Va Tech Wabag Ltd Management Discussions.

Global Water Overview

Water – a crucial resource for the existence of all forms of life. It is the cornerstone of societal resilience, inclusive growth and people’s well-being. The year 2020 saw the world against the CovId-19. The fight against the pandemic witnessed water become even more precious. Frequent hand washing, considered effective for avoiding CovId-19, saw water emerge from an ordinary to an extraordinary resource. However, 3 Billion people along with two out of every five healthcare facilities that lack adequate access to water and sanitation were hit hard by the pandemic. Adding to this, burgeoning population, changing lifestyle patterns, rapid urbanisation, focus on industrialisation and other drastic changes in the climate are constantly putting this essential resource for survival under tremendous stress. over the past 100 years, global water use has increased six-folds and it is further expected to steadily rise by 1% annually (Source: UN World Water Development Report 2020). Water demand is likely to surpass its supply by 40% by 2030. It is not possible to chalk out a single pathway for water management amid the rapid rising population, pollution and urbanisation. To help strengthen water security there is crucial requirement to build capacity, capability, resilience, adaptability and proper planning for the management of resources.

The real issue of water crisis is not about the quantity. It is more about managing what we using every drop have wisely and responsibly, the onus of which, is on the humans residing our planet. Inconsistency in water supply due to growing population, water intensive growth patterns and irregular rainfall are some factors which, when combined, hold the potential to pose a serious threat to the future of water. It can drastically impact the sustainable development of the economies.

The demand for water is expected to globally

rise by 55% over the period 2000 to 2050 (Source: OECD). The major demand, expected to arise from the emerging and developing countries, would be driven by key factors like manufacturing, thermal electricity and domestic usage.

Global Water Treatment Industry

Sustainability of water is the need of the hour. Extreme climate changes, expanding urban boundaries, new industrial facilities and increased sensitivity to environmental needs have made the governments focus on improving water sustainability, globally. To achieve this, right and responsible water management, building adequate water infrastructure and putting the right water treatment systems in place are some of the key areas of emphasis. Around 80% of the entire industrial and municipal wastewater is released untreated into the environment. This causes a detrimental impact on the entire ecosystem. (Source: UN Water) The current state of affairs underpin the need of improved water resource management. Water treatment systems are considered essential and reliable. They are important sources of contribution to public health, especially after the pandemic. The stress on water underscores the need to uplift the water management infrastructure.

Global Wastewater Market

The water and wastewater market is estimated to be worth USD 243 Billion by 2027, at a CAGR of 6.7%. Rising demand for new water resources, increased industrial demand and stringent Government regulations are the growth drivers of this market (Source: Meticulous research, https://www.meticulousresearch. com/product/water-and-wastewater-treatment-market-5026)

Countries like Singapore, Philippines, India and Kingdom of Saudi Arabia are increasingly focussing on sewage treatment. This, along with the need for potable water, present substantial growth opportunities in the future.

An impressive 380 Billion m3 of water can be recovered from the annual volumes of wastewater. This is estimated to reach 470 Billion m3 and 574 Billion m3 by 2030 and 2050, respectively. The full recovery of nitrogen, phosphorus and potassium from wastewater can offset 13.4% of the global demand for these nutrients in agriculture.

(Source: UN Water Report, Valuing Water 2021)

Global Industrial Wastewater Market

The global industrial wastewater treatment market is projected to be worth USD 15 Billion by 2024, registering CAGR of 5.8%. depleting freshwater reserves, along with stringent regulations with respect to emissions and treatment of industrial wastes are factors leading to the growth of the industrial wastewater

Global desalination market

The global desalination market is experiencing a robust growth. Approximately 1% of the global water requirements have been met through desalination in the last few years. This has resulted into the emergence of desalination as critical for the water industry. It has also been incorporated in arid regions and regions with rapid exhausting water supplies. The desalination market is likely to showcase a CAGR of 7.8% over 2018-2025, valuing USD 27 Billion by 2025.

(Source: Water Technology)

Major desalination projects

Egypt undertakes mega desalination programme with an outlay of USd 15 Billion, creating a capacity for

10,480 MLD

Kingdom of Saudi Arabia having a pipeline of

MLd desalination projects

Water Trends Across Regions

Asia-Pacific Region: The Water Landscape

Home to 60% of the global population, Asia Pacific only has 36% of world’s available water resources. Asia has witnessed an impressive socio-economic growth over the last decade. Amid this rapid progress, modernisation and advancements, the region’s water security, availability and accessibility have all been severely challenged. Even today, around 1.5 Billion people living in the rural and 0.6 Billion people in the urban areas lack adequate water supply (Source: SDG outlinehttp://sdghelpdesk.unescap.org/ SDGs/sdg6-clean-water-and-sanitation).

