Apollo Pipes Ltd Management Discussions

An Economic Review

The global economic landscape in 2024 was characterised by a nuanced picture of moderate growth accompanied by significant divergence across regions. While overall expansion continued, it did so at a subdued pace, and the strength of that growth varied considerably.

Key factors that shaped the 2024 economic landscape included the ongoing efforts by central banks to manage inflation, robust private consumption in key economies, the potential impact of geopolitical uncertainties on trade and supply chains, and the increasing focus on transitioning to sustainable energy sources.

Against the backdrop of global uncertainty, India has emerged as a notable outlier. The nation recorded a GDP growth of 6.5% in FY25, following 9% in FY24. This growth is underpinned by a confluence of factors, including a notable resurgence in rural demand, which has propelled private final consumption expenditure. Furthermore, the services sector was a significant growth catalyst. Increased government capital expenditure also played a seminal role in the nations economic growth.

Headline inflation for the full year moderated to 4.6%, the lowest since 2018-19, aided by favourable weather, relatively stable commodity prices, an improved supply chain, and a sharp decline in vegetable prices. Easing pressure on commodity prices led the MPC to cut the repo rate by 50 basis points from 6.5% to 6.0%, reducing the repo rate twice during the fiscal year.

In FY25, the agriculture sector grew by 3.8%, the industry sector expanded by 6.2%, and the services sector recorded a robust growth of 7.2%. The core sector maintained stable momentum, registering a 4.6% growth.

Industrial performance, while moderated, showed signs of recovery. The Index of Industrial Production (IIP) growth slowed to 4% in FY25 from 5.9% the previous year. The Reserve Bank of Indias surveys highlighted stronger production, order books, and capacity utilisation, signalling an industrial upswing. Complementing this, the HSBC India Manufacturing PMI rose to 58.2 in April 2025, driven by increased international orders and purchasing activity.

OUTLOOK

In FY26, the Indian economy is expected to demonstrate moderate growth compared to the previous financial year, with a projected real GDP growth of 6.3-6.8%, albeit from a high base. With that, India is poised to strengthen its position as one of the fastest-growing major economies, significantly contributing to global GDP growth. However, external risks such as a global economic slowdown, geopolitical tensions, tariff wars and trade disruptions could impact Indias future economic outlook.

Indias Agricultural Sector

In the context of a dynamic economic landscape, Indias agricultural sector has emerged as a resilient pillar, surpassing expectations and reinforcing its crucial role in the nations development. According to reports, the sector realised a robust growth rate of 3.8% in agriculture for the fiscal year 2025, indicating a significant rebound from previous years and reflecting the sectors resilience and adaptability.

The sector accounts for 16% of Indias GDP and employs over 46% of the workforce; agriculture remains the backbone of the Indian economy, sustaining rural livelihoods and anchoring national food security and economic stability.

Governments Push for Productivity and Sustainability

Central to this growth is robust policy support. The government has significantly enhanced its efforts to transform Indian agriculture through disseminating knowledge, implementing sustainable practices, and modernising irrigation systems. A key initiative propelling this endeavour is the Sub-Mission on Agricultural Extension (SMAE), which advocates for best farming practices, empowers farmers with scientific knowledge, and improves productivity at the grassroots level.

The Per Drop More Crop Impact

A significant cornerstone of Indias agricultural transformation has been the Per Drop More Crop (PDMC) initiative, which operates under the broader framework of the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY). This initiative is focused on enhancing water-use efficiency and has seen the release of ?21,968.75 Cr to states between FY16 and FY25, thereby facilitating the coverage of 95.58 lakh hectares under micro-irrigation. This is 104.67% more than what was achieved before the launch of PDMC, marking a significant leap in precision irrigation and water conservation.

Other policy drivers

Complementing this, the Micro-Irrigation Fund has approved ?4,709 Cr in loans, of which ?3,640 Cr has been disbursed, supporting states in expanding drip and sprinkler systems across farms.

