Finolex Industries Limited (FINPIPE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Finolex Industries Limited Q1 F527 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr. Arun Bait from ICICI Securities. Thank you, and over to you, sir.

Thank you, Sanya. On behalf of ICICI Securities, I welcome you all to the Q1 FY27 Post-Results Control of LX Industries. From the management side, we have Mr. Udit Agarwal, Mining Director, and Mr. Chandan Verma, CFO. Now I hand the call over to Udit, post which we will open the floor to the question and answer. Thank you. Thank you, Aram, and good afternoon, ladies and gentlemen. Welcome to Phinolex Industries earnings call for quarter one FY2627. We all are very pleased to have you here. I remind everybody that this call may contain certain forward-looking statements based on management's current expectations. Actual results may differ. I want to begin by saying that the quarter one of this current financial year was marked by volatility in polymer prices, which became the dominant macro factor for the industry during the quarter. Average PVC prices higher year on year at about US dollars 875 per metric ton in the quarter as compared to about US dollars 707 per metric ton average according to the ISIS reports. Largely carrying forward the elevated level seen in the quarter 4 of February 26 as well. However, prices show a sharp intra-quarter correction which triggered a channel de-stocking and impacted volumes even during what is typically a seasonally strong pre-monsoon quarter for us. Two regulatory developments which I would like to also bring to everybody's attention is that the withdrawal of the customs duty exemption on PVC resin prices, which happened during the mid of July, and the imposition of the minimum import price for the PVC resin. These two developments should help and support some stability in the PVC prices as we go forward. And I think this should also help with the channel inventories, and we look forward to having somewhat improved volume and business momentum over the coming quarters. As we all know, PVC demand in India follows a well-established seasonal pattern. Demand peaks in the pre-monsoon period, January to May. The period is the farmers and the agriculture segment prepare for the carried seasons. And then it starts to moderate a little bit during quarter two, quarter three. And then we also again see the impact coming up and back again in end of quarter two, quarter three, I would also like to give a little bit comment about the, as we look into the rest of the year, I mean, we are, we remain optimistic, however, with a caution about recovery of the volumes and realization. As the inventory is normalized, polymer prices are stabilized, headed by the current two developments which I talked about, the recent customs duty and MIP interventions. We believe that the structural demand drivers continue to remain in place and intact, and will continue to underpin the medium-term confidence. This year, we are also celebrating 45 years of Innolex pipes in industries. We remain equally committed to our brand, our distribution partners, and the communities which we serve. Thank you for your continued trust and support. I will pass on the floor to Mr. Chandan Verma, who will talk about the numbers on the quarter one FY27 performance, and then we will open the floor to questions and answers. Over to you, Chandan. Hi, good afternoon, everyone.

So, as you know, the number already we have published in our investor presentation and uploaded on the site. Though, I want to give a brief highlight on the numbers, what we have. So, overall, sales volume declined by 27% from the corresponding quarter of the last year. Total volume we have registered around 68,000 metricton during the Q1 FY27. Though we have seen a decline in revenue by 27%, the overall decline in revenue is moderated by around 15% only, and our total revenue for the Q1 is 884 crore compared to 143 crore of the same quarter of the last year. We have seen a significant and healthy jump in EBITDA by 14% and EBITDA margin improved from 9% to 12%. Current quarter EBITDA stood at 107 crore, whereas the last quarter of the last year it was 94 crore. PBT is currently at 148 crore, and PAT is around 107 crore. We have a strong liquidity as we continue. We are having 2636 crore of cash in hand, which we will continue to have in our balance over the present time. The floor is now open for the question. We will write questions one by one, and we will address them as and when possible.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shravan Shah from the Orlid Capital. Please go ahead.

Hi, sir. I have a couple of questions, but before that, a couple of data points. So, it will help us to ask the relevant questions. So, for this quarter, what was the Agri share, fitting share, CPVC share in the total volume?

Current quarter, we have the egress here is 69%, and fittings here within egress 5%, and within non-eggress 25%, and overall this is fitting percent on a total volume is 11%.

Okay, and CPVC share is 7.5%?

CPVC share for the current quarter is around 7%, yes.

Okay. So, now, given, I understand the volume of significant degrowth eases there, which we have seen across the companies who have reported results, for instance, something also, but in terms of the realization front, our QQ jump is just a 1% versus both the companies who reported, they reported a 7% and 9%.

