Expect PVC will be dumped in India and hence a downward trend: Finolex CEO

“Volume-wise. we are yet to cross the pre-Covid levels. Our first target would be to try and see whether we can move past the pre-Covid numbers. We are optimistic about it.We are seeing some positive indications from the housing market, good rains have also given us some hope we have to wait and see,” says Ajit Venkataraman, CEO, Finolex Industries

Asian PVC prices have fallen 30% in the last three months and your company immediately passed these on to the consumers. Going forward, do you see the macro headwinds continuing and the impact of the Q2 numbers or do you think the worst is behind us?
Headwinds are coming from various markets. China, Europe and the US are going through a housing crisis. We expect that PVC will be dumped in India and therefore we are already seeing a downward trend. We are seeing the bottom of it but it is we have to wait and see.

Can we make a conclusion that margins will remain under pressure in Q2 but given you are seeing some signs of bottoming out, you are confident that margin may improve in the next six months?
See Q4 and Q1 are the best quarters for us historically and with good rains, we are expecting that the market will start showing green shoots soon. We have to wait and see because margins depend on the price of PVC, the market and also the product mix we have got. It is tough to predict at this point of time but yes we are hoping for the best.

Volumes have been a bit subdued this year and PVC demand from the Chinese realty sector has been weak. Could you talk to us about what kind of volume growth you are pencilling in for FY23? Can we expect any turnaround in the second half of this year?
We are yet to cross the pre-Covid levels. Our first target would be to try and see whether we can move past the pre-Covid levels. We are optimistic about it and it all depends upon how the market picks up. We are seeing some positive indications from the housing market, good rains have also given us some hope we have to wait and see.

Over the past two years, demand for agriculture pipes has been much lower than plumbing pipes. Almost 60-70% of Finolex pipe demand comes from the agriculture sector. What is the outlook specifically?
Our product mix is also changing. Currently, 60% comes from the agri sector and 40% from the non-agri sector. This trend is likely to continue but there is enough headroom to grow even in agri business. Less than 50% of our farm is through irrigation. It is mostly through rain irrigation and we expect enough headroom to grow in this segment as well.