Ladies and gentlemen, good day and welcome to the Finolex Industries Q2 FY twenty-five earnings conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arun Baid. Thank you, and over to you, sir. Thank you, Leo. On behalf of ICICI Securities, I welcome you all to the Q2 FY twenty-five results con call of Finolex Industries. We have the senior management, including Mr. Ajit Venkataraman, MD, and Chandan Verma, interim CFO right now. Now I hand over call to Ajit, who will open up for Q&A. Over to you, Ajit. Thank you, Arun. Good morning, ladies and gentlemen. Good morning, all. This is Chandan. Welcome to the investor conference call, the Q2 FY twenty-five earnings release. We thank you all for continued support and interest in Finolex Industries Limited. Finolex has registered a robust growth in volume in pipes and fittings segment this quarter. Operating performance of the company were muted during the quarter due to volatility in PVC price, prolonged monsoons. Let me now take you through some of the performance indicators. Q2 FY twenty-five highlights: Total income from operations was INR 828.43 crores for Q2 FY twenty-five, down 6.2% against INR 883.15 crores in Q2 FY twenty-four. EBITDA decreased by 90% year on year to INR 10.57 crores in Q2 FY twenty-five, compared to INR 102.98 crores in Q2 FY twenty-four. EBITDA margins during the quarter stood at 1.28%, compared to 11.66% in corresponding previous quarter of Q2 FY2024. The company reported a PAT of INR 51.44 crores in Q2 FY2025 against INR 93.78 crores in Q2 FY2024, a drop of 45%. Now, getting into the segmental performance. Pipes and fittings. Revenue decreased by 3.57% year on year to INR 819.60 crores in Q2 FY2025, from INR 857.15 crores in Q2 FY2024. Volume in the segment increased by 10.22% year on year to 69,341 metric tons in Q2 FY2025, against 62,914 metric tons in corresponding last quarter. The EBIT in the segment decreased by over 157% to a loss of INR 38.54 crores in Q2 FY25, compared to a profit of INR 67.60 crores in Q2 FY24. Moving to pipe PVC resin segment. Revenue in this segment stood at INR 308.49 crores in Q2 FY25, compared to INR 297.85 crores in Q2 FY24. Volume in the segment increased by 7.25% to 40,236 metric tons in Q2 FY25, against 37,516 metric tons in Q2 FY24. EBIT in the resin segment stood at INR 35.90 crores in Q2 FY25, compared to INR 20.40 crores in corresponding previous year's quarter. company continues to have a strong balance sheet, with a net cash surplus of roughly INR 2,380 crores as of thirtieth September 2024. Let me now leave the floor open for questions. Thank you. Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Shravan Shah, from Dolat Capital. Please go ahead. Thank you. Sir, we'll come to the margin, but first I wanted to check in terms of the volume growth. So 1H, we have done in pipes and fittings 3%, 3.1%. Last time we said 10-15% a growth for 2025. So what's the now revised guidance for FY 2025 and for even going forward also, we were looking the similar 10-15%. So any deviation there? Thank you for your question, Shravan. As you know, this industry is a little bit cyclical, with Q2 being the weakest of all the four quarters, and Finolex being a little bit heavy on the agri segment. During rainy season, the volume does reduce. Our projection for the year is still around 10%-12%, given the quarter we have gone through, or the H1 we have gone through. But our projections for the year going forward is still around 10%-12%. Okay, got it. And so now coming to the margin, that was a complete a washout quarter for us. So trying to understand on that, so two aspects of what was the inventory loss for this quarter, and then, what likely is there a chance for any further inventory loss in the Q3? And now how one can look at in terms of the margin. See, one of the phenomenon which we have had seen starting from middle of June was a significant price drop. The prices had increased from month of May to almost about market prices of PVC had reached up to about INR 96. And within six weeks, we saw a significant drop from INR 96 to INR 77. And this has impacted the realization, and that gets reflected in the performance of the company. We had seen something very similar in Q3, I mean, Q2 of FY 2023 as well. So, this will even out during the course of the year. But since middle of August, around 10th of August, we have seen the PVC prices steady in the INR 77-INR 78 range. With a steady price, it is good for the industry and less. Expectation is that the volatility for PVC prices being less, the performance should come back. Okay. But there is no, how much was the in Q2? So generally, we do not have the inventory loss during the quarter this time. Okay, okay. And lastly, two aspects, the agri share for Q2, and last time we said that we may be announcing the expansion plans. So, are we talking or guiding any expansion plan? So the agri, non-agri split is about 60/40 for the quarter. And in terms of expansion plan, we are already expanding in our existing facilities, both in Masar and Ratnagiri. We are adding more extruders and expanding, replacing our old machines with new machines. So that plan is already on. So that will take increase our capacity. But we were talking previously. We're thinking about one lakh to one lakh eight thousand. Incremental capacity. While we are planning out a step change in the overall capacity of the organization, we are going from the current level of four hundred and twenty thousand metric tons to about, we are adding forty to fifty thousand additional metric tons in our existing facilities itself. That will be operational by? This should be operational by the Q1 of FY twenty-five. I mean, the Q4 of FY twenty-five. Okay. Okay, got it. Thank you, and all the best. Thank you. Thank you. The next question is from Praveen Sahay from PL India. Please go ahead. Thank you for giving me opportunity. My first question is related to margin. If I look at your, you know, both the segments, the EBIT margin is quite different. So, you know, if there is a fluctuation in the PVC resin prices or the spread has gone down, why is it your, you know, the PVC resin segment margin has improved, whereas, you know, PVC pipe and fitting reported a loss? So can you make me understand why there is so much