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Finolex Industries Ltd
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Ladies and gentlemen, welcome to the Finolex Industries Limited Q3 FY '23 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I would now like to hand the conference over to Mr. Arun Baid from ICICI Securities. Thank you. Over to you, sir.
Good morning, ladies and gentlemen. On behalf of ICICI Securities, I welcome you all to the Q3 FY '23 post results con call by Finolex Industries.
On the management side, we have Mr. Anil Whabi, Managing Director; Mr. Ajit Venkataraman, CEO; and Mr. Niraj Kedia, CFO.
Now I hand over the call to Mr. Whabi for opening remarks, post which we'll be open for Q&A. Over to you, sir.
Thank you.
Good morning, ladies and gentlemen. Welcome to the investor conference call of the Q3 end of '23 earnings release. We thank you all for your continued interest in Finolex Industries Limited.
After the adverse effect on Q2 FY '23 due to falling prices of PVC, this quarter, company reported a substantial improvement in performance on account of robust growth in sales volume for both PVC Resin and Pipes and Fittings segment, and stabilization of PVC prices. Earnings performance improved on the back of stability in raw material prices.
Let me give you some of the performance indicators for the second quarter of the financial year '23.
Q3 FY '23 highlights. Total income from operations increased 12% to INR 1,125 crores against INR 1,004 crores in Q3 FY '22. The EBITDA on a Y-o-Y basis decreased 62% to at least INR 92 crores in Q3 FY '23 from INR 242 crores in the previous corresponding quarter of Q3 FY '22. However, there is a marked improvement over the EBITDA loss of INR 142.67 crores incurred in Q2 FY '23. So company reported profit after tax of INR 72 crores in Q3 FY '23 as compared to INR 178 crores in Q3 FY '22 and compared to a loss of INR 93.2 crores in the previous quarter.
Now getting to segmental performance. Pipes and Fittings. Pipes and Fittings revenue increased 30% to INR 1,077 crores in Q3 FY '23 from INR 831 crores in Q3 FY '22. Volume in Pipes and Fittings segment reported a robust growth of 92% Y-o-Y to 90,396 metric tonnes in Q3 FY '23 against 46,994 metric tonnes in the corresponding last quarter.
The EBIT in Pipes and Fittings segment was INR 69 crores in Q3 FY '23, 25% up on Y-o-Y basis compared to INR 55 crores in Q3 FY '22, and compared to a loss of INR 47.63 crores in Q2 FY 2023.
Moving to PVC Resin segment. Revenue in the Resin segment decreased 21% from INR 636 crores in Q3 FY '22 to INR 504 crores in Q3 FY '23. Volume in Resin segment grew 49%, 64,696 metric tons in Q3 FY '23 against 43,464 metric tons in Q3 FY '22. EBIT in Resin segment was INR 12 crores in Q3 FY '23 compared to INR 178 crores in the corresponding previous year's quarter, and compared to loss of INR 110.68 crores in Q2 FY '23.
The company continues to have a strong balance sheet with net cash surplus of roughly INR 1,520 crores as on 31st December '22.
Let me now leave the floor open for questions. I have my colleagues, Ajit and Niraj with me. Thank you.
[Operator Instructions] The first question is from the line of [ Aman Agarwal ] from [ Equirus ] Securities.
Congratulations on great results.
So just wanted to understand on the demand side for the Piping segment. Q3 obviously had some other impact because of falling PVC prices. So how is the situation now, and what's the kind of annual number that you are looking at now?
So yes, Q3 was, I would say, very good in terms of demand. You can check it in the results. Primarily because the markets opened up, we believe there was some pent-up demand which was long due, which came up. So Q3, in fact, what we have achieved, it is the highest-ever Q3 number that we have achieved.
Q4 and Q1 traditionally are strong quarters when the season opened up. So -- but see, we expect that we will breach the pre-COVID levels in -- by the end of this financial year, but there is a slight sluggishness in demand that compared to Q3, what we saw.
Okay.
So in terms of [indiscernible], [ 63,000 ] was the number that we achieved in FY '19 for the Piping segment, in which that is in retail?
Yes, yes.
And sir, on the realization side, do you see any further cut in [indiscernible], or there should be a slight jump up?
