You should read the following discussion of our financial condition and results of operations together with our restated financial statements for the financial year ended on 31st March 2023, 31st March 2022and 31st March 2021 including the notes and significant accounting policies thereto and the reports thereon, which appear under the "Financial Information" starting on page no. 142 in this Draft Prospectus. You should also see the section titled "Risk Factors" beginning on page 17 of this draft prospectus, which discusses a numberof factors and contingencies that could impact our financial condition and results of operations. The following discussion relates to our Company, unless otherwise stated, is based on restated audited financial statements.
These financial statements have been prepared in accordance with Ind GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditors dated October12,2022 which is included under the section titled "Financial Information as Restated" beginning on page 142 of this draft prospectus. The restated financial statementshave been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. We do not provide a reconciliation of our restated financial statements to US GAAP or IFRS and we have not otherwise quantified or identified the impact of the differences between Indian GAAP and U.S. GAAP or IFRS as applied to our restated financial statements.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" beginning on page 17 and 10 respectively in this draft prospectus
Accordingly, the degree to which the financial statements in this draft prospectus will provide meaningful information depends entirely on such potential investors level of familiarity with Indian accounting practices. Our F.Y. ends on March 31 of eachyear; therefore, all references to a particular fiscal are to the twelve-month period ended March 31 of that year unless otherwise specified. Please also refer to section titled "Certain Conventions, Use of Financial, Industry and Market Data and Currency Presentation" beginning on page 9 of this draft prospectus.
BUSINESS OVERVIEW
We are an engineering company focused on environmental solutions and provides waste management solutions across waste types and across the value chain. Our Company has been a forerunner in providing sustainable waste management solutions in India since 2008. Incorporated by technocrats our focus primarily has been on developing robust, cost effective & environment friendly technologies that are simple to operate. We have proven technology and capability of successfully running one of India?s first Waste to Energy (WTE) plant developed on anaerobic biomethanation technology.
The anaerobic bio methanation technique has been recognized as a promising technology as per National Master Plan issued by Government of India, We have also set up a MSW processing and disposal plant in Solapur, Maharashtra to convert Municipal Solid Waste (MSW) into electricity and compost. The plant has been operational since 2013 with the plant being recognized as one of the case studies for best practices for MSWM under the Swachh Bharat Mission and various other reports. With the data collected over the years, our company is now a front runner for various EPC opportunities in the country and therefore providing solutions encompassing entire value chain for waste management.
Our Business verticals includes Build Own Operate Transfer (BOOT) model, Engineering Procurement and Commissioning (EPC) model and Supply of key equipment.
Waste Management is a very huge opportunity in India due to its demographics and consumption pattern. The sector is in its growth stage with very few players having the right technology and capability to provide sustainable solutions. Hence we are determined to enter into and become one of the leading technology & service providers in Asian, Middle Eastern, and African region for mitigating waste management challenges by promoting sustainable technological innovations right from door-step and community level solutions to large scale end-to-end infrastructure solutions for municipal waste management.
Our projects are implemented keeping in the mind positive social impact on environment & well-being for society at large. Driven by principles of circular economy, we are committed to recover maximum resources from waste thereby reducing burden on landfills.
SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED PERIOD
In the opinion of the Board of Directors of our Company, since the date of the last audited period i.e., March 31, 2023 as disclosed in this draft prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the trading or profitability of our Company or the value of its assets or its ability to pay its material liabilities within thenext twelve months except as follows:
1. The Company received Patent Certificate dated July 10, 2023 issued by The Patent Office, Government of India towards invention entitled "Integrated Process for pre-treatment and Anaerobic Digestion of Waste and Apparatus used therein".
KEY FACTORS AFFECTING OUR RESULTS OF OPERATION
Changes in laws and regulations relating to the Sectors in which we operate;
Emergence of alternate products which may be technologically advanced and our inability to keep pace with thechange
Political instability or changes in the Government in India or in the government of the states where we operate couldcause us significant adverse effects;
Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;
Any failure to comply with the financial and restrictive covenants under our financing arrangements;
Our ability to retain and hire key employees or maintain good relations with our workforce;
Impact of any reduction in sales of our products;
Increased competition in industries/sector in which we operate;
Our ability to expand our geographical area of operation;
General economic and business conditions in India and in the markets in which we operate and in the local, regionaland national economies;
Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;
Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition;
Our inability to successfully diversify our product offerings may adversely affect our growth and negatively impactour profitability; and
COVID-19 pandemic and similar circumstances
SIGNIFICANT ACCOUNTING POLICIES:
Our significant accounting policies are described in the section entitled "Financial Statements as Restated" beginning from page no. 142 of the draft prospectus.
