KKV Agro Powers Ltd Management Discussions

KKV Agro Powers Limited (CIN: L40108TZ2012PLC018332), is a leading Precious Metals and renewable energy generation and trading Company based in Coimbatore, Tamil Nadu. The company, listed in the NSE Emerge platform and engaged in multiple businesses, has hit a turnover of an impressive Rs. 962.13 crores, and has recorded a net profit after tax of Rs. 1.68 crores.

The Board of Directors of your company proudly presents the Management Discussion and Analysis Report ("MDA Report") of the company for the financial year 2024-25.

During FY 2024-25, the global economic landscape was shaped by moderating inflationary pressures, stabilising interest rates in major economies, and gradual recovery in global trade flows.

Gold and silver continued to remain attractive investment avenues, supported by safe-haven demand amid geopolitical uncertainties and central banks sustained buying. The domestic precious metals market in India benefitted from stable demand in the jewellery segment and rising interest in investment-grade bullion. However, volatility in global commodity prices, currency fluctuations, and changes in import duties influenced trading margins.

Indias renewable energy industry saw sustained policy support with emphasis on solar and wind power expansion to meet the national target of 500 GW of non-fossil fuel capacity by 2030. Falling solar module prices, improved wind turbine technology, and enhanced grid integration policies encouraged capacity growth. The market also witnessed increased competition from independent power producers, along with emerging opportunities in hybrid renewable projects and energy storage solutions.

Opportunities

Rising demand for gold and silver as a hedge against inflation and geopolitical risks.

Favourable government policies, incentives, and renewable purchase obligations (RPOs) driving demand for green energy.

Technological advancements in renewable energy improving efficiency and reducing costs.

Scope for hybrid renewable energy projects for better capacity utilisation.

Growing ESG (Environmental, Social, and Governance) consciousness among investors and stakeholders.

Threats

Price volatility in global precious metals markets impacting trading margins.

Changes in import duty and GST regulations affecting bullion trade.

Variability in wind speeds and solar irradiation affecting generation levels.

Regulatory and tariff changes in the power sector.

Competition from larger integrated renewable energy players.

The Company has reported the details and performance under Segment Reporting in the Notes to Financial Statements (Note No. 2.42)

The energy segment, consisting of wind and solar operations, continues to be the mainstay of the companys operations. The renewable energy segment achieved steady plant load factors despite seasonal variability. Solar generation benefitted from improved module performance, while wind generation was aligned with historical averages.

During FY 2024 25, the company generated a total of 1.60 crore units of electricity, with 1.14 crore units from wind and 0.46 crore units from solar. Windmill Division: The Windmill division reported revenue from operations of 4.92 crores. It incurred total expenses of 4.45 crores, including 1.63 crores in power generation expenses, and 1.05 crores in depreciation and amortization. This division delivered a profit before tax of 47.08 lakhs, despite high capital costs, reflecting a steady margin and operational efficiency. Solar Division: The Solar division posted revenue of 2.59 crores. Expenses stood at 2.50 crores, primarily due to 1.59 crores in power generation, 68.72 lakhs in depreciation, 7.31 lakhs in employee benefits, and 14.48 lakhs in other operational costs. The profit before tax for this unit was 8.59 lakhs, reflecting a better-than-expected margin and showing potential for long-term viability, subject to capital cost optimization.

The precious metals segment remained resilient with stable demand from jewellery manufacturers and investment clients. However, margins were impacted by fluctuations in international prices and currency movements.

Bullion Division:

With revenue of 902.80 crores and other income of 9.38 lakhs, the Bullion business continued its high-volume trade model. Expenses were led by 904.18 crores in purchases, alongside an inventory buildup of 3.32 crores. Though the absolute profit before tax was 63.68 lakhs, the margin was razor-thin at about 0.07%, which is typical for bullion trading where scale, not margin, is the driver of value. Retail Division: The jewellery retail branch contributed 51.79 crores in revenue. It exhibited stronger profitability with a profit before tax of 1.33 crores and a margin of roughly 2.57%. Strategic inventory reduction of 1.38 crores and disciplined cost management played a key role in this improved outcome, suggesting that the retail jewellery vertical holds promise for higher-margin growth.

The Company remains optimistic about the long-term prospects of both business segments. In the precious metals segment, consistent demand fundamentals and evolving customer preferences towards certified and sustainable sourcing are expected to provide growth avenues. In renewable energy, the policy push towards clean energy and corporate adoption of green power are likely to strengthen the Companys position.

The strategic focus will remain on enhancing operational efficiencies, exploring hybrid renewable projects, diversifying the customer base, and maintaining a prudent risk management framework.

The Company also is planning to relaunch its Purification Business in the financial year 2025 26 as a vertical of the Jewellery Segment. This business was previously operational during the period 2017 to 2019 but was subsequently discontinued. The Purification Business involves the refining and purification of precious metals such as gold and silver to enhance their quality and purity for use in jewellery manufacturing, bullion trade, and other applications. After conducting trial runs and preparatory activities, the Company is now set to resume the Purification Business at full capacity.

Market Risk: Volatility in global bullion prices and currency exchange rates. The inflationary trends in gold prices not only affect pricing strategies but also tend to hamper trade volumes, as high prices may reduce consumer demand, particularly in the jewellery segment.

Regulatory Risk: Possible changes in renewable energy tariffs, RPO norms, and import/export regulations.

Financial Risk: Interest rate changes impacting borrowing costs. The Company actively monitors these risks and adopts mitigation measures through hedging, diversification, and continuous operational improvements.

High Margin and Capital Intensive: Both the precious metals trading and renewable energy segments are characterised by high margins but also require significant capital investment. This capital-intensive nature can affect liquidity and return on investment if market conditions turn adverse.

The Company has adequate internal control systems commensurate with the nature and size of its operations. Internal audits are conducted periodically to assess the effectiveness of controls and ensure compliance with statutory and internal policies. Any deviations or process gaps are promptly addressed through corrective action.

Management has overall responsibility for the Companys Internal Control System to safeguard the assets and to ensure reliability of financial records. Audit Committee reviews all financial statements and ensures adequacy of internal control systems.

During FY 2024-25, the Company maintained stable operational performance in both segments despite external market challenges. The precious metals segment saw steady turnover with price-driven volatility, while the renewable energy segment sustained generation in line with historical performance. Focus on cost control, operational efficiency, and prudent procurement contributed to maintaining margins.

Income from Operations of the Company during the Financial Year 2024-25 showed a marginal decline from Rs. 1,55,477.74 lacs during the previous year to Rs. 96,222.95 lakhs in the present year. After providing for expenditure and tax the Company has earned Net profit of Rs. 168.70 Lakhs.

Human capital continues to be the most important and valuable asset of the Company. During the year, operations were carried out in a cordial atmosphere with exemplary co-operation between employees and the management. The management remains committed to promoting safety, occupational health, and a conducive work environment through proper planning, training, and execution of tasks.

The industrial relations climate remained harmonious throughout the year under review. As on 31st March 2025, the Company employed a total of 31 (thirty-one) employees (excluding Directors) across its business segments.

The Net worth of the Company increased from Rs. 2,123.19 Lakhs in the Financial Year 2023-24 to Rs. 2,272.19 Lakhs in the financial year 2024-25.

The return on net worth has increased during the year:

The details of significant changes in key financial ratios (i.e. change of 25% or more as compared to the previous financial year) along with detailed explanations for such change is provided in the table hereinbelow:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied due to various factors, including economic conditions, government policies, and other incidental factors.