Thursday, July 25, 2024

Raksha Pipes Unveils Aggressive Growth Strategy

Aims for Tenfold Capacity Surge & Set to Achieve ₹3,000 Crores in Revenue by FY29, Fueled by a Robust 20% CAGR

Raksha Pipes, a leading player in the piping solutions industry and a flagship brand of The Shand Group of Industries, is embarking on an ambitious journey to expand its capacity tenfold within the next five years. The company is executing a robust overhaul of its agri-pipe market strategy in pursuit of this goal. The overarching objective is to position the group for an impressive turnover of ₹ 3,000 Crores by FY29, with a projected annual growth rate of 20 percent. Furthermore, the company is strategically planning the construction of warehouses in key locations such as Odisha, Bihar, and Jharkhand, augmenting its strategic preparations for the agri-pipe market.

Raksha Pipes has demonstrated exceptional resilience and forward-thinking, achieving a remarkable 20% year-on-year revenue growth over the past two years, even amidst the challenges posed by pandemic-induced lockdowns. According to Crisil Ratings, plastic pipes find extensive use in various sectors, with agriculture accounting for the largest end-user segment, followed by plumbing for real estate (both residential and commercial) at 38%, sewerage infrastructure at 12%, and other industrial applications comprising the remaining share. As of 2022, the agri-pipe segment held a substantial 45.2% share of India’s total plastic pipes market. With the agriculture sector experiencing robust expansion and the Indian government investing in water transportation facilities for agriculture, a significant surge in demand for plastic pipes is anticipated.

In FY23, Raksha Pipes reported revenues of ₹950 crores, marking it as a profitable and debt-free entity. Mr. Sanjay Shand, Managing Director – Raksha Pipes, highlights the diversified sales distribution, with 50% attributed to construction/building solutions, 25% to agriculture, and 25% to industrial infrastructure solutions. He said, “Raksha Pipes, embodying its tagline’ Raksha – Jeevan Bhar Ki Suraksha,’ stands as a beacon of trust and quality among stakeholders, particularly distributors and dealers. With a rich legacy of 44 years, Raksha Pipes boasts a robust PAN India distribution network of over 6500, ensuring widespread product accessibility. Our global presence extends to over 20 countries, underlining our commitment to international excellence. Raksha Pipes, known for its diverse product range, including Column/Riser Pipe, HDPE pipes, Casing pipes, Pressure pipes, and Suction pipes, is gearing up for an aggressive revamping. The group is aligning its capacities to meet the heightened demand in the agri-pipe market.”

With an eye on future business, Mr. Shand states that the additional capacity aligns with anticipated increased demand. Industry analysts project a 20% Compound Annual Growth Rate (CAGR) for Raksha Pipes’ volumes over FY24 to FY29E, driven by a resurgence in rural demand and sustained demand from the plumbing segment.

Mr Sanjay Shand
Mr Sanjay Shand

“With increased capacity utilization at all plants, we are poised for robust growth, anticipating the company’s expansion at a healthy 20-22% CAGR over FY24-FY29. As utilization levels pick up, operating leverage will drive EBITDA gains. The target is to position the group for achieving a turnover of ₹3,000 Crores by FY29. Key standards and principles prioritized for inclusive growth within the company include quality, price, and service. We take our stakeholders’ interests seriously, fostering partnerships with our dealers and distributors, who are integral to our growth,” Mr Shand added.

Raksha Pipes takes pride in its debt-free status, a testament to its rock-solid financial footing. Robust cash flows bolster this financial strength, minimal capital expenditure demands, and a steadfast dedication to upholding a healthy balance sheet. These strategic financial decisions catalyze the introduction of cutting-edge international products to the Indian market and expand the company’s portfolio into new and diversified offerings.

Raksha Pipes is expanding its presence in urban and rural areas, aligning with the government’s focus on critical infrastructure projects such as irrigation and drinking water supply. The company actively supports national priorities like Housing for All and responds to the recovering demand in the residential real estate sector. Government initiatives such as Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Accelerated Irrigation Benefits Programme (AIBP), Command Area Development, and programs like the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) provide strong support for growth in irrigation. Initiatives like Jal Jeevan Mission, BIS IS 16647 (2017), and Rashtriya Krishi Vikas Yojana (RKVY)-Scheme drive demand for PVC pipes. Moreover, adherence to international standard ISO 16422 ensures that the global production of PVC-O pipes aligns seamlessly with local needs.

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