Envirotech Systems Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT

Envirotech Systems Limited is a leading acoustic products manufacturing organization specializing in noise measurement and control for industrial and commercial applications. Incorporated in 2007, we have expanded our capabilities to include innovative acoustical product design and manufacturing. With over 98 employees and a network of technical experts, we offer cost-effective solutions for various acoustical challenges in industrial, commercial, architectural, and environmental markets.

Our comprehensive services encompass research, cost-benefit analysis, and engineering solutions to provide you with the most efficient noise abatement solutions.

Manufacturing Facility & Infrastructure

• We have state-of-the-art manufacturing facilities capable of working with carbon steel, stainless steel, and alloy steel, using materials like rock wool, multiple sound dampening & absorbing materials.

• Our facilities include welding, painting, and fabrication areas for large structures and equipment.

• Our skilled workforce and qualified welders ensure sustained production.

• We have technical personnel proficient in various NDT levels.

Envirotech Systems Limited offers its services across India, catering to a diverse range of industrial and commercial clients. While we also export some products, the revenue generated from these exports is not a significant portion of our overall revenue.

Envirotech Systems Limited specializes in manufacturing products tailored to meet customer demands, offering customized solutions for various noise control requirements. Our products are designed and fabricated according to the specific needs of our clients, ensuring optimal performance and efficiency. While we provide our services PAN India, our focus remains on delivering bespoke solutions that align with individual customer requirements. This customer-centric approach has enabled us to establish long-term relationships with our clients, who trust us to deliver high-quality, customized products that meet their unique needs.

We are committed to excellence and customer satisfaction through the use of the latest technology and continuous quality improvement. With a track record of over various successful projects in industries such as Oil & Gas, Manufacturing, Power Generation, Cement & Steel, Automobile, and Construction, ESL continues to expand both domestically and internationally.

To drive innovation and cost-effectiveness, our well-established R&D department employs computer- aided tools and efficient personnel. Our research activities focus on market research, continual product development, and improved product and production technologies.

2. BUSINESS OPERATIONS

With almost 2 decades of experience to back us we have come a long way since our inception in 2007. Founded with a dream to provide sound control products, Envirotech Systems has progressed much subsequently. Over time we have scaled up our manufacturing unit to include many new products and new solutions for sound attenuation. We have increased our product range to cater to new areas that need noise reduction solutions. We have ramped up our technical expertise and the size of our team to be able to handle a greater number of projects for more clients.

• RESEARCH AND DEVELOPMENT

Our core belief at Envirotech Systems Limited has been to deliver the best product to the client. In order to do this, we ensure that we continue to improve on our products with the passage of time and incorporate new technologies and methods of working. We do our best to keep ahead of the technology and continue to lead the market.

Latest technology: Staying up to date with the latest break throughs and new inventions around the world is a part of what our research and development team does. We want to provide our clients with the latest technology products.

Innovative concepts: Our inventive team of R&D engineers take challenges seriously and work on them to come up with an innovative solution. At Envirotech Systems we feel compelled to find a way around every problem. This has led to some great inventions by our team.

Improving existing products: Integrate new concepts into our existing products to better their performance is something we constantly strive for.

Variations of products: There are times when certain products need a few adjustments to suit different situations. Instead of altering the same product to suit the situation we have created multiple products that are readily available for each different situation.We are constantly looking for ways to improve up on our line of products to gives our clients the advantage of a better option. Our research and development team also work at finding new ways to devise cost effective acoustic products and solutions.