of difference? So, Praveen, the way we operate is that since we operate both the resin segment and pipes and fitting segment separately, whatever resin gets transferred from the resin segment is transferred to the pipe and fitting segment at the market price. Okay, so that is the reason why no matter what our production price is or the PVC production price is, the transfer price to the pipes and fitting segment happens at the market price. Mm-hmm. Okay. So, you know, your external sales of PVC resin is quite low this quarter, so largely- Going forward as well, Praveen, the sale to external will be very low. We will be providing resin only to select customers who really need, for example, people who are using it for medical segment, et cetera, who really want a high quality resin. Those are the people to which we are supplying, and those are long-term, who are such customers who cannot change the resin. Only to those customers we will continue. Other than that, we have stopped. Since January, we have stopped selling resin outside, and we are consuming almost all the resin we produce. Okay. So would we, you know, the way forward, 2%-3% of your total production would be- Correct. You know, transferred. Second question is related to the volume. So for a quarter, it's a 10% of the volume, and I understand that the last year, the base were also very good. Last year also, you had done very well. So is and the Q2 is a lean quarter for you. So is there some spillover of Q1 has been booked in this quarter? Or you had a theme in the agri demand were very good. So this 10% of the growth, how to look at actually? See, typically, the way I see it is that with the dropping prices, it is good for the market. Okay? So, people do wait for prices to drop. For example, our sales really started picking up only mid-August onwards, when the price had reached 77, 78, and when the market knew that it is not going to drop any further. So that is when the sales started picking up really good. Other than that, if you actually see the market, June and July were really bad months for the market as such, and fortunately, it picked up, at least volume picked up. And there is no impact of rain or, you know, we had also heard- The impact of rain will start coming from now onwards, because, see, typically Q2 is muted, because you cannot lay pipes during rainy season in agricultural fields. This year, looks like the monsoon has been good in all the key markets, Gujarat, Haryana, Karnataka, Maharashtra, Tamil Nadu. All these markets have seen 10+% growth over, I mean, over normal rains. So we expect these markets to pick up going forward. And that's why you had given a 10%-12% for the- That's right. Despite this quarter being, I mean, the H1 being fairly flat, the H2, we expect that the money flow in the market will be better, and therefore, a pick up as well. Around 17%-20% of the growth you are guiding for the H2. Overall, for the year, we are expecting around 10%-12%. So ultimately, H2 would be 17%-20%, if I look at a 3% of the growth in the H1. Mm-hmm. So you are confident of delivering that 17%-20% H2. Okay. And anything on the ADD, on the PVC raising prices? ADD on PVC is likely to come on, 24th of December, that time frame. It's a wait and watch at this point of time. In CPVC, it has already been introduced. In PVC, whether it comes, the next target date is twenty-fourth of December, so it is a wait and watch at this point of time. Okay. And there is no inventory loss, you said, for a quarter? No gain, no loss. Oh, no. No gain. Okay. Thank you, sir, and all the best. Thank you, Praveen. Thank you. The next question is from Sneha Talreja from Nuvama. Please go ahead. Hi, good morning, sir, and thanks a lot for the opportunity. Just couple of extension on the previous question. Did I rightly understand that you mentioned there is no inventory gain or loss? And if that is correct, we would like to understand why margins are, you know, down. I needed to understand that. So, Sneha, as Ajit has rightly explained in our previous questions, we do not have the inventory gain or loss during the current quarter. But you see, the margin has largely declined because of the changes in PVC prices in a shorter span of time. So on the onset of July, if you can notice the prices were almost around 88, and it exited the Q2 at the 76. So this decline in prices has generally caused the reduction in revenue and consequently reduction in our overall margin. If I don't understand the mark-to-market losses, loss is what we generally call it as, inventory losses. Is that correct? Yes, mark-to-market. This scenario will arise only when we are carrying a huge inventory, which got liquidated on the subsequent quarter. But we are not in a scenario where we have been carrying an inventory at the higher level, which we need to liquidate at the lower prices. This was not exactly the scenario. Why is it that we've seen multi-year low margins in plastic pipe segment? Because if I go back even historically, leaving apart a quarter in twenty twenty-two, we've never ever seen this a margin, despite much more high volatility that we've seen during the COVID times, when, you know, prices shot up to one sixty and then fell down to twenty again. How is this quarter different from those quarters? Because volatility is certainly impacting us in a very big way. Is there any accounting treatment change that we do from, you know, PVC segment to plastic pipe segment? No, Sneha, the, if you see the similarity between Q2 of FY 2023 and Q2 of FY 2024, I'm sorry, Q2 of FY 2025, the rate of decline of PVC prices was very, very steep. And as Chandan mentioned, we did not carry too much of inventory getting into Q2. The rate of decline is what is impacting impacting the overall profitability, because the price gets passed on to the market immediately. So when the price is declining, then the realization has dropped significantly. This was largely on the volume side. I just wanted to understand where is the optimism for 20% plus growth coming up. Is it only led by agri segment? Are you betting on plumbing? Because as I understand, you know, you're not present into the infra-led activities, which other players are betting on. Where is this optimism coming on in that case? So, in terms of