A. INDUSTRY STRUCTURE AND DEVELOPMENT Global Economy:
Financial year 2022-23 start with a good sign with recovery from the COVID-19 pandemic
with life and business came to its normalcy. This was result of awareness and vaccination
programme. Whereas on the other side the world is facing increase in inflation due to
supply chain disruptions in China and specifically Russia-Ukraine conflict impacting
commodity prices, specifically, food and oil which has created stress in the overall
economic environment..
As per IMF, the outlook on Global Economy is uncertain amid financial sector turmoil,
high inflation, ongoing effects of Russias invasion of Ukraine, etc. The forecast for
growth is that it will fall from 3.4 percent in 2022 to 2.8 percent in 2023, before
settling at 3.0 percent in 2024. Advanced economies are expected to see an especially
pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a
plausible alternative scenario with further financial sector stress, global growth
declines to about 2.5 percent in 2023 with advanced economy growth falling below 1
percent. Global headline inflation in the baseline is set to fall from 8.7 percent in 2022
to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core)
inflation is likely to decline more slowly. Inflations return to target is unlikely
before 2025 in most cases.
Indian Economy:
As the Global economy faced challenges due to various factors, in FY 2022-23, the
Indian economy has faced multiple challenges of rising retail as well as wholesale
inflation and also consumer price inflation (CPI) above the standard. Rising international
crude prices due to Russia-Ukraine war coupled with domestic weather conditions like
excessive heat and unseasonal rains kept food prices high, given rise to high inflation.
The inflation was high almost during the whole year but towards the end of the year it
started coming down due to various measures taken by the Indian Government such as cutting
the excise duty on import and imposing customs duties as well as putting restriction on
exports on essential items. In addition to that the Reserve Bank of India has raised the
repo rate to check the increase in inflation. The increase in inflation and also
depreciation of the Indian rupee has given rise to current account deficit (CAD).
Even though there were various challenges, due to Government Policy and RBIs
intervention, India emerged as the fastest growing major economy in the world. As per the
data released by the Central Statistics Office (CSO) on February 28, 2023, real GDP growth
in FY2022-2023 is expected to be 7.0%.
The rural economy is steady and improving progressively. The informal sector, disrupted
due to the pandemic, is now seeing normalisation in the labour force. In Q3 FY2023, the
agricultural sector displayed resilience and was supported by the pick-up in rabi sowing
(6.4% higher than a year ago), the progress of the north-east monsoon and above average
reservoir levels.
Global Water treatment industry:
The global world is witnessing water pollution at an alarming rate. With rising
industrialization and urbanization, the scenario continues to exacerbate. This is owing to
the need to address the decreasing availability of freshwater. In this regard, water and
wastewater treatment companies play a pivotal role.
Wastewater treatment is the removal of impurities from wastewater or sewage before it
reaches bodies of water such as rivers, lakes, oceans, or aquifers. Water pollution is
generally occasioned by human activities. Discharge of contaminated water into surface
water or groundwater is one of the activities. The burgeoning population is a major menace
to the environment and ecology. As a result, water and wastewater treatment companies have
to be more responsible.
Advanced exploration technologies give a boost to water and wastewater treatment
companies. Many governments have introduced stringent regulations regarding water
pollution. This is done to create awareness among people of its harmful consequences.
Consciousness-raising initiatives have been taken to acquaint people. Biodiversity
conservation and ecotourism is a sine qua non. Therefore, water and wastewater treatment
companies prove to be a boon for the planet.
The global water and wastewater treatment market size was estimated at USD 301.77
billion in 2022 and is projected to grow from USD 323.32 billion in 2023 to USD 536.41
billion by 2030, exhibiting a CAGR of 7.5% during the forecast period.
Whereas the global water purifier market size accounted for USD 26.42 billion in 2022
and it is projected to hit around USD 63.99 billion by 2032, growing at a noteworthy CAGR
of 9.30% during the forecast period 2023 to 2032.
Indian Water treatment Industry:
With large size of population in India is not having access to safe drinking water,
cases of people falling severely ill or losing their lives to waterborne diseases have
been hitting the news daily. In India, these diseases are estimated to add an economic
burden of $600 million annually.
More people, especially in the post-pandemic era, are re-evaluating their lifestyle,
becoming health conscious and aware of the water they are consuming. The increased
awareness coupled with the modern lifestyle changes has led to most Indians wanting a
water purifier in their homes leading to an increase in the water purifier market size.
