Finolex Industries posted a good set of Q2 earnings numbers. The year-on-year (YoY) revenue was up 85 percent and EBITDA was up 108 percent. Operating margins were up only 27.8 percent YoY versus 24.7 percent.

Niraj Kedia, Deputy CFO of Finolex Industries, said PVC prices are at all-time highs; most likely they would go down but when and how that would happen remains to be seen.

However, the industry is disciplined and the prices are passed on to the customers almost simultaneously. There could be a lag of a week or so but otherwise the industry is able to pass on the prices, said Kedia.

Guiding for annual sales, Kedia said, sales so far this year have been pretty good. "Our endeavour is to first reach FY20 levels of sales and then pick it from there," Kedia said.

Commenting on the market share gain from unorganised players to organised ones, Kedia said, there is an impact on the unorganised players but cannot put a number to how much they have gained; however, there has been a gradual increase.

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On the cash flow and debt situation, he said, the company has Rs 900 crore net cash, and that they do not have any long-term debt. The company uses its short-term debt primarily to fund its imports. Thus, the company has no debt on its books.

"In terms of expansion, we have enough headroom available as of now, and we have done some expansion on the fitting side, and gradually as the need is, we are able to expand further. Expansion is not a very cumbersome task for us, it doesn't take much time. It's not very capital intensive either, and so when the time comes, we can expand very quickly," said Kedia.

Asked what the company plans to do with the cash, he said, inorganic expansions for the industry do not work out because it is not a technologically-restrictive sector. Technology is easily available.

"We definitely have our own very good distribution network. So inorganic growth in pipes and fittings may not really work out, but nothing is out of the question," Kedia stated.

He further said some part of the cash would go to the shareholders, most likely in the form of dividends.

On margins, it all depends on how PVC prices move, he said. “In pipes and fittings, typically Rs 8-10 a kilo is a maintainable, long-term margin; these levels are definitely not sustainable. But, we will see how the year goes by when it comes to PVC pricing," he said.

Watch the video for full interview

(Edited by : Thomas Abraham)