• MANUFACTURING FACILITY

We have a state-of-the-art manufacturing facility. We employ the latest techniques and all our equipment is hi-tech. Our factory work space area covers over 1,21,520 sq. ft. and comprises of a range of equipment for different purposes. Our factory sustains itself on the motivation of our workforce that work in a dedicated manner providing noise control measures to clients. Amongst our infrastructure we have the facility to manufacture different variations of steel. Steel is one of the core components we use for our noise reduction products. The different types of steel we make are stainless steel, carbon steel and alloy steel. This is done with the aid of a number of insulation materials such as rock wool, wool and others. We have a large section of our work space dedicated for welding and painting, including galvanizing. This area is also used for fabrication of large structures like acoustic containers and various acoustic panels. Our welders are adept at putting together a combination of different material to achieve the perfect sound reduction level. We have a full manufacturing setup and a huge list of machinery in our factory. Our manufacturing unit also comprises of a sound measuring and testing facility. Our products are tested at each stage of manufacture and also upon completion. This is to ensure that we supply our clients with the high-performance acoustic products.

3. Summary Of Key Financial Indicators (? Lakhs)

Particular	FY 2024-25	FY 2023-24	Variance (%)
Revenue from Operations	4,761.17	4,623.98	2.97
Other Income	459.94	63.97	619.04
Total Income	5,221.11	4,687.95	11.37
Total Expenses	3,381.20	3,127.77	8.10
Profit/(Loss) Before Tax	1,839.91	1,560.18	17.92
Profit/(Loss) After Tax	1,405.78	1,142.88	23.00
EPS (?)	7.48	8.54*	(12.39)

* The number of equity shares for FY2025 increased due to the public issue. For a fair comparison, if the number of shares were kept at the same level, the EPS for FY2024 would be 6.08. The % increase would be 23.05%

The Company posted a total income of ?5,221.14 lakhs for FY 2024-25, representing a incline of approximately 11.37 % over the previous year. Revenue from operations contracted mainly due to reduced processing volumes and price pressures, while other income increased, backed by interest income from IPO proceeds.

Operating expenses and employee costs increased, reflecting inflationary wage hikes and provisions, notably a substantial provision for gratuity in alignment with actuarial valuation standards

Financial Position & Liquidity

• Net Worth: Stood at ?6,390.39 lakhs as of 31st March 2025.

• Reserves and Surplus: Increased due to receipt of securities premium from IPO and Profits from Business.

• Cash and Bank Balances: Significant increase to ?376.56 lakhs as of year-end, mainly due to unutilized IPO proceeds placed in fixed deposits

• Current Ratio: Improved to 2.49 (previous year: 2.31), reflecting higher liquidity from IPO proceeds.

• Debt-Equity Ratio: Improved to 0.13 (previous year: 0.46), on account of significant repayment of debt using IPO funds.

The Company continues to uphold its reputation for ethical and transparent practices, thereby maintaining its status as a trusted service provider in this sector.

4. Capital Expenditure and Assets

Capital Work-in-Progress Ageing: (Amount Rs.in ‘000)

As at 31st March, 2025

CWIP	Amount in CWIP for a period of
	Less than 1 year	1-2 years	2-3 years -	More than 3 years
Projects in Progress	2,93,684.75	-	-	-	2,93,684.75
Projects Temporarily Suspended	-	-	-	-	-
Total	2,93,684.75	-	-	-	2,93,684.75

Intangible Assets under Development Ageing: As at 31st March, 2025

Intangible Assets under Development	Amount in CWIP for a period of				Total
	Less than 1 year	1-2 years	2-3 years -	More than 3 years
Projects in Progress	902.98	-	-	-	902.98
Projects Temporarily Suspended	-	-	-	-	-
Total	902.98	-	-	-	902.98

