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INDUSTRY STRUCTURE, DEVELOPMENTS, OPPORTUNITIES, THREATS AND INDUSTRY OUTLOOK

Global Water Overview

Life on Earth depends on water. Water is linked to each aspect of development and almost every Sustainable

Development Goal (SDG) with significant focus on SDG 6.

It is crucial for healthy ecosystems, socio-economic growth, food and energy production, and human survival, which is at the core of sustainable development. About 71% of the Earths surface is covered with water and the oceans hold

96.5% of it. A burgeoning population, changing lifestyle patterns, rapid urbanisation, speedy industrialisation and other drastic changes in the climate are constantly putting this essential resource for survival under tremendous stress. Thus, reliable water supply is not available to a quarter of the population globally. By 2030, water demand is forecast to increase by 40%.

Trends in the Global Water Sector

Water Scarcity

Water scarcity is a pressing global issue, impacting 2 Billion people without safe drinking water and 3.6 Billion without proper sanitation. Water is unavailable for every 1 in 3 Africans. Around 400 Million people in Sub-Saharan Africa need access to drinking water. India has a population of around 1.38 Billion people, but over 6% of them lack access to clean and safe water.

Urbanisation

Globally, urbanisation will continue to be a key factor in

2023. An additional 2.5 Billion people from the rural areas are expected to migrate to cities by 2050 to find opportunity to overcome conflict, poverty, and climate change.

Growing Population

Increasing number of people are living in water deficit areas.

About a third of the worlds population already deals with water stress, or limited access to clean water. It is expected that in a few years, this number will increase to two-thirds of the worlds population. To put it into perspective, the quantum of water required for drinking and sanitation becomes even more significant. Ensuring an adequate supply of water for these basic human needs will be a pressing challenge as the population continues to grow.

Industrialisation

Rapid industrialisation not only brings economic growth but also environmental and social challenges, necessitating sustainable practices and responsible approaches. Industries consume 20% of global freshwater and also pollute water with 300-500 Million tonnes of harmful waste annually. To secure a sustainable future, most of them are adopting efficient technologies and management systems to minimise resource usage.

Source: https://www.un.org/waterforlifedecade/green_economy_2011/pdf/ info_brief_water_and_industry_eng.pdf

INCREASED GLOBAL WATER STRESS

The worlds demand for water is expected to surge in the next few decades. Accelerating urbanisation, rapidly growing population, climate change, and economic development are placing pressure on water systems.

More than 2 Billion people (26% of the population) live in water-stressed areas and suffer from a lack of access to safe drinking water and hygiene. Another 3.6 Billion (46%) lack access to safely managed sanitation, according to the UNESCO.

By 2050, the number of countries facing water stress could increase, with a combined population of 4 Billion people - around 40% of the expected global population of 9.4 Billion.

Lack of water continues to be a major cause of concern for many nations. Around 44 countries would face either ‘extremely high or ‘high water-stress levels by 2040.

Source: https://www.statista.com/chart/26140/water-stress-projections-global/, https:// www.unesco.org/en/articles/imminent-risk-global-water-crisis-warns-un-world-water-development-report-2023

According to a study by the Organisation for Economic and Cooperative Development (OECD), worldwide water demand is expected to increase by 55%. The foremost demand is anticipated to come from emerging and developing countries and would be driven by key aspects like manufacturing sectors, thermal electricity, and domestic use between 2000 and 2050.

Source: https://www.oecd.org/env/indicators-modelling-outlooks/oecdenvironmentaloutlookto2050theconsequencesofinaction-keyfactsandfigures.htm

GLOBAL WATER TREATMENT INDUSTRY

The sustainability of water is an absolute necessity. The demand from industries, rising health consciousness, scarcity, climate change, and stringent environment norms, have all contributed to the growth of the global water treatment market over the past few years. This prompted the development of facilities to treat wastewater using innovative technologies before letting it out to the environment. The main goals of the water treatment process are to improve the quality of the water for the intended end use by removing pollutants and undesired components or by lowering the concentration of hazardous substances. The global wastewater treatment plant market is estimated to USD 125 Billion in 2021 and is expected to rise to USD 179 Billion at a CAGR of 6% over 2021-27.

https://www.arizton.com/market-reports/wastewater-treatment-plant-market

Water withdrawal exceeding consumption is due to inefficient practices, distribution losses, and additional water needs for industry. Unused water includes treated wastewater for non-potable use and untreated wastewater requiring proper management to minimise environmental impact and ensure sustainability.

