jash engineering ltd share price Management discussions

ECONOMIC REVIEW

Global Economy

Amidst global economic uncertainty, the pandemic and the Russian invasion of Ukraine had profound impact on the economy. While the shocks of the pandemic continue to affect several countries across the world, the war in Ukraine has triggered a new crisis that is disrupting food and energy markets and worsening food insecurity, malnutrition in several developing countries. The conflict further disrupted global supply chains, leading to rising commodity prices, increasing in ationary pressures, and a global housing crisis driving millions of people into poverty and economic hardship. As a result, rising borrowing costs and the continued surge in in ation are now being reflected in several leading indicators of global economic activity. Major central banks around the world have tightened their monetary policies to stabilise the resulting in ation, resulting in more restrictive financial conditions.

The impact was evident in the first half of 2022-23, as the current account de cit (CAD) widened, retail in ation rose, portfolio investment drained, and the U.S. dollar strengthened against the INDIAN . In the second half of 2022-23, retail in ation fell below tolerance levels, portfolio investment began to return, the INDIAN has stabilised against the U.S. dollar, but export growth slowed as global growth slowed. Ascending interest rates and declining purchasing power have negatively impacted consumer and investor con dence, circulating further doubt on the global economys near-term prospects for expansion. Global trade has slowed as consumer demand has diminished, the Ukraine conflict has dragged on, and supply chain challenges continue to arise.

The global output growth is expected to slow from an estimated 3% in 2022 to only 1.9% in 2023, indicating one of the lowest rates in recent decades. Global growth is expected to moderately accelerate to 2.7% in 2024 if some macroeconomic headwinds begin to fade next year, as expected. In ationary pressures are expected to ease gradually as global aggregate demand weakens. The slowdown is widely distributed, affecting both developed and developing countries ( gure I.1). The global manufacturing PMI, a leading indicator of economic activity, fell steadily in 2022, remaining in contraction territory from September to November( gureI.2).

INDIAN ECONOMY

Over the past eight years, India has embarked on a transformative journey of new-age reforms, strengthening the economys foundations and enhancing ef ciency. From 2014 to 2022, structural and governance reforms were implemented that focused on improving living and business conditions while unlocking the economys productive potential. Emphasis was placed on both physical and digital infrastructure development, thereby empowering individuals and businesses alike.

According to the Economic Survey, the nations economy is expected to grow by 7% in real terms for the scal year ending March 2023. In FY23, Indias economic growth was primarily driven by private consumption and capital formation, which helped generate employment as evidenced by the declining urban unemployment rate and faster net registration in Employee Provident Fund. Private consumption as a percentage of GDP stood at 58.4% in Q2 of FY23, the highest among all second quarters since 2013-14, supported by a rebound in contact-intensive services such as trade, hotel, and transportation. The Reserve Bank of Indias foreign exchange reserves jumped $12.8 billion to $572.80 billion in the week ended 17 March 2023, registering the highest rise since the week ended November 11, 2022.At present levels, the RBIs reserves are at their highest level since February 3, 2023.

The central governments Capital Expenditure (Capex), which increased by 63.4 percent in the first eight months of FY23, was another growth driver of the Indian economy this year, crowding out private Capex since the January-March quarter of 2022. According to the survey, credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, at more than 30.6 percent on average between January and November 2022, thanks to the Union governments extended Emergency Credit Linked Guarantee Scheme (ECLGS).

Indias GDP growth is expected to be between 6.0 and 6.8 percent in 2023-24, depending on global economic and political developments. Corporate balance sheets have improved due to deleveraging and decline in non-performing assets in the banking sector. While there are challenges such as the current account and scal de cits, India continues to demonstrate economic resilience by reducing external imbalances caused by global disruptions. It is the third largest economy in the world in PPP (Purchasing Power Parity) terms and the fth largest in market exchange rates. In FY23, the Indian economy nearly "recovered" what it had lost, "renewed" what had paused, and "regained" momentum that had slowed during the pandemic and since the conflict in Europe.

