Excerpts from an exclusive interview with S Dhanorkar, Managing Director, Finolex Industries on how India’s next step into infrastructure development will be in tune with the company’s growth plans.

What is the current manufacturing capacity for PVC pipes, resins and fittings? Could we have details of how this production is managed through the company’s different plants?

Finolex Industries Ltd (FIL) is India’s largest manufacturer of PVC pipes and fittings with a capacity of 2,50,000 MT per annum (pa) and is the only PVC pipe manufacturer which has gone in for backward integration by setting up a PVC resin manufacturing capacity of 2,72,000 MT pa. The PVC pipes and fittings manufacturing capacity is spread across three ultra-modern facilities at Pune and Ratnagiri in Maharashtra and Masar in Vadodara while the PVC resin manufacturing plant is located at Ratnagiri. Broadly, the Pune plant caters to the western and eastern parts of the country, the Ratnagiri plant caters to the south, while the Masar plant caters to the northern part of India.

FIL is the first Indian PVC pipe manufacturer to be awarded the IS/ISO 9001:2008 certification. These PVC pipes and fittings are available in a vast range (sizes, pressure classes and diameters) for diverse applications in agriculture, housing, telecom, construction and industries. FIL enjoys a leadership position and sells over a network of more than 14,000 direct and indirect retail outlets spread across India. PVC finds applications in various areas such as manufacturing of pipes, insulation of cables, window profiles, flooring, blister packaging, etc. The universality of its service properties is such that new areas of application are being continuously developed.

How has the shift in business model from B2B (PVC resin) to B2C (pipes) helped over the past few years?

Finolex Industries has been expanding the PVC pipes’ capacity every year. The average CAGR growth for the pipes business over the last 10 years has been more than 15 per cent. This has resulted in the captive consumption of PVC resin going up. In the PVC pipes’ segment, Finolex Industries has better control on margins, as it is the market leader in India. The dependence of the company on the commodity part of business, i.e., PVC resin is going down from year to year and FIL expects to consume the entire PVC resin capacity in the coming years.

Has the recessionary trend, especially in the agriculture and realty sectors, impacted the performance of the company?

Selling of agriculture pipes is a cyclical business. We have our business crests and troughs in the same year. Generally monsoon is a quieter period for us and business picks up again from September. The slowdown in agriculture has not affected us much. Pipes and plumbing infrastructure are basic requirements and generally their purchase cannot be put off to the next season. Having said that, Finolex Industries as a company has forged strong relationships with farmers and dealers. Today the relationship has graduated from a buyer-seller relationship to one of being partners.

We are partners in their growth and have schemes/policies in place, which makes it easier for them to deal with the company and buy its products. As market leaders in a predominantly agriculture product like PVC pipes, we have realised that the rural markets place a high value on trust and we have lived up to this. As for the realty sectors, India is expected to witness huge growth in terms of infrastructure and construction in the Tier 1 as well as Tier II cities and towns. With the announcement of the 100 smart cities by the government, is expected to give a fillip to the demand for our products.

What are the new products in the pipeline? Is the company working on R&D related to raw materials used for making pipes and fittings?

Finolex Industries is now also giving an impetus to its non-agriculture business offering. Earlier the company use to only manufacture pipes and fittings used for agriculture purposes. As urban city spaces grow and with the announcement of smart cities, there has been an increase in demand for pipes and fittings for commercial and residential purposes. Finolex Industries has come up with new products like CPVC pipes and fittings used for urban development.

Finolex Pipes has always believed in creating products of the highest quality. We have a robust R&D centre in which we continuously innovate and create solutions for the marketplace. Finolex Industries was the first to introduce new technologies in the industry like self-socket pipes, ring fit pipes, etc. Finolex is the only pipe manufacturer to have its own production of PVC resin to ensure consistently high quality of inputs. All its manufacturing facilities are equipped with state-of-the-art laboratories where quality and sustainability of the finished goods are tested before sending them out to the market.

We also have plans to enter into new products for water management, which will be distributed through our vast network across India. Currently we are in the process of evaluating some such products and we expect these new products to make a substantial contribution to our top line over the next four to five years. We have set ourselves a target of reaching a turnover of USD 1 billion by 2020. We intend to get into several new products under the broad category of ‘Water Management Solutions’.

What is the plan for further geographical expansion both within and outside the country?

