Jash Engineering Ltd Management Discussions.

Economic Overview

The global economy was showing signs of recovery from the impact of the and had picked up its strongest post-recession pace. However, Chinas zero Covid policy and subsequent lockdowns and hampering of port activity began causing serious supply chain challenges once again. While this was going on, the world witnessed one of its largest humanitarian crisis as Russia declared war on Ukraine. While this invasion was catastrophic for the people of Ukraine, it also resulted in prominent negative spillover across the globe. Commodity and crude oil prices skyrocketed and supply chains came under heavy pressure. The World Economic Outlook (WEO) report from the International Monetary Fund (IMF) released in April 2022 predicts that the risk of corporate borrowing distress in several countries, in ationary pressure, tightening monetary policies, and debt vulnerabilities will all cause global growth to slow from 6.1 percent in 2021 to 3.6 percent in 2022 and 2023, respectively.

The tightening of monetary policy brought on by higher interest rates will be detrimental although necessary to the outlook for the world economy. A rise in interest rates would result in increased borrowing costs, thereby limiting investment opportunities. Despite the negative reaction from financial markets, these actions are necessary to prevent an economic collapse from the higher leveraged debt (IMF).

India was showing optimism in recovery at the start of 2022. However, rising Omicron cases, supply shortages and the growing in ationary pressures from Russias invasion of Ukraine turned the tables for the coutnrys economic growth.

However, experts believe that India will continue its economic rebound on the back of domestic demand potential. The Indian governments focus on capital spending and supportive policies is estimated to contribute to 9.2 percent real GDP growth in 2021 22 as opposed to a contraction of 7.3 percent in 2020 21, according to the Economic Survey 2021 22. High foreign exchange reserves, ongoing foreign investments, and expanding exports will act as a buffer against potential global liquidity tapering that may occur in 2022 2023. The second and third waves of COVID-19 had a minor negative impact on the economy as compared to the complete lockdown phase in 2020 21.

As the global economy combats in ationary trends along with the crisis in Europe, an aggressive vaccination campaign covering the majority of the population, supply-side progressive reforms, the deregulation of various sectors, and production-linked incentives are all expected to support the Indian economys growth of 8.0 8.5 percent in 2022 2023 and provide the country with long-term benefits.

INDUSTRY STRUCTURE AND DEVELOPMENTS

A year post the pandemic saw a growing demand for water resources, not just for municipal or agriculture purposes, but also for critical industrial processes. Consequently, the global water and wastewater treatment market size grew to USD 301.7 Billion in 2022, and is expected to reach USD 489.07 Billion by 2029, exhibiting a CAGR of 7.1% during the forecast period. The growth in market size has led the industry to surpass pre-Covid levels after a slowdown in investments in the water treatment industry.

A growing global population, an increase in water pollution levels and climate change causing a rise in water levels demonstrates that the need for water and wastewater treatment will escalate significantly in the future. Consequently, the Asia Pacific region that saw hasty urbanization and climate change effects dominated the market with a revenue share of 32.44% in CY2021.

India remains the worlds second-largest consumer of water. To meet the demands of its population, the nation needs over 740 billion cubic meters of water annually. Furthermore, it is predicted that in the next 20 years, water demand would outpace availability. Strong development prospects are consequently being created for the water and wastewater treatment industry. Its also crucial for businesses to take into account the rising demand for pure water brought on by growing public awareness of water quality and health.

With industrial urbanization approaching the country, the Indian market size for water and wastewater treatment is expected to register a CAGR of 8.50% from 2022 to 2029. However, high operating expenses of water treatment plants have subdued market expansion and with in ationary pressure on raw materials, market conditions in the short run will hinder the industrys growth. Furthermore, coal production consumes a large amount of water, and India being the third largest coal producer means the demand for water treatment is exponentially high.

With growing demand for water treatment plants, India has been rapidly developing advanced technology in the industry to significantly reduce operating costs. Researchers from India have developed an "advanced" technique for treating wastewater that can safely be used in both residential and commercial settings, reusing dye wastewater from the textile industry and reducing its toxicity.

BUSINESS PERFORMANCE

Your Company is an an ISO 9001:2015, ISO 14001:2015 & BS OHSAS 18001:2007 certified rm engaged in manufacturing of water control gates, ap valves, knife gates valves, energy dissipating valves, water hammer control valves, ne and coarse screens, screening conveying, washing and compaction equipment, industrial valves for bulk solids handling, hydro power screw generator, screw pump and process equipment like detritors, clari ers, clari occulators, thickeners, decanters aerators, trickling lters, dissolved air otation (DAF) units, rotary drum slackers, rake classi ers, pressure sand lters, etc. The products of your Company nd application in water intake systems, water and wastewater pumping stations and treatment plants, storm water pumping stations, water transmission lines, power, steel, cement, paper & pulp, petrochemicals, chemical, fertilizers and other process plants.

Your Company offers a one-stop solution including Design, Casting, Fabrication, Assembly & Testing and providesa a vast range of products in all possible sizes and diversi ed material options unlike several peers. The Company has world class manufacturing facilities equipped with advanced manufacturing techniques enabling us to produce best-in-class products at competitive prices. Your Company continues to enjoy leadership position in most of the product groups in the domestic market. In the international markets, the Company is progressing towards leadership position in products like water control gates, screens and knife gate valves.

The Company has a diversi ed customer base spread across the globe with presence in countries like United States of America, UK, France, Germany, Austria, Qatar, Saudi Arabia, Bahrain, Oman, UAE, Hongkong, Singapore, Malaysia, Thailand and over 35 other countries. The Company continues to undertake various development initiatives and reengineer its products as per the need of customers and deliver products adhering to global manufacturing standards. The Company is witnessing immense opportunities in developing countries where the markets are growing at a much faster pace compared to developed countries.

