Oswal Pumps Addresses Report Observations in Detailed Response

Oswal Pumps Limited has released a press statement addressing observations from a report in the public domain. The company provided a detailed response to key points raised, focusing on its financial reporting integrity and governance framework. The report highlighted several areas of concern, including negative operating cash flow, audit trail issues, and high receivables. Oswal Pumps has responded to these observations, attributing them to its current high-growth phase, which is largely driven by government-led programs such as PM-KUSUM.

The report noted a negative operating cash flow of Rs.1,505 million for FY25 and Rs.659 million for the first half of FY26, despite a reported Profit After Tax of Rs.2,806 million. Oswal Pumps explained that this divergence is due to elevated working capital requirements associated with rapid execution under government programs. The company recognizes revenue upon fulfilling performance obligations, while cash realization is subject to disbursement and approval cycles, as per Ind AS 115.

Concerns were also raised about the lack of an audit trail at the database level, which the statutory auditor noted as a governance lapse. Oswal Pumps acknowledged the limitations of its older ERP system, Microsoft Navision, which did not fully enable certain audit trail functionalities. The company has initiated a migration to Microsoft Business Central, which includes enhanced audit trail features. This transition is aimed at aligning with the requirements of Section 128 of the Companies Act, 2013, and will be subject to validation by statutory auditors.

The report highlighted a significant increase in trade receivables, which rose to Rs.6,150 million in FY25 from Rs.2,399 million in FY24. Oswal Pumps attributed this increase to higher volumes under government-backed projects, particularly the PM-KUSUM scheme, which typically involves a realization cycle of six to nine months. The company assesses credit risk on these receivables in accordance with Ind AS 109 and regularly accounts for delays through Expected Credit Loss provisions.

Oswal Pumps also addressed concerns regarding its supply chain financing arrangements, which were classified under “Other Current Financial Liabilities” rather than “Borrowings.” The company clarified that these arrangements are part of normal working capital management and are linked to trade payables. The classification and disclosure of these obligations have been made in accordance with Indian Accounting Standards, and the statutory auditors have not reported any material misstatement in this regard.

The company raised approximately Rs.8,900 million through an IPO in June 2025, which significantly improved its liquidity position. As of September 2025, cash and equivalents surged to approximately Rs.4,400 million. Oswal Pumps emphasized that the IPO proceeds are being utilized as per the stated objectives and that management remains focused on improving operating cash flow conversion through tighter working capital management and accelerated collections.

Oswal Pumps Limited is a vertically integrated solar pump manufacturer in India, with over two decades of experience in pump engineering and manufacturing. The company provides turnkey solar pumping systems and has a strong presence in solar-powered and grid-connected submersible and monoblock pumps, electric motors, and solar modules. Oswal Pumps is accredited with ISO certifications and is listed under the Ministry of New and Renewable Energy’s Approved List of Models and Manufacturers.