Aggravating this situation further is the climate change induced disasters, constantly stressing the groundwater resources. Unsustainable water withdrawals are a major concern for this region. Some countries have already withdrawn as much as 50% of their fresh water supply resources. Groundwater use is estimated to rise to 30% by 2030. Further, the evolution of megacities from cities will put additional pressure on the water resources as development of infrastructure struggles to keep pace.

The Way Forward

Water scarcity in the Asia-Pacific region is a combination of poor access to quality and quantity of water, limited sewerage networks and wastewater treatment systems. The demand for water in the region is anticipated to increase multiple times. This would be led by accelerated urbanisation and intensified population along with the impact of climate changes.

The Asian Development Bank (ADB) has been undertaking key initiatives and steps towards effective and efficient use of available water resources. Additionally, there have also been initiatives to ensure that the ongoing expenditures towards water are substantially passed on to the communities, environment and the economy.

According to the Strategy 2030 estimates, the anticipated investment needs for water and sanitation would be USd 53 Billion, on an average, per year up to 2030. Such investments would expectedly bring about water security to: Satisfy the water and sanitation needs in rural household in all communities Support activities like agriculture, industry and energy in productive economies develop cities and town that are liveable and vibrant Restore rivers and ecosystems in a healthy manner and Build communities that are resilient and capable of coping with water-related extreme events

Facts Government Initiatives
70% of surface water in India is unfit for consumption Funds worth INR 4 lakhs crore, under various schemes, allocated to water connections and building up infrastructure for water management
0.8% is the current level of wastewater treatment in Indonesia Indonesia has multilateral funding worth USD 985 Million (active and pipeline)
90% of Bangladesh homes have no piped water connection The World Bank approved USD100 Million to be appropriated towards increasing access to improved water supplies
30% of population in Mongolia has access to clean piped water USd 6.5 Billion proposed investments over 2015-2030 under the Integrated Water Management Plan (https://www. adb.org/sites/default/files/institutional-document/618776/mongolia- country-water-security-assessment.pdf)
90% of urban wastewater is released back untreated into the environment in vietnam The vietnamese Government is planning to invest USd 10.5 Billion to build new water plants and invest in urban wastewater treatment plant by 2025 (Source: Vietnam Economic Times ) https://vneconomictimes.com/ article/business/funds-pouring-in-for-clean-water)
Improvement in wastewater collection and treatment envisaged by the utilities Manila Water and Maynilad outlay of USd 6.5 Billion for wastewater collection and treatment. 16 major WWTPs to come up by 2027

(Source: Borgen Project,https://borgenproject.org/facts-about-water-quality-in-asia/)

India: The Water Landscape

India is in the dual state of growth as well as crisis. on one hand it is one of the leading, rapidly emerging and growing nations and on the other hand, the country is amid a severe water crisis. With more than

17% of the global population residing in India, the country has only 4% of the world’s renewable water resources. It is alarming to note that 50% of India’s population has no access to safe drinking water. Not only this, about

Two lakh people die every day in India due to its lack of access to drinking water. As per NITI Aayog, 40% of India’s population will not have access to drinking water by 2030. The groundwater currently caters to 60% of irrigation needs, over 80% of rural and urban domestic supply are served from groundwater.

This makes India the largest consumer of groundwater globally. If the current trend continues, then 60% of the Indian districts will expectedly reach critical groundwater depletion, within just two decades. This is likely to impact 25% of the country’s agriculture production.

The Way Forward

The Government of India has been strongly emphasising on water management. The aim of ‘Make in India’ and Atmanirbhar Bharat highly dependent on water connectivity, availability and accessibility. The Government has been paying special attention towards provision of drinking water, reusing and recycling of wastewater. Along with this, management of effluents in the water is also being paid attention to. The Government has undertaken various schemes and initiatives in the direction of water preservation and conservation as discussed below:

Namami Gange Programme

AMRUT

Jal Jeevan Mission

Swacch Bharat Mission-Urban (2.0)

National River Conservation Directorate (NRCD)

Atal Bhujal Yojana (ABHY)- National Groundwater

Management Improvement Program

National Infrastructure Pipeline

Namami Gange Programme

The Namami Gange Programme, an Integrated Conservation Mission, has been approved as a ‘Flagship Programme’ by the Union Government. Its aim is to accomplish the twin objectives of effective abatement of pollution and conservation and rejuvenation of the national River Ganga.