The Company is not only engaged in providing machinery for Water treatment industry but also provides value added services that include providing guidance to customers for proper utilization and installation of machinery in order to help them achieve desired output. Besides, the Company offers a range of support services on an ongoing basis and continuously monitors, audits and facilitates its customers in equipment maintenance by promptly supplying of parts and accessories and ensuring maximum machine uptime.

In the financial year 2021-22, the Company has generated standalone Net Profit of Rs. 2475.97 Lacs. as against Rs. 2769.88 Lacs. in the previous year.

OPPORTUNITIES AND THREATS

Rising pollution levels and climate change has consequently led to a rise in adopting sustainable practices along with growing health awareness in the urban population. This coupled with a rise in costs of manufacturing water treatment plants have made potable water costly among the urban cities across India. The business environment is expected to improve as a result of strict government restrictions to control water contamination. The industry picture will also improve by the simple accessibility of purifying technology and the huge decrease in manufacturing and operating costs.

Under the water and water treatment industry, several industries including the distillation water treatment market will grow largely due to low operating costs and easy installation process. The ltration market is also expected to grow owing to technological advancement along with lower production costs and easy availability. Lastly, the Point Of Use (POU) Market is also expected to display robust growth due to its convenience, easy installation and cost efficiency.

The cost of producing freshwater and industrial water have increased as a result of water shortages in Indias cities, where the issue is now most noticeable. The high prevalence of water-borne infections is caused by the fact that just one-third of Indias wastewater is currently treated. Water-intensive businesses like manufacturing and hospitality are investing in better wastewater treatment as Indias cities are beginning to run short of water. Demand for wastewater treatment facilities is also anticipated to increase with the implementation of stringent government requirements, such as the zero liquid discharge regulation, for the treatment of sewage prior to release into aquatic bodies.

Several government initiatives drive water and waste water treatment markets and help build the foundations of the Industry in the coming future. The Namami Gange Program is one such initiative that aims to ensure that no untreated wastewater enters the gange. The framework developed for this project can be used for projects further along in the future.

With the rise in water scarcity in major metropolitan cities, governments are implementing initiatives to shorten the gap between supply and demand. Water-scarce states like Gujarat, Tamil Nadu, and Rajasthan frequently adopt desalination technology. Indias 7,517 kilometres of coastline presents a huge opportunity for desalination facilities. There are more than 1000 membrane-based desalination plants with capacities ranging from 20 m3/day to 10,000 m3/day, according to the Desalination Association of India. Large desalination facilities are primarily found in Indias municipal sector. Major industries like the coal production sector, distillery, steel plants, textile and Pulp & Paper have enforced zero liquid discharge policies where they aim to manage water waste in an efficient manner. These initiatives along with a depletion in natural resources will trigger a rise in demand in the Industry and ensure they reach its growth targets.

In the industry, competition and excessive overhead costs act as threats. Due to Indias great growth potential, there will be threats of foreign players wanting to expand their business in India. The cost of installing water and wastewater treatment equipment is significant, as are the costs of running and maintaining it. This functions as a limiting factor since it raises product costs, which puts pressure on both sales and pro tability. Water and wastewater treatment, however, has the potential to develop into a pro table endeavour due to increasing water scarcity and rising water prices.

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 2022 Previous year ended 31 March 2021
(Audited) (Audited)
Segment revenue from external customers
Within India 18,446.41 12,575.52
Outside India 18,309.91 17,367.17
Income from operations 36,756.32 29,942.69
Segment assets
Within India 27,576.46 23,279.34
Outside India 9,33,8.54 8,362.26
Total assets 36,915.00 31,641.60
Capital expenditure
Within India 1036.41 882.40
Outside India 258.64 59.82
Total capital expenditure 1295.05 942.22

FUTURE OR FORWARD OUTLOOK

The water and wastewater treatment equipment market is expected to display a CAGR of 5.1% between 2022 to 2030. This growth is largely driven by an increasing demand for clean water due to rapid industrialization and urbanization coupled with a fall in natural freshwater resources. After a supply chain shortage owing to the crisis in Europe and unprecedented lockdowns, the global market recovered efficiently.

Water and Wastewater Treatment Equipment Sales from both municipal and industrial applications are taken into account in market analyses. The municipal segments ability to sustain its market position will be greatly in uenced by factors including the increasing adoption of different technologies in water treatment plants. Our analysis on the global water and wastewater treatment market also examines aspects including rising water shortage concerns, rising industrial water consumption, wastewater dumping in water bodies, and strict laws supporting global market expansion.

However, factors such as high cost of industrial water treatment equipment, operational and technical difficulties, and worries about nutrition impairment may restrain the industrys expansion over the projection period. As industrialization spreads internationally, there is a rising need for water for industrial use. Environmental issues are growing as a result of the discharge of wastewater from various industrial operations, including process water, sanitary wastewater, and stormwater, into water bodies. Several businesses are forced to look for ways to reduce water usage and use water more effectively due to the depletion of water supplies and the constantly increasing demand for water. The market for water and wastewater treatment will grow as a result.

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 identification and assessment of all risks. The Company will continue to improve its risk framework through technology to suit its remodeled 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 confidence 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 2021-22 is described in the Directors Report under the headings Summarized Profit & 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 efficiency, 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 31,2022 we have over 550 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 : 23rd August 2022 Sd/- Sd/-
Place : Indore Pratik Patel Suresh Patel
Chairman & Managing Director Executive Director
DIN - 00780920 DIN:00012072