Denta Water & Infra Solutions Ltd Management Discussions

1. Global Economic Environment

The global economy, at the midpoint of 2025, is navigating an increasingly complex and fragmented environment. According to the EY Global Economic Outlook June 2025, global real GDP growth is projected to moderate to around 3.0% in 2025, down from 3.2% in 2024, reflecting the weight of persistent geopolitical tensions, policy uncertainties, trade frictions, and sectoral inflation divergence. This slowdown marks a shift toward more modest but uneven momentum, with advanced economies showing notable deceleration while some emerging markets maintain resilience.

Global real GDP growth is projected to moderate to around 3.0% in 2025, as rising geopolitical and policy uncertainty reshape the world economy.

Growth in developed markets is expected to ease to approximately 1.3% in both 2025 and 2026, following 1.8% growth in 2024. In contrast, emerging markets are projected to expand by 4.1% in 2025, then soften slightly to 3.9% in 2026, following a 4.2% advance in 2024. This divergence underscores the differentiated impact of

Global inflation is set to ease from 4.5% in 2024 to 3.6% in 2025 as supply chains stabilise and monetary policy recalibrates. macroeconomic headwinds, including elevated interest rates, trade tariffs, and geopolitical uncertainties.

Global inflation is expected to trend lower, declining from 4.5% in 2024 to around 3.6% in 2025, driven by easing supply chain pressures, modest stabilisation of commodity prices, and a gradual recalibration of monetary policy. However, EY warns that this progress is fragile and remains vulnerable to fluctuations in commodity prices, currency movements, and ongoing geopolitical disruptions. In developed economies, inflation is expected to converge toward central bank targets; however, the US may experience renewed price pressures due to tariff-driven supply shocks. Emerging economies, particularly in Asia, are forecast to see further disinflation despite localised cost and currency pressures.

Monetary policy, as per the EY analysis, is entering a divergent phase. While the Federal Reserve is likely to proceed cautiously due to upside inflation risks linked to tariffs, the European Central Bank is anticipated to ease further through 2025, and the Bank of Japan will continue its slow policy normalisation into 2026. Among emerging markets, policy stances remain mixed: India, Mexico, and South Korea are cautiously easing rates to support demand, while Brazil, Nigeria, and Turkey are maintaining or tightening to anchor inflation expectations amid volatility.

According to the IMF, Indias real GDP is projected to grow 6.2% in FY25 and 6.3% in FY26, surpassing global forecasts.

Fiscal policy frameworks globally are under growing strain from elevated debt burdens, rising interest costs, and competing social priorities. Governments face difficult trade-offs between supporting growth through spending and maintaining fiscal credibility, with political fragmentation further complicating the development of durable policy frameworks. The resultant higher debt servicing costs are putting upward pressure on term premiums, especially in economies with low fiscal buffers or high rollover risks.

2. Indian Economic Environment

Despite the spillover effects from global economic headwinds, India continues to demonstrate remarkable resilience, growing at nearly twice the pace of the world economy. This strength is underpinned by robust domestic demand, targeted policy support, and a steady implementation of structural reforms. According to the April 2025 IMF World Economic Outlook, Indias real GDP is projected to expand by 6.2% in FY25 and 6.3% in FY26, significantly outpacing the global growth forecasts of 2.4% and 3.0% for the same periods. This solid growth trajectory reinforces Indias role as a key driver of global expansion, even amid persistent global uncertainties.

According to the recent report by EY, India is expected to lead the pack of emerging markets with projected growth rates of 6.6% in 2025 and 6.5% in 2026, far surpassing regional peers across Asia, Latin America, and Africa. This robust momentum reflects Indias strong domestic demand, policy continuity, and an ongoing infrastructure push, especially in rural and semi-urban development. In comparison, other emerging markets, such as ASEAN nations, are forecast to grow at around 4.4% in 2026, while Mainland China is projected to grow at 4.0%, highlighting Indias relative outperformance. These forecasts reaffirm Indias role as a key engine of global growth, supported by structural reforms, resilient consumer spending, and large-scale government initiatives.

FHeadline inflation eased to 2.8% in May 2025, primarily benefiting from a decline in food prices. Looking ahead, the Reserve Bank of India (RBI) has revised its CPI inflation estimates for FY26 to 3.7% in its June forecast, down from 4.0% projected earlier in April. Every quarter, inflation is expected to be at 2.9% in Q1 FY26, 3.4% in 02 FY26, 3.9% in Q3 FY26, and 4.4% in Q4 FY26. This disinflationary trajectory, coupled with Indias strong economic momentum, reflects a healthy macroeconomic balance that supports purchasing power, consumption demand, and public investment programs vital for infrastructure growth.

