Texmo Pipes & Products Ltd Management Discussions

INDIAN ECONOMY

The Indian economy displayed positive growth year on year despite global uncertain situations. The Gross Domestic Product (GDP) ofthe Company shows an improving prospect and recently GDP for the Q1 FY 2025-26 estimated at 7.8% over the growth rate of 6.5% during the Q1 FY 2024-25. By looking to the Union Budget 2025 the Government is keenly working hard enough taking into vision of “Make In India” and “Viksit Bharat @2047”. Despite of ongoing trade routes and war, along with subsequent developments imposed by different economies, global economy had a major impact on global supply chain and oil prices, which in turn also affect Indian economy and business trade. Also in line with the global movements, stock markets variation, inflation, forex reserves also impact during the fiscal year. All the major economies of the world have also gone through some form of changes in trade policies and are also approaching India in various sectors for trade and commerce.

OUTLOOK

During the Financial Year 2024-25, the overall growth scenario is remained well, although significant challenges persist in the global environment and scenario. The factors i.e. Consumption, income growth, and borrowing costs shall affect the countries overall economic scenario. Despite other challenges, there are positive elements within the global economic landscape and the move and outlook of the Government. Even as the global conflict remained geographically distant from India, ripples comprised increased oil import, inflation, cautious government and a sluggish equity market, India continuously emerged as the fastest- growing economy in FY 2024-25 with fourth largest global economy. India became the worlds most populous nation. The Governments increased impetus on infrastructure creation, showcased in the largest-ever allocation in the Union Budget is expected to drive economic progress. Expanding public digital platforms and measures such as boosting infrastructure, global outreach, PM GatiShakti, the National Logistics Policy, Jal Jeevan Mission and the Production-Linked Incentive schemes will support and aid economic growth..

INDIAN PIPING INDUSTRY OVERVIEW

The Indian plastic pipe market in the coming future is eyeing and witnessing a futuristic approach and filled with opportunities and is likely to grow in coming years. As the country chart shows growth towards development, the market is expected to grow at an impressive CAGR of 10.3% from 2022 to 2027, reaching a valuation of $10.9 billion. The key sectors in Indian Piping Industry are divided in potable water supply, wastewater supply, electrical and telecommunication cable protection, agriculture, chemicals, and oil and gas etc. This growth can be attributed to a large number of factors, including government investment in infrastructure, an uptick in residential and commercial construction, industrial expansion, the irrigation sector, and the replacement of deteriorating and GI pipes and household water supply etc. The PVC Pipe Sector expected to grow 10-11% this year. The demand for metal to polymer pipes has experienced a noticeable shift across various industries, particularly in plumbing and piping applications within the construction industry. CPVC pipes have also witnessed a surge in demand in the hot- and cold- water plumbing industry in recent years. As the Indian economy continues to march forward, the plastic pipe market is poised for an impressive growth trajectory, spearheading a new era of infrastructure development in the country. The massive outreach of Functional Household Tap Connection is also a major boost for the piping industry to reach at every household for providing drinking water. The IMD forecast for the year is to have above normal rainfall. The same will boost crop production and contain inflation.

OPPORTUNITIES AND THE GOVERNMENT IMPETUS

The efforts of the Government and its focus and impetus on infrastructure creation, road transportation, showcased the allocation in the Union Budget is expected to drive economic progress and growth. Expanding public digital platforms and measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes will support and aid economic growth. The Government is year on year focusing on allocating and increasing budgets for infrastructure, agriculture and major sectors giving highest level of revenue and employment in all means. The infrastructure sector and the attention of every household and livelihood for all is the major focus of government to reach at an improved outlook.

THE GOVERNMENT DEVELOPING INITIATIVES:

The Capital Outlay in Budget 2025-26:

The Budget 2025-26 sought to lay the foundation for the future of the Indian economy by raising capital expenditure outlay to Rs. 11.21 Lakh crores which equivalent to 3.1 per cent of GDP of the economy earmarked in FY 2025-26. The Governments allocation of Rs. 99,503 crores to Department of Drinking Water and Sanitation (DoDWS) and Rs. 10,000 crores for AMRUT

Scheme for providing basic amenities to improve and focus on standards of living in the Budget is the driving force for the polymer pipes industry. The Governments primary focus in this budget is Agriculture and it is earmarked as first engine of development introducing various projects and programmes to be launched in partnership with the states and encouragement for agricultures, fisheries and enhanced credit through Kisan Credit Card (KCC).

Har Ghar Nal Se Jal: The Governments focus under the Jal Jeevan Mission, the ‘Har Ghar Nal Se Jal Scheme aims to provide every household with a Functional Household Tap Connection (FHTC) in its premises to reduce the burden of fetching water on women in the household. By introducing the scheme in the year 2019 to 2024, the Government has further extended the same till the year 2028 for its wide outreach to every household. With the scheme, the government looks to provide all citizens of the country with sustainable water supply connectivity for the provision of clean drinking water and is focusing with a clear vision with a roadmap.

PM Gati Shakti National Master Plan:

By PM Gati Shakti National Master Plan and National Logistics Policy catalyse the infrastructure sector and its huge outlay boost all sector in infrastructure and development.The Governments focus by this initiative creates master plan for efficient and speedy work progress in developing sectors.

