Prakash Pipes Ltd Management Discussions

ECONOMIC OUTLOOK Indian Economy

India continues to stand out among major economies, with the RBI projecting real GDP growth at 6.5% for FY26, supported by strong agriculture, industry, and services sectors. The quarterly outlook remains robust: Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%. High-frequency indicators, including industrial and services activity, GST collections above C2 lakh crore, digital transactions, and e-way bills, underscore economic resilience despite global headwinds. Despite the slight divergence, India remains the fastest-growing major economy in this cycle.

The growth is attributed to a robust agricultural sector, which expanded by 3.8%, and steady services sector growth, while manufacturing and industrial production showed signs of slowing, growing at 5.3% and contributing to the overall moderation in growth. On the expenditure side, private consumption remained resilient, supported by rising rural and urban demand, while government spending and investment also showed positive momentum. Exports grew by 5.9%, although this was tempered by slower global demand and trade barriers.

The Centres debt-to-GDP ratio is estimated at 56.1% for FY26, with a target to reduce it gradually to around 50% by FY31. This fiscal discipline, combined with sustained

capital expenditure on infrastructure and social sectors, is expected to support medium-term growth and macroeconomic stability.

Inflationary pressures are projected to moderate, with the RBI targeting inflation around 4%, supported by stable food prices and effective monetary policy. The central banks accommodative stance aims to balance growth support with inflation control, ensuring a stable monetary environment conducive to investment and consumption.

Despite global headwinds such as supply chain disruptions, geopolitical risks, and trade uncertainties, Indias economy benefits from strong domestic consumption, a growing middle class, and ongoing structural reforms. The services sector, particularly IT and financial services, continues to be a significant growth driver, contributing to export resilience and employment generation. Steady remittance inflows and a manageable current account deficit further bolster external stability. While global uncertainties pose risks, the countrys strong fundamentals and policy focus on inclusive and sustainable growth providing a solid foundation for continued economic expansion, making it a key engine of global growth in the coming years.

OUTLOOK

India remains the fastest-growing major economy among emerging markets and developing nations. In its latest World Economic Outlook, the International Monetary Fund (IMF) upgraded Indias GDP growth forecast for FY25 by 20 basis points to 7.0%, citing improving consumption prospects, particularly in rural areas. This revision underscores the countrys economic resilience and growth momentum.

Key drivers of this resilience include strong private consumption, a sustained infrastructure push, and overall macroeconomic stability. Government-led capital expenditure, high capacity utilisation, and improving business optimism are further catalysing investment activity. As a result, both urban and rural demand remain steady, while the services sector continues to demonstrate strong performance.

The outlook for the agriculture sector and rural demand is expected to strengthen, supported by the forecast of abovenormal southwest monsoon rainfall. Concurrently, the governments sustained emphasis on capital expenditure,

coupled with elevated capacity utilisation, easing financial conditions, and improving business sentiment, is likely to further revive investment activity across sectors.

Private consumption, the primary driver of aggregate demand, remains robust, bolstered by a steady rise in discretionary spending. Investment momentum is also picking up, as reflected in several high-frequency indicators.

While the IMFs global outlook highlights rising uncertainties, India stands out for its stable macroeconomic fundamentals and reform-driven growth momentum. Even as the global economy slows, India remains well-positioned to lead among major emerging markets.

This resilience is supported by the Reserve Bank of Indias prudent monetary policy, which balances inflation control with growth facilitation. By effectively managing interest rates and liquidity, the RBI has ensured financial sector stability, reinforcing the broader macroeconomic framework.

INDUSTRY OVERVIEW

PVC Pipes Industry Undergoing Rapid Growth

The demand for PVC pipes and fittings in India has remained strong, largely fuelled by sustained momentum in government-led initiatives such as the Jal Jeevan Mission and the Pradhan Mantri Awas Yojana, which prioritise water supply, sanitation, and housing. Notably, the government has more than doubled its budgetary allocation for these schemes in the current fiscal year, setting the stage for an even greater uptick in PVC demand.