Another significant initiative, the Paramparagat Krishi Vikas Yojana, has made considerable progress in the realm of organic farming. As of the fiscal year 2025, 14.99 million hectares have been transitioned to organic cultivation, thereby benefiting approximately 2.53 million farmers.

In an effort to enhance agricultural finance and support rural livelihoods, more than 9,000 new Primary Agricultural Credit Societies (PACS), as well as dairy and fishery cooperatives, have been established.

Progressing ahead

With a 6.4% rise in real Gross Value Added (GVA) from the supply side, Indias agriculture sector is well-positioned for continued advancement. The synergy between innovation, policy support, and grassroots initiatives ensures that agriculture not only remains a stabilising force but also evolves into a driver of inclusive, sustainable growth.

As the nation progresses, Indian agriculture transcends the mere objective of nourishing the population; it encompasses the empowerment of farmers, the conservation of resources, and the stimulation of economic momentum from the grassroots level. The robust development of Indias agricultural sector offers substantial opportunities for the PVC pipes and fittings industry, particularly concerning the advancement of irrigation infrastructure and the adoption of sustainable farming practices.

By the year 2030, it is anticipated that the Indian irrigation sector will experience considerable growth, particularly in relation to micro-irrigation systems and the automation of irrigation processes. Indias market for microirrigation systems is projected to reach US$1.20 billion by 2030. Furthermore, drip irrigation, which serves as a crucial element of micro-irrigation, is also expected to reach a valuation of US$1,897.0 million by this same year.

Indian Real Estate Sector

Indias real estate sector is poised for exponential growth, undergoing a transformative phase driven by rapid urbanisation, strong economic fundamentals, expanding digital infrastructure, and changing consumer preferences. The market is valued at approximately US$482 billion in 2024 and is expected to reach US$1 trillion by 2030.

This expansion is poised to significantly enhance the sectors contribution to the national economy. The real estate sectors share of GDP, which was approximately 7.3% in 2022, is now anticipated to nearly double, rising to 15.5% by 2030. This trajectory underscores the sectors growing importance in Indias growth narrative and its pivotal role in shaping the countrys future urban and economic landscape.

Indias residential real estate market is projected to reach US$44.37 trillion by 2030, with a CAGR of 3.38%. With a rising population, increasing income levels, and supportive government initiatives like PMAY, the demand for housing, especially in the affordable and mid-income segments, remains strong.

Tier 2 and 3 cities in India are rapidly emerging as new growth centres, attracting both homebuyers and real estate developers seeking opportunities beyond the saturated metropolitan markets. Their increasing attractiveness is attributed to a combination of affordability, enhanced infrastructure, and developing urban lifestyles. As property prices persist in rising within metropolitan areas, buyers are progressively inclined towards the more spacious and cost-effective housing alternatives than these burgeoning cities present.

According to a CREDAI-Liases Foras research report on the real estate sector in 60 Indian cities, as many as 44% of the 3,294 acres of land acquired by real estate developers in 2024 were concentrated in the emerging hubs of Indias Tier-2 and Tier-3 cities.

Another key driver of this momentum is the commercial real estate segment, which is experiencing remarkable growth across the retail, office, and data centre sectors. Between 2024 and 2028, nearly 41 million sq. ft. of retail space is anticipated to become operational across the top seven cities, reflecting aggressive expansion by domestic and international retailers alongside robust consumer demand.

Indias office space market continues to demonstrate strong upward momentum, characterised by increasing

absorption levels. This sustained growth is driven by the expansion of sectors such as IT/ITES, BFSI, and Global Capability Centres (GCCs). Cities like Bengaluru, Hyderabad, and Pune are at the forefront of this demand, leading the uptake of Grade A office spaces as businesses scale and consolidate their operations.

Meanwhile, the data centre segment is emerging as a pivotal growth engine. As digital transformation continues to accelerate in 2025, driven by widespread cloud adoption and strengthened data localisation mandates, the demand for real estate dedicated to data centres is projected to rise significantly, reaching an estimated 15 to 18 million sq. ft. by the end of the year.