WATER AND WASTEWATER TREATMENT INDUSTRY STRUCTURE AND DEVELOPMENTS GLOBAL INDUSTRY DEVELOPMENTS

Demand for water and wastewater treatment is driven by the rapid industrialization and urbanisation of cities around the world along with the increasing need for clean water. Growing awareness of health risks, negative environmental impact, and incidence of serious diseases is likely to have a positive impact on the global market for residential as well as industrial water treatment equipment. Moreover, strict manufacturing standards for treated water are expected to promote further expansion of the residential water treatment equipment market. The growing demand for fresh water around the world, particularly in countries such as South Africa, Russia, India, China, and Brazil, is another factor driving demand for water treatment equipment.

According to the global strategic business report, the global water and wastewater treatment equipment market size was valued at US$ 61.6 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 4.5% from 2023 to 2030 with an estimated growth US$81.7 billion by 2030.The report by Business Research Insights projects the global market size for this industry valued at US$47.350 billion in 2022 and US$54.7 billion in 2023. It is estimated to reach US$62.020 billion by 2028, growing at a CAGR of 4.6% during the forecast period 2022-2028.

In the United States, the market for water and wastewater treatment equipment is valued $16.8 billion in 2022. In order to reach a projected market size of US$16.6 billion by 2030, China, the second-largest economy in the world, is expected to grow at a 6.1% CAGR between 2022 and 2030. Japan and Canada are two other noteworthy geographic markets, with 1.9% and 2.9% growth rates expected between 2022 and 2030, respectively. Within Europe, Germany is predicted to expand at a CAGR of about 2.3%. By 2030, it is anticipated that the market in Asia-Paci c will reach US$10.7 billion, led by nations like Australia, India, and South Korea.

Indian Industry Developments

The Indian marketsize for water management stood at INR 216.03 Bn in 2022 and is anticipated to reach INR 518.15 Bn in 2027 expanding at a CAGR of 15.95% during 2023-2027. Municipal Segment is expected to dominate the market for treatment equipment in the coming years. Indias growing demand for wastewater recycling and zero discharge system are opportunities for such companies which deal in manufacturing of water treatment equipment.

The National Mission for Clean Ganga, Jal Jeevan Mission, and Community Drinking Water Schemes are few of the numerous government initiatives that have contributed to the growth of the Indian water and wastewater treatment market. Sewage from cities is the biggest source of organic pollution in the Ganga. By building and maintaining sewage treatment plants and a network of drains, sewage water from houses in several of these cities now gets treated before reaching the river.

Water meters, water quality monitoring systems, IT systems for water management, tertiary treatment technology, and engineering, procurement, and construction rms all have opportunities as a result of this ambitious project. While the government has announced major budgetary contributions to promote the development of infrastructure for both rural and urban sanitation, there are areas that still require policy support to guarantee that the money is being used where it would have the greatest impact.

The Indian Water and Wastewater Treatement Technology Market

The Indian water and wastewater treatment (WWT) technology market is segmented by equipment type and end-user industry. Treatment equipment, process control equipment, and pumps make up the three equipment-type segments of the market. Oil/water separation, suspended solids removal, dissolved solids removal, biological treatment/nutrients, metals recovery, disinfection/oxidation, and other treatment equipment are the different categories of treatment equipment. Municipal, food and beverage, pulp and paper, oil and gas, healthcare, poultry and agriculture, chemical, and other end-user industries are among the market segments. The market size and forecast for each segment are based on revenue (in USD million) globally.

The industry for water treatment equipment is crucial in nding ways to purify and treat water and address the problem of the scarcity of freshwater on Earth. Water treatment plants are used to remove pollutants from drinking water, wastewater, groundwater, and seawater The sector includes a wide range of goods and services, such as chemical treatment options, ltration systems, and equipment for disinfection.

Treatment equipment such as Water control gates, Screening equipment, Knife gate valves & Bulk solids handling valves, Treatment process equipment, Water Intake equipment Renewable energy & pumping water hammer control valves & air vessels disc lters are used in a wide range of settings, including residential, commercial, and industrial ones. The private sector power, food and beverage, chemicals, pharmaceuticals, re neries, and textiles industries prefer advanced treatment technological systems such as reverse osmosis membranes for treating their wastewater leading to significant growth in industry.

Scope of water treatment industry

Introduction

With technological advancements in production processes, the quantity of wastewater generated has multiplied sharply in the recent past. Ef uents from companies processing chemicals, pesticides, rare metals, and other harmful chemicals and materials are hazardous to the environment and may cause catastrophic effects if not adequately treated before dumping in freshwater sources. Access to clean, fresh water is limited by both availability and water quality, threatening human health, food security and socioeconomic development. At least 40% of the worlds population is affected by severe water scarcity every year.

