Felix Industries Ltd Management Discussions

i) Industry Structure and Development

India wastewater treatment market was valued at US$3.981 billion in 2020 and is expected to grow at a CAGR of 12.92% over the forecast period to reach a market size of US$9.320 billion by 2027.

Demand for water and wastewater treatment technology in India is anticipated to be driven by rapidly depleting freshwater sources and increasing wastewater complexity. However, the high cost of water treatment plants, as well as the impact of the COVID- 19 pandemic, is likely to stifle market expansion. Water treatment technology advancements are expected to create opportunities in the industry. The end-user industry includes Municipal, Food and Beverage, Pulp and Paper, Oil and Gas, etc.

Wastewater treatment is essential and utilized in many cities around India. Treatment technologies are used for a variety of purposes, including preliminary treatment, main and secondary treatment, tertiary treatment, biological nutrient removal (BNR), resource recovery, and energy generation.

Wastewater technology is widely utilized by municipal authorities in various cities across India for municipal wastewater treatment. According to NITI Aayog, the market for wastewater treatment plants in India was worth USD 2.4 billion in 2019 and is anticipated to rise to USD 4.3 billion by 2025 due to rising demand for municipal and sewage water treatment facilities across the country. The continual growth in the urban population in major Indian cities has created a demand for wastewater treatment facilities in the country to balance population with fresh water supply. According to a survey conducted by United Nations, 40.76 % of the Indian population would be living in cities by 2030, which will contribute to the market growth.

Furthermore, India is the worlds third-largest coal producer. According to the Indian Brand Equity Foundation (IBEF), in FY20, the coal production in India was 729.10 million metric tonnes (MT), and it is anticipated to rise to 304.88 MT in FY21. Coal accounts for around 70% of the power generated in India. Coal production consumes a large amount of water, therefore significant wastewater treatment is required. Clarifiers and filter disposable equipment are largely utilized by the mining sector to treat suspended particles. The COVID-19 pandemic disrupted mining production rates and expansions in 2020, thus affecting the adoption of advanced solid treatment equipment.

Impact of COVID-19 on the India wastewater treatment market

The COVID-19 outbreak has had an unfavourable impact on the Indian economy. The pandemic had a detrimental impact on the operations of numerous end-user sectors in the market examined, resulting in a decrease in the outflow of industrial wastewater. The outbreak caused a significant reduction in oil consumption. Due to the reduction in demand, the future of the oil market has become negative. This resulted in lower investments and a significant reduction in drilling efforts. As a result, the industrys need for water treatment technology has decreased. Shortage of labor and facility closures lowered food production levels in the food and beverage industry in 2020.

The food and beverage sector contributes 3% of Indias GDP and is the single largest employer in the country, employing over 7.3 million people. Food products other than - staple foods and ready-to-eat foods had large declines due to low food consumption at restaurants and hotels. These developments hampered the expansion of the food sector. Furthermore, in the pulp and paper sector, decreased packaging material imports by existing clients resulted in an excess local supply of pulp and paper materials in the manufacturing countries. The industry expansion is being hampered by the oversupply problem.

(Source : https://www.knowledge-sourcing.com/report/india-wastewater-treatment- market)

ii) Opportunities and Threats

Indias wastewater treatment plants market stood at USD 2.4 billion in 2019 and is projected to reach USD 4.3 billion by 2025 owing to increasing demand for municipal water as well as sewage water treatment plants across the country, according to Amitabh Kant, CEO, NITI Aayog.

"There will be a huge gap of investments in this market and the private sector can fill this gap in terms of technology selection, fund rotation and implementation," Kant said while addressing the valedictory session 6th Edition of India Industry Water Conclave & 8th Edition of FICCI Water Awards, here yesterday.

In his address, the NITI Aayog CEO said that climate change along with rapid population and economic growth is resulting in an increased demand for water and food, potentially leading to over stressing not only for our present resources but also jeopardizing the resources for future generations.

To achieve the SDG 6.3 targets significant investments will be required in new infrastructure, grey and green and locally appropriate combinations along with appropriate technologies to increase the treatment in use of water. Inadequate sanitation resulting in poor hygienic practice leads to huge economic and social losses for the country, he said.

(Source:https://ficci.in/ficci-in-news-

page.asp?nid=28979#:~:text=India's%20wastewater%20treatment%20plants%

20market%20stood%20at%20USD%202.4%20billion,Kant%2C%20CEO%2C%20

NITI%20Aayog.)

iii) Risk and Concerns

Pre-empting risks and activating a mitigation plan has been a priority on the managements agenda. As during the starting of the financial year, due to COVID-19 pandemic was a difficult year to start which overall affected the business and the company has faced some insufficient capital investments in processing equipments being a manufacturing company and the debtors cycle processes was slow. The risk factors raised faced can be solved by taking different steps which are in favorable to the industry.

iv) Segment wise performance

FELIX INDUSTRIES LIMITED (FIL) is a company that offers total water and environmental solutions to the end customers. It is supported by a robust - infrastructure of ISO certified manufacturing facilities and provide the best after-sales network in form of Operation & Maintenance to the companies. It offers complete range of solutions for water , waste water management by way of Reverse Osmosis Systems, Effluent Recycling System, Zero Liquid Discharge System upto 90% plus recovery. Today more than ever, to meet the rising demand for water, it is imperative that water be effectively managed not just at the source but throughout its life cycle. Now our focus is towards meeting sustainable goals. As far as E-waste is concerned the sector is growing in a faster manner as in this sector government involvement is more and they are taking different steps for recycling of E-Waste. The company is also into trading of industrial piping and is providing end to end services. During the year due to COVID-19 we have researched and developed few more technologies for all the upcoming projects which can be beneficial to the end users.

v) Internal Control system and their adequacy

The Company has a proper and adequate system of internal control and ensures that all assets are safeguard and protected against from unauthorized use or disposition, which has been looked after by Ritesh Patel, Managing Director of the Company

vi) 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 head overview of Companys financial performance.

vii) Human Resources/ Industrial Relations

Relation between management and the employees at all level remained healthy and cordial throughout the year. The management and the employees are dedicated to achieve the corporate objectives and the targets set before the company.

viii) Details of Significant Changes in key financial ratios

There is a slight significant change in the key financial ratios for the year 2021-22 which are as below:

Key Ratios:

Ratios	2021-22	2020-21
Current Ration	1.30	1.05
Inventory Turnover	3.61	1.31
Debt Service Retio	0.41	-0.13
Current Ratio	1.30	1.77
Debt Equity Ratio	1.04	0.72
Net Profit Margin	6.70	-20.27%

ix) Cautionary Statement

Statement in this management Discussion and Analysis describing the companys objectives, projections, estimated and expectations are "forward looking statements" Actual results might differ, materially from those anticipated because of changing ground realities.

By Order of the Board of Directors For, Felix Industries Limited

Regd. office: 208, Devshruti Complex,
Opp. HCGHospital,
Nr. Mithakhali Cross Roads
Ellisbridge, Ahmedabad-380006.
Date: 13/08/2022
Place: Ahmedabad
Sd/-	Sd/-
Ritesh Patel	Vinay Patel
Managing Director	Whole Time Director
(DIN: 05350896)	(DIN :08377751)