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Prince Pipes & Fittings Ltd Management Discussions

263.48
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Apr 1, 2025|12:00:00 AM

Prince Pipes & Fittings Ltd Share Price Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

GLOBAL ECONOMY

The world economy is expected to continue to grow at 3.2% over 2024 and 2025, at a pace similar to 2023 according to a report by IMF. This is a mild acceleration for advanced economies, where growth is expected to increase from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. This will be offset by a slight slowdown in emerging markets and developing economies from 4.3% in 2023 to 4.2% in both 2024 and 2025.

The forecast for global growth five years down the line, at 3.1%, is at its lowest in decades. Worldwide inflation is anticipated to decline gradually, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, as advanced economies come back to their inflation targets sooner than emerging markets and developing economies. The global economy has been remarkably resilient, despite significant central bank interest rate hikes to restore price constancy. The risks to the global outlook are broadly balanced. The downside could be stemming from geopolitical tensions, including the Ukraine war and the conflict in Gaza and Israel, along with persistent core inflation in some markets, which could raise interest rate expectations and put pressure on asset prices.

INDIAN ECONOMY

The Indian economy grew 8.2% in FY 2024 and averaged 8.3% in the last three financial years. The Reserve Bank of India has projected 7.2% GDP growth for the current financial year. In the financial year 2023-24, the Indian economy contributed 18.5% of global growth which has been a noteworthy achievement. Indias current account registered a surplus in the final quarter of the previous financial year, primarily driven by higher services exports. For FY 2024, the current account deficit decreased significantly due to a lower merchandise trade deficit. The current account deficit fell to 0.7% of GDP, or $23.2 billion, in FY 2024, down from 2% of GDP, or $67 billion, in FY 2023.

The RBI attributed the main drivers for this growth in the last three years to the various structural reforms and policy initiatives. GST has stabilized much faster than other economies which is reflected in the fact that tax collections reported are Rs. 1.7 lakh crore per month. Additionally, the introduction of the Insolvency and Bankruptcy Code and Flexible Inflation Targeting Framework by way of amendment to the RBI Act in 2016 - have been instrumental in this growth.

OUTLOOK

Indias growth story has been and will continue to be multisectoral. The RBI has outlined that as the fifth largest economy, with an expanding population of 1.4 billion, India aspires to become the third largest and an advanced economy by 2047. This can be achieved with multi-sectoral progress. With well- sustained growth, which is set to continue at 7.2% for the current fiscal, Indias economic outlook is robust and broad-based to reach its aim of Viksit Bharat by 2047. On investment and consumption aspects, a gradual pick-up in the private sector capex will make investment growth more broad-based, and continued disinflation will support the purchasing power of consumers. While the countrys structural foundation is strongly led by digital infrastructure, manufacturing, infrastructure, and technology, other key areas of progress and development are set to be climate change, healthcare, agriculture, income equality, and further reforms in GST, taxation, and urban infrastructure.

Indian Plastic Pipes and Fittings Market - Overview

Pipes and fittings - well placed for long-term growth

In India, the demand for water supply and water management infrastructure, with pipes as the primary component, is significantly high and has a vast scope for expansion.

In fiscal year 2023, Indias plastic pipe industry is estimated to be around C470 billion. It reported a CAGR of 9.7% from FY 2015 to FY 2023.

In FY 2023, organized players are believed to be growing their market share consistently from ~59% in FY15 to ~67% in FY 2023. Additionally, the volumes of the top 5 plastic pipe companies grew at a healthy 8.4% CAGR for FY 2015-FY 2023 despite a weak real estate cycle.

In terms of end use, plumbing and sewerage pipes constitute approximately 55% of the industrys total volume, followed by agriculture pipes (35%) and infrastructure & industrial pipes (10%). The infrastructure & industrial pipe segments are expected to witness the highest growth due to increased Government expenditure on the Jal Jeevan scheme which aims to provide rural drinking water connections and urban infrastructure. Plastic pipes still have low penetration in water supply management, an area currently dominated by expensive cement and steel pipes.

According to estimates, the plastic pipe industry is expected to report a volume CAGR of 10-12% between FY 2023 to FY 2028. This projection considers favorable resin prices, potential revival in the urban real estate sector, and the Governments emphasis on boosting farm income and advancing infrastructure development.