Another positive catalyst for the Indian economy is the outlook for the southwest monsoon. The India Meteorological Department (IMD) has forecasted an above-normal monsoon for 2025, with rainfall expected at 105% of the Long Period Average of 87 cm. This forecast is supported by neutral ENSO conditions and reduced Eurasian snow cover, factors that have historically been associated with robust monsoon activity. A strong monsoon is anticipated to improve kharif crop sowing in central and eastern India, thereby supporting agricultural output, stabilising food prices, and boosting rural incomes. However, the IMD has cautioned that certain regions, particularly the northwest, northeast, and the southern peninsular areas, may experience below-average rainfall, potentially creating localised challenges for sowing patterns.

Overall, a favourable monsoon, a disinflationary price trend, and a supportive monetary policy environment are expected to strengthen rural demand and stabilise farm incomes, which are vital for Indias consumption-driven growth model.

3. Global Water and Wastewater Treatment Market

The global water and wastewater treatment market is facing significant structural challenges driven by the widening gap between water demand and available supply. According to the World Economic Forum and the World Bank, world water demand is projected to exceed supply by as much as 40% by 2030. Population growth, industrial expansion, and climate change impacts have already outpaced water supply in many regions, limiting economic development and heightening water insecurity risks. If not addressed urgently, this could lead to broader social and food security crises.

Sustainable water supply, improved sanitation, and better resource management are therefore critical for supporting global economic growth and poverty alleviation. Investing in water and wastewater treatment is also viewed as a sound commercial opportunity, as it enables the development and deployment of advanced solutions, equipment, and improved water efficiency measures that can enhance productivity across various industries.

The wastewater treatment segment, encompassing both public and private operators, plays a vital role in safeguarding human and environmental health. With increasing flow variability, changes in organic content, and seasonal surges resulting from rainfall or industrial

According to Grand View Research, the Global water treatment equipment market is valued at USD 68.1 billion in 2024, growing at a 4.9% CAGR through 2030. activities, reliable, real-time water quality monitoring is crucial. Typical water quality parameters include dissolved oxygen (DO), biological oxygen demand (BOD), chemical oxygen demand (COD), and total organic carbon (TOC).

Freshwater is finite and essential for sustaining agriculture, industries, and human populations. If its availability is compromised, the broader sustainable development agenda is at risk. Pollution from agriculture (e.g., nitrates, phosphates, pesticides, and sediments) and industry (e.g., toxic discharges, chemicals, and point-source wastewater) has compounded water stress. Natural events, such as torrential rains and hurricanes, also deteriorate water quality through sedimentation, salinisation, and increased concentrations of undesirable minerals in certain aquifers.

At the same time, this scenario presents opportunities for contractors, technology providers, and equipment manufacturers. Growing urban and industrial water needs, combined with tightening environmental regulations and the push for a circular economy, have created a fertile ground for innovation. Governments, alongside private players, are being encouraged to modernise existing plants, develop advanced technical designs, introduce high-efficiency treatment equipment, and improve water reuse and recycling systems.

According to Grand View Research, the global water and wastewater treatment equipment market was estimated at USD 68.12 billion in 2024 and is expected to grow at a CAGR of 4.9% from 2025 to 2030. The Asia Pacific region dominated the market, accounting for 35.6% of the global share in 2024. This growth is driven by rapid industrialisation, urbanisation, and population expansion. Countries such as China, India, and Japan are making significant investments in water treatment infrastructure to meet the rising demand for clean water and to address the challenges of water pollution.

4. Domestic Water Scarcity and Sector Challenges

India accounts for 2.45% of the worlds land area and 4% of its water resources, yet represents 16% of the global population. With a current population growth rate of 1.9% per year, Indias population is expected to exceed 1.5 billion by 2050. According to the Planning Commission of the Government of India, water demand is projected to rise from 710 billion cubic meters (BCM) in 2010 to nearly 1,180 BCM by 2050, with domestic and industrial water consumption expected to increase almost 2.5 times. The accelerating trend of urbanisation is placing significant pressure on civic authorities to provide essential services such as safe drinking water, sanitation, and supporting infrastructure. Rapid population growth has further increased the demand for potable water, necessitating the exploration of new raw water sources and the development of modern treatment and distribution systems.

India faces an intensifying water crisis that is increasingly recognised as a top environmental and economic risk. According to the World Economic Forums Global Risks Report 2025, water shortages have emerged as one of the most severe environmental risks for India and globally over the next two years, given the compound pressures of climate change, growing populations, and rising consumption patterns. This threat is particularly concerning for India, where per capita freshwater availability has fallen below the water-stress threshold of 1,700 m3.

With a current population growth rate of 1.9% per year, Indias population is expected to exceed 1.5 billion by 2050.

In recognition of Indias growing water stress, the Government has strengthened measures to improve groundwater sustainability and recharge. According to the Ministry of Jal Shaktis 2024 assessment, total annual groundwater recharge has increased by 15 billion cubic meters (BCM) compared to the 2017 assessment, while annual groundwater extraction has declined by 3 BCM over the same period. Notably, recharge from tanks, ponds, and water conservation structures has increased steadily, reaching 25.34 BCM in 2024 from 13.98 BCM in 2017 — a rise of 11.36 BCM.