Together, these trends reflect a dynamic and diversified real estate landscape, with commercial, residential, and digital infrastructure development fuelling Indias journey toward becoming a US$5 trillion economy. The sector is well-positioned for long-term growth.

Key growth drivers

Urbanisation: By 2030, an estimated 38% of Indias population will reside in urban areas, significantly increasing demand for both residential and commercial real estate. This urban shift is driving the development of modern infrastructure and integrated townships across major and emerging cities.

Policy Push: The Indian real estate sector has benefited from a series of progressive policy interventions aimed at promoting transparency, sustainability, and growth. Landmark initiatives such as the Real Estate (Regulation and Development) Act (RERA), Pradhan Mantri Awas Yojana (PMAY), and the Smart Cities Mission are creating a more regulated and investor-friendly environment while supporting inclusive and sustainable urban development.

Foreign Direct Investment (FDI) and REITs: Rising capital inflows through FDI and the growing popularity of Real Estate Investment Trusts (REITs) are strongly boosting the organised real estate market. These investments enable large-scale development, improve liquidity, and attract both institutional and retail investors.

Technology and Innovation: Technological advancements are transforming Indias real estate landscape. The rise of prop-tech platforms and smart home solutions is enhancing operational efficiency and customer experience.

The PVC Pipes Sector

FY25 proved to be one of the most challenging years for the PVC pipe industry in India. Demand was significantly affected by a slowdown in private real estate activity and diminished government infrastructure spending. Furthermore, frequent fluctuations in the price of polyvinyl chloride (PVC), the industrys key raw material, led to destocking by channel partners. Consequently, the overall industry is estimated to have contracted by approximately 5% during the year.

The PVC pipes market plays a vital role in various sectors, including water supply, sewage management, agriculture, and industrial applications. It encompasses a wide network of manufacturers, suppliers, distributors, and end-users. The increasing focus on rural development, irrigation efficiency, and affordable housing is likely to continue driving demand for durable and cost-effective piping solutions.

Raw Material Volatility and Margin Pressure

PVC resin prices experienced significant volatility throughout the year. These sharp price fluctuations created uncertainty in the supply chain, leading to inventory losses for manufacturers and decreased procurement by distributors, further diminishing volumes. This volatility continued to place pressure on margins and operations planning.

The fiscal year 2025 was characterised by diminished capital expenditure activity and a significant base effect from the preceding year. Nevertheless, the latter half of the year provided some respite as business-to-business (B2B) activity and capital expenditure spending commenced a recovery, resulting in a slight rebound in volume.

Sectoral Performance

Despite short-term headwinds, the long-term growth prospects for Indias PVC pipes industry remain highly encouraging. Driven by robust demand from sectors such as agriculture, infrastructure, real estate, and water management.

The Indian PVC pipes market is expected to grow at a compound annual growth rate (CAGR) of 14.2% from 2024 to 2033. The market size is valued at US$374.7 million in 2024 and is poised to reach US$1,237.8 million by 2033.

Although FY25 presented significant headwinds for the PVC pipe industry, structural drivers such as urbanisation, infrastructure investments, and policy support offer a strong foundation for long-term growth. With resilience and strategic adaptation, the industry is poised to rebound and scale new heights in the years ahead.

Indias per-capita pipe consumption is lower than the world average and further lower than that of the US, Europe, and China. This implies significant headroom for growth for the Indian plastic pipe industry.

SWOT ANALYSIS

STRENGTHS

?€? Diverse end-use applications across sectors.

?€? Market expansion is driven by rapid urbanisation.

?€? Favourable policy environment and regulatory support.

WEAKNESSES

?€? Limited geographic spread constrains broader market access.

?€? High competitive pressure from a fragmented, unorganised sector.

OPPORTUNITIES

?€? Accelerated growth in the real estate sector is driven by rising demand.

