Shakti Pumps (India) Ltd Management Discussions

^ COMPANY OVERVIEW

Shakti Pumps (India) Limited is a leading manufacturer of energy-efficient submersible pumps, motors and solar pumping systems, with a strong presence in both domestic and international markets. With over four decades of experience, the Company is recognised for its integrated manufacturing capabilities, in-house R&D and innovation- driven product portfolio. As one of the largest beneficiaries of government initiatives like PM-KUSUM, Shakti Pumps holds a commanding market share in solar pump installations across major agricultural states.

The Company operates three state-of-the-art manufacturing facilities and offers over 1,200 product variants, catering to diverse applications across agriculture, industry, domestic use and export markets. With a presence in 100+ countries and a growing retail footprint, Shakti Pumps continues to expand its customer base through superior product performance, robust after-sales service and strong distributor relationships. In recent years, Shakti Pumps has diversified into EV motors and controllers through its wholly owned subsidiary-Shakti EV Mobility Private Limited and is actively tapping opportunities in the solar rooftop segment under government programmes like PM Surya Ghar: Muft Bijli Yojana.

Shakti Pumps has strategically diversified into the Electric Vehicle (EV) mobility segment through its subsidiary, Shakti EV Mobility, with the vision of becoming a key enabler in Indias e-mobility ecosystem. The Company has indigenously developed a range of AC and DC fast chargers for two- wheelers, three-wheelers, and four-wheelers, leveraging its strong expertise in electrical and power electronics manufacturing.

During FY 2024-25, Shakti EV Mobility secured several notable project wins, including the supply and installation of 2,000 EV chargers under government-led initiatives and contracts with leading State DISCOMs for deployment of public charging infrastructure. The Company also collaborated with institutional and fleet operators to establish charging hubs in urban and semi-urban areas, ensuring affordable and efficient charging access. In addition, Shakti EV Mobility has been empanelled with multiple state nodal agencies, creating a strong platform for participation in upcoming tenders under FAME-II and state EV policies.

© DIVERSIFIED SECTORS

Shakti Pumps operates across a well-diversified portfolio of sectors, including solar, agriculture, domestic, commercial, industrial and sewage & drainage. This diversified presence enables the Company to cater to a broad spectrum of water management needs-from powering solar irrigation systems

for farmers to supporting high-rise water pressure systems, industrial utilities and municipal wastewater handling. The breadth of applications enhances business resilience, reduces dependency on any single segment and supports long-term, sustainable growth.

Solar Sector

As a trusted channel partner of the Ministry of New and Renewable Energy (MNRE), SPIL continues to deliver high-performance solar pumping solutions across India. The Companys product range-spanning 0.5 HP to 300 HP-meets stringent DCR norms and is equipped with advanced remote monitoring systems, enabling farmers to optimise performance and water usage. In FY 2024-25, the Company further expanded its solar footprint under flagship schemes like PM-KUSUM and PM Surya Ghar: Muft Bijli Yojana. With a growing installed base and integrated in-house manufacturing of key components such as VFDs, inverters and solar structures, SPIL remains at the forefront of Indias clean energy transition.

Agriculture Sector

Shakti Pumps continued to play a pivotal role in rural irrigation modernisation, offering pumps and motor solutions designed to address diverse agricultural requirements. During the year, the Company successfully executed significant orders under various scheme which includes the Magel Tyala Saur Krushi Pump Yojana and the M.P. Government-approved Pradhan Mantri Krishak Mitra Surya Yojana-a scheme that is steadily gaining market traction and is expected to create substantial opportunities in the near future. Alongside, SPIL strengthened its retail and direct-to-farmer model, supported by a growing network of dealers and service centres. By delivering comprehensive support from product supply to after-sales service, Shakti Pumps contributed meaningfully to enhancing rural productivity and strengthening water security.

Commercial Sector

In the commercial segment, Shakti Pumps supplied customised high-pressure and multistage pump systems for use in shopping malls, hotels, high-rise buildings and other large premises. These solutions addressed the need for efficient water distribution, pressure boosting and utility management in dense urban environments.

Domestic Sector

Catering to residential needs, the Company expanded its domestic pump offerings across bungalows, housing complexes and urban water supply systems. Compact, user-friendly and energy-efficient pumps were deployed for applications such as storage tank filling, gardening and domestic water distribution. Shaktis strong brand reputation and after-sales service network contributed to growing adoption in both urban and semi-urban markets.

Industrial Sector

Shakti Pumps continued to serve the industrial sector with robust solutions for applications including process cooling, fluid transfer, firefighting and wastewater management. With a focus on reliability and energy efficiency, the Companys industrial-grade pumps have been well received by sectors such as manufacturing, infrastructure and utilities. Its presence in export markets further enabled access to global industrial demand.

