Finolex Industries Ltd (NSE: FINPIPE) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
Ajit Venkataraman — Managing Director
Chandan Verma — Chief Financial Officer
Analysts:
Arun Baid — Analyst
Shravan Shah — Analyst
Praveen Sahay — Analyst
Sneha Talreja — Analyst
Nikhil Agrawal — Analyst
Udit Gajiwala — Analyst
Sonali Salgaonkar — Analyst
Utkarsh Nopany — Analyst
Salil Desai — Analyst
Ritesh Shah — Analyst
Miraj Shah — Analyst
Rishab Bothra — Analyst
Varun Jain — Analyst
Keshav Lahoti — Analyst
Karan Bhatelia — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Finolex Industries Q2 FY ’25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]
I now hand the conference over to Mr. Arun Baid. Thank you. And over to you, sir.
Arun Baid — Analyst
Thank you, Rio. On behalf of ICICI Securities, I welcome you all to the Q2 FY ’25 results con call of Finolex Industries. We have the senior management, including Mr. Ajit Venkataraman, MD; and Chandan Verma, Deputy — Interim CFO right now.
Now I hand over the call to Ajit, post which, we’ll open the floor for question-and-answers. Over to Ajit.
Ajit Venkataraman — Managing Director
Thank you, Arun. Good morning, ladies and gentlemen.
Chandan Verma — Chief Financial Officer
Good morning, all. This is Chandan.
Ajit Venkataraman — Managing Director
Welcome to the investor conference call, the Q2 FY ’25 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 & 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 ’25 highlights. Total income from operations was INR828.43 crores for Q2 FY ’25, down 6.2% against INR883.15 crores in Q2 FY ’24. EBITDA decreased by 90% year-on-year to INR10.57 crores in Q2 FY ’25 compared to INR102.98 crores in Q2 FY ’24. EBITDA margins during the quarter stood at 1.28% compared to 11.66% in corresponding previous quarter of Q2 FY ’24. The Company reported a PAT of INR51.44 crores in Q2 FY ’25 against INR93.78 crores in Q2 FY ’24, a drop of 45%.
Now getting into the segmental performance. Pipes & Fittings, revenue decreased by 3.57% year-on-year to INR819.60 crores in Q2 FY ’25 from INR857.15 crores in Q2 FY ’24. Volume in the segment increased by 10.22% year-on-year to 69,341 metric tons in Q2 FY ’25, against 62,914 metric tons in corresponding last quarter. The EBIT in the segment decreased by over 157% to a loss of INR38.54 crores in Q2 FY ’25 compared to a profit of INR67.60 crores in Q2 FY ’24.
Moving to PVC Resin segment. Revenue in this segment stood at INR308.49 crores in Q2 FY ’25 compared to INR297.85 crores in Q2 FY ’24. Volume in the segment increased by 7.25% to 40,236 metric tons in Q2 FY ’25 against 37,516 metric tons in Q2 FY ’24. EBIT in the Resin segment stood at INR35.90 crores in Q2 FY ’25 compared to INR20.40 crores in corresponding previous year’s quarter. Company continues to have a strong balance sheet with a net cash surplus of roughly INR2,380 crores as of 30th September 2024.
Let me now leave the floor open for questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Shravan Shah from Dolat Capital. Please go ahead.
Shravan Shah
Yeah. Thank you. Sir, we’ll come to the margin, but first, just wanted to check in terms of the volume growth. So in 1H, we have done in Pipes & Fittings, 3%, 3.1%. Last time, we said 10%, 15% kind of a growth for ’25. So what’s the now revised sales [Phonetic] for FY ’25? And for even going forward also, we were looking at a similar 10%, 15%. So any revised stand there?
Ajit Venkataraman
So 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% to 12% given the quarter we have gone through or the first half we have gone through. But our projections for the year going forward is still around 10% to 12%.
Shravan Shah
Okay. Got it. It. And also, now coming to the margin, that was a complete kind of a washout quarter for us. So trying to understand on that, so two aspects, what was the inventory loss for this quarter? And then what likely is there a chance for any further inventory loss in the third quarter and now how one can look at in terms of the margin?
Ajit Venkataraman
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 have reached up to about INR96. And within six weeks, we saw a significant drop from INR96 to INR77. 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 ’23 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 INR77, INR78 range. And with a steady price, we — it is good for the industry and a less — and expectation is that the volatility for PVC prices being less, the performance should come back.
Shravan Shah
Okay, but there is no — how much was the inventory loss in Q2?
Chandan Verma
So generally, we do not have the inventory loss during the quarter, Shravan.