?€? Robust government initiatives to enhance irrigation infrastructure.

?€? Increased private sector investments are boosting industry expansion.

THREATS

?€? Fluctuating raw material prices pose risks to margins and operational stability.

?€? Rising interest rates may dampen investment sentiment and slow project pipelines.

About Apollo Pipes

Apollo Pipes (BSE: 531761, NSE: APOLLOPIPE) is a prominent player in Indias piping and fittings industry, specialising in water management solutions. Headquartered in Delhi, the company has decades of experience in serving a diverse clientele across key sectors including?€” plumbing, sanitation, water supply, infrastructure, and agriculture.

With a strong brand presence in the domestic market, Apollo Pipes operates five state-of-the-art manufacturing facilities with a combined capacity of 2,25,500 TPA. Its extensive product portfolio comprises over 2,600+ high-quality offerings, including CPVC, UPVC, and HDPE pipes and fittings, as well as bathroom accessories, water tanks, and solvents.

Backed by a robust distribution network of over 1,000+ channel partners and 10,000 customer touchpoints, the company remains committed to delivering innovative, reliable, and efficient piping solutions across India.

Operational

Performance

In line with our growth strategy, Apollo Pipes invested in capacity expansion and technology upgradation to boost product offerings and supply chain efficiency. The revenue stood at ?1,182 Cr, with margins slightly impacted by pricing volatility. Average capacity utilisation stood at 66% for PVC, 21% for OPVC, 78% for IMD, and 21% for HDPE, reflecting demand dynamics.

New OPVC capacity of 450 kg/hr was commissioned to support infrastructure growth. Quality enhancement measures included advanced testing equipment, real-time process controls, and the establishment of a centralised

Financial Performance

Despite persistent macroeconomic headwinds and volatile input prices, Apollo Pipes displayed strong operational resilience in FY25. While revenue from operations stood at ?1,182 Cr, marking a 20% growth over the previous year, the Company fell short of its internal growth targets due to muted demand and sharp price fluctuations across key product categories.

Despite scaled operations and sustained efforts towards cost optimisation, the impact of price volatility and softened market demand adversely affected bottom-line performance in FY25. EBITDA for the year stood at ?96 Cr, the same as the previous year. Net Profit declined to ?33 Cr in FY25 from ?43 Cr in FY24, reflecting the challenging business environment.

Net cash flow from operations in FY25 was ?50 Cr, as compared to ?125 Cr in FY24. The Company continued to prioritise efficient working capital management, although the working capital cycle witnessed some pressure during

R&D facility. The supply chain was strengthened through cost optimisation, vendor diversification, and supplier audits.

Energy efficiency was improved via power factor correction devices, while renewable sourcing under PPAs contributed to greener operations. Solar energy initiatives reduced reliance on conventional power, supporting our ESG goals. Future plans include motor replacements and mixer automation to ensure long-term energy optimisation.

the year, moving from 19 days in FY24 to 36 days in FY25. Despite these challenges, management remained focused on deploying available operating cash flows judiciously, balancing debt optimisation and strategic investments in capacity and capability building.

Shareholders funds grew to ?880 Cr as of March 31,2025, up from ?668 Cr in the previous year. Net Debt was Nil as of March 31,2025, as compared to ?41 Cr in FY24, leading to a debt-equity ratio of (0.06) in FY25 versus 0.01 in FY24.

During the year, the Company invested ?166 Cr in capacity expansion?€”both organic and inorganic?€”to strengthen its long-term growth trajectory. These investments are expected to yield returns in the coming fiscal and help improve the Companys financial performance and profitability.

