Finolex Industries Ltd
NSE:FINPIPE
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
207.3
348.1
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Finolex Industries Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Finolex Industries hosted by Investec Capital Services. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Ritesh Shah, Head of Mid-Markets Coverage and ESG from Investec. Thank you, and over to you, sir.
Thank you, Rutuja. Thank you all for joining the conference call. We have with us from Finolex management, Mr. Math, Managing Director; Mr. Whabi, Director, Finance and CFO; and Mr. Kedia, Deputy CFO.
First, I'd like to thank Mr. Math for his continued support and guidance over the last decade. And also, we wish him very best for the next phase of his life. Also, we'll take the opportunity to congratulate Mr. Whabi and Mr. Kedia as they step into new roles as Managing Director and CFO, respectively.
I'll request Mr. Math for initial remarks and sir, if you could please touch upon the announced management role changes for the wider benefit of all that will be great. Over to you, sir. Thank you so much.
Thank you, Ritesh, and good morning to all of you, ladies and gentlemen. I welcome you to this investor conference call for quarter 4 FY '22 and full year FY '22 earnings release. Thank you for your continued interest in Finolex Industries Limited. The company has once again reported a robust set of financial numbers by reporting the highest ever quarterly and annual revenues.
PVC prices after touching all-time high of USD 1,900 per metric tonne has now come down to USD 1,500 level. The demand scenario remained robust with growth in volumes. The company's operating performance has consistently shown a good improvement.
Let me give you some performance indicators for Q4 of financial year '22 as well as for the full year of financial year '22. So Q4 FY '22 highlights. Total income from operations was INR 1,595 crores for quarter 4, up by 28% against INR 1,249 crores in last year's quarter 4. On a full year basis, revenues grew by 34% to INR 4,647 crores against INR 3,462 crores. Volume in Pipes & Fittings segment grew by 30.5% to 78,629 metric tonnes in Q4 '22 against 60,232 metric tonnes in Q4 last year. The segment reported a growth of 11.7% to 2,36,895 metric tonnes in FY '22 against 2,12,060 metric tonnes in FY '21.
EBITDA exceptional items stood at INR 264.66 crores for Q4 '22. This is down by 35.5% against INR 410.05 crores for quarter 4 '21. EBITDA, excluding exceptional items for the year '22 was 3.5% up to INR 1,024 crores against INR 989 crores in FY '21. PAT, excluding exceptional items -- or sorry, including exceptional items for the quarter, up by 66% at INR 494 crores against INR 297 crores for quarter 4 '21. On a full year basis, PAT, including exceptional items, was INR 1,053 crores, up by 45% against INR 728 crores last year. The company reported an exceptional gain of INR 376 crores on account of assignment of lease hold rights on land during the quarter.
Now getting into segmental performance. EBIT in the Resins segment was down by 52% on a year-on-year basis at INR 157 crores in quarter 4 '22. For the full year, the segment reported a growth of 4% to INR 723 crores compared to last year FY 2021. EBIT in Pipes & Fittings segment, on the other hand, has increased by 36% to INR 94 crores in quarter 4 '22 compared to quarter 4 '21. For the full year, the segment reported a stable performance with marginal fall of 0.4% to INR 250 crores from INR 251 crores last year. The company had a net cash surplus of INR 1,550 crores as on 31st March, '22.
Before I leave this floor open to the questions. I think let me thank all of you for the support that you have given to Finolex. I am retiring by this month end, and I'm handing over my charge to Mr. Whabi, whom you have already met. So you have -- I believe that I'm leaving this company on the stronger hands, and we will see that Finolex grows under his leadership in the near future.
So while I will be answering few questions, anything on the future guidance. Mr. Whabi and Mr. Kedia, will be taking your questions, and they will be answering more. I won't be able to give any further guidance on the next year's performance. It will be better that they handle these questions. At the same time, I will be adding wherever there is possibility to answer your other questions on technology or any other things, okay?
So thank you, gentlemen, for the support you have given as well as the support that you will be giving to my new colleagues, okay? Thank you. So I'll leave this floor open to the questions to all the investors now.
