EP Biocomposites Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT</dhhead>

1. BUSINESS OVERVIEW:

Our company was incorporated on 17^th January 2020 and is into manufacturing and supply of fibre reinforced polymers (FRP) products such as door shutters, frames, laminated doors, Biodigestor Tanks, Bio toilets and allied products for construction and Industrial applications which meets customer requirements as well as sewage water treatment solutions. The company has taken over the running business of our promoter M/s Om Ventures, a sole proprietorship through a business transfer agreement dated August 31, 2021 and the Company has become a flagship entity of EP Kamat group. Further the Company has established an Aqua Division offering Sewage & Effluent Treatment Plants for hotels, industry, institutions, Government bodies as well as residential and commercial buildings. The Company, in the year 2023-24, has added the line of fire doors to its portfolio to better cater to the needs of the customers for a one-stop solution.

 

2. INDUSTRY STRUCTURE AND ECONOMIC OVERVIEW:

Changing economic and business conditions, rapid technology, innovation and adoption and globalization are creating an increasingly competitive market environment that is driving corporations to transform the manner in which they operate. Companies in this environment are now focusing even more on ESG goals along with revenue and profitability.

International Monetary Fund has projected that the global growth is likely to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO), it has remained weak by historical standards. The rise in central bank policy rates to fight inflation continues to weigh on economic activity.

In this bleak scenario, Indian economy is continuing its steady march towards growth by growing at an estimated rate of 7% which is the highest for all major economies. The Finance Minister has laid down the seven priorities in her 2023 budget speech which complement each other and act as the Saptarishi for guiding India through the Amrit Kaal which are as follows:

1. Inclusive Development

2. Reaching the Last Mile

3. Infrastructure and Investment

4. Unleashing the Potential

5. Green Growth

6. Youth Power

7. Financial Sector

One of the main promises of the Central Government are with reference to moving forward firmly net- zero carbon emission by 2070 to usher in green industrial and economic transition. The activities of the Company aid in reduction of falling of trees, recycle millions of litres of water, and save the environment.

Some of the key factors which may aid the business of the Company are as follows:

1. The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The Effective Capital Expenditure of the Centre is budgeted at INR 13.7 lakh crore, which will be 4.5 per cent of GDP. This is likely to enhance the green projects which are undertaken by the states and promote the overall business of the Company.

2. States and cities will be encouraged to undertake urban planning reforms and actions to transform our cities into sustainable cities of tomorrow. These urban planning reforms are likely to aid in the STP, WTP, and other businesses of the Company.

3. NITI Aayog is churning out multiple research papers on how to attain water neutrality and how to manage waste-water treatments in urban cities. The business of the Company is a right fit for attaining this objective.

 

3. DEVELOPMENTS:

Our Company is involved in manufacturing and supplying a vast portfolio of products and services for a cleaner and greener planet. The main lines of the business of the Company are FRP doors, water treatment solutions, and bio-digester tanks and toilets.

FRP business of the Company consists of the fiber-reinforced polymer products which have multiple uses and applications. FRP is an eco-friendly substitute for wood that has long been the chosen

building material - a limited resource that has resulted in major environmental problems, such as fast forest decline. We have become leaders for FRP Doors in Goa and Konkan.

Bio-digester tanks and toilets of the Company utilize the unique Defence Research and Development Organisation (DRDO) technology. We focus on giving sanitation solutions to those who do not have access to toilets, as well as to those who have toilets but face trouble treating and managing the waste through septic tanks. We provide sanitation infrastructure and human waste management solutions and services, involving innovative and simple bio-digester technology licensed from Defence Research and Development Organisation (DRDO) and Industry Interface and Technology Management, operating under the aegis of DRDO, Ministry of Defence, Government of India. The anaerobic bio-digester technology helps users manage waste onsite, without depending on expensive and energy-consuming sewage infrastructure.

Water treatment solutions of the Company include Sewage Treatment Plants (STP) and Effluent Treatment Plants (ETP). The effluent water treatment - a technique used for processing industrial wastewater for reuse or safe discharge to the environment. We are presently recycling 1 Million litres of waste everyday for leading Hotels, Industries and Housing Companies. Our Company, by its investment in setting-up the Acqua Division, is well placed to offer sustainability solutions to companies to meet their ESG goals.

 

4. STRENGTHS, OPPORTUNITIES AND THREATS:

Strengths:

Growth in the Indian economy and demand creates unprecedented opportunities for company to invest significantly in each of its core businesses. Outlook for the overall industries is positive. In keeping with the philosophy of continuous consumer centric approach which is the hall mark of our organization, several developmental activities have been planned for the next fiscal year.