See, if you see in Q3 after September, the prices in fact went down by INR 11.5. PVC prices.
Subsequently, in the month of December, some of it was recovered. In fact, most of it was recovered actually. But last month has been more or less stable. After the first week of January, we have not seen any price increases, neither we have seen any reductions. So there is stability in the market, which you would think. We don't foresee any abnormal movements, either sides.
So as of now -- and the way the markets have behaved in the last 1 month, we hope this to continue. But I say, this is anybody's call.
Yes, sure.
And sir, lastly, do you see any capacity constraint for proper growth for the company in this year or maybe FY '24?
No, not yet.
The next question is from the line of Akshat Mehta from Sameeksha Capital.
Yes. So a couple of questions on -- if you can provide the mix between agri and non-agri for quarter 3, and the CPVC volumes as well?
Yes. So in terms of volumes, our non-agri was 38%, and agri was remaining. For the full year as of now, 9 months, non-agri is 41% in terms of -- Sorry. The non-agri was 27% in terms of volumes, and for the full year, 9 months, it is 30%.
Okay. CPVC?
So CPVC, we did roughly 4,100 tonnes this quarter.
Okay. .
Secondly, sir, my question is on the cash that you have on your balance sheet, some kind of -- you had around INR 1,300 crores of cash on the balance sheet. So what is the plan to utilize this cash that is available to either putting into expansion of some inorganic acquisition, or do you want to pay it out as dividend to shareholders? What is the plan for use of that cash?
See, we were -- see, in the last 1 year, I know this question has been coming and we have also been saying. See, the whole idea was first for the markets to get stabilized. After all these 2 years of [indiscernible] of COVID, we were not able to kind of strongly predict how the market is going to behave.
But now mostly COVID is behind us, and volumes have come back to normalized levels. So we'll see probably in a year, 2 time, we will require additional capacity. This money will be either used there, and if the money generation is more, then it will be written to the shareholders in one form or another. It will not be kept in the balance sheet for a very long term.
Apart from that, sir, if you can -- is there any inventory loss that we had in quarter 3? Any figure that you can provide for that?
Figure is difficult. [indiscernible] is difficult. Yes, we did have inventory loss. In fact, the whole losses that we reported was primarily on account of inventory losses.
Okay. Okay.
And can you guide me as to how you are going forward, you are seeing that non-agri deal? You want to increase share of that non-agri side because there are higher margins there, and you want to reduce our dependence on the agri side. So what is the plan to go forward with that, how are you going to execute that?
Yes, yes.
So I'll -- I'd like Ajit to answer that. But before he answers, see, yes, there is a very clear focus on improving non-agri. If you see on the non-agri side, per se, also, in this quarter, our non-agri growth has been [ 33% ]. On a 9-month basis, our non-agri growth has been 20% in terms of volumes. So non-agri is definitely moving up as per our expectations.
The split has slightly changed in this quarter because the agri demand far surpassed than non-agri demand. So in fact, if you see on a quarter-on-quarter basis, agri volumes were more than 100% as compared to last year. So that is what has skewed the ratio towards agri. Otherwise, if you look at non-agri from a standalone perspective, the growth is substantial.
Thanks, Niraj.
In addition to what Niraj mentioned, there is a renewed force on making sure that the brand awareness of Finolex in the non-agri segment is -- has been increased. We are going after an increase in network for our non-agri business. And in terms of our product range also, we are expanding it. And therefore, all these things that -- these areas put together, we expect that the renewed focus of Finolex on non-agri segment will help us grow in these segments.
The next question is from the line of Rahul Agarwal from Incred Capital.
Three questions. Firstly, to take forward the earlier question on sales mix. My sense is the company obviously intends to become a very well-balanced company in both agri and plumbing. You said, obviously, you're expanding network and you mentioned product offering expansion. I had a related question versus other national brands like Ashirvad or Supreme, Astral, Prince, whoever. Could you highlight some gaps, in case there are any, on the Plumbing, Pipes and Fittings side today, what we offer?
And a subquestion to that also was that in terms of derisking from West and South India, because I think that's like bulk of the business for Finolex, any thoughts on that, please? That's the first question.
All right. I don't think there is any gaps in the product portfolio. We do agree that we started a little bit late in the whole process, so it is more of a [indiscernible] than anything else.
