Filtra Consultants & Engineers Ltd Management Discussions

Annexure 4

A. INDUSTRY STRUCTURE AND DEVELOPMENT

Global Economy:

In Financial Year 2025, the global economy remained robust, growing at a rate of 3.2%, despite headwinds from geopolitical conflicts, unpredictable trade conditions, and changing monetary policies. Inflation, which remained elevated in the previous year began to ease, dropping from an estimated 5.9% in FY 2024 to 4.5% in FY 2025 and further to 3.5% in FY 2026, as advanced economies are anticipated to return to their inflation targets faster than emerging markets.

The developing and emerging markets recorded a growth rate of 4.2%, owing to strong consumer demand and increased foreign investment, especially in manufacturing and technology sectors. On the other hand, advanced economies grew at a much slower rate of 1.7% as higher costs and cautious spending held back momentum. The developing markets played a vital role in sustaining the global economy amidst such economies displayed good recovery and played a crucial role.

Indian Economy:

The Indian economy is set to achieve nearly 6.3% to 6.9% growth in the financial year 2025-26, according to a report released by the World Bank, Reserve Bank of India (RBI), and the Economic Times. The report attributes this positive outlook to the robust domestic demand that has propelled the country to a growth rate almost 7% over the past three years. The financial year 2024-25 witnessed a growth rate of 7.4%, securing Indias position as the fastest-growing major economy.

As per IMF Report, Indias GDP growth is projected at 7% (for FY 2025) and 6.5% (for FY 2026), with the robustness reflecting continuing strength in domestic demand, technological advancement, thriving services sector and a rising working-age population.

Global Water treatment industry:

Water and waste water treatment is necessary to meet the growing demand for clean water resources, serving municipal, agricultural and critical industrial processes. Currently, over 40% of the global population resides in regions experiencing acute water stress. With only about 1% of the Earths water being fresh water, countries grappling with severe water scarcity are compelled to carry out treatment to convert sea water into freshwater via the desalination process.

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.

One major element driving the market expansion of wastewater treatment chemicals is the growing worry about the depletion of freshwater resources and health concern due to contaminated water. In order to prevent and resolve such issues and improve the reusability of wastewater in the process, governments of many nations throughout the world are putting tight laws and regulations into place.

A number of governments are also actively interested in enhancing municipal water infrastructure in both urban and rural locations. The demand for water & wastewater treatment chemicals is anticipated to increase as a result of such advancements in industrial and domestic/municipal water treatment. Rapid industrialization is also contributing to rising groundwater pollution, particularly in developing nations.

Because of this, governments in many nations are launching programs to use wastewater effectively, which are predicted to increase demand for chemicals used in wastewater treatment.

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.

Increased water use, industrialization, urbanization, and population growth has expanded the global water and wastewater treatment market by both scale and significance. In 2024-25, the market stood at about $ 347.90 billion and is expected to reach $ 623.2 billion by FY 2032, reflecting a CAGR of nearly 7.6%

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.

The India Water and Wastewater Treatment Technology Market size is expected to reach USD 1.89 billion by 2030 and grow at a CAGR of 10.78% from 2025 according to GII research. The market was valued at USD 1.13 billion in 2025. This growth is driven by factors like rapid urbanization, industrialization, and increasing water scarcity, coupled with government initiatives and rising environmental awareness.

Water treatment include those chemicals that are used to remove waste particles such as solid waste, bacteria, fungi, and other contaminated minerals from wastewater for the purification of water. The chemicals used for the treatment of water is mainly used for treatments of equipment such as boiler water treatment, cooling water treatment, purification of water, and treatment of wastewater effluent in the industries. Water treatment improves the quality of water to make it appropriate for the specific end-use.

Wastewater treatment is necessary and used across India in different cities. The significant applications of treatment technologies include preliminary treatment, primary and secondary treatment, tertiary treatment, biological nutrient removal (BNR), resource recovery, and energy generation. Municipal wastewater treatment involves a lot of biomass. Therefore, biological treatment is a significant step used to treat bio-waste.

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, Amrut

2.0, Jal Shakti aAbhiyan, Atal Bhujal Yojna etc. 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.

This ambitious project, Jal Jeevan Mission, 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 as governments will become more able to afford investments in clean water and pollution control.

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 2024-25 was 6.5%, against 7.2% in the earlier fiscal year, outpacing major economies. Indias nominal gross domestic product will likely outstrip Japans in 2025 to become the worlds fourth-largest economy, according to an International Monetary Fund estimate, a year earlier than the previous projection.

Indias water treatment market is expected to sustain robust growth of 14 15% annually over the next three years (2025 2027). The sector is being driven by rapid urbanization, industrial expansion, rising public awareness of water quality, and strong government initiatives aimed at sustainable resource management.