GLOBAL WASTEWATER MARKET

The global wastewater treatment market is fully developed in the Asia- Pacific region, Europe, and North America. On the other hand, the Middle East & Africa, and Latin America are high-potential markets with plenty of room for expansion. The wastewater treatment plant market in the Middle East & Africa region was valued at USD 13.05 Billion in 2021 and is expected to grow to 18.56 Billion at a CAGR 6.04%

GLOBAL INDUSTRIAL WASTEWATER MARKET

The global industrial wastewater market was valued at USD

106.6 Billion in 2021 and is expected to register a CAGR of 5% to cross USD 193.7 Billion by 2031.

The primary factor which is boosting the demand for effective industrial wastewater treatment is increasing environmental concerns coupled with stringent Government regulation. Industrial wastewater treatment is the process of converting wastewater from different industries into usable soft water for processing. The major benefits of using wastewater treatment systems in the industrial sector are waste reduction, energy production, fertiliser production, and the provision of clean and processed water.

The industrial wastewater treatment market in the Asia-

Pacific Region is driven by the implementation of a tertiary treatment plant. It represents a resource recovery model, where the entire wastewater undergoes thorough treatment and is subsequently reintroduced into society, specifically to industries for reuse. This approach not only helps in conserving water resources but also promotes sustainable practices by maximising the utilisation of treated wastewater.

GLOBAL DESALINATION MARKET

Water desalination is a technique in which impurities and excess salts are removed from the water, making it safe for various applications. Seawater or brackish water can be purified using the desalination technique. The increasing water demand, urbanisation, and rising population are some of the main drivers for the growing adoption of water desalination plants. The global desalination market was valued at USD 17.32 Billion in 2023 and is expected to register a CAGR of 9% to cross USD 23.22 Billion by 2027.

The increasing instances of water scarcity and droughts worldwide have made water desalination a reliable alternative choice to meet the rising water demands of the growing population. The Middle East & Africa dominate the global desalination industry. Furthermore, they have opted for large-scale desalination to cut down their dependency on increasingly costly imported water. The Asia-Pacific region is expected to grow due to escalating water scarcity combined with increasing water demand owing to rapid urbanisation.

Primary Desalination Market Growth Drivers

Growing world population Depletion of freshwater resources

Rapid urbanisation and industrialisation of developing economies Requirement of large volume of water in rapidly growing industrial sectors Growth adoption in coastal regions for Municipal and Industrial

Major Challenges in the Desalination Market

High CAPEX involved in setting up a desalination plant Disposal of brine High energy or operating cost

WATER TRENDS ACROSS REGIONS

Asia-Pacific Region

The heavily populated Asia-Pacific region is rapidly advancing in terms of urbanisation, energy production, agricultural development, and industrialisation. All these are crucial elements for the social and economic development of the region. These aspects may act as a driving force that may lead to unfavourable situations of water stress. It is also likely to reduce the capacity of the region to maintain a proper balance in the socio-economic need for water development. Around 1.5 Billion people in rural areas and 600 Million more in urban areas still lack adequate water supply and sanitation.

Climate change-related disasters, which put a persistent strain on groundwater resources, worsen this situation. Unsustainable water use is a serious issue in this region. Groundwater use is estimated to rise to 30% by 2030. Further, the evolution of megacities from cities will put additional pressure on water resources as the development of infrastructure struggles to keep pace.

Strategy 2030

The Asian Development Bank (ADB), World Bank, and other multi-lateral institutions have set what is called ‘Strategy 2030. Under this, the ADB is determined to eliminate extreme poverty and expand its vision to accomplish a prosperous, comprehensive, resilient, and sustainable Asia-Pacific region.

Rural Household Water Security: Growing rural household water security is primarily appropriate to the Asia-Pacific as, even with urbanisation trends, approximately half of the regions households are still in rural communities Economic Water Security: Economic water security is due to a lack of water infrastructure in general or the poor management of water resources where infrastructure is in place Urban Water Security: The Asia-Pacific region is quickly growing and urbanising. Asian cities have become important drivers of economic growth. Water plays a vital role in maintaining sustainable, liveable, buoyant, and productive cities Environmental Water Security: In order to ensure water security and the sustainability of water use in the Asia-Pacific region, it is critical to maintain the health of rivers, wetlands, groundwater systems and track the development of aquatic ecosystems

A Step Towards Water Security for Tomorrow

India aims at revitalisation of 200 water bodies in the capital and upsurge the groundwater level in the surrounding areas By 2030, Malaysia is planning to invest in reviving and building new water infrastructure with a tentative investment of USD 3.6 Billion

The World Bank is supporting Bangladesh with USD

200 Million to help 3.6 Million people with access to hygiene and clean water Mongolia plans to invest USD 300 Million for wastewater management at power plants