In terms of strength, we are -- we have tremendous strength in both West and South. And in our non-agri portfolio, we are seeing strengths coming from North as well. So we are focusing on all these areas to make sure that the growth comes in the non-agri segment, the plumbing and sanitation.
So in terms of your internal intention to derisk from South and West, is that an intention at all going forward?
No, we would capitalize on our strength, so there is no reason to move away from that. Also, our strength in rural areas is where growth is coming from. These regions give us a pretty good foundation for us to take off.
Got it, sir.
Sir, second question was on pipe volumes. The reasons attributed to such a high number in the quarter essentially is, one is, agri demand is stellar. Second, my sense is that there is some restocking element, as you said, some pent-up demand.
Questions are essentially, would you expect a soft fourth quarter? Because generally, you would do such volume in 4Q and 1Q of every year. And assuming 4Q demand is also solid, you are using almost like 80% of your pipe capacity, I typically think the industry peaks out at this number. Would you be in a situation where your capital is actually delayed and you're not announcing that right now? [indiscernible ] some question on pipe volumes, please?
No, no. So there is no announcement that we delayed. I mean, that is not the case at all.
And on demand side, as I said, and you also said the same thing, that Q4 and Q1 are generally our strong quarters. The demand is strong in this quarter as well, but it is not as strong as we saw in Q3.
Sir, that's pretty clear, and I would imagine to beat 260,000 tonnes per [indiscernible] is pretty easy because we're already at 220,000 9 months.
What I'm trying to get to is your fourth quarter should be softer than Q2 purely because of the pent-up number in [indiscernible]. Is that understanding correct?
Yes, yes.
Okay.
And in terms of CapEx duty, you're not delayed. So 80% is a very high number, don't you think so? Because I think the effective usage of rated capacity generally is 75%, right? In terms of different sizing and stuff.
See, our rated capacity is 370,000 tonnes when it comes to pipes. Plus, there's a second capacity as well. So that way, we are very comfortable on it.
Okay. Got it.
And lastly, on other expenses, the number is INR 224 crores for the quarter, looks really high to me. Previously, you had explained that coal pricing and ForEx losses are impacted. Could you give clarity as to what really happened in 3Q and what lies ahead, please?
So what you're saying -- which -- which quarter are you talking about?
Current quarter, third quarter, you reported INR 224 crores of other expenses. It looks very, really high to me. Any one-off elements here?
No, no. It is also because of higher volumes. And of course, power cost anyway has gone up for everybody compared to last year. But this jump that you see is because of higher volumes.
Okay. Got it. No significant ForEx loss sitting here, right?
No, no. Of course not.
We have the next question from the line of [ Vanit ], an individual investor.
I have a question with regard -- I have 2 questions, actually.
First one with regards to the sales rate. I just wanted to know that in a long-term kind of perspective, I'm talking about like 2 or 3 years from now, is there any particular figure which we have in mind between agri and non-agri and, as well as Plumbing and Fitting and the other division?
And my second question was with regards to the price of the raw material, and by what time can we actually come to a little bit of a sustainable margin? And is that -- if there is a particular figure which is a sustainable margin for us in the long run?
So see, on the volume mix, we, a couple of years ago, 3 years ago, our mix was 20:80 in the average. But now it's comfortably over 30%, 35%. Our long-term target is both these segments, subsegments, I would call it, Agri and Plumbing and Sanitation, it should be equal contributors in terms of volumes. That is -- it will take some time, but that is what we aspire for.
And coming to your question on raw material pricing. See, as I said, last 1 month has been more or less stable when it comes to PVC prices. So if everything remains same and these are normal levels, which were there even pre-COVID.
So if there's nothing else that changes globally. We are almost there, I would say.
Is there a particular figure, like 10% or like 20% or something like that?
Sorry?
The margin -- the margins is at...
No, no if you see in Pipes and Fittings, the normal margins in our case are normally INR 8 to INR 10 a kg, which we should achieve. But in case of PVC, it is always volatile and depends on market parameters.
The next question is from the line of Aasim Bharde from DAM Capital Advisors Limited.
