A. INDUSTRY STRUCTURE AND DEVELOPMENT
Overview:
Ion Exchanges strategy is based on the purpose of its business i.e. to conserve
the planets most precious resources through total water and environment management
solutions. To this end, the Company for 59 years has been providing state-of-the-art
sustainable technologies and solutions for managing liquid, solid and gaseous waste
generated by industries, institutions, homes and communities – both urban and rural.
Thus, eliminating contributors, which lead to adverse climate changes and help create a
positive impact on peoples lives and the environment.
To meet the rising demand for water and to conserve natural resources, it is imperative
that the water and environment sector expands scientific knowledge and technology
applications to change the way water and waste is managed and reused by applying the
concept of Circular Economy and advance AI/ IOT enabled digital solutions for meeting
human, economic and environmental needs. At Ion Exchange we also nurture sustainable and
inclusive growth along with EESG (Environmental, Economic, Social and Governance) goals
which are essential for creating a positive impact on society, industry, the economy and
environment. By integrating EESG principles with process and digital technologies that
promote the concept of Circular Economy, we help our customers in industries,
institutions, homes and communities reduce their inefficiencies in water management,
environmental footprint and help promote responsible and ethical behaviour while
conducting their business. This benefits all stakeholders and contributes to a more
sustainable future even as the world continues to recover from the effects of the pandemic
and geopolitical tensions that have muted its growth whilst increasing demand for safe,
pure water and other natural resources.
Global Economy
The Global Economy recovery was well on track until the Russia-Ukraine conflict
broke out in February 2022.
It disrupted the restoration of supply chains disrupted earlier by lockdowns and
limited trade traffic. The conflict caused the prices of critical commodities such as
crude oil, natural gas, fertilizers and wheat to soar strengthening inflationary pressures
that the global economy had triggered, backed by massive fiscalstimuli undertaken during
the Pandemic years. This resulted in hardening of bond yields across economies and
resulted in outflow of equity capital from most of the economies around the world into
traditionally safe haven market of the US. It led to the strengthening of US Dollar
against other currencies whose depreciation widened the current account deficit and
increasing inflationary pressures in the under importing economies, including India.
Rising inflation and monetary tightening also led to slowdown in global output as
evidenced by the global
PMI Composite Index remaining in contradictory zone since August 2022, while the yearly
growth rates of global trade and industrial production significantly declined in the
second half of the year 2022. These global economy challenges led to downward revision in
growth forecast of global economies. IMF predicts the advanced economies and USA to grow
at 1 percent and global growth projection at 2.7 percent in the FY 2023.
Indian Economy
During the FY 2022-23 Indian Economy has proven to be remarkably resilient. It
withstood the challenge of renewed threat from Omicron variant of the Corona
virus, external imbalances caused by Russias invasion of Ukraine leading to disruptions
and volatility in global supply chain and ripple effect of the policy tightening measures
announced by several major central banks, especially the US Federal Reserve. Indias
inflation rate did not creep too far above RBIs upper tolerability of 6% and was
curtailed below 6.7% during the year. The current account deficit also narrowed to an
estimated 3 percent on the back of strong growth in service exports and easing of crude
and global commodity prices in the latter half of FY 2023. Further, aided by strong
consumption rebound, robust revenue collection, sustained capex, both in the public and
private sector, growing employment levels in the urban as well as the rural areas has made
Indian Economy the fastest growing major economy in the year
(7 percent), the third largest economy in the world in PPP terms.
Indian Water and Environment Industry
Water and Wastewater management is a promising subsector in Indias environment
technology segment. Indias demand for water is projected twice as much as the available
supply by 2030. According to Frost &
Sullivan report, the Indian water and wastewater treatment market will likely reach
$2.08 billion by 2025 from $1.31 billion in 2020, registering growth at a compound annual
growth rate (CAGR) of 9 percent. The report also ranked India as the sixth largest market
for environmental technologies in the world, with subsector rankings of second for
water/wastewater management.
Robust governmental initiatives, such as the Atal
Mission for Rejuvenation and Urban Transformation, National Mission for Clean Ganga,
Jal Jeevan Mission, and Community Drinking Water Schemes will contribute to the growth of
the Indian water and wastewater treatment market.
Government agencies are implementing regulatory and funding mechanisms to open up the
water and wastewater market for private investments providing an opportunity for market to
achieve significant growth as the industry shifts toward deriving more project value-based
(total cost of ownership) and utilizing government expenditure efficiently.