Some of our strengths which form the basis of Our Company are:

 

1. Partnerships with government and non-governmental players

DRDO, the inventor of the bio-digester technology, is our technology partner. NGOs and non-profit organizations are our partners in installing household and community toilets, and creating awareness. In association with them, we reach out to the rural populace and urban slums. Besides our basic product range of Doors, Bio Digester Toilets and STP / ETPs we would like to tie up with

Entrepreneurs offering containerized STPs & Precast products, SMC tanks etc. considering a huge demand for these in our targeted market segment.

In order to take advantage of our diversified product portfolio and existing client base of above mentioned products, we are planning to diversify our product portfolio by adding Delivery of clean water Dispensers by partnering with Wayout International AB (Wayout) and we are in the process of exploring further synergy between us.

We have entered into a Collaboration Agreement with Digital Paani and Bactreat Environmental Solutions LLP, which will assist us in offering solutions in special cases like Green Corridors for Smart Cities as well as use IOT to reduce operations & maintenance costs and improve consistency.

 

2. Technology

The company utilizes sandwich technology from TIFAC (Technology investigations & Forecasting) for FRP Doors and unique DRDO (Defence research Development Organisation) Biodigester technology for bio-toilets to offer Greener products for Swachh Bharat Mission. The company is a licensee (through transfer of technology) and has partnered with DRDO for technology commercialization for large-scale deployment of sanitation systems. The technology is effective in resolving the huge challenge of open defecation in India. We also continue to explore more application areas of the technology. With many successful projects in place, and recognition from the government, industry and academia - we have overcome many entry barriers, as also made a mark for ourselves.

The Biodigester Technology has now been included in the manual prepared by the Goa State Pollution Control Board.

 

3. Wide Range of products and services

We are a manufacturing company having varied product segments. Our diversified portfolio of products and services for greener and safer planet consists of Fibre Reinforced Polymer (FRP) doors and allied products, Bio Digester toilets DRDO technology and actively contributing to wastewater recycling through it solution in Sewage Treatment Plant (STP) and Effluent Treatment Plants (ETP).

In the financial year 2023-24, we have added fire doors as a product line for our business.

 

4. Consistent and Standardised Product Quality

Our Company has received ISO Certification from SQAC Certification Private Limited and was found to be in accordance with the requirements of ISO 9001:2015 in regards to manufacturing and supply of fibre reinforced polymer (FRP) products such as door shutters, frames, Biodigester tanks, bio toilets besides design, procurement, system integration, operation and maintenance of waste water recycling systems and allied products for construction and Industrial Applications.

Our Company undertakes stringent quality control as mandated in its Quality Manual to adhere to the quality norms of ISO.

 

5. Experienced and Qualified Team

The Promoter and the management team of our Company have significant industry experience and have been instrumental in the consistent growth of our Companys performance. Our Promoter Mr. Rajkumar Kamat has close to 3 decades of business experience and has been instrumental in the consistent growth of our Companys performance. He has been the main guiding force behind the growth and business strategy of our Company. A dynamic and multi-faceted personality, he handles the marketing, operations, finance, and business growth and development of the organization. Further, our promoter is supported by a team of well qualified and experienced professionals.

Mr. Shreyas Nadkarni is an Executive Director of our company and a key part of the core team. He has completed Post Graduate Diploma in Business Administration (PGDBA) Specialization - Operations Management Welingkar Institute of Management Development & Research, Mumbai. He was associated with the companies such as BNI (Business Network International) - Hubli Dharwad, Karnataka, Telstra India Pvt Ltd Bangalore, Zettata Technologies Pvt. Ltd, Bangalore, Bharti Airtel Limited Mumbai, SAP lndia Pvt. Ltd Mumbai, REGUS Business Centre Dubai, UAE. His extensive business experience and keen marketing insights help the Company in charting its way forward.

With effect from 29^th May, 2023, Mr. Anand Menon has been appointed as a Chief Executive Officer and Key Managerial Person of the Company. He has an extensive experience of over 30 years in strategic institution building, marketing management, project execution and operations management.

Mr. Anand Menons experience also includes close to a decade as Head-South East Asia operations based at Bangkok for an Indian Multinational. With his addition, the Company has welcomed a professional manager with clear vision and granular control over the details.

We believe that our management teams experience will enable us to continue to take advantage of both, current and future opportunities. It is also expected to help us in addressing and mitigating various risks inherent in our business, including significant competition.