the non-agri segment, which contributes to the infra segment, we have seen a robust growth. So, we are there, and we are continuing to have presence and aggressively go look for business in that area. So non-agri business will be there, and we also expect, given the good rainfalls, the agri segment should pick up, and we should see a healthy growth in agri segment because the cash available in the system will be much better because of the good rains. Understood. And one last question, if at all I can just squeeze in. You know, we are adding this capacity at our existing plants, what's the CapEx we are doing there? And what about the greenfield expansion plan now, is that yet to be seen or no, that's deferred for coming period? We are adding new equipment. So to let you know that we are adding higher capacity equipment in existing lines, because most of our equipment in some of the locations, especially in Masar, have been old. So we are adding more state-of-the-art high throughput equipment replacing the old machines. And as a result, we are buying some new, adding new capacity also there, in both Masar and Ratnagiri. And as a result, we are expecting about a 40,000-50,000 metric ton additional capacity. This will be within the 150 crores of annual CapEx and maintenance CapEx that we normally budget. This new location will be a completely different investment, where we will be looking at almost a hundred thousand plus capacity. That, as I mentioned, is still under the plans, and we are taking some time, but at the same time, we don't want to leave money on the table, and therefore, we are expanding in our local existing facilities, so from a four hundred and twenty thousand metric tons capacity that we have got in our existing plants at the moment, we will be increasing it to approximately four hundred and sixty to four hundred and seventy thousand metric tons for pipes. Fittings, we already have a good capacity of almost fifty thousand metric tons. Understood, and which will be completely utilized, or will we have further scope for greenfield expansion? No, in terms of both locations, Ratnagiri and Masar, we do have land banks for further expansion, but I don't think we will be expanding any further in these two locations, because we will be approaching the four hundred, I'm sorry, one hundred and fifty thousand metric ton capacity. Understood, sir. Thanks, thanks a lot for answering. Thank you. All the best. Thank you. Thank you. Next question is from Nikhil Agarwal, from Kotak Asset Management. Please go ahead. Good morning, sir, and thank you for the opportunity. Sir, my question was more like, since most of our plants are located in Maharashtra, are we seeing some demand impact due to the state elections next month? So far, Nikhil, thanks for your question. So far, none. Okay. Since middle of August, we have seen the demand pick up, and there is no letup since then. All right, great. So can you, like, quantify the volume growth, month-wise, on a year-on-year basis for quarter two, if possible? We normally don't do that. Okay, okay. No worries. That's it from me. Thank you so much. Thank you, Nikhil. Thank you. Next question is from Udit Gajiwala from YES Securities. Please go ahead. Yes, sir, thank you for taking up my question. So just one clarification again on the margin front. Since there are no inventory losses, but our volumes are still growing 10%, versus our peer, who has reported a flattish volume growth, but their margins have been intact. So for them also, the resin prices would have come down, but they have, we have not seen any such a dent on their profitability. So what's the distinction over here? Thanks for your question, Udit. Udit, I will not be able to comment on competition, but I can just say that we have been carrying low inventory, and the impact of the price drop of almost 15%-20% within a span of six weeks has definitely impacted us. I mean, sorry for being ignorant of this thing, but you know, you mentioned that you pass on the prices once it comes down. You still pass on and you are not carrying any inventory. So, I mean, still unable to understand that how does... You know, we understand that there might be some knock on the profitability for sure, but this time, you know, the quantum is too high. And when you mentioned about Q2 of 2023 also, you know, where we had seen impact on even your resin business, but that has not happened this time. But it's just dented the pipe plant, so there is some disconnect over here. So Udit, see, we need to buy resin in order to make pipes. Right. Okay, and we have to make sure that we buy our raw materials, et cetera, well in advance, in order to make sure that the resin is available for pipe production. The issue is not when the price decline is a bit more gradual, then you don't see this impact, and we have tried analyzing this as well. But when the price decline is really steep, like what happened from June to mid-August, if you actually go and see the analysis of, say, Q2 of September of FY 2023, it was almost a similar phenomenon where we had to make a loss. So there is a direct correlation, because yes, we buy resin at a higher price, and the market price, when it drops very fast, we have to sell at the market price only, the existing price of market, existing PVC prices. And therefore, we have seen the realization drop significantly in a very short period of time. Understood. Understood, sir. But you know, just one counter to that, in last Q2 that we are comparing when we had the loss, that time I remember you mentioning that we were carrying some inventory. Right. But this time we were with a very lean inventory, so- Right. So we had to store up for the entire summer during FY 2023 in our facility. Right. Right. And therefore, we had to take a large inventory loss. This time around, we have made an alternate arrangement so that we don't have to stock up, but even then, even then, when we had this phenomenon happen this time, it is not. Last time we had an inventory loss. Yeah. Here, this time around, it is just that the realization that we have got has declined very steeply over a short period of time. Understood. And just, last question, on your fittings capacity that you mentioned is fifty thousand tons. So that will be over