Further, the growing regulations by the regional
Government to prevent pollution of naturally occurring water bodies and illegal
wastewater discharge have boosted the market growth. To maintain a balance between the
population and freshwater supply, wastewater treatment facilities are planned with private
sector participation in large Indian cities where the urban population is constantly
growing.
Industrial sectors Power, Food and Beverages, Chemicals, Pharmaceuticals, Steel,
Refineries and
Textile industries prefer advanced treatment technological systems such as reverse
osmosis membranes for treating their wastewater. The concept of wastewater recycling and
zero discharge systems is becoming more widely accepted as newer technologies such as
membrane bioreactor (MBR) based treatment gain in adoption. As examples, some power
plants, oil refineries, plants and fertilizer plants are pursuing the principle of Reuse,
Recycle and Zero Liquid Discharge to better manage water usage and improve their
environmental footprint.
Industries are also setting up sea water desalination plants to meet process water
requirements. The coastal states of Tamil Nadu and Gujarat are frontrunners in setting up
desalination plants to bolster drinking water supply. Rapid industrialization,
deteriorating quality of surface and ground water has increased the demand for pure and
safe water in residential, institutional and community segments.
The home water purifier market continues to exhibit good growth rate (CAGR of 9%) and
thereby remaining the largest in the South-East Asian region. Moreover, with growing
awareness amongst consumers about safe water consumption and its health effects, aided by
advancements in technology, industry participants are introducing higher end models at the
top of the pyramid whilst increasing the penetration at the bottom rungs with quality
value-added products.
High tariffs, particularly in the area of monitoring and instrumentation, and
fragmented structure are market challenges for the sector.
B. Highlights of Performance: Standalone
? Total Income: INR 1939 crores registering a growth of 24.7% annually??? EBITDA:
INR 280 crores??? EBITDA Margin: 14.4%??? Net ProfitAfter Tax: 185 crores???
PAT Margin: 9.5%??? Diluted EPS: 150.26 (Face value INR 10 each)
Consolidated
??? Total Income: 2031 crores registering a growth of 25.4% annually??? EBITDA:
296 crores registering a growth of
16.1% annually
??? EBITDA Margin: 14.6%
??? Net Profit After Tax: 195 crores registering a growth of 20.4% annually??? PAT
Margin: 9.6%??? Diluted EPS: 165.95 (Face value INR 10 each)
C. Segment wise Operational Performance:
The business of your company can be segmented into:
1. Engineering
2. Chemicals
3. Consumer Products
Engineering
The year has seen increase in sales profitability, order inflow from both domestic
and international markets. It also has a healthy order backlog and bid pipeline from core
industries like Oil & Refining, Steel, Infrastructure & Chemicals and OEMs in
renewable energy domain, apart from Food & Beverages, Pharmaceuticals, Automobile
& Components, to name a few. The service business also reported a healthy growth in
the post
Pandemic period. With these the segment has visibility for sustaining growth in the
next 2-3 years.
On a standalone basis, the Engineering segment achieved a turnover of INR 1179 crores
compared to INR 900 crores for the previous year. The profit from Engineering Operations
stood at INR 101 crores.
The execution of Sri Lanka project remained significantly affected and the company has
engaged in discussions for expediting the project closure on a mutually acceptable terms.
On the other hand, execution of UP Jal Nigam project progressed satisfactorily and revenue
has been recognized based on work completion. The Membrane Division continued to deliver a
double-digit growth in its top line with proportional growth in the EBITA margins. The
success of its range of world-class membranes (RO, NF) and earlier than planned capacity
expansion during the year, will help to further increase our market share in India and
increase export of membranes to geographies where we have global presence.
Chemical Segment
The sales in the domestic segment continued to record steady growth while the export
volume remained muted due to geo-political issues and recessionary trends in global
markets, particularly US and Europe.
However, the segment witnessed improved margins aided by softening and stability of
input costs. During the period, the company successfully introduced its range of
"Green Chemistry" products to enhance sustainability footprint of its customers.
Several new ion exchange resins, adsorbents were introduced in local and export markets.
On standalone basis, the segment achieved sales turnover of INR 583 crores compared to
INR 526 crores of the previous year.
Consistent with increased demand for ion exchange resins, we have announced a
greenfield expansion project for manufacturing world-class ion exchange resins in Roha,
Maharashtra. The state-of-the-art manufacturing facility will also be aligned with
internal sustainability goals and environment quality management practices.
