Finolex Industries Ltd is not only India’s largest manufacturer of PVC pipes and fittings but also the only backward integrated PVC pipes and fittings manufacturer in India. In a exclusive conversation with Dibyendu RoyChowdhury, Saurabh Dhanorkar, Managing Director, Finolex Industries, shares how Finolex truly leads the way in India’s economic development in pipes and fittings segment.
India PVC pipes and fittings market will grow at a double digit CAGR over the period FY14-FY19. How has PVC pipes and fittings market been evolving in India?
The Indian PVC pipes and fittings market will grow at a double digit CAGR over the period FY14-19, and it is projected that the growth will reach up to Rs.391 billion by FY19, according to a report by Ken Research (a leading global industry research and information service company, operating with a network of partner firms across the US, Asia and Europe.) Indian Government’s increased thrust on infrastructure development, rising demands from construction sector, expansion in the non-agri business is leading to the increase in the demand for PVC pipes and fittings and will drive the market growth in the coming years.
Finolex is one of the pioneers in introducing the concept of PVC pipes in India at a time when the market was dominated by metal pipes. Over the years, Finolex has established itself as the benchmark in quality across products. With its unmatched product quality and reach, Finolex truly leads the way in India’s economic development in this segment. Because of its inherent advantages, PVC pipes have become a preferred material for transportation of water. Except for very large diameter pipes for municipal corporations, PVC pipes have found application in almost every sector. Application like plumbing which used to be traditionally GI pipes is fast transitioning to PVC pipes.
Finolex Industries is India’s largest backward integrated PVC pipe manufacturer. What makes Finolex so irresistible in PVC pipes and fittings market?
Finolex Industries Ltd is not only India’s largest manufacturer of PVC pipes and fittings but also the only backward integrated PVC pipes and fittings manufacturer in India. Finolex started off as a PVC pipes manufacturer in early 80s. Within 10 years, it decided to set up a backward integration plant for manufacture of PVC resin, a key raw material for the manufacture of PVC pipes. (For a good quality pipe, the PVC resin content in the compound is more 90 per cent.)
Finolex products go through various levels of testing before being released in the market. Also as a market leader, we keep on engaging in various consumer-connect initiatives and branding activities across the media spectrum. We also take extensive feedback from direct customers and farmers and identify problem areas which could be further improved based on their feedback. All these helped us be connected to our consumers directly and understand their needs.
Finolex Industries are pre-dominant into agri-business market. About 70 per cent of your revenue comes from agri-business market. Interestingly, the government plans to invest $650 billion in urban infrastructure during the next 20 years. What’s your strategy to get a strong foothold in the non-agri business market too?
Prime Minister Narendra Modi has recently launched two path-breaking schemes which we expect will have far reaching positive impact on the Indian economy. Both these schemes augur very well for the business of Finolex Pipes. The first scheme is “Pradhan Mantri Krishi Sinchai Yojana (PMKSY)”. The motto of this scheme is “Har Khet Ko Paani”. In other words, the scheme will focus on end-to-end irrigation solution. Currently only about 45 per cent of the cultivated land area in India has access to irrigation. PMKSY seeks to address this issue by bringing water to every field. We expect a huge surge in the demand for PVC pipes in the coming years. The other announcement by the government regarding a strong push on urban infrastructure, including launching of 100 smart cities also indicates a much higher requirement of pipes and fittings in the non-agri sector.
For our non-agri pipe business, our approach to meet the market’s demand is to encourage a large number of our distributors to focus on plumbing and sanitation pipes rather than only agricultural pipes. We have also appointed new dealers in various upcoming cities that will deal exclusively in non-agri pipes and fittings to meet the increasing demand. Our recently opened warehouses in Cuttack (Odisha), Indore and Noida will act as the hub for our distribution needs to non-agri pipes in Eastern and Northern India. We are focusing on exhibitions and other such activities around the users and influencers of this product category. Our communication will clearly convey our strength in these products.
What are the key trends in the PVC pipes and fittings market as per the end-user sector in India?
India occupies 2 per cent of the world’s land area, supports over 16 per cent of the global population but has only 4 per cent of its water resources. It is, therefore, imperative that water management techniques of the highest efficiency are deployed in India. Today, there is already a tussle between demand for water for agriculture, for drinking, for sanitation and for industry. Going ahead, this shortage of water is likely to get worse. Unfortunately, a large portion of available water is wasted in India. The various government departments and NGOs are working towards better utilisation of water resources. PVC pipes offer many performance advantages, such as moderate cost, ease of installation, long service life and corrosion resistance. In such applications as potable water and sewer and drainage, PVC pipes will increasingly be specified by consumers looking to reduce maintenance and replacement costs. PVC pipes and fittings are fast replacing traditional material such as cement and metal in many sectors.
CPVC pipes are expected to register fastest growth in terms of the production capacity in the next 5 years. Where would you place Finolex in CPVC pipe segment? What is your strategy for CPVC pipe segment?
CPVC pipes are being preferred by certain users in the construction segment for hot water application. However, the base is still small as compared to UPVC pipes. As the largest player in PVC pipes and fittings market, Finolex has CPVC pipes in its diverse portfolio. We expect this segment also to grow in line with the rest of the market.
How big are your manufacturing operations in India, and what are the opportunities you see under “Make in India” initiative?
Finolex Industries has always believed in the huge potential of the Indian market. As the leading manufacturer of PVC pipes and fittings in India, Finolex Industries carries water from source to destination across India. It believes that every Indian directly or indirectly is a part of this journey. Although many multinationals have been manufacturing in India for many years, what is unique about the “Make in India” campaign is that there is now a concerted push towards manufacturing which will help India emerge as a manufacturing hub. This should help sell Indian products in the domestic as well as international markets. India has the advantage of a huge pool of scientific and technical manpower. This should definitely help the initiative. The challenge is that the demand for skilled manpower will only increase going forward. The government is addressing this through the National Skill Development Corporation. How quickly and effectively this corporation can meet the demand for skilled manpower will finally determine the outcome of this programme.
On our side, Finolex Industries will continue to invest in new capacity for pipes and fittings as well as increase its penetration in the rural markets of India.
In order to make 5,000 state villages permanently water scarcity-free, the Maharashtra Government has undertaken a flagship programme, Jalyukta Shivar Abhiyan. What are the right steps the government must follow to achieve this goal?
The Jalyukt Shivar Abhiyan proposed by the government has come out to be one of the great news to us and for the farmers in general. Agriculture in India needs reforms like this, and farmers are one of the key drivers for the growth of the economy.
This is one of the most positive news for the Indian farmers in the past 30 years. It is also a great news for Finolex as a company, because we will be looking for the expansion with the addition to our existing 15,000 dealers and sub-dealers across. This will definitely help us grow our business by partnering in the successful execution of this scheme.
The Maharashtra’s Economic Survey for 2014-15 reports that out of the 70,000 small irrigation projects constructed in the state, only 12 per cent have been utilized. How has Finolex been working to provide a long-term resolution to the structural challenges faced by Indian agriculture?
As an organization we are keen on ensuring that the available water should reach the end user in the most efficient manner. Finolex understands the value of what water can do in the urban and rural context. Water being a limited resource the company’s vision is to help every consumer find a more effective way of managing water by creating products across all touch points to manage water better. We have laid a very high emphasis on our product quality.
The company has been continuously engaged with concerned agencies to create solutions and partnering many initiatives to help efficient water transportation as well as conservation.