Real estate industry - A strong growth driver

The activity of new real estate launches has seen a significant increase over the last 2-3 years, which is expected to result in a robust demand for pipes.

Indias population is expected to surge to 1.55 billion by 2034 with an estimated 42.5% of the population residing in urban centres. Consequently, Indias existing rural and small towns are set to transform into mini-urban towns. The burgeoning urban population will generate the demand for housing in India, especially in cities. As per estimates, to accommodate the urban population, urban cities in India will require an additional 78 million housing units between 2024-34. Such demographics and movement in the real estate industry augur well for the Indian pipes & fittings industry, expanding the industrys potential in the long term.

With growing customer awareness, durable, high-quality branded products will continue to gain mind share.

In recent years, companies specializing in pipes and fittings offering branded products have gained prominence within the industry, surpassing unorganized manufacturers and some larger regional players facing financial constraints. These brands strategically invest in building awareness, educating consumers, and engaging with local audiences, particularly in Tier 2 and 3 towns and cities. Their efforts have heightened awareness among plumbers and consumers regarding quality and adherence to BIS standards, especially in residential real estate projects.

The growth of organized players is further supported by their focus on value-added products, fittings, and expanded portfolios for channel partners. These organized players now serve as comprehensive solution providers for plumbing applications. Among various types of plastic pipes, UPVC and CPVC consistently experience demand due to their affordability, high quality, durability, and versatility.

However, unorganized manufacturers encounter challenges related to operating issues, tax compliance, and quality standards. Supply-side limitations and inflation in raw material costs also impact their profitability and financial stability. Legacy players prioritize building resilient brands, optimizing pricing, engaging with influencers, driving product innovation, and streamlining supply chain management, positioning themselves as leaders with strong recall among consumers.

INDIAN BATH & SANITARYWARE MARKET

The domestic bathware market is estimated at Rs 180 billion in FY 2023 (sanitaryware: Rs.60 billion; faucets: Rs 120 billion) and has posted a 7.9% CAGR over FY 2015-FY 2023. The bath fittings market is riding the wave of urbanization, consumer awareness, and real estate growth. As more households embrace modern amenities, the demand for stylish and functional bathroom fittings continue to rise.

The Thriving Indian Sanitaryware and Faucet Industry

• Sanitaryware Industry:

> India ranks as the worlds second-largest sanitaryware manufacturer, following China.

> The Indian sanitaryware industry is estimated to be around C 60 billion in FY 2023, with approximately 75% of it constituting the organized market.

> The industry is highly consolidated, with the top four players commanding ~60% of the total market share.

> Morbi and neighboring areas in the state of Gujarat manufacture majority of Indias total sanitaryware.

> Easy availability of raw materials and a skilled labor force contribute to the industrys growth.

While sanitaryware is already highly penetrated in India, the industry still offers strong long-term growth potential. Currently, replacement demand accounts for only 15-20% of the domestic sanitaryware market (compared to 80% in developed countries).

• Faucet Market:

> The faucet market in India is valued at over Rs. 120 billion, with approximately 60% being the organized market.

> Unlike sanitaryware, the faucet industry is highly fragmented.

> New real estate construction activity and a trend toward premiumization are the primary demand drivers for faucets.

Factors Driving Growth:

Urbanization: As urban areas expand, the demand for bathroom fittings increases. Having at least one bathroom has become a necessity in cities.

Consumer Awareness: With growing aspirations for a better lifestyle, people are becoming more conscious of new bath accessories, leading to a surge in demand.

Rise in the Housing Sector: Factors like increased purchasing power, population growth, and Government support for easy loans contribute to the housing sectors growth.

Real Estate Boom: The Indian real estate industry caters to various property segments, including residential, commercial, and hospitality. This fuels the demand for bath fittings as an integral part of modern infrastructure.

COMPANY OVERVIEW

Prince Pipes - Leading the transformation in Indias water infrastructure

Over the last four decades, Prince Pipes has emerged as a leader in the Indian pipes and fittings industry, creating innovations in plumbing, irrigation, storage, and sewerage systems. With time, the journey has assumed a much larger scale.