 

6. Environmentally-friendly and Sustainable System

Bio STPs + utilizes multiple technologies innovatively, to customize the waste treatment process for optimum results and minimal cost, thereby contributing effectively to environment protection. The mission is to become the leader in sanitation and water recycling space in India by introducing the most technologically advanced yet environmentally friendly products. By the year 2025, the company hopes to achieve the goal of recycling 100 million liters of water every day. The bio-toilet is a complete environmental-friendly system. The faecal matter isnt left to ground, nor does it pollute the ecology in any manner. The system ensures that the human waste is completely degraded or "eaten up". The effluent water is pathogen-free, can be re-used or left to seep into the ground. Even as it percolates, it recharges the water table. Above all, the system doesnt require any energy source or other input for treatment, rather gives out utilizable biogas. There is a growing need to conserve more water and make India more self-sustainable. The bio-toilet can be easily installed without high cost, for the economically challenged or for the people at the bottom of pyramid (BoP). Bio STP Plus utilizes multiple technologies innovatively, to customize the waste treatment process for optimum results and minimal cost. Our company also manufactures FRP Doors that are unique, eco-friendly and greener alternatives to wooden doors.

 

7. Strong Client Base

We have developed a strong client base for our product and services. Also, for our products we have developed corporate client base as well including public sector undertakings (PSUs), publicly-listed and private companies, construction, infrastructure and Hotel companies, Foundations, NGOs and other organizations. We have expanded our market across, urban, peri-urban and rural India. In addition to the regions we are operating, we have embarked upon expanding our markets into more regions.

 

Opportunities:

A lack of sanitation also holds back economic growth. The economic losses are mainly driven by premature deaths, the cost of health care treatment, lost time and productivity seeking treatment, and lost time and productivity finding access to sanitation facilities. Pollution resulting from improper disposal and treatment of wastewater and domestic faecal sludge also affects both water resources and ecosystems. At the same time, faecal sludge and wastewater can provide valuable resources (water, nutrients, soil conditioner, briquettes and energy) and economic opportunities, especially in urban areas and in water-scarce environments.

The Company sees tremendous opportunity in the Biodigester Technology being included in the manual prepared by the Goa State Pollution Control Board.

With the Companys collaboration with Bactreat Environmental Solutions LLP, the Company has been awarded an order from M/s. Hubballi-Dharwad Smart City project for their Green Mobility Corridor at Hubballi. As a result of this collaboration, the Company anticipates many more of such projects.

The benefits of tackling the challenges of sanitation are manifold. Improved sanitation leads to lower disease burden, improved nutrition, reduced stunting, improved quality of life, increased attendance of girls at school, healthier living environments, better environmental stewardship, increased job opportunities and wages, improved competitiveness of cities, and economic and social gains to society more broadly.

 

Threats:

We operate in a competitive atmosphere. Some of our competitors may have greater resources than those available to us. While product quality, brand value, distribution network, etc are key factors in client decisions among competitors, however, price is the deciding factor in most cases. We face fair competition from both organized and unorganized players in the market. We believe that our experience in this business and quality assurance will be key to overcome competition posed by such organized and unorganized players. Although, a competitive market, there are not enough number of competitors offering services similar to us. We believe that we are able to compete effectively in the market with our quality of services and our reputation. We believe that the principal factors affecting competition in our business include client relationships, reputation, and the relative quality and price of the services.

 

5. OUR STRATEGIES:

1. Market Expansion

We propose to cater to both, domestic as well as international markets. We aim to further develop our domestic sales networks in two ways: by Strengthening our local presence in and around Goa and increase the number of retailers and secondly by creating new distribution channels in non- penetrated geographies considering various cities. We currently supply in Goa , North Karnataka (Belgaum, Hubli & Dharward) and United Arab Emirates (UAE). We want to expand our market by leveraging our business platform and tie up with Business Associates / Distributors throughout India. We believe that we have developed good clientele network in domestic markets and going forward shall be able to take advantage of our existing operations and network to expand these markets.

The Company has ventured into setting-up "EP Green Centres" in strategic locations, with sustainable partners in order to showcase the Companys Greentech products and solutions.

 

2. Investing in Human Resources and Building a Professional Organization

We believe that the successful implementation of our business and growth strategies depends on our employees commitment to our vision. We also believe that to sustain our future growth, we need to continue to train and empower our employees. As we expand our business into other geographical region, our ability to successfully train our existing and new employees will play a crucial role. We believe in transparency, commitment and coordination in our work, with our suppliers and customers. We have a blend of experienced, young and sufficient staff for taking care of our day to day operations.

 

3. Networking

Our promoter is heading the Goa region of BNI (Business Network International), a Global Organization with more than 2, and 70,000 Businessmen & Professional as members worldwide. His key position in various organizations helps him connect easily to these Entrepreneurs for support in Pan India & Global Expansion. EP Biocomposites limited is a member of Business Network International. All these connections help us network with, and build relationships. Thus, corporations and the non-profit sector help us in reaching out to users and clients.