and above your, you know, four seventy odd tons capacity, which we'll be having by this year end. That is right. Pipe is about four hundred and seventy, fittings is about fifty thousand. Four twenty. No, no. With the added capacity coming forward. With the added. Got it. That is helpful, sir. Thank you. Thank you for that, sir. Thank you. Next question is from Sonali, from Jefferies. Please go ahead. Thank you for the opportunity, sir. My first question is, could you help us with some numbers related to what was the PVC to EDC spread for Q2 FY 2025 versus 2024, and what it is currently? The PVC EDC spread in FY 2024 was $571 in Q2 FY 2024, and in Q2 FY 2025, it was $513. The PVC VCM delta was $157, and for Q2 FY 2025, it was $130. At this current moment, the PVC EDC delta is about $490, as of 26th of September. The PVC VCM delta is currently at one, say, the same as one, one hundred and thirty. There's a lag which happens between PVC prices and these deltas. Understood. So I understand it is very difficult to predict the PVC prices of being a global commodity, but what is your sense, are we near somewhere near the bottom, or do you think there is further leeway for a correction? And how are the channel inventories right now? See, Sonali, typically, it bottoms out in the 73-77 range. We have not seen too many cases where it goes below about 73, so we are expecting that this is about the level it should, because if I look at the numbers, since August tenth, we are in that range. We are now in September, October twenty-fifth, so past two months, we have seen that it has been in a very tight range. Okay? And your second question was, one was whether it has bottomed out, and then what was your second question? Channel inventories. Channel inventory. See, the channel inventory movement happens when there is volatility. See, when the prices were dropping, the channel was completely... They stopped taking material. Okay. Whereas, when the volume or the price of PVC is fairly stable at whatever level, then it comes back. So right now, it has been a smooth movement. As I mentioned, since August fifteenth, we have seen this demand to be fairly steady. So are channels in the restocking mode right now due to the earlier destocking, or are they normal? See, between, see, when the prices dropped between mid-June to mid-August, okay. All of us, we definitely saw a complete drop in volumes, and that clearly indicates that the channel is not, it's completely destocking. They don't want to take the risk of PVC price volatility. Okay? The moment that stopped, we have seen the demand pick up. Okay? And this is a standard phenomenon which we have seen. No matter how much price protection we give, people are apprehensive of buying when the price is going down. Understood. Sir, you did mention in your earlier remarks that June and July were bad months in terms of volumes, and then we have seen subsequent volume pick up. Could we quantify the volume growth in July and August and September, if possible? No, we don't give directions in terms of in between months. We can give you only on the quarter. For sure, sir. Sir, would you be able to quantify agri volume growth versus non-agri for this quarter? So, this quarter, Sonali, agri volume has grown around 12%, and non-agri is around somewhere around 9%-10%. Understood. And last question, CapEx for FY 2025, 2026, any outlook? CapEx, generally, we are doing on the maintenance CapEx that we are incrementally doing around 100-150 crore. That is the plan that we have at this moment. No, the major announcement with respect to greenfield or brownfield expansion we have. We are adding capacity only on account of this maintenance CapEx that we are adding, and that is sufficient enough to add up the incremental capacity in our existing capacity. Understood. So your agri volume growth of 12% seems to be quite healthy, considering the prolonged monsoon through September. Is it because of higher affordability, given the PVC price drop? Yes, yes, yes. You are right. It's because of the affordability by the farmers, where the pricing, PVC prices came down, that has resulted into the higher uplift. Sure. So, in October, the first twenty days, how has been the demand? We have yet to conclude on the October, Sonali. Sure, got it. So thank you, and wishing everyone a happy Diwali! Thank you very much, Sonali. Thank you, Sonali. Thank you. The next question is from the line of Utkarsh Nopany from BOB Capital Markets. Please go ahead. Hi, good morning, sir. Good morning. Sir, actually, I just wanted two clarifications from you. So please pardon me again, I'm coming to pipe EBIT margin point. So like you mentioned that this quarter our margin got impacted because of the steep decline in the resin prices, the way we have seen in Q2 of FY 2023. But if we see the domestic PVC resin prices fell sharply by around 22%-25% in Q2 FY 2023 on a Q-o-Q basis, whereas it was almost flat in this September quarter. And also, if we see the industry leader margin was relatively stable on a Q-o-Q basis. So how come we have reported loss? So I'm not able to digest the point that you have given earlier, sir. Thanks for your question, Utkarsh. See, going into, again, let me reiterate, going into Q2, we were not carrying any much of a pipes and fittings finished goods inventory. Okay? And if you remember Q1, we had sold about 90,000 metric tons, if I remember correct. 