Key Growth Drivers

Government Infrastructure Initiatives: The sector benefits significantly from continued budgetary allocations toward flagship schemes, including the Jal Jeevan Mission for rural water supply and Pradhan Mantri Krishi Sinchai Yojana for irrigation enhancement. The Jal Jeevan Mission has successfully provided tap water connections to over 15.19 crore households, representing 78.58% coverage of rural households as of October 2024.

Agricultural Modernisation: Indias agricultural sector, contributing ~15% to GDP, is undergoing significant modernisation with increased adoption of efficient irrigation systems. PVC pipes are crucial for drip and sprinkler irrigation systems, which help conserve water and improve crop yields. The governments focus on improving irrigation coverage from the current 54% of net sown area presents substantial growth opportunities.

Urban Development: The residential real estate sector serves as an important demand driver, with mid to

premium residences showing strong sales momentum. Government initiatives under Pradhan Mantri Awas Yojana for affordable housing further support demand for PVC pipes in plumbing applications.

Water Infrastructure Investment: Indias water

infrastructure sector presents annual opportunities worth C1 lakh crore, driven by government initiatives and growing water stress affecting 66% of the population. The countrys water and wastewater market is projected to expand at a CAGR of 11.6%, reaching $179 billion by FY29.

Environmental Benefits

The manufacturing process supports waste reduction and circular economy models by incorporating a high proportion of recycled material, as PVCs thermoplastic properties allow multiple recycling cycles without significant loss of performance. Environmentally safer formulations are increasingly adopted, including lead-free stabilisers and bio-based plasticisers, which reduce health and ecological risks during production and use.

Innovations such as unplasticised PVC (uPVC) decrease harmful by-products, further enhancing environmental safety. Collectively, these attributes enable PVC pipes to contribute meaningfully to several United Nations Sustainable Development Goals (SDGs), especially those targeting clean water, sanitation, and energy efficiency through their critical role in modern infrastructure and reduced environmental footprint.

OUTLOOK

The outlook for the Indian PVC pipes industry remains robust, with the market projected to grow from approximately $5.25 billion in 2024 to around $743 billion by 2030, reflecting a CAGR of about 5.8% during this period. This growth is propelled by rapid urbanisation, increasing construction activities, and a strong government focus on infrastructure development, including flagship initiatives such as “Housing for All," the “Smart Cities Mission," and substantial investments in water supply and sanitation infrastructure.

The rural sector is also a significant contributor, as PVC pipes are increasingly adopted for irrigation and water management, supported by government schemes like the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), which received a substantial budget allocation for 2025-26 to enhance irrigation infrastructure and efficiency.

PVC pipes are favoured over traditional materials due to their durability, cost-effectiveness, corrosion resistance, and ease of installation, making them the preferred choice for water supply, sewage, drainage, and agricultural irrigation. Technological advancements are further improving product longevity and sustainability, while ongoing replacement of aging infrastructure and expansion of urban housing continue to drive demand. Despite challenges such as raw material price volatility, the sector is well-positioned for steady expansion, underpinned by Indias ongoing urban and rural infrastructure transformation and the increasing need for efficient water management solutions.

Sources:

https://eiaishakti.gov.in/iimreport/JJMIndia.aspx https://www.business-standard.com/economy/news/india- s-water-market-to-touch-17-9-billion-by-2029-colliers- report-124020800475 1.html

https://sdgs.un.org/goals

https://www.globenewswire.com/news-relea

se/2025/01/23/3014431/28124/en/India-7-4-Bn-PVC-

Pipes-Market-Analysis-Competitive-Landscape-Forecasts-

Qpportunities-2024-2030.html

FLEXIBLE PACKAGING INDUSTRY ANALYSIS

The Indian flexible packaging market demonstrates exceptional growth potential, with the sector valued at $20.41 billion in 2025 and projected to expand at a CAGR of 11.46% during 2025-2030. The industry benefits from multiple growth drivers, including rising demand for packaged food and beverages, expansion of e-commerce, and increasing consumer preference for convenience packaging. The shift toward sustainable packaging solutions and a growing middle-class population with higher disposable income further support market expansion.

