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Thank you all for joining the conference call. Whabi, sir, [Math], you have any closing remarks?

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Anil V. Whabi, Finolex Industries Limited - Director of Finance, CFO & Whole-Time Director [254]

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I think we are happy to meet all of you, and we will give a guidance on our growth rate, particularly of double-digit. We are focusing on non agri aggressively, and you will see some numbers coming up better against the agri product. And our dependence on agri will also be slowly coming down, from 70%, it should come down. Not losing the focus on agri market, we will try to maintain our market share. We also would say that we are looking at new products as well as new verticals and maybe even new geographies. And so there will be some kind of decisions which can be made in this direction.

So with this note, I would like to conclude this. It was pleasure talking to you guys. Thank you very much.

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Operator [255]

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Thank you. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.