92,000 metric tons of pipes and fittings, and we did not go into Q2 with much of a inventory. And so whatever was produced was with PVC from existing stock, which we had, which was bought at a higher price. And when the prices started going down steeply, our realization came down quite steeply, okay? And that had a huge impact. So, sir, like, whatever inventory we were carrying, whether we were just carrying the pipes and fittings inventory at the end of June, we were not carrying inventory of PVC resin, because we have not seen a decline in the profitability, on per unit basis for PVC resin segment. But we have seen a material decline in the profitability of the pipe and fitting segment, sir. See, the resin segment. See, we do have, since it is backward integrated, we do have. The margins were not to the tune of 10-15 INR per kg, right? So, whatever prices which we have transferred to the pipes and fittings, it was at a market rate. Even then, we were able to make margins in the resin segment, but that did not translate into margins in the pipes and fittings segment. Okay, sir. Sir, next point is on the capacity side. So, in the last earnings call and in the annual report, it was mentioned that our pipe and fitting capacity is 4.7 lakh. But now today you've mentioned that it's around 4.2 lakh. So can you please provide? No, no, so let me correct that. We have a total capacity of four hundred and seventy thousand pipes and fittings, out of which four hundred and twenty is for pipes. Fifty is for fittings. So forty-two plus, I mean, four twenty plus fifty, which is four seventy thousand metric tons, is the total capacity. Okay. Now, what we are doing is expanding in our existing locations, both by adding extruders and replacing old extruders with more higher capacity extruders, and that is resulting in moving it from four hundred and twenty to four hundred and seventy. So our total pipes and fittings capacity would go from 4.7 lakh to 5.2, or it would remain at 4.7 lakh by end of March? So, when pipes goes from 420 to 470 and fittings remains at 50, so 470 plus 50, which is 520. Okay. And sir, lastly, sir, like, on the CPVC pipe, sorry. Our CPVC pipe volume share was 5.5% in FY 2022 of the total pipes and fittings sales volume. Can you please provide some sense what would be our CPVC pipe volume share in FY 2024, and where it is likely to be in FY 2025? See, we don't normally split up our volumes based on the type of product. So but it, essentially, it is about eight to 10% of our overall volume. Okay. Thanks a lot, sir. Thanks, Utkarsh. Thank you. The next question is from Salil Desai, from Marcellus Investment Managers. Please go ahead. Thank you. So in a scenario where prices are, PVC prices are, say, trending lower, then how does that help you from a competitive point of view, against, say, the regional or local brands which might be largely competing on price? And does the price differential narrow? Does it help you? Does it hurt you? So, what you're saying is that if the PVC prices remain low, will it... How is, will it help Finolex? Especially compared to some of the smaller peers that you might be competing with in the regional or some local markets. One of the key differentiators we have is the type of, the quality of products we produce. Okay. We do get a premium for our products. And therefore, if customers can afford, they will buy Finolex. So in terms of... And most of our pipes, which we have sold 30 and 40 years back, are still in agricultural fields. Mm-hmm. So people know what they are buying, and therefore, in terms of differentiation, our reach, our brand, and our quality should be sufficient for us for people to come and ask for our products. So the only difference here is that one is when the quality is assured, then at a lower price, it is much more affordable for customers, and therefore, the demand will be better. And again, I'm telling you, whatever price the PVC is, as long as it is steady, it is good for business. The moment you introduce volatility- Mm. That is when the question marks come in terms of when to buy, how to time the buy, et cetera. So therefore, we honestly don't like volatility, but that is not under our control. Right. So then in that context, the current quarter's 10% volume growth- Uh. Is that indicative of, say, some market share gains? Because even if prices are lower, people might as well buy Finolex rather than buying something else. See, Salil, it's difficult to say this, because we don't have an industry body which collects this information. Right. We need to see what other competition is, how other competition is performing to come to this conclusion. T here is only one other company which has released the results so far. So for me to conclude on anything at this point of time will be not right. Fair enough, sir. Thank you very much. Thank you. The next question is from Ritesh Shah, from Investec. Please go ahead. Thank you, sir. So a couple of questions. So first is, you indicated anti-dumping duty by twenty-fourth of December. Sir, possible for you to indicate what is the extent, some quantification around the duty structure? Just trying to understand what impact it could have on present prices. And a related question, sir: How do we have this date of twenty-fourth of December? Can it get pushed out into next calendar year, or is it for certain that it will come by December? I'll answer the second question first. It is a movable date. At this point of time, what we have heard from the agencies is that it is in the last week of December. That's when the decision will be made. Now, how will it impact? See, depending upon which countries will come under this, in the anti-dumping, if these are major suppliers to India in terms of PVC resin, then there will be a shortage in supply, and therefore, there is a likelihood of price increasing. So, it all depends upon whether we are going ahead with anti-dumping duty for PVC at all or not. There's a good chance that it can get postponed as well. It has happened several times, so it's a wait and watch for all of us. Right. So I would presume there would have been some representations done by us, industry body. So I was just trying to understand, what could be the extent of dumping duties which could come in, like, is it like 10%, 15%? Any color if you could please provide? It is very difficult to predict here. ... Okay. Sure. So second question, again, on the regulatory side, we understand the quality control order on PVC got pushed out. What is the status on EDC, ethylene, and DCM? And, will it have a bearing on our operations, or is it something that we have already secured, where we secure our raw materials from those guys, they have already secured those particular approvals or licenses? See, some of the suppliers have already got the approval, and we are trying to ensure that all the suppliers are, say, qualified before we buy. So, it's work in progress, but we don't see a challenge out there. And since the implementation date, I understand it was August-September. Has it got pushed out again, just like PVC, even for EDC? It's in DCM into November? A ll of them