Sewage & Drainage Sector

The Company contributed to civic and municipal infrastructure by supplying sewage and drainage pumps engineered to manage wastewater and floodwater effectively. These systems were deployed in applications such as basements, parking areas and water treatment facilities, offering reliable performance in demanding operating environments.

Retail Sector

The retail segment remains an important growth driver for Shakti Pumps, complementing government and export projects while offering farmers greater flexibility. Unlike subsidy-led schemes, retail sales enable farmers to purchase pumps directly through the Companys extensive dealer and distributor network, ensuring faster access, assured quality, and seamless service support. For example, a 5 HP solar pump in retail costs around 0.25 Mn compared to 0.12 Mn under subsidy-farmers benefit from immediate availability and avoiding long waiting periods associated with government allocations.

To improve affordability, Shakti Pumps has partnered with financial institutions to extend easy installment and financing options, thereby making solar solutions more accessible for small and medium farmers. Backed by a network of over 1,200 dealers across India, the Company continues to deepen its retail footprint, enhance customer engagement, and drive wider adoption of energy-efficient and solar-powered pumps. This approach not only broadens market reach but also supports farmers in adopting sustainable and reliable irrigation practices.

Exports Business

Exports continue to be a high-margin growth driver for Shakti Pumps, with the segment delivering stronger profitability compared to other business verticals. During FY 2024-25, the Company secured a landmark USD 35.3 Mn contract from the Government of Uganda for supplying solar-powered water pumping systems, significantly strengthening its international order book. Beyond Africa, Shakti has expanded its footprint across North America, Europe, the Middle East, Asia, and Oceania, addressing diverse water management and irrigation requirements through its portfolio of solar and energy-efficient pumping solutions.

The Company is also an active participant in the International Solar Alliance (ISA), which is aggregating large- scale global demand for renewable energy systems, including over 2,70,000 solar pumps across 22 countries, more than 1 GW of rooftop solar across 11 countries, and over 10 GW of solar mini-grids across 9 countries under various programmes. Leveraging its integrated in-house manufacturing, proven product reliability, and expanding distribution and service networks, Shakti Pumps is well-positioned to capture these opportunities. Exports are expected to remain a scalable, sustainable, and high-margin contributor to the Companys long-term growth, while also providing natural diversification beyond the domestic market.

Domestic Content Requirement (DCR) Cell and Module

The Government of Indias Domestic Content Requirement (DCR) policy has served as a catalyst in promoting local manufacturing and reducing reliance on imported solar components. Under schemes like PM-KUSUM, the use of indigenously manufactured solar cells and modules is mandatory-offering a strategic advantage to players with strong backward integration and domestic production capabilities.

Shakti Pumps has effectively capitalised on this policy shift by producing and supplying DCR-compliant solar pumping systems. With a fully integrated manufacturing setup encompassing motors, controllers, and solar cells, the Company has positioned itself as a key beneficiary of DCR-linked demand. This alignment has not only enhanced Shaktis participation in government-led solar initiatives but also strengthened its competitive edge in public sector projects.

The Companys focus on adhering to DCR guidelines has translated into growing order inflows, improved operational visibility, and increased traction in the rural and agricultural solar irrigation segments. Going forward,

Shakti Pumps remains committed to advancing domestic manufacturing in line with national sustainability and self-reliance objectives.

FINANCIAL PERFORMANCE

Revenue from Operation

Shakti Pumps has demonstrated a strong growth trajectory, with revenue from operations increasing from 13,707 Mn in FY 2023-24 to a record 25,162 Mn in FY 2024-25. This reflects the Companys expanding presence across solar, agriculture and export markets. The sharp revenue uptick underscores the Companys operational strength, product leadership and ability to scale effectively in a high-growth environment.

EBITDA

2,248 Mn 6,030 Mn

EBITDA Margin %

EBITDA margin improved to 24.0%, up from 16.4% in FY 202324, reflecting a significant margin expansion of 760 basis points. This improvement was driven by increased scale, enhanced product mix and strong cost control measures, highlighting the Companys operational efficiency and profitability focus.

PROFIT AFTER TAX (PAT)

1,417 Mn 4,084 Mn

EBITDA also improved significantly during this period, rising from 2,248 Mn in FY 2023-24 to 6,030 Mn in FY 2024-25, driven by higher operating leverage, enhanced product mix and improved execution efficiency.

Profit After Tax stood at 4,084 Mn in FY 2024-25, reflecting a robust 188% YoY growth over 1,417 Mn in FY 2023-24. This sharp increase was driven by strong revenue growth, improved operating margins and efficient cost management, underscoring the Companys enhanced profitability and financial strength.