Finolex Industries Ltd. is planning a big push in its northern and eastern markets. As a first step, the company has opened depots at Indore, Noida and Cuttack and is planning to open many more across India in order to serve the region better. The company plans to cater to the states in northern and eastern India as part of a hub and spoke model to service the markets of Punjab, Haryana, Delhi, Chandigarh, Uttar Pradesh, Himachal Pradesh, the seven sisters in the North East, West Bengal, and Odisha. The company is also now focusing on the non-agri business to fuel its growth across India and capture a 25 per cent market share in the next three years.

Finolex Industries will target both the construction and infrastructure sectors in order to capitalize on the growth expected in these sectors. The company sees a lot many opportunities to expand and grow here in the Indian markets. The impetus given to business by the present government through announcements like the Smart City Development Programme and the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) are huge. It is a direction for us to expand and grown within the country.

How will the sales trends for pipes and fittings shape up in the coming years?

According to market analysts, the Indian PVC pipes and fittings market is projected to grow at a double-digit CAGR over the period FY2014-19. It is s expected to touch about Rs 400 billion by FY2019. The Indian government’s enhanced push on infrastructure development, increasing demands from construction segment and a renewed focus on the non-agriculture business is expected to spur the demand for PVC pipes and fittings and drive market growth in the coming years. Finolex Pipes is one of the pioneers in introducing the concept of PVC pipes in India and this was done at a time when the market was dominated by metal pipes.

Over the years, Finolex Industries has emerged as a benchmark in quality across the product segment in which it is a player. With its unrivalled product quality and reach, Finolex Pipes truly leads the way in India’s economic development in this segment. Because of their inherent advantage, PVC pipes have become a preferred material for transportation of water and found application in almost every sector.

Is the company working on indigenous plans or technological collaborations with foreign companies to introduce new manufacturing methods?

The PVC resin plant was initially set up with technologies imported from Uhde GmbH, Germany and is at par with any world-class PVC manufacturing facility. While the PVC pipes’ plant is not very technologically intensive, the extruders, which form the heart of a PVC pipe plant, are imported from a renowned manufacturer in Austria.

The company has announced a new warehousing facility recently?

Finolex Industries has recently taken a giant leap in eastern India with its new warehouse in Cuttack, which holds a capacity of 800 tonnes. The company plans to cater to the states in eastern India through a hub and spoke model to service the markets of Bihar, Odisha, Chhattisgarh, West Bengal, Assam, Nagaland and Tripura. Buoyed by the presence of the warehouse, the company is now planning to strengthen its dealer network further. It already has about 100 dealers catering to over 3,000 retailers in East. The network is spread over distant places like Tinsukia in Upper Assam, Jeypore in Odisha, Dimapore in Nagaland and Agartala in Tripura.

Is the company also working on any social connect with India?

On the occasion of the World Youth Skills Day, Finolex Pipes announced its plan to collaborate with Kushal to improve the skills of the building services’ workforce by imparting training in the area of plumbing. Kushal is a partnership project between Confederation of Real Estate Developers Association of India (CREDAI), Pune Metro and National Skill Development Corporation (NSDC). Incidentally, the prime minister also launched the Skill India Campaign on July 15, 2015 in order to skill up Indians to cater to the needs of the domestic industry as well as the needs of the developing world. The objective of this scheme is to encourage skill development by providing monetary rewards for successful completion of approved training programmes. Fundamentally, we are celebrating people who work with their own hands, who form the backbone of any society. We need people who believe in working hard and adding value in whatever they do.

The Kushal model is mix of ‘on-job-on-site-earn-while-you-learn’, wherein 80 per cent is practical on-the-job-training and 20 per cent is classroom training, entailing zero wage loss for workers. The training duration is of two months. So far Kushal has trained 22,408 construction workers. As a pilot project, Finolex Pipes will be sponsoring the training of 500 trainees with the long term aim of training 1,00,000 workers in the next five to seven years, who will be taught the entire plumbing course along with additional inputs on on-site-training from Finolex Industries Ltd. The Finolex-Kushal training programme will help these plumbers to learn technical skills faster which in turn will help them gain personal growth and higher income.

Aren’t you focusing on creating awareness about saving water too?

We launched an innovative campaign on the occasion of World Environment Day. A ten-day campaign on social media was run with the aim to highlight the problem of water wastage and to create awareness on the importance of water conservation. The campaign questions the casual attitude that we in general have towards water. The video campaign, which has been uploaded on Facebook and YouTube, focuses on how people talk about water in an extremely depreciating way in India. Different people speak about water and insinuate that it is not of any great value. For instance a person who has just attended a party hints about how everything flows like water, a woman who has shopped for shoes says that she has spent money like water and a taxi driver who has just dropped a passenger says that what is being consumed is petrol and not water.

-HUNED CONTRACTOR