Okay, but on a Q1, Q1 basis, if we have seen, our realization per kg has gone up by 15% with the same quarter of the same year, but our peers are also in the same range. So, I think we are well within the range of the realization per kg. We do not see off from our other peers. So, whoever the data is...

Okay, no, I am talking about the QoQ upfront particularly because for QoQ, the realization raises broadly if I do the math with the volume 1.1% QoQ improvement and then the realization in this quarter versus... I was saying that the other two players who have reported numbers there, it was significantly higher. So I understand the volatility, but in the April, there was a downtick in that. But given the maybe the March where we have seen the significant prices open, maybe the pass-on would be happening with maybe a 10 days, 15 days lag. So, that may be the reason why the other players were able to kind of show the improvement, but we haven't. So, just wanted to understand, was there any specific reason on that front?

You are talking about for the entire quarter or March to April only? For Q1 versus Q4. Q1 versus Q4. Q1 versus Q4, definitely. You have seen, see, Q4 is the year, is the quarter for the aberration of the water, where we have seen an unprecedented increase in the prices of PVC. That has resulted in the unprecedented realization high. But as we move in the Q1, and particularly in the month of April, there was a sharp decline in the PBC prices. And the PBC prices have gone, if I need to quote a number, it has gone from 96 to 92, then 82. This is the reason that the prices have gone down per kg. So, that is how the realization has been moving from the quarter and quarter from the last year and from the current year. So, it's more about the equalization within the industry, plus there are quite an incentive and discount also within the sector when we compute our landed price net realization per few years. That is how things will work upon. However, from the Q1 to a quarter and quarter, if you see, from the same quarter of the last year, we are fairly within the range around that other public domain number we can see.

Okay. So, now two things. So, on the volume and then the now the on the realization and obviously that will lead to kind of margin also. So, first on the volume, have we started seeing the kind of channel level the inventory because in last 15 odd days we have seen 12-13 rupees per kg price hike in the PVC because of MIP and the import duty withdrawal. So, have you started seeing the growth particularly in the July and maybe in the June also? Have you seen that kind of a growth? And now, for full year, how are we looking at on the volume front? And realization also, given the 12, 13 rupees hike which has happened in last 15, 20 days, can we see a sharp QQ jump in realization in Q2?

Thank you. And so we should see a little better quarter 2 in terms of the realizations.

And also in terms of volume, as you rightly said, post-MIT, the volume has started to pick up. So we have seen a quite good uptick in the volume in the month of July as well.

So for full year, how now we can look at the volume for us as a full year?

So, no, so full year C, Sravan, at this moment it's too early to say anything because, you know, PVC industry is surrounded by a lot of uncertainty and volatility. So, at this moment, whatever the position we have given during our Q4 con call, we will continue to say. We will see how the year progresses because it's only the Q1 that we have completed. Let's see how the year progresses, then we will give any commentary on the full year numbers.

And at margin level also, any kind of guidance that we want to give?

We will continue with our last quarter's anticipation that we have given.

The 15% kind of a number that we have said for full year.

Sub-15 around somewhere, we will continue to say that. If everything goes well, then we will see how the number will look like throughout the year. But it's too early to say anything.

I mean, because there's a lot of volatility also, I mean, global geopolitical situation is still fluctuating.

True, true. And any inventory loss in Q1?

So, see, there are inventory losses and two inventory gain and loss definitely would be there, but it's true not to report it at this moment. Whatever the gain and loss that is there, that will be utilized over the period of Q1, Q1, Q2, over the period in time.

Okay, okay. Thank you.

Thank you. The next question is from the line of Drenit from SJ Investments. Please go ahead.

Hi, sir. Thank you for the opportunity. So, I just had one question in terms of volume degrowth. I understand that the market is down and everything, but I think we've grown substantially compared to our peers in the market. So, just trying to understand what exactly happened.

I mean, as you know, our dominance or our larger presence in the angry segment, which was more affected than the other, which is the plumbing or non-agree segment, as you call it, yeah. So that's the primary reason what we see it, yeah, as part of the reason for lower volumes for us, other than the channel which we talked about in the beginning of the call.

Understood, sir. And in terms of expansion, I understand that right now market is off and everything. Do we have any idea of in terms of expanding capacities? Do we have any plan in terms of increasing our plans? Yeah, yeah.