Jal Jeevan Mission

The Jal Jeevan Mission, launched in 2019, aligns with the Government’s ambitious programme to provide tap water to all households in the country by 2024. It also includes the National Rural Drinking Water Programme and the total estimated cost of JJM is INR 3.6 lakhs crore over 2019 to 2024.

Nal se Jal

A part of the Jal Jeevan Mission, this scheme aims at providing Functional Household Tap Connections (FHTC) to

18 lakhs rural households by 2024. It is based on a unique model where villagers themselves get to decide the amount they would pay, based on their personal water consumption. Under the scheme, the Government plans to provide a minimum of 55 litres of water per person, per day.

Swachh Bharat Mission (Urban) 2.0

This mission has been launched under the ‘Health and Wellbeing’ vertical with an estimated outlay of INR 1,41,678 crore. It focuses on:

Sustainable sanitation

Wastewater treatment, including fecal sludge management, in all

urban local bodies with less than 1 lakh population

Solid waste management

Information, education and communication and

Capacity building

Atal Bhujal Yojana (ABHY): National Groundwater

Management Improvement Program

This project aims at facilitating sustainable management of groundwater resources. It targets to achieve the same through a strong groundwater database and community participation.

Middle East & North Africa (MENA)

Middle East & North Africa region is facing acute water crisis. Around 6.3% of the global population residing in MENA has access to a meagre 1.4% of the world’s renewable fresh water resources. Around 60% of the population faces extreme water stress. At the current rates of land degradation, around

8.3 Million hectares of arable land will be lost in few years. The crisis is so severe that the average water coverage has fallen by 25%. Further, by the year 2025, it is estimated that average per capita availability in the MENA countries will merely be 500 cubic metres per person. Climate change is also a major contributor behind the water scarcity. As per the World Bank Report, the water crisis issue in the region is more of water mismanagement than water scarcity.

Around 82% of the water is inefficiently managed.

The Way Forward of the total wastewater produced, MENA countries treat 43% – highest among the developing nations. The region has maximum opportunities for reuse and recycling of water. Arab Water Security Strategy 2010-2030 aims at achieving major goals in development and economics, politics and institution Egypt’s Water Authorities have outlined a 30-year, USd 15 Billion investment programme for desalination Total cost of the program is USD 15,243 Million Total desalination capacity of 10,482 MLD to be created

GCC countries are leading in desalination with approximately 40% of total desalinated water globally. The countries have 81% desalination capacity.

The Kingdom of Saudi Arabia produces 50% of their consumption demand through desalination. It produces

4 Million cubic meters of desalinated water per day and plans to further invest USD 80 Billion over the next 10 years.

(Source: Utilities, Middle East)

Europe

Climate changes have impacted the water availability in the European region. The countries are witnessing warm winters and hotter summers creating drought like situations.

The groundwater is also showing signs of depletion. The

Government is taking various initiatives in this area and the call for wastewater treatment has escalated.

The Way Forward

Loans have been signed and sanctioned with European Investment Bank for Water Supply and Sanitation

Infrastructure. The Government is floating tenders for Greenfield WWTPs, co-financed by Europe Union.

(Source: GWI) one of the leading players and geographically diverse water technology Companies, vA Tech WABAG (‘The Company’ or ‘WABAG’ or ‘We’) dates back to 1924. The Company works towards water sustainability and rejuvenates water. We consciously direct our efforts towards effective and holistic water management. This helps ensure water availability to meet multiple needs from agriculture to municipal to industrial segments. We are the system specialists, present across the value chain, providing engineering, procurement and construction to o&M services. WABAG’s laser sharp technology is perfectly complemented by its constant R&d. This has helped the Company carve a niche for itself in the segment and evolve across all water management formats.

The Company has been facilitating access to clean and safe water to over 500 Million people. It also caters to major industrial segments such as oil & gas, power, steel and food & beverages. The Group plays a critical role in optimising use of the water resource. With over 6,000 projects executed across 20 countries, WABAG is making sustainable contribution to Millions of people across the world. The Company, through its efforts towards better water management, is creating milestones across the Indian subcontinent, Middle East and Africa, Europe, South-East Asia and Latin America.

Experience. Expertise. Excellence.