Today Prince Pipes is one of Indias largest integrated piping solutions providers. Our operations continue to expand across agriculture, plumbing, borewell categories, as the company continues to build an extensive range in sewerage and underground drainage solutions.

With a product portfolio of 7,200+ SKUs, Prince Pipes is well positioned as an end-to-end solutions provider. The Company has an extensive pan-India distribution network of over 1,500 channel partners. With seven manufacturing units and the 8th unit under construction in Begusari, Bihar; we are well-poised to address the growing potential of the Indian pipes and fittings industry.

VISION

To be an acknowledged leader in the Indian plastic piping industry by exceeding customers expectations and maximizing the bottom line for all our stakeholders.

MISSION

Our mission is to bring a revolution in the plastic piping industry through innovative solutions that will create profitable growth and benefit our customers & the society at large.

Company Profile

Over the past four decades, Prince Pipes has emerged as a leader in the Indian pipes and fittings industry, driving innovations in plumbing, irrigation, storage, and sewerage systems. Prince is taking bold strides to strengthen its market and industry presence by diversifying into newer verticals, including Modern Plumbing and Bathware.

We are seizing every opportunity to push our limits further, expand our growth verticals, enhance efficiencies, and optimize capital productivity—all to create higher stakeholder value. Prince Pipes stands as one of Indias largest integrated piping solutions providers, marketing products under the brand names of Prince Piping Systems and Trubore. Our operations span across agriculture, plumbing, and borewell categories, and we are actively building the widest range of sewage products and underground drainage solutions.

In March 2024, Prince Pipes signed an Asset Purchase Agreement (APA) with KLaus Waren Fixtures Pvt Ltd., for the acquisition and assignment of identified assets including the Aquel brand and plant and machinery located in Bhuj, Gujarat. This transaction allows Prince to be able to increase its participation and contribution to the high-growth real estate market by being present across the plumbing and bathing segments. With the acquisition of the Aquel brand, Prince Pipes aims to become a prominent player in the Bathware segment, replicating the success it has achieved in its other segments.

Prince Pipes has an extensive pan-India distribution network of over 1,500 channel partners. With seven manufacturing units at Athal (Dadra and Nagar Haveli), Dadra (Dadra and Nagar Haveli), Haridwar (Uttarakhand), Kolhapur (Maharashtra), Chennai (Tamil Nadu), Jaipur (Rajasthan) and Sangareddy (Telangana), we are well positioned to actively address the growing potential of the Indian pipes and fittings industry. In line with our expansion goals, the construction of our Begusarai plant is progressing well on course marking Prince Pipes dynamic expansion in East India - which is a major frontier of growth. The The proposed capital expenditure in the Bihar facility is approximately Rs.220 crores for the proposed capacity of 48,000 MT of pipes and fittings.

Prince is building several levers of growth that will give greater play to the Companys expansion and growth strategies, transforming into a larger and more resilient enterprise building a strong presence across Pipes, Water tanks and Bathware.

The Company has been building a multilocation manufacturing network for the water tanks segment, to enable us to leverage its channel network for greater scale. The water tanks plant in Dadra was launched in July 2020, Jaipur in May 2022, Telangana in June 2022, Haridwar in February 2024, while the Chennai plant was launched in July 2024.

Prince Pipes is committed to and prides itself on its ability to address the needs of changing times. Our focus remains on meeting the evolving customer demands, building a robust and efficient supply chain, safeguarding the environment, and undertaking strategic initiatives that will give greater play to our business model.

A strong platform, complementary to Princes growth plans in the high-growth Indian bathware market

Prince Pipes signed an Asset Purchase Agreement with KLaus Waren Fixtures Pvt Ltd., for the acquisition and assignment of identified assets for Rs. 55 crores in March 2024.

The acquisition presents strong synergies and advantages:

• Direct access to an iconic brand along with a state-of-the- art facility.

• Increase presence in the plumbing and bathing segments enabLes Prince to expand its participation and contribution to the high-growth real estate sector.

• Access to distribution channels in major markets across India.

• Presents an opportunity to build greater depth for Princes Bathware segment and leverage Aquels iconic brand equity.

