About Enviro Infra Engineers Limited

Business Overview

The company specializes in developing Wastewater Treatment Plants (WWTPs) and Water Supply and Sanitation Projects (WSSPs), funded through central and state government schemes such as AMRUT, NMCG, and Jal Jeevan Mission (JJM). These projects are executed on EPC or HAM models, with the company holding a strong track record of 28 completed projects (22 with capacities of 10 MLD and above) as of June 30, 2024.

Key Highlights:

• Order Book: ₹1,90,628.06 lakhs across 21 projects as of June 30, 2024.
• In-House Capabilities: A team of 180 engineers, supported by consultants, handles design, engineering, procurement, construction, and operations. The company also independently manages civil works, reducing reliance on external contractors.
• Joint Ventures: Collaboration with infrastructure firms for technical and financial prequalification, currently executing five projects in partnership.
• Sustainable Initiatives: Integration of solar power plants and Compressed Bio Gas (CBG) plants in ongoing projects, contributing to "Waste to Energy" and environmental sustainability goals.

Recent Project Awards:

• Fiscal 2024: 11 projects worth ₹1,27,589.55 lakhs.
• Fiscal 2023: 9 projects worth ₹1,61,011.38 lakhs.
• Fiscal 2022: 4 projects worth ₹27,380.37 lakhs.

The company’s focus on innovation, sustainability, and strategic partnerships positions it as a leader in the wastewater and sanitation sector, aligning with government priorities for clean water and sustainable development.

Industry Analysis: Wastewater Management in India

India's wastewater management industry faces significant challenges due to rapid urbanization, population growth, and rising water demand. The Central Pollution Control Board (CPCB) reports that urban wastewater generation in 2020-21 reached 72,368 MLD, while rural areas produced 39,600 MLD. However, existing sewage treatment plant (STP) capacity covers only 18.6% of sewage generation, with utilization rates at 72.2%.

Key issues include:

1. Policy Gaps: A lack of centrally mandated regulations and a fragmented framework impede effective wastewater management.
2. Inadequate Infrastructure: Despite demand, STP development lags, leaving most sewage untreated.
3. Water Pollution: Major contributors include industrial discharges, untreated municipal waste, and agricultural runoff.
4. Urban-Rural Divide: Urban areas generate significantly more wastewater due to higher water availability, emphasizing the need for targeted investments.

The Water (Prevention and Control of Pollution) Act, 1974, established pollution control boards to address these issues, but enforcement and infrastructure remain weak. With rising water scarcity and pollution, the need for effective wastewater treatment and reuse policies has never been more urgent. Expanding STP capacity, optimizing usage, and implementing robust policy frameworks are critical to mitigating environmental and public health risks.

Business Strengths

1. In-House Design, Engineering, and Execution:

   • Expertise in designing complex projects, including process flow diagrams, hydraulic and electrical calculations, and STP layouts.
   • Capability to execute projects with technologies like UASB, ASP, MBBR, and BNR removal, ensuring cost-effective and timely delivery.

2. Proven Track Record:

   • Successfully developed 28 WWTPs and WSSPs (22 with 10 MLD+ capacity) across India within seven years.
   • Consistent on-time project completion has bolstered eligibility for high-value tenders.

3. Advanced Technology Integration:

   • Employs Sequential Batch Reactors (SBR) and High Rate Anaerobic Digestors (HRAD) for compliance with stringent environmental norms, small footprints, and full automation.
   • Innovations enable treatment at low BOD concentrations with superior efficiency.

4. Experienced Leadership:

   • Promoters Sanjay Jain and Manish Jain bring over two decades of industry experience.
   • A skilled senior management team ensures smooth project execution and business growth.

5. Expanding Geographic Presence:

   • Projects executed across eight states: Gujarat, Rajasthan, Delhi, Jharkhand, Karnataka, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh.
   • Focused bidding strategy in key regions has secured repeat projects.

These strengths position the company as a reliable leader in the water and wastewater treatment industry, leveraging its technological expertise, execution capabilities, and strategic focus on sustainability.

Business Strategies

1. Scaling Project Capacities:

   • Focus on larger WWTP (50–200 MLD) and CETP (20–50 MLD) projects to leverage economies of scale, improve margins, and enhance resource utilization.
   • Continued bidding for EPC and HAM projects while executing STPs (5–100 MLD) and CETPs (3–26 MLD).

2. Geographical Expansion:

   • Strong presence in eight states, including Gujarat, Rajasthan, Uttar Pradesh, and Karnataka, with recent project awards in Jharkhand and Karnataka.
   • Plans to enter East and South India, targeting Odisha, West Bengal, and Goa to diversify and grow operations.

3. Increased Focus on HAM Projects:

   • Awarded two HAM projects worth ₹23,372.10 lakhs and ₹24,001 lakhs under the Namami Gange Programme, for rejuvenating the Ganga at Bareilly and Mathura.
   • Established SPVs in partnership with consortium partners for project execution.

4. Sustainable “Waste to Energy” Initiatives:

   • Integrated waste-to-energy technologies to harness energy, nutrients, and organic matter from wastewater.
   • Early adoption of sustainable solutions in project designs fosters a regenerative approach to resource utilization.

These strategies aim to solidify the company’s market position, expand its footprint, and ensure long-term growth through innovation and sustainability.

Risk Factors and Concerns

1. Dependence on Government-Funded Projects:

   • Reliance on government contracts for WWTP and WSSP projects, awarded through competitive bidding, exposes the business to regulatory scrutiny and policy uncertainties.

2. Implementation Risks:

   • EPC projects are prone to time and cost overruns due to unforeseen delays, impacting financial outcomes.
   • Dependence on JV partners or subcontractors may result in delays at the partner or client level, materially affecting business performance.

3. Working Capital Intensity and Negative Cash Flows:

   • Business is capital-intensive, with negative cash flows from operating activities in FY2024 and Q1 FY2025, stressing financial health.
   • Delay in project execution, as seen in the Hoskote STP (8.52 MLD), adds to unexecuted order backlog (₹3.66 crore).

4. Low Bid/Win Conversion:

   • Declining bid-win percentages (58% in FY2024, 41% in FY2023, and 17% in FY2022) indicate increased competition and pressure to secure projects.

5. Technological and Regulatory Challenges:

   • Rapid advancements in water treatment and zero liquid discharge technologies necessitate continuous upgrades, which can strain resources.
   • Trademark objections for “Enviro” and “EiE” as word marks may restrict branding efforts, affecting competitive positioning.

6. Risk of Financial Closures and Bank Guarantees:

   • Failure to achieve financial closures for HAM projects within stipulated periods may lead to penalties or contract terminations.
   • Bank guarantees (₹257.00 crore) expose the company to financial risks if performance obligations are not met.

7. Market and Growth Risks:

   • Inability to scale project size or meet pre-qualification criteria could hinder growth prospects.
   • Limited project availability or delays in tender awards affect project pipeline continuity.

8. Regulatory and Client Risks:

   • Heavy dependence on government or government-funded entities increases vulnerability to regulatory scrutiny, payment delays, or policy changes.

These risks highlight the need for prudent financial management, operational efficiency, technological adaptability, and diversification of the client base to mitigate uncertainties.

As of June 30, 2024, the total number of employees of the company stand at 939. The Bankers of the Enviro Infra Engineers Limited are Indusind Bank Limited, Yes Bank Limited, ICICI Bank Limited, HDFC Bank Limited, Kotak Mahindra Bank Limited, The Federal Bank Ltd, Punjab National Bank and Axis Bank Ltd.