[Operator Instructions] The first question is from the line of Ritesh Shah from Investec Capital.
Yes. Sir, I'll just start with the first question till we have a question queue. Sir, my question is on the balance sheet. We have monetized a part of the land bank. There's a lot of cash on the books. How should one look at the incremental capital allocation? If at all, if you are looking at any particular CapEx where it could be? If not, is there any particular time line on dividends that one can expect? So that's the first question then we'll go to the question queue.
So on CapEx front, we hope to incur INR 200 crores, INR 250 crores over the next 1, 1.5 years. See, we also understand large amount of cash should not and will not remain in the books for long. So a decision on that will be taken soon.
Sure. Rutuja, we can go to the question queue. I'll join the question queue.
The next question is from the line of Rahul Agarwal from InCred Capital.
As Ritesh said, congratulations to the entire team, Sanjayji for the contribution guidance and best wishes to Anilji and Niraj for more responsibilities. Sir, first question on pipe volumes, we could see the number pretty strong for the quarter. We understand the agri season pickup. But how about non-agri? It looks like you were very aggressive during the quarter. I can also see that from the balance sheet because the debtor days have increased a bit. My sense is you mentioned about higher credits to be offered on that business.
So if you could help us understand the growth strategy in the planning for fiscal '23. And purely, this is obviously in light with falling PVC pricing because you're seeing another INR 10 cut now from Reliance and channel might behave very differently because we saw that during October to December, there's a lot of destocking. So on that background, if you could just help us understand how should we think about the business in terms of growth for fiscal '23? That's the first question.
Yes. Thanks, Rahul. See, on non-agri, our growth in this quarter, we did roughly 23,000 tonnes in non-agri, which is a growth of 23% over last year. And on a full year basis, it is 27% growth. So when you talk about the data on the balance sheet, if you see PVC prices have gone up and as our share of non-agri inches up. So we had a non-agri, agri mix of 25% 2 years ago in terms of volume, which was 29% last year. And this year, we've ended at 33%. And continuing with the same philosophy and the same strategy going forward also, the non-agri basket will grow in proportion.
Impacting value terms, it is more than 40% for this financial year. And that is why you see the debtor slightly being more. But if you see on a -- we don't give any long extended credits even in non-agri. Credit days generally range between 30 to 60 days. And if you see what is outstanding there is roughly 45 days of non-agri sales if you take it.
Got it. And how should we look for the year in terms of growth for volumes?
Again, double-digit growth is something that we are buying for. Hopefully, now we are, at least I am personally confident that we are behind -- the corona is behind us. So those blips, we should not see. This year, April was kind of lukewarm because prices were going down, PVC prices. But now as we speak, market seems to be picking up. Those still not at the peaks that we have seen 2 years ago. But still, we are seeing pretty strong demand right now, both from agri and non-agri.
Right, sir. And then I'll come back in the queue. On the outlook on spreads, so obviously, the profitability for resins is half almost quarter-on-quarter. I thought the Jan-Feb started well, but I think Feb and March was not good on those spreads. So if you could help us understand some outlook for the next 6 months, very short term on what do you think about resin profitability and help us with the fourth quarter and the current trends on the PVC, EDC, PVC, VCM spreads, along with PVC and ethylene prices, please?
So broadly, right now, PVC prices are around $1,500. EDC is around $680 and VCM is around $1,270. The PVC/EDC delta is roughly $850 and PVC/VCM delta is $250. You are right, the resin spreads have reduced obviously, because -- see, there's always a lag between while though not directly relatable, PVC prices move for various reasons, not necessarily because of raw material price changes. And raw material prices also change, not keeping PVC in mind.
So in November, December, January, we saw the raw material prices, especially EDC going up. And with PVC prices coming down, and that is the impact that you see in the reduced or contracted margins for the Resin segment in Q4. But see future -- we'll see how the market goes because there are other factors also which come into play there is slowdown in China, so material being pushed into India, which is also affecting the PVC prices in the country. So it remains to be seen, Rahul, how the delta moves going forward.
