Interview with Finolex Industries

To stand out in a competitive market, we constantly believe in developing new and better products to meet the changing needs of our customers, affirms Niraj Kedia, CFO of Finolex Industries.

Can you shed some light on your Q3FY23 and 9MFY23 results?

In regards to Q3FY23, we exceeded our expected results across all major parameters. The company's quarterly performance was aided by a significant improvement in sales volumes for pipes-fittings. The stabilisation of PVC prices is expected to further benefit the operating margin in the upcoming quarters. Although the net sales increased by 11.9% YoY to Rs 11.2 billion, the adjusted net profit of Rs 0.7 billion was down by 55.2% over Q3 FY22. (This was primarily attributable to a sharp reduction in PVC prices in the last 6-8 months). However, we are optimistic about the company's overall earnings due to healthy demand and stability in raw material prices. Due to our gradual improvement in product mix in favour of the plumbing and sanitation market, healthy balance sheet, and backward integrated operations we anticipate a gradual improvement in sales and margins soon.

For 9MFY23, the total income from operations was Rs 3,255.99 crore, representing a 6.66% YoY increase from Rs 3,052.76 crore in 9MFY22. The Pipes & Fittings segment experienced a 40% volume growth to 2,21,574 MT, while the Resin segment saw a 24.54% volume increase to 1,81,506 MT in 9MFY23 compared to 1,58,266 MT and 1,45,742 MT, respectively, in 9MFY22. EBITDA for 9MFY23 declined by 90.03% to Rs 75.11 Cr from Rs 753.42 crore in 9MFY22, and the Profit after tax dropped by 86.08% to Rs 76.90 crore in 9MFY23 from Rs 559.67 crore in 9MFY22.

What is important to note here is that after 2 years of heightened PVC prices, the prices have now normalised to pre-COVID levels. This softness in PVC price reflects in substantial improvement in the volumes during the year, especially in Q3FY23.

Competition in the pipes & fittings market is intense and is likely to remain high in the foreseeable future. What strategy are you implementing to retain and grow market share?

To stand out in a competitive market, we constantly believe in developing new and better products to meet the changing needs of our customers.

At present, we are focusing on a few major aspects mentioned below:

Strong Distribution Channels: We have a strong and efficient distribution network that assists us to reach a wider customer base and improve market penetration. With FIL’s well-planned distribution strategy, we can ensure that the right products are available at the right time and place, and can help to reduce lead times and transportation costs.

Brand Building: FIL is a strong trusting brand a strong brand and has facilitated us to differentiate from the competition and create a robust loyal customer base. By investing in brand-building activities such as advertising, sponsorships, and social media marketing, we have generated a strong brand identity and increased brand awareness.

Quality: Quality in what we produce is what defines us. Our immense focus on providing quality products to our customers has helped us create a niche where our name is synonymous with top quality. We continue to improve the quality standards which we have set internally for ourselves.

ESG has garnered great traction on the board-level agenda with the onset of the COVID-19 disruption. Can you shed some light on how you are integrating ESG practices with your core business operations? 

The outbreak of the Covid-19 pandemic was a watershed moment for ESG investment, significantly altering societal values on a global scale. The pandemic also compelled us to transform our business operations that ensure the delivery of quality products and services, and the maintenance of transparent and fair relationships with stakeholders while assuring minimal environmental impact. 

Our ESG vision remains to deliver quality products and services, maintain transparent and fair relationships with all stakeholders and ensure minimal environmental impact. Moving forward, we at Finolex intend to strengthen the organization’s ESG agenda by improving upon an already robust governance mechanism to manage its ESG impacts on business activities across the value chain. We published our first ESG report this year provides insights into our long-term agenda on how we plan to integrate ESG within our organisational DNA