Additionally, the proportion of assessment units classified as "safe" has improved significantly from 62.6% in 2017 to 73.4% in 2024, while the share of "over- exploited" units declined from 17.24% to 11.13% in the same timeframe. These improvements highlight the impact of local water conservation initiatives, regulatory oversight, and community participation under various government-led schemes, including the Jal Shakti Abhiyan. Collectively, these efforts aim to strengthen groundwater sustainability, improve drinking water availability, and bolster climate resilience across both urban and rural India.

Given this context, aquifer recharge through managed rainwater harvesting, infiltration structures, and the recharging of treated wastewater into depleted aquifers has become critical. Initiatives like the KC Valley project in Karnataka, which uses treated wastewater to recharge groundwater, provide replicable models for other states. Similarly, Madhya Pradeshs rural recharge programs have shown promising outcomes by reviving local water tables and supporting agricultural resilience. Scaling these efforts nationally can help break the cycle of overextraction and supply stress.

5. Wastewater Scenario in India

India, with a population of 1.38 billion, faces enormous wastewater management challenges driven by rapid urbanisation and population growth. As of 2020-21, rural wastewater generation was estimated at over 39,600 MLD, while urban areas generated 72,368 MLD. However, the countrys sewage treatment capacity is inadequate, with only 31,841 MLD available, of which just 26,869 MLD is operational. This means that only 28% of the total sewage is treated, with 72% being directly discharged into rivers, lakes, and groundwater, thereby severely affecting water quality.

Indias growing urban population is expected to demand an estimated 1,450 km3 of water by 2050, with 7% allocated for drinking water, 4% for industry, and 9%

Only 28% of Indias sewage is treated; 72% flows untreated into water bodies.

According to NITI Aayog, 600 million Indians face high water stress, which could result in a 6% drop in GDP by 2030. for energy generation. Yet most cities draw freshwater from rivers and then dispose of untreated or partially treated wastewater back into them, compounding contamination. Pollutants originate from industrial effluents, uncollected solid waste, unauthorised groundwater extraction, and agricultural runoff.

According to the Ministry of Jal Shakti, the number of contaminated river stretches declined from 351 in 2018 to 311 in 2022, and water quality improved in 180 of these stretches. The share of contaminated rivers decreased from 70% in 2015 to 46% in 2022, indicating some positive results from conservation efforts, such as the National River Conservation Plan and the Namami Gange initiative. However, challenges remain, as 62.5% of urban wastewater is still untreated or inadequately treated, and only 37% of the total human waste generated in urban India is processed effectively.

A 2018 NITI Aayog study highlighted that India is among the most water-stressed nations, with 600 million people facing high water stress and a risk of a 6% reduction in

GDP by 2030 if current patterns persist. Compared to high-income countries, which treat around 70% of their wastewater, Indias current treatment capacity stands at just 18.6%, with another 5.2% under development, which is still insufficient given the scale of the challenge.

Notably, there is no centrally mandated wastewater management policy, and implementation gaps persist despite the Water (Prevention and Control of Pollution) Act of 1974 providing a legal framework for such management. The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and other programs have helped boost capacity. Still, many sewage treatment plants under initiatives like the Ganga Action Plan remain non-operational.

Moving forward, enforcing stringent regulations, promoting Zero Liquid Discharge, upgrading treatment technology, and investing in reuse and recycling infrastructure are crucial for safeguarding Indias freshwater resources and maintaining environmental and human health.

Market Drivers for Chemically Treated Water

Characteristic	Growing Demand	Regulatory Mandates	Industrial Consumption
Awareness	Increased focus on pollution	Consumers are more environmentally conscious	Industries recognize efficient water use
Industries	Investment to protect processes	Adoption of circular economy approaches	Momentum towards water recycling
Agriculture	Treated water improves yields	Stricter water quality standards enforced	Heavy penalties for non-compliance
Household	Demand for safe drinking water	Investment in water infrastructure rises	None
Requlations	Pressure to treat wastewater rises	Climate change impacts drive adaptation	Shift towards resource recovery occurs

India aims to achieve 25% wastewater reuse by 2026, increasing to 50% by 2050 for longterm sustainability.

6. Growing Focus on Circular Economy in India

India has been steadily advancing the concept of a circular economy, aiming to transform traditional production and consumption patterns by promoting recycling, reusing, refurbishing, and optimising available resources. The Government of India has championed this transition across various sectors, including energy, infrastructure, and manufacturing. Agencies such as NITI Aayog have been at the forefront, organising international conferences on sustainable growth through recycling, and establishing 11 expert committees to prepare action plans for implementing circular economy practices nationwide.