So, the capacity planning is always done on a long-term basis, bit to long-term basis. So, capacity or the capex plans do not get impacted by this short-term macroeconomic environment. So, all of our plans remain in place.

No sir, but no, at this point of time, do we have any greenfield or brownfield things we want to do? Because I understand it here right now with our probably plants, we've been only catered to largely lagry and our mix is also mostly focused that way. In terms of reducing reliance, are we doing anything in terms of more material like putting plants closer to urban locations or something like that?

Yeah, so we are expanding capacity and we are also augmenting capacity via deporting lacking. So as we have said in our previous calls, also the capital outlay for around 125 to 200 crore range, and that remains intact.

Got it, sir. Do we see structurally anything affecting us because, at least on the ground level, it's been noted that the minister has not been that aggressive as compared to other peers. So, what do you have to say about that? Because there has been many people who have been saying that.

At this moment, our capacity, see, we have the headroom to grow, right? At this moment, we have the total installed capacity of 520 and our last year volume was 333 only. So, still, we have the headroom to grow at a healthy rate of 10 to 1%. So, let the volume, let our installed capacity heat exhausted first.

We are invested.

Yeah. And apart from that also, as Mr. Agrawal has just pointed out, There is a continuous process going on in our organization with respect to de-bottlenecking, where we remove our old lower-capacity extruders and keep adding our higher-capacity extruders. So, in a way, within the same periphery, the few capacity we keep adding every year, rather than announcing a big in terms of greenfield and brownfield expansion. And still, as I have mentioned, we still have the headroom to grow as healthy, 10-12% over at least 2028 years, next to one year, one and a half year.

Correct, sir. I understand the headroom to grow. It's just that, because the last few years and like whatever, there's been some, at least distress in terms of the Agri segment also. I'm just trying to understand, is there potential that we are actually meaningfully looking for some other segment? Because I know you already have plans and going beyond Agri itself, but is it working out is my question.

So, other sector, because the non-Agri is a wide area where we are looking into, but not in the other adjacent sector. We are definitely not at this moment looking for an adjacent sector.

Got it, sir. Understood. That's it, Ramitra. Thank you. So, just, sorry, one final question. In terms of JGM, do we expect any substantial revenue growth from JGM 2.0 from September, they expect some substantial rollout. So, how does the company see it?

J.J.M. 2.0, you know, for the current financial year, government has announced a layout of, I think, 67,000 crores, somewhere, ballpark. The second point is, how is the realization, how is the distribution of this? I think in J.J.M. 2, they also have a different mechanism of distributing the corpus. And as you would know that all of our business is through channel. All of our channel partners participate in this. And we do not have a direct measure or direct correlation of the JJM impact or any other, for that matter, the other infrastructure-related issues onto our whole volume. Yeah, because, as I said, all the sales are through channel, but yes, as the money gets distributed from the government funds, that will certainly have an overall impact on the demand.

Sir, but in terms of allocation, is it in terms of the share quantum of value, is it higher than JGM 1.0, for JGM 2.0 for piping, at least for the segments we cater to?

I think on an overall basis, it is not higher than JGM-1.

Okay, so in terms of value also?

Yeah, in terms of the value I am talking about. I think, I don't have to remember the JGM-1 number on the top of my head, but I know that JGM-2 is about 67,000 crores, and it is lower than JGM-1.

For piping electricity, I am asking more specific to piping. That is the overall number, right? So, I think, do we have any specific insights?

I don't think I can add anything more to it than what I have already said.

Thank you, sir. That's a pleasure.

Thank you. Before we take the next question, we would like to remind the participants that you may press star and want to ask a question. Reminder to all participants, please press star and want to ask a question. The next question is from the line of Neha Talreja from Nuwamab. Please go ahead.

Hi, good evening, sir, and thanks a lot for the opportunities. A couple of questions from my end. Firstly, with respect to, again, your volume growth, which has been substantially lower than tiers, not only this particular quarter, but even if I look at quarter four now, what are your thoughts on market share loss? Because if you look at the industry-level numbers also, So, I think industry would have de-grown around 8% to 10% versus our de-growth would be much higher in volume terms. So, what are our thoughts here? How do we, you know, expect, you know, gain back this market share?