SUMMARY OF THE RESULTS OF OPERATION:
The following table sets forth select financial data from restated profit and loss accounts for the financial year ended on 31st March 2023,31st March 2022 and 31st March 2021 and the components of which are also expressed as a percentage of total income for such periods.
(Rs in Lakhs)
Particulars | March 31, 2023 | % of Total Income | March 31, 2022 | % of Total Income | March 31, 2021 | % of Total Income |
Revenue from operations | 2,471.93 | 97.55 | 1461.37 | 83.19 | 1252.38 | 79.36 |
Other income | 62.18 | 2.45 | 295.30 | 16.81 | 325.80 | 20.64 |
Total Income | 2,534.10 | 100.00 | 1756.67 | 100.00 | 1578.18 | 100.00 |
Expenses: | ||||||
Direct Expenses | 526.08 | 2076 | 687.25 | 39.12 | 774.97 | 49.11 |
Changes in inventories of finished | 28.00 | 1.10 | -16.85 | -0.96 | 11.99 | 0.76 |
goods and work in progress | ||||||
Employee benefits expense | 359.06 | 14.17 | 275.40 | 15.68 | 227.70 | 14.43 |
Finance costs | 187.95 | 7.42 | 152.74 | 8.69 | 131.42 | 8.33 |
Depreciation and amortisation | 495.82 | 19.57 | 595.99 | 33.93 | 644.69 | 40.85 |
Other expenses | 471.52 | 18.61 | 596.78 | 33.97 | 236.63 | 14.99 |
Total expenses | 2,068.43 | 81.62 | 2291.32 | 130.44 | 2027.40 | 128.46 |
Profit / (Loss) before Extraordinary | 465.68 | 18.38 | -534.65 | -30.44 | -449.22 | -28.46 |
Items, Prior Period and Tax | ||||||
Extraordinary Items | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Prior Period Expenses | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Profit before tax | 465.68 | 18.38 | -534.65 | -30.44 | -449.22 | -28.46 |
Tax expense: | ||||||
(1) Current tax | 82.56 | 3.26 | 0.00 | 0.00 | 0.00 | 0.00 |
(2) Deferred tax | 17.73 | 0.70 | 0.00 | 0.00 | 0.00 | 0.00 |
(2) Short/(Excess) provision of tax of earlier years | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Profit / (Loss) before Share of Profit / | 365.38 | 14.42 | -534.65 | -30.44 | -449.22 | -28.46 |
(Loss) of Associates | ||||||
Share of Profit / (Loss) in Associates | 0.00 | 0.00 | -0.38 | -0.02 | -0.14 | -0.01 |
Profit (Loss) for the period | 365.38 | 14.42 | -535.03 | -30.46 | -449.37 | -28.47 |
PERFORMANCE OF THE COMPANY FOR THE PERIOD BEGINNING FROM APRIL 1, 2022 TO MARCH 31,2023.
Revenue: The revenue for the year has increased significantly over the previous year on account of the following developments:
MOU with White Organic Retail Limited (WORL) The Company has entered into a Memorandum of Understanding with WORL on December 28, 2022, Mumbai to provide comprehensive solutions for agricultural waste management in the states of Punjab, Haryana and Maharashtra. Salient features of the MOU is given below :
WORL is in the business of retail and wholesale trading of agro produce, processing of Agriculture products and allied activities. With an objective to expand its footprints in agro waste processing, WORL has decided to collaborate with ORS to acquire projects in Agricultural waste management sector as ORS has 14 years of extensive experience in building and managing multiple waste management projects. As per the terms of the MOU, WORL has agreed to pay a sum of Rs. 6 crores (Rs. 60 lakhs to ORS and balance Rs. 540 lakhs to Solapur Bioenergy System Private Limited (SBSPL) towards one time technological and operational sub-licensee fee for exclusive partnership rights for development of 1,000 MT/day (aggregate) processing capacity plants in next 3 years. ORS shall be the exclusive EPC partner for the said projects. The overall value of such contracts is estimated to be over Rs. 300 crores to be developed over the next 3 years. Monetisation of Palakkad project - ORS had entered into Engineering Procurement and Construction (EPC) Contract on December 14, 2020 with Blue Planet Palakkad Waste Solutions Private Limited (Blue Planet) for setup of 200 TPD Waste Processing facility at Palakkad, Kerala (please refer page 97 of the draft Prospectus). Blue Planet belongs to the Blue Planet Environmental Solutions group based in Singapore which specialises providing waste management and processing solutions for municipal solid waste (MSW), plastic / medical / e-waste etc. In this project, Blue Planet group is responsible for meeting the financial capacity requirements and ORS responsible for meeting the technical capacity requirements.