Key Market Trends

E-commerce Growth: The Indian e-commerce market is projected to grow from $125 billion in FY24 to $345 billion in FY30, at a CAGR of 15%. COVID-19 accelerated the shift toward online shopping, creating sustained demand for flexible packaging solutions that offer durability, lightweight properties, and space efficiency.

Urbanisation Impact: Indias urbanisation rate is accelerating, with about 34% of the population currently living in urban areas, projected to reach 37% by 2025. This rapid urbanisation drives infrastructure development and creates demand for efficient food distribution channels, increasing the volume of packaged products.

Sustainability Focus: Environmental regulations and sustainability challenges are driving innovation in ecofriendly packaging solutions. The implementation of Extended Producer Responsibility (EPR) mandates companies to ensure responsible packaging disposal, creating opportunities for sustainable packaging alternatives.

Technological Advancements

The flexible packaging industry is experiencing significant technological innovation, with investments in bio-based materials reaching $4.5 billion in 2024. Nearly 60% of consumers express a preference for brands using sustainable packaging, with 72% willing to pay premium prices for ecofriendly packaging solutions. The customisation trend is gaining momentum, with approximately 45% of millennials expecting personalised experiences from brands. This creates opportunities for flexible packaging manufacturers to develop tailored solutions that enhance brand image and consumer engagement.

KEY DRIVERS

Consumer Demand and Urbanisation: The shift toward urban lifestyles and the rise in disposable incomes has fuelled demand for packaged foods, beverages, and personal care products. The growing e-commerce sector has also accelerated the need for durable, lightweight, and tamper-evident packaging solutions.

Technological Advancements: Innovations in packaging materials and manufacturing processes have enabled the development of more sustainable and customisable packaging options, supporting market expansion.

Sustainability and Environmental Awareness: Increasing consumer and regulatory focus on sustainability is pushing manufacturers to develop eco-friendly, recyclable, and biodegradable packaging solutions. This trend is reinforced by government regulations and consumer willingness to pay a premium for sustainable packaging.

Food Safety and Shelf Life: The need for packaging that extends product shelf life and maintains food safety standards is a crucial driver, especially in the food and pharmaceutical sectors.

Export and Infrastructure Growth: The rapid growth of exports and government investment in infrastructure, such as under the National Infrastructure Pipeline, have enhanced supply chain efficiency and increased the volume of packaged products.

STRATEGIC GOVERNMENT INITIATIVES

Extended Producer Responsibility (EPR): The Indian government has implemented EPR guidelines that require manufacturers to ensure the responsible disposal and recycling of packaging materials. This has led to increased investment in recycling infrastructure and the development of sustainable packaging alternatives.

Plastic Waste Management Rules: Amendments to these rules mandate the use of compostable and biodegradable materials, encouraging innovation in eco-friendly packaging and reducing plastic waste.

Production Linked Incentive (PLI) Scheme: The expansion of the PLI scheme to include critical sectors such as electronics and pharmaceuticals has boosted demand for high-quality flexible packaging by incentivising domestic manufacturing and reducing import dependence.

National Packaging Initiative: Government-led initiatives aim to promote the adoption of advanced packaging technologies and support the transition to sustainable materials, aligning with global best practices.

India Plastics Pact: In collaboration with industry stakeholders, the government supports the India Plastics Pact, which provides a roadmap for transitioning to recyclable and mono-material flexible packaging, improving waste segregation, and expanding markets for recycled materials.

ENVIRONMENTAL PERFORMANCE

The flexible packaging industry is increasingly adopting mono-material structures to enhance recyclability, as these simpler material compositions facilitate more efficient sorting and processing within recycling systems. Companies are investing in bio-based polymers, recycled content,

and biodegradable additives to improve recyclability and decrease fossil fuel dependency. Alongside this, there is a growing emphasis on incorporating these sustainable materials into packaging formulations, which helps reduce reliance on virgin fossil-based resources and lowers the overall environmental footprint.