The growth was driven by broad-based investment in domestic drivers such as private consumption, public consumption, investments and increased government expenditure. 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 war in various parts of world, etc.

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.

RISKS AND CONCERNS

The last year started on an encouraging note only to run into more turbulence with the developments arising from the conflict in Europe. Supply chain disruptions, a weaker rupee, higher interest rates and extreme challenges of inflation globally are key concerns for the ongoing financial year.

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. - Due to Cost Escalation, Rising logistics, tariff shocks, and raw material costs may exert pressure on profitability - Customer Adoption Lag: Low awareness and slower technology uptake in certain regions could moderate short-term demand for advanced products. - Small and mid-sized enterprises face increasing challenges in navigating complex environmental clearances and evolving regulatory standards. Maintaining compliance often requires frequent technology upgrades and sustained financial investment, adding strain to their operational and capital structures.

E. 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 continues to strongly believe that effective internal controls are critical for good corporate governance and that the operational freedom in conducting business should be exercised within the framework of appropriate checks and restraints, subject to adherence to applicable laws of the land.

Filtra Consultants and Engineers Ltd. is well-positioned to capture opportunities in the evolving water treatment market. The Company has consistently differentiated itself through

Early Digital Advantage: As the first Indian water treatment company to launch a B2B eCommerce platform for registered OEMs and dealers, Filtra benefits from direct customer access, faster order cycles, and scalable operations.

Product Leadership: With a strong portfolio of advanced water treatment solutions, membranes, cartridges, blowers, and dosing systems, automation, online monitoring, instruments Filtra is aligned with the industrys shift toward energy-efficient and innovative components.

Operational Resilience: The Company maintains better profit margins than its peer group, supported by disciplined cost management, data-driven decision-making, and strategic supplier relationships that mitigate tariff and logistics risks.

Market Expansion Focus: By addressing the needs of small and mid-sized customers with modern solutions at competitive pricing, Filtra taps into one of the fastest-growing market segments.

Sustainability Commitment: Filtra continues to align its business model with government policies promoting water reuse, decentralized treatment, and eco-friendly technologies, strengthening its long-term growth trajectory.

Overall, despite industry-wide challenges such as cost pressures and regulatory complexity, Filtra Consultants and Engineers Ltd. remains on a strong growth path, supported by its innovative approach, strategic positioning, and focus on customer-centric solutions.

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.

F. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL

PERFORMANCE

The year 2024-25 has shown reasonable increase in every aspect of the business. The sales of the Company reduced from Rs. 99.76 Crores to Rs. 86.93 Crores, drop of 12.86%. EBT reduced by 11.54% in F.Y. 2024-25 and was at Rs. 4.14 Crores as against Rs. 4.68 Crores in previous year. Net profits after tax of the Company stood at Rs. 2.91 Crores in the F.Y. 2024-25 as against Rs. 3.57 Crores in the F.Y. 2023-24, recording reduction of 18.48%.

G. 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, 2025 were 58.

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.

H. 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	2023-24	2024-25	Changes (in %)
1	Debtors Turnover ratio	11.57	10.50	-9.25
2	Inventory Turnover ratio	7.01	5.19	-25.88
3	Interest Coverage Ratio	170.29	932.20	447.42
4	Current Ratio	2.35	2.65	13.03
5	Debt Equity Ratio	0	0	0
6	Operating Profit Margin (%)	16.35	16.85	3.05
7	Net Profit Margin (%)	3.58	3.35	-6.36

- Interest Coverage Ratio: Interest Coverage Ratio has increased from 17.029 in the year 2023-24 to 932.20 in the year 2024-25 due to reduction in interest expenses from Rs. 2.77 lacs in the F.Y.2023-24 to Rs. 0.44 lacs in the F.Y. 2024-25.

- Inventory Turnover ratio: Inventory Turnover ratio has reduced from 7.01% in 2023-24 to 5.19% in 2024-25 due to decrease in Turnover & increase in stock.

I. 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	2023-24	2024-25	Changes (in %)
1	Return on Net Worth	15.05	12.05	19.93%

- Return on Net Worth: The return on Net Worth decreased from 1505 in Financial Year 2023-12.05 in Financial Year 2024-25. This change was due to increase in paid-up share capital issue of bonus shares during the year and lower profit as compared to previous year.

Cautionary Statement

Certain statements under ‘Management Discussion and Analysis describing the Companys objectives, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual could materially differ from those expressed or implied, since the Companys operations are influenced by external and internal factors beyond the control of the Company. The Company assumes no responsibility to amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, or events