Key policy frameworks, such as the Construction and Demolition Management Rules, the Metals Recycling Policy, and the Plastic Waste Management Rules, reflect this push toward circularity. Within the water sector, the Ministry of Housing and Urban Affairs has prioritised the recycling of plastic waste and, importantly, the treatment and reuse of wastewater. The Ministry has set intermediate targets to achieve 25% reuse of wastewater by 2026, 35% by 2035, and 50% by 2050, acknowledging the critical importance of water reuse for long-term sustainability.

Despite Indias capacity to recycle as much as 20,000 MLD of wastewater, many existing water treatment plants are not running at full capacity, and about 60% of Indias industries continue to face operational bottlenecks due to inadequate water reuse practices. Highlighting successful models, the Surat Municipal Corporation showcased its wastewater reuse initiative at COP26, where it demonstrated how selling 115 MLD of recycled water generated revenue of Rs62.5 million. Such case studies illustrate the practical benefits of circular economy principles and set a benchmark for other urban centres.

Rapid urbanisation, combined with rising water scarcity in many regions, is driving the Indian government and various municipal bodies to finance more wastewater treatment projects and invest in advanced technologies. To make these efforts sustainable, decentralisation of projects, effective management, and community engagement are seen as essential. According to the

Council on Energy, Environment, and Water of India, large-scale interventions, greater access to technology, and a positive public perception will be critical enablers of a robust circular water economy.

Indias move toward a circular water economy is increasingly supported by technologies such as reverse osmosis purification, bio-augmentation, multiple-effect desalination, multi-stage flash distillation, and vapour compression systems. Furthermore, India is promoting the 6R rule—reduce, reuse, recycle, reclaim, recover, and restore—as a guiding framework for urban water conservation. However, challenges remain; for instance, rivers like the Musi in Hyderabad still receive partially treated wastewater, which undermines purification efforts and impacts water quality.

With greater public awareness of the limitations of a linear economic model and increasing government funding for circular solutions, India is expected to accelerate its journey toward a more resilient, resource- efficient, and sustainable water infrastructure in the years to come.

7. Government Policies and Regulatory Framework

According to the provisions of the Environment (Protection) Act, 1986, and the Water (Prevention and Control of Pollution) Act, 1974, industries in India are mandated to implement effluent treatment plants (ETPs) and treat their respective effluents to comply with prescribed environmental standards before releasing them into rivers and other water bodies. To enforce these standards, the State Pollution Control Boards (SPCBs) and Pollution Control Committees (PCCs) regularly inspect industrial units and take corrective action in case of non-compliance under these Acts.

The Bureau of Indian Standards (BIS) has formulated IS 10500:2012 - Drinking Water Specification, which prescribes requirements, sampling methods, and testing procedures to ensure the safety and quality of drinking water. These specifications align with guidelines developed by the World Health Organisation (WHO)

through an extensive global consultative process involving WHO member states, including India, national authorities, and international agencies.

For recreational and bathing waters, the Ministry of Environment, Forest and Climate Change (MoEF) has laid down Primary Water Quality Criteria for Bathing Waters, specifying quality parameters based on the "Designated Best Use" principle. This principle identifies the most sensitive or highest-quality use for a particular stretch of water and establishes water quality requirements to ensure its suitability for that purpose.

Similarly, the Central Pollution Control Board (CPCB) has specified Water Quality Standards for Coastal Waters and Marine Outfalls. In coastal segments, depending on the type of use and activities, water quality criteria are defined to determine the suitability of water for specific purposes, again following the "Designated Best Use" framework.

8. Company Overview

Denta Water & Infra Solutions Ltd. (DWISL), incorporated in November 2016, is a specialist engineering, procurement, and construction (EPC) player operating primarily in water management infrastructure. In less than a decade, the Company has built a reputation for excellence in groundwater recharge, recycled water projects, and sustainable water supply solutions. As of March 2025, it has delivered 35 projects and established itself as one of the few Indian companies with end-to- end expertise in the design, installation, commissioning, operation, and maintenance of groundwater recharge systems utilising recycled water. DWISL has also extended its capabilities to infrastructure projects in the railways and highway sectors, aiming to diversify its footprint while remaining anchored in its core mission of water security.

? Water Sector: Over 97% of its ongoing projects relate to water, including iconic schemes such as the Byrapura and Hiremagaluru Lift Irrigation Scheme, the Karagada LIS Project, and the KC Valley Project near Bengaluru, which is recognised as the second-largest treated wastewater reuse scheme globally. The company also has a robust order book valued at Rs10,667.52 million, with water management accounting for approximately 97%.

? Railways & Highways: The Company has executed infrastructure upgrades in railway yards, roads, and bridges to complement its water projects. As of March 2025, these segments account for approximately Rs336.84 million, representing about 3% of the total order book, indicating early-stage diversification beyond its core water sector.

The Company primarily serves state water boards, municipal bodies, and public health engineering departments, with no single client accounting for more than 30% of its portfolio, ensuring a healthy risk profile. Denta is deeply entrenched in Karnataka, where approximately 80-85% of projects have been delivered, but is gradually expanding into Maharashtra, Madhya Pradesh, and Gujarat. Its strategy is to replicate its proven execution excellence in new geographies while maintaining a strong presence in Karnataka, where relationships and trust built over the past seven years remain key enablers.