Around 2 billion people worldwide do not have safe drinking water, 3.6 billion people do not have access to safe sanitation, and 2.3 billion people do not have basic handwashing facilities In many places, gaps in access to water supply and sanitation, growing populations, more water-intensive patterns of growth, increasing rainfall variability, and pollution are combining to make water one of the greatest obstacles to economic progress, poverty abolition, human well-being, and sustainable development. Population growth will make things worse because there will be an ongoing rise in water demand from people, agriculture, and industry. Moreover, it has also been identified as a serious societal challenge by global organizations such as the United Nations, the IPCC, and the World Health Organization.

Global industry scope

The ongoing global efforts toward the improvement of sanitation standards in developing economies by improving the wastewater treatment infrastructure is expected to boost the demand for water and wastewater treatment equipment in municipal applications. With a revenue share of over 66.0% in 2022, the municipal application segment had the highest revenue share. Moreover, governments and local bodies are increasingly focusing on technologically advanced wastewater treatment systems ultimately escalating the market growth. Governments around the world have launched various initiatives to promote water treatment and conservation. Some of the most common government initiatives of water treatment include water pricing policies, quality regulation, re-use policies, Investments in water treatment infrastructure etc. As one of the largest consumers of water resources, the impact of these initiatives on industry may be significant.

Government promotion of expanding mining operations, particularly in South America, is anticipated to result in an increase in sewage and sludge formation. As a result, the demand for sludge treatment equipment in mining applications is anticipated to increase. Rural homes are expected to use public sewers more frequently, which will strain the capacity of the current centralised wastewater treatment facilities. Due to the potential need for new capacity development or capacity expansion, the market for wastewater secondary treatment equipment is expected to increase. The municipal authorities of various cities in India use wastewater technology primarily for municipal wastewater treatment.

Indian industry scope

According to the World Bank, India will take the lead in the increase in urban population around the world by 2050, followed by China, Indonesia, Nigeria, and the United States. Additionally, the Indian government plans to provide its citizens access to safe and sufficient drinking water inside of properties by the years 2024 or 2025, which will expand the nations municipal water treatment facilities.

Over the past few years, the urban sewage capacity in the country grown significantly. This growing capacity will likely drive the countrys innovative water treatment technology demand. Hence, owing to the abovementioned factors, municipal water, and wastewater treatment technologies will likely dominate the market during the year 2023-2030.

Several players are establishing their manufacturing and distribution facilities all over the world as the water and wastewater treatment equipment industry experiences growth on a global scale. The market is characterised by intense competition as a result of numerous new players entering the market and ongoing exploration of new opportunities by the established players to develop better and more inventive equipment.

Opportunities

Reaching the underserved in Indias villages: Over the last decade, the World Bank has supported the governments efforts to bring clean drinking water to rural communities. A range of projects with a total financing of $1.2 billion have benefitted over 20 million people.Villages in the mountain state of Uttarakhand, suffered from the lack of water supply as the steep Himalayan terrain made it dif cult to build and maintain the required infrastructure. For many villagers, particularly women, obtaining fresh water for domestic use meant traveling distances of over 1.6 km.

Reliable water supply to cities: Continuous piping of water has always been a pipe dream in Indias rapidly urbanizing cities. Most urban households only have access to water for a few hours per day, at most, and frequently only on certain days of the week. This particularly affects the poor, women and children, who spend time and money securing water for their daily needs.

Growing demand for clean water:> There is a rising need for clean, safe drinking water as the population continues to grow. The development and supply of new technologies that can successfully treat and purify water opens a significant opportunity for businesses that manufacture water treatment equipment.

River water management projects: The World Bank has been supporting the Government of Indias efforts to rejuvenate the rivers since 2011. two World Bank projects, worth $1 billion, are helping set up the institutions needed to manage the river and build the infrastructure to keep it clean. As a result of the Jal Jeevan Mission, which was started by the Jal Shakti Ministry, 146 million households in 700,000 villages will have access to piped drinking water by 2024. The mission provided $51 billion to the states in order to increase the coverage of household water connections from 18.33 percent in 2019 to 100% in 2024.