The Palakkad project was facing regulatory delays beyond the control of the parties concerned. Given that ORS had been continuously deploying resources for the project, and has now other multiple project opportunities (like the one mentioned in (a) above). For better optimization, ORS has requested the Developer for an early resolution for services provided till date by ORS with an understanding to review the project once the Developers permissions are received and the land is allotted. Based on discussions, it was decided to amend the EPC Agreement for better utilisation of respective resources and accordingly amendment agreement dated December 31, 2022 was entered into between the parties. The salient features of the amendment agreement are given below :
The Purchaser (i.e. Blue Planet) and Contractor (i.e. ORS) have noted and agreed that despite constant efforts by each Party, there has been a significant delay in land allotment for the Project by KSIDC, and consequently the Contractor has only carried out the Basic Engineering and Detailed Engineering works under the EPC Contract.
The parties agree and acknowledge that the Contractor has completed all the basic and detailed engineering works.
The Purchaser hereby agrees to pay to the Contractor, the Contract Price in consideration of the performance by the Contractor of its obligations identified under this Contract Agreement. The Contract Price shall be an amount of Rs. 13,28,71,000/-, exclusive of GST, payable in relation to the Basic Engineering (Rs. 3,28,71,000/-) and Detailed Engineering works (Rs. 10,00,00,000/-).
Execution of project at Kalyan Dombivali Municipal Corporation (KDMC) The company has commenced execution of EPC contract as per terms of agreement with KDMC and revenues from the project have started to accrue from the FY 2023.
Expenses: The Company and its subsidiaries have continued incurring expenses towards plant operations, engineering services and project management of the projects in hand. However, due to monetization of technology development through the MOU with WORL and the amendment of the EPC agreement for Palakkad, the overall operational expenses have reduced and resulted into an operational profit to the tune of Rs. 365.38 lakhs (including depreciation) and Rs. 861.20 lakhs (before depreciation) for financial year ended as on March 31, 2023.
Net worth: The net worth of the Company as on March 31, 2023, was Rs. 2,550.07 lakhs.
COMPARISON OF THE FINANCIAL PERFORMANCE OF FISCAL 2023 WITH FISCAL 2022
Total Income: During the FY 2022-23 the restated revenue from operation of the company has increased to Rs. 2,471.93lakhs as against Rs. 1,461.37 lakhs in the FY 2021-22. This represents a 69% increase YoY. This increase was mainly due to increase in volume of operation.
Other Income : Out of the total restated income, restated Other Income comprise an amount of Rs.62.18 lakhs amounting to over 2% of the restated total income in FY 2022-23 and restated other income for FY 2021-22 stood at Rs. 295.30lakhs which was about 16% of the restated total income. Besides the normal interest income, it included an amount of Rs. 50.75 lakhs in FY 2022-23 pertaining to profit of sale of assets and sundry balance written back which are non-recurring in nature. In FY 2021-22, Rs. 283.77 lakhs pertains to profit of sale of assets and sundry balance written back which are non-recurring in nature.
Total Expenses: The total restated expenditure excluding depreciation, interest and tax amount, for the FY 2022-23 has decreased to Rs.1,384.65 lakhs as against Rs. 1,542.59 lakhs in the FY 2021-22. This represents a 10% decrease YoY. This decrease was mainly due to efficiency in operations at the plant in Solapur
Direct Cost & Changes in Inventories of Finished Goods and Work in Progress: The restated Direct Cost & Changes in Inventories of Finished Goods and Work in Progress for the FY 2022-2023 has reduced to Rs.554.08 lakhs as against Rs. 670.41 lakhs in the FY 2021-22. This represents a 17% decrease YoY. This decrease was mainly due to efficiency in managing inventory during the FY.
Employee Benefit Expenses: The restated Employee Benefit Expenses for the FY 2022-23 has increased to Rs.359.06 lakhs as against Rs. 275.40 lakhs in the FY 2021-22. This represents a 30% increase YoY. This increase was mainly due to increased investment in manpower made for future growth during the FY.
Finance Cost: The restated Finance Cost for the FY 2022-23 has increased to Rs.187.95 lakhs as against Rs. 152.74 lakhs in the FY 2021-22 which represents a 23% increase YoY.
Other Expenses: The restated Other Expenses for the FY 2022-23 has decreased to Rs.471.52 lakhs as against Rs. 596.78 lakhs in the FY 2021-22. This represents a 21% decrease YoY. This decrease was mainly due to reduction in bad debts and balance written off during the FY 2023.
Profit/ (Loss) for the period: The restated profit after tax for FY 2022-23 has increased to Rs.365.38 lakhs as against loss of Rs.535.03 lakhs in the FY 2021-22. This increase was mainly due to significant increase in revenues from monetization of Palakkad project and MOU with WORL along with reduction in expenses during the year.
