Finolex Industries to Enter Water Business

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Finolex Industries to Enter Water Business

The Company Plans to Leverage Its Existing Dealer Network Across India to Expand the New Business

Pune-based Finolex Industries Ltd, which makes rigid PVC pipes, fittings and PVC resin, is entering the water supply and water equipment business by leveraging its existing dealer network across India, said Prakash Chhabria, chairman of the company, in a phone interview on Thursday. PVC refers to polyvinyl chloride, a polymer used in pipe construction. "We are planning to leverage our existing 15,000 dealers network that we built over the last 25 years. We are firming up plans to enter the water business.

We are talking to a couple of consultants and a final plan would be formalized in 12-18 months," Chhabria said. Chhabria, however, did not disclose investment details or other details for his company's proposed entry into the water business. "Finolex's water vertical would explore options such as water-related equipment, water supply equipment and water filters.

A final picture will emerge only after consultations considering fast-changing technology," he said. At present, the company has three manufacturing plants—in Pune and Ratnagiri in Maharashtra and Masar, near Vadodara, in Gujarat. According to Mint research, the total debt of the company stood at Rs.713.42 crore as on 31 March.

According to a 21 July report by Barclays Research, the current market size for water supply and sanitation is $6 billion and is expected to reach around $10-12 billion per annum by 2016-17, according to the Planning Commission estimates. "We see demand being driven by five major segments—fresh water supply, waste water management, water recycling and reuse, desalination plants and equipment (pipes, pumps, irrigation equipment)," the Barclays report added.

To tap into this demand, many large companies have strengthened their presence in the space, including Larsen and Toubro Ltd, Thermax Ltd, Ramky Infrastructure Ltd, Praj Industries Ltd, IL&FS Water Ltd (IWL) and VA Tech Wabag Ltd, to name a few. Chhabria said his company is in comfortable position to enter into a new business. He said his company is also planning to create solutions which help prevent water leakages. To reflect this new focus in the business, the company also unveiled a new brand identity.

The company has also unveiled a new tagline—"Tarakki Zindagi bhar"—promising a lifetime of prosperity to the consumer through water management. The company, which clocked a turnover of Rs.2,453 crore in 2013-14, is expecting to post a compound annual growth rate of 15-20% over the next five years, which will see its turnover cross $1 billion.

Source: Live Mint

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