Joint Managing Director’s Message

Dear Shareholders,

I am thrilled to present to you the 103rd Annual Report of our esteemed company for the fiscal year 2022-23. Your unwavering support and steadfast belief in our Company’s mission has been instrumental in our continued success. Together, we have embarked on a remarkable journey of transformation and growth through innovation and technology, to create a lasting impact and to make India self-reliant in fluid management.

At the heart of our Company’s ethos lies an unwavering commitment to provide maximum value to our customers through futuristic, ingenious, cost-effective, and energy-efficient innovations. We have consistently remained at the forefront of our industry, pushing boundaries and challenging the status quo. By embracing cutting-edge technologies and approaches, we have harnessed the power of innovation to revolutionise the way our customers experience our products and services. It’s more than a century since Kirloskar pumps have gained customers’ trust and naturally, we are the most preferred choice for our users today.

Our products have become catalysts for change, enriching lives and transcending boundaries. They have improved productivity, enhanced comfort and contributed to the overall well-being of individuals and communities worldwide. We take immense pride in witnessing the positive impact that our offerings have had on people’s lives, regardless of their location or background. Through our dedicated customer-centric approach, we have created a global footprint, connecting with diverse cultures and creating a positive ripple effect.

During the year under review, our top line grew at a healthy pace, driven by an improved product mix, recovery in key geographies and robust momentum in B2C pumps in the domestic market. On a consolidated basis, our Net Revenue from Operations stood at ₹ 37,302 Million in FY 2022-23, indicating a growth of 22% over ₹ 30,576 Million in the earlier fiscal year of FY 2021-22. Reported Profit After Tax was ₹ 2,358 Million, demonstrating a 150% rise over ₹ 943 Million PAT in the previous year. At 6.3%, PAT margin compared favourably with 3.1% previously. EBITDA at ₹ 4,264 Million was 79% higher than ₹ 2,385 Million, while EBITDA margin grew to 11.4% vis-à-vis 7.8%. Our minimal exposure to the engineering, procurement and construction (EPC) business helped us improve our working capital cycle and cash flows. However, our operating expenses grew mainly on account of a sharp rise in raw material prices and other key input costs. Going ahead, we see future growth being driven by a healthy order book and enhanced profitability.

Looking ahead, our strategic priorities are focussed on further enhancing cash flows, profitability and revenue. We have strategically reduced our exposure to EPC contracts, which historically have been low-margin, lumpy and working capital intensive. We have reduced the share of EPC to revenue from 75% in FY 2009-10 to a mere 5% in FY 2022-23. This shift has allowed us to selectively engage in more profitable contracts. We have also diversified our presence in the water, power, and irrigation sectors, without compromising on our commitment to innovation and quality.

It is extremely gratifying to witness a demand resurgence from the rural, urban, and industrial sectors. As a company, we have always been prepared to meet the diverse demands in fluid management, providing the highest quality products and services. I am delighted to announce that our unwavering focus on innovation has resulted in the successful launch of numerous new products, including an extensive range of mini-series pumps. These state-of-the-art offerings are amongst the most efficient products available in the market today and deliver superior performance and significant energy savings.

Building upon our proud legacy of empowering India and fostering self-reliance through world-class fluid management solutions, we are continually inspired by our vision to enrich lives across communities through innovative and sustainable engineering solutions. At KBL, we consistently exceed our own high standards and strive to bring unparalleled satisfaction to our customers through our exceptional products and services.

We have also taken significant strides in enhancing our product mix. Over the past decade, we have undergone a significant transformation from being primarily a project-based company to one that places a strong emphasis on products. Today, a remarkable 97% of our revenue is generated from products, while our projects business accounts for the balance 3%. This shift has been driven by a growing contribution from our services and value-added products, coupled with our expanding presence in Business-to-Business (B2B) and Business-to-Consumer (B2C) market. By focussing on delivering exceptional products and expanding our service portfolio, we continue to meet the evolving needs of our customers.

In today’s digital age, we recognise the importance of accelerating our digitalisation efforts. We have strengthened our digital capabilities and recently launched an enhanced version of our signature IoT-based technology, KirloSmart^TM. This state-of-the-art pump management solution empowers our users to remotely monitor pumping operations and troubleshoot products, demonstrating our unwavering commitment to deliver futuristic, energy-efficient solutions. By embracing digitalisation, we ensure that our customers undergo seamless experiences and gain access to cutting-edge technologies.

We are deeply committed to delivering exceptional value to our customers by consistently keeping pace with the latest technologies and continuously striving to create intelligent, efficient, and sustainable products. Our new SP and KDI pump sets, with IE5 Motor integration, have successfully established a new benchmark in the cost and power-efficient pumps segment. This achievement showcases our relentless pursuit of excellence in optimising our performance and energy efficiency.

In line with our sustainability focus, we have designed and developed a series of fish-friendly pumps that not only prioritises efficient water management, but also provides a safe and thriving habitat for diverse fish species. This ecological approach significantly contributes to maintaining the delicate balance of nature. Such an accomplishment has been made possible through the implementation of our ingenious and environmentally conscious design techniques.

Another notable product in our diverse portfolio is the indigenously developed Solar Pumping System, powered by our cutting-edge Jalverter technology, with a steadfast commitment to delivering clean and green energy solutions.

Furthermore, our cost-efficient and innovative product, PICO, stands as a micro-hydropower generator that harnesses the force of water from hydro energy resources like natural streams, drinking water supply lines, and industrial process lines. This clean and ecological approach to electricity generation showcases our dedication to minimising the environmental impact, while providing efficient and reliable power solutions.

Looking ahead, our strategic orientation places significant focus on value-added products, besides monetising our intellectual property, debottlenecking operations, optimising costs, and placing a strong emphasis on quality and product innovation. These initiatives will position us for sustainable growth and success in the ever-evolving market landscape.

As we analyse the future outlook, we anticipate increased profitability, driven by an improved business mix, steady commodity prices, calibrated price increases, cost rationalisation measures, a higher proportion of high-margin and reliable services businesses and an improvement in the global supply chain. We are well-positioned to expand our business further, fuelled by strong underlying demand from important domestic industries. However, we also remain vigilant of potential challenges, including increased competition in the pump sector, changes in raw material prices and fluctuations in foreign exchange rates.

Rest assured, we are well-poised to leverage future opportunities and capitalise on our inherent strengths. Our robust order book provides us with strong revenue visibility. With a successful business track record over nine decades, we are proud to be recognised as one of the leading players in pumps and valves. The foundations we have laid, coupled with our unwavering commitment to excellence, position us favourably to capitalise on future growth opportunities.

Customer care is one of our main areas of focus, and we have taken numerous steps to empower them. We also encourage them to register their warranties quickly and paperless on the KBLOne4All app.

Our processes are continually evolving to embrace the future, as we introduce new products that address emerging challenges. In this report, you will witness the successful completion of several such endeavours. Technology has long been viewed as a key enabler within our organisation, and moving forward, it will also serve as a tool of future empowerment. With numerous small, incremental changes and significant milestones occurring around us, the wave of transformation at KBL is poised to engulf our professional lives.

In conclusion, we extend our deepest gratitude to all our stakeholders, including our esteemed shareholders, for their unwavering support. We pledge to collaborate in making a brighter and better future together, as we continue delivering more efficient and future-driven innovations that enhance lives, transform industries and create sustainable value. Together, let us embark on this journey of growth and prosperity, confident in the knowledge that our collective efforts will shape a brighter future for all.

Thank you, once again.

Warm Regards,

Rama Kirloskar Joint Managing Director - Kirloskar Brothers Limited