Dear Shareholders,
It gives me great pleasure to write to you after another year of purpose-led growth. We
continued to progress through a year that witnessed inflationary trends, supply chain
constraints, and sustained pressure on PVC prices.
In this operating environment, our focus remained on meeting the evolving demand of our
consumers, ensuring uninterrupted supply of our products, safeguarding the environment,
and undertaking strategic initiatives that will give greater play to our business model.
I am happy to share that we have been persistent and successful in transforming our
intent and ideas into unstoppable growth. Our robust results for the financial year
2022-23 demonstrate our team's leadership, strength of our brands, our execution prowess,
and our agility.
Resilient development and focus on execution were symbolic of FY2023
The year saw an unprecedented volatility in input costs in PVC prices, which led to
significant inventory losses adversely affecting our profitability. Since April 2022, PVC
prices have been corrected by a record of Rs. 66 per kg and bottomed out at ~ Rs. 76 per
kg by end of November. We were able to partly mitigate the situation by cost and inventory
optimisation initiatives. This trend moderately stabilised until March 2023 and, we
displayed a resilient volume and margin performance in the second half of the fiscal.
On an Annual basis, we were able to maintain a volume expansion of 13.4% with EBITDA
margins rebounding to 19.4% in Q4, led by our operational aggression, efficient supply
chain management, cost efficiency measures, and marketing thrust. We ensured a resilient
mindset to capture growth, strengthen business fundamentals, and implement key strategic
initiatives through the launch of new products and segments - all of which were aimed at
giving greater thrust to our business model. We simultaneously widened our distribution
network and enhanced brand visibility.
The company reported consolidated revenue growth of 2% to Rs.2,711 crores, EBITDA stood
at Rs.250 crore and EBITDA margins stood at 9.2% in FY23. Profit after tax was at Rs.121
crores in FY23. The company remains long-term debt free during the year. The company
continues to maintain CRISIL long-term and short-term debt with long-term debt now rated
CRISIL A+/Stable (upgraded from CRISIL A/Positive) and short term CRISIL A1+ (upgraded
from CRISIL A1).
I am proud to share that Prince Pipes was ranked in Business Today in 500 Most Valuable
Companies list. On behalf of all my colleagues, I thank each one of you for your continued
support and dedication as we take definite strides towards our vision of transforming our
country's water infrastructure.
Vibrant and active environment for growth
The Indian economy continues to gain global attention as one of the world's leading
growth engines. The Union Budget 2023-24 has effectively captured this potential and
outlined initiatives to stimulate India's growth momentum. The Budget finely pushed up the
capex spending without compromising on fiscal discipline. It continues to maintain a
thrust on the real estate, infrastructure, agriculture, social infrastructure sectors and
key themes of inclusive development, green growth, sanitation, health, drinking water
connections-which are measures to ensure comprehensive economic growth. PM Jal Jeevan
Mission- budgeted allocation of Rs.700bn and PM Awas Yojana allocation of Rs.790bn are
initiatives that augur well for the building materials industry.
Resolutely navigating Industry headwinds
The first half of the fiscal factored the impact of an unprecedented inventory loss led
by a steep fall in raw material prices, impacting margins. Further sustained destocking
amongst our channel partners, adversely impacted volumes in the second quarter. This was
an unprecedented, one-off development since our three-decade presence, that our team
navigated with all resilience reporting better volume performance and improved market
share. The second half of the fiscal year saw a gradual upward trend of PVC prices with
pressures abating, which enhanced our volume performance led by improvement in sentiment
and re-stocking in the distribution channel. This stability supported by underlining
demand momentum from real estate, agriculture, and infrastructure sectors, also provided
strong growth impetus.
On course and well placed to serve customers of the future
At Prince, we pride ourselves on understanding and serving industry needs. Hence, our
focus continues to be on innovation and market expansion as we launched two key products
with superior German technology in Modern Plumbing division which marks the start of the
next chapter of our growth. We launched Prince Skolan Safe, a Premium Polypropylene (PP)
Silent Drainage System, Prince HT Safe - low noise PP Drainage System and Prince Hauraton
- a modern range of Surface Drainage solutions. This initiative is aligned with company's
growth strategy to bring innovative products to the Indian markets, significantly expand
our capabilities and give new depth to our portfolio. Prince Pipes now brings a
world-class range of technology-oriented drainage and plumbing solutions, to builders,
homeowners, and consultants across the nation, under the modern plumbing vertical. We are
leveraging the Prince Pipes brand and our pan-India network of dealers and channel
partners as we roll out the product across India.