Irrigation & Flood Managements projects for agriculture: India has invested substantially in infrastructure necessary to usher irrigated agriculture to vast areas all over the country. Hence the demand for Rainwater treatment equipment has wider scope.

Environmental regulations: Governments worldwide are becoming increasingly concerned about environmental issues, including water pollution. As a result, there are several regulations in place that require industries to treat their wastewater before releasing it into the environment. This creates an opportunity for water treatment equipment manufacturers to provide solutions that comply with these regulations.

Technological advancements: Manufacturers of water treatment equipment can create more efficient and economical equipment as a result of technological advancements. Companies may benefit from this and increase their market share and competitiveness.

Threats:

Competition: The water treatment equipment manufacturing industry is highly competitive, with many established players and new entrants. With 350 players, the global market for water and wastewater treatment equipment is extremely competitive. These players are globally diversi ed, regional, and country-speci c, with each having a specific niche in the production of water and wastewater treatment equipment. 15% of competitors are large global players, while 50% of competitors are country-specific players. The key players in the global water treatment equipment market are adopting different key business strategies, such as product launch, agreement, acquisition, collaboration, joint venture, and merger to withstand global competition, which can lead to pricing pressure and reduced pro tability.

Economic conditions: The key issues facing the players in the water and wastewater treatment industry in the short and medium term are noted as shifting end consumer preferences in a projected economic downturn scenario, changes to industrial policies to reflect growing environmental concerns, significant fluctuations in raw material costs caused by ongoing geo-political tensions and anticipated economic turbulences. This can lead to a decrease in revenue and pro tability.

Supply chain disruptions: Water treatment equipment manufacturers rely on a complex supply chain that includes raw materials, components, and transportation. Any disruption in the supply chain, such as natural disasters, political instability, or a global pandemic, can impact the availability and cost of these resources.

Environmental concerns: While environmental regulations can provide opportunities for water treatment equipment manufacturers, they can also pose a threat if companies fail to comply with these regulations. Non-compliance can result in nes and damage to the companys reputation.

The demand for clean water and government regulations are driving significant growth opportunities in the water treatment sector. However, the sector also faces several dif culties, such as high capital expenditure, water scarcity, and competition, which call for careful consideration by businesses in the sector.

SEGMENT WISE OR PRODUCT-WISE PERFORMANCE

The business activities of the Group predominantly fall within a single primary business segment viz "Manufacturing and trading of varied engineering products for general engineering industry, water and waste water industry, power plant and bulk solids handling industry". There is no separate reportable business segment.

As part of secondary reporting for geographical segments, the Group operates in two principal geographical areas i.e. in India, its home country, and other countries. The following table presents revenue from operations, segment assets and capital expenditure regarding geographical segments: -

Particulars	Current year ended 31 March 2023	Previous year ended 31 March 2022
	(Audited)	(Audited)
Segment revenue from external customers
Within India	19,306.04	18,446.41
Outside India	20,892.58	18,309.91
Income from operations	40,198.62	36,756.32
Segment assets
Within India	32,004.01	27,576.46
Outside India	12,847.85	9,33,8.54
Total assets	44,851.86	36,915.00
Capital expenditure
Within India	996.92	1036.41
Outside India	614.93	258.64
Total capital expenditure	1,611.85	1295.05

Future & Forward Outlook

As we look ahead, the demand for clean and safe water is only going to increase. Water treatment equipment manufacturers have a lucrative opportunity for growth with promising future. As concerns about water quality and scarcity increase, there will be an increase in the demand for innovative and efficient water treatment equipment, suggesting a sizeable market opportunity in both developed and developing countries.

Technological developments will be crucial to the development of the water treatment industry in the coming years, with emphasis on the development of new, improved water treatment technologies that are more efficient and environmentally friendly. Companies will have a competitive advantage in the marketplace if they can keep up with these technological developments and incorporate them into their products. Another important trend that will shape the water treatment industry is the growing awareness on the importance of water conservation. As a result, companies that manufacture water treatment equipment must focus on both providing clean water and reducing water waste. This can be achieved by building smart water treatment systems that can monitor and control water consumption.

Decentralised water treatment systems that can be installed in remote locations without access to a centralised water treatment facility will also be in higher demand. This presents an opportunity for companies that manufacture portable and scalable water treatment equipment.