Affordable Housing Project:

The growing awareness of home ownership and the Governments favorable affordable housing schemes has led to significant growth in the affordable housing segment. As we advance, the demand for affordable housing will continue over the coming years. As in the last Union Budget, the Finance Ministry has again announced PM Awas Yojana 2.0 - an initiative addressing urban housing shortage, ensuring a pucca house to all eligible families focusing on urban poor.

The land based transportation system:

he Government focus is to build and develop roads and highways to ease transportation and efficient and effective time management and ease in doing business. The Indian government intends to accelerate road construction year on year and the overall road construction project pipeline remains robust across various areas and seen in execution stages.

Other Opportunities:

• The Water Supply and Distribution channels outreaching to the end areas focused us on improving technological advancement and reaching public distribution channels.

• The Governments focus on Telecom and Gas Sector, Company is driving its approach towards gas pipeline projects supply and distribution channels.

• The increased growth in construction industry and technological advancement leads to the clear vision of government in our sector which shows the roadmap for our industry and future outlook.

• Furthermore, policy initiatives like AMRUT (Atal Mission for Rejuvenation and Urban Transformation) and Smart Cities Mission creates huge demand for commercial and real estate.

• Sectors focusing more positively year on year includes Irrigation, Real Estate and Urban Infrastructure and various government schemes like Pradhan Mantri Krishi Sinchayee Yojana and boosting in micro irrigation projects and agriculture.

CHALLENGES Cost of raw material

The raw material prices during the year under review shows substantial decline and it broadly impacts the performance and operations of the industry and the Company and due to the sudden volatility the operations affected to an extent. Also an unpredicted and unseasonal rainfall impacted the industry to a possible extent. Moreover, the change in raw material prices impact the end users and pipe manufacturing players, as the cost is to be passed down to the downstream industry users and is also affects both organized and unorganized sectors. However, the raw material prices are slightly improving and shall develop a positive and growth impact in both revenue and operational outlook.

Risk Management

The Company has in place an effective risk management framework to primarily control business and operational risks. The major risk areas are systematically and periodically reviewed by the senior management. At various levels, comprehensive policies and procedures will help to identify, mitigate and monitor risks. By taking such proactive measures, the Company ensures that strategic business objectives are achieved seamlessly in a steady and efficient manner. During the financial year under review, rating for fund based facilities of the Company has been ‘IND BBB+. Further, your Company has an intricate Risk Management procedure which depicts business risk and operational risks that are supported by policy framework.

Human Resource

The Human Resource division of the company plays a vital role in hiring, training, managing and retaining employees to build a group of talented workforces. So that they can reach their full potential and work diligently towards the growth of the organization. The Company has created a level playing field space, whereon equal opportunities to all employees is provided. With this belief, it has enhanced employee morale, boosted productivity and reduced people absenteeism. As of March 31, 2025, the Companys permanent total work force is 331 employees.

Product Wise Performance

Companys major products are PVC, HDPE, Fittings and Trading. Performance of various products at a glance is as under:-

(Rs. in lakhs)

Particulars	2024-25	2023-24
HDPE Pipe	10,449.47	26,211.09
PVC Pipe	16,549.87	18,265.81
CPVC fitting	1,301.42	1,296.53
Moulding fittings	3,256.31	3,255.37
CPVC Pipe	7.76	72.98
Roto Water Tank	666.44	724.76
RM Compound Sale	110.77	242.46
Trading Sale	3,683.22	3,077.84
Total	36,025.27	53,146.84
Add - Sales of Services	580.75	686.34
Total revenue from operation as per audit report	36,606.02	53,833.18

Note - The Previous year figures have been regrouped/ reclassified wherever necessary to make them comparable with current periods figure.

Internal Control System and their adequacy

The Company considers that internal control is one of the key supports of governance which provide freedom to the management within a outline of appropriate checks and balances. Texmo Pipes and Products Limited have a strong internal control framework, which was instituted considering the size, nature and risk in the business. The Companys internal control environment provide assurance on efficient conduct of operations, security of Assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records, timely preparation of authentic financial information and compliance with applicable laws and regulation. The Company uses SAP - Enterprise Resources Planning software as its core IT system. The Internal Auditor is a Chartered Accountant has been entrusted the job to conduct regular internal Audits at all the units/Branches and report to the management the lapses, if any and submitted Report on quarterly basis to the Board of Directors for their review and comments. To ensure efficient Internal control system, the Company has a well constituted Audit committee who at its periodical meeting, review the competence of internal control system and Procedures thereby Suggesting improvement in the system and process as per the changes of Business dynamics. The system and process are continuously improved by adopting best in class processes, automation and implementing latest IT tools.

Discussion on Financial Performance with respect to operational performance

On a standalone basis your company recorded a turnover of Rs. 36,606.02 Lakhs for the year ended 31^st March, 2025 as against Rs. 53,833.18 Lakhs in the previous year which shows a decrease of 32 %.