Source: https://newsonair.gov.in/News?title=Bangladesh-receives-USD-200-mn-from-World-Bank-for-safe-water-and-sanitation-services-in-Rural-areas&id=409558

Source: https://www.adb.org/news/government-mongolia-and-adb-sign-wastewater-treatment-improvement-project-five-additional

INDIA – THE WATER LAND

Water is a limited resource. With only about 0.3% of the worlds water being fresh, India has access to only 4% of the worlds freshwater resources. With a population of 1.3 Billion, which is further expected to grow to 1.7 Billion by 2050, India finds itself incapable to serve the vast majority with clean and safe water. It is distressing to note that 91 Million people (6% of the population) lack access to safe water, and 746 Million people (54%) lack access to safely managed household sanitation facilities. As per NITI Aayog, 40% of Indias population will not have access to drinking water by 2030.

Water supply in India comes from two primary sources: rivers and groundwater. However, the rivers are shrinking because of pollution and industrialisation, while the population keeps growing, pushing us towards overuse of groundwater resources. Groundwater is one of the most important sources for irrigation and domestic water supply in the rural and urban areas. However, overexploitation of this valuable resource has led to its depletion.

Making the Country from Water Stressed to Water Secure

Over the last few years, the Indian Government has been ambitiously investing and promoting the water sector; with a vision to make the country ‘Water Secure by 2030.

Allocated USD 11.86 Billion for the water sector in FY 2023-24 Budget.

WASTEWATER GENERATION

Wastewater treatment refers to the elimination of contaminants from sewage or wastewater to make it recyclable, reusable, and safe for the environment. After the treatment, the wastewater is discharged into water bodies without any risk of pollution. The increasing environmental compliances, rising water pollution, scarcity of water, and demand for wastewater services from different industries drive the growth of the market. The Wastewater Treatment Plant market size was estimated to be USD 15 Billion in 2021 witnessing a CAGR of 6.9% over 2021-26 to reach USD 21 Billion.

The Way Forward – Governmental Schemes in India

Water management has received significant attention from the Indian Government. Initiatives like Aatmanirbhar Bharat and

‘Make in India are both heavily reliant on the connectivity, accessibility, and availability of water. The Government has launched a series of programmes to safeguard water security and sustainability. Some of these are as follows:

AMRUT 2.0

(Atal Mission for Rejuvenation and Urban Transformation)

AMRUT 2.0 started with an outlay of USD 36.40

Billion, which will promote the circular economy of water through development of a City Water Balance Plan (CWBP) for each city focussing on the recycling/reuse of treated sewage, rejuvenation of water bodies and water conservation.

The Objectives of AMRUT 2.0

Provide 100% water supply to all households in around 4,700 ULBs (Urban local bodies) Rejuvenation of water bodies Development of gardens and green spaces 100% coverage of sewage/sewage management in 500 AMRUT cities By 2030, SDG 6 intends to significantly improve water usage efficiency across all sectors, ensure sustainable freshwater withdrawals, and significantly reduce the number of people who experience water scarcity.

JAL SHAKTI ABHIYAN

Catch the Rain (JSA: CTR)

The Government launched the ‘Jal Shakti Abhiyan: Catch the Rain campaign as a Jan Andolan (mass movement) to encourage water conservation at the grassroots level via the active participation of people.

The Objectives of Jal Shakti Abhiyan

Water conservation and rainwater harvesting Renewal of traditional and other water bodies/tanks Reuse and renewal of bore wells Watershed development Intensive afforestation

The objective of Jal Jeevan Mission

Jal Jeevan Mission will resolve the lack of tap water connections Development of piped water supply infrastructure, reliable supply source and treatment plants Rainwater harvesting

SWACHH BHARAT MISSION - URBAN 2.0

The Swachh Bharat Mission aims to achieve the vision of ‘Garbage Free Cities over the next five years. The outline emphasises on key focus areas of source segregation, collection, transportation, and processing of waste, plastic waste management, and remediation of legacy dumpsites to truly transform the urban landscape of India.

ATAL BHUJAL YOJANA

The Atal Bhujal Yojana has been launched in the water-stressed states of India. This includes Gujarat, Haryana, Karnataka, Maharashtra, Uttar Pradesh, Rajasthan, and Madhya Pradesh where the groundwater levels are low.

In total, the scheme will cover 78 districts, 193 blocks, and more than 8,300 gram panchayats across these states.