The trend can be compared to that of past trends in cities like Delhi where they witnessed
a surge in the demand for air purifiers due to continuous air quality deterioration.
Similarly, water purifiers are now no longer seen as a luxury. They have become a
necessity.
According to some research, India Water Purifier Market size is projected to grow at a
CAGR of 14.7% during 2022-2028. The market would continue to climb up with increasing home
sales in cities like Mumbai, Pune, Delhi, and Bengaluru, the India water purifier is
anticipated to experience growth during the forecast period. Additionally, rising water
pollution and waterborne diseases respectively, would also contribute to increase in
demand for water purifiers in the forecast period. Moreover, as per media reports,
additional 25 million units of affordable housing would be required by 2030 to meet
countrys growing urban population, which would contribute to increase in demand for water
purifiers.
RO + UV witnessed significant market growth owing to rising awareness about the effects
of contaminated surface water which result in increasing customer demand for
technology-based water purifiers. Additionally, economic development in the country driven
by rising residential sector and increase in nuclear families, rapid urbanization, and
household income which further expected to fuel the demand for RO + UV water purifier from
residential sector in the coming years.
B. OPPORTUNITIES AND THREATS
Opportunities:
In most developing countries, water pollution is becoming worse every day as a result
of industry and urbanization, and sanitization issues are getting worse as well. In the
manufacturing sector, where water demand has expanded, waste water production has
increased as well. The waste water includes toxic chemicals and sludge which are separated
through the water treatment and then discharge it in the water bodies by industries.
Various chemicals are used by the industries for the treatment of the waste water which is
generated during the manufacturing.
Various governmental initiatives, such as the Atal Mission for Rejuvenation and Urban
Transformation, National Mission for Clean Ganga, Jal Jeevan Mission, and Community
Drinking Water Schemes, contribute to the growth of the Indian water and wastewater
treatment market. In
May 2019, the Indian government created the Jal Shakti Ministry, bringing all
water-related agencies under one ministry to provide safe drinking water to the people of
India. Soon after it was founded, the Jal Shakti Ministry launched the Jal Jeevan Mission,
designed to provide piped drinking water to 146 million households in 700,000 villages by
2024. The mission earmarked a budget of $51 billion for states to increase household water
connection coverage from 18.33 percent in 2019 to 100 percent by 2024. This ambitious
project is creating opportunities for suppliers of water meters, water quality monitoring
systems, water treatment products, Water purifiers, tertiary treatment technology and
water-related Engineering, Procurement, and Construction companies.
Water purifier is no longer a high-end electronic product, limited to affluent
households as it is available at lower prices and has started to penetrate into the
countrys middle income group as well as rural households over the last few years. Water
purifier manufacturers are also developing and positioning products to target the middle
income and rural households which are technology advances. With more than 20 metros
expected to mushroom by 2032, the water stress will only increase, creating huge demand
for water and wastewater treatment systems in the Indian municipal segment.
After the COVID-19 Pandemic people are more concerned about the hygiene in the lives,
they are also looking for a better choice for hygienic food and water, this would drive
the demand of water filter. High metal content in water sources in States such as West
Bengal, Bihar, Rajasthan, Orissa, Tamil Nadu, Andhra Pradesh is further augmenting the
water purifier demand in various Tier II and Tier III cities across these States. Till
recently, rural markets in India werent on the radars of purifier companies, primarily
due to vast presence of low income consumer in rural pockets coupled with weak sales and
distribution networks of the companies in these areas. However, various companies with
innovative low-cost products are now aggressively targeting the countrys rural market,
particularly in offline water purifier segment. Further, the municipalities and industries
are continuously investing substantial money in water and wastewater improvement, creating
ample opportunities for water and wastewater treatment equipment technology in India.
Threats:
The chance of intentional contamination of water by undesirable person is a strong
possibility in present times. Water infrastructure can be targeted directly or water can
be contaminated through the introduction of poison or disease causing agents. The damage
is aimed at inflicting human casualties, rendering water unusable, or destroying
purification and supply infrastructure. Although, massive casualties from attacking water
systems are difficult to produce, yet the risk of societal disruptions, disarray and panic
are high. Water contamination can disrupt the entire supply of purified water which can be
of following types:
• Chemical contamination
• Biological contamination
• Radiological contamination
• Nuclear contamination
Water purifiers require timely maintenance every 6 to 12 months for optimally filtering
water. The replacement cost of filters is expensive. Although it varies from manufacturer
to manufacturer, a common overall rate is pretty high for maintenance. It is a notable
challenge for the India Water Purifier Market growth that might restrain the adoption of
water purifiers across rural areas or among the low-income population in the country.