COMPARISON OF THE FINANCIAL PERFORMANCE OF FISCAL 2022 WITH FISCAL 2021
Total Income: During the FY 2021-22 the restated revenue from operation of the company has increased to Rs. 1,461.37 lakhs as against Rs. 1,252.38 lakhs in the FY 2020-21. This represents a 17% increase YoY. This increase was mainly due to increase in volume of operation.
Other Income: Out of the total restated income, restated Other Income comprise an amount of Rs. 295.30 lakhs amounting to over 16% of the restated total income in FY 2021-22 and restated other income for FY 2020-21 stood at Rs. 325.80 lakhs which was about 20% of the restated total income. Besides the normal interest income, it included an amount of Rs. 283.77 lakhs in FY 2021-22 pertaining to profit of sale of assets and sundry balance written back which are non-recurring in nature. In FY 2020-21, sundry balance written back amounted to Rs. 303.76 lakhs which are non-recurring in nature.
Total Expenses: The total restated expenditure excluding depreciation, interest and tax amount, for the FY 2021-22 has increasedto Rs.1,542.59 lakhs as against Rs.1,251.29 lakhs in the FY 2020-21. This represents a 23% increase YoY. This increase was mainly due to increase in volume of operation and expenses incurred for future growth during the FY.
Direct Cost & Changes in Inventories of Finished Goods and Work in Progress: The restated Direct Cost & Changes in Inventories of Finished Goods and Work in Progress for the FY 2021-2022 has reduced to Rs. 670.41 lakhs as against Rs.786.96 lakhs in the FY 2020-21. This represents a 15% decrease YoY. This decrease was mainly due to efficiency in managing inventory during the FY.
Employee Benefit Expenses: The restated Employee Benefit Expenses for the FY 2021-22 has increased to Rs.275.40 lakhs as against Rs.227.70 lakhs in the FY 2020-21. This represents a 21% increase YoY. This increase was mainly due to increase in volume of operation and hiring made for future growth during the FY.
Finance Cost: The restated Finance Cost for the FY 2021-22 has increased to Rs.152.74 lakhs as against Rs.131.42 lakhs in the FY 2020-21 which represents a 16% increase YoY.
Other Expenses: The restated Other Expenses for the FY 2021-22 has increased to Rs.596.78 lakhs as against Rs.236.63 lakhs in theFY 2020-21. This represents a 152% increase YoY. This increase was mainly due to increase in volume of operations, increased travelling & other expenses for new orders and provisioning of receivables during the FY.
Profit/ (Loss) for the period: The restated loss after tax for FY 2021-22 has increased to Rs.535.03 lakhs as against Rs.449.37 lakhs in the FY 2020-21. This represents a 19% increase YoY. This increase was mainly due to more than proportionate increase in other costs as highlighted above.
AN ANALYSIS OF REASONS FOR THE CHANGES IN SIGNIFICANT ITEMS OF INCOME AND EXPENDITURE IS GIVEN HEREUNDER:
1. Unusual or infrequent events or transactions
Except as described in this Draft Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.
2. Significant economic changes that materially affected or are likely to affect income from continuing operations.
There are no significant economic changes that may materially affect or likely to affect income from continuing operationsexcept the Covid-19 pandemic which is still to be controlled. However, Government policies governing the sector in which we operate as well as the overall growth of the Indian economy has a significant bearing on our operations. Major changesin these factors can significantly impact income from continuing operations.
3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.
Apart from the risks as disclosed under Section "Risk Factors" beginning on page 17 in the draft prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.
4. Expected Future changes in relationship between costs and revenues
Our Company?s future costs and revenues will be determined by demand/supply situation and Government Policies.
5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of newproducts or increased sales prices
Changes in revenue in the last financial years are as explained in the part "Comparison of the financial performance" ofabove.
6. Total turnover of each major industry segment in which our Company operates
The Company is mainly engaged in Construction, Development and Maintenance of Waste-to-Energy projects, particularly in the Municipal Solid Waste sector. Therefore, there are no separate reportable segments.
7. Status of any publicly announced New Products or Business Segment
Our Company has not announced any new product except as disclosed in the Draft Prospectus.
8. Seasonality of business
We do not believe our business to be seasonal.
9. Competitive conditions
Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on page 76 and 86 respectively of the draft prospectus.
10. Details of material developments after the date of last balance sheet i.e., March 31, 2023.
Except as mentioned in this draft prospectus, no material circumstances have arisen since the date of last financial statement until the date of filing the draft prospectus, which materially and adversely affect or are likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months.
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Securities Support WhatsApp Number
+91 9892691696
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.