Finolex Industries (FIL) believes that it can continue to improve CPVC volumes with better margins as its products are equally of good quality and the company will be able to maintain volumes with its own brand. It may be recalled here that FIL has disassociated itself from the Lubrizol Flowguard brand from 1st September 2020 due to a business decision.
The company has maintained pricing of its products and hopes that this will lead to improvement in margins. The company is also confident of getting CPVC raw material supplies as there are many suppliers and doesn’t expect any disruption in supplies.
Meanwhile, Lubrizol Advanced Materials has entered into an agreement with Grasim Industries Limited wherein the latter will manufacture and supply chlorinated polyvinyl chloride (CPVC) resin in India with initial production expected in late 2022. This special type of polymer material that is widely used in hot and cold water pipes, will be manufactured at Chlor-alkali unit of Grasim located at Vilayat to take advantage of captive chlorine integration.
While FIL’s PVC resins business is operating close to 100% capacity, utilisation for its pipes & fittings business stood at 70–75%. Furthermore, currently, the share of sub-contracting as a percentage of pipes business stands at 10–12%.
The company is likely to benefit from strong industry consolidation as many smaller players were not able to start operations after the pandemic-induced lockdown. Further, real estate has picked up and management expects the improvement to continue, which will drive non-agri pipes’ volumes.