Thanks, Shasneya, for the question. I just want to bring to everybody that if we look at FY26 and the top five reporting companies who report their volumes, Yes. And on that basis, our share for the full year FY26 was about 22%. And when we look at market share, we should look at it over a longer period of time, and not on a quarter-to-quarter basis. But we do not have the numbers from all the reporting companies for the quarter one as yet. I think one or two are still to report their numbers. But I do not see any change in the market share, even for the quarter one, as compared to full year FY26.

Okay, so let me just put it this way. If I look at top six companies, and if I compare that data from FI23 to FI26, our market share used to be 27%, which has come down now to about 24%. This is just top six, not even thinking about industry-level growth and all. How would we fare that, and what are plans to basically, you know, get back is all I'm trying to understand.

So there is a constant push in terms of increasing penetration in the market. Increasing our presence in the underrepresented areas, and that's what there's been a push from our side to improve our volumes. There are few segments of the market where we are not present, where some of our competitors are present. So that also has to take, you have to also take into perspective and calculating the overall market shares. So, I think to better understand the question and the underlying dynamics, we have to look at absolute like-to-like, phenolite industry is a pure play PVC pipes and fittings producers, where other producers also have a larger share of other polymers into their portfolio. So, that could also be a factor which might have an impact on the numbers, the way they Understood.

That was helpful. The second question is regarding, you know, PVC prices now that they are an upward trend. What sort of a volume rebound can we see? And more importantly, out of the total PVC price increase that we've seen in this last one month, how much of it is passed on to the end user at this point of time?

So, Sneha, you have seen there is an upward trend, as you have rightly said, in the prices of BVC in the market, and I think largely, hardly, barring rupees 1 or 2, I think most of the thing has been passed on to the customer at this moment. Talking on today's date.

Understood. And how is the demand after the price increases that we have seen? Yeah, yeah.

So, demand is quite, as I have mentioned, July was quite good volume pickup that we have seen, and since it's the 6th or 7th days of August only, but numbers are looking in the right direction.

Understood. Understood. Thanks, team, and all the very best.

Thank you.

Thank you. The next question is from the line of Sonali, from Jefferies. Please go ahead.

Sir, thank you for the opportunity. Sir, my first question is again on the volume. So, we understand that agri-pipes is about 70% of your mix. So, could you help us understand of the volume decline of 27%, how much was the decline in agri versus plumbing?

So, we have seen both the overall total volume degrowth is 27%. So, if you compare our volume from the Q1 of current year versus last year of the same quarter, the agree has declined by 27% and non-agree is around 24%. So, both are in the same, more or the same direction.

Understand. Sir, it would be really helpful if you could help us understand the month-by-month, very approximate, you know, volume trends. The reason I'm asking is because we saw maximum amount of volatility of PVC in April. So, of the 27% for the quarter, how much was the degrowth in April, May, and June? That would be very helpful.

I don't, I think Chandan will have the exact numbers, I will comment on that, but as you rightly said, April was the month where there was maximum volatility, and so April was the, out of the three months, April was the lowest volume month, and then we saw the pickup in the month of May, yeah, and June was like a normal month, I would say, yeah. So, so I would. You have the specific.

Yeah, so this is what the trend that we, as Mr. Azakala rightly pointed out, April was quite a dismal performance, then May and June fairly in the way that things would have been there, and July, as I have mentioned, is a quite good number. That's it.

Chandran, sir, do we have the numbers for April?

At this moment, I don't have. We can reach out separately. At this moment, I am not with me immediately, month on month. Generally, we hold the number on a quarter and quarter basis.

Sir, is it fair to assume that May and June was a growth and April was a degrowth or even May was a degrowth?

No, no, no. May was a growth.

May was a growth. So May and June were growth and April was a degrowth. All right. Hello? Yes, yes. Thank you. So, my second question is, obviously, you know, 27% volume decline means a lot of weak operating leverage, but our margins have surprised quite positively. I understand you talked about the better realizations, but having said that, the lower margin agrees still about 70% of our mix. So, how should we look at the margins? What, in your view, has supported? Is there any element of inventory gain that you would like to talk about?

So, whatever the operating performance we have seen earlier, this is largely the top-line driven. So, for the cost-wise, as we have the more or less cost remain range bound, but the bottom-line contribution largely came from the top-line only. That's it.

But the top-line, in the sense, the volume was quite weak. I'm just trying to understand what could have supported our 300 bits year-on-year margin improvement, despite a weaker or rather a sharp decline in volume.

We will see if the cost will remain way round, and we will see good realization during the current quarter. So then the things will definitely get percolated down to the EBITDA level.