Our Ongoing Projects

Denta Water & Infra Solutions Ltd. has steadily built a strong portfolio of ongoing projects that reinforce its capabilities in groundwater recharge, lift irrigation, and sustainable water supply infrastructure. As of March 31, 2025, the Company has a total of 17 ongoing projects with an aggregate contract value of Rs11,004.36 million. Of this, approximately Rs10,667.52 million (or ~97%) relates to water sector infrastructure, while Rs336.84 million (or ~3%) pertains to infrastructure projects involving roads and railways. Work worth Rs2,376.23 million had already been executed as on that date, leaving a robust outstanding order book of Rs6,143.79 million to be delivered over the next 2-3 years.

These projects align with centrally sponsored schemes, such as the Jal Jeevan Mission and Atal Bhujal Yojana, as well as major state-led lift irrigation initiatives, underscoring Dentas technical leadership and strong execution record. Below are five major projects that form the cornerstone of the current execution portfolio:

Project Name	Date of Award	Expected Completion	Companys Stake	Current Status
KC Valley Package Work	FY2022	FY2026	97%	Civil works under execution
Kerehalli Drinking Water Project - Koppal	FY2023	FY2025	100%	Pipeline works ongoing
KC Valley Phase 2	FY2022	FY2025	48% (JV)	Engineering design and mobilisation
Chikkabenakal Drinking Water Project-Gangavathi	FY2023	FY2026	100%	Civil works commenced
Providing Water Supply Scheme to Kuknuru & Yelburga towns under Amrut-2.0	FY2024	FY2026	98% (JV)	Survey and design finalisation phase

These projects are strategically important because they address groundwater recharge and the reuse of treated wastewater - critical solutions for water-stressed regions such as Bengaluru and the semi-arid districts of Karnataka. Dentas technical leadership in designing and delivering high-capacity lift irrigation and recharge systems positions it strongly to execute these complex multi-year programs.

Beyond these five flagship projects, Denta is simultaneously managing 12 additional projects, comprising rural water distribution systems, smaller lift irrigation schemes, overhead storage tanks, and pumping station upgrades. Together, these contracts carry an aggregate value of Rs2,309.96 million and are spread across various districts of Karnataka and adjoining areas. These works are at different stages, ranging from detailed engineering and procurement to active construction.

The Companys disciplined approach - including milestone-based billing, in-house design control, quality audits, and efficient project management - ensures consistent progress across this diversified execution portfolio. Supported by a highly skilled engineering team, trusted vendor relationships, and established subcontractor frameworks, Denta expects to execute its current backlog within the scheduled timelines, positioning itself for future bidding opportunities under expanding national water infrastructure programs.

SWOT Analysis

STRENGTHS

Established Execution Credentials: Denta has successfully executed 23 water infrastructure projects, including complex lift irrigation schemes, groundwater recharge using recycled water, and rural water supply pipelines.

Its demonstrated ability to deliver high-quality projects on schedule positions it as a credible and trusted EPC contractor in this niche.

Technical Expertise: The Companys in-house engineering, design, and project management capabilities provide a clear competitive advantage.

Denta is among the few players in India with experience spanning feasibility studies, hydraulic modelling, structural engineering, and commissioning for groundwater recharge infrastructure, an area of growing policy focus.

Integrated Business Model: Denta offers services from concept to commissioning, including preliminary investigations, surveys, design, procurement, construction, and subsequent operations and maintenance. This integrated approach supports project efficiency, ensures higher client satisfaction, and strengthens long-term relationships.

Strong Regional Relationships: The Company has established deep ties with government departments, public health engineering agencies, and water boards, particularly in Karnataka, which enables a consistent inflow of orders and repeat business opportunities.

Healthy Order Book: As of March 2025, Dentas total order book stood at Rs11,004 million, with approximately Rs6,143.79 million. As per the latest publication dated 22nd July 2025, the outstanding order book amounts to Rs7,455.38 million, which includes seven newly awarded projects worth Rs1,830.06 million that are yet to commence execution.

WEAKNESSES

Geographic Concentration: Roughly 80-85% of Dentas projects are concentrated in Karnataka, exposing the Company to local policy changes, funding bottlenecks, or socio-political disruptions in a single state.

Customer Dependency: Almost all projects are sourced from government clients and public sector undertakings, creating exposure to procedural delays, budget reallocation, or payment uncertainties from these entities.

Limited Diversification: Although Denta has ventured into roads and railways, these segments currently account for only around 3%-4% of its order book, indicating that diversification efforts are still in their early stages of development.

Scale Limitations: Compared to larger pan-India EPC players, Denta remains a modest-scale contractor, which may constrain its ability to bid for very large or multistate projects where greater financial or operational resources are needed.

