Finolex Industries Ltd Q3 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, you indicated agri growth at 4.5% and non-agri at 5.7%. Sir, would it be possible for you to comment on the industry growth numbers? Just wanted to have a sense on market share gain or loss. Either on a Q3 basis or 9-month basis will also do fine. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2021 / 5:30AM, FINX.NS - Q3 2021 Finolex Industries Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, any sense on PVC consumption basis at India level on 9-month basis, if that's probably acts as a broader proxy, not exactly apple-to-apple comparison, though?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. Sir, my second question is you did indicate about the distribution number being at 21,000. I think a couple of quarters back, you had indicated the same number at 18,000. Do you have a sense on where this additional 3,000 have come in from? And is it for a particular segment that we are looking at on the non-agri side?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Correct. My question is, is it like the more we are focusing on tier 1, tier 2, where is this additional 3,000 distributors being posted?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : On north and east, right? That's what you said.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. Sir, in the earlier call, you had indicated about basically 40% non-agri, and you had also spoken about the variable component being implemented for the marketing people. Sir, any update over here on the variable component in salaries so that there could be probably more [aggression] on volume push on the non-agri side?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, so whatever understanding is for Finolex is the marketing people, they don't have a variable component unlike the [PSA]. So there was a thought or comment earlier in one of the calls that this is something that we were looking at which will motivate the marketing people better, and it will help on the volume growth as well. Sir, so any update on here?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. So no basically, right?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay And just last question. Sir, given the prices have been quite volatile, PVC, EDC, VCM, what is our philosophy on maintaining the inventory levels? And if you could give broad ballpark numbers on how much is the volume inventory and, if possible, the average cost of EDC, including this year, end of quarter, that would be very useful.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. And sir, how much will be the average costing end of the quarter? Is that possible? Just help us understand what sort of inventory gains... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2021 / 5:30AM, FINX.NS - Q3 2021 Finolex Industries Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. So one can assume November, December average. Would that be a fair assumption?

Question: Prateek Bhatnagar - HSBC, Research Division - Analyst : Yes. I have just one. So what we've seen is that your inclined industry globally has been impacted a lot by shutdowns. So the question is what is the risk that we are not able to source our feedstock due to the scarcity or the quantities less? So the question is basically how many suppliers do we have, what is the contractual agreement, what is the options we have if the suppliers are not able to give us in the U.S. or Middle East? So any color there will be helpful.

Question: Prateek Bhatnagar - HSBC, Research Division - Analyst : Yes. So resin division, the EDC, VCM, ethylene, which we source.

Question: Prateek Bhatnagar - HSBC, Research Division - Analyst : Right. So the question is on the existing plants, sir. So is there a risk that because of the global shutdowns, we are not able to source the EDC, which you require for existing plants, a risk?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Yes. So this is the last question. Sir, you did clarify that we are not looking at revenue-related CapEx, which is great. But sir, just want to understand what is this MOU on technological side that we are looking at. If it's (inaudible) feasibility stage, we just want to understand the thought process for you, sir.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, my question is you did indicate that there could be something in Ratnagiri related to the resin plant. So just want to understand what is this MOU on technological or feasibility study that we are doing, just to understand the thought process there.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. So would it be fair to assume if the feedstock all of a sudden improves, and this is something that we would be looking at? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2021 / 5:30AM, FINX.NS - Q3 2021 Finolex Industries Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Correct. And sir, what will be the rationale for this, just to ensure that we have full degree of backward integration? Would that be the rationale?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : So that we don't have to buy PVC from outside, we can use captive PVCs.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Yes. Thank you, Margaret. Thank you all for joining the conference call, and thank you management for having the opportunity to host this. Over to you for concluding comments, sir.