were together, if I remember correct. But I can, check back and get back to you, Ritesh. Sure, so my second question is more generic. P artly I'm picking up from the prior question, so over your tenure at Finolex, and I presume this would be probably your last call, so thank you for your guidance and support, how has the competitive intensity in the space changed? See, it is getting more and more intense, definitely. But the good part of it is that this is in a growing industry, and, and, the building and construction segment is something which is likely to grow at a 15-plus% over the next 5 to 10 years. So, it is fantastic to be in a growth segment where there is an opportunity for everybody to grow. Yes, competitive intensity is high, but at the same time, the industry, the size of the pie itself is growing, and therefore it's good for everyone. Right. But, sir, I just for the sake of just playing a devil's advocate, if I look at the pipes and fittings realizations for us, divided by the PVC realizations, the other way around, pipes and fittings divided by PVC, that ratio has actually dropped from 1.7 to 1.54, which, assuming a constant mix, probably may not be the case, which reflects that probably the discounts that we could have offered in the market to get to the desired volume growth, could have also increased. Now, is this something which is by design, or is it more a function of mix? How should one read into this? It will vary quarter by quarter. And this quarter is any which way weak, and therefore we have to respond to the market requirements. And therefore, see, it will even out over the course of the year, Ritesh. This quarter has always been difficult, whichever year you took. Correct. But, sir, if I just have to push you a little bit, if we had an option to grow at half the growth rate and still get some positive EBIT, would we have preferred to do that rather than going all out and pushing volumes? Because this is a clear question of growth versus profitable growth, wherein we have chosen growth. Both are important, and given the fact that this next half is going to be, we expect it to be much better than the H1, we are optimistic. Sure. Sir, thank you so much for all the answers and all the very best for your future endeavors. Thank you. Thank you. Thank you, Ritesh. Thank you. Next question is from Viraj, from Arihant Capital. Please go ahead. Okay, thank you. Thank you so much for the opportunity. Sir, most of my questions have been answered, but I still had one clarification that I wanted. In an answer to one of the questions, you mentioned that you will be adding 100,000 tons through greenfield. Did I hear it right? That is work in progress, Viraj, work in progress. We are taking some time in terms of deciding where to put this up, okay? And we want to put it up in an appropriate location. The capacity is something which we are not questioning, but it is the location which we are questioning. We will need this for any growth beyond three years, okay? All our three facilities cannot take, with this final expansion, any more volume growth, okay? So we will have to do that, and that is still work in progress. And we are taking a little bit more time, because we want to do it properly. As a stopgap, we have gone for an incremental capacity in our existing locations where we can do expansion. And then, okay, understood. So this 100,000 tons, which we'll be planning, still just finalizing the location. Post that, you will decide how much will be pipes and how much will be fittings, right? Fittings, look, see, fittings is a much more dense product, okay? And, we would rather have fittings being made in one location. For example, all our fitting is made in Pune itself. Because, supplying a dense product across the country is much easier than, supplying pipes to the rest of the country. So, our aim always would be to try and, keep the fittings in and around Pune itself. ... Understood, okay. Okay, and just this last part on guidance, so you mentioned that for the full year, you are aiming pipe and fitting growth to be 10%-12%, right? About 10%-12% at this point of time, based on what our for the H1 of the year. Right. But Non-Agri would still be positive for 20%, Non-Agri growth? We would be aiming at that. Perfect. Okay. T hank you so much for answering. All the best. Thank you very much, Viraj. Thank you. Next question is from Rishab Botra, from Anand Rathi. Please go ahead. Rishab Botra from Anand Rathi, you may go ahead with the question. Good morning, sir. Just a few questions. Firstly, where do we see the Agri, Non-Agri mix in two to three years timeframe from now? Rishabh, I'm not able to hear your voice with background noise. Can you repeat that question again? Just a sec. Hello, is it better now? Yes, better. I was trying to understand where do we see our Agri, non-Agri mix from two to three years now? Actually, we have been trying to push hard for expanding our non-Agri mix. Huh. But its scaling up is taking slightly longer tenure. See- So we just wanted to have a clue. Three to four years, we are expecting that will be a 50/50 split. That is the intent. Okay, okay. Yeah. And how are we going to do that, color on that front? How are we scaling up? So, Rishabh, several initiatives which have been taken. Mm-hmm. We have defined focus cities- Okay. Because that is where the non-Agri business will be coming from. Right. And we have reorganized our sales team to focus much more on institutional sales and in terms of the non-Agri segment. The type of people we are hiring itself has changed quite significantly. And finally, in terms of the data analytics that is needed for improving the sales in this segment, we have made, we are, and we are going to make a lot of significant investments. So all these, a combination of all these, will hopefully help us to move to that 50/50 split. Okay, so the plans which we chalked out two years before, t hose are reaping benefits and you are heading in the right direction. Correct. I understand that. Okay. Secondly, on the inventory side, if you could let me know what's the quantum of raw material inventory and finished goods inventory we are carrying out, in terms of quantity and at what rate? Because that will drive future performance. Let's say we