OPPORTUNITIES

Policy Tailwinds: Large-scale government initiatives, such as the Jal Jeevan Mission, Atal Bhujal Yojana, and AMRUT 2.0, create significant demand for water infrastructure, benefiting players like Denta, which have proven capabilities.

Growing Focus on Sustainability: There is rising awareness around treated water reuse, groundwater recharge, and water security, which aligns well with Dentas expertise and can drive new project pipelines.

Geographic Expansion: The Companys intention to expand into Maharashtra, Madhya Pradesh, Gujarat, and other states will help reduce over-dependence on Karnataka while tapping new growth opportunities.

Annuity-Based O&M: Dentas growing operations and maintenance portfolio supports a steady, predictable revenue stream beyond EPC execution, enhancing its long-term income stability.

Selective Infrastructure Diversification: By building capabilities in road and railway infrastructure,

Denta can participate in Indias broader infrastructure push, leveraging its engineering and execution knowledge base.

THREATS

Competitive Intensity: The EPC market in India, particularly in the water supply and irrigation sectors, is highly fragmented and characterised by intense price competition. Aggressive bidding by larger or regional players could pressure Dentas margins.

Execution Risk: Projects are exposed to cost overruns, subcontractor failures, resource bottlenecks, and weather-related disruptions, which can delay delivery and strain working capital.

Regulatory and Environmental Changes: Changes in water resource policies, environmental clearance frameworks, or public procurement rules could impact Dentas project approvals and profitability.

Budgetary Dependence: Any slowdown or disruption in government funding, or delays in disbursement, could materially affect cash flows and delay project milestones.

Talent Retention: EPC operations rely on retaining experienced engineers, project managers, and skilled workers. Loss of key staff or difficulty attracting talent could disrupt execution timelines and increase costs.

Financial Performance Analysis

Metric	FY24	FY25	% Change YoY
Revenue from Operations (Rs Mn)	2385.98	2032.85	-14.80
EBITDA (Rs Mn)	823.76	724.33	-12.07
EBITDA Margin (%)	34.53	35.63	3.2%
Profit Before Tax (Rs Mn)	813.84	715.56	-12.08
Profit After Tax (Rs Mn)	604.68	528.85	-12.54
PAT Margin (%)	25.34	26.02	2.65%
EPS (Rs)	31.49	25.83	-17.97

During FY25, Denta Water & Infra Solutions Ltd. reported revenue from operations of Rs2,032.85 million, reflecting a 14.8% year-on-year decline compared to Rs2,385.98 million in FY24. This moderation in topline was primarily attributable to the phasing of project billing milestones and a relatively slower pace of new project execution during certain quarters of the year.

EBITDA for FY25 was Rs724.33 million, declining 12.1% compared to Rs823.76 million in the previous year. Nevertheless, the EBITDA margin improved from 34.53% in FY24 to 35.63% in FY25, a 3.2% increase. This margin expansion underscores the companys ability to preserve operating efficiencies and manage overheads despite revenue headwinds, reflecting a resilient business model and sound execution discipline.

Profit before tax (PBT) for FY25 came in at Rs715.56 million, down 12.1% from Rs813.84 million in FY24.

Profit after tax (PAT) was also moderated by 12.5%, from Rs604.68 million in FY24 to Rs528.85 million in FY25. Despite these declines in absolute profit numbers, the PAT margin improved to 26.02% from 25.34%, supported by a more favourable cost structure and controlled finance expenses.

Earnings per share (EPS) stood at Rs25.83 for FY25, reflecting a 17.97% decline compared to Rs31.49 in the prior year. The decrease in EPS is broadly in line with the decline in absolute profitability. At the same time, the substantial PAT margin illustrates the companys resilience in managing profitability on a per-unit revenue basis.

Key Ratios:

Particulars	FY 2024-2025	FY 2023-2024
Return on Equity (ROE) (%)	18.5%	45.0%
Current Ratio (in times)	20.28	3.16
Debt Equity Ratio (in times)	0.00	0.01
Net Profit Ratio (%)	26.02%	25.3%
Net Capital Turnover Ratio (in times)	0.54	2.03
Inventory Turnover Ratio (in times)	4.38	18.35

* Based on Standalone Values.

9. Risk Management

The Company operates in an environment where multiple external and internal risks can influence its business performance. As disclosed in the Red Pierring Prospectus, Denta has identified the following key risk areas, together with its approach to mitigating them:

1. Client Concentration Risk: Dentas revenue is predominantly dependent on contracts awarded by government bodies, municipal corporations, and public sector undertakings. This concentration exposes the Company to budgetary cycles, policy priorities, and payment practices of public sector clients, particularly in Karnataka, where a significant share of projects is located.

Mitigation: The Company is actively diversifying geographically beyond Karnataka to states such as Maharashtra, Madhya Pradesh, and Gujarat. Additionally, Denta maintains close working relationships with multiple government agencies to broaden its client base and reduce dependency on any single department or scheme.