The numbers you gave was the current picture, right?
Yes.
What was the fourth quarter price?
Fourth quarter PVC/EDC was $727, and PVC/VCM was $350.
The next question is from the line of Sonali Salgaonkar from Jefferies.
Sir, my first question is on the industry demand front. You mentioned that the demand is picking up in May as we speak. Could you help us understand what is the current channel inventory position in both agri as well as non-agri?
Sonali, we have been saying, normally, dealers don't keep inventory when the prices are volatile. [indiscernible] In normal times, also, they don't keep inventory of more than 8 days, but more so in the volatile times. Now PVC price has just gone down by INR 10. So I don't think dealers are carrying large inventories and volumes have picked up. But then as Niraj said, we are not seeing the peak which we normally should see in the peak season.
Understand. Sir, and from 1st of April till now, what is the cumulative decline in PVC prices?
So 3 prices dropped by INR 10 yesterday and INR 6 before that.
Got it. Sir, my second question is regarding the CPVC. Could you help us with the volumes as well as the value that we did in Q4 this quarter versus last year?
So in terms of volumes, CPVC pipe fitting together, we were 3,600 tonnes this quarter. On a full year basis, we reached 13,000 tonnes as compared to 9,600 tonnes last year. So on a full year basis, there's a growth of 35% in CPVC in terms of volumes.
And value?
And value this quarter was roughly INR 130 crores.
And full year?
Full year, roughly INR 450 crores.
And full year last year?
INR 280 crores.
Got it. Sir, my last question is, could you help us with the delta of PVC/EDC in Q4 FY '21, last year Q4?
So last year, Q4, Q1, PVC EDC, right?
$877 on PVC/EDC. And PVC/VCM $331.
The next question is from of Praveen Sahay from Edelweiss Financial.
So on the distribution side, can you give a color by year-end how many are dealer or a subdealer you end with?
So Praveen, we have close to 900 dealers and 22,000-plus retail touch points.
Okay. So we have not added much in the entire year in this. So we are...
When you look at the total number, yes, probably we don't see a much higher increase. But what we have done, and we spoke about this even in the last couple of quarters. What we are doing is we are kind of profiling dealers who -- with who -- so what we're doing is we're kind of analyzing which dealers is good for us, who is performing, not performing.
So we have kind of said in the internal benchmark, which is not very rigid, but somebody below a certain threshold or who is not going, we are kind of asking them to be our secondary dealers and not primary dealers. So we are improving the quality of the dealers that we have. So you may not see a very large jump in the number per se. But in terms of the qualitative dealers that we have, that is steadily improving.
Any geographical penetration in that?
Okay. We are strong in West and South. We are focusing in Southwest as well as North and also East.
Okay. Okay. And the second question is related to the CapEx for year '23 or '24, if you can guide us?
So roughly INR 200 crores, INR 250 crores for the next 1, 1.5 years.
That is for the capacity ensure plastic pipe?
Yes. Pipes and resin together.
Okay. [Technical Difficulty].
Sorry, Praveen, but your voice is not very clear.
So you were saying capacity increase...
Sorry to interrupt Mr. Sahay, but your voice is breaking, sir. Can you please check?
Yes. Am I audible now? Fine?
You are audible. But there's a slight breaking in your voice.
Should I go ahead or should I come back again.
Yes. Yes, Praveen.
Yes, Praveen, now we can hear you.
Yes. So I was just inquiring on that, like as you said that the CapEx of INR 250-odd crores, that is for both the segments you are taking some capacity hike in the resin business as well?
No, no, there's no capacity high. Resin, it's only the replacement of assets. And basically, in pipes also right now, there's no capacity addition. It is only fitting that we are adding more molds.
Okay. Okay. Got it, sir. And related to the land, the half the land you already monetized, another half is also expected to monetize in this financial year?
Should happen, yes.
Okay. Okay. Any color on your Finolex Plasson number? Plasson?
Yes, so -- just a minute. So INR 3.6 crores was the profit that they made and we -- INR 3.8 crores, sorry. And we consolidated INR 1.5 crores in the financials.