are carrying at INR 80 PVC resins and INR 130 finished goods, and if prices inch upward towards, let's say, 100 or 110 for resin, so we can conclude what profitability we will be able to make, and based on the inventory which we are carrying currently. So, Rishabh, the inventory levels that we have, you see in our balance sheet number, right? Correct. That is the amount figure. Figure. Split between. S plit between. Inventory at the September end, which will carry, which will cater the immediate requirement, and the production is already going on. So in terms of exact number, it's very difficult to give you at some point in time. Can we get it offline? We can discuss it later. Okay, okay, fine. And with respect to your expansion plan, you mentioned the location is yet to be identified. I mean, which are the states which we are looking at, and are there tax incentives for those states which we are opting? And I mean, what, what would be the timeframe, let's say, if we conclude in Q3, Q4, by what timeframe that expanded capacity will come up? So, Rishabh- Yeah. I would not like to go into those details at this point of time. Mm-hmm. At an appropriate time when we are ready for the announcement, we will let you know. Correct. Okay. Yeah. Because what I was trying to understand is, we have been speaking of the expansion since long. Or you can say, let us know what would be the amount required for such expansion, and what will be the utilization of the remaining proceeds? So- You can- -Typically, for a 100,000 facility, it will be anywhere between INR 300 and INR 400 crores- Depending upon the price of land. The range of INR 300-400 will depend upon the price of land. Okay. Equipment is more or less the same. Uh-huh. It takes about 18 months to set up a plant. Okay. To productionize it and to full capacity will be probably another six months. Based on what we discussed and what you made us aware, we will be still remaining with INR 15 billion of cash, because cash generation will be also there for the next 18 months. Right. So CapEx will be self-funded. So why don't you distribute the amount which is lying in balance sheet? I mean, return ratios will look better, is what I understand. We'll let the board decide on that. But that that's true, but that has been for quite some time. And lastly, sir, if may I ask, in terms of the cross-holding, what are the game plans? Because a lot of chatter is there in the markets with respect to simplifying the group structure, Orbit Electricals holding Finolex and Orbit Electricals holding Finolex Cables. C hairman-level positions are also very much clear in Cables. So any color on that front? ... I cannot add any color on that because we don't get involved in the family matters. Mm-hmm. The operations of the organization is very independent from that of what is happening at the group level. So, and it has got no bearing on the operations. So, I will leave that question out. The information which you have got is as good as mine. So that, that will not change, alter anything in terms of, the growth momentum which we are having at the industry level? Not at all. Oh, got it. Thank you, sir. Thank you. Thank you. Before we take the next question, we'd like to request participants to please limit your questions to two per participant. Should you have follow-up questions, we request you to rejoin the queue. The next question is from Varun Jain, from Dolat Capital. Please go ahead. Hi, sir. So most of my questions have been answered. Just one question I had was, since our margins falling has been attributed to lower realization. So just wanted to understand, like, why did the realizations fall so low? Like, did we take some pricing action to push volumes vis-a-vis competition? Or was the fittings ratio low or the CPVC ratio low, which was, you know, higher yielding volumes? So like, what happened? Why did it fall so much? So Varun, as you know, the pipe and fitting industry, the prices is directly linked with the PVC prices, right? So as Ajit and I explained for my previous question, so during the Q2, the price of PVC has come down from 88 and ended with 76. This was at Q2 only. And say, if you say within the, it peaked out around 96 during mid-June, and it started to come down and ended at 76. So largely, our realization has got impacted because of this decline in the PVC prices. So there was no change in product mix, like, CPVC share and fitting share, all of that? None of that? No, no, nothing significant changes in that kind. The mix always keep changing due to something here and there, but no significant changes. We have taken no pricing action also, like, to, toward competition, since competition intensity is increasing, like pushing discounts and all of that. None of that action has been taken? No, sir, we have the discount which is generally prevalent in the market, we have gone ahead with that. No further action on this. Okay, sir. Thank you and all the best. Thank you. Thank you. Next question is from Praveen Sahay, from PL India. Please go ahead. Thank you for the follow-up. Just on, on the data points only, for a current, PVC EDC spread, you had given a four ninety or a PVC VCM around one thirty. How is the PVC right now, the pricing is? What was the question? How was the...? How PVC resin prices at the current moment? Eight hundred. It's about seven eighty to eight hundred. Okay. And, secondly, on these numbers, if I look at the VCM prices on the Q2 has jumped up significantly. So, how, what's the reason for that? Or how is that setting? Because one thirty is still the spread, so I believe that is still on the higher side. Can you give some indicative why it's- Praveen, a couple of things which influence. One is there is always a lag between PVC price and VCM. So, there is a, it's a PVC... PCM always follows a VCM, I mean, VCM always follows the PVC price. Second, also, there is a demand-supply equation also which comes in. There may be situations where, for some reason, one of the refineries is closed down for maintenance or sudden maintenance, and as a result, VCM supply goes down. So in those situations, we do see a spike in the VCM price. So, it is one aspect of it's a lag, and second aspect of it is, the local phenomenon, which happens. So, it's a combination of