Our Value Creation Model

Our multifaceted strategy goes beyond mere financial aspects. It involves weaving together stakeholder relationships, innovation, efficiency, and distinctiveness to achieve enduring success.

Relationships

Purpose-Driven Individuals Our skilled and motivated workforce dedicate their expertise and time across our offices, factories, and R&D centers. Were embracing greater efficiency and agility in our work processes.

Reliable Suppliers: We collaborate with over 1,300 essential supplier partners who procure materials and deliver critical services to our organization.

Dedicated Partners: Our collaboration with global industry leaders empowers us to extend our impact.

Manufacturing Process: Our facilities and factories transform raw materials into high-quality finished products.

Sourcing Raw Materials: Annually, we procure substantial quantities of raw materials and packaging materials to support our business operations.

Consumer Insights: We bring products and global water management technology based on industry needs, evolving trends and customer insights.

Innovation: Our R&D and marketing teams leverage these insights, along with expertise from external specialists, to develop customer-centric products.

Supply-chain: Our robust supply-chain system plays a crucial role in managing inventory and delivering products to pan-India retail outlets.

Marketing: Our marketing & branding efforts ensures top-of-mind recall based on key strengths of Quality, Trust and Innovation

Sales: Our 1500+ channel partners ensure that our brands are available to customers across India. They are also strong sources of customer insights enabling new product development.

Input Material: We use thousands of tonnes of polymers packaging material, and chemicals for our products.

Financial resources Capital from our shareholders allows us to invest for the long-term

Intangible Assets: Over 7,200 SKUs, robust R&D capabilities, and valuable intellectual property, including patents. Our manufacturing excellence, 40 years+ legacy, and focus on Quality, Innovation, and Trust also distinguish us in the market.

Owned and leased assets:

Manufacturing units, offices, and warehouses spread across the country.

Customers: Our mission is to offer high-quality, sustainable products manufactured through sustainable protocols.

Channel Partners: We partner with distributors, retailers and digital commerce marketplaces that enable us to grow together.

Suppliers and business associates:

Our suppliers are our partners in growth through mutually beneficial policies led by long-term relationships.

Our people: Our focus is on personal growth, and well-being as we guide them in discovering their purpose, enabling them to reach their full potential.

ESG Goals: Our approach includes reducing environmental footprint, promoting responsible sourcing, and supporting community development. We strive to create a positive impact on society and the environment

Shareholders: We aim to deliver profitable & responsible growth.

Fortifying key strengths

Agility and Resilience: Transforming Our Enterprise for the Future

With strong macroeconomic fundamentals in place, we are committed to sharpening our business execution and roll-out plans. We are focusing aggressively on driving volume growth through various efforts aimed at expanding distribution and strengthening our channel network.

At Prince Pipes, our rich industry heritage provides us with a robust knowledge advantage, enabling us to meet the ever- evolving needs of our customers. We continuously enhance our competitive strengths and operational efficiencies to thrive in an increasingly competitive business landscape. Our unwavering commitment to excellence and strategic initiatives positions us on a trajectory towards becoming an even more agile and resilient organization.

Strategic Transformation To Fulfil Our Mission To Enhance Indias Water Infrastructure

As part of our commitment to being an end-to-end pipes and fittings solution provider, our Company has undergone deep, transformative changes. These changes enable us to establish a strong presence across the entire product value chain spanning Pipes, Water Tanks and Bathware, to play a leading role in strengthening Indias water infrastructure. From an enterprise with modest beginnings, Prince Pipes has evolved into one of Indias largest integrated pipe manufacturers, with presence across high-growth verticals to shape Indias water infrastructure.

Bathware segment Aquel by Prince propels Prince Pipes growth trajectory

Our unwavering focus on innovation allows us to actively address the needs of consumers across pipes and now bathware products led by Aquel by Prince. With a robust portfolio encompassing pipes, water tanks and bathware, we look to not only consolidate our industry presence but are also excited to contribute to Indias remarkable growth story.

Comprehensive Product Portfolio

We expanded our product portfolio by introducing several new offerings. Among these were the Terrafit-Subsurface drainage pipes, which provide innovative solutions for managing excessive subsurface water. We also launched the Duratap range, which includes faucets and showers. Duratap products are manufactured using PTMT material, offering significant advantages in terms of functionality and durability. These products are targeted at the cost-conscious mass market.