Consumer Products
The Consumer Products segment comprises of Home growth to the Divisions top
Water Solutions, Institutional, Commercial Water Solutions and Rural Sales Division.
Together these verticals achieved a turnover of INR 193 crores It was a path-breaking year
for Zero B Home Water Solutions which had significant and profits. Sustained product
innovations, commercial success of its Zero B Hydrolife range of top end product and Smart
Digital initiatives in sales and services contributed to the growth. It also launched
innovative products like Bathroom Softeners, low-cost value-added purifiers and extended
range of domestic Softeners and sand filters. With focus on quality and speed of response,
the vertical greatly improved customer experience and preference for its brands with its
after-sales service.
The Institutional segment which caters to the requirement of Realty, Hospitals,
Hospitality, etc. also registered good growth in its topline as compared to the previous
year. High and differentiated product solutions like INDION HEMO (High Purity Water for
Dialysis system), INDION QUENCHER (System for packaged drinking water in glass bottles
with an aim to eliminate single-use plastics) and a wide range of Sewage
Treatment Plants, contributed to the verticals performance. In the Commercial Water
segment the new Water Cooler models with unique features of purified water dispensed at
three temperature variants (normal/warm/cold) received good response contributing to this
segments growth. The LAB Q "Ultra Plus", and High Purity Water systems for
research laboratories and institutes requiring ASTM type-1 water registered good growth.
In the Rural Segment your Company continues to grow through its participation in
various Government initiatives such as the Jal Jeevan Mission as well as with its
association and support to non-government organizations and companies under their CSR
activities.
Exports
Your Company has posted export turnover of INR 394 crores for the year 2022-23.
Having built a favourable position as a reliable exporter of quality ion exchange
resins, two of its important markets, namely North America and Europe continued to be
constrained due to economic and geopolitical reasons. However, it is expected that these
markets will recover in coming years. Basis this pragmatic optimism we have formed a
European subsidiary for penetrating the European market as part of our sustainable growth
strategy for resins and chemicals.
On the Engineering front, the company witnessed steady order flow in the international
market. It includes a 40 MLD Seawater Desalination project for a leading EPC company in
North Africa and other significant orders from customers and global EPC companies
resulting in a significant bottom line.
Digital Initiatives
Your Company continued to extend its digital adoption for optimizing its business
activities and enhancing its customers satisfaction in FY 2022-23. This included multiple
Omni-channel digital campaigns for enhancing product awareness and promotion during the
year resulting in enhanced digital engagement and increase in business leads. Product and
industry specific campaigns were successfully executed on various social media platforms
further increasing customer engagements.
In addition to this, your Company launched their new Corporate
(www.ionexchangeglobal.com) and Hydramem (www.hydramem.com) websites which were stronger
in functionality, appearance and navigation. Development of the new regional websites for
Asia
Pacific, Africa, Europe, India, Middle East and North America widened our marketing and
sales reach to global customers.
In a step ahead towards our aim of being a paperless organization, Ion Exchange
equipped our exhibition booths with QR Codes which linked our customers to customized
landing pages and E-catalogues thereby significantly reducing distribution of paper
catalogues.
Digitalization played a very vital role in increasing your Companys Consumer Care
Business (Zero B) brand footprint in FY 2022-23. Considering the high percentage of users
accessing website and related content on mobile phones, Zero B website was revamped and
modified as per the mobile interface. The new, simplified and user-friendly interface
helped the brand to acquire a higher number of new and repeat visitors on the website.
Lead generation campaigns were fine-tuned on social media where regular content posting
resulted in higher engagement which helped in gaining additional followers and subscribers
for the brand. The Consumer Care business initiated integration of the website & CRM
for smooth functioning of the service vertical. Other digital initiatives include launch
of mobile application for service partners & leaders and enabling scan based payment
authentication to enhance and ease customer experience.
Risks, Threats, Concerns & Risk Mitigation
Pre-empting risks and robust mitigation strategy has been a priority on the
managements agenda. Your Company has a comprehensive risk management framework that
identifies risks arising out of internal as well as external factors, assesses, reports
and mitigates impact of these risks. The multi-layered risk management framework adopted
by your Company is aimed at achieving the strategic objective of increasing market share,
optimal utilization of assets to increase productivity, comprehensive financial reporting
and compliance to regulatory and social obligations.