A glimpse of our flagship projects

World’s first Wastewater Treatment Re-use Plant, converting effluent into ultra-pure demineralised water at Panipat World’s firstPurifiedTerephthalic Acid (PTA) plant, along with other petrochemical effluent treatment, through UASB process followed by MBR UFRo Wastewater recovery for reuse at Reliance dahej Asia’s largest Wastewater Treatment plant for the 20 Million tonne Reliance Refinery at Jamnagar India’s largest Seawater RO plant (110 MLD) at Nemmeli, Chennai on DBO basis, meant for 100% potable use. The Kodungaiyur STP Power Neutral Plant in India, leads in achieving the milestone of completing over 100,000 hours on a single gas engine The largest single train 28 MLD Seawater Desal Plant (UFRO) at Reliance at Jamnagar Refinery Building STP for the University Diliman, Quezon City employing innovative NEREDA Technology for the first time at the Philippines WTP retrofit project, 900 MLD La Mesa-2 for Metro Manila,the world’s ninth largest drinking WTP desalination plant for supply of potable water with a capacity of 192,000 m3/day in Muscat, catering over 5 lakhs people Water Reclamation plant for Madinaty - a new satellite city near Cairo, Egypt World’s first and unique direct potable water reuse plant at Goreangab, Windhoek, Namibia Largest tertiary wastewater filtration plant at Zurich

Industrial Water Reclamation plant for steel works Smederova, Serbia

T urnkey drinking WTP employing an advanced multi-barrier system for the entire district of Br ko in Bosinia and Herzegovina

F AC received for energy-neutral municipal WWTP at Sanilurfa (140,000 m3/d turnkey employing innovative solar sludge drying system) Modernisation and extension of the WWTP of Kashira snacks manufacturing site of PepsiCo Inc., located near Moscow, Russia

India Cluster

Key highlights of the year

Achieved financial closure for our first Hybrid Annuity Model (‘HAM’) project awarded by Kolkata Metropolitan Development Authority (‘KMDA’). The Company secures the closure partnering with International Finance Corporation, Tata Cleantech Capital & EverSource Capital under the Namami Gange programme administered by the National Mission for Clean Ganga (‘NMCG’). 40% will be funded by NMCG Grant during the construction period. 60% will be funded by a mix of Debt and Equity (75:25)

Financial closure for our second HAM project awarded by Bihar Urban Infrastructure development Corporation (BUIdCo) achieved. The Company has partnered with PTC India Financial Services Ltd for the project under NMCG to develop Sewage Treatment plants of 150 MLd along with sewerage network of over 453 Km in Digha & Kankarbagh.

Middle East & Africa (MEA) Cluster

Key highlights of the year

Secured 4.5 Million Bahraini Dinar (approx. 900 Million INR) order from Ministry of Works, Municipalities Affairs and Urban Planning (‘MoW’) in Kingdom of Bahrain.

The order is towards operation, Maintenance and Management of the Madinat Salman Sewage Treatment

Plant (‘STP’) and Long Sea Outfall for a period of 5 years. Awarded USD 48 Million order to execute the 300 MLD

(expandable to 500 MLd) Jeddah Airport 2 Independent

Sewage Treatment Plant Project at Jeddah, Kingdom of

Saudi Arabia. The plant will be built with state-of-the-art

NEREDAR technology for the first time in the region. This is a repeat order from Electro Mechanical Works

Company.

Awarded 11 Million Euros worth of project for Water

Treatment Plant (WTP) at Kaseeb from Societe Nationale d’exploitation Et de distribution des Eaux ("SoNEdE"),

Tunisia, funded by KfW, the WTP will be built using advanced Lamella clarifier technology. This is a repeat order from SoNEdE.

WABAG Austria has signed 62 Million Euros Framework contract with General desalination Company of Libya (‘GdCoL’) to design and build 3 Thermal seawater desalination — Multi-Effect distillation (MEd) plants in Bomba, Libya. This is the largest order for thermal desalination plant order in the history of WABAG. Post completion the plant will provide drinking water capacity to more than 3,00,000 people of the region.

Europe Cluster

WABAG Switzerland received its biggest ever order towards design and build of Lake Water Treatment Plant from ENERGIE SERvICE BIEL/BIENNE. This order is towards replacing the existing facility over 50 years old and ensuring water security to the city of Biel and Nidau.