On a standalone basis, the profit before interest, depreciation and tax for the financial year is Rs. 2,819.55 Lakhs as against Rs. 2,938.51 Lakhs recorded in the previous year. The profit before tax for the financial year stood at Rs. 1,506.46 Lakhs compared to Rs. 1,669.45 Lakhs of the previous year. The profit after tax & exceptional item for the financial year at Rs. 1,746.41 Lakhs compared to Rs. 962.25 Lakhs ofthe previous year.

On a standalone basis your company recorded Production of 26,608.36 MT for the year ended 31^st March, 2024 as against 40,907.70 MT in the previous year which shows a decrease to 34.96%.

During the year under review, the Companys subsidiary ‘ Shree Venkatesh lndustries Private Limited has also completed its first full year of Operations in the Pithampur Industrial Area, Dist. Dhar, M.P. in Indore Region by manufacturing and adding other products.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Details of significant changes, i.e., change of 25% or more, as compared to the immediately previous Financial Year in key financial ratio, along with detailed explanation therefore:

Sr. No.	Particulars	Ratio as on 31 March 2025	Ratio as on 31 March 2024	% of Change	Explanation, if any
i.	Return on Equity Ratio	8.52%	5.02%	69.54%	Due to increase in Profit after tax as compared to previous year.
ii.	Net Profit Ratio	4.77%	1.79%	166.90%	Due to increase in Profit after tax as compared to previous year.
iii.	Return on Capital Employed	8.80%	12.81%	-31.25%	Due to decrease in earnings before interest & tax and increase in Capital employed as compared to previous year.
iv.	Trade Receivable Turnover Ratio	5.12	8.85	-42.18%	Due to decrease in Turnover and increase in Trade Receivable as compared to previous year.
v.	Net Capital Turnover Ratio	2.57	4.59	-43.92%	Due to decrease in Turnover and Increase in working capital as compared to previous year.

RETURN ON NET WORTH:

Details of change in Return on Net Worth as compared to the immediately previous Financial Year as follows:

Sr. No.	Particulars	Ratio as on 31 March 2025 in	Ratio as on 31 March 2024 in	% of Change	Explanation, if any
i.	Return on Net Worth	11.65%	7.28%	60.11%	Due to increase in Profit after tax as compared to previous year.

Cautionary Statement

Some of the statements in this Management Discussion and Analysis, describing the companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable Laws and Regulations. Actual results might differ substantially from those expressed or implied. Important developments that could affect the Companys operations include changes in economic conditions affecting demand, supply and price movements in the domestic and overseas markets in which your company operates changes in the Government regulations, Tax Laws and other Statutes or other incidental factors. The company assumes no responsibility in respect of forward-looking statements, which may be amended or modified in future.

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014) Statement containing salient feature of the financial statement of subsidiaries or associate companies or Joint ventures

Part “A”: Subsidiaries

(Information in respect of each subsidiary to be presented with amount in Rs. Lakhs)

Name of the Subsidiary	Tapti Pipes and Products Limited FZE (Refer Note (i) & (ii))	Shree Venkatesh Industries Private Limited	Shree Venkatesh Polymers Private Limited
S. No.	1	2	3
The date since when subsidiary was acquired	13.03.2011 (Date of incorporation)	20.03.2024 (Date of acquisition)	30.04.2023 (Date of Incorporation)
Reporting period	2024-25	2024-25	2024-25
Share capital	7323.11	2.04	1.00
Reserves & surplus	(8308.70)	1792.32	374.51
Total assets	63.92	5527.36	780.91
Total Liabilities	1049.51	3733.00	405.40
Investments	-	-	-
Turnover	-	3451.40	3095.49
Profit before taxation	-	(299.84)	377.45
Provision for taxation	-	(51.59)	65.08
Profit after taxation	-	(248.25)	312.37
Proposed Dividend	-	-	-
Extent of shareholding (in percentage)	100%	51%	100%

Notes:

i) Converted into Indian Rupees at the Exchange rate USD 1 = 85.5814 INR.

ii) The financial statements have been audited by a firm of Chartered Accountants other than M/s. Anil Kamal Garg & Company.

iii) Names of subsidiaries which are yet to commence operations: Nil

iv) Names of subsidiaries which have been liquidated or sold during the year: Nil

Part B: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

(Amt. in Lakhs)

Name of Jointly Controlled Entity	NIL
1. Latest audited Balance Sheet Date	31.03.2025
2. Date on which the Associate or Joint Venture was associated or acquired	Not Applicable
3. Shares of Jointly Controlled Entity held by the company on the year end	Not Applicable
No.	Not Applicable
Amount of Investment in Jointly Control Entity	Not Applicable
Extend of Holding in percentage	Not Applicable
4. Description of how there is significant influence	Not Applicable
5. Reason why the Jointly Controlled Entity is not consolidated	Not Applicable
6. Net worth attributable to Shareholding as per latest audited Balance Sheet	Not Applicable
7. Profit or Loss for the year	Not Applicable
i. Considered in Consolidation	Not Applicable
i. Not Considered in Consolidation	Not Applicable

Note:

i) Names of associates or joint ventures which are yet to commence operations: Nil

ii) Names of associates or joint ventures which have been liquidated or sold during the year: Nil