The Objectives of ATAL BHUJAL YOJANA

Boost groundwater levels and create sufficient water storage for agricultural purposes Focus on the renewal of surface water bodies to increase groundwater levels, especially in rural areas Enable Indian states to recharge groundwater sources and ensure efficient use of water by involving people at the local level

NAMAMI GANGE PROGRAMME

The Namami Gange Programme is an Integrated Conservation Mission, approved as a ‘Flagship Programme by the Union Government in June 2014. The National Mission for Clean Ganga was initiated with a budget of USD 2.43 Billion with the objective of rejuvenating the Ganga basin, which has gone on to become a perennial attraction for many countries that have expertise in river rejuvenation.

43 Projects under the mission were supported by the World Bank funding.

NMCG 2.0 is initiated with an outlay of USD 2.68 Billion.

NATIONAL RIVER CONSERVATION DIRECTORATE (NRCD)

The NRCD aims to reduce the pollution load in rivers through various pollution abatement works, thereby improving their water quality. It is an initiative by the Indian Government to address the challenge of river pollution.

NATIONAL INFRASTRUCTURE PIPELINE (NIP)

The National Infrastructure Pipeline (NIP) aims to invest in infrastructure across sectors such as water, sanitation, energy, and social and commercial properties and enabling the economic development of the country.

MISSION AMRIT SAROVAR

Mission Amrit Sarovar was launched on National Panchayati Raj Day on April 24, 2022, as part of the Azadi ka Amrit Mahotsav celebration. The objective of this mission is to conserve water for the future. The mission is also aimed at developing and rejuvenating 75 water bodies in each district of the country.

NATIONAL FRAMEWORK ON RECYCLE & REUSE - SRTW

Widespread and Safe Reuse of Treated Water in India that reduces the pressure on scarce freshwater resources, reduces pollution of the environment and risks to public health, and achieves socio-economic benefits by adopting a sustainable circular economy approach.

Other Government Initiatives

ARTH GANGA

Arth Ganga implies a sustainable development model with a focus on economic activities related to Ganga.

Government is Working on Six Models under the Programme:

Zero Budget Natural Farming, which comprises chemical-free farming for 10 km on both banks of the river and elevation of cow dung as manure through the Govardhan Yojana

The second phase is the monetisation and reuse of sludge and wastewater, which seeks to reuse treated water for irrigation industries, and revenue generation for urban local bodies (ULBs) The third phase is the chances for livelihood generation by creating haats where people can sell local produce, medicinal plants, and Ayurveda Fourth phase is to upsurge public contribution by increasing coordination among the stakeholders associated with the river The fifth model seeks to encourage cultural heritage and tourism in and around the Ganges through boat tours, adventure sports, and yoga activities The final model strives to encourage institutional building by empowering local administration for improved water governance

THE MIDDLE EAST AND AFRICA (MEA) REGION

The Middle East and Africa (MEA) region is considered the most water-scarce region of the world. Home to 6.3% of the worlds population, it contains only 1.4% of the worlds renewable fresh water. As the regions population continues to grow, per capita water availability is set to fall by 50% by 2050. The MEA region may see more frequent and severe droughts and floods.

The MEA region is also a global hotspot of unsustainable water use, especially groundwater. It has the greatest anticipated economic losses from climate-related water scarcity, estimated at 6-14% of GDP by 2050.

Strategies for Increasing Water Supply

Most Governments have conventionally focussed on increasing access to fresh water by locating, developing, and managing new sources, despite the high costs.

Desalination: Desalination provides an alternative and reliable source of water Transporting Water: There are several ways to transport water from one region to another Qanats and Rainwater Harvesting: Qanats, or chain wells, are an old-style method for bringing water to the surface Sequential Water Use: Sequential water use comprises capturing and treating water that has been used in one sector so that it can be directed to other uses Water Reallocation: For most MENA countries, reallocating water away from agriculture and towards the domestic and industrial sectors may be a critical way to adjust to water scarcity Efficient Technologies: Better technologies may help reduce long-term costs and improve efficiency

Water Reuse and Recycle: The current trend is going towards a circular economy and water reuse for industries would: a. Ensure water security for the industries b. Divert fresh water for domestic use to that extent

Source: https://www.worldbank.org/en/topic/water/publication/beyond-scarcity-water-security-in-the-middle-east-and-north-africa

EUROPE

Freshwater resources are essential for human health, nature, and the functioning of economies and societies. However, water scarcity is a complex phenomenon. The combination of pollution, droughts, and water scarcity is no longer considered rare or extreme in Europe. Approximately 20% of European land and 30% of the people are currently affected by water scarcity Water scarcity is predicted to become more prominent as climate changes. Regions across Europe are already seeing drastic impact in the form of frequent droughts and changing weather patterns such as rainfall and storm.