C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
The Company deals in only water treatment equipments. Therefore there are no different
segments or products of the Company.
D. OUTLOOK
Global Outlook:
Water is the driving force of nature; however, sources are now running dry at an
alarming rate. The global population continues to soar, but freshwater supplies have not
increased similarly. Rapidly diminishing fresh water resources, increasing industrial
activity, inefficient irrigation practices in agriculture, growing world population and
stringent legislation on used waste discharge are driving the market for wastewater
treatment technologies worldwide. Six billion people are expected to face a scarcity of
clean water by 2050 due to the rising water demand, reducing water resources, and
increasing water pollution, driven by the exponential growth in the world population and
rapid industrialization.
Demographic pressures, the rate of economic development, urbanization, and pollution
are creating unprecedented pressure on the worlds water resources. The water demand is
growing rapidly mainly due to poor sanitation and water management.
Taking just the technology into account, dissolved solids removal hold the largest
share of the water treatment technologies market, with municipal water treatment being the
largest end-user industry. In terms of growth, food & beverage industry, pharma
Industry and pulp & paper industry would fuel the amount of growth in the demand for
water treatment technologies in the region.
In North America, United States occupies the highest market share, in the value. Asian
Countries like China and India, due to their large population, show exciting prospect for
future market for wastewater treatment industry establishments, and is expected to lead
the market.
Indian Outlook:
Indias GDP in FY 2022-23 was 7.2%, against 9.1% in the earlier fiscal year, outpacing
major economies. The growth was driven by broad-based investment in domestic drivers such
as private consumption, public consumption and investments. India remains the worlds
fifth-largest economy, underpinned by strong investment activity bolstered by the
governments capex push and buoyant private consumption. IMF has projected that India will
be the fastest growing economy in the world, despite considerable challenges such as
inflationary pressures, effects of the Russia-Ukraine war and the persistent impact of
Covid-19 over the past three years.
The rising prevalence of waterborne diseases in the country, along with the
introduction of product variants that can remove inorganic compounds effectively, the
implementation of favorable government initiatives promoting safe drinking water, and the
emerging technological advancements in water purification technology are some of the major
factors driving the India water purifier market.
Moreover, several advancements in water purification technology have made systems more
affordable, efficient, and user-friendly representing another major growth-inducing
factor. As these technologies become more accessible, consumers are inclined to invest in
water purification solutions that cater to their specific requirements. Besides this,
government initiatives and regulations promoting clean water access with campaigns such as
the swachh bharat abhiyan and efforts to improve rural water infrastructure resulted in
the adoption of water purifiers, thus accelerating the market growth. Furthermore, rapid
urbanization and industrialization led to increased pollution of water sources, further
emphasizing the need for effective water purification systems, thus creating a positive
market outlook.
E. RISKS AND CONCERNS
Russia-Ukraine war, supply chain and Government policies are major concern and risk for
the Companys business as in view of the above the cost of the products are increasing.
Water and waste water management, which also includes wastewater treatment plants
(WWTPs), are considered essential elements critical infrastructure. A disruption of their
operation can result in the discharge of wastewater into the environment without having
been adequately treated. This can cause health problems, contamination of soil,
groundwater and surface water, etc.
Following are the major Risk and concerns:
• Changes in economic and relevant regulatory policies, lower GDP growth, scaling
back of government initiatives and termination of government contracts with little or no
prior notice, insufficiency of funds and the reluctance of government departments to make
quick decisions may adversely impact opportunities from a specific country or region.
• Disruptive geopolitical scenario (includes political shifts, such as major
policy changes, coups, revolutions and wars) and changes in governments or unstable
political regimes in the geographies where the Company is present, can delay project
execution.
• Rising competition from other global players and also un- organized sectors in
the Industry may compel the Company to lower prices to win contracts and maintain market
share. This may lead to substantial margin pressure.
• Poor credit worthiness of customers can cause multiple setbacks in the midst of
an order execution and lead to project delays.
• Inconsistent commodity supply and price volatility of specific commodities/raw
materials could affect project cost and gross margins.
• FILTRA depends on vendors for supply of key products. Therefore, it is exposed
to uncertainty in the quality of their services, equipment and supply including timely
delivery. This can cause operational delays and increased costs.