Just one question on PVC. Just wanted to know how is supply right now, especially from imports? And when, say, China reopening and the possible -- like there was a recent snowstorm that knocked out Southern U.S. recently, could that hit supplied? And if so, could that drive prices higher, in your opinion?
So when it comes to PVC for our consumption, we make our own PVC. So we don't generally import PVC.
But on overall industry demand side, we don't hear of any shortages anywhere. There was this condition some months ago. But now, we don't see -- we don't hear from our purchase team or anywhere else that there is demand -- supply constraint from any ways. PVC is available.
Is PVC from China also coming in at a regular pace still? It might have come off in recent times, but is it still coming in or is that completely dried up?
After their new year closure, in fact, China market has picked up, so demand is better there now. So what is expected is prices up to March. If not, Shenzhen will definitely not [ fall ]. So there will be good demand in China. As you know, the prices are falling because of lack of demand in China.
I think there was no case for price fall from me. I was just trying to check what is the probability of a price rise in the near term? Because China is reopening, so that should take supplies away from the Indian markets.
It is possible, but I don't think the price rise will be phenomenal. It may range. It will be ranged off.
The next question is from the line of Abhishek Ghosh from DSP.
Sir, in terms of profit from associates has seen a major jump. Any sense on that?
No. So that's a small operation that they do. I mean, the demand was good on that side as well, so that's how. I mean -- again, this is also largely agri that business gets us to largely agri demand. And in our case also, agri demand was pretty high. And similarly, in the drip irrigation business also, [indiscernible] pent-up demand which came up, contributing to their profitability.
Okay.
Sir, the other question is since you have already done [ pin-up ] peak largely closer to your peak capacity, or the other way to look at it is your 90,000 tonnes per quarter, given the overall fittings demand, fittings capacity and overall PVC pipe capacity. In a quarter, can you produce more than 1 lakh? Is there a possibility due to...
Yes, yes.
Okay. So if demand comes back in fourth quarter or first quarter of FY '24, you can produce up to 1 lakh tonne per quarter?
Yes, yes, definitely.
Okay. Okay.
Sir, the other thing is given that you have such amount of a huge cash on balance sheet, the way we look at your business is you typically do 90,000 tonnes in those peak quarters of 4Q and 1Q, and there is fairly a lean quarter as far as 2Q and 3Q is concerned, given so much of cash on balance sheet. But building up inventory for those peak seasons, given that you're not adding capacity, can that also be an option? Or is outsourcing also something that you will evaluate at some point in time?
So see, theoretically speaking, that is an option that we stock up. But in our business, we are in commodity business, then you are leaving yourself open to the volatility in material price movements. So today, if you stock up and material prices crash, and then you will be susceptible to those risks. So then it does not really make sense for us or anybody else, for that matter, to stock up for the lean season or for the peak season in the lean season. So that is something that is not advisable in our field.
And secondly was on our outsourcing? No. On pipe side, we will not be outsourcing to somebody else.
Okay. Okay.
Sir, the thing is if you can also help us with your CPVC volumes and revenue for the quarter?
So CPVC, to say that our volumes for the quarter was 4,100 tonnes. Revenue was roughly INR 160 crores.
Okay.
Sir, just one last question from my side. In terms of the channel inventory now, which was fairly lean in 3Q FY '23, how does it appear now in terms of the overall channel inventory?
Channel inventory per se is not very high always. It is 7 days to 10 days, between 1 to 2 weeks. Yes, in Q3, it had gone down because naturally, the prices were rapidly going down. Now it is normally -- it is back to the normal levels. But see, this does not really make much of a difference. You're talking about 10 days going down to 2 days or 3 days. It [indiscernible] 1 week's impact only.
Yes. But I'm saying now, the channel inventory is back to a stable level.
Yes, more or less.
Okay. Okay.
So how should one expect the volume growth for FY '24 now from here on? Any thoughts?
We'll get more clarity on this after Q1 of FY '24.
Okay.
Because see that the industry dynamics are very volatile. From a very, very slump situation, we went to excess demand, and again normalized now. So there are a lot of factors which affect the demand and supply.
So as we move into next year, first quarter, we get a bit more clarity.
Sir, my question was more trending towards the fact that last 3 agri seasons, 2 agri seasons were impacted due to the 2 waves of decreases. And then last year, you had sharp increases in PVC prices, so you didn't have any demand at those PVC prices of [ INR 150 ], [ INR 160 ].