Shravan Shah
Okay. Okay. And lastly, two aspects, the agri share for Q2 and the last time we said that we may be announcing the expansion plans. So we are talking or guiding any expansion plan?
Ajit Venkataraman
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 have been — we have — we are adding more extruders and expanding our — replacing our old machines with new machines. So that plan is already on.
Shravan Shah
So that will take — increase our capacity by how much? I think we were talking previously where we’re thinking about 1,00,000 to 1,50,000 [Speech Overlap]
Ajit Venkataraman
This is the 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 420,000 metric tons to about — we are adding 40,000 to 50,000 additional metric tons in our existing facilities itself.
Shravan Shah
That will be operational by?
Ajit Venkataraman
This should be operational by the first quarter of FY ’25. I mean, the fourth quarter of FY ’25.
Shravan Shah
Okay. Okay. Got it. Thank you, and all the best.
Ajit Venkataraman
Thank you.
Operator
Thank you. The next question is from Praveen Sahay from PL India. Please go ahead.
Praveen Sahay
Yeah. Thank you for giving me opportunity. My first question is related to margin. If I look at your — both the segments, the EBIT margin is quite different. So if there is a fluctuation in the PVC Resin prices or the spread has gone down, why is it your — the PVC Resin segment margin has improved, whereas PVC — Pipes & Fittings reported a loss? So can you make me understand why there is so much of a difference?
Ajit Venkataraman
So Praveen, the way we operate is that the — since we operate both the Resin segment and Pipes & Fittings segments separately, whatever resin gets transferred from the Resin segment is transferred to the Pipes & Fittings segment at the market price. Okay? So that is the reason why no matter what our production price is or the — or PVC production price is, the transfer price to the Pipes & Fittings segment happens at the market price.
Praveen Sahay
Okay. So your sales of — external sales of PVC Resin is quite low this quarter, so largely [Speech Overlap]
Ajit Venkataraman
No, 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 are — who are using it for medical segment, etc., who really want high-quality resin, those are the people to which we are supplying and those are long-term 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.
Praveen Sahay
Okay. So would we — the way forward 2% to 3% of your total production would be [Speech Overlap]
Ajit Venkataraman
Correct.
Praveen Sahay
External sales. Second question, sir, related to the volume. So for a quarter, it’s a 10% of a volume and I understand that the last year, the base, we are also very good. Last year also you had done very well. So is — and the second quarter is a lean quarter for you. So is there some spillover of first quarter has been booked in this quarter or you had a scene in the agri demand were very good. So this 10% of a growth, how to look at actually?
Ajit Venkataraman
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 INR77, INR78 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.
Praveen Sahay
And there is no impact of rain or we had also [Speech Overlap]
Ajit Venkataraman
See, 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 is being good in all the key markets, Gujarat, Haryana — I mean, Karnataka, Maharashtra, Tamil Nadu, all these markets have seen a 10-plus-percent growth over — I mean, over normal range. So we expect these markets to pick up going forward.
Praveen Sahay
And that’s why you had given a 10% to 12% for the financial year [Speech Overlap]
Ajit Venkataraman
That’s right. This quarter being — I mean, the first half being fairly flat. The second half, we expect that the money flow in the market will be better, and therefore, a pick up [Speech Overlap]
Praveen Sahay
So around 17% to 20% of a growth you are guiding for the second half?
Ajit Venkataraman
Not overall for the year, we are expecting around 10% to 12%.
Praveen Sahay
So ultimately, second half would be 17% to 20%, if I look at a 3% of a growth in the first half. So you are confident of delivering that 17% to 20% second half, okay. And anything on the ADD on the PVC Resin prices [Technical Issues] share.
Ajit Venkataraman
So ADD on PVC is likely to come on, I think, 24th of December, that timeframe. So 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 24th of December, so it is a wait-and-watch at this point of time.
Praveen Sahay
Okay. And there is no inventory loss you said for a quarter, no gain, no loss?
Chandan Verma
No. No, Praveen.
Praveen Sahay
Okay. Thank you, sir, and all the best.
Ajit Venkataraman
Thank you, Praveen.
Operator
Thank you. The next question is from Sneha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Hi, good morning, sir, and thanks a lot for the opportunity. Just a couple of extension of the previous question. Did I rightly understand that you have mentioned there is no inventory gain or loss? And if that is correct, we would like to understand why margins are down. Unable to understand that.
Chandan Verma
So Sneha, as the Ajit, sir, rightly explained in our previous question, see, 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 INR88 and it exited the second quarter at INR76. So this decline in prices has generally has caused the reduction in revenue and consequently reduction in our overall margin.
Sneha Talreja
Sir, if I’m not understand the mark-to-mark lock is — loss is what we generally call it as inventory losses. Is that correct?
