.Majority of Apollo pipes market was limited to northern region. Pvc pipe technology is nothing unique other than brand and distribution strength. Obviously other players would have taken away market share in northern region. Unfortunately the previous annual reports(Amulya leasing) does not through any light on their capacity utilization or pipe business. Below pic give you an idea about how they expanded.
FY 18 AR is very clear with their plan to expand to other regions of country and expanding capacity region wise which will help in reducing logistic costs. The concern raised by about underutilisation of capacity is genuine which we need to monitor. Management seems to be aware of it and already delayed capacity expansion by a year. They will set up Raipur plant by FY20 instead of Bengaluru plant which was planned for FY19.
I was invested in finolex considering the low valuation when compared to peers and their backward integration of pvc resin manufacturing which I thought as additional advantage. After going through the below report I understood it may not have any additional advantage and infact prone for significant inventory loss/gain. Please go through the below report which gives an idea about pvc/caustic soda market. Particularly chapter no 3 and 4 gives idea about trade agreement which gives an impression that importing may be better than infusing capital for backward integration (as per my understanding).PVC- caustic soda Report.pdf (2.5 MB)
As per H1FY19 balance sheet:
D/E= total liabilities/ shareholder equity =400/126=3.1