The next question is from the line of Sneha Talreja from Edelweiss Securities.
Congratulations on a great set of number, sir. And congratulations to Whabi sir, on elevation. Just wanted -- just have 2 questions from my end. Firstly on the current pricing trends today, yesterday, as you said, the prices have fallen by around INR 10-odd. I just wanted to know what scenario currently. Is there any more anticipation falling prices? And what is the kind of volumes that we started seeing from China, given that we hear that there is volume weakness in China and a lot of material is getting imported in India. So I just wanted to get some sense there from you.
As Niraj said, material from China has started coming. There was earlier antidumping duty, which has been removed from February. And today, the demand in China is pretty low because of the lockdowns. So whatever they are producing, they are trying to push out. So there are a lot of orders being booked in India. That is where we see softness in prices in India. So even after this drop of INR 10, the Chinese offers may come lower. But we'll have to wait and see what happens to the prices.
So in that regards, there can be further pressure on the prices for the domestic market by Reliance?
There could be, there could be.
Understood that. And what's the impact that we are seeing on agri demand since we've already lost 2 seasons. Is it good from the affordability angle that now we start generating good amount of demand from the agri side? Or you think that such kind of volatility and further expectation of price falls will kind of let go of even this season?
See, earlier, we used to hear that the people are waiting on generally on the sideline for prices to correct. But as you rightly said, it's been 2 years. So there will be many who instead of now waiting will go ahead because they can't wait endlessly.
So we've already started seeing some amount of pickup is what you are highlighting?
Yes.
Understood, sir. Sir, the last one from mine. Could you also -- you also mentioned the current prices for PVC/EDC. Can I get same numbers for Q4? PVC/VCM prices?
Yes. So Q4, PVC was $1,563. EDC was $835 and VCM was $1,213.
The next question is from the line of Vipul Shah from Sumangal Investments.
Congratulations for good set of numbers and best wishes for Sanjay sir for his future life. So my question is, what is -- can you comment, what is the exceptional income?
Vipul, Niraj here. So we have a land parcel in Chinchwad. So last year, our Board had given a go ahead that we can dispose of because this is a leasehold land. So this exceptional income is the income or the gain that we have accrued by assigning the rights on half of the land.
And the money has come?
Yes, yes. Transaction completed, money came before 31st March.
So this is for half of the land parcel and half is still with us, right?
Yes. Roughly half, yes.
And sir, can you comment on prices of other raw materials like ethylene also vis-à-vis PVC? I mean how they are behaving. They are also falling in the same proportion as PVC?
No. So ethylene prices and raw material prices are going up, in fact, when PVC prices were coming down, off-late very recently, we see some correction in the raw material prices. Ethylene is currently $1,220. For the quarter, it was $1,187. And for the same quarter last year, it was $960.
The next question is from the line of Rahul Agarwal from InCred Capital.
Just bookkeeping questions here. What are the total amount received for the assignment of rights because I think INR 375 crores is the gain. So could you help me with the total amount received on the tax paid on the transaction fee?
Sorry?
If you could help me with the total amount received for 34.88 acres and the tax paid on the same amount, please?
So INR 376 crores is before tax, and the tax is about 20% from this transaction.
Okay. I thought the INR 375 crores number was the gain. So I thought the book value -- so there is no book value, right?
It is the gain. It is the gain on the transaction. And as you know, the value of the land in the books was very low. We had bought it ages back. So that was about INR 1 crores or INR 2 crores, very small.
Okay. Okay. Got it. And just one last thing on the dividend. So obviously, you highlighted that the money won't be retained for a long time. But at the same time, we're also saying at 1.5 years, the CapEx plan is freezed at INR 200 crores. I think that can easily be internally funded. So sir, could you help us understand what is holding back the decision of sharing this money with shareholders?
No. Of course, as Niraj said, we will not keep large cash on our balance sheet. So if we don't undertake any new large CapEx, money obviously will flow back to the shareholders.
The next question is from the line of Amanjit Singh from Oculus Capital.