2. Project Execution Risk: Given its focus on extensive and technically intensive water infrastructure projects, Denta faces execution risks related to delays, resource availability, subcontractor performance, and weather disruptions.

Mitigation: Denta has institutionalised robust project management frameworks supported by ERP-based monitoring systems, milestone-based billing, and strict subcontractor selection processes. Its project teams conduct periodic progress reviews and quality checks to ensure adherence to timelines and specifications.

3. Regulatory and Policy Risk: Operating in a sector with significant environmental and compliance requirements, the Company is exposed to changes in tendering norms, water usage policies, and ecological clearance conditions, which could delay or halt projects.

Mitigation: Denta has a dedicated compliance and liaison function that monitors changes in regulations and maintains proactive engagement with statutory authorities to secure necessary approvals in a timely manner. Its engineering team is trained to adapt designs to evolving norms to remain compliant.

4. Funding and Payment Risk: A considerable portion of Dentas projects is funded through state or central budgets. Delays in fund disbursement or changes in budgetary allocation could impact the projects working capital cycle.

Mitigation: The Company structures its contracts with milestone-linked billing to match its cash flow needs and maintains prudent working capital buffers. Additionally, it actively engages with client agencies to track funding disbursements and minimise delays.

5. Sectoral and Geographic Concentration Risk: Approximately 97% of Dentas current order book is from water-related projects, and nearly 80-85% of these orders are from Karnataka. This sectoral and geographic concentration exposes it to localised risks.

Mitigation: Dentas strategic plan prioritises expanding its portfolio to other infrastructure segments such as railways and roads, while scaling its presence across more Indian states. This approach aims to diversify revenue streams and mitigate concentration risk over time.

6. Competitive Risk: The Indian EPC market, particularly in the water infrastructure sector, is intensely competitive. Aggressive bidding by established players could result in margin pressures and a challenging environment for contract renewals.

Mitigation: Denta focuses on niche expertise in groundwater recharge and lift irrigation systems, where its execution credentials and technical differentiation are valued. It builds strong client relationships and relies on its proven quality standards to win projects beyond pure price competition.

7. Joint Venture and Partnership Risk: For specific large projects, Denta partners through unincorporated joint ventures. The performance of these projects depends on coordination and trust with partners.

Mitigation: Denta carefully evaluates potential joint venture partners for capability, financial stability, and alignment of project management practices.

It also structures joint venture agreements with clear responsibilities and exit provisions to manage conflicts if they arise.

8. Dependence on Skilled Workforce: Execution excellence in water infrastructure requires skilled engineers, project managers, and field workers. Any difficulty in attracting or retaining such talent can impact operations.

Mitigation: The Company invests in ongoing training and skill development, offers competitive remuneration, and promotes a positive, safe, and inclusive work culture. This helps to retain core talent and reduce operational disruptions.

10. Sustainability, ESG & CSR

At Denta Water & Infra Solutions Ltd., sustainability is embedded in the very nature of our business. Our focus on designing and executing water infrastructure projects - including groundwater recharge, treated wastewater reuse, and lift irrigation systems - directly supports improved water availability for both rural and urban communities. These interventions promote water conservation, reduce reliance on depleting freshwater sources, and contribute to the sustainable management of natural resources.

The positive social and environmental impact of our projects is evident in the lives of thousands of farmers who gain access to reliable irrigation water through lift irrigation schemes, as well as residents who benefit from improved drinking water supply networks. By facilitating year-round water access, our projects help enhance agricultural productivity, stabilise local economies, and improve the quality of life in semi-urban and rural regions.

Although Denta has not yet adopted a formal ESG framework or CSR policy — in line with the statutory thresholds prescribed under the Companies Act — the Company intends to develop these programs progressively as it grows. Our future CSR initiatives are expected to prioritise water security, community development, skillstraining, and environmental stewardship.

We are also committed to strengthening our internal practices with a responsible business mindset. This includes ensuring adherence to applicable environmental standards during project execution, promoting safety and well-being at worksites, and maintaining fair and transparent relationships with stakeholders.

As we continue to expand our presence and diversify geographically, we intend to embed formal ESG performance tracking and governance processes in line with stakeholder expectations. Our long-term goal is to create sustainable value by integrating economic growth, environmental responsibility, and social progress.

11. Human Capital & Talent

At Denta, we believe that our people are the cornerstone of our project execution capability and sustainable growth. As of March 31, 2025, the Company employed 83 permanent staff across its engineering, project management, procurement, quality, finance, and corporate functions.

The Companys talent pool includes highly skilled engineers, technicians, designers, and project execution specialists with experience across diverse water infrastructure projects, including groundwater recharge systems, lift irrigation schemes, and urban-rural drinking water supply networks. Our in-house teams work collaboratively with subcontractors, vendors, and community partners to deliver technically complex projects to the highest standards of quality and safety.