 

4. Innovation and solution oriented approach

The Company is adopting a solution oriented approach which has seen it leverage the existing technology to provide new solutions. The STP and ETP divisions of the Company have deployed this the most as they are frequently required to improvise and change the offerings of the Company to suit the needs of the project. This has been seen in innovative solutions for previously uncatered set of clients like the beach shacks and boats.

 

5. Digital Marketing

We actively use social media for customer engagement, service provision and interaction with our vendors. We have increased our touch points and engagement with customers through various digital and technology initiatives. We are already active on social media websites such as Instagram, LinkedIn and Facebook. We believe that the granularity of data available with us, both geographically and across various segments will enable us to enhance our distributions and help us to increase our customer base both locally and globally.

 

6. OUTLOOK:

The continual growth in the Indian sector is necessary to give necessary support to the industry. The Company is making all effort to accelerate the growth of its business. It expects to improve its position in the market by focusing on environmental friendly products and market segment and working aggressively in the area of environment protection, productivity, efficiency, and cost reduction.

 

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

Your Company follows a policy of building strong teams of talented professionals. People remain the most valuable asset of your Company. The Company recognizes people as its most valuable asset and the Company has kept a sharp focus on Employee Engagement. The Companys Human Resources is commensurate with the size, nature and operations of the Company.

 

8. STEPS TAKEN SINCE THE INITIAL PUBLIC OFFERING

Some of the concrete steps taken by your Company since the completion of the Initial Public Offering are as follows:

 

A. Team Building

The Company has hired additional team of resources including top management personnel to support its vision for the forthcoming years. The major steps in human resources shoring up are as follows:

- Recruitment of CEO

- Technical Sales personnel for Kolhapur, Mangalore and Belgaum

- Senior Project Executive Engineer

- Senior Sales Personnel

- Human Resource professionals to handle the HR Department of the Company

 

B. Systems and Trainings

The Company has focused on establishing robust processes and systems which include the following:

- Exhaustive HR Manual through HR and Organizational consultancy

- Compliance and Audit systems through Internal Audit process and related consultancy

- Sales training through sales trainer

 

C. Collaborations

The Company has collaborated with the Digital Paani and Bactreat Environmental Solutions LLP during the year. Bactreat (a BITS PILANI start-up) collaboration is for BIO STP using wetland technology. This helped us to bag order of Rs. 2.64 Cr to set up 2 nos of 1000 KLD BioSTP on Utkal sub Nallahs as a part of Hubli Smart City s Green Corridor project .

With Digital Paani (an IIT Delhi startup), the Company is planning for the use of IOT and automation to monitor STP operations.

 

D. O&M orders

In addition to the existing clients, the Company prestigious Operations & Maintenance orders regarding the STPs from clients like MRF Limited, Zuri White Sands, Goa Resorts and Casino, and CommScope Limited. This has increased the waste water recycling from 1 million liters per day to the present 2 million liters per day. The Companys goal is to cross 5 million liters per day in the year 202324.

 

E. Marketing and Promotion

The Company has participated in multiple programs which were focused on the business of the Company. The glimpses of the same are contained in the photo gallery:

- In association with Indian Institute of Engineers, Indian Plumbing Association, Institute of Indian

Interior Designers and CREDAI , the Company celebrated the World Water Day creating awareness through TV channels as well as seminar in the distinguished presence of Water Resources Minister and Environment/PWD Minister for stakeholders and influencers.

- Highly successful Architects meet was held in Mangalore to kick start our operations in the highly potential city.

 

F. Subscription Model

- In order to expand the markets by making it easy for customers to take quick decisions, the company has tied up with M/s HECS Pvt. Ltd. for Packaged STPs which will be offered on Monthly Subscription Basis - This has just been started and execution of 20 KLD packaged STP unit for a famous restaurant is in Progress.

 

G. Immediate Future Prospects

In the rest of the year 2023-24, the following immediate developments are foreseen by the management of the Company:

- The company has secured an order for revamping a 25 KLD STP Plant at ONGC, Betul, Goa.

- Execution of Bio STP for Hubli Green Corridor Project is scheduled by September 2023 and is

expected to open a huge market for similar projects in other towns and cities.

- Inclusion of Bio-digesters in the Goa State Pollution Control Board manual is also going to open a substantial market for replacement/enhancement of existing septic tanks.

 

9. CAUTIONARY STATEMENT:

This report contains forward-looking statements based on the perceptions of the Company and the data and information available with the company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements and they reflect Companys current views of the future events and are subject to risks and uncertainties. Many factors like change in general economic conditions, amongst others, could cause actual results to be materially different.

By Order Of The Board Of Directors

FOR EP BIOCOMPOSITES LIMITED

RAJMKUMAR G. KAMAT

Managing Director

DIN:01157652

Place: Bicholim, Goa

Date: 29th May, 2023