As part of our growth strategy, we consistently introduce cutting-edge products in our piping division, aiming to bring innovative and globally competitive solutions to the domestic market.

Marketing efforts centered on expanding brand recall and target audience engagement

Marketing Transformation: We revamped our marketing strategy to focus on pushing the boundaries of category norms. Our goal is to create robust demand among customers, encouraging them to recognize and value the enhancements offered by Prince products. Exciting customer engagement campaigns included "Paani ka muh todd jawab" conducted through a housing society campaign in Ahmedabad engaged general audiences in the housing societies to engage with the Prince brand through this unique know your pipes initiative.

Aggressive Campaigns: Through assertive campaigns, Prince Pipes tackle issues related to counterfeit products and duplicity. Our roadshows span across India, targeting specific customer segments based on industry requirements. We also conduct educational sessions for plumbers and raise awareness through various initiatives. Into the 7th year of launching the unique Plumber song, Prince Pipes once again celebrated the spirit of plumbers across India on World Plumbing Day. Prince has been taking the industry lead in commemorating World Plumbing Day on March 11 since 2018, and in March 2024, Prince Pipes launched a new song dedicated to plumber associates emphasizing on their role as Paani ke Pehredaar.

Channel Partner Engagement: Our active engagement with channel partners includes high-decibel below-the-line (BTL) branding through events, B2B exhibitions across India, and targeted digital marketing efforts, all aimed at achieving greater brand appreciation and marketing leverage.

Seamless Customer Experience:

As an end-to-end piping systems solutions provider, we offer customers a seamless experience. From plumbing and storage solutions to sewerage systems and product installations, we ensure a holistic approach that considers related products and plumber assistance. From operations that focused on behind- the-wall products of pipes and fittings, Prince is now also present in the front-of-the-wall category with Aquel by Prince bathware, sanitaryware and accessories range.

Forging Tomorrow: Strengthening Manufacturing Prowess

As we strive to become future-ready, we recognize that strengthening our manufacturing capabilities goes beyond mere production capacity. Our 8th manufacturing unit located at Begusarai in Bihar is a new greenfield facility to enhance our presence in East India. Our continuous focus is improving operations, reducing waste, enhancing production profitability, and achieving a competitive edge through quality and safety innovations. Our approach extends beyond maximizing production throughput. We are committed to building multiple pillars of our business, with the following key areas of emphasis:

Well-being & Safety: Safety is paramount for both our employees and product integrity. Our effective safety systems ensure that employees handle products in a secure environment.

Uncompromising Quality: Meeting customer expectations and consistently delivering high-quality products drive our success. We encourage employees to take ownership of product quality, fostering innovation and an effective quality management system.

Maximizing Yield: Profitability remains a strong focus. We take numerous steps to eliminate waste, minimize product loss, and continuously innovate our processes. Our yield systems closely track measurements and establish robust waste control mechanisms.

Boosting Productivity: We explore novel approaches to maximize throughput while maintaining safety, quality, and yield. Engaged employees on the plant floor contribute to overall efficiency.

Plant location Installed capacity (TPA) Production capacity (TPA) Products Year of establishment
Athal (UT of Dadra and Nagar Haveli) 9,537 8,106 Fittings 1995
Dadra (UT of Dadra and Nagar Haveli) 65,649 47,638 Pipes and Tanks 2000
Haridwar (Uttarakhand) 98,900 78,026 Pipes, Fittings and Tanks 2008
Chennai (Tamil Nadu) 47,003 35,356 Pipes 2012
Kolhapur (Maharashtra) 16,157 12,360 Pipes 2012
Jaipur (Rajasthan) 44,799 34,074 Pipes and Tanks 2019
Telangana 56,914 45,644 Pipes, Fittings and Tanks 2021
Begusari (Bihar)

Ongoing construction

Pipes, Fittings and Tanks
Total 3,38,959 2,61,204

Key Performance - Financial Highlights

Financial Highlights (in Rs. million)

