MAHEPCNSEApril 25, 2025

Mahindra EPC Irrigation Limited

6,382words
27turns
3analyst exchanges
1executives
Management on call
Ramesh Ramachandran
MANAGING DIRECTOR, MAHINDRA EPC IRRIGATION LIMITED
Key numbers — 40 extracted
3.8%
continues to be a major sector for India's growth and sustenance. Other than the likely growth of 3.8% in agriculture and allied sectors, India is likely to see faster growth rates in the secondary, i
rs,
ndia's growth and sustenance. Other than the likely growth of 3.8% in agriculture and allied sectors, India is likely to see faster growth rates in the secondary, i.e. manufacturing, construction, ele
6.5%
iary sector, which is mainly the services sector. And those growth rates would be in the range of 6.5% and 7.2% respectively. We also know that there is a strong focus on Atmanirbhar Bharat and Make i
7.2%
or, which is mainly the services sector. And those growth rates would be in the range of 6.5% and 7.2% respectively. We also know that there is a strong focus on Atmanirbhar Bharat and Make in India.
20%
on to the farmer in savings such as fertilizer, labor, electricity, which all are in the range of 20% to 30%, and also improvement in productivity in the range of 30% to 40%. In fact, in a recent add
30%
he farmer in savings such as fertilizer, labor, electricity, which all are in the range of 20% to 30%, and also improvement in productivity in the range of 30% to 40%. In fact, in a recent address by
40%
all are in the range of 20% to 30%, and also improvement in productivity in the range of 30% to 40%. In fact, in a recent address by the honorable Agriculture Minister to the parliament, it will st
9.7 million
, in a recent address by the honorable Agriculture Minister to the parliament, it will state that 9.7 million hectares has been covered under micro irrigation so far. My impression is this is still only abou
14%
ectares has been covered under micro irrigation so far. My impression is this is still only about 14% to 15% of the total identified current potential for micro irrigation in India and that potential
15%
has been covered under micro irrigation so far. My impression is this is still only about 14% to 15% of the total identified current potential for micro irrigation in India and that potential is est
72 million
tal identified current potential for micro irrigation in India and that potential is estimated at 72 million hectares. This estimated potential, while very large, is based mostly on groundwater availability
5.1%
rowing again. If we compare F'21 to F'24, we do see a bounce back of the industry and a growth of 5.1% compounded annual growth rate in lakh hectares covered as per the official site of the PDMC. Co
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Guidance — 16 items
Coming to the year under review
qa
“For the year under review, which is FY'25, the first half of FY'25 saw a de-growth over the same period of FY'24 due to strong headwinds on account of general elections, which I am sure you're aware of.”
Coming to the year under review
qa
“However, the second half of FY'25 for the industry was much better than the first half and the industry grew in the second half compared to the same period in FY'24.”
Coming to the year under review
qa
“Against that industry context, let me now come to the performance of your company in FY'25.”
Coming to the year under review
qa
“And this translates to 2 million hectares a year versus what we estimate to be a 1.1 million hectares of micro irrigation actually done in FY'25.”
Coming to the year under review
qa
“As reference, FY'25 AP coverage was 1.2 lakh hectares.”
Coming to the year under review
qa
“For instance, the groundwater uses efficiency scheme through Atal Bhujal Yojana, the inclusion of pressurized piping systems in the detailed project reports for major irrigation projects, the modernizing of command area development and water management.”
Coming to the year under review
qa
“The effect of this, of course, will be realized in improving the area and the micro irrigation in the future.”
Coming to the year under review
qa
“In fact, as a consequence of this, you will be happy to note that we have reached a 33.4% contribution of the non-subsidy business, which was a mere 3% contribution to the total business in FY'20.”
To summarize and conclude
qa
“And in the medium term, we as Mahindra EPC are well-placed to take advantage of both our unique benefits from our parentage, as well as the emerging opportunities to deliver above industry performance.”
Aditya Shah
qa
“But if I were to simplify, the main reason would be that we have had a much higher share of project sales where our material costs tend to be lower than in the subsidy segment.”
Risks & concerns — 4 flagged
First, in the subsidy business, we have reduced business concentration risk with a better balance across states and across geographies.
— Coming to the year under review
Some parts of a business will help take out some of the inconsistency and unpredictability of a business that is operating only in the subsidy space because as we all know, it is cyclical and somewhat difficult to call.
— Aditya Shah
Ramesh Ramachandran: So the other expenses, like I was mentioning to Aditya earlier, it includes the impact of the growth in our irrigation projects.
— Jigar Shroff
So difficult to comment on that point, but needless to say, we will be very focused on growing faster than the industry.
— Ramesh Ramachandran
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Q&A — 3 exchanges
Q
For the year under review, which is FY'25, the first half of FY'25 saw a de-growth over the same period of FY'24 due to strong headwinds on account of general elections, which I am sure you're aware of. However, the second half of FY'25 for the industry was much better than the first half and the industry grew in the second half compared to the same period in FY'24. Against that industry context, let me now come to the performance of your company in FY'25. In what we estimate as an industry that has had a slight degrowth or is nearly flat versus FY'24, your Company has registered a growth of a
To summarize and conclude
We feel that the micro irrigation industry will, like any industry, go through some ups, some downs. But the long-term outlook is very compelling. And in the medium term, we as Mahindra EPC are well-placed to take advantage of both our unique benefits from our parentage, as well as the emerging opportunities to deliver above industry performance. And this brings me to the end of my information sharing session. Thank you very much for listening. We are now open to questions and answers.
Q
Hello, Sir. Good to be talking to you after a brief gap. So my first question is regarding the material cost margins. As I can see from March 24 over March 25, we have a savings of around 7%. Now, if I translate that 7% into rupees, it comes to around Rs. 19 crores. So, like-to-like basis, the operating profit should have been Rs. 25 crores instead of which is Rs. 14 crores. So, my question is, where are we losing that Rs. 11 crores? Because as I can see, there are lesser provisions over our trade receivables for this year compared to last year. So where are we losing money even though when we
Aditya Shah
So Sir going forward, considering the change of the mix that we're planning to have and sustain it over these years, over the coming years, what kind of operating profit margin is something that should we work with which can be sustainable? I can see that the March 25th quarter, we have an operating margin of around 10% for the quarter. But let's say when I see for the full year, it's 5%. Obviously because of the first two quarters were bad. But on a consistent basis for the next three, four years, what is the kind of operating profit would we be targeting irrespective of the changes in materi
Q
Thank you sir for taking my question. Sir, I had a couple of questions. I think most of the questions which Aditya asked have been answered, which I had. Sir one is that on and often we keep on reading in the paper that Netafim is very aggressive in terms of providing micro irrigation solutions to optimize for water usage. So if anything, you could share what we are doing to increase our penetration? Secondly, Sir, I mean, there has been an appointment of Ami Goda as a Non-Independent Director. So, I mean, could you please tell does she bring the benefit, I mean, to the company for appointing
Ramesh Ramachandran
Jigar, thank you very much for your questions and very nice to interact again after we had our previous interaction. My pleasure. So very good question. So let me just take them in not necessarily in that order, but I will answer all the three questions. The first one on Ami. So she is the Head of Finance of the Farm Equipment Sector, which is in Mahindra & Mahindra. That sector, which looks after our mechanization business, our farm machinery business, our Agri business as well as some other businesses that roll into the Farm Equipment Sector. And she is the CFO of that business. She understa
Speaking time
Jigar Shroff
11
Aditya Shah
7
Moderator
5
Ramesh Ramachandran
2
Coming to the year under review
1
To summarize and conclude
1
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