All right, sir. So my next question is channel inventory. As of now, what is the scenario of the channel inventory? Is it normal, below normal, and could you quantify that in a number of days, if possible, please?

Last part is the third part of your question is the easiest part, so I'll take it first. It's very hard to quantify the number, how many days of inventory is there, okay. But yes, there's been quite a lot of stocking which has happened in the month of July because the expectation was that the prices will go up and which have gone up. I would say that henceforth the demand would be more like stable, because we have a minimum floor set for the price A, so the volatility part should get somewhat moderated, and if there is a stability, that also has a steady impact on the demand. And the demand remains pretty stable, and channel also do not want to stop too much, more than what is required in the market.

So, does it mean that the channel inventory is normal right now, almost normal?

Yeah, I mean, it's near normal, I would say. There is still some room, but I would say that if the situation continues to remain like this, Got it.

And lastly, if you could help us with a few data points on PVC, EDC, VCN, and the spread for Q1 this year, Q1 last year, and if possible, how it stands right now?

So, PVC for the Q1 current year is $866, and PVC EDC spread is around $501. And same for the first quarter of the last year, $698 was the PVC prices, and spread was $522. And as latest as current, so $7.95 is the PVC prices, and the spread between the PVC, it is around $4.90.

Understand. So the spreads here on here have marginally gone down, right? $5.22 to $5.01. Yes. All right. All right, sir. That's it from my end. Thank you.

Thank you, sir. Thank you.

The next question is from the line of Anuparak from Anandrati. Please go ahead.

Yeah, hi, sir. Sir, you said that the non-agri pipe volume declined by 24%, whereas, so what could be the reason for this steep decline? Because we see that the other pipe companies have not seen such kind of decline in Q1.

So, if you see, in terms of the peer competitive, the non-existent segment, peer also has more or less declined by the, I think, around 18 to 20 percent, if I am not wrong, in terms of totality. And the volume demand generally is driven by two factors. One is the price, and second is the price anticipation in the market. So, in both scenarios, the prices have seen the volatility for the agri and the same prices that holds good also for the non-agri as well. So, the prices, that's why we have seen the, because of the in anticipation of the price volatility, the volume of the non-agri is also in the same direction as we have seen in the agri sector. Okay.

And, sir, for Pipe, what was the price difference compared to Supreme for, say, two, three years back, and what is the difference now?

See, it's very hard to define that in exact terms, but more or less we are 10 to 12 percent, I think, we are pricey in market. Just a ballpark number, not exact number.

And this is also driven by the commodity prices here. So, no player would be too far away from the market benchmarks, either on the positive side or on the negative side.

Sir, next on the margin guidance, you are giving a sub-15% kind of a margin guidance, whereas in an environment where the raising prices are falling and the volumes are also declining, we have delivered a 12% kind of margin. So, why are we underwriting on that front?

So, as we have just mentioned, we are continuing to hold back whatever we have seen in the Q4, and Q1 is because we have seen too many volatility during the current quarter, so we will remain, our guidance remains the same, what we have given a sub-15 kind of thing during our Q4 on-call. So, let's see how the quarter progresses over the period, because there are a lot of geovortical scenario and uncertainty that surrounds our PVC industry. So, let's move for another quarter, then we'll see whether this needs to be revised or not. At this moment, we are holding back whatever we are doing.

Okay, thank you.

Thank you.

Thank you. The next question is from the line of Rahul Shah from PL Capital. Please go ahead.

Yeah. Hi, sir. I'm audible, you know? Yeah, just two questions from my end. So, could you please provide some color on the gross margin performance, like if you see the sequentially, the PEC, the spread has got declined, yet our gross margin got expanded. So, what were the factors driving the margin expansion?

So, as I have just mentioned, if the prices of material will remain range bound, and we will see a growth in the realization, then definitely that will contribute to the gross margin.

And on the second is, if I had missed out some data points, can you please repeat the spread of PVC-VCM for the quarter 1 FY26 and 27?

So Q1 26, the spread was PVC-VCM spread was 522, and current quarter Q1 FY27, the spread is 501.

No sir, I just want PVC to VCM spread.

Thank you. The next question is from the line of Shdavan Shah from Dollard Capital. Please go ahead.