F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Board and the Audit Committee are responsible for maintaining and reviewing the
risk management framework and internal control processes and policies. The Board assesses
and approves its overall risk appetite, monitors the risk exposure and sets limits, which
are periodically reviewed. The Companys management systems, organizational structures,
processes, standards, code of conduct and behaviors together form a system of internal
control that governs how it conducts its businesses and manages associated risks.
The Company has a system of internal controls to ensure that all its assets are
properly safeguarded and not exposed to risks arising out of unauthorized use or disposal.
The Internal Control system is supplemented by programs of internal audit to ensure that
the assets are properly accounted for and the business operations are conducted in
adherence to the laid down policies and procedures. The internal control system also
focuses on processes to ensure integrity of the Companys financial accounting and
reporting processes.
The effectiveness of the internal control mechanism is reviewed by an independent
professional Internal Auditor and by the Statutory Auditors. The Audit Committee of the
Board periodically reviews the functioning of the internal audit and the implementation of
the recommended measures to improve the internal control mechanism.
The Management were regularly exploring on new systems and processes to have better
controls. In addition to the external auditors, the Companys Management also carries out
Audits and analysis of its various functions and reporting to check working of internal
control systems and their adequacy.
G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The year 2022-23 has also shown increase in every aspect of the business. The sales of
the Company increased from Rs. 73.91 Crores to Rs. 90.66 Crores, registering a growth of
22.66%. EBT has been
increased by 9.16% in F.Y. 2022-23 and was at Rs. 4.53 Crores as against Rs. 4.15
Crores in previous year. Net profits after tax of the Company stood at Rs. 3.44 Crores in
the F.Y. 2022-23 as against Rs. 3.01 Crores in the F.Y. 2021-23, recording an increase of
14.47%.
H. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING
NUMBER OF PEOPLE EMPLOYED
The Company promotes positive workplace environment through its policies and best
practices for all its employees. The Company policy prohibits harassment of any kind,
including harassment based on age, race, religion, caste, creed, color, sex, marital
status or any other basis protected by law. During the year, the Companys Internal
Complaints Committee did not receive any complaint. Total numbers of employees on pay roll
as on March 31, 2023 were 67.
Health, Safety and Environment:
The Company takes timely measures to protect the health and safety of its employees and
minimize pollution to preserve the internal as well as the surrounding environment. The
Company also conducts safety induction trainings for its employees and workers to make
them aware of the system, safety rules and the procedure to report any incident to their
supervisors. The training programmes also give them an overview of the dos and donts
during emergency situations.
I. Details of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial year) in key financial ratios, along with detailed
explanations therefor:
| Sr. No. Particulars |
2021-22 |
2022-23 |
Changes (in %) |
| 1 Debtors Turnover ratio |
10.42 |
12.63 |
21.21 |
| 2 Inventory Turnover ratio |
4.71 |
5.32 |
12.95 |
| 3 Interest Coverage Ratio |
325.60 |
755.07 |
131.90 |
| 4 Current Ratio |
1.98 |
2.35 |
18.69 |
| 5 Debt Equity Ratio |
0.00 |
0.01 |
0.00 |
| 6 Operating Profit Margin (%) |
16.26 |
16.09 |
-1.05 |
| 7 Net Profit Margin (%) |
0.04 |
0.04 |
0 |
• Interest Coverage Ratio: Interest Coverage Ratio has been improved from 325.60
in the year 202122 to 755.07 in the year 2022-23 due to increase in Profits.
J. Details of any change in Return on Net Worth as compared to the immediately previous
financial year along with a detailed explanation thereof.
| Sr. No. Particulars |
2021-22 |
2022-23 |
Changes (in %) |
| 1 Return on Net Worth |
18.00 |
17.08 |
-5.08 |
• Return on Net Worth: The return on Net Worth decreased from 18.00 in Financial
Year 2021-22 to 17.08 in Financial Year 2022-23, this decreased was due to increase in
share-holders fund from Rs. 1671.34 Lakhs to Rs. 2015.66 Lakhs.
Cautionary Statement
Certain statements under Management Discussion and Analysis describing the Companys
objectives, projections, estimates, expectations or predictions may be forward-looking
statements within the meaning of applicable securities laws and regulations. Although the
expectations are based on reasonable assumptions, the actual results could materially
differ from those expressed or implied, since the Companys operations are influenced by
many external and internal factors beyond the control of the Company. The Company assumes
no responsibility to publicly amend, modify or revise any forward-looking statements, on
the basis of any subsequent developments, information or events
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