Chandan Verma
Yes, mark-to-market, this scenario will arise only when we are carrying a huge inventory, which got liquidated from the subsequent quarter, but we are not in a scenario where we have been carrying inventory at the higher level, which we need to liquidate at the lower prices. This was not exactly the scenario.
Sneha Talreja
And why is it that we have seen multi-year low margins in plastic pipes segment? Because if I go back even historically, I think leaving apart a quarter in 2022, we’ve never ever seen this kind of a margin despite a much more high volatility that we’ve seen during the COVID price — COVID times when prices shot up to INR160 and then fell down to INR70 again. How is this quarter different from those quarters because volatility is actually impacting us in a very big way? Is there any accounting treatment change that we do from PVC Resin segment to plastic pipes segment?
Ajit Venkataraman
No, Sneha, the — if you see the similarity between Q2 of FY ’23 and Q2 of FY ’24 — I’m sorry, Q2 of FY ’25, 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 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.
Sneha Talreja
Understood. Lastly, 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’re not present into the infra-led activities, which other players are betting on. So where is this optimism coming on in [Indecipherable]?
Ajit Venkataraman
So in terms of the non-agri segment, which contributes to the infra segment, we have seen the robust growth. So we are there and we are continuing to have presence and aggressively a good 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.
Sneha Talreja
Understood. And one last question, if at all, I can just squeeze in. 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 that’s deferred for some other period?
Ajit Venkataraman
See, we are adding new equipment. So to let me — 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 — and 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 to 50,000 metric ton additional capacity. This is — this will be within the INR150 crores of annual capex and maintenance capex that we normally budget. This is — this new location will be a completely different investment where we are — we will be looking at almost 100,000 plus capacity that, as I mentioned, is still under 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 420,000 metric tons capacity that we have got in our existing plants at the moment, we will be increasing it to approximately 460,000 to 470,000 metric tons for pipes. Fittings, we already have a good capacity of almost 50,000 metric tons.
Sneha Talreja
Understood. And post which will be completely utilized or will we have further scope for brownfield expansion?
Ajit Venkataraman
No, in 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 400 — I’m sorry, 150,000 metric ton capacity.
Sneha Talreja
Understood, sir. Thanks. Thanks a lot for answering. Thank you. All the best.
Ajit Venkataraman
Thank you.
Operator
Thank you. Next question is from Nikhil Agrawal from Kotak Asset Management. Please go ahead.
Nikhil Agrawal
Yeah, 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 election next month?
Ajit Venkataraman
So far — Nikhil, thanks for your question. So far none.
Nikhil Agrawal
Okay.
Ajit Venkataraman
Since middle of August, we have seen the demand pickup and there is no let-up since then.
Nikhil Agrawal
All right. Sir, can you like quantify the volume growth month-wise on a year-on-year basis for quarter two, if possible?
Ajit Venkataraman
We normally don’t do that. Yeah?
Nikhil Agrawal
Okay. Okay. No, worries. That’s it from me. Thank you so much.
Ajit Venkataraman
Thank you, Nikhil.
Operator
Thank you. Next question is from Udit Gajiwala from YES Securities. Please go ahead.
Udit Gajiwala
Yes, sir. Thank you for taking my question. So just one clarification again on the margin front, since there are no inventory losses, but our volumes have still grown 10% versus a 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 kind of a dent on their profitability. So what’s the distinction over here?
Ajit Venkataraman
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 scope of — within a span of six weeks has definitely impacted us.
Udit Gajiwala
How much — I mean, sorry for being ignorant of this thing, but you mentioned that you pass on the prices once it comes down, you still pass on and you’re not carrying any inventory. So I mean, still unable to understand that how does — we understand that there might be some knock-on the profitability for sure, but this time, the quantum is too high and when you mentioned about Q2 of ’23 also, 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.
Ajit Venkataraman
So, Udit, see, we need to buy resin in order to make pipes.
Udit Gajiwala
Right.
Ajit Venkataraman
Okay? And we have to make sure that we buy our raw materials, etc., 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 ’23, 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.
Udit Gajiwala
Understood. Understood, sir. But just one counter to that in last Q2 that we are comparing when we had the loss, that time I remember you’re mentioning that we were carrying some kind of inventory.
Ajit Venkataraman
Right.
Udit Gajiwala
But this time, we were with a very lean inventory. So [Speech Overlap]
Ajit Venkataraman
Correct. So we have — Udit, we had to store up for the entire summer during FY ’23 in our facility.
Udit Gajiwala
Right. Right.