PAT MARGIN %

PAT margin improved significantly to 16.2% in FY 2024-25, up from 10.3% in FY 2023-24, marking an expansion of 590 basis points. This improvement was driven by strong operating performance, better cost management and increased contribution from high-margin segments, reflecting the Companys focus on sustainable and profitable growth.

Cash profit rose sharply to 4,284 Mn in FY 2024-25, reflecting a 167% year-on-year increase from 1,607 Mn in FY 2023-24. This growth was driven by strong operating performance, improved cost efficiency and lower non-cash expenses relative to earnings.

Basic EPS

Basic EPS surged to 34 in FY 2024-25 from 12.8 in FY 202324, marking a robust 166% year-on-year growth. This sharp rise reflects the Companys strong bottom-line performance and improved earnings efficiency, reinforcing its ability to deliver enhanced shareholder value.

Working Capital Management

The Company achieved a marked improvement in its working capital cycle during FY 2024-25, with receivable days reducing by 63 days, from 171 in FY 2023-24 to 108 in FY 2024-25, even as turnover expanded significantly. This reflects Shakti Pumps focus on efficient collections, disciplined credit practices, and robust customer engagement. The improvement has strengthened operating cash flows and enhanced the Companys ability to fund growth internally, thereby lowering reliance on external borrowings. Shakti Pumps remains committed to sustaining this momentum and further optimising its working capital management as it scales across government, retail, export, and EV mobility segments.

Key Ratios
Key Ratios	FY 2024-25	FY 2023-24
EBITDA Margin (%)	24.0%	16.4%
PAT Margin (%)	16.23%	10.31%
Debt Equity Ratio (x)	0.14	0.11
Return on Assets (%)	45.33%	25.13%
Return on Equity (%)	42.61	24.15
Current Ratio (x)	2.27	1.82
Debtors Turnover (x)	2.93	3.01
Inventory Turnover (x)	7.87	5.43
Interest Coverage Ratio (x)	12.52	11.73

Human Resource

Human capital remained a cornerstone of Shakti Pumps success in FY 2024-25, playing a pivotal role in driving innovation, operational excellence and sustainable growth. With a workforce strength of 1,734 employees, the Company prioritised structured training, leadership development and a high-performance culture. Initiatives around workplace flexibility, employee engagement and continuous learning contributed to higher productivity and morale. Health and safety remained paramount, with zero workplace accidents reported during the year. Through its people-first approach, Shakti Pumps continues to build a skilled, motivated and future-ready workforce aligned with its long-term strategic vision.

Internal Control System

The Company has a well-structured internal control system in place to ensure accurate financial reporting, safeguard assets and maintain operational efficiency and compliance. During FY 2024-25, the Company further strengthened its controls through enhanced automation, ERP integration and periodic internal audits across key functions such as procurement, inventory, manufacturing and finance. The internal audit function operates independently and reports to the Audit Committee, ensuring transparency and timely corrective actions. Based on regular reviews and assessments, the Company believes its internal control systems are adequate and commensurate with the scale and complexity of its operations.

Risk & Concern
Risk	Description	Mitigation Strategy
1. Policy & Scheme Dependency Risk	A large portion of revenue is linked to government subsidy schemes like PM-KUSUM, exposing the Company to risks of policy delays or discontinuation.	Strengthening presence in retail and export segments; actively bidding across multiple states; enhancing engagement with state nodal agencies.
2. Working Capital & Receivables Risk 0	Execution of government orders often leads to longer receivable cycles, affecting liquidity and operational efficiency.	Tightening credit control, reducing receivable days (already improved from 178 to 152); diversifying into cash- and-carry retail business.
3. Raw Material Price Volatility (@)	High exposure to fluctuations in prices of steel, copper and electronics affects cost of production and profitability.	Securing long-term supply contracts; leveraging backward integration; design optimisation to reduce input intensity.
4. Export Market Risks	Revenue from over 100 countries exposes the Company to currency risks, geopolitical issues and changing trade regulations.	Geographic diversification across regions; adopting hedging strategies; partnering with local distributors in key markets.
5. Technology Obsolescence Risk ()	The solar and EV technology landscape is evolving rapidly, potentially making current product lines less competitive.	Continuous R&D investment (15 patents till date); collaboration with IITs and DSIR; product innovation in loT-enabled smart pumps.

Cautionary Statement

The statements in the Board of Directors and Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events, many of which are beyond the control of Shakti Pumps (India) Limited. Actual results, performance, or achievements could differ materially from those expressed or implied due to various factors such as changes in government policies, economic developments, global market conditions, climatic conditions, raw material prices and interest rate fluctuations. The Company assumes no obligation to update or revise any forward-looking statements, whether because of new information, future events, or otherwise.