Now those things have normalized, so can one expect a very strong 4Q, 1Q despite a good 3Q, is what my question was. And on that basis, how should one look at the growth? So I think that is what I was trying to get a sense around.
Let's see how the quarter goes, that -- with a little bit of right measure. So far, as I said earlier also, the demand is not bad. It's good, but it is slightly sluggish when compared with Q3.
The next question is from the line of Sandesh Barmecha from Haitong Securities.
Just 2 questions on my end.
So what is the Fittings revenue for Q3 FY '23, sir?
So Fittings revenue was INR 200 crores.
Okay.
Sir, so what would be our CapEx plan for next 2, 3 years, sir? Any plans with capacity through any brownfield or open up any new plant in North or East?
So there are various discussions which keeps happening on [indiscernible] board. On the Pipe side, there is nothing concrete as of now. We keep on adding capacity wherever required on a module basis, big upgradation of an extruder or something. On Fitting side, we keep on adding molds and some machines. That will continue.
But as of now, your answer is -- question is, specifically, is there any plan finalized for opening a new factory somewhere of -- for pipes? That is nothing concrete as of now.
Okay.
So what will be the CapEx from amount from 9 month FY '23 and the full year FY '23 and FY '24, sir?
So CapEx for this year...
Yes. Again, as we have said earlier, will be in the range of INR 150 crores for the year.
Okay. So anything planned for FY '24?
The similar range, unless we take up some large projects to take agreement.
The next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund.
Congrats for a good set of numbers.
My first question is on the implementation of DMS. So we believe that the dealers now place orders through DMS, but how about distributors or dealers further placing -- giving business to retailers. What has been progress on that front, and are we able to see that all schemes are being passed on to retailers?
Bhargav.
So dealers are completely on our CRM, as we call it. So I think it will be almost a year now. No more orders on e-mails or Excels, so they are fully using our CRM.
On the secondary side, that's what your question was, on the retailers?
Yes.
So that has commenced. So there are pockets where this has already started and gradually it is moving to all dealers.
So by when do we expect that to fully get completed, the secondary, sir?
In 3 to 6 months.
Okay. Okay. Understood.
Secondly, in terms of number of SKUs, is it possible to quantify how much we have in total?
See, roughly 2,200.
The next question is from the line of Ritesh Shah from Investec.
Couple of questions.
Sir, first is on the volumetric terms, can you help with what was the agri and the non-agri pipe for Q2 FY '23 and for Q3 FY '23, please?
So agri Pipe and Fitting was roughly 66,000 tonnes and non-agri was roughly 24,000 tonnes.
And so this was for Q3 or Q2?
Q3.
And the same number for Q2, please?
37,000 and 22,000. 37,000 and 22,000.
Sir, my question is if you look at the realization on the [indiscernible] for Pipes and Fittings versus [indiscernible], it has actually gone up very sharply. So if you look at last year, those numbers were at around 1.28x, 1.29x. This year, the same numbers are at 1.52x, 1.53x. I'm looking at realization per tonne of Pipes and Fittings versus PVC realization. So there's something right which we are doing, either on the product that it is more of CPVC or is it more of fittings. Sir, how should we understand this?
Ritesh it's number of factors. But obviously, when the demand was much more than what we could supply, there was a slight correction in the pipes. Yes.
Sir, I could not understand it.
So we are focusing more aggressively in the mix toward non-agri side and more on fittings? Is that the reason why the numbers are actually [indiscernible]?
Obviously, if you see past period, the fittings volumes in terms of total have gone up.
Sir, possible to quantify the PVC and CPVC together? Because in the presentation, you only have for PVC.
No, it is both put together.
It's both put together. Okay, that helps. That helps.
Sir, my second question is, can you just provide some color on the sourcing for EDC, ethylene and VCMs? What sort of contracts we have, and is this business normal scenario right now? Or are we facing some challenge when it comes to sourcing of this raw material?
You see, we normally have annual contracts, and they have been going for years. And off and on, because of some shutdowns, there are temporary blips. But -- and then if such a thing happens, we source from the open market on spot basis. But otherwise, we have annual contracts with all of them.