Sir, am I audible.
Yes, Amanjit.
Yes. Sir, I just wanted to confirm one thing. As for the current prices, the spread of PVC, it was $350, that you have mentioned during the quarter. And currently spread is $250, that you said?
Yes.
Because one of our peers in the recent commentary said that still seeing the spread is about $325 to $400. So just wanted to understand why that difference?
Can you repeat your question Amanjit, sorry?
Sir, I just wanted to understand whether the spreads were fallen from $350 in the previous quarter to currently $250 because one of our peers in their recent con call said that spreads are kind of formed between $325 to $400. So there was just a difference in commentary that is why I asked.
Comment on the...
These numbers are from Platts. These are published numbers. You can also verify them. So the numbers at the quarter 4 are given as the average numbers of the quarter 4, and that is $349 or $350. Whereas the presently, the prices of PVC have been correcting and they have come down, so the spread has also gone down. Even if you take INR 10 down today or yesterday, it will be further going down. It is not necessary that it will be static. So the numbers which are given by anyone, they have a reference of time.
The next question is from the line of Rajesh Ravi from HDFC Securities.
My question pertains to, first, could you share the fittings revenue for the fourth quarter and third quarter in FY '22?
Sorry, can you please repeat?
Fittings revenue for fourth quarter and third quarter and FY '22?
So fittings, we had a revenue of INR 240 crores this quarter. Last year, it was INR 160 crores. For the full year, we have around INR 760 crores.
INR 760 crores, okay. And for third quarter, December quarter?
INR 190 crores.
INR 190 crores. And could you repeat again the CPVC volumes which you had, it is, you mentioned see...
13,000 tonnes.
No, no, for the quarter.
3,600 tonnes.
3,600 tonnes, okay. And so that mix for the full year at 13,000 tonnes, right?
Yes.
Okay. And coming to this, sir, what would be our volume proportion resin manufacturing through the EDC route?
I think we have 60% on the EDC route and 40% from the VCM route.
Okay. So this is the current quarter, we are seeing that there is a similar -- one of them has gone up, and there is a similar decline in the compression margin or spread compression in the second half in the VCM route, right?
Yes.
From $730, we are close to vis-à-vis $100 term.
Yes, we had unplanned shutdown for some reason. That is why VCM route is more than the EDC route. Similarly, VCM supplies also were disturbed because of sequence.
Okay. No, this is you're talking about Q4?
Q4, yes.
Okay. Okay. Okay. No, I'm saying talking about June quarter, as you talk about the spread has gone up in case of the PVC/EDC route, whereas it has come down by around $120 in case of the VCM route. So on a net debt basis, you would be having similar spread?
Rajesh, you're right. But see, these are daily volatile prices, they keep on changing. Right now, this peak, these prices are changing. So what will happen in the full quarter, it will be difficult to say now.
Right, right. Understood. And sir, resin prices correcting and you said the demand remains strong. what is happening at dealers level? Are they stocking at normal levels? Or are they moving with cautious inventory levels?
So Rajesh, as Mr. Whabi said earlier, generally also dealers don't keep very large inventory, when I say given that in a falling price scenario we are a bit more cautious. And that is the same behavior that we are expecting and that is how the market is behaving.
Okay. And are you able to pass on these price which happened with the lag? I mean are you able to retain some of it? Or is there enough competition to pass it on at the first instance?
Generally, the industry itself is pretty disciplined, and that is how traditionally it has been, if we sit in the prices of PVC, we upwards or downwards. They have passed on to the dealers very quickly, almost simultaneously. Obviously, there is some lag of 2, 3 days or 5 days a week. Otherwise, generally, these are passed on.
Okay. Because why I'm asking this December -- November, December last year when prices were just shooting up, we were -- the managements were commenting that there is a lag of 2 to 3 weeks versus 1 week in the cost pass-through.
So that depending in Q3 was. In the beginning of Q3, prices started rising. And after mid -- somewhere during the mid of the quarter, prices started falling. And the potential range, which very badly impacted the demand. So those factors also keep or keep playing a role. But generally speaking, traditionally and even today, price passing on is a very disciplined thing in the industry. We are eventually maybe a lag of a week or so, but they have passed on.
