Signet Industries Ltd Management Discussions

Industry Structure and Developments

The Indian pipe and polymer industry has witnessed substantial growth, driven by infrastructure development, urbanization, and increasing demand in sectors such as irrigation, water supply, construction, and telecom. The plastic pipe segment, particularly uPVC, CPVC, HDPE, and PPR pipes, continues to dominate due to cost-effectiveness, durability, and ease of installation.

The Government of Indias initiatives like Jal Jeevan Mission, Smart Cities Mission, and PM Awas Yojana have contributed significantly to the demand for pipes. In addition, the polymer industry has benefited from increasing applications across consumer goods, automotive, healthcare, and packaging sectors.

However, the industry remains sensitive to raw material price volatility, mostly linked to crude oil prices and global supply chain disruptions.

The Indian plastic industry clearly has the potential to continue its fast growth. However, over the years, competition in the industry has increased considerably. To survive the competition, both polymer manufacturers and processors will need to adopt radically new methods and approaches to reduce costs, improve market and customer service and management of performance. The per capita consumption of plastics in India is well below the world average.

However, it also reflects many years of growth ahead, as the countrys economy continues to grow and upgrade the usage of products. Translating the expected growth rate into incremental demand, it is obvious that the country will remain one of the largest sources of additional demand for almost all kinds of plastics.

Hence, it is clear that plastics will continue to be a growth industry, with boosting prospects for fresh investments in polymerization and downstream processing capacity. This is in contrast to the situation in various other countries, where growth prospects are limited, either because of stagnant demand or due to the historical over building. In such countries, the overall outlook would be far less promising, with the key imperatives being cost cutting and capacity rationalization.

Outlook

Dwelling on the Outlook for, the Survey says, Indias recovery from the pandemic was relatively quick, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment. It says that aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible and more importantly, compensating for the private sectors caution in capital expenditure, the government raised capital expenditure substantially.

Budgeted capital expenditure rose 2.7 times in the last seven years, from FY16 to FY26, re-invigorating the Capex cycle. Structural reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code enhanced the efficiency and transparency of the economy and ensured financial discipline and better compliance, the Survey added.

Global growth is forecasted to slow from 3.2 per cent in 2022 to 2.7 per cent in 2023 as per IMFs World Economic Outlook, October 2022. A slower growth in economic output coupled with increased uncertainty will dampen trade growth. This is seen in the lower forecast for growth in global trade by the World Trade Organization, from 3.5 per cent in 2022 to 1.0 per cent in 2023.

On the external front, risks to the current account balance stem from multiple sources. While commodity prices have retreated from record highs, they are still above pre-conflict levels. Strong domestic demand amidst high commodity prices will raise Indias total import bill and contribute to unfavourable developments in the current account balance. These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure.

Entrenched inflation may prolong the tightening cycle, and therefore, borrowing costs may stay higher for longer. In such a scenario, global economy may be characterised by low growth in FY24. However, the scenario of subdued global growth presents two silver linings - oil prices will stay low, and Indias CAD will be better than currently projected. The overall external situation will remain manageable.

Opportunities

The future of the Indian plastic pipe market looks attractive with opportunities in the potable water supply, wastewater supply, agriculture, infrastructure and chemical sector. While agriculture sector is expected to remain the largest growth driver, growth of residential and commercial construction and the growth in infrastructure development are expected to spur growth for this segment. Furthermore, with the key market players integrating more back-end exploration and refining businesses, alongside streamlining their sourcing operations, opportunities are expected to increase in the coming years.

India is facing one of its major and most serious water crises. There is acute shortage of water in both urban and rural areas due to erratic rainfall patterns and decreasing natural sources

of water. More than fifty percent of the country is grappling with drought-like conditions and groundwater is declining faster than it is being replenished. The Union government recently formed a new Jal Shakti (water) ministry, which aims at tackling water issues with a holistic and integrated perspective on the subject. The ministry has announced an ambitious plan to provide piped water connections to every household in India by 2024 which bodes well the industry. Also, the agricultural sector which currently consumes about 80 percent of water in India is likely to be further incentivized to adopt water saving techniques using micro irrigation/drip irrigation.