So sir, currently, is it business normal when it comes to sourcing all the 3 raw materials for us?
Yes.
Okay.
And sir, last question on CPVC [ hedging ]. Sir, what is our sourcing right now? And is it again a business normal thing, or are we looking at anything different over here?
No, it is normal.
Okay.
And sir, where did we source on the CPVC revenue from?
It is multiple sources.
Okay. Fine.
And sir, last question. Would there be some mix that we'll be looking on outsourcing versus captive manufacturing? You indicated on, right, so there will always be captive manufacturing. Any specific number on fitting? Will it always be outsourced? How do we look at it?
See, those outsourced capacities where we say, they are exclusive for us. So actually, these capacities have been set up for us. It's not the normally -- outsourcing in the normal terms where the vendor is supposed to supply to somebody else also. So these are exclusive capacity for us.
Okay.
Sir, let me put it the other way. Like we have full confidence in Finolex when it comes to adding capacity on the piping side. But when we do that on the piping side, will we have the same [ flux ] on the outsourcing side, or is there an element of time line?
So when I say, how does it matter? When the fitting -- as we have been adding capacities over the year, so whether we add a [indiscernible] vendor or our own, it actually doesn't make any difference.
Sir, I'm looking at the time element. Basically, we can easily add an extruder and actually increase the capacity. But the same thing, will it be as easy when it comes to fittings and outsourcing in [indiscernible]?
See, in case of fittings, you must know the most belong to us. Molds and design of the fittings belong to us. So we keep on adding molds.
[Operator Instructions] We have the next question from the line of [ Ritukumar ] Shah from [ Sumangal ] Investment.
Sir, can you give the value-wise figure for agri and non-agri separately? I think you have given volume-wise, it is 30% for 9 months. But what was the -- value wise, of course, it should be much more, no?
See, generally, we don't give this value strip.
See, I'll tell you just -- while we say this agri, non-agri also, we need to understand when we come into the fact that in a lot of markets, especially [indiscernible], the agri pipes are used on non-agri applications. So that way, if you look at it from a usage perspective, it becomes very difficult to say where it is agri or non-agri.
So while we give that the volumes and all, it is not right to look at them purely from an agri, non-agri perspective because there is a flux in that between agri and non-agri also.
So generally, we don't give these numbers. It's a lot less relevance.
Okay.
And sir, my second question relates to our fitting volumes. I can understand that Q1 and Q4 for agri has higher [ shares ]. But even in fitting, we see a lot of volatility in our sales. So what is the reason for this volatile?
I am not sure why and how are you coming in this volatility in fitting volumes because if you look at last 7, 8 quarters, every quarter, this has only improved.
No. I think on the last slide of your presentation, I think -- means there is some volatility here. One I can...
Not on PVC fittings, not on fittings.
See, this quarter, we did roughly 8,000 tonnes of fittings, so...
No, no. So quarter 4, it was 7,834 tonnes. Then it came down in first quarter to 6,44 (sic) [ 6,445 ] tonnes.
That is seasonality. That is seasonality. Q4 will be generally more than Q1.
So that I was trying to understand, sir.
So in fitting also, there is seasonality?
Yes, there is seasonality. But there is less seasonality.
Not as seasonal as pipes, right?
Both are seasonal. It actually depends -- see, the demand of fittings in agri is much less. In fitting, the major volume [indiscernible] of plumbing, sanitation, where the volatility is a little less.
Okay.
And sir, lastly, what is the current delta of PVC, EDC as of today?
See, latest 1 week -- latest numbers on PVC, EDC, the delta is roughly $665.
Then [indiscernible] same last quarter average, right?
Last quarter average was roughly $570.
$100 higher than that. Okay, sir.
The next question is from the line of Rahul Agarwal from Incred Capital.
As a follow up. Actually, the question was on the pricing. You could help me with PVC, EDC, VCM material pricing for third quarter Y-o-Y and the current price, please?
So for Q3, PVC was $840. EDC was $270, and VCM was $650. So the PVC/EDC delta was $570, and PVC/VCM delta was $189.
And the Y-o-Y number in the current mix, please?
So you mean Q3 FY '22?
Yes.
PVC was [ $17 ], EDC was $959, VCM was $1,403, the PVC/EDC delta was $795 and the PVC/VCM delta was $350. That is average for Q3 FY '22.