VA TECH WABAG

One of the leading players and geographically diverse water technology companies, VA TECH WABAG LIMITED (hereafter referred to as ‘the Company or ‘WABAG or ‘We) is consciously promoting circular future and directing all its efforts towards water management. Its rich legacy has been continuing since 1924. With a strong focus on R&D, backed by cutting-edge technology, we have evolved as system specialists. We are the leaders in the water space providing designing, engineering, and procurement, construction, and O&M services to meet the demands of the municipal and industrial segments.

The Company plays a critical role in optimising the use of water. With over 6,500 projects executed across 25+ countries, WABAG is making a sustainable contribution to millions of people across the world. Serving the Indian sub-continent, Middle East and Africa, the European region, and South-East Asian markets, the Company has been facilitating access to clean and safe water to over 88 Million people. We have been ranked 3rd globally by the Global Water Intelligence (‘GWI), United Kingdom for ensuring safe and clean drinking water and a healthy environment for over 88 Million people.

BUILDING ExCELLENCE WITH ExPERIENCE

Indias largest seawater RO plant at Nemmeli SWRO, Chennai, India on EPC basis, meant for 100% potable use

Desalination plant for supply of potable water with a capacity of 1,92,000 m3 /day in Muscat, Oman

Worlds first wastewater treatment reuse plant, converting effluent into ultra-pure demineralised water at Panipat, India

Energy-neutral municipal WWTP at Sanilurfa, Turkey with a capacity of 1,44,833 m3 /day

Asias largest wastewater treatment plant for the 20 Million tonne Reliance Refinery at Jamnagar, India

Turnkey completion of 400 MLD drinking water treatment plant, Kavaklidere, Izmir, Turkey

Worlds first and unique direct potable water reuse plant, the new Goreangab WTP at Windhoek, Namibia

Al Madina Al Shamaliya 40 MLD Sewage Treatment Plant, Bahrain

54 MLD Effluent Treatment and recycling plant, for Indian Oil Corporation Limited, Paradip, Odisha, India

102 MLD Industrial Effluent Treatment Plant for PETRONAS RAPID, Malaysia

140 MLD Sewage Treatment Plant, Dinapur, Varanasi, India

32 MLD Drinking Water Treatment Plant, Dambulla, Sri Lanka

110 MLD Sewage Treatment Plant, Kodungaiyur, Chennai, India

14 Sarneraatal WWTP, Alpnach, Switzerland

India Cluster

Key Highlights

WABAG-led joint venture secured DBO order towards South East Asias largest seawater desalination project with a capacity of 400 MLD, worth about INR 4,400 Crore, funded by JICA

WABAG forays into Bangladesh with a World Bank and AIIB funded DBO order worth about INR 800 Crore WABAG signed concession agreement for 40 MLD Recycle and Reuse TTRO plant in Ghaziabad WABAG secured a repeat order worth about INR 430

Crore from Reliance Industries Limited for a 53 MLD

Desalination plant at Jamnagar

Middle East & Africa (MEA) Cluster

Key Highlights

WABAG expands Global footprint with a new JICA funded, consortium order for 50 MLD desalination project in Senegal, worth about EUR 146 Million

Europe Cluster

Key Highlights

WABAG secured industrial wastewater treatment order in Romania worth about INR 260 Crore (EUR 30 Million)

NTERNATIONAL ENGINEERING CENTRE (IEC)

WABAGs International Engineering Centre (IEC) in Pune and Vadodara provides design and engineering services to the Companys EPC business under the banner of WABAG Engineering Services.

This centre is equipped to deliver world-class cost-effective engineering services. It has a competent team of engineers and state-of-the-art software to attract global engineering business. IEC provides services to oil & gas, power, fertiliser, and steel industries across the globe.

IEC has provided engineering services to prestigious clients like Reliance, SIBUR (AGCC), IOTL, Marafiq, Kuwait

National Petroleum Company, Aramco, Dangote, HMEL, SSEM, SONEDE, PETRONAS, and Thai Oil.

IEC continues to support engineering for WABAG office in other clusters from both onshore and offshore. IEC has always focused on innovation 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 2022-23 stood at its highest at INR 13,200 Crore.

On a consolidated basis, the Companys income stood at INR 3,014 Crore in FY 2022-23, as compared to INR 3,011 Crore in FY 2021-22. Profit after tax for FY 2022-23 stood at INR 10.93 Crore (after exceptional items).

On a standalone basis, the income for FY 2022-23 stood at INR 2,385 Crore as compared to INR 2,171 Crore in FY 2021-22.