Jash Engineering Limited manufactures a wide range of customized equipment for Water & Sea Water Intake Systems, Water and Wastewater Pumping Stations and Treatment Plants, Desalination plants, Storm Water Pumping Stations, Water Transmission Lines, Hydropower generation and for Power, Steel, Cement, Paper & Pulp, Petrochemicals, Chemical, Fertilizers and other process plants. We as market leaders have a vision to lead the industry and command respect for ourselves and our stakeholders through growth, innovation, and customer focus with an aim to:

O Be the market leader in India throughout our product range

O Be amongst the top three companies globally, in the Water Control Gates business by 2025

O Reach Rs. 500 Cr in net revenue by 2024-25 through expansion and acquisition(s) Company will sustain strong growth rate and is likely to achieve revenue target given the

O Specialized skillset and product set of Jash

O Government bodies (in India as well in key market like US) spending on water infrastructure, and

O Environmental regulations and ESG norms for process industries due to which margins are likely to be volatile with some upward improvement.

The future is promising for businesses that produce water treatment technology and companies that can keep up with these trends and create cutting-edge, effective products will be well-positioned to succeed in the years to come.

RISKS AND CONCERNS, INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has developed and implemented a risk management policy with a forward-looking approach that allows it to maintain a medium-low risk pro le, through a risk appetite as may be defined by board of directors and the identi cation and assessment of all risks. The Company will continue to improve its risk framework through technology to suit its remodelled business as described herein.

We are subject to foreign currency exchange rate fluctuations which could have a material impact on our results of operations and financial conditions. The Company has a well-de ned Policy for Risk Mitigation on foreign exchange by adopting hedging strategies. Global as well as Indian economic and political factors that are beyond our control, influence forecasts and may directly affect our business operations.

The Company has initiated process re-engineering to introduce in-built process elements to monitor and comply with several internal and external requirements for various aspects of conducting business. Compliance beyond prescribed will continue to be underlying principle for business processes. The Company will strive to be the best by increasing the role of technology in monitoring and fulfilling compliance requirements.

Internal control systems play a crucial role in the health of a Company in every industry. An effective system of internal control is a backbone, necessary for building, maintaining and improving shareholders con dence and value as well as helps to enhance the overall quality of the business and the enterprise.

The Company has an adequate internal control system commensurate with the size of the Company and the nature of its business. The Company also has internal control systems for speedy compilation of accounts and Management Information Reports and to comply with applicable laws and regulations.

The effectiveness of the internal control mechanism is reviewed by an independent professional internal audit function 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

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Financial performance of the Company for the year 2022-23 is described in the Directors Report under the headings Summarized Pro t & loss Account and State of Companys Affairs & Review of operations.

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

With highly experienced senior management, competent middle management and enthusiastic junior management team, the Company is capable of handling large and complex projects. The Company focusses on promoting a positive work culture through its policies and best HR practices. This contributes towards higher transparency while providing equal opportunities to all. The Company adopts zero tolerance approach towards any kind of racial, sexual, religious, gender or any other kind of harassment as protected by the law.

We believe that our employees are key contributors to our business success. We focus on attracting and retaining the best possible talent. Our Company looks for specific skill-sets, interests and background that would be an asset for our business.

The Company has undertaken several initiatives to support business through organizational ef ciency, process change support and various employee engagement programs which has helped the organization to achieve higher productivity level. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

Focused attention on management of available human resources by training, incentivizing, and a fair policy of promotion, transfer and equal pay for equal work played a significant role in achieving the desired objective and remained competitive in terms of product quality, price pattern, brand equity and service deliverables. Nurturing of talent and best HR practices will continue to differentiate and provide strength to company.

As on March 31,2023 we have over 900 employees on payroll as well as contractual. Company is committed to provide necessary training / conduct development programmes to upskill and reskill the employees. The management of the Company enjoys healthy and cordial relations with its employees at all levels. The management and the employees strive to achieve its corporate objectives and targets set before the company.

CAUTIONARY STATEMENT

The statements contained in the Boards Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations. Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results.

	For and on behalf of Board of Directors of Jash Engineering Limited
Date : 14th August 2023	Sd /-	Sd/-
Place : Indore	Pratik Patel	Suresh Patel
	Chairman & Managing Director	Executive Director
	DIN - 00780920	DIN:00012072