Hi, sir. Sorry, sir, again, coming to the volume front. Sir, is it possible to maybe directionally quantify the July volume growth? Will it be a kind of a 15-20% kind of a number? So, ultimately, what I am trying to understand for full year, can we see a degrowth or not? That's the one I am trying. And because if, as you mentioned, the April was kind of a washout, May and June was a growth, and July obviously should be a better growth. If that's the case, then can we see a kind of a 15% kind of a growth in Q2 itself so that we have some fair bit of understanding what kind of a volume for full year can we look at? Or maybe the other way is, can we see a flattice or a degrowth for the full year?

Shavan, I would say that July was the best month of this four months, of this year. And it's at this moment, as Chandan also earlier mentioned, it's very difficult to say that the full year out guidance Volatility has been too much in the quarter one, and if we see what is happening in the quarter two, then probably we would be in a better position to give a more realistic guidance for the full year. It's just past one quarter, which was also so much of uncertainty, volatility. I would not like to make some forecasts based on just one quarter developments.

But at least July, whatever the growth, will it be a kind of a mid-teens kind of a growth that we are witnessing? Some understanding on that will help us.

July was a good number, but let us not get this quantified at this moment. As we are seeing, we have seen a good growth in the month of July, but let us not get into the quantification at this moment, Shavan.

Okay. And in terms of, though for last, many times we are saying that agree, non-agree, 50-50, we want to achieve, but looking at this, this quarter, obviously 69%. Do we think, Marlap, do we have internal any kind of an early number that we want to do at least 2, 2, 3, 3, 4% kind of an improvement from AGRI to non-AGRI kind of a thing? Because I don't see anything broadly happening there.

So if you look at our last couple of years, so last year our AGRI versus non-AGRI was 63, and AGRI, The year before was 67%, so there's been a constant improvement in terms of share of our business in agri and non-agri, so better portfolio balanced in terms of the market segments. And I think we will continue to have that directional approach which we have always been saying, that we want to have a more balanced portfolio in the market segments which we operate. So, as we said, in the case of market share also, and so I would say here also in the case of the segments in which we operate, every one quarter is not a representative number for a longer period of time. True.

But, sir, given the kind of 2,636 crore cash, there also we are not even finalizing how we will be distributed to the shareholders. So, at least, at least, why even we are not finalizing in terms of the growth plan? So, maybe we are very less in terms of the CPVC, which is a kind of a high price, high margin, why we are not even thinking to deploy some money there. So, at least it will help us in terms of the growth and also better realization and better margin.

See, the investment into the business for the current portfolio organic is always there. So we are continuing to invest into the business and we will continue to invest into the business to support the growth across all sectors, whether it is UPVC or CPVC. The second part of your question is that all these investments, the large-scale investments, Are guided by the board, and the board has to take a call at when is the right time with this strong cash, and whether it is giving back to the shareholders, whether it is investing into large-scale investments. So, that's a constant discussion with the board, and since we are guided by the board in this matter, as soon as there is some decision, I think we would be happy to announce.

But sir, that's the main thing because this gas is piling up. So we are not even saying that distribute the 100%, but even 500, 700 or even 1000 crore, if we would have invested in, let's say, expansion of the CPVC plant there or the capacity, it would have helped. And even till now, even right now also, we are not even planning to deploy or start. Otherwise, how, when we can start seeing the kind of overall, because that will ultimately help us to reduce our agree share once the CPVC share keep on rising. So, unless we start, how we will receive 7-8% kind of a CPVC share, that too in our volume is there. I don't know. If I look at the entire industry and against that, our CPVC volume, maybe even that would be lesser than 5%. So, why not, we are even thinking that to have at least 10, 15, 20 percent kind of a share in CPVC. For that, we need to expand the capacity. For that, we need the money. That money is there, but we are not even thinking for last many years. It is already there.

So, just to bring one point, we have enough CPVC extrusion capacity. So, for manufacturing of pipes, we have enough CPVC extrusion capacity to support the growth. So, if that is the question, so, that's what our response would be. If you also look at the overall share of C-PVC in the entire P-VC market, which is around 7-8%. Our estimation is that about 7-8% is the total C-PVC in the pipe segment. And this is the same share which we also have. So we are also moving along with the industry.

Okay. Okay. Thanks.

Ladies and gentlemen, we would like to remind all the participants who wish to ask a question, please press star and 1. The next question is from the line of Hena Vora from D.A.M. Capital. Please go ahead.