COVID-19

In March 2020, the World Health organisation (WHo) declared Public Health Emergency of International Concern (PHEIC) CovId-19 as a global pandemic. Subsequently, there were lockdowns announced globally derailing economies and human life. It took the world by a storm. Social distancing, work from home, sanitisation, thermal checks and an additional impetus on the health and safety have become the new normal of the same world. Managing information, security, infrastructure, productivity and coordination added to the challenges encountered by every industry. This ongoing crisis calls for the entire nation to fight it collectively and face it unitedly. vA TECH WABAG is no stranger to challenges and adversities. The Corona crisis compelled Governments across nations to rightly priortise life over everything else and imposed extensive lockdowns. Occupations, lives and businesses were jeopardised. An event of such scale and impact puts to test the core strengths of any organisation. WABAG has time and again demonstrated its abilities to adapt to the changing realities. Several measures were taken to ensure safety, health and well-being of all our employees and other stakeholders across the organisation.

We adhered to all protocols laid down by the Governments across all our operational sites:

High level steering committee was formed comprising

functions, disciplines and management to respond to the

situation

Specific SOPs were implemented and monitored across

sites

Social distancing was maintained

W ashing hands at regular intervals

Sanitisers were kept at all entry and exit gates

Thermal scanning at entry and exit from sites

PPE kits were provided

Employees were asked to immediately report in case of

any symptoms

Business Continuity

Wabag operated hundreds of plants across globe, during lockdown both in India as well as in other countries. We have ensured uninterrupted supply of drinking water our and treatment of sewage / effluent. commitment of protecting environment even during tough times Our world-class IT systems enabled seamless remote working during lockdown which ensured business as usual Due to cOvId entire global supply chain has been disrupted. In response to our requests most of our clients have approved additional time (extension of time) for delay in construction activities due to lockdown Workplace hygiene, continuous awareness (SOP), vaccination drive are facilitated for our direct and indirect employees to ensure workplace safety The employees mental health also had to be taken care for which we introduced several initiatives like Online

Meditation Sessions and Zoom Chatter Sessions wherein employees were encouraged to share their experiences of working from home At our construction as well as O&M sites, employees were provided with well sanitized accommodations, safety measures and all essentials within the project premises to restrict the movement and to avoid the risk of infection Multiple weeks of business trips are reduced to few hours of digital interactions with employees as well as customers

International Engineering Centre (IEC)

WABAG’s International Engineering centre in Pune and vadodara provides design and engineering services to its EPc business under the banner of Wabag Engineering Services. It is equipped to deliver world-class and cost- effective engineering services. It has competent team of engineers and state-of-the-art software to attract global engineering business. IEc provides services to oil & gas, power, fertilizer and steel industries across the globe.

IEc has provided engineering services to prestigious clients like RIL, dangote, HMEL, Jazan, SSEM, SONEdE, Petronas, Thai Oil.

IEc continues to support engineering for Wabag office in other clusters from both onshore and offshore.

Innovation has always been IEc’s focus to improve on existing equipment design and for processes to ensure productivity in terms of time and cost. IEc has developed innovative designs to improve on performances and maintainability of their existing range of equipment.

Financial Performance

The order book during FY 2020-21 stood at the highest at INR

9,584 crore.

On a consolidated basis, the Group’s revenue stood at INR 2,835 crore in FY 2020-21 as compared to INR 2,557 crore in FY 2019-20. Profit After Tax for FY 2020-21 stood at INR 110 crore.

On a Standalone basis, revenue for FY 2020-21 stood at INR 1,843 crore as compared to INR 1,746 crore in FY 2019-20. Profit After Tax reported for FY 2020-21 stood at INR 73 crore. The key metrics of the year under review as per SEBI

Regulation were as follows: debtors Turnover ratio: 1.91 times

Interest Coverage ratio: 4.38 times current ratio: 1.40 times

Debt equity ratio: 0.22 times

EBIdTA and net profit margin stood at 7.70% and 3.90% respectively and return on net worth at 7.81% for the FY 2020-21.

Human Capital

At WABAG, our people are the priority. As an effort towards empowering our employees, the following initiatives were taken and implemented through the year.

Young Entrepreneur Program (YEP)

A program intended to identify potential talent among young engineers/executives of the Company and develop functional / business managerial capabilities. The objective of the program is to build middle level leadership pipeline.

Leadership Excellence program (LEX)

A program intended to identify potential talent among Manager / deputy General Manager of the Company and to develop functional / business managerial capabilities. The objective of the program is to build senior level leadership pipeline.

Emerging Leader Program (ELP)

Though we have YEP in the middle management level, only 4-5 members are getting selected through this program.

Hence, to broaden the base, we have initiated another program called Emerging Leader program in the age group of 29 to 40 years. The object of this program is to identify emerging talents in the middle management level and build leadership capability.

