We will stick to making pipes and fittings: Prakash Chhabria

Mumbai-listed Finolex Industries Ltd, the country’s biggest PVC pipes and fittings maker in the farm sector, has set a $1-billion revenue target and to double its capacity by 2020. The company’s Executive Chairman Prakash P Chhabria spoke to BusinessLine at its mother warehouse in Pune. Excerpts.

You have set a target to reach $1 billion in revenues by 2020. What is the strategy to reach that goal?

Our aim originally was to do some third-party business also, to get products from outside and distribute on our channel. We went through one year of rigorous searching only to realise we are not cut out for that. We are good at what we do. We are good at making pipes and fittings. So, instead of trying to stretch ourselves, we said let us focus on our job. We will keep growing only in our business and we will still reach the target. So, the earlier strategy of doing third-party business is totally out. We will grow only on the strength of our products.

Currently, 70 per cent of your sales is in agriculture and 30 per cent non-agriculture. Your aim is to make it 50-50. How do you plan to go about it?

My machines can make agri pipes, they can also make non-agri pipes. They are listening to what we want. I am in the market for both – agri and non-agri. If there is a shift in demand from agri to non-agri, I will also shift. I have the flexibility. I’ll take advantage. And, if it shifts from non-agri back to agri, I will shift to agri.

Yes, I want to. I am not going to sacrifice on agri. It’s our heart. I’ll keep doing both. What the market wants is what I’ll give.

We were one of the late starters in the industry to get into non-agri. We started hardly four years ago. We were struggling because coming from agri into non-agri is a shift. It’s a change in the thinking and way of selling. So, for us, it took time. It was good. Because only when you struggle can you come out stronger. And we came out stronger.

Big difference. In non-agri pipes, just application-wise, when you go to a building, there are two types of piping, one is to bring the water in and the other is to take the dirt out. Whatever happens, remember buildings have nooks and corners, the pipes cannot go through the corners, it has to go around it. It means you need fittings and make available a variety or range of fittings.

Then only your customers will buy it so that they can meet their requirements. In agri, it is only straight line. The whole concept changes. Despite starting late in non-agri, we managed to launch 155 new different products/units in six months. Besides, the compound of agri pipe and that of non-agri pipe is different. Hence, the non-agri pipe is more expensive than the agri pipe.

Pricing is one thing. But more importantly, our strength is customer reach. We have an existing dealer network. People are aware of the brand. So, on the strength of my dealers and brand, we were able to enter the market and do a good job. So, it’s not necessary everything has to be on pricing.

To supplement this, we came out with plumber workshops. We have groups of plumbers. All of them get together and organise plumber workshops across the country everyday. Plumber workshops does not necessarily have to be of 100-200 people. It can also be of 10 people. My strength is my dealer network. We have more than 800 dealers and more than 18,000 retailers.

Nearly 18,000 retailers can sell anything. But, my 800 dealers have to sell only my products. But if they want say pumps, or if they want to sell some agri implements or whatever, which I don’t make, that’s totally up to them. Because whatever they do is going to supplement their business, complement my business.

What I love doing is adding capacity every quarter instead of spending a lot of money in one go and setting up a huge capacity. I’d rather not do that. I keep taking small steps, small baby steps every quarter, adding little capacity every quarter. My friends call it very conservative, but I am happy.

It’s a part of being conservative in outlook because when you are very disciplined in what you are doing you cannot be exponential in growth because you are restricting to only selling in advance. If I give credit, then I can keep giving credit and keep selling. But my philosophy is in our business, we buy materials, we convert them into a product and sell it. So, our margin is less. We are not like an engineering company which has got so much of margin. So, if I have bad debts even one per cent, it will take away so much of my business.

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Post time: Jul-08-2019
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