Profit After Tax for FY 2022-23 stood at INR 1.27 Crore (after exceptional items).

The key metrics of the year under review as per SEBI Regulation were as follows: Debtors Turnover ratio: 1.38 times Interest Coverage ratio: 11.94 times

Inventory Turnover ratio: 6.72 times

Current ratio: 1.33 times Debt Equity ratio: 0.14 times

EBIDTA (Operating Profit Margin) and Net Profit margin stood at 12% and 7.7% respectively and return on Net

Worth at 14.7% for the FY 2021-22.

The reasons for significant changes can be referred in the notes Financial Statements forming part of this Annual Report

Internal Control Systems and their Adequacy

WABAGs internal financial control framework has been established to ensure adequacy of design and operating effectiveness of operational, financial and compliance controls. The effectiveness of the internal controls is regularly reviewed and monitored by the Corporate Assurance Department of the Company and the Internal Auditors during the audit process.

WABAG has put in place, adequate policies and procedures, which play a pivotal role in the deployment and monitoring of the internal controls. These controls and processes have been implanted and integrated with IFS (An ERP system), which has been implemented across WABAG. The Corporate Assurance Department of WABAG continuously assesses opportunities for improvement in all business processes, policies, systems and controls, provides its recommendations, which add value, and strengthen WABAGs internal control environment. Non-conformities, if any, are addressed through systemic implementation of remedial and preventive action as appropriate taken by the respective functions. Positive action is initiated to ensure compliance with upcoming regulations through deployment of cross-functional teams. Emphasis is always placed on computerisation of controls within the process to minimise non-conformities and exclusions. Respective Cluster CEOs are responsible to ensure compliance with the policies and procedures laid down by the management. It helps WABAG to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and corporate governance processes.

A BRIEF ON HUMAN CAPITAL (MATERIALDEVELOPMENTS IN HUMAN RESOURCES)

HR being one of the key strategy partners, contributed comprehensively to the organisational development over the years at WABAG.

At WABAG, our people are our priority. As an effort towards empowering its employees, the following initiatives were taken and implemented by WABAG throughout FY 2022-23.

Extra Milers Programme (EMP)

This programme intended to identify potential talent among trainees who come through graduate/executive training programme. The objective of this programme is to build junior management level leadership pipeline. Selected extra milers get a sponsorship to a premier institute for a week long basic leadership skills training programme followed by an individual development plan that will facilitate their growth on fast track.

Young Entrepreneur Programme (YEP)

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

Leadership Excellence Programme (LEx)

A programme intended to identify potential talent among managers and deputy general managers of the Company and develop functional/business managerial capabilities. The objective is to build a senior-level leadership pipeline.

Emerging Leader Programme (ELP)

Though we have YEP in the middle management level, only four or five members get selected through this programme.

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

Hi-Pot Programme

This programme aims to strengthen the leadership pipeline of our organisation. We have developed a very strong programme in this regard under the Global Talent Architecture framework, wherein we are identifying the Hi-Potential (Hi-Pots) leaders who can take on higher responsibilities and larger roles. Through this, we are covering various aspects of leadership management such as individual development plans, succession planning and their periodic and continuous monitoring through focussed mentorship from business leadership and the talent managers within HR.

QUALITY, HEALTH, SAFETY AND ENVIRONMENT (QHSE)

Quality

At WABAG, we constantly focus 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 and continuously strive for excellence in all processes.

We focus on quality products, service, and performance at right first time. We have obtained Seamless Re-certification for our Integrated Management System (ISO 9001:2015, ISO 14001:2015, ISO 45001:2018) from an external certification body which is significant.

We have rolled out a competency enhancement programme for our quality professional through a structured mapping and training programme.

We are moving ahead with secured way of storing, & retrieving the data through a data management system (WRENCH application). The FIFO was implemented in the EPC sites and operational and maintenance of the plant along with the work procedure. During the supplier registration process, we check the process, their certification, credentials and so on.

For us, client feedback is extremely important and for this reason, we conduct a client satisfaction survey, every year. During the year, we saw a remarkable improvement in our customer service performance. This was due to the stringent policies we have implemented to provide quality services.

With the help of professional experts and a proactive approach, we constantly strive to deliver superior quality at every stage of the project.

Health and Safety

The Health, Safety and Environmental Management

System (HSEMS) at WABAG reflects our commitment to protect the environment by providing an appropriate working environment, and protecting the health and safety of personnel, including employees, contractors and visitors in line with the strategy of ISO 45001:2018 certification.

