Performance review, FY 25
Your company reported a 16.61% decline in revenues from Rs 870.00 Cr in
FY 2023-24 to Rs 725.54 Cr in FY 2024-25. EBITDA dropped 49.12% from Rs 62.85 Cr in FY
2023-24 to Rs 31.98 Cr in FY 2024-25. Net loss was Rs4.50 Cr in FY 25 against profit of Rs
21.41 Cr in FY 2023-24. What is creditable is that the company reported a cash profit of
Rs 9.96 Cr during a challenging year, validating its business model robustness.
The company reported a disappointing performance for reasons largely
beyond its control, marked by a sharp decline in raw material costs, corresponding
inventory losses and increased interest outflow. The company's interest cover - an
effective liquidity measure - declined from 2.59 to 1.42.
By the fourth quarter of the year under review, the green shoots of a
rebound appeared visible.
Declining resource prices
The company encountered raw material volatility of the kind that was
last witnessed during the 2008 meltdown. During the last financial year, PVC prices
experienced moderate-to-significant volatility.
PVC resin costs weakened on account of price swings in ethylene,
chlor-aLkaLi, EDC/VCM input prices. This was on account of plant maintenance and outages
in China, Europe and U.S.
This PVC price volatility from April 2024 to March 2025 had a
multidimensional impact on buyers and processors, particularly those in the polymer pipe
manufacturing sector. Frequent price changes disrupted budget forecasting for long-term
infrastructure and construction projects; it compelled pipe buyers to stagger their
purchases. PVC converters like our company encountered erratic customer orders, leading to
unsteady production schedules and compressed margins due to medium-term resource
procurement contracts at high prices and the inability to hedge cost changes. Besides, the
decline in PVC
costs moderated pipe costs, affecting our revenues.
The company's industrial pipes business reported lower revenues: from
Rs 223.76 Cr in FY 2023-24 to Rs 58.64 Cr in FY 2024-25; the proportion of revenues from
this segment of the business moderated from 25.81% to 8.12% of revenues across two years.
Responsiveness
However, not all was grim during the last financial year. The company's
performance was protected by the management's proactive responsiveness to opportunities in
the building products and agriculture segments. At Kriti, we see a bright demand outlook
from these business
fed. The complement of schemes like PM Krishi Sinchayee Yojana, Har
Khet Ko Pani and Per Drop More Crop is creating a larger demand for PVC pipes for surface
and sub-surface irrigation systems. Besides, farmers are shifting to PVC-based sprinkler
and drip systems, especially in waterscarce areas.
The launch of the Jal Jeevan Mission targets 100% rural tap water
supply by 2024 that could involve the laying thousands of kilometers of PVC pipes. Rural
infrastructure schemes comprise new roads, toilets (Swachh Bharat), borewells and tanks
supported by PVC pipes. Besides, Budget allocations for agriculture and
The company reported a disappointing performance for reasons largely
beyond its control, marked by a sharp decline in raw material costs, corresponding]]
in.entor. losses and increased interest outflow.
segments. The market for PVC pipes in construction and agriculture in
India remains bullish for the next decade due to a combination of long-term structural
demand drivers, favourable government policies, and material-level advantages.
The Indian government aims to invest H111 Lakh Cr under the National
Infrastructure Pipeline. Affordable housing demand under PMAY (Urban & Gramin) is
expected to remain strong, driving the demand for plumbing and drainage pipes.
There is another dimension that appears as optimistic: the country's
aggressive irrigation push. India has 55% of net sown area that is still rain-
In view of this, the Indian PVC pipes market size of around H30,000 Cr
($3.6 Billion) in 2024 is expected to grow at a compounded 8-11% till 2035, the
combination of the agriculture and construction/ plumbing segments accounting for around
90% of the national PVP pipes demand.
Business-strengthening
initiatives
At Kriti Industries, we responded to this projected sectorial outlook
through relevant initiatives during the last financial year. During the course of the
year, the company engaged a prominent international management consultancy firm to enhance
supply chain efficiency, inventory management and working capital
efficiency.
In the agriculture pipes segment, the company focused on widening its
presence in South India. The company extended beyond product sale and transaction; it
encouraged and counselled farmers on the right piping or fittings solution; the result is
that the company enhanced its respect not merely as a product manufacturer but as a
solution provider.
The company outlined a three-year plan to provide stakeholders with
visibility on what lies ahead. The principal priority at the company is to utilise its
130,000 TPA manufacturing capacity. Much of this capacity is
growing demand, geographical shifts, and need for timely,
quality-assured product availability at a time when rural and semi-urban penetration
represents the next growth frontier in response to decentralised infrastructure growth.
Besides, we believe that wider and deeper distribution channels will
leave less space for low-quality substitutes and counterfeits in rural markets, benefiting
brands like ours. In a category where price differentiation is limited, reach and
availability will drive market share.
The company is also seized of the need to strengthen its inventory
management, the principal reason for the under-performance during the last financial year.
The efficient
In the agriculture pipes segment, the company focused on widening its
presence in South India. The company extended beyond product sale and transaction; it
encouraged and counselled farmers on the right piping or fittings solution;
under-utilised as the demand from agriculture pipes is seasonal; the
priority is to increase the proportion of sales from building or constriction pipes with a
more consistent offtake through the year. The building pipes segment growth rate of around
18-22% outperforms the growth of all pipe segments in India.
Meanwhile, the company will also continue driving the offtake of
agriculture pipes. This market segment is growing at around 6%; the company is deepening
its distribution network to retailer points across central, western and southern India. We
believe that this wider distribution network will become increasingly critical due to the
interplay of
management of raw materials will become increasingly critical for
polymer processors in India due to the increased volatility of feedstock prices, global
supply chain complexities, and the strategic need to protect margins.
Reinventing our culture
At Kriti Industries, we are not merely addressing a functional issue
like superior inventory management; we are transforming our culture.
The new Kriti Industries is one driven by nimbler responsiveness to
market changes. One of the visible manifestations of this will be the elimination of
resource overstocking or understocking. In turn, this will
warrant stronger systems coupled with enhanced technology-enabled
systems management.
As India digitises its manufacturing base, companies like ours will
utilise advanced digital technologies like Artificial Intelligence and Machine Learning to
forecast price trends or demand spikes. The company will integrate ERP with supplier
dashboards for real-time tracking and onward auto-replenishment systems, so that
inventories are adequately sized and market exposure moderated.
During the current financial year, we expect to generate a growth in
our manufacturing volumes in the high teen percentages. Through enhanced management
systems and stability in PVC prices, we expect to return the company to erstwhile margins.
By the virtue of a more responsive organisational framework, three-year
growth visibility across segments of the company's preference and a wider distribution
footprint, the company is confident of reaching H1,000 Cr in turnover by FY 2028-29,
enhancing value for all those associated with the company.
Shiv Singh Mehta,
Chairman