The next question is from the line of Ritesh Shah from Investec Capital.
Couple of questions. Whabi sir, when we -- when you indicated that we might look at a large CapEx, sir, how should 1 understand this? Like we appreciate INR 200 crores, INR 250 crores pertaining to increase in molds. But when we say large CapEx, what is it that this could be? And how should one understand this?
Ritesh, there is nothing on the drawing board right now. I said we will look at the options. And in reasonable time, if there's no project being undertaken, that's when we'll go back to the shares.
Okay. Sir, if I put it the other way around, if we were looking at, say, a mass balancing or scope of improvement on operational parameters, are there any particular variables that we might look at over the next 2 to 3 years?
See, that keeps on happening anyway, but that doesn't retain large CapEx.
Okay, perfect. Sir, secondly, can you highlight the agri versus non-agri, the volume mix, which was there in FY '21 and FY '22?
Yes. We were at -- this ratio was 63-37, with in the current year is 59-41.
59-41, that helps. And sir, just last one question. You did indicate about the duties being taken off. I think it was in 2 parts. There was an element of $147, which was there, which has been taken off. And after that, correct me if I -- that now also you have duties of nearly 11%. Is that number right? This is after $1,450.
For that it's dependent on the particular supplier.
Okay. But if we -- so hypothetically, if you're looking at the larger exporters out of China, is that number of 11% still there? If that is the number I was just trying to arrive at.
No. no, this normal duty of 10% applies to them also.
Correct. Correct. And sir, how much would be the freight if I look at it on a per tonne basis? If $1,450 is a spot rate, if I just put on that incremental import duty of 10%, how much is the freight that one should considered to arrive at a import positive math on pricing?
But it applies to all locations, wherever we import from, there will be a freight cost.
Okay. But sir, how much could that be specifically if it is Chinese?
I have no idea.
So Chinese will be somewhere around $40 for PVC. Whereas if it is coming from Middle East side, it will be less. But most of the Asia Pacific region, where it is -- either it is Taiwan, it is Japan, it is Korea, like LG, Hanwha or China, all these are from Asia Pacific. The distances are same. So almost there about $40.
Sure. Perfect. And sir, one last question for Math sir. One of the larger groups, basically, they're also setting a PVC resin plant, and they are doing with also carbon crude. They talk about circular economy, putting on hydrogen, solar power, everything. Sir, how do you think the cost curve will be different versus the way in which we produced. We are actually converters. But given they have captive coal. Can the cost be very different? And can it impact the local market premium for PVC resin say, 2 years, 3 years out of whenever that plant starts commercialized?
I think the route, calcium carbide route -- compared to the ethylene route is definitely costly because it is more energy intensive. Now the cost of making energy by solar park, which that group is trying to do, I think that will reduce their energy cost. The carbide route will require coal, it will also require limestone to make calcium carbide, so that is a furnish. So there is an energy.
Secondly, after making calcium carbide, you make acetylene, but you need HCl, so you have to have a caustic chlorine plant. That again is a hydrolyzer, which also requires energy. So then you react this acetylene with HCl and make VCM. So the VCM made from carbide route by itself is definitely energy intensive. Now the cost of energy will depend upon how you make the energy, whether it is coal-based power plant or it is the solar-based green energy.
So this will depend upon I think they are putting up a big green solar park. Getting particularly EIA is a question which they will know better. But environmental clearance on carbide route is definitely, is quite challenging compared to the ethylene route. I can't talk about somebody else's costing structure. So these are all generalized statements that how carbide route is there. And that is why people are not doing carbide route in India.
Correct. Sir, that's very helpful. Sir, just one incremental question. Is there anything that we can do with our plant consideration to optimize on the cost further?
I think the costs are almost stabilized in the sense that whatever operations are there, there is hardly any technology change that has really happened. It all depends upon how you source your raw materials. The profitability of making PVC depends upon how you source your feedstocks and how they are compared to -- so there, again, it is being dependent on imports and with international pricing. There is hardly anything that you can do on the feedstocks.