The HSEMS takes cognizance of interested parties and focusses on compliance with applicable legislations in the regions where we operate. It includes well-defined policies, procedures and also strives to keep interested parties well-informed, trained and committed to our HSE process. We have developed operational control procedures to be followed at the site to enable a safe work environment and also take care of workers safety.

Medical camps are being conducted to ensure the health and safety of the employees and workers. We continue to target improvement through training programmes. Various initiatives like campaigns for first aid, general health check-up for all the employees and workers, heat stress prevention to promote awareness and prevent illness have been undertaken at regular intervals. Essential health-related topics are shared with employees and workmen via toolbox talk on a daily basis. We strive for the highest standards of safety to achieve our objective for an accident free environment. Several health camps are being conducted at regular intervals at the EPC, BOOT/HAM and O&M sites for all. To enhance learning and cascading the safety awareness, E-learning programme has been launched for employees for self-training and certification.

Environment

WABAG is ISO 14001:2015 system certification, where we follow Plan-Do-Check-Act (PDCA cycle). We have vision on environment ‘Sustainability Solution, for a better life whereby natural resources are reduced and optimised, preventing pollution, waste management, utilisation of resources, disposal method, few other aspects and also providing awareness to the communities. Focussing on ESG: We integrate environmental considerations in every aspect of our operations, driving the transition towards a sustainable world. We reduce, recycle and reuse water through demand-side measures and implement efficient technology to enable freshwater conservation. The state-of-the-art sewage treatment plants of tertiary treatment capabilities enable zero discharge of wastewater from our campuses. We initiated lake rejuvenation projects near our campus, that enhances water availability in the surroundings, with additional expected benefits such as improved health, reduced flooding and enhanced biodiversity.

We are committed towards legal compliance related to the environment and waste management: WABAG adopts the principles of the Circular Economy, based on Refuse, Reduce, Reuse, Recycle and Recovery approach. We seek to uphold our ambition of ‘zero liquid discharge and safe waste disposal method through water technology process. We conduct training for all employees and workers related with ESHS aspects like World Bank guidelines standards, IFC performance standards, ADB safe guard policies, etc every week from Head Quarters All our sites and plants are inspected by an 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

INFORMATION TECHNOLOGY

Ongoing efforts are directed towards making WABAG digital and more secure by adopting various digital initiatives such as the following: Upgradation of technological components of ERP including IT infrastructure, database & applications.

Implemented mobile-enabled geotracking & geofencing system for real-time tracking of field workforce

Implemented advanced backup solutions for safeguarding business-critical data implemented NextGen antivirus solutions with advanced features to safeguard the business from IT security threats Upgraded the IT infrastructure – Virtualisation environment Automated BOQ control for engineering function Implemented Zero-Trust Solution to enhance the Security Posture Upgraded common file storage infrastructure

RESEARCH & DEVELOPMENT CERAMOZONE?

The CERAMOZONE? pilot plant is a combination of the CERAMOPUR? pilot plant and the Ozonisation 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 indirect potable water reuse. However, due to Covid-19 pandemic and other miscellaneous constraints it could not be done until FY 2022-23. Now, it is planned to continue in FY 2023-24.

This process (advanced multiple barrier system) has a high market potential for potable water reuse in the medium term (India, South Africa, Botswana, Namibia, Brazil, USA, Singapore, Australia, etc.). Patents have been granted for this process (e.g. the Namibian patent in September 2022).

CERAMOPUR? study at ICT Mumbai

The Study is in progress since February 2019. In-house ceramic membranes were synthesized at ICT Mumbai. Characterisation and the fouling study were done for the fresh membranes. Studies on Petroleum refinery wastewater were completed. The studies on textile effluent and secondary treated sewage were also completed. A research article based on a petroleum wastewater study was submitted to the Korean Journal of Chemical Engineering. A patent based on the preparation and synthesis of novel Ceramopur membranes and petroleum refinery effluent treatment was filed at the Chennai patent office on 2nd Jan 2023. A paper based on petroleum refinery effluent was presented at the 13th IWA International Conference on Water Reclamation and Reuse at Chennai, January 15-19, 2023. These results were also presented at the 15th Process Engineering Forum. The manuscript based on textile effluent studies is submitted to Water and Environment Journal. The manuscript writing based on secondary treated sewage is in progress right now. Experiments based on Steel effluent studies are in progress at ICT, Mumbai.

DAMOPUR?

DAMOPUR? is WABAGs technology for the Deammonification process (conversion of ammonia to nitrogen gas) in side and mainstream. Initially, it was proposed to start a pilot study on DAMOPUR? in India at Perungudi STP and some detailed engineering work has also been started based on the basic engineering provided by internal experts. However, based on the results from a Ph.D. study report at EAWAG and the challenge of inhibition of nitrite oxidising bacteria (NOBs) in the nitritation upstream of the ANAMMOX reactor, it has been decided to start first a bench scale study instead of a pilot scale study (in Egypt or in India).