On the global front, the conflict between Russia and Ukraine has overshadowed the world
economic scenario. In the first half of FY 2022-23, the war had its effect on economies in
Europe with energy cost and thereby creating inflationary pressure. The outlook remained
fragile in the major part of second half. Global growth slowed in 2022 to 3.2%, which is
one percentage point weaker than what was expected at the end of 2021. In early 2023,
signs of improvement are visible and decline in energy prices have improved the sentiments
and resulted in decline in food prices thus boosting the purchasing power. After the surge
in Covid numbers, early re-opening of China had a positive impact on the supply chain and
helped boost international tourism. On one hand, commodity price inflation has shown signs
of easing but on the other hand strong increase in service price and cost pressures from a
tight labour market have negated the benefit of inflation moderation.
Majority of global agencies have projected growth to further downslide in 2023 on
account of the ongoing war in Ukraine, and growing geo-economic fragmentation.
Policymakers in various countries have taken forceful actions to stabilize the banking
system as the other major forces that shaped the world economy in 2022 seem set to
continue into this year, but with changed intensities.
During 2022-23, your Company continued with its reassessment of short-term and
long-term impacts on the economies of countries of interest. Geopolitical tensions due to
the war between Russia and Ukraine, surge of covid cases in China and slowdown in most
European countries compelled most countries to rethink about their manufacturing
strategies and focus shifted to strengthening of domestic manufacturing capabilities. To
tap the business opportunities in these international markets, to ward off the threat on
the price front from other countries and to deliver as per the quality standards and
prices in the export market, your company resorted to building capabilities in the
countries of interest by investing in business and manpower abroad.
The Indian economy post the pandemic shocks, moved on and staged a full recovery in FY
2022 ahead of many countries and positioned itself to ascend the pre-pandemic growth path
in FY 2023. The ripples created by global economy scenarios had an impact on the Indian
economy too. India has also faced the challenge of reining in inflation created by these
global scenarios and the Indian Government and RBI had to resort to credit control policy
decisions. The depreciating rupee on account of US Fed interest rate hike and growth
momentum of Indian market led to increase in CAD gap. The overall growth for 2022-23 is
estimated at 7%. The current account deficit narrowed in Q3 due to strong growth in
service exports and easing of global commodity prices. Despite strong global headwinds and
tighter domestic monetary policy, Indias GDP growth is expected to be 6% in FY 2023-24.
In order to cash in on the growth opportunities in the
Indian markets and to offset the impact of uncertainties, your Company continued to
build a good order bank of of the profitablebusinesses. The emerging opportunities were
evaluated for the risk appetite they carry and unprofitable or highly volatile
opportunities were declined. Your
Company continued to maintain a healthy mix of profitable and relatively stable stream
of revenues from the engineering, chemical and home segment along with a good opening
order bank. Given the global scenario and its impact on the Indian economy, margins were
under pressure. However, your company maintained an apt mix of large and small businesses,
ensured steady stream of revenue by maintaining the quality of its products and services
in domestic as well as the international market and proactively adjusted to the price
sensitive scenarios.
For large EPC jobs your Company has built in a robust and dynamic risk identification
and mitigation framework through provision of proper infrastructure, tight operational and
internal controls and an extensive monitoring mechanism. For other large jobs matching the
companys business profile, your Company is very selective and cautious evaluation is done
with respect to various risks. Other risk mitigating measures include robust screening of
customers for ensuring business with only credit worthy customers, prime focus on
liquidity and positive operational cash flow and a cut discretionary spend. Your Company
continues to reassess and realign its strategies in the wake of the changes in market
dynamics and business uncertainties brought about by the international uncertainties.
Human Resources and Training Developing & Managing Talent
Promoting an environment that encourages the growth and development of your Companys
personnel is critical to the success of its business. Employees are encouraged to channel
their potential and gain success throughout their career lifecycle with the Company.
Your Company has established an integrated performance management system that evaluates
employee achievements on a periodic basis, in an objective and structured manner.
Employees are provided with opportunities to discuss their performance as well as their
personal and professional ambitions with their managers across all functions and levels.
In FY 2022-23 through your Companys robust performance review system, 100% of the
eligible employees have undergone performance and career growth and talent mobility.
Your Company is slowly moving towards Performance Enabler. At your company, learning is
integral to work, and therefore along with their performance review, your company provides
employees with learning and upskilling opportunities for capability building, to enable
them to undertake leadership roles effectively. Training imparted to employees cover a
wide range of subjects through internal and external programmes which include technical,
non-technical, skill upgradation, prevention of sexual harassment, etc.