You can incrementally see some kind of improvement in terms of raw material consumptions or in terms of, say, power consumption, we have the cheapest power because we are on coal. And coal is still at present, the cheapest power that is there. We also have our all utilities, which are in-house developed like water, like air, oxygen, we make ourselves. So all those utilities, we are also making ourselves I think there is very little that we have in terms of savings on -- in terms of power also.
Okay. Sir, my question was more from a mass balancing standpoint, given we also buy VCM from outside, and the other line that we have with EDC ethylene. Any thought process on change in mass balancing over here which can actually optimize our cost structure?
I think PVC -- VCM to PVC conversion, whether it is in-house VCM or imported VCM or the outside VCM, that conversion cost will remain same, okay. Now the question is how much is the balance between in-house VCM and the external VCM. Naturally, the in-house VCM will be cheaper than the bought out VCM. So in the make-and-buy, if the composition changes from make to buy, the margins will definitely be lower.
The next question is from the line of Chirag Lodaya from Valuequest.
Sir, my first question was on PVC industry, how it would have grown or it will be grown in FY '22?
I won't be able to give you the exact numbers, but PVC industry was growing somewhere around 7% to 8% earlier. Normally, it grows around 1.3x the GDP, but it has not reflected that much during the pandemic. Like the GDP has grown better in FY '22, say around 8% to 9%. To that extent, it has not grown in line with GDP, it is less than 10%. So there is a growth, but it is not there. I think if you really look at it, more or less, we are pre-pandemic level on PVC.
Got it. On an annualized basis, right?
Yes.
Got it. Sir, and what would be the current lending prices of imported resin for say July delivery today?
At present Formosa, yesterday has given $1,410. That is Formosa.
Okay. So maybe more 5%, 6% reduction can happen on PVC prices, looking at the current...?
It all depends upon how people will see the demand in their domestic markets or in China. China is a major consumer, China under lockdown and they have surplus PVC available, either from the ethylene route or from the carbide route. Carbide route is still working, and they are looking at the outside market. So they are exporting at wherever possible. India being the major market, they are dumping it. Now when there are other suppliers, other countries are reducing their prices, there is possibility China also reduces their price further.
Right, right. So sir, now post this ADD removal from China, what is the share of Chinese inputs currently versus, say, last 2, 3 years average? How it has moved?
I don't have the numbers to give you because earlier there was ADD also and their domestic market was good. So both these changes have happened now. So I have no numbers to give.
Got it. And sir, lastly what kind of inventory losses we expect in Q1 now because of sharp decline in PVC prices?
No, I couldn't get your question.
What kind of inventory losses we can expect in Q1 because of this sharp decline in PVC prices currently?
I think we don't have internal PVC so much that there will be a, really a major inventory loss to happen.
The next question is from the line of Karan Bhatelia from AMSEC.
Am I audible?
Yes, please.
Yes. Sir, while we are focused on the building material side on the pipe, what kind of SKU additions we've seen in the last 2 years? And how do we see things going for the next 2, 3 years?
Major addition happens in fittings. So in last 2 years, we have possibly added about 100, 150 SKUs in CPVC and other cities.
Right, right, right. Okay. And going ahead, the same will be the run rate 150, 200 kind of SKU addition.
That depends on the business potential, but obviously, we'll keep on adding, yes.
Right, right. And Finolex Plasson, can you give me the yearly numbers on profitability?
So for the full year, the company incurred a loss of INR 3.9 crores.
Right, right. And one small clarification, while you mentioned a breakup of 57-43. This was for full year revenue for agri, non-agri?
Yes. Yes, full year. Yes, true.
On the value side, right?
In value terms, it was 59-41, this year.
Okay. And which was 63-37 for previous year?
In FY '21, true.
The next question is from the line of Rajesh Ravi from HDFC Securities.
I have 2 follow-up questions. First is your inventory losses in Q4. Did you book anything?