The industry is also advancing toward packages that are recyclable or compostable in mainstream waste streams, driven by regulatory and consumer pressure. The industry focuses on lightweighting and material simplification strategies, aiming to minimise the quantity of raw materials used while maintaining packaging performance. These combined efforts contribute significantly to improving the circularity of flexible packaging by making products easier to recycle, decreasing resource consumption, and aligning with evolving sustainability demands.

OUTLOOK

The outlook for the Indian flexible packaging industry remains highly positive, underpinned by sustained economic growth, rising consumer demand, and a strong policy push toward sustainability. The sector is expected to maintain double-digit growth rates, with increasing adoption of ecofriendly materials, technological innovation, and expansion into new end-use sectors. Government regulations and strategic initiatives will continue to drive the shift toward responsible packaging practices, positioning India as a leading market for flexible packaging solutions in the region. Continued investment in recycling infrastructure and the development of biodegradable materials will be crucial for balancing growth with environmental responsibility.

Sources:

https://www.mordorintelligence.com/industry-reports/india-flexible-

packaging-market

https://www.ibef.org/industry/ecommerce

https://population.un.org/wup/

https://www.mckinsey.com/business-functions/sustainability/our-

insights

https://www.unep.org/reducing-plastic-pollution-through-extended- producer- responsibility

https://www.wwfindia.org/?20402/India-to-be-the-First-Asian- Country-to-Launch-a-Plastics-Pact&gad source=1&gad campaigni d=22768927Q93&gbraid=0AAAAAD2-siOWiGAnoPzRaQpYOiUeEkXgI &gclid=CiwKCAiw1ozEBhAdEiwAn9qbzfPCUHT9Jovi3lb23AroJ8IwD 2d9c9JzAoxX6h8Dt50uUrGoIfWRmxoCiBcQAvD BwE

FINANCIAL PERFORMANCE - PRAKASH PIPES LIMITED

Revenue

Revenue from operations was C780.48 crore in FY25 as against C669.35 crore in FY24.

EXPENSES

Total expenses of the Company increased by 18.30% from C575.49 crore in FY24 to C680.82 crore in FY25. Raw material costs, accounting for a 79.80% share of the Companys total expenses, increased 1747% from C462.51 crore in FY24 to C543.32 crore in FY25. Employee expenses, accounting for a 5.89% share of the Companys total expenses, increased 15.74% from C34.62 crore in FY24 to C40.07 crore in FY25.

KEY RATIOS

Key Ratios	FY21	FY22	FY23	FY24	FY25
EBITDA Margin (%)	12.73	13.05	14.77	18.39	16.68
Net Profit Margin (%)	7.52	7.59	10.05	13.39	10.65
EBITDA/Net Interest Ratio	41.24	33.25	33.69	32.83	18.63
Debt-Equity Ratio (X)	Nil	Nil	Nil	0.02	0.02
Return On Equity (%)	18.58	19.81	25.59	24.55	18.73
Book Value Per Share C	80.09	98.38	116.48	152.67	185.51
Earnings Per Share C	17.08	19.57	29.81	37.48	37.74
Debtors Turnover (Days)	32	28	32	37	34
Inventory Turnover (Days)	43	44	38	41	41
Current Ratio (X)	3.01	3.06	4.15	3.51	3.57

Risks and Concerns

Risk, representing the uncertainty that can influence business performance, is an integral and unavoidable aspect of the Companys operations. To effectively manage this, the Company follows a robust and holistic risk management framework designed to identify, classify, and prioritise operational, financial, and strategic risks. This approach reflects PPLs strong commitment to allocating significant time, resources, and expertise towards managing and mitigating these risks, thereby protecting our business interests and strengthening our ability to achieve sustainable growth.

Internal Control Systems

The Companys internal audit system has been continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with, and pending issues are addressed promptly. The Audit Committee reviews reports presented by the Internal

Auditors on a routine basis. The Committee makes note of the audit observations and takes corrective actions, if necessary. It maintains a constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

Cautionary Statement

This Report contains forward-looking statements that may be identified by their use of words such as plans, expects, will, anticipates, intends, projects, estimates, or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the Companys strategy for growth, market position, expenditures, and financial results, are forward looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised.