Filtra Consultants & Engineers Ltd Management Discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENT Global Economy:

In Financial Year 2026, the global economy continued to operate in an environment shaped by geopolitical uncertainty, trade-policy changes, inflation normalization and divergent monetary conditions. For Filtra, the relevance of the macro environment is primarily through industrial investment, foreign-exchange movements, imported component costs, logistics, customer working-capital conditions and the pace of capital expenditure in water and wastewater infrastructure.

Rather than treating macroeconomic growth as an investment thesis by itself, management believes Filtras resilience depends on product breadth, supplier relationships, inventory discipline, customer diversification and the ability quickly to changing demand.

Indian Economy:

India remains one of the faster-growing major economies, supported by domestic consumption, infrastructure investment, manufacturing activity and services. Industrialization and urbanization increase the need for reliable water treatment, wastewater reuse, monitoring and resource efficiency. These structural drivers are relevant to Filtra because the Company participates primarily through components, spares, instruments and solutions used by OEMs and industrial water-treatment customers.

Global Water treatment industry:

Water scarcity, industrialization, urbanization, tighter discharge standards and increasing attention to water reuse continue to support long-term demand for water and wastewater treatment technologies. The current MDAR cites a global water and wastewater treatment market of about US$347.9 billion in 2024-25, expected to reach about US$623.2 billion by FY 2032 at a CAGR of approximately 7.6%. These external market-size figures should be independently revalidated before publication. For Filtra, the more important strategic point is that every treatment plant requires a continuing ecosystem of membranes, cartridges, pumps, blowers, instruments, dosing systems, pressure vessels, chemicals, automation and replacement spares.

The recurring nature of this requirement creates opportunities beyond the initial project cycle.

Indian Water Treatment Industry:

With large size of population in India is not having access to safe drinking water, cases of people falling Indias water-treatment opportunity is being shaped by urbanization, industrial expansion, water scarcity, environmental regulation, reuse requirements and increasing awareness of water quality. The current MDAR cites the India water and wastewater treatment technology market at approximately US$1.13 billion in 2025, with an expectation of about US$1.89 billion by 2030. It also refers to government programmes such as Jal Jeevan Mission, AMRUT 2.0, National Mission for Clean Ganga, Jal Shakti Abhiyan and Atal Bhujal Yojana.

Filtras opportunity should, however, be viewed independently of government project exposure. The Companys strength lies in serving the broader water-treatment ecosystem through components, spares and technical solutions, particularly OEM and industrial customers requiring dependable availability and product choice.

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 Abhiyan, Atal Bhujal Yojna etc. contribute to the growth of the Indian water and waste water 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 is engaged in the water-treatment business and is treated as a single operating/reportable segment for statutory reporting, subject to confirmation with the audited financial statements. Commercially, however, Filtra operates across multiple water-treatment product categories. Management believes future investor communication can be strengthened by providing selected category-level operating indicators — without disclosing competitively sensitive information — such as recurring versus project-linked revenue, digital-order contribution, customer concentration and cross-sell penetration.

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 agriculture, growing world population and stringent legislation on used industrialactivity,inefficient 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 waste water treatment industry establishments, and is expected to lead the market.

Indian Outlook:

FY 26s recovery should be treated as a platform for the next phase rather than an end in itself. Managements objective is quality of growth: higher revenue accompanied by disciplined inventory, better cash conversion, deeper customer penetration, stronger systems and higher productivity.

The strategic priorities can be expressed through five connected ideas: Availability, Advice, Automation, Agility and

Accountability. Availability means keeping the right products accessible through a resilient distribution network. Advice means helping customers select and use products correctly. Automation means using e-commerce, data and the chatbot to simplify repetitive interactions. Agility means responding faster to a changing B2B market. Accountability means maintaining the discipline and transparency expected of a listed company.

Filtras aspiration is larger than selling more water-treatment components. It is to become a preferred, dependable and technology-enabled partner to the water-treatment ecosystem — combining the speed of digital commerce with the trust of human relationships.

In the spirit of Vasudhaiva Kutumbakam, customers, employees, suppliers, business partners and shareholders are participants in one value-creation journey. In the spirit of Seva Bhav, service must come before entitlement. And in the spirit expressed at the Companys listing Small is the next big thing disciplined execution can allow a focused SME to create meaningful and enduring value.

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.

Risk / Concern	Potential Impact	Management Response / Direction
Inventory & warehousing	Stock loss, concentration risk, working-capital pressure	Inventory distributed across multiple godowns reduces single
Pune godown fire incident	Inventory damage and temporary operational disruption	The incident occurred after the FY26 balance-sheet date. Public reporting used in the prior draft indicated inventory damage of approximately Rs. 70.59 lakh and insurance coverage/claim assessment. Final disclosure must reflect the latest audited and legal position.
Supplier dependence	Delay, quality variation or cost escalation	Diversified supplier relationships, stock planning, alternate sourcing and quality controls.
Price, freight, tariff & FX volatility	Margin pressure	Pricing discipline, inventory planning, supplier negotiation and product-mix management.
Customer credit risk	Delayed cash conversion or bad debts	Credit assessment, receivable monitoring, collection discipline and customer diversification.
Competition & unorganised market	Price pressure and customer chum	Technical support, availability, breadth of portfolio, digital convenience and differentiated products.
Technology execution / cyber risk	Service disruption, data or access-control risk	Access governance, master-data controls, cyber security, backups, audit trails and phased deployment.
Regulatory change	Compliance cost or market disruption	Ongoing compliance review and adoption of relevant standards.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board and Audit Committee oversee the Companys risk-management and internal-control framework. Management systems, organizational structures, policies, codes and operating processes together form the control environment for safeguarding assets, reliable financial reporting and compliance. Internal audit and statutory audit provide independent review, while management continues to use analysis and process improvement to strengthen controls. As Filtra digitizes more customer and transaction workflows,internal control should increasingly cover access rights, master-data governance, pricing approvals, inventory accuracy, cyber security, audit trails, backups and business-continuity arrangements. 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

Based on the audited financial results for F.Y. 2025-26, revenue from operations increased to approximately Rs.97.68 crore from Rs.86.93 crore in F.Y. 2024-25, representing a growth of approximately 12.4%. Profit after tax increased to approximately Rs.3.73 crore from Rs.2.91 crore in the previous year, reflecting an improvement of approximately 27.9%.

The improvement in profitability during the year is encouraging and reflects a recovery in operating performance. Going forward, the management will continue to focus not only on revenue growth but also on the quality and sustainability of earnings, with particular emphasis on inventory productivity, receivable management, cash conversion, margin quality and return on capital employed.

Inventory efficiency remains an important area of focus. The inventory

Management Discussion and Analysis Report, declined to 4.74 times from 5.19 times in F.Y. 2024-25, indicating higher turnover and higher stock. The Companys broad product availability and stockholding provide a competitive advantage; however, these will continue to be managed with due emphasis on inventory productivity and disciplined working-capital management.

The Company also intends to strengthen its investor and stakeholder communication by presenting a consistent multi-year performance dashboard financial and operating indicators, including the Annual Report. The dashboard may cover key revenue, EBITDA/ operating profit ,profit after tax, operating cash flow, inventory days, receivable days, ROE/ROCE, dividend and other relevant operating KPIs. This will facilitate a clearer assessment of the Companys financial performance, operating efficiency and value creation over time.

G. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Companys culture is founded on the principles of responsibility, discipline, continuous learning and service. At the Companys listing ceremony in 2015, Mr. Nayan Mehta, then CFO of BSE, specifically appreciated Mr. Ketan Khant for recognizing the contribution of his team before his own. This observation reflects a principle that continues to guide the Company: sustainable institutions are built through collective effort, shared ownership and empowered teams.

At Filtra, Seva Bhav begins within the organization—with respect for colleagues, accountability for responsibilities, a willingness to learn and the recognition of individual and collective contributions. The Company remains committed to fostering a positive, inclusive and respectful workplace. Its policies provide a framework for maintaining a work environment free from harassment and discrimination, while encouraging professionalism, collaboration and mutual respect.

As at March 31, 2026, the Company had 55 employees. During the financial year, no complaints were received by the Internal Complaints Committee, as reported in the previous years MDAR.

As the Company continues to grow, it recognizes the importance of strengthening its people and human-capital disclosures. Going forward, the Company will seek to progressively enhance investor reporting through relevant and validated metrics covering employee retention, learning and development, internal career progression, succession planning, sales productivity and digital-skill development. These measures will support greater transparency on the Companys efforts to build a capable, engaged and future-ready workforce.

Health, Safety and Environment:

The Company seeks to protect employee health and safety and minimise adverse environmental impact through safety practices, induction and awareness. Warehouse firepreparedness and business continuity have gained additional importance following the Pune incident. Managements continuing focus should include preventive inspection, extinguisher readiness, electrical and storage safety, staff training, insurance adequacy and documented emergency-response procedures.

H. Details of significant changes (i.e. change of 25% or more as compared to the immediately in key financial ratios, along with detailed explanations therefor:

Sr. No. Particulars	2024-25	2025-26	Changes (in %)
1 Debtors Turnover ratio	10.50	12.57	19.71
2 Inventory Turnover ratio	5.19	4.74	-8.67
3 Interest Coverage Ratio	932.20	167.80	-81.99
4 Current Ratio	2.65	2.52	-4.90
5 Debt Equity Ratio	0.00	0.05	0.00
6 Operating Profit Margin (%)	16.85	16.43	-2.49
7 Net Profit Margin (%)	3.35	3.82	14.03

• Interest Coverage Ratio: Interest Coverage Ratio has decreased from 932.20 in the year 2024-25 to 167.80 in the year

2025-26. This change was due to increase in net profit after tax.

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	2024-25	2025-26	Changes (in %)
1 Return on Net Worth	12.05	14.50	20.27

• Return on Net Worth : The return on Net Worth decreased from 12.05 in Financial Year 2024-25 to 14.50 in Financial

Year 2025-26. This change was due to increase in net profit after tax.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, plans, strategies, expectations or projections may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially because of economic conditions, customer demand, competition, supply-chain developments, regulatory changes, foreign-exchange movements, technology execution, working-capital requirements and other factors beyond the Companys control. The Company undertakes no obligation to publicly update such statements except as required by law.