Membrane Distillation (MD) – Crystallisation

A small-scale pilot plant with one tube combined HX-MD Module was built in 2021. First crystallization tests with sodium chloride solution and fractionated crystallization with and NaCl were also done in 2021. Also, real saline CaCl2 wastewater was tested (salty highway runoff; first half of 2022). The test results from the first phase were evaluated and the planning for the next phase and small plant adaptations were completed in the second half of 2022. First tests with fly ash leachate have been started and showed promising results. In 2023, it is intended to conduct also tests with metallurgical effluents. A paper was successfully presented atthe13thIWA International Conference on Water Reclamation and Reuse at Chennai, January 15-19, 2023 (‘Chennai 2023); it was also presented at the 14th and 15th WABAG Process Engineering Forums. Publications in various journals (e.g. IWA Journal of Water Reuse). This patented new technology has the potential of a game changer technology within Zero Liquid Discharge/Minimum Liquid Discharge (ZLD/MLD) processes to be started at Romanian or Indian industry.

Hard Chemical Oxygen Demand (COD)

Hard COD removal by the BIOZONE? process is an important add-on as the COD discharge has been limited for industries, viz. IOCL Paradip, RIL Dahej, HMEL, etc. The first pilot tests were conducted at HMEL Bathinda, Punjab and will be continued at the Chennai Koyambedu Water Reclamation Plant for RO brine treatment/oxidation of hard COD. Since the raw influent is secondary treated sewage there are possibilities to study also the degradation of micro-pollutants and anti-microbial resistance (AMR; antibiotic resistant bacteria and genes/DNA) by the BIOZONE? process during the current FY 2023-24.

Frauenkirchen, Austria - Micro-Pollutants Removal

Micro-pollutants removal by ozone and activated carbon (CARBOPUR? and BIOZONE?) – The Pilot tests were completed by WABAG Austria in cooperation with the Vienna University of Technology in fall 2019 at Frauenkirchen, Austria. 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). The full-scale project which was interrupted due to Covid-19 likely will be continued. However, increasing water stress could have an accelerating effect.

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 multibarrier treatment facility for direct potable reuse in the IWA Journal of Water Reuse was published in September 2021 and was successfully presented at the 13th IWA International Conference on Water Reclamation and Reuse at Chennai, January 15-19, 2023.The study will be repeated at the Windhoek NGWRP with more modern and sensitive analytical (molecular-biologic) methods (which have been substantially further developed during the Covid-19 pandemic) and as aforementioned,it will be also investigated in the Hard COD project.

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

MICROPUR-CAS? – Pilot tests were successfully completed in 2017 at Birsig/Therwil, Switzerland, to reduce the organic load to the activated sludge process. The contract for the full scale plant at Birsig STP in Therwil was awarded in Q4 of 2019. This contract is under execution, however the startup has been postponed three times by the client. The pilot tests at Nidda and Aarbergen, Germany, were successfully completed in 2019 and 2022 respectively. The full scale plant at Therwil will be started-up in Q4 2023.

RISK MANAGEMENT

In the yester years, WABAG had strengthened its risk management framework to address unprecedented and emerging risks from large-scale uncertainties like COVID-19 pandemic and their impact on economy, society and industry, particularly on the Water industry.

The Company faces several risks which could affect its ability to achieve its strategic objectives.

The Board is responsible for identifying principal risks and ensuring that 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 them and determine whether they are being mitigated properly.

From the tendering stage till closure of the 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) 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 could 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 the COVID-19 pandemic and been thoroughly analysed for change in risk grading.

Additional risks such as those related to safety, productivity, and working capital, 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 and independent assurance.

The Chairman and Managing Director identifies various operational, business, commercial and external risks and implement processes to address them. We also conduct periodical review and audit 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.

FORWARD-LOOKING STATEMENTS

This Management Discussion and Analysis Report contains certain ‘forward-looking statements, based on the currently held beliefs and assumptions of the Management of WABAG, which are expressed in good faith, and in its opinion and judgment, are fairly reasonable. For this purpose, forward-looking statements mean statements, remarks or forecasts that address activities, events, conditions or developments that the Company expects or anticipates which may occur in the future. Because of the inherent risks and uncertainties in the social and economic scenarios, the actual events, results or performance can differ materially and substantially from those indicated by these statements. WABAG disowns any obligation to update these forward-looking statements to reflect future events or developments.