Effwa Infra & Research Ltd Management Discussions

OF THE FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

During FY25 Effwa Infra & Research Limited ("Effwa" or the "Company") continued to consolidate its position as an integrated provider of water and environmental infrastructure solutions. The Company executed industrial EPC projects while expanding its annuity-style O&M portfolio. Management focused on disciplined execution, margin protection on large EPCs, and expanding higher-value offerings (Zero Liquid Discharge (ZLD), membrane-based treatment, and energy-recovery solutions).

GLOBAL ECONOMIC ENVIRONMENT

Global economic activity in 2024 25 remained uneven as central banks maintained tighter policy stances to manage inflation. For infrastructure companies, the primary implications were higher financing costs, elevated freight and capital equipment costs and episodic currency volatility for imported components. In the Indian context, public capital expenditure and water-sector focus created steady demand for municipal and industrial wastewater solutions, supported by national programmes targeted at water security and urban sanitation.

INDIAN ECONOMIC ENVIRONMENT & POLICY SUPPORT

Indias economy continued to outpace many peers in 2024 25, with government capital spending and several flagship water & urban programmes creating steady demand for water / sanitation infrastructure. Government focus on water security, urban wastewater management and industrial compliance (ZLD where applicable) under programmes and funding initiatives supports medium-term visibility for companies in Effwas space.

The Indian Water & Waste Water market has been expanding driven by urbanization, industrial water reuse mandates, and higher public & private capex. Industry estimates (2024 25) put the domestic market in the tens of thousands of crores with projected CAGR 7 11% across different research houses. Key near-term demand pockets include municipal STPs, industrial ZLD and wastewater reuse for process/utility water.

Technology trends: modular ZLD solutions, membrane technologies (MBR/RO), anaerobic digestion (biogas/CBG) and digital SCADA/automation for O&M efficiency. These are areas where clients are prepared to pay a premium due to water scarcity and compliance requirements.

Key policy drivers: Jal Jeevan Mission (Har Ghar Jal), AMRUT/Urban reforms, higher capital allocations to municipal & industrial infrastructure and targeted clean-technology programmes - all supporting growth in municipal and industrial water projects and O&M contracts.

Sources: IMF World Economic Outlook / WEO updates (global growth projections & inflation commentary).

GOVERNMENT INITIATIVES AND FUNDING CATALYSTS

Rising state and central allocations for water and sanitation, along with schemes such as Jal Jeevan Mission and AMRUT, are driving strong project opportunities. Funding through capex grants, PPP/HAM models, and multilateral programs is enhancing the quality of the project pipeline and supporting long-term O&M contracts for companies like Effwa. Sources: IMF country note & India macro updates; Government of India programmes (Jal Jeevan Mission / Ministry of Jal Shakti).

BUSINESS OVERVIEW:

Our company Effwa Infra & Research Limited ("EIRL") is a comprehensive solutions provider in the water management and environmental infrastructure sector. The Company specializes in engineering, consultancy, procurement, construction, and integrated project management for water pollution control, including sewage treatment, industrial effluent treatment and recycling, water treatment plants, and distribution networks. In addition, EIRL acts as consultants and advisors, delivering services in project planning, execution, equipment procurement, funding, and overall project lifecycle management-from conceptualization and design to supervision, implementation, and O&M.

An ISO 9001:2015 certified company, EIRL focuses on EPC and O&M services for effluent and sewage treatment with recycling, water treatment and distribution systems, and end-to-end project management solutions with an emphasis on sustainability. The Company promotes eco-friendly waste management practices such as Zero Liquid Discharge (ZLD), sewage reclamation, and resource recovery, aligning its business with global environmental goals. Its guiding principle is the 4R approach - Reduce, Reuse, Recycle, and Rehabilitate - which supports industries like chemicals, steel, mining, power, petrochemicals, and others in meeting regulatory norms while reducing their ecological footprint.

EIRLs capabilities cover the full spectrum of project activities: feasibility studies, process and technology selection, detailed engineering, procurement, inspection, supply chain management, cost engineering, construction, commissioning, and long-term O&M. Additional services include environmental engineering, equipment design, safety services, and preventive maintenance. Projects are primarily awarded through transparent competitive bidding processes conducted by central and state government bodies, PSUs, and private enterprises. The Company undertakes contracts for STPs, ETPs with recycling/ZLD, industrial wastewater treatment, water distribution systems, and allied infrastructure.

