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Jul 13, 2011, 07.54 PM IST
Sanjay Agarwal, chairman and managing director, Texmo Pipes said that the company is looking to enter the Chlorinated Polyvinyl Chloride (CPVC) pipes and fittings space.
Below is the verbatim transcript of his interview with Ekta Batra and Reema Tendulkar of CNBC-TV18. Also watch the accompanying video.
Q: We understand that the company is now planning to develop and also launch CPVC fittings. Could you tell us your plans with respect to that?
A: Yes, the company is planning to enter into the CPVC pipes and fittings. This is like new and advanced version of the plumbing. The full form of CPVC is Chlorinated Polyvinyl Chloride and is basically used for in the drinking purpose, household fittings and bathroom fittings.
Q: Could you tell us how much are you planning to invest in manufacturing and launching these and when will they come into the market?
A: The main things for the CPVC is the availability of the raw material, as there are very few manufacturer in the world who manufacture the CPVC compounds. We are in talks with the suppliers for the minimum of quantity assurance so that we get the raw material continuously for the production of material. Once that is finalised very soon we will finalise the extrusion line and the moulds for the fitting.
Q: Then what sort of margins would you work on with regards to CPVC and what sort of demand scenario would you envisage at this point in time?
A: The margin for the CPVC is much higher, currently we are working on the PVC and the plumbing section and the market is more or less the same. We will be operating in the existing market and through our dealer’s network. So we will not take any extra effort for the development of the market. The market is still there. There is a good demand for this product and we expect that as soon as we get into the market, we will be receiving very good response.
Q: So do you expect to increase your margins in terms of a consolidated basis going forward once this product launches you stand at around 13% odd currently?
A: Like when we will start with this CPVC, we will not be going aggressively into production. First we will start with the one and two extrusion lines. So on an overall basis the share of the CPVC in the production will be comparatively less. But once we like get into the market and gets the grip of the market then we will gradually go with the production and the expansion into the CPVC.
Q: Could you tell us the investment that you have planned for this particular thing and also if you could give us a number of what the margins would be? Currently the company is sitting on margins of about 13% odd, for this what would it be?
A: The margin for CPVC will be quite higher than previously because I cannot exactly tell you in the numbers. In the beginning when we get into the market we may need to work on the little over margins for getting the market share. But once that is done then gradually we can command higher prices.
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