FY 2024 FY 2023 y-o-y change (%)
Revenue from operations 25,687.48 27,108.71 (5%)
Other income 160.93 85.50 88%
EBITDA 3,074.15 2,503.16 23%
Profit after exceptional items and before tax 2,437.68* 1,648.41 48%
Profit after tax (PAT) 1,824.97* 1,214.20 50%

*Exceptional item for the year ended 31.03.24 represents net gain of Rs.17.93 crore towards settlement of registration of Corporate office, at The Ruby, Dadar, Mumbai, based on the valuation report

Ratios FY 2024 FY 2023 Change
Debtors Turnover (x) 5.14 6.38 (19.48)%
Inventory Turnover (x) 5.95 5.19 14.61%
Interest Coverage Ratio (x) 3.02 2.06 46.41%
Current Ratio (x) 2.43 2.45 (0.76)%
Debt Equity Ratio (x) 0.07 0.04 73.86%
Operating Profit Margin (%) 11.97 9.23 273 Bps
Net Profit Margin (%) 7.10 4.48 262 Bps
Return on Equity- RoE (%) 11.32 9.24 22.53%

Balancing Risks and Opportunities

A proven risk management system that monitors, identities, and addresses both current and emerging risks.

Types of risks Risk description Mitigation
Industry Risks
Raw material supply The prices of inputs have undergone substantial fluctuations in recent years. Unanticipated changes in commodity prices will likely affect profitability and the ability to meet market demand. Additionally, any increase in crude oil prices directly impacts the cost of resins, which serve as a critical raw material for pipes. Our company acquires commodities and raw materials based on our production needs and schedules. We follow strong guidelines and extensive plans to manage inventory positions strategically, mitigating the impact of price fluctuations.
Competition As the industry moves towards consolidation, competitive branding, marketing, and pricing dynamics among other players may affect our market share. Our company invests in diverse branding efforts to build high customer brand recognition. The company has been actively pursuing volume growth. Additionally, we have expanded our product range by entering additional segments like Modern Plumbing and Bathware, and we will continue to seek further opportunities for growth and advancement.
Operational Risks
Safety risks Our companys core business revolves around manufacturing processes. As part of this, some of our employees operate plant machinery and equipment, all of which carry inherent risks of injury or accidents. The company follows high safety standards across plants designed to ensure inherent safety following various applicable standards. Regular safety audits, continuous monitoring, periodic review, and timely maintenance of equipment and infrastructure are conducted to prevent accidents and downtime to ensure good progress.
Logistic and Supply Chain Supply chain disruptions or logistical challenges may arise. Additional concerns may involve material receipt and vendor payment challenges. Regular reviews of processes assess inventory, invoicing, stock management, and dispatch of goods. We collaborate closely with suppliers to ensure high-quality supply, reliability, and business continuity.
Enterprise Risk Mgmt. covering anti-Fraud Control Framework Addressing duplicity remains an ongoing challenge, with counterfeit goods prevalent in the markets. Additionally, channel partner credibility, without thorough due diligence, may present risks. We actively address duplicity issues with decisive actions and unwavering commitment. We have established processes to assess the effectiveness of these actions and take corrective measures if needed. Additionally, we regularly conduct surprise raids on illegal premises where counterfeit products are manufactured and sold, with the assistance of relevant authorities.
Financial Risks
Foreign exchange Certain imported raw materials and equipment are used in our manufacturing plants. Adverse exchange rate fluctuations could affect our overall performance. As an essential aspect of our operations, we systematically assess exchange rate exposure resulting from foreign currency transactions to safeguard our financial well-being. We proactively utilize various financial instruments to mitigate this risk.
Changing regulations and policies The Indian Government has imposed a five- year antidumping duty (ADD) on CPVC resin/ compound imports from China and South Korea, valid until June 2029, unless revised earlier.

The Government has also initiated anti-dumping investigation on (PVC) Resin (suspension grade) from China, Indonesia, Japan, South Korea, Taiwan, Thailand and the U.S.

Earlier, CPVC resin was sourced from various geographies, including Korea, China, Japan, and Europe. The Company now sources its CPVC compound from Lubrizol therefore we have been able to mitigate this risk.

Procurement department works effectively to discover best prevailing price globally and procure from countries which would have low to nil duty. Domestic prices also adjust to global PVC prices over time.