We place a strong emphasis on continuous learning and skill development. Employees undergo regular training in technical, safety, and project management to stay current with evolving standards and practices in the infrastructure sector. Additionally, the Company fosters a culture that is transparent, merit-based, and encourages innovation, accountability, and teamwork.

As the Company expands geographically and diversifies into adjacent infrastructure verticals, investing in human capital will remain a strategic priority. We intend to strengthen our talent pipeline by attracting and retaining high-calibre professionals who share our commitment to sustainable water solutions and community development.

12. Corporate Governance & Compliance

At Denta, sound corporate governance practices form the bedrock of our operations and stakeholder trust.

The Company has established a structured corporate governance framework that complies with the provisions of the Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other applicable laws.

The Board of Directors comprises a balanced mix of executive and non-executive members, including independent directors who bring diverse perspectives and experience to board deliberations. Various committees of the Board, including the Audit Committee, Nomination and Remuneration Committee, and

We are capitalising on Indias expanding water infrastructure agenda by aligning with national priorities such as groundwater recharge, wastewater reuse, and lift irrigation systems.

Stakeholders Relationship Committee, have been constituted with clearly defined roles and responsibilities to ensure effective oversight and governance of the Companys affairs.

The Company has implemented internal control systems designed to provide reasonable assurance of compliance with applicable laws, protection of assets, reliable financial reporting, and operational effectiveness.

Periodic internal audits and management reviews are conducted to assess and strengthen these systems.

Denta is committed to maintaining the highest standards of transparency, ethics, and accountability in all its dealings. It follows a code of conduct for directors and senior management personnel, adhering to statutory and regulatory frameworks to ensure fair and responsible business practices.

As a newly listed entity, Denta intends to enhance further its governance framework in line with evolving stakeholder expectations and global best practices.

The Company believes strong corporate governance is essential to delivering long-term sustainable value for shareholders and society.

13. Forward-Looking Statements & Strategic Outlook

Denta remains focused on leveraging its strong execution track record and sectoral expertise to capitalise on the significant growth opportunities emerging in Indias water infrastructure sector. The sector outlook remains favourable, supported by consistent government investment through programmes such as the Jal Jeevan Mission, Atal Bhujal Yojana, and various rural and urban water supply initiatives. Increasing policy emphasis on groundwater recharge, treated wastewater reuse, and lift irrigation systems is expected to create a robust pipeline of future tenders, providing long-term growth visibility for experienced players like Denta.

For FY26, the Company is actively pursuing a healthy order pipeline driven by centrally sponsored water infrastructure initiatives as well as state-level programmes. Discussions and tender processes for multiple projects are already underway, positioning Denta to sustain its revenue visibility beyond its existing Rs6,143.79 million unexecuted order book as of March 2025.

In terms of growth plans, Denta intends to deepen its presence in Karnataka while expanding strategically into newer states, including Maharashtra, Madhya Pradesh, and Gujarat. These states are witnessing significant water-related investments, and entering these geographies will help Denta diversify its client base and revenue concentration. Beyond water, the Company plans measured growth in sectors such as roads and railways, capitalising on its design, engineering, and execution strengths to build a complementary infrastructure portfolio.

On the technology front, Denta aims to strengthen its competitive edge by investing in advanced project monitoring, quality assurance, and digital control systems. The Company plans to adopt GIS-based planning tools, digital twin frameworks, and loT-enabled monitoring of pumping stations and pipelines to enhance operational efficiency, support predictive maintenance, and deliver higher quality outcomes to clients.

Regarding margins and profitability, while Denta expects to maintain a disciplined approach to project selection, its focus on high-value, technically advanced contracts is anticipated to support healthy margins over the medium term. The management will prioritise

With an unexecuted order book of ^6,143.79 million and a robust pipeline of centrally and state-sponsored tenders, we are strategically positioned to sustain revenue visibility and geographic expansion. operational excellence, stringent cost controls, and timely execution to protect profitability in a competitive bidding environment.

Finally, Denta remains deeply committed to its long-term sustainability objectives. The Companys expertise in groundwater recharge, wastewater reuse, and integrated water infrastructure aligns with national sustainability priorities, contributing directly to community resilience and environmental stewardship. Overtime, Denta intends to formalise its ESG strategy, expand community- based water solutions, and integrate best-in-class sustainability practices into all phases of project delivery.

14. Cautionary Statement

This document contains forward-looking statements that reflect the Companys current expectations, beliefs, assumptions, and estimates regarding future business performance and economic conditions. These statements are inherently subject to risks and uncertainties, many of which are beyond the Companys control. Actual results may differ materially from those projected due to a range of factors, including but not limited to global commodity price fluctuations, regulatory changes, climatic conditions, input cost pressures, and changes in consumer behaviour or government policy.

The Company undertakes no obligation to publicly revise or update any forward-looking statements, whether due to new information, future developments, or otherwise. These statements should be read with the financial and operating performance data and risk factors outlined in this Annual Report.