Infrastructure development typically involves designing, raw material procurement, construction of jack wells and pump houses, pipeline installation, electro-mechanical works, and complete project execution through to commissioning. Post-commissioning, EIRL provides operations and maintenance services (generally three to five years) through a specialized AMC/O&M team to ensure project longevity and compliance.

Currently, EIRL operates pan-India across six states - Andhra Pradesh, Chhattisgarh, Gujarat, Maharashtra, Odisha, West Bengal - along with presence in the Adani Port SEZ and select international markets. The Company has scaled its execution capabilities from a 3 MLD plant to 135 MLD, with marquee projects like the 135 MLD ETP for Sukinda Mines in Odisha. EPC projects generally take 18 24 months, while O&M contracts range from 1 - 5 years. As of March 31, 2024, EIRL has successfully completed 45+ water management infrastructure projects, serving state governments, PSUs, and private sector clients.

Its execution strength is underpinned by a dedicated team of 12 design engineers and 76 engineers across civil, mechanical, electrical, instrumentation, automation, safety, and quality control, supported by third-party consultants to ensure compliance with government standards.

During FY25, the Companys strategy focused on enhancing revenue quality by increasing long-tenure O&M orders, improving contract terms (advance payments, milestone LCs), and targeting bids with strong technical differentiation (ZLD, MBR, energy recovery) and counterparties with robust credit. Execution priorities included faster mobilization, tighter project controls, and closer monitoring of costs to mitigate inflationary pressures in inputs and logistics.

Operational footprint and capabilities: Effwa operates PAN India across multiple states and has experience delivering projects ranging from small modular plants to large-capacity works (historical execution up to 135

MLD). The Companys technical stack includes membrane technologies (MBR/RO), biological treatment (SBR/ASP/anaerobic systems), ZLD packages, and integration of automation/SCADA for remote operations. The in-house engineering team, supported by specialist consultants where needed, enables turnkey delivery and post commissioning O&M.

Key industry tailwinds:

Continued government focus on urban wastewater treatment, river cleaning initiatives and industrial compliance programmes.

Growing emphasis on water reuse and circularity in industrial processes, increasing demand for ZLD and tertiary treatment solutions.

Demand for integrated O&M services as clients prefer lifecycle operators to ensure compliance and uptime.

Key headwinds:

Inflationary pressure on raw materials, steel and mechanical equipment, and higher freight costs.

Public sector receivables and project payment delays in certain geographies; requiring contract-level mitigations.

Key Performance Indicators of our Company

As per Financial Statements

( in Lakhs)

Key Financial Performance	March 31, 2025	March 31, 2024	March 31, 2023	March 31, 2022
Revenue from Operations	18511.93	14515.93	11509.57	10437.94
EBITDA	3003.00	2075.92	911.50	703.13
EBITDA Margin (%)	16.21%	14.30%	7.91%	6.74%
PAT	2011.28	1390.46	514.38	436.73
PAT Margin (%)	10.86%	9.58%	4.46%	4.18%
Return on equity (%)	30.45%	45.76%	24.44%	28.35%
Return on capital employed (%)	30.41%	34.91%	22.89%	24.76%
Debt-Equity Ratio (times)	0.31	0.38	0.69	0.56
Current Ratio (times)	2.88	1.68	1.52	1.59

OUTLOOK FOR FY26:

Effwa enters FY26 with a strong order book, an expanding O&M base, and proven expertise in advanced wastewater technologies. The immediate focus is on timely conversion of the order book into revenue through disciplined execution and tighter project controls. A parallel priority is to grow recurring O&M revenues, providing stable, long-term cash flows.

The Company is also emphasising higher-margin solutions such as ZLD, energy recovery and biogas, which are gaining traction as industries adopt stricter compliance and sustainability practices. Financial discipline remains central, with prudent balance-sheet management and working-capital optimisation aimed at preserving liquidity and reducing leverage. In addition, Effwa will pursue selective strategic partnerships and technology tie-ups to enhance capabilities and expand into new segments.

With Indias wastewater sector projected to grow at 7 11% CAGR over the medium term, supported by government programmes and industrial demand for reuse, Effwa is well-positioned to deliver sustainable growth and long-term value.