Credit Most of our sales to distributors occur on an open credit basis, with a standard payment period ranging from 15 to 30 days. Failure to collect receivables could have a negative impact on our performance. Our company procures raw materials from domestic suppliers with credit terms of less than a week, while imported raw materials have credit terms of 90-150 days. However, our standard payment terms with distributors typically range from 15 to 30 days. To manage the timing difference between raw material payments and product receipts, we utilize working capital facilities. Additionally, we optimize working capital requirements and enhance collections by employing channel financing.
Regulatory Risks
Regulatory/legal The Companys performance may be affected by evolving regulatory changes in tax, legal, and industry scenarios. Stringent governance practices are implemented across legal and regulatory matters, overseen by qualified and responsible professionals. Regular monitoring ensures compliance, and timely inputs are provided to the Company for prompt corrective action.

Sustainability

A force for good

At Prince Pipes, our commitment to ESG goes beyond mere metrics and statistics. It influences our daily habits, purchasing decisions, business strategies, and our role as a responsible corporate citizen. We are expanding and deepening our focus to create a more positive impact by providing opportunities, manufacturing responsibly, and approaching business conscientiously. In essence, we prioritize Environmental, Social & Governance (ESG) through sustained, environment-specific programs.

> Carbon footprint: CO2 per Kg of production reduced from 0.394 in FY 2023 to 0.361 in FY 2024, i.e., a reduction of 8.4%.

> Renewable sources of energy increased by ~20% YoY in FY 2024

> The Haridwar plant achieved Greenhouse Gas Emission Certification done as per ISO 14064-3:2019 (Scope-1, 2 & 3) for the year FY-23 from DQS India, reiterating the companys commitment to ESG goals.

Environment

Prince Pipes remains a committed steward of our natural environment. Our endeavors revolve around conserving natural resources, minimizing pollution, safeguarding biodiversity, and ensuring a sustainable future for generations to come. We proactively take decisive steps to address the visible impacts of climate change, including increased adoption of renewable energy and our commitment to carbon neutrality. Additionally, we enhance water recycling efforts and uphold stringent quality standards, earning us multiple safety awards. Our business decisions consistently prioritize sustainable development.

Social

Prince Pipes and Fittings has consistently demonstrated socially responsible behavior towards employees and the community. Our commitment extends to creating and maintaining a diverse, vibrant, and merit-based work environment. Our CSR policy focuses on social investments, empowering the plumbing community, and educational initiatives. Some of our key initiatives along with our implementation partners benefitting the industry and larger society undertaken this fiscal, are as follows:

• Empower Pragati: In Delhi and Solan, a special initiative was created for plumber upskilling. The aim was to enhance plumbing skills while also providing them with essential healthcare services.

• Ambuja Cement Foundation: Implemented in Chomu, Rajasthan, this initiative was taken to facilitate access to safe drinking water and augment groundwater recharge while promoting efficient water usage for drinking and irrigation.

• Mahita Organisation: Undertaken in Sangareddy, Telangana, this effort was aimed at improving water access & farm livelihood. Efforts were concentrated on enhancing communities quality of life through water access to farmers, education support for girls, and entrepreneurship skills for women.

• United Way of Mumbai: Implemented in Jaipur and Sangareddy, the effort helped enhance communities wellbeing by improving water access, boosting farm-based livelihoods, facilitating access to Government schemes, and promoting ongoing education.

Governance

Prince Pipes is committed to values and ethical business conduct in letter and spirit. We have maintained high standards of governance that guide us to achieve strong, balanced, and sustainable growth for all stakeholders. Our experienced Board of Directors, supported by robust risk management and compliance processes, plays a key role in ensuring the highest standards of governance and disciplined oversight in our corporate activities.

People

At Prince Pipes, our people are the cornerstone of progress. Our comprehensive people management approach encompasses employee development, safety, leadership training, and family well-being. Our policies foster operational democracy, ensuring that employees feel heard and take ownership.