Comprehensive Leadership Development Programmes and Leadership Engagement Sessions were
conducted on a regular basis for all critical roles in your Company.
Training programmes were also undertaken for first time managers to enhance their
leadership skills and orientation sessions were undertaken to familiarize them with their
new roles and responsibilities.
Your Company has a structured, well-documented Leadership Competency Framework as well
as a Functional Capability Framework, which defines key competencies and forms the bedrock
for various talent processes in your Company.
In the year under review a Mentor-Mentee program also called the ‘Sarathi –
Viraathi program was launched in which the senior management team volunteered to mentor
39 grass root leaders to develop and strengthen their supervisory skills. New
Mentor-Mentee are identified for 2023-24.
Succession planning in an integral part of your Company, which measures the depth of
leadership bench at the senior leadership levels. Your company has a strong succession
bench for most of the key positions and successors are identified prior to senior
management positions falling vacant, to ensure a smooth and seamless transition.
Internal controls
Your Company maintains a robust internal control framework to ensure that there is
reasonable assurance with respect to all information within the business and for that
which is available for external publication is correct and adequate. The existing
governance and policy framework implemented by your Company provides reasonable assurance
of the efficacy of the internal control operating within the Company.
The Company has a well-qualified Internal Audit Department. The internal audits are
planned from risk perspective. In preparing the Annual Audit Plan, reference is made to
past audit experience, current economic and business environment, the groups risk matrix,
directives from senior management and audit committee members. Major observations are
periodically highlighted to the audit committee members, corrective steps are taken and
are also reviewed by the statutory auditors.
Social Responsibility Initiatives
Your company has been undertaking social investments largely through its CSR wing
‘Ion Foundation working with NGOs and partners, as well as employee volunteers, to
assist in the implementation of various sustainable development programmes.
The core philosophy of the Companys social intervention programmes is to work closely
with communities living near its operations, and beyond. The CSR interventions are wholly
based on the needs assessed through community engagement, backed with a definitive
structure arising from the identification of needs of the local area and the existing
systemic gaps.
Your company has deployed a strategic inclusive development approach that valets and
cab drivers. Theyencompasses preserving and building drinking water resources for
sustainable water resource management, ensuring access to safe drinking water,
implementing long-term plans and enabling water security for domestic and agriculture
usage in communities, constructing better sanitation facilities, conserving environment,
providing health and nutrition amenities, providing quality education, creating platforms
for skill-building and community empowerment. Your company continued to make a positive
difference in more than eight states during FY 2022-23, aligned with Ion Foundations
vision ‘To empower the economically disadvantaged towards social equality and to
refresh our environment.
Some of the major interventions undertaken during FY 2022-23 were: l Solar
powered farming and irrigation systems:
Your Company assisted two villages in Palghar, Maharashtra by installing a new solar
powered water pumping irrigation system of 20 KWp Solar PV. The project had many positive
outcomes for the development of the community. It provided an opportunity to the farmers
to cultivate multiple seasonal crops, which enabled them to boost their average yearly
income by 60%. This resulted in significantly reducing the migration of the farmers to
other locations in search of jobs. Children were also able to continue their primary
education in their native village. l Your Company collaborated with an NGO to
support a driving training course in partnership with a driving school for 25
underprivileged women. The women received their driving licenses and badges for driving
commercial vehicles after this 6-month initiative. This helped the women to achieve
financially independence whilst balancing their family life with secured jobs as
chauffeurs, able to provide better education for their children as well as support their
families. l Besides the various education initiatives, which your Company has
undertaken over the years, the new focus in FY 2022-23 was to help bridge the gap in the
field of education by compensating the teachers who take extra classes for needy students.
During FY 2022-23 employees were encouraged to volunteer by forming specific interest
groups and join volunteering programmes with different institutions/
NGOs planned throughout the year.
Cautionary Statement
The statements or explanations given in this report may contain some forward looking
statements based on assumptions having regard to the government policies, economic
conditions, etc. The management cannot guarantee the accuracy of the assumptions and
expected performance of the Company in future.
Hence, the actual results may substantially differ from those expressed or implied
herein.
|
On behalf of the Board of Directors |
|
Sd/- |
|
Rajesh Sharma |
|
Chairman & Managing Director |
| Mumbai |
|
| Date: 26th May, 2023 |
|
+91-9892691696