Hi-POT Program

To strengthen the leadership pipeline of our organisation We have developed a very strong program in this regard under the Global Talent Architecture framework, where we are identifying the Hi-Potential (Hi-Pots) leaders who can take on higher responsibilities and larger roles. By this program, we are covering various aspects of Leadership

Management such as Individual Development Plans, Succession Planning and their periodic & continuous monitoring through focused mentor ship from business leadership and the talent managers within HR.

EXTRA MILERS PROGRAM (EMP)

A program intended to identify potential talent among trainees who come through Graduate/Executive training program.

The objective of this program is to build junior management level leadership pipeline. Selected Extramilers will get a sponsorship to a premier institute for a week long basic leadership skills training program followed by an Individual development plan which will be facilitated for their growth in fast track.

Quality, Health, Safety and Environment (QHSE)

Quality

Our constant focus is on improving our efficiency through delivering high quality services to our customers. We proactively seek to understand their needs and priorities. Based on our understanding, we make the most of new technologies and innovation to work on appropriate improvements. We aim to ensure that procedures are effective, understood and applied. The core team members and cross functional team is created to adhere to the IMS management system throughout the organisation.

Client feedback matters to us and hence, we conduct a

Client Satisfaction Survey, every year.

The FIFO was implemented in the EPC sites and operational and maintenance of the plant along with the work procedure. During supplier registration process we do check the process, their certification, credentials and so on.

The vendor portal system is well established where core process and multi activities take place in the software portal in the single system.

During the year, a remarkable improvement was seen in our customer service performance. This was due to our stringent policies placed at right place to provide quality services. With the help of professional experts and a pro-active approach, we constantly make an effort to deliver the superior quality at every stage of the project.

Health

WABAG’s policy is to provide and maintain a safe working environment while preventing injury and ill health, wherever possible. We continue to target improvement through training programmes. Various initiatives like campaigns for first aid, general health check-up for all the employees and workmen, heat stress prevention to promote awareness and prevent illness have been undertaken at regular intervals.

Essential health-related topics are shared with employees via toolbox talk on a daily basis. We strive for the highest standards of safety to achieve our objective of an accident free environment. Several health camps are conducted at regular intervals at the EPC, BOOT and O&M sites for all.

To enhance learning and cascading the safety awareness, E-learning program has been launched for employees for self-training and certification. We are committed to provide a safe place for our people to work where health and well-being comes first.

Safety

Achieve 4.5 Million safe man hours d at WABAG’s

Marafiq Sewage Treatment Plant, KSA. The current manpower working at site (Jubail and Yanbu) is close to 1,000+. Wabag was awarded the ‘Best Safety Contractor Award for 2020-21’ by the client. Achieved 2 Million safe man hours at WABAG’s

Polgahawela Water Supply Project, Sri Lanka, on August

31, 2020

Bangalore Water Supply and Sewage Board certification of appreciation for 1.6 Million safe man hours on

December 14, 2020

Achieved more than 1.7 Million man hours in rehabilitation and expansion of WWTP at Guheswori, Nepal on November 4, 2020 and overall WABAG has achieved more than 9.6 Million safe man hours

The projects and the corporate office celebrated the 49 th National Safety Week with all the stakeholders’ participation. The best workers and the contractors were awarded. This year, a new initiative has been taken by the Company to promote and encourage hazard reporting and conduct HSE awareness communication etc., by implementing a system called ‘HSE Assessment Index’ across all the project sites. Assessment of the same is done on a monthly basis. The

QHSE Passport has been updated by the department to circulate to all our engineers; this is aimed at continually developing the professional capability of our workforce in the matters pertaining to QHSE.

The HSE Performance of sites is monitored through a well-developed internal and external audit system. We periodically review our Integrated Management Systems to improve efficiency and effectiveness. WABAG has a self developed HSE index system, which helps in: verifying the safety process and procedure implementation Identifying the gaps and areas for improvement Standardising the HSE process across the projects Identifying the best practices and sharing with other projects

Environment

The Environment Management System is well established and implemented in the EPC and O&M sites. We are implementing World Bank /IFC guidelines and performance standards.

Various initiatives have been taken by the Company for improving sustainability and EHS matters. The main objectives are to:

Reduce the in-house water and energy use and waste

emissions

Improve greenery development

Avoid/reduce utilisation of plastic materials

Reuse treated water

Control oil slippages

Protect soil surface contamination

Noise pollution control

Avoid the odour in the treatment process, and

Effective management of concrete waste

All our sites and plants are inspected by the external agency at regular intervals. This helps us to keep a check on the necessary measures to be taken for the air and water quality and noise levels as well. We have achieved CII EHS Excellence awards by implementing best practices.

