Like all other industries, plastic pipes industry too suffered due to countrywide sudden lockdown but impact on their volume was less as compared to others. For most of the plastic pipe manufacturers shrinkage in volume during the first quarter of current financial year was less than 30%.
Impact of lockdown was less in case of manufacturers with Pan India network like Supreme Industries while the single location manufacturers suffered the most. Having said that Finolex Industries lagged the peers due to continued COVID spread in Pune area due to which stringent lockdown measures were imposed.
One of the reasons for the resilient performance pipes industry is due to continued healthy demand from rural India. According to pipe manufacturers, demand from rural India and smaller cities and towns was strong both for irrigation pipes and plumbing pipes. As a result, manufacturers with Pan India distribution network performed better during the first quarter.
An interaction with the cross section of the pipe manufacturers reveal that their main focus will be on improving their supply chain efficiencies and capturing new markets. Pipe manufacturers have also decided to go slow on their capex programmes considering the uncertainties prevailing in the economy. However, their outlook for second half of the current financial year remains positive with the pipe manufacturers pinning hopes on a strong Kharif harvest for demand revival in the rural markets.
Further, affordable housing has aplenty pent-up demand for pipes. Faster pace of urbanisation, increased emphasis on Smart Cities Mission and Swachh Bharat Mission and AMRUT schemes are likely to give big boost to plastic pipes demand in the coming years. Thus, COVID-19 inflicted lockdown and subsequent demand disruption is only a temporary phenomenon and is not likely to alter the long term prospects of the industry.