Got it.
And you said currently, PVC/EDC delta is $665. And what would be the EDC/VCM?
$190.
Which is similar to last quarter [indiscernible]?
Yes, yes.
Okay.
And sir, one question was on the land update. Obviously, we don't think more transactions happened. But should we see this as a delay, or this is how you are expecting it to play out?
No, no. So we have to close this as soon as possible. We are working towards it. There is no intentional delay or there is no investment speeding up of things. The mandate from the Board is very clear, we have to get this disposed of, and we're working to it.
There is no delay as such.
So let's say, another -- let's say, by December, we should expect this to complete because that's another INR 300 crores of...
Yes, hopefully.
[Operator Instructions] We have the next question from the line of Karan Bhatelia from Asian Markets Securities.
Sir, if you [indiscernible] the inventory fluctuation in the division, what could be the margin is for this quarter?
That is difficult to quantify.
Right. So we'll be still getting...
And why I'm saying this? You see, see prices after September, in October and November, prices kept going down. In fact, by November, they had gone on further by INR 11.5. It is only in December that prices kind of stabilized and they went up again, so that number is very difficult to give.
Right, right.
And sir, one clarity which I wanted to have is, sir, you keep mentioning about INR 8 to INR 10 margins for the plastic pipe division, so that is assuming a 50%, 50% mix on the agri and non-agri?
No. With that, the margin should improve.
The next question is from the line of [ Padma Raju Mathi ] from SBI Life Insurance.
Sir, my first question is related to the capacity side. By end of this financial year, what would be our capacity on the PVC pipes?
370,000 tonnes.
Okay.
There could be some debottlenecking next year, or it's not required?
As of now, it's not required. We have substantial headroom.
Okay.
And my second question is related to your earlier comment on the sluggishness on demand, so is that visible on the agri and non-agri, or it's fixed overall?
Overall, overall.
We have the next question from the line of Rahul Agarwal from Incred Capital.
The last thing.
One question on [indiscernible] the land in PVC right now, talking about Pipes and Fittings largely. Obviously, PVC pricing stabilizing means that smaller regional players become competitive, and they want to increase their own business. Across your market, South, West and North, these are 3 large markets where you work. A lot of new plants have come up for peers, national brands, as well as you must be seeing some regional players trying to come back and increase business. Any thoughts on how is the market behaving in terms of supply side from a PVC Pipe and Fitting perspective? How is Finolex coping up with that?
So we have done an analysis of our network and also the ideal location of plants, and we are not seeing ourselves at a great disadvantage because of concentration of manufacturing location in the rest of the country. And this is something which we are constantly evaluating. And at an appropriate time, when the volumes reach a critical mass in any of the locations, then we will consider it.
In terms of competition, any comments, sir? How are you looking at competition right now?
The competition has always been there, so there are huge number of regional players and new players have been coming in the market. But as the market is growing, I think there will be space for everybody to grow.
[Operator Instructions] The next question is from the line of Arun Baid from ICICI Securities.
Just one thing. When we look at our EBIT numbers for resin business in this quarter, it's obviously low, so you would have an inventory loss there. Is that the right way to look at it?
Yes, yes, that's right. That's what I said, Arun. In October and November also, prices kept on going down. So there was inventory provisioning in October, November as well.
Okay.
But as [indiscernible] things today, we'll go back to normalization of profit in Q4 from this segment because PVC Pipes was normal?
We should, we should.
See now, most [indiscernible] that all high price inventories [indiscernible], so that we have consumed. So in our view, a large part of the pain is behind us. We'll see how markets behave in the coming months.
And just one more clarification. So when you mentioned there was a slowdown compared to Q3, are you trying to just make it a Q2 [indiscernible] or generally demand is good, but compared to Q3, which was abnormally high [indiscernible]?
Compared to Q3.
But compared to a normal situation, Q4 is much better than normally, right? Is that right?
It's normal quarter. It looks like normal quarter so far, we'll see how it pans out.
Okay.
There are no more questions, so I want to thank you all for giving us a chance about this call. And if there are any concluding remarks you want to give, please share.
Thank you. I appreciate it, Arun. Thank you very much.
Thank you. Okay.
Thank you.