both. Okay. Thank you, sir. Thank you. Thank you. It was helpful. Thank you. Next question is from Keshav Lahoti, from HDFC Securities. Please go ahead. Hi, thank you for the opportunity. So I want to understand the debottlenecking which you are talking, is it fair to assume it will come by the end of the year, possibly, no volume contribution will come from that? Our equipment is already coming in one by one, so by Q4 of this year, FY 2025, we should have almost all the equipment installed. Okay, got it. The reason I'm asking, because you are implying, you know, to let 10,000 volume in the H2, and normally we have seen, you know, whenever you touch 90, 90,000, one lakh in a quarter, you face capacity constraints. So possibly, if the debottlenecking doesn't happen, maybe at max you would be able to do maybe one lakh ninety to two lakh. So possibly it would be hard to achieve what we are guiding. By Q4, we should have almost all the equipment up and running. Understood. Got it. That is helpful. That's it from my side. Thank you, Keshav. Thank you. Next question is from Karan Bhatelia, from Asian Markets Securities. Please go ahead. Hi, sir, very good, good morning. Sir, one clarification on the greenfield CapEx. Will it only be for pipes or it be for fittings, too? So at the moment, we have, it is, it will be for pipes. Fittings, we can actually expand in our existing facilities itself. Right. And just some clarification to the earlier participant, you know, you did mention that in FY 2023, we had to stock up for the summers, and hence, the inventory loss was more. But this time we had some temporary arrangement, so I just- See, what we have done is, there are two raw materials which come in. Mm. One is EDC and one is VCM. Mm. VCM is a carcinogenic material, and therefore cannot be transported on road. Okay? EDC is something which can be transported by road. So we have, since our jetty in Ratnagiri is a fair weather jetty, it gets closed from May first week, all the way to September end. So we have to stock up for material, and therefore, we were exposed to the vagaries of, the price fluctuations. Mm. So what we have done is, we have found a port which is 60 km north of Ratnagiri, which is able to handle our EDC cargo, and therefore, we are able to buy it as and when necessary, instead of stocking up for the entire rainy season. Mm. Understood? Right. Yeah. Right. So, just to continue on this, this is where our PVC margins were holding back despite of a lower spread and okay-ish volume growth, right? I mean, this is, especially, it, what it does is, it does smoothen out the PVC resin performance a lot more. Mm. Right, and that is what is visible in this quarter as well. Correct. Correct. Right. Okay, because there was no- We just started it this year. So this will improve as we go along, but it was a good start. Because that is what I was wondering, because the volume growth was in single digits, spreads were lower, but still the EBIT performance was much better. So we've already started to see the benefits of this activity, right? That's right. Yes. Thank you so much for the clarification. Thank you. Next question is from Shravan Shah, from Dolat Capital. Please go ahead. So just a last question, so, everybody try to understand how the margin will improve. So, again, trying to understand. If at current prices, the PVC prices, if it remains the same for, let's say, Q3, so is it fair to assume that in the Q3 we will again see the pipes and fittings EBIT per kg will be close to twelve odd rupees? That is the intent, Shravan. If the margins remain at the price, PVC price remains at the 77-78 level. Mm-hmm. and, there's not much fluctuation from this- Mm-hmm. We should be back to where we were. Okay. Okay. Thank you, sir. All the best, and happy Diwali. Thank you very much, Shravan. Thank you. The next question is from Puneet Zaveri, from Zaveri & Co. Please go ahead. Hi. Thank you for the opportunity. J ust one clarification. Y ou mentioned in one of the previous questions, that about the Ratnagiri jetty and how. So your EDC is was, you know, something that you had available in this particular quarter, and that's why the PVC resin margins and the PVC resin financials look much better than the PVC margin. Is that, is that the correct assumption to make? See, to some extent, yes. What we, what I'm again saying is that we are able to modulate much better, the EDC price, EDC buying, not VCM. EDC buying, we are able to spread it out over the summer and rainy season, and therefore, we are not locked into a position, in the month of April, March or April, for the entire, summer and rainy season. So that helps quite a bit in terms of the cost of raw materials that we use for producing PVC. Correct. And you did mention in detail to one of the participant question for Utkarsh, basically, that going into Q2, you have very low inventory of raw material as well, and as the prices are very high in June and July, so you had purchased inventory at a very high level. And then, since the prices had a lot of volatility in this particular quarter, and prices corrected in the next one to two months, you had to sell the final product at a lower price, at the market rate at that time. Is that the correct assumption? See, let me also try to... See, most of these contracts are done about two months with a lead time of two months. Okay? Yeah. If you look at, say, April, May beginning, the PVC prices were at seventy-six, seventy-seven. So many of the contracts would have been done then. Understand? Got it. So, and the ship has to sail, reach Ratnagiri, we have to offload it, et cetera. So, so many of these contracts are done way before. About, we have a lead time of two to three months, and therefore, that, that is also getting reflected here. Understood. Got it. Thank you so much for your opportunity, and season's greetings to you. Thank you. Thank you. Thank you. Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments. Thank you. Thank you, Arun. Thank you all for attending today's call. If you have any further questions, please feel free to get in touch with us, and have a wonderful day, and Happy Diwali to all of you. Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines. Thank you. Thank you, everyone. Happy Diwali to all.