See prices keep on changing. So obviously, inventory losses will be booked when the net realizable value is less than the cost. That doesn't happen. So we don't need to book anything.
And sir, generally, just for technically, how does this happen? This is only on the holding inventory of regions or even on the finished goods at the end of the quarter where you have to book gain or losses?
Obviously, whatever inventory we hold, whether in raw material form or in the finished form, the change in prices does impact the bottom line.
Okay. Okay. So what was the change in the prices accordingly, you book a gain and loss on both the resins as well as on...
No we don't need to book anything. See, when the selling price drops like what it has happened yesterday, so obviously, the realization will be lower by INR 10 and whatever inventory we are carrying. So the bottom line will get hit temporarily until prices correct to that level.
Yes. Okay. And on the CPVC, I just wanted to get your sense. There are a few companies bringing in a good amount of CPVC capacities this year and over next 2 years. How will that change the CPVC landscape in India? Would there be more volume like for companies like Finolex looking to expand its CPVC portfolios and overall?
See, if you look at a few years earlier, the CPVC volumes were growing very fast. Now that pace has slowed down, but yes, that business will continue to grow. But not at the pace at which it was growing earlier.
No, but was it also a function of that there were a few global suppliers and most of them was tied up with the companies who are having a large portfolio of CPVC?
No, no. This supply side constraint has come since last 1 year, because of many issues, including some issues in the U.S., the CPVC supplies were diverting their material to U.S. and that is why producers in domestic market were starved of raw material. And that still happens, but it is not as bad as it was a few quarters back.
So with massive capacities coming up in India, will it not have -- like companies like you and many others start pushing in more volumes of CPVC, which is perceived as a better product, high-value product?
Of course, but that capacity addition will take time. It's not going to happen.
No, I'm not asking for immediately FY '23. So I believe that there are a few capacities coming up in FY '23 and FY '24.
True. In fact, India happens to be the largest market for CPVC consumption.
Yes, yes. Correct. And most of it is imported resins.
Yes.
[Operator Instructions] The next question is from the line of Udit Gajiwala from YES Securities.
So just a clarification. Can you help me with the CPVC price trends and what is the price difference currently between PVC and CPVC?
Both prices keep on changing, PVC prices are more volatile. So as in the past few quarters, when the PVC prices shot up very sharply, CPVC prices for, to some extent, did not move. But then they started also rising because all CPVC producers had to pass on. So then the gap which was there narrowed down, but then now it is back to normal because CPVC prices also have risen in last few quarters.
Understood. Understood. And sir, with changing of our user industry mix towards the non-agri base, can you share that in non-agri, what would be your regional mix for say, South and West and North if something?
Sorry?
Can you share the split out -- geographic split up a non-agri base?
No, I don't have that.
The next question is from the line of Ruchitaa Maheshwari from BOB Caps.
Hello? Am I audible?
Yes, ma'am.
Yes, you are.
Yes. I actually missed this PVC delta spread for Q4 FY '22 and FY '22, can you please repeat the same?
You mean PVC/EDC delta?
Yes, PVC/EDC delta price for Q4 FY '22 and for full year FY '22.
So for Q4, it was $727.
Okay.
And for full year...
It was $785.
Sorry?
For full year it was $785.
$785, okay.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Ritesh Shah for closing comments.
Thank you, Rutuja. I'll request Whabi sir, or Math sir to actually have some concluding remarks for the call. And thank you so much for having us to host you. Over to you, sir.
Yes. Thank you, Ritesh. From me, the concluding remarks, I think I will request Whabiji to give. But in the meantime, I will say goodbye to all of you. I think I enjoyed talking to you guys in the last few years that we -- I attended this investor call, and I enjoyed talking to you. I hope that you will continue to support Finolex in future, the same way that you are doing it and best of luck to all of you. I think I will give Mr. Whabi to conclude for the present investor call. Over to Whabiji. Thank you.
Thank you. Thank you, Math sir. Thank you, everybody. We will continue to interact. We will miss Math, sir, but I'm sure he'll be available to us for any guidance. Thank you.
Thank you, sir.
Thank you. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.