Particulars	2024-25	2023-24	Change (%)	Reason for Change
Debtors Turnover Ratio (x)	13.5	13.6	-	Remain intact
Current Ratio (x)	1.7	1.1	49%	As increase in our inventory
Net Debt-Equity Ratio (x)	(0.06)	0.01	-	Generated Net cash flow
Interest Coverage Ratio (x)	5.1	13.8	(63%)	Lower EBITDA Led to decrease in EBIT
EBITDA Margin (%)	8.1	9.7	(17%)	Lower Revenue Relisation
Net Profit Margin (%)	2.9	4.3	(47%)	Decline in EBITDA
Return on Net Worth (%)	4.2	6.4	(34%)	Lower PAT led to decrease in Return on Net worth

Internal Control & its Adequacy

At Apollo Pipes, the internal control mechanism is meticulously structured to safeguard assets and ensure that all transactions are appropriately authorised, accurately recorded, and reported promptly. This system fully complies with local statutory requirements while simultaneously aligning with global best practices to maintain competitiveness in a dynamic business environment.

The internal control framework consistently monitors and evaluates risks across all operational and strategic domains, including research and development,

Human Resources

At Apollo Pipes, human resources remain our most valuable asset. In FY25, we expanded our workforce to 627 employees and onboarded 124 new hires to support growth and leadership succession. We continued to invest in structured learning through Paathshala, SAP training, and CBWE partnerships, fostering a culture of continuous upskilling. Attrition stood at 14.75%, addressed through employee engagement programmes and recognition initiatives.

partnerships, and commercial and financial exposures. It ensures the efficient execution of accounting and financial functions by regularly reviewing both manual and automated processes pertaining to transaction approvals.

Oversight is further reinforced through the Audit Committee, which reviews the internal audit plan, evaluates the adequacy of the control systems, addresses audit observations, and ensures the implementation and sustainability of corrective actions.

We advanced internal mobility via job rotations, performance-linked promotions, and cross-functional assignments. Engagement was fostered through events, awards, and collaborative reviews across levels. Safety remained a top priority with zero fatalities and proactive fire and safety drills.

HR digitisation, policy enhancements, and expanded trainee programmes were implemented to support future- ready talent strategies. These efforts collectively reinforced a resilient, skilled, and motivated workforce aligned with our growth vision.

Information

Technology

In FY25, Apollo Pipes advanced its digital transformation agenda by modernising infrastructure, deploying realtime analytics, and strengthening cybersecurity across systems. Significant investments were made in cloud- based scalability, integrated SAP and CRM platforms, and user training to boost digital adoption. Barcode, QR code, and weighment system integrations enhanced shop floor accuracy, traceability, and regulatory compliance.

In the supply chain, mobile-SAP integration, real-time tracking, OTIF analytics, and Super Procure streamlined operations and logistics. Interactive dashboards and automated MIS reports enabled faster, data-driven

decisions. Digital asset management and SD-WAN ensured seamless, secure IT connectivity across units. Content governance and cloud-enabled CMS platforms improved customer engagement and transparency. Finance automation enhanced efficiency in returns, payments, and reimbursements.

The roadmap for FY26 focuses on sales automation, distributor enablement, advanced dashboards, SAP upgrades, and stronger cybersecurity protocols to support scalable, intelligent operations.

Risk

Management

Apollo Pipes acknowledges that its operations are subject to a variety of risks and uncertainties that may have implications both in the short term and the long term. In a constantly evolving business environment characterised by dynamic customer expectations and market volatility, the Company remains attentive to identifying and managing emerging risks.

To address these challenges, Apollo Pipes upholds a thorough risk management framework that consistently monitors the external environment and evaluates potential threats to its strategic, operational, compliance, and reporting objectives.

The risk management initiatives of the Company are directed by the Risk Management Committee of the

Board, consisting of Independent Directors and Senior Management. This Committee assumes a crucial role in supervising risk-related strategies and offering strategic insights to enhance the organisations risk management proficiency.

Under the Committees guidance, Apollo Pipes develops risk policies, identifies potential vulnerabilities, and ensures the effective implementation of mitigation measures. Functional Heads across departments are accountable for the ongoing execution of these risk controls, maintaining a proactive and responsive approach to risk mitigation throughout the organisation.