Key aspects of our HR policy include:

s Skill Enhancement Programs: We regularly conduct specialized training programs, including Six Sigma, to enhance employee skills and support career development.

s People-Centric Culture: We prioritize talent attraction, nurturing, and retention. Inclusivity, diversity, and transparency are integral to our organizational culture.

s Human Rights: We respect and promote human rights, conducting due diligence to prevent adverse impacts from our business activities.

s Safe and Hygienic Workplace: Our workplace environment upholds employee dignity, safety, and well-being. We comply with statutory provisions related to health and safety.

s Training Opportunities: We provide internal and external training to upskill the Companys 1,913 employees, contributing to organizational vision and growth.

s Employee engagement and welfare initiatives include health-related programs such as weight loss competitions, health webinars, yoga and meditation sessions, and emotional health discussions with experts.

Health, Wellness, and Safety

Our unwavering commitment to workplace safety ensures that we report no incidents that could lead to legal actions, compensation claims, increased insurance premiums, reduced productivity, or reputational damage. Responsible health and safety practices are fundamental for our long-term sustainability.

Creating a safety-conscious culture among employees is our priority:

s Occupational Health and Safety (OHSMS): Our OHSMS certification process, supplemented by plant Safety Committees, governs safety practices. Specially trained safety professionals and line management contribute to our safety initiatives.

s Safety Performance Metrics: We measure safety performance using metrics such as Lost Time Injury (LTI)

comp

and Accident-Free Days (AFD), benchmarked against global industry standards.

s Behavior-Based Safety (BBS): Our BBS initiative fosters a zero-accident culture by identifying hidden habits and environmental factors. Employees actively participate in hazard identification and risk assessment.

s Employee Training: We provide regular safety and skill- upgradation training, including:

o Daily Toolbox Talks (TBT) on relevant topics

o First aid training by St. John Ambulance

o BBS training by external experts

o EHS awareness training for new employees

o Hazard Identification and Risk Assessment (HIRA) training

o Safety auditor training o Practical training on fire safety equipment o Quarterly mock drills

o Environment and safety awareness events, including tree plantation drives.

o Our commitment to safety extends beyond compliance — it is ingrained in our organizational culture

Innovation

Innovation remains a cornerstone of Prince Pipes success, allowing us to establish strong product differentiation and achieve top-of-mind recall. With a 40-year legacy, our unwavering passion for impacting Indias water infrastructure has been a constant driving force. We take immense pride in our industry leadership, which enables us to understand evolving needs and anticipate future trends.

Leveraging this strength, Prince Pipes consistently introduces new products aligned with evolving industry trends, changing customer needs and international modern technologies in water management. Our commitment to innovation drives sustained investments in manufacturing, research and development, information technology, and sustainability.

As part of our goal to be an end-to-end pipes and fittings solution provider, we continuously enhance our comprehensive product portfolio. Notably, we have recently launched the following products:

Pipes & fittings:

> Duratap in Polytetra Methylene Terephthalate (PTMT) combines the advantages of both plastics and metals. Aimed at the cost-conscious, mass market.

• Duratap range includes faucets and showers - the product has been introduced in key markets across all zones in India

• Being a specially engineered plastic, PTMT has several advantages over other materials in terms of functionality and longevity.

> Terrafit - Subsurface Drainage Pipes - an innovative solution, addressing challenges related to excessive subsurface water in agriculture.

• Also plays a pivotal role in modern infrastructure development by regulating and maintaining water tables. Ideal for maintaining stability in Agriculture & Airports.

Internal Control

Prince Pipes has implemented a robust internal control system, supported by well-documented procedures across all corporate functions. These internal controls provide evidence-based assurance regarding operational effectiveness, efficiency, financial controls, and compliance with legal requirements.

Our policies and procedures are regularly updated under the supervision of the Internal Auditor. We align all processes and controls with industry standards and regulations. The Board and the Audit Committee oversee the adequacy of internal controls by monitoring the implementation of internal audit recommendations through compliance reports. Independent auditors have also verified the adequacy of our reporting.

Cautionary Statement

Certain Statements found in the Management Discussion and Analysis may constitute "Forward Looking Statements" within the meaning of applicable securities laws and regulations. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that are difficult to predict and which may cause our actual results, performance, or achievements to be different from any future results, performance, and achievements expressed or implied by these statements. Following the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in the future or any update made thereon.

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