Hi, sir. Thank you for the opportunity. Just one question. We may speak a lot on the margins for this quarter. I assume you said the cost remain raised on. Are you trying to say that we have some low-cost inventory from the previous quarter, at least liquidated during this quarter, and that's how the margins have come up?

Two things you'll have to keep in mind, Hena, that we have the certain cost advantage in terms of our being a backward integrated player. So, whereas the other players are procuring the raw material directly from the market, the core raw material, we are one step back where we procure the raw material for the manufactured resin. And that depends upon at what point in time we have booked our procurement and consignment. So, that's how the dynamic keeps playing in our case, which is quite different from the other players in the industry. So, that is how we are getting certain questions over there.

I miss you, sir. That was my only question. Thank you.

Thank you. The next follow-up question is from the line of Anuparak from Anandrathi. Please go ahead. Yes, sir.

Sir, in the last call, we indicated about the VCM sourcing. So, are we facing any issues in terms of availability or we were able to diversify the supply chain?

The VCM availability continues to remain limited because of this issue in the Middle East. And one of the challenges with VCM is that it requires a specialized logistics. And so, and with the feedstock, also going to the, in the Northeast Asia, where most of the material in India comes from, is also constrained. So overall availability of BCM is also limited. It's not as freely available as it was in the previous years. And this also has an impact on availability of VCM for us. The Middle East producers continue to remain under force majeure and wherever and where we had major contracts. But to also tell you that we were in any case not importing VCM during the four months from end of May We have been working on the journey till end of September because our jetty in Ratnagiri is a fair weather jetty. So during this monsoon period, in any case, in a normal year also, we were not importing BCM.

Okay, and the last question is, what is the expected capacity utilization of the PVC plant for the remaining nine months of FY27?

No, PVC we continue to produce in Ratnagiri. As you all would know, we have two lines, one is based on EDC, one is based on VCM. So EDC line we continue to produce without any interruption.

Yes, sir. So what about the VCM line?

No, as I said, in VCM line, in any case, during the month of monsoons, we do not produce, because we cannot import VCM during this time, because of our jetty limitations, and it's a difficult product to transport. So it's also not like that, that we can import it at the other port, and bring it to Rakhnagiri. So, during these four months, in any year, we are not producing PVC with the VCM supply.

But, sir, what about H2F27 for VCM?

Our efforts to secure the VCM supply chain are ongoing, and we expect that the situation in Middle East should also get better with all this, but the situation remains also a Very unpredictable there. Depends on the availability of VCF, competitive VCF, okay, because one of the questions which was also asked is the spread of PVC VCF. So, that's also a factor which we also have to keep into perspective.

Thank you, sir.

Thank you. The next question is from the line of Arun Bid from ICICI Securities. Please go ahead.

I have just one clarification. Based on whatever you have seen in July and the trends in the near term, do you think for the first half of this financial year, will we

at least be flat YOY? As we have just mentioned, Q July was a good number.

So we are hopeful that flight plus YOY basis we can expect. But still, the August and September, we need to see how the volume comes. But since the July, only in anticipation of the July, sorry, as per the performance of July, if we continue to go that, then definitely we can see a certain plus number.

Thank you. Thank you.

The next follow-up question is from the line of Shravan Shah from Dollar Capital. Please go ahead.

The last one, the other income, this 75 odd, so it was lower because of some there, so now this number is kind of sustainable, so on a full year basis, can we kind of look at 300 odd crore kind of other income?

No, no, no. Next one, you have to keep in mind, because this is purely driven by the bond yield scenario in the market. And these are the mark-to-market gain loss, not the realized gain loss. So as the bond yield will, if you see the stable bond yield, then the number will remain in the range bond, but it will see a quite volatility in the bond yield, because a lot of factor keeps in place while deciding the yield of our portfolio. So, if the bond yield will remain range-bound, then the number will definitely come. Otherwise, this is a simply purely a mark-to-market gain loss, not the exactly realized gain loss.

Okay, okay, okay. Thank you. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thanks for the interesting discussions and a lot of questions around growth around market shares. So I just would like to comment that our endeavor will be focused and to be able to deliver sustained margins over time. And with that, I would like to say thanks. Thanks to everybody for your continuous trust and support. I look forward to interacting with you all next quarter.

Thank you so much to all of you for your continuous support and confidence in the phenolic industry. Thank you so much for my head as well.

On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.