Some of our other new product launches during the fiscal year include WireFit, range of
electrical conduit pipes and fittings and Prince OneFit with Corzan CPVC technology with
super resistant to corrosion for high industrial application.
Another significant milestone is our expansion into the Bathware segment with the
launch of a premium line of faucets and sanitaryware. This development is a natural
extension of our business. Making a presence in the 'front-of-the-wall' category will
enable us to organically expand the product portfolio, leverage the equity of a leading
brand and serve the real estate market, where we already have a robust presence. The
products will be initially introduced in a phased manner across India. As per market
estimates the overall market size of the Bathware segment is expected to reach
approximately Rs.15,000 crores with the organized market at ~65% and unorganized market at
~35%. In the Bathware segment, faucets are estimated to be in the range of Rs.9,000 -
10,000 crores and Sanitary in the range of Rs.6,000 - 7,000 crores.
One of our core competitive strengths is our strong distribution network and deep
relationships with our business associates, customers and other influencers. We've been
able to build strong customer loyalty due to the value-creating experiences and a positive
emotional relationship with the Prince brand. For the second time, Prince won The Customer
FEST Best Channel Loyalty Program. Prince Pipes was one of the first corporations in the
pipes and fittings industry to have launched a loyalty program in November 2016 for
plumbers and dealers.
Leading Social and Environmental change
At Prince Pipes, we follow a multistakeholder model of sustainable growth. We believe
that to generate superior long-term value, we must care for all our stakeholders - our
consumers, customers, employees, shareholders, and above all, the planet and society. This
fiscal year too, we made commendable progress as we made strong environmental impact,
created social capital, and achieved cost efficiency.
We are cognizant of the way Prince Pipes creates social capital in the way people
interact and collaborate with each other to create greater value. Our flagship event to
commemorate World Plumbing Day in March 2023 was a great success as we hosted Season 2 of
Shram Ka Sammaan Campaign across Mumbai, Pune, Ahmedabad, Jaipur, Delhi, Patna, Lucknow,
Chennai, Kolkata, and Hyderabad. The event felicitated plumbers for their long-standing
association with the company, as Prince provided over 5,000 loyal plumbers with accidental
insurance policies - again an industry first.
Committed to strengthening India's water Infrastructure
With prospects in the areas of potable water supply, wastewater supply, electrical and
telecommunication cable protection, agriculture, chemicals, and oil and gas, the future of
the Indian plastic pipe market is bright. The Indian plastic pipe market is expected to
grow at a CAGR of 10.3% from 2022 to 2027, reaching an estimated $10.9 billion. The
expansion of government infrastructure investment, rising home and business building,
industrial production, the irrigation sector, and the replacement of deteriorating pipes
are the main growth drivers for this market. The government has already set the ball
rolling through various schemes. Several opportunities in the industrial realm are
witnessing transformation, where Prince Pipes can bring its expertise, know-how, and wide
product range.
With the growing industry potential, strategically, our entry into Bathware and faucets
gives us the opportunity to harness synergies with our robust pan-India sales and
distribution network and equity of the Prince brand which has the potential to create
great value for our stakeholders. We will continue to evaluate our portfolio with future
trends and opportunities to build a wide product canvas that addresses several industry
drifts and needs, as we work towards strengthening India's water infrastructure.
Conclusion and commitment
As passionate entrepreneurs, we remain hungry for progress, to create lasting change,
accelerate results, and be the best at transforming progressive ideas into unstoppable
growth. Walking the path of this mission becomes much more enjoyable with the support of
like-minded comrades, partners, and teammates. I take this opportunity to thank all the
members of our Prince Parivar who continue to bring sincerity, enthusiasm, passion, and
integrity to work every day. I also express my sincere gratitude to all our investors,
customers, partners, Bankers, and other stakeholders, for your overwhelming trust,
support, and confidence in Prince Pipes and Fittings Limited.
We look forward to your continued encouragement.
Sincerely,
Mr. Jayant S. Chheda
Chairman and Managing Director.