Prime Industries Ltd Management Discussions

Your company in order to optimize resources is undergoing a strategic transformation, primarily focusing on the dynamic capital goods segment. The first step in this direction was acquiring a stake in Kay Bovet engineering limited, marking our entry into the capital goods industry. Recognizing the capital goods sectors significance, especially in Indias goal to become an 8 trillion-dollar economy, Company see promising opportunities ahead. This industry also plays a vital role in the defense domain. With this in mind, The Company is enthusiastic about the prospects in this segment.

Indian Economy

The Indian economy holds the position of the fifth-largest in the world by nominal GDP and the third-largest based on purchasing power parity (PPP). It operates as a mixed economy, characterized by a significant public sector and a steadily expanding private sector. Notably, Indias economic growth has been noteworthy, maintaining an average of 7.8% GDP growth annually, surpassing the Reserve Bank of Indias (RBI) estimate of 7 per cent as projected in its April monetary policy review.

The World Bank predicted that India would remain the fastest-growing major economy globally though this growth rate is expected to slow down. According to the Global Economic Prospects report, this moderation is mainly due to a slowdown in investment from a high base. However, investment growth is still expected to be stronger than previously envisaged and will remain robust over the forecast period, with strong public investment accompanied by private investment. The GDP growth forecast for India is estimated at 6.6% for FY 2024-25.

(Source: NSO, World Bank, PIB)

Overall, the Indian economys recent growth trajectory has been marked by notable achievements and challenges, as reflected in its various economic indicators.

Capital Goods Sector

The capital goods industry has always been a frontrunner in Indias growth story, significantly contributing to the nations development. A new report by leading research analyst CRISIL Ratings expects the capital goods sector to maintain its growth momentum, predicting double-digit revenue growth in fiscal year 2025.

CRISIL Ratings published a report forecasting a 9-11% revenue growth for the capital goods sector in FY 2025. This growth is driven by the governments substantial investments in railways (including metro rail), defence, highways, and renewable energy. Additionally, private players are investing heavily in new projects and expanding existing ones. SOURCE: https://teiimandi.com/blogs/feature-articles/capital-goods-sector-a-powerhouse-of-growth-in-fv-2025

In FY 2024, government spending on railways increased by 28%, while defence spending rose by 10%. Conventional sectors saw a 6-8% rise in capital expenditure, and investments in renewable energy capacity grew by 18%.

Defense and Space industries

The defense and space sectors in India hold immense significance within the countrys economy, contributing substantially to GDP, employment, and technological innovation. Heres a breakdown of these sectors:

Defense Industry:

The Defence Budget for FY24 was Rs. 5,93,537.64 crore, constituting 13.18 per cent of the central governments expenditure.

- Capital allocations for modernization and infrastructure development increased to Rs 1,62,600 crore, a rise of Rs 10,230 crore (6.7 per cent) over previous year.

- 43 per cent increase in the capital budget of BRO to Rs 5,000 crore.

- 9 per cent increase in the allocation to DRDO, reaching Rs 23,264 crore for research & development in Defence.

Source: https://www.business-standard.com/budget/news/interim-budget-2024-defence-budget-under-modi-govt-from-2014-2023-124012900326 1.html

Space Industry:

Indias space industry is experiencing rapid growth.

The year 2024 was action-packed with significant missions including the Reusable Launch Vehicle Autonomous Landing Mission (RLV LEX) dated 02^nd April, 2023, PSLV-C55/TeLEOS-2 Mission dated 22^nd April, 2023, GSLV-F12/NVS-01 Mission dated 29^th May, 2023, LVM3 M4 / Chandrayaan-3 Mission dated 14^th July, 2023, PSLV-C56/DS-SAR Mission dated 30^th july, 2023, PSLV-C57/Aditya-L1 Mission dated 02^nd September, 2023, Gaganyaan TV-D1 Mission dated 21^st October, 2023, PSLV- C5?/XPoSat Mission dated 01^st January, 2024, GSLV-F14/INSAT-3DS Mission dated 17^th February, 2024, Reusable Launch Vehicle Autonomous Landing Mission (RLV LEX -02) dated 22^nd March, 2024.

Source: https://www.isro.gov.in/Timeline.html

Nuclear industry

The nuclear industry holds a prominent position in Indias energy landscape, contributing significantly to its energy mix with nuclear power. Based on the countrys project timeline, Nuclear power generation is expected to increase rapidly during 2024-2026, with new plants totaling an estimated 4 GW of capacity entering commercial operation. NPCIL currently operates 24 nuclear reactors with a combined capacity of 8.1GW.

The Indian government has an ambitious goal of increasing nuclear powers share to 25% by 2050, one of the step in this direction was taken by Indias Prime Minister Narendra Modi of two 700MW indigenously built reactors at Kakrapar in Gujarat in February 2024.

Souce:https://www.power-technology.com/news/india-18-nuclear-reactors-2032/#:~:text=NPCIL%20currentlv%20operates%2024%20nuclear,(KAPS%203%20and%204).

In conclusion, Indias nuclear industry plays a vital role in its energy sector, offering the benefits of low carbon emissions and stable energy supply. The government is taking proactive steps to promote the industrys growth and intends to expand its nuclear power capacity to meet future energy demands.