Ajit Venkataraman
Okay? And therefore, we had to take a large inventory loss. This time around, we have made our alternate arrangement so that we don’t have to stock up. But even then, even then, when the — we had to — we — when we had this phenomenon happen this time, it is — last time, we had an inventory loss.
Udit Gajiwala
Yeah.
Ajit Venkataraman
Here this time around, it is just that the realization that we have got has declined very steeply over a short period of time.
Udit Gajiwala
Understood. Understood, sir. And sir, just last question on your fittings capacity that you mentioned is 50,000 tons. So that will be over and above your 470,000-odd-tons capacity which we’ll be having by this year end.
Ajit Venkataraman
Right. Right. That is right. Pipe is about 470,000, fittings is about 50,000.
Chandan Verma
420,000 and 50,000.
Ajit Venkataraman
No, no, with the added capacity running forward from here.
Udit Gajiwala
Yeah. Yeah. Got it. That is helpful, sir. Thank you. Thank you for answering.
Operator
Thank you. Next question is from Sonali from Jefferies. Please go ahead.
Sonali Salgaonkar
Sir, 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 ’25 versus ’24 and what it is currently?
Ajit Venkataraman
The PVC-EDC spread in FY ’24 was $571 in Q2 FY ’24, and Q2 FY ’25, it was $513. And PVC-VCM delta was $157, and for Q2 FY ’25, it was $130. And at this current moment, PVC-EDC delta is about $490 as of 26th of September. And PVC-VCM delta is currently at — the same as $130. There is a lag which happens between PVC prices and these deltas.
Sonali Salgaonkar
Understood. Sir, I understand it is very difficult to predict the PVC prices 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?
Ajit Venkataraman
See, Sonali, typically it bottoms out in the INR73 to INR77 range. We have not seen too many cases where it goes below about INR73. So we are expecting that this is about the level it should because if I look at the numbers since August 20 — August 10th, we are in that range. We are now in September 20 — October 25th. So past two months we have seen that it has been in a very tight range, okay? And your second question was, one was the — whether it has bottomed-out? And then what was the second question?
Sonali Salgaonkar
Channel inventories.
Ajit Venkataraman
Channel inventory, see, the channel inventory movement happens when there is volatility. See, when the prices were dropping, the channel was completely — they stop taking material, okay? Whereas when the volume — the price of PVC is fairly stable at whatever level, then it comes back. So right now, the — it has been a smooth movement, as I mentioned, since August 15th we have seen this demand to be fairly steady.
Sonali Salgaonkar
So are channels in the restocking mode right now due to the earlier destocking or are they normal?
Ajit Venkataraman
See, between — see, when the prices dropped between mid-June to mid-August, okay? I think 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.
Sonali Salgaonkar
Understood. So 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 pickup. Could we quantify the volume growth in July and August and September, if possible?
Ajit Venkataraman
No, we don’t give directions in terms of — in between months, we can give you only on the quarter.
Sonali Salgaonkar
That’s a fair point. Sir, would you be able to quantify agri volume growth versus non-agri for this quarter?
Chandan Verma
So this quarter, Sonali, agri volume has gone around 12% and non-agri is around somewhere around 9% to 10%.
Sonali Salgaonkar
Understood. Sir, and last question, capex for FY ’25, ’26, any outlook?
Chandan Verma
For capex, generally, we have — we are doing the — on the maintenance capex that we are incrementally doing around, INR100 crore to INR150 crore that is the plan that we have at this moment. No 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 facilities.
Sonali Salgaonkar
Understood. Sir, your agri volume growth of 12% seems to be quite healthy considering the prolonged monsoons in September. Is it because of higher affordability given the PVC price drop?
Chandan Verma
Yes, yes, yes. You are rightly said because of the affordability by the farmers where the pricing — PVC prices came down, that has resulted into the higher uplift.
Sonali Salgaonkar
Sure. Sir, and in October, the first 20 days, how has been the demand?
Chandan Verma
Yeah, we need to conclude on the October, Sonali.
Sonali Salgaonkar
Sure. Got it. Sir, thank you, and wishing everyone a happy Diwali.
Ajit Venkataraman
Thank you very much, Sonali.
Chandan Verma
Thank you, Sonali.
Operator
Thank you. The next question is from the line of Utkarsh Nopany from BOB Capital. Please go ahead.
Utkarsh Nopany
Yeah. Hi, good morning, sir.
Ajit Venkataraman
Good morning.
Utkarsh Nopany
Sir, actually, I just wanted two clarifications from you. So please pardon me again. I am 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 ’23. But if we see the domestic PVC Resin prices fell sharply by around 22% to 25% in Q2 FY ’23 on a Q-on-Q basis, whereas it was almost flattish in this September quarter. And also, if we see the industry-leader margin was relatively stable on a Q-on-Q basis. So how come we have reported loss? Sir, I’m not able to digest the point what you have given earlier, sir.
Ajit Venkataraman
So I — thanks for your question, Utkarsh. See, going into — again, let me reiterate, going into Q2, we were not carrying any much of Pipes & Fittings finished goods inventory, okay? And if you remember Q1, we had seen a — we had sold about 90,000 metric tons, if I remember correct, 92,000 metric tons of Pipes & Fittings and we did not go into Q2 with much of an 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.
Utkarsh Nopany
So, sir, like whatever inventory we were carrying, whether we were just carrying the Pipes & 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 Pipes & Fittings segment, sir.
Ajit Venkataraman
See — the Resin segment, see, we do have — see, since it is backward integrated, we do have — the margins were not to the tune of INR10 and INR15 per kg, right? So whatever prices which we have transferred to the Pipes & 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 & Fittings segment.
Utkarsh Nopany
Okay. Thank you. Sir, next point is on the capacity side. So in the last earning call and in the Annual Report, it was mentioned that our Pipes & Fittings capacity is 4.7 lakh. But now today, you’ve mentioned that it’s around 4.2 lakh. So can you please provide [Speech Overlap]
Ajit Venkataraman
So let me correct that. We have a total capacity of 470,000 Pipes & Fitting, out of which 420,000 is for pipes, 50,000 is for fitting. So 42 plus — I mean, 420,000 plus 50,000, which is 470,000 metric tons is the total capacity.
Utkarsh Nopany
Okay.
Ajit Venkataraman
Now what we are doing is expanding on our existing locations, both by adding extruders and replacing old extruders with more higher capacity extruders and that is resulting in moving it from 420,000 to 470,000.
Utkarsh Nopany
So our total Pipes & Fittings capacity would go from 4.7 lakh to 5.2 lakh, or it would remain at 4.7 lakh by end of March?
Ajit Venkataraman
So when pipes goes from 420,000 to 470,000 and fittings remains at 50,000 so 470,000 plus 50,000, which is 520,000.
Utkarsh Nopany
Okay. And sir, lastly, sir, like on the CPVC pipe side, our CPVC pipe volume share was 5.5% in FY ’22 of the total Pipes & Fittings sales volume. Can you please provide some sense what would be our CPVC pipe volume share in FY ’24 and where it is likely to be in FY ’25?
Ajit Venkataraman
See, we don’t normally split up our volumes based on the type of product. So — but essentially, it is about 8% to 10% of our overall volume.
Utkarsh Nopany
Thanks a lot, sir.
Ajit Venkataraman
Thanks, Utkarsh.
Operator
Thank you. The next question is from Salil Desai from Marcellus Investment Managers. Please go ahead.
Salil Desai
Thank you. Sir, 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, regional or local brands, which might be largely competing on price and does the price differential narrow and does it help you, does it hurt you?
Ajit Venkataraman
So what you’re saying is that if the PVC prices remain low, will it — how is — will it help Finolex?
Salil Desai
Especially compared to some of the smaller peers that you must be competing with in the regional or some local markets.
Ajit Venkataraman
See, 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. So people know the — 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 us 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, that is when the question marks come in terms of when to buy, how to time the buy, etc. So therefore, we honestly don’t like volatility, but that is not under control.
Salil Desai
Right. So sir, in that context, the current quarter is a 10% volume growth. Is that indicative of, say, some market share gains because in general prices are lower, people might as well buy Finolex rather than buying something else.
Ajit Venkataraman
See, Salil, it’s difficult to say this because we don’t have industry body which collects this information.
Salil Desai
Right.
Ajit Venkataraman
We need to see what other competition is — how other competition is performing to come to this conclusion. I think there 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.
Salil Desai
Fair enough, sir. Thank you very much.
Operator
Thank you. The next question is from Ritesh Shah from Investec. Please go ahead.
Ritesh Shah
Thank you, sir. Sir, couple of questions. First is, you indicated anti-damping duty by 24th of December. Sir, possible for you to indicate what is the extent, some quantification around the duty structure, just trying to understand what sort of impact it could have on resin prices? And a related question, sir, how do we have this date of 24th of December? Can it get pushed out into next calendar year or is it for certain that it will come by December?
Ajit Venkataraman
I’ll answer your 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 an anti-dumping duty for PVC at all or not. There is 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.
Ritesh Shah
Right. Sir, 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?
Ajit Venkataraman
It is very difficult to predict, yeah.
Ritesh Shah
Okay. Sure. Sir, 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 VCM? And will it have a bearing on our operations or is it something that we are already secured where we secure our raw materials from those guys they have already secured those particular approvals or licenses?
Ajit Venkataraman
See, we are — some of the suppliers have already got the approval and we are trying to ensure that all the suppliers are qualified before we buy. So it’s work in progress, but we don’t see a challenge out there.
Ritesh Shah
And sir, the implementation date, I understand it was August, September. Has it got pushed out again just like PVC, even for EDC, Ethylene, VCM into November?
Ajit Venkataraman
I think all of them were together, if I remember correct. I can check back and get back to you, Ritesh.
Ritesh Shah
Sure. Sir, my second question is more generic. I think partly I’m picking up from the prior question. Sir, 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 this space changed?
Ajit Venkataraman
It is — see, it is getting more and more intense, definitely. But the good part of it is that it’s in a growing industry and the building and construction segment is something which is likely to grow at a 15-plus-percent over the next five 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.
Ritesh Shah
Right. But sir, I — just for the sake of just playing a devil’s advocate, if I look at the Pipes & Fittings realizations for us divided by the PVC realizations — the other way around, Pipes & 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?
Ajit Venkataraman
It is — it will vary by quarter-by-quarter, yeah. And this quarter, if 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.
Ritesh Shah
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 fetch 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.
Ajit Venkataraman
Both are important, both are important. And given the fact that the next half is going to be — we expect it to be much better than the first half, we are optimistic.
Ritesh Shah
Sure. Sir, thank you so much for all the answers, and all the very best for your future endeavors. Thank you.
Ajit Venkataraman
Thank you. Thank you, Ritesh.
Operator
Thank you. Next question is from Miraj from Arihant Capital. Please go ahead.
Miraj Shah
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 one of — an answer to one of the questions, I think you mentioned that you will be adding 100,000 tons through greenfield. Did I hear it right?
Ajit Venkataraman
That is work in progress, Miraj. 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 always — 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, all our three facilities cannot take any more volume growth, okay? So we will have to do that and that is still work under 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.
Miraj Shah
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?
Ajit Venkataraman
Fittings — 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, yeah? So our aim always would be to try and keep the fittings in and around Pune itself.
Miraj Shah
Understood. Okay. Okay. And just last part on guidance. Sir, you mentioned that for the full year you are aiming Pipes & Fittings growth to be 10% to 12%, right?
Ajit Venkataraman
About 10% to 12% at this point of time based on what — for the first half of this year.
Miraj Shah
Right. But non-agri would still — you’re still positive for 20% non-agri growth?
Ajit Venkataraman
We would be aiming at that.
Miraj Shah
Yeah, perfect. Okay. Yeah. Thank you so much for answering. All the best.
Ajit Venkataraman
Thank you very much, Miraj.
Operator
Thank you. Next question is from Rishab Bothra from Anand Rathi. Please go ahead. Rishab Bothra from Anand Rathi, you may go ahead with your question.
Rishab Bothra
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?
Ajit Venkataraman
Can you — Rishab, I’m not able to hear your voice. There’s background noise. Can you repeat that question again?
Rishab Bothra
Just a sec. Hello? Is it better now?
Ajit Venkataraman
Yeah, it’s better.
Rishab Bothra
So 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. But I think it’s scaling up, is taking slightly longer tenure. So just wanted to have a clue.
Ajit Venkataraman
See, next three to four years, we are expecting that it will be a 50-50 split. That is the intent.
Rishab Bothra
Okay. Okay.
Ajit Venkataraman
Yeah.
Rishab Bothra
And how are we going to do that, color on that front? How are we scaling up?
Ajit Venkataraman
So, Rishab, several initiatives which have been taken, okay? We have defined focus cities because that is where the non-agri business will be coming from, then 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 been — has changed quite significantly. And finally, in terms of the data and 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 — combination of all these will hopefully help us to move to that 50-50 split.
Rishab Bothra
Okay. So the plans which we chalked out two years before, I think those are reaping benefits and you are heading in the right direction. Is this understanding right?
Ajit Venkataraman
Yes, right.
Rishab Bothra
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 at in terms of quantity and at what rate? Because that will drive future performance, let’s say, we are carrying at INR80 PVC Resins and INR130 finished goods and if prices inch upward towards, let’s say, INR100 to INR110 for resin. So we can conclude what kind of profitability we will be able to make. I mean, based on the inventory which we are carrying currently.
Chandan Verma
So Rishab, the inventory level that we have, you see in our balance sheet number, right?
Rishab Bothra
Correct, that is the amount figure. So if you split between — yeah, split between [Speech Overlap]
Chandan Verma
[Speech Overlap] 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 this point in time.
Rishab Bothra
Can we get it offline?
Chandan Verma
We can discuss, Rishab.
Rishab Bothra
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 would be the timeframe, let’s say, if we conclude in Q3, Q4, by what timeframe that expanded capacity will come up?
Ajit Venkataraman
So Rishab [Speech Overlap]
Rishab Bothra
Is it — yeah.
Ajit Venkataraman
I would not like to go into those details at this point of time. At an appropriate time when we are ready for the announcement, we will let you know.
Rishab Bothra
Correct. Okay. 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? You can [Speech Overlap]
Ajit Venkataraman
So typically for 100,000 facility, it will be anywhere between INR300 crores and INR400 crores depending upon the price of land. The range of INR300 crore to INR400 crore will depend upon the price of land.
Rishab Bothra
Okay.
Ajit Venkataraman
Equipment is [Foreign Speech] the same, okay? It takes about 18 months to set up a plant.
Rishab Bothra
Okay.
Ajit Venkataraman
And to productionize it add to full capacity will be probably another six months.
Rishab Bothra
So based on what we discussed, what you made us aware, I think we will be still remaining with INR15 billion of cash because cash generation will be also there for next 18 months.
Ajit Venkataraman
Correct.
Rishab Bothra
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.
Ajit Venkataraman
We’ll let the Board decide on that, yeah.
Rishab Bothra
Yeah, yeah, but that — I think 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 lot of chatter is there in the market is with respect to simplifying the Group structure, Orbit Electricals holding Finolex and Orbit Electricals holding Finolex Cables. I think Chairman level positions are also very much clear in Cables. So any color on that front?
Ajit Venkataraman
See, Rishab, I cannot add any color on that because we don’t get involved in the family matters. The operations of the organization is very independent from that of what is happening at the Group level. So — and it has got no bearings on the operations. So I will leave that question out. The information which you have got is as good as mine.
Rishab Bothra
So that will not change, alter anything in terms of the growth momentum which we are having at the industry level?
Ajit Venkataraman
Not at all, not at all. Not at all.
Rishab Bothra
Okay. Got it. Thank you, sir. Thank you.
Chandan Verma
Thank you, Rishab.
Operator
Thank you. [Operator Instructions] The next question is from Varun Jain from Dolat Capital. Please go ahead.
Varun Jain
Yeah. 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 higher-yielding volumes. So like what happened, why did it fall so much?
Chandan Verma
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 in my previous — for my previous question, so during the Q2, the price of PVC has drove — came down from the INR88 and ended with INR76, this was the Q2 only. And if you say within the — it peaked out around INR96 during mid-June and it started to came down and ended at INR76. So largely, our realization has got impacted because of this decline in the PVC prices.
Varun Jain
So there was no change in product mix like CPVC share and fitting share, all of that, none of that?
Chandan Verma
No, nothing significant changes in that, the mix always keep changing due to something here and there, but no significant changes.
Varun Jain
And we have taken no pricing action also like to thought competition — since competition intensity is increasing, like pushing discounts and all of that, none of that action has been taken?
Chandan Verma
No, so we are — the kind of discount which is generally prevalent in the market, we have gone ahead with that, no further action on this.
Varun Jain
Okay, sir. Thank you, and all the best.
Ajit Venkataraman
Thank you.
Operator
Thank you. Next question is from Praveen Sahay from PL India. Please go ahead.
Praveen Sahay
Yeah, thank you for follow-up. Just on the data points only, For a current PVC-EDC spread, you had given $490 or a PVC-VCM around $130. How is the PVC right now, the pricing is?
Ajit Venkataraman
What was the question? How is the?
Praveen Sahay
How PVC prices at the current moment?
Ajit Venkataraman
$800 [Phonetic] — it’s about $780 to $800 [Phonetic].
Praveen Sahay
Okay. And secondly on these numbers, if I look at the VCM prices on the Q2 has jumped up significantly. So how — what the reason for that or how is that stepping? Because $130 is still the spread. So I believe that is still on the higher side. Can you give some indicative why it’s a [Speech Overlap]
Ajit Venkataraman
A couple of things which — so Praveen, couple of things which influence. One is, there is always a lag between PVC price and VCM. So there is a — it’s a — PCM always follows 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 is a lag and second aspect of it is the local phenomenon which happens. So it’s a combination of both, yeah.
Praveen Sahay
Okay. Thank you, sir. Thank you. That was helpful
Ajit Venkataraman
Thank you.
Operator
Thank you. Next question is from Keshav Lahoti from HDFC Securities. Please go ahead.
Keshav Lahoti
Hi, thank you for the opportunity. Sir, I want to understand the debottlenecking which you’re talking. Is it fair to assume it will come by the end of the year, possibly no volume contribution will come from that?
Ajit Venkataraman
The — our equipment is already coming in one-by-one. So by first quarter — I mean, I’m sorry, Q4 of — the Q4 of this year, FY ’25, we should have almost all the equipment installed.
Keshav Lahoti
Okay, got it. The reason I’m asking because you are implying 2,10,000 volume in the second half and normally we have seen whenever you touch 90,000, 1,00,000 in a quarter, you faces capacity constraints. So possibly if the debottlenecking doesn’t happen, maybe at max, you would be able to do maybe 1,90,000 to 2,00,000. So possibly it would be hard to achieve what we are guiding.
Ajit Venkataraman
By Q4, we should have almost all the equipment up and running, yeah.
Keshav Lahoti
Understood. Got it. That is helpful. That’s it from my side.
Ajit Venkataraman
Thank you, Keshav.
Operator
Thank you. Next question is from Karan Bhatelia from Asian Markets Securities. Please go ahead.
Karan Bhatelia
Hi, sir. Very good morning. Sir, one clarification on the greenfield capex. Will it only be for pipes or it be for fittings, too?
Ajit Venkataraman
So at the moment, we have — it is — it will be for pipes. Fittings, we can actually expand in our existing facilities itself.
Karan Bhatelia
Right. And just some clarification to the earlier participant, you did mention that, in FY ’23, 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 [Speech Overlap]
Ajit Venkataraman
See, what we have done is — see, there are two raw materials which come in, one is EDC and one is VCM. 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 1st 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. So what we have done is we have found a port, which is 20 — I’m sorry, 60 kilometers 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. Yeah?
Karan Bhatelia
Right. Right, right. So just to continue on this, this is where our PVC margins were kind of holding back despite of a lower spreads and okay-ish volume growth, right?
Ajit Venkataraman
I mean, this is — especially it — what it does is, it does smoothen out the PVC Resin performance a lot more.
Karan Bhatelia
Right. And that is what is visible in this quarter as well.
Ajit Venkataraman
Correct. Correct.
Karan Bhatelia
Right. Okay, because there was no [Speech Overlap]
Ajit Venkataraman
We just started it this year. So this will improve as we go along, but it was a good start.
Karan Bhatelia
Right. Yeah, because that is what I was wondering because the volume growth was in single-digit, spreads were lower, but still the EBIT performance was much better. So we’ve already started to see the benefits of this activity, right?
Ajit Venkataraman
That’s right.
Karan Bhatelia
Yes. Thank you so much for the clarification.
Operator
Thank you. Next question is from Shravan Shah from Dolat Capital. Please go ahead.
Shravan Shah
Yeah. Sir, just a last question. So everybody try to understand how the margin will improve. So again, trying to understand, if the — at current prices, the PVC prices, if it remains the same for, let’s say, third quarter, so is it fair to assume that in the third quarter, we will again see the Pipes & Fittings EBIT per kg would be close to 12-odd-rupees?
Ajit Venkataraman
That is the intent, Shravan. If the margins remain — the price — PVC price remains at the INR77, INR78 level and there’s not much fluctuation from this, we should be back to where we were.
Shravan Shah
Okay, sir. Okay. Thank you, sir. All the best, and happy Diwali.
Ajit Venkataraman
Thank you very much, Shravan.
Operator
Thank you. The next question is from Puneet Jhaveri [Phonetic] from Jhaveri and Company [Phonetic]. Please go ahead.
Unidentified Participant
Hi, thank you for the opportunity. I think just one clarification. I think you mentioned in the — one of the previous questions that the — about Ratnagiri jetty and how — so your EDC is — was 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 the correct assumption to make?
Ajit Venkataraman
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.
Unidentified Participant
Correct. And I think you didn’t 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 were 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 give — you had to sell the final product at a lower price at the market rate at that time. Is that the correct assumption?
Ajit Venkataraman
See, let me also try to — see, most of these contracts are done about two months — with a lead time of two months, okay?
Unidentified Participant
Yeah.
Ajit Venkataraman
So if you look at, say, April, May beginning, the PVC prices were at INR76, INR77. So many of the contracts would have been done then, [Foreign Speech].
Unidentified Participant
Yeah. Got it.
Ajit Venkataraman
So — and the ship has to sail, reach Ratnagiri, we have to offload it, etc. So many of these contracts are done way before about — have a lead time of two to three months. And therefore, that is also getting reflected here. Yeah?
Unidentified Participant
Understood. Got it. Thank you so much for the opportunity, and season’s greetings to you. Thank you.
Ajit Venkataraman
Thank you. Thank you.
Operator
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.
Ajit Venkataraman
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.
Operator
[Operator Closing Remarks]