5. Key Financial Ratios

Ratio	Numerator	Denominator	Current Period	Previous Period	% Variance	Reason cor Variance (if more than 25% )
Current Ratio	Current Assets	Current liabilities	2.49	2.31	7.60%	-
Debt-Equity Ratio	Total Debt	Shareholder s Equity	0.13	0.46	-72.09%	There has been Fresh Equity fund raising through IPO resulting in sharp decrease in ratio.
Debt Service Coverage Ratio	Earnings available for debt service	Debt Service	1.54	30.88	-95.00%	There has been substantial reduction due to full repayment of long term debt out of IPO proceeds.
Return on Equity Ratio	Net profit after taxes- Preference dividend(if any)	Average Shareholders Equity	22.00%	58.29%	-62.26%	There has been Fresh Equity fund raising through IPO resulting in sharp decrease in ratio.
Inventory turnover ratio	Revenue from operations	Average Inventory	16.69	39.96	-58.24%	The company has orders in hand & anticipates growth in sales due to operationalisation of its new factory, hence there is increase in average inventory, resulting in sharp decrease in ratio.
Trade Receivables turnover ratio	Revenue from operations	Average Accounts Receivable	2.08	3.09	-32.67%	The company has undertaken various orders with higher credit period, hence there is increase in average trade receivables, resulting in decrease in ratio.
Trade payables turnover ratio	Purchases	Average Trade Payables	10.23	6.27	63.20%	The company has bought materials in cash to take advantage of the cash discounts, hence there is increase in average trade payables, resulting in decrease in ratio.
Net Capital Turnover Ratio	Revenue from operations	Average working capital (i.e. Total current assets less Total current liabilities)	2.30	4.72	-51.31%	There has been increase in Inventory & Trade Receivables as mentioned above, hence there is increase in average trade payables, resulting in decrease in ratio.
Net Profit Ratio	Profit for the year	Revenue from operations	29.53%	24.72%	19.46%	-
Return on Capital Employed	Earnings before Interest and Taxes	Capital Employed	30.80%	62.43%	-50.67%	There has been Fresh Equity fund raising through IPO resulting in sharp decrease in ratio.

Detailed working of ratios is as per the financial statements and applicable regulatory requirements.

6. Opportunities And Threats Opportunities:

• Expansion of the office network in India from IPO proceeds.

• New service models and digital transformation (software projects under development).

• Ability to leverage brand post-listing and enhance market presence.

Threats:

• Adverse changes in global immigration regimes and policies.

• Heightened regulatory scrutiny and compliance requirements for listed entities.

• Exposure to macroeconomic volatility, foreign exchange movements, and geopolitical risks

7. Area Of Activities

The Company is operating under a single segment:

Activities:

Envirotech Systems Limited is one of the most renowned companies for its acoustic solutions. We lead the market with our large range of products and solutions that can cater to almost every acoustic need. Our capability to provide noise control solutions is spread over a number of domains.

Activities have contributed positively to the revenue streams during the period under review

8. Future Outlook

• The Company plans to deploy unutilized IPO funds judiciously to achieve objected expansion, software capabilities, and working capital optimization.

• Management initiatives focus on improving operational efficiencies, cost controls, leveraging digital infrastructure, and adapting to sector trends.

• The Board, based on comprehensive going concern assessments, remains committed to restoring profitability and shareholder value in subsequent periods, contingent on improvements in market conditions.

9. Risks And Concerns

The principal risks facing the Company are inherent to the nature of its business, including but not limited to:

• Unanticipated modifications in immigration rules and policy frameworks by the host countries;

• Any resurgence of global health crises or unforeseen emergencies;

• Dependency on third-party associates and vendors for certain ancillary services.

The Company has instituted an adequate risk management policy to monitor and mitigate identified risks on a continuous basis.

10. Internal Control Systems And Their Adequacy

The Company has in place adequate internal financial controls commensurate with its size and scale of operations. These controls ensure that all assets are safeguarded and transactions are authorized, recorded, and reported correctly. The internal control systems are reviewed at regular intervals by the Internal Auditor and the Audit Committee to ensure operating effectiveness.

11. Human Resources And Industrial Relations

The Company considers its human resources as a valuable asset and remains focused on training, upskilling, and retaining a competent workforce. The relations between the management and employees continued to be cordial and harmonious during the year under review.

12. Cautionary Statement

Statements in this report describing the Companys objectives, projections, estimates, expectations, or predictions may constitute “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to economic, regulatory, market risks and future events beyond the Companys control. The above Management Discussion and Analysis should be read in conjunction with the Companys audited financial statements for the year ended 31st March, 2025 and notes thereon, and is prepared in compliance with applicable regulatory requirements, including Listing Regulations.