Texmo Pipes & Products Ltd Management Discussions.


The Indian economy displayed steady growth over the last year on the back of various Government initiatives and reforms and challenges faced due to COVID-19 and lockdown. The growth outlook was optimistic prior to the unexpected Corona virus (COVID-19) outbreak. However, owing to the massive impact of COVID-19, almost all the major economies of the world have gone through some form of lockdown or social distancing. The Central government declared the Gross Domestic Product (GDP) for the financial year 2020-21 contracted 7.3% as compared to 4.0% in 2019-20.

Indias GDP for the fourth quarter (January to March) grew by 1.6%. The Indian economy grew by 0.4 percent in October-December 2020, the third quarter of FY 2020-21. Prior to this, with two straight quarters of GDP contraction, India had fallen into a technical recession - the first since India began releasing quarterly estimates of GDP in FY98.

However, to overcome from the impact of COVID-19, the Government implemented various measures. These measures included reduction in repo rate and reverse repo rate, moratorium on repayment of term loans among others etc. The Government last year along with the RBI released a stimulus package of Rs. 20 trillion (mid-May 2020) which is approximately 10% of GDP. The package aims to boost private investments, increase liquidity support and infrastructure.


There were various significant monetary and liquidity measures taken by the RBI and the fiscal measures taken by the Government are expected to mitigate the adverse impact of COVID-19 and help reinvigorate the economic activities. The stimulus package is expected to foster long-term employment and opportunities that will strengthen the economy further. There are a number of factors like low per capita consumption, manufacturing focus, end use industry growth, increasing urbanization, changing lifestyle, promoting growth of plastic industry in India. The Company, therefore, envisaged a faster growth in business from upcoming years.


The Indian plastic pipes and fittings industry is expected to reach Rs. 500-550 billion by the year 2025 growing at a CAGR of 10% from the current levels of Rs. 290-300 billion. The integration in the PVC pipe market is expected to accelerate. With limited supply and rising PVC resin costs, the regional and unorganized players are expected to face significant sourcing and working capital challenges in the coming years. While leading market players are expected to enjoy expansion as market is moving towards organized segment wherein small players are getting merged with large players to recover the losses and financial crunches caused by slow demand and supply after the virus hit the country. According to AIPMA, price hikes have aggravated working capital and financial problems caused by the emerging COVID-19 pandemic. The major driver leading to growth is Government infrastructural spending, increasing constructions, industrial production, irrigation sector, replacement of aging pipelines, among others. Besides, its superior properties and economical cost makes plastic pipes favorable over metal pipes. There has been growing adoption in PVC/CPVC pipes owing to its corrosion resistant, flame resistant, easy to install & handle, environmentally sound and durability features. Along with this, increased focused by the Government in the end user application will be the major contributor in the growth. Consequently, it is also creating upsurge in the demand for solvent cement used in the fitting and attaching of pipe. The plumbing pipe segment will be comparatively less affected, led by the adhesive segment, while categories like wood panel, tile, and sanitaryware will likely face more growth pressures due to the COVID pandemic.


Post implementations of GST, the unorganized players in the plastic pipes industry were already finding it difficult to gain advantage on the price and market outreach. Presently, with COVID-19 scenario, the companies with high debt and weak cash flow are bound to head towards consolidation. This will result in leading of organized players with opportunities to acquire regional players at lower valuation.

The position of market is critical for all and also pertaining to our sector. The prices of raw material reach a very high level and mainly shown an increasing trend during the year under review. The industry also affected due to COVID-19 scenario to a great extent. The demand of Agri products reaches to just 30% as against 100% due to the present situation. However, the Company has accelerated growth in corporate sales by increase of around 74% as compared to the last year.

CHALLENGES Cost of raw material

The prices cf raw material increases to a great extent by this financial year and the production cost of the players operating in the industry affected a lot. However, the increase in raw material prices impact the end users and pipe manufacturing players, as the higher cost is passed down to the downstream industry users.

Risk Management

The Company has an effective risk management framework in place to primarily control business and operational risks. The major risk areas are periodically and systematically reviewed by the senior management. Comprehensive policies and procedures help identify, mitigate and monitor risks at various levels. By taking such proactive measures, the Company ensures that strategic business objectives are achieved seamlessly. During the financial year under review, the Company was reaffirmed ‘BWR BBB rating for fund based facilities. Higher finance cost is still a concern to the Company and Company is still striving hard to get more improved ratings for more reducing the finance cost. 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, 2021, the Companys total work force is 458 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 2020-21 2019-20
HDPE Pipe 20,680.56 14,134.84
PVC Pipe 12,716.61 13,218.80
CPVC fitting 938.41 724.56
Moulding fittings 3,845.10 2,783.29
RM Compound Sale 2,087.41 1.06
Trading Sale 1,897.58 1,932.01
Total 42,165.68 32,794.55
Less excise duty - -
Add Sell Fit Charges



VAT/CST subsidy for Industrial promotion
Installation Charges - -
Total revenue from operation as per audit report 42,165.68 32,794.55

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. 42,165.68 Lakhs for the year ended 31st March, 2021 as against Rs. 32,794.55 Lakhs in the previous year which shows an increase of 28.58%.

On a standalone basis, the profit before interest, depreciation and tax for the financial year is Rs. 2,582.94 Lakhs as against Rs. 1,796.89 Lakhs recorded in the previous year. The profit before tax for the financial year stood at Rs. 1,440.79 Lakhs compared to Rs. 615.76 Lakhs of the previous year. The profit after tax & exceptional item for the financial year at Rs. 1,123.08 Lakhs compared to Rs. 432.56 Lakhs of the previous year.

On a standalone basis your company recorded Production of 36,115.66 MT for the year ended 31st March, 2021 as against 30,680.48 MT in the previous year which shows an increase to 17.72%.


There were significant changes, i.e., change of 25% or more, as compared to the immediately previous Financial Year in key financial ratios pertaining to the Company, as under:

Sr. Particulars No. Ratio as on 31 March 2021 Ratio as on 31 March 2020 % of Change Explanation, if any
i. Debtors Turnover 9.53 6.20 53.70% Due to Increase in Turnover
ii. Inventory Turnover 6.53 4.78 36.64% Due to Increase in Turnover and Decrease in Inventories
iii. Interest Coverage Ratio 3.79 2.26 67.44% Due to Increase in Profit
iv. Debt Equity Ratio 25.54% 53.95% -52.65% Decrease in Outside Liabilities
v. Net Profit Margin (%) 3.42% 2.16% 57.96% Due to Increase in Turnover


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

Sr. Particulars No. Ratio as on 31 March 2021 in Ratio as on 31 March 2020 in % of Change Explanations
i. Return on Net Worth 10.52% 4.73% 122.54% Due to Price Fluctuation of FG & RM and increase in Sales

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.