In the past few years, government of India has initiated many new projects and investments in the irrigation sector. Governments thrust on reviving the farm sector through various initiatives and reforms such as increasing minimum support price, direct income support and interest subvention on crop loans augurs well for the sector. The focus of the government is on rural water management, which will be fulfilled only when there will be proper infrastructure for the transportation of water to the end-user. This factor will remain as one of the major drivers for the growth of PVC pipe industry in the country along with the expansion of housing sector and increasing demand for oil and gas transportation. It has also been anticipated that both urban and rural areas in India are likely to suffer from water shortage problems due to erratic rainfall patterns and decreasing natural sources of water. This will lead to the construction of more borewells across the country to draw groundwater.

Multiple schemes and projects launched in last couple of years are leading to higher demand for pipes. Some of the Schemes are as under:

Housing for all by 2022: Pradhan Mantri Awas Yojna (PMAY) is an GoI initiative in which affordable housing will be provided to the urban poor with a target of building 2 crore affordable houses by 31 March 2022. Smart cities mission: It is an urban renewal and retrofitting program with the mission to develop 100 cities across the country making them citizen friendly and sustainable. The Government increased allocation for the Smart Cities Mission by 7% to Rs 6,600 crore in Union Budget 2019. Since the launch of the mission, a total of 5,151 projects have been identified and are in various stages of implementation in 100 cities.

AMRUT: The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) was launched with the focus to establish infrastructure that could ensure adequate robust sewage networks and water supply for urban transformation by implementing urban revival projects. An investment of Rs 50,000 crore has been approved by the cabinet.

National Rural Drinking Water Programme: The main objective of this scheme is to provide rural people adequate safe water for drinking, cooking and ensure that all the sections of the communities have access to safe drinking water. This scheme seeks to prevent the contamination of water.

Pradhan Mantri Krishi Sinchayee Yojana (PMKSY): Through this scheme the GoI aims to increase cultivation area with assured irrigation, reduce wastage of water and improve water use efficiency. The initiative not only on creating sources for assured irrigation, but also creating protective irrigation by harnessing rainwater.

Threats

There is a need to keep vigil on the quality of products being offered in market place as many players have joined the wagon. Constant increase in prices of Raw Material is a severe issue for the PVC Pipes since it has a direct effect over the prices of finished goods product demand.

There are many other threats which includes increasing crude oil prices, import threat from Middle East, neighboring countries specializing in processing industries could lead to imports and replacement threat from substitutes.

Future Outlook

With government policies promoting infrastructure, irrigation, sanitation, and housing, the outlook for the pipe and polymer industry remains positive. The Company aims to:

Expand its dealer/distribution network across India. Introduce new product lines in value-added segments. Enhance manufacturing efficiency through automation and process optimization. Invest in R&D for sustainable and innovative polymer solutions.

Internal Control Systems

The Company has a well-established internal control system commensurate with the size and nature of its operations. These controls ensure accurate and reliable financial reporting, safeguarding of assets, and compliance with laws and regulations. Regular internal audits and management reviews are conducted to maintain the effectiveness of the system.

Human Resources

The company continues to maintain a strong relationship with its employees, in order to improve their efficiency level at the workplace. The Company provides employees with numerous opportunities to increase their knowledge, skills and abilities and enables them to grow in their careers.

Cautionary Statement

The Statement made in this Report on Management Discussions and Analysis, describing the Companys view may be forward looking statements within the meaning of the applicable security regulations and laws. These assumptions are based on certain expectations on demand, imports, and availability of power rates etc. and any change in Government laws and the economic situation in the country may mark a difference to the Companys operations. The Company assumes no responsibility in respect of forwardlooking statements herein, which may undergo changes in future for reasons beyond the control of the Company.

availability of power rates etc. and any change in Government laws and the economic situation in the country may mark a difference to the Companys operations. The Company assumes no responsibility in respect of forwardlooking statements herein, which may undergo changes in future for reasons beyond the control of the Company.

By Order of Board For Signet Industries Limited

Place: Pithampur Date: 05th September, 2026

Sd/- Mukesh Sangla Chairman and Managing Director DIN: 00189676