Capacity expansion by Feb-March; profits up by Q4: Finolex

Finolex Industries had a big move yesterday. Today the counter is seeing a bit of profit taking. Q3 saw a turnaround for Finolex.

In an interview to CNBC-TV18, Prakash Chhabria, executive chairman, Finolex Industries said the road ahead for Finolex looks good. The turnaround is durable he says because they now have control on their power, finance costs.

Finolex Industries soars 17% on excellent results in Q3

He also expect year-on-year improvement in profitability in Q4. Debt levels could be down if they are able to prepay the loans he added.

With regards to capacity expansion he said, "Our expansion plan in Gujarat is already up and about. It will go into full stream by end of February  or by early March. So the full benefit would come in the next financial year."

Below is the edited transcript of his interview on CNBC-TV18

Q: You have reported profits this quarter. Is it a durable turnaround or is it a one quarter phenomenon?

A: It’s a durable phenomenon because we have got a lot of control on our finance cost, lot of control on the power cost. So the road ahead looks bright and good.

Q: Given what you have done in Q3 - what do you think you could finish up the financial year with in terms of sales and profits?

A: We can’t give forward looking statements but basically, it is going to be a better number than last year. We have been focusing more on the bottom line than on the top line and the results can be seen.

Q: Can you update us on where your debt levels stand at by the end of this quarter?

A: Debt levels would be down. I cannot give a right number on it because we are trying to actually prepay our debt. We are trying to work with the bank. In case that happens then we will have a good number on it.

Q: I believe that you are also trying to improve your production capacity. Will it go up significantly in the next couple of quarters?

A: Yes it will. Our expansion plan in Gujarat is already up and about. It will go into full stream by end of February  or by early March. So the full benefit would come in the next financial year.

Q: Would the power plant at Ratnagiri continue to suffer from high coal prices or do you see any resolution?

A: In the last few months it has started giving better results because the Maharashtra State Electricity Board (MSEB) prices have gone up and therefore it was able to absorb the high coal prices. In fact coal prices have come down. So the high coal priced stock is already over and the stock we have now is of cheaper coal prices.

Q: What is your own forecast of how strong domestic demand for PVC resin will be for the first part of this calendar year?

A: PVC resin will grow at least between 10-12%.

Q: How much of the market do you hold right now?

A: We are close to 20%.