Information Technology

Ongoing efforts are directed towards making WABAG digital & more secured by adopting various digital initiatives.

Digital initiatives

Implemented a cloud-based NextGen HRMS addressing Hire to retire Process

Implemented facial recognition system for recording attendance through mobile App & Tablet for one City one operator Sites

Implemented advanced backup solutions for safeguarding business critical data

Implemented NextGen Antivirus solutions with advanced features to safeguard business from IT security threats

Upgraded operating systems of business critical application servers

Implemented DR setup for ERP systems Consolidated & upgraded Email servers across globe

Implementation of Wrench Smart solution – Engineering document management system

Implementation of call centre operations & CRM applications for one City one operator projects for capturing & addressing the citizens grievances

Implementation of E-Invoicing solution

Implementation of knowledge management solution to capture our existing learnings for improved & error free productivity and performance

Continuous project and financial position monitoring through the dashboard This

Piloted mobile-enabled geo tracking & geo fencing system for real-time tracking of field workforce

Enhanced the Company’s corporate website with a fresh new and appealing look

Research & Development

CERAMOZONE

CERAMOZONER pilot plant is a combination of the CERAMOPURR- pilot plant and the Ozone pilot plant which was transported from Vienna to Pappankalan STP, Delhi. The Pilot tests were planned to be started in the FY 2020-21 at Pappankalan STP, Delhi, for potable water reuse.

However due to CovId-19 pandemic it could not be done and it is planned to continue in 2021-22. It has a high mid-term potable reuse market potential (India, South Africa, Botswana, Namibia, Brazil, Mexico, USA, Singapore, Australia, etc.). A patent has also been filed for this process.

DAMOPUR

DAMOPURR is WABAG’s technology for the Deammonification process (Ammonia removal) in the mainstream. The detailed engineering of Pilot plant is in progress and the construction of Pilot plant is planned in the FY 2020-21 and planned to start the Pilot tests at Delhi/Kondli STP in the FY 2021-22. However based on the results of Ph.D. study at Ewag AG at Switzerland the plan is switched to go to lab scale study first and the basic engineering for the same is in progress and the construction of Lab scale plant is planned in the FY 2021-22 at Koyambedu TTP in Chennai.

Membrane Distillation (MD)

The Pilot tests at Panipat Refinery (IOCL) was completed in 2018. The pilot plant is currently at Chennai/Nemmeli Seawater Desalination Plant for potential pilot tests for further recoveries from Ro Brine is planned at Nemmeli desalination plant pilot tests for further recoveries from

RO Brine at Nemmeli Sea Water Desalination Plant and from RO reject at IOCL Paradip refinery. However due to

CovId-19 pandemic the studies did not progress and now it is planned to carry out in the FY 2021-22. The technology for Zero Liquid Discharge (or minimum liquid discharge) which has an increasing market potential and has several advantages against classical evaporation. Membrane distillation crystallisation patent was filed in June 2020. new technology has potential of a breakthrough technology within Zero Liquid Discharge (ZLD) processes.

Hard Chemical Oxygen Demand (COD)

Hard COD removal by BIOZONER The Pilot tests at HMEL Bathinda, Punjab, was completed in 2018 (pilot plant currently in a WABAG warehouse in Chennai), the important add-on as COD discharge has been limited (IOCL Paradip,

RIL dahej, HMEL). After CovId-19 outbreak, potential pilot tests were planned to be started at Chennai/Koyambedu

Water Reclamation Plant and at IOCL Paradip refinery (in both cases Ro brine treatment/oxidation), but could not be started. Now it is planned to start in FY 2021-22.

Frauenkirchen, Austria - Micro-pollutants Removal

Micropollutants removal by ozone and activated carbon

(CARBOPURR and BIOZONER) - The pilot tests were completed by WABAG Austria in cooperation with the vienna

University of Technology in fall 2019 at Frauenkirchen, Austria and the planning of full scale project has been started. The

Final report "Advanced purification of Municipal Wastewater with ozone and activated carbon to remove organic trace substances - toxicology and general applicability" was published by the Austrian Federal Ministry of Agriculture & Water in May 2020. Special research: Genotoxicity (bacterial mutagenicity/ AMES tests and hepatocyte/Comet assay) and bioassays (cyto-toxicity, estrogenicity, and others).

