Unit Economics of Plastic Pipe Industry

Manufacturing pipes is simple and not very capital intensive, but fittings are different. Fittings require precision and significant investment in moulds which makes it capital intensive compared to pipes (~3x of pipes). The requirement to maintain large number of SKUs also increases the working capital in fittings. On the other hand, pipe is a fast-moving product and have higher asset turns compared to fittings. However, due to its specialized nature, fittings fetch much higher margin than pipes (~2x of pipes).