Altenrhein, Switzerland - Micro-pollutants Removal

CARBOPURR and BIOZONER Long-term pilot plant MP monitoring & MP monitoring at the full scale plant.

Antimicrobial Resistance Project

Antimicrobial resistance in water reclamation and reuse. The project has been carried out by WABAG Austria in cooperation with the vienna University of Technology to assess the efficiency of conventional and advanced treatment technologies in removing Antibiotic Resistant Bacteria (ARB) and Antibiotic Resistant Genes (ARG) at the New Goreangab Water Reclamation Plant (NGWRP) in Windhoek, Namibia. The paper "Fate and persistence of antibiotic-resistant bacteria and genes through a multi- barrier treatment facility for direct potable reuse" in IWA Journal of Water Reuse (uncorrected proof) was published in January 2021. The Final paper is expected to be published shortly.

Micro-sieving full scale plant execution at Switzerland, pilot tests in Germany

MICROPUR-CASR pilot tests were successfully completed in Q1 of 2017 at Birsig/Therwil, Switzerland, to reduce the organic load to activated sludge process. The contract for full scale plant at Birsig STP in Therwil was awarded in Q4 of

2019. This contract is under execution and expected start-up at the end of 2021. The pilot tests at Nidda, Germany, were successfully completed in Q4 of 2019. The additional pilot tests at Aarbergen, Germany, have been started and there are several potential projects in Germany.

Risk Management

The Company faces a number of risks which, if they arise, could affect its ability to achieve its strategic objectives.

The Board is responsible for identifying principal risks and ensuring appropriate risk mitigation is in place to manage them effectively.

Successful management of existing and emerging risks is essential to the long-term success of the Company. WABAG has established a risk management framework, to identify significant risks and determine whether they are being mitigated properly.

From tendering stage till closure of projects, the Company identifies both internal and external risks. During execution of these processes, a continuous risk monitoring system, is being followed, Enterprise Resource Planning (ERP), which helps us make more prudent decisions.

Our risk identification and management activities are continuous and ongoing. Each functional area is responsible for assessing, articulating and controlling relevant risks.

This includes scanning of the internal and external business environment to identify and review new and emerging risks. Such risks could lead to a future impact or emerging circumstances of existing risk, affecting the exposure in the short to medium term.

Risk events are assessed in their current state for the likelihood of occurrence, based on the level of threat and the vulnerability of controls. When we are not satisfied with current state of our general risk appetite or when we can present an unacceptable risk in relation to a specific risk appetite, we determine an appropriate risk exposure as a target state. We further develop mitigating measures to deliver this within a definite time frame. Risks that are part of our risk register have been re-evaluated during pandemic and been thoroughly analysed for change in risk grading. Additional risks like safety, productivity, working capital etc. which are attributable only to CovId-19 pandemic are included and appropriate mitigation strategy has been put in place. These are visible in our year end results.

Risks are identified by the Board, Audit Committee and Risk

Management and Monitoring Committee. These bodies ensure effective risk management across the Group Risk framework of WABAG. This is based on the concept of

‘three lines of defence’ wherein the management control is the first, oversight functions established by the management the second and independent assurance the third.

The Managing Director & Group CEO identifies various operational, business, commercial and external risks and implements processes to address them. Also, periodic review and audit are also conducted to mitigate these risks.

WABAG continues to adapt and plan for climate change. We continue to plan and prepare its significant and permanent impacts on the water cycle, our operations and the broader operating environment. This includes consideration of the long-term viability of water and wastewater services such as water abstraction, drinking water supply and treatment capability, drainage and sewer capacity, wastewater treatment and its discharge efficiency and effectiveness.

Cautionary Statement

The Management discussion and Analysis contains

‘forward-looking statements’, identified by words like ‘plans’,

‘expects’, ‘will’, ‘anticipates’,‘ believes’, ‘intends’, ‘projects’, ‘estimates’ and so on within the meaning of applicable securities laws and regulations concerning WABAG’s future business prospects and business profitability. All statements that address expectations or projections about the future, the Company’s strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. All these prospects are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward-looking statements.

The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, ability to manage growth, competition (both domestic and international), economic growth in India and the target countries worldwide, ability to attract and retain highly skilled professionals, time and cost overruns on contracts, ability to manage international operations, Government policies and actions with respect to investments, fiscal deficits, regulations, interest and other fiscal costs generally prevailing in the economy etc. Past performance may not be indicative of future performance. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future nor shall the Company update any forward-looking statements made from time to time by or on its behalf.