Rajesh Sharma, CMD of the company addressed the meet>

Highlights of the call:

The company was the first to introduce reverse osmosis (RO) concept in India in 1978.

Its zero B brand was launched in 1986.

The company is engaged in Industrial water treatment, drinking water treatment, sewage treatment, process water treatment, management of process water and solid waste management.

Engineering business accounts for 56% of sales, Chemical business accounts for 34% and 10% comes from consumer product business.

The company works with almost all the big names in the industry and most of them are its repeat clients.

The company is largest one stop water solution company in India.

It has 50 years of PAN India presence.

The company has global footprint with exports to several nations in Arica, Europe, Middle East, UK and USA. Africa and Middle East regions are growing fast.

Consolidated Engineering business sales stood at Rs 512.30 crore in FY 2016 against Rs 457.3 crore in FY 2015.

This division has order book of Rs 400 crore and order pipeline is of Rs 3500 crore.

Consolidated Chemical business sales stood at Rs 310.6 crore in FY 2016 against Rs 294.90 crore in FY 2015.

Resins and industrial chemicals account for 50% of this business.

Consolidated Sales from consumer product division stood at Rs 87.10 crore in FY 2016 against Rs 83.22 crore in FY 2015.

Standalone RoCE in FY 2016 stood at 20.2 against 15.3 in FY 2015

Standalone Debt/Equity ratio in FY 2016 stood at 0.1 against 0.1 in FY 2015

Standalone RoE in FY 2016 stood at 13.8 against 11.8 in FY 2015

Standalone working capital days improved from 42 to 40 in FY 2016.

Consolidated RoCE in FY 2016 stood at 20.0 against 14.8 in FY 2015

Consolidated Debt/Equity ratio in FY 2016 stood at 0.3 against 0.3 in FY 2015

Consolidated RoE in FY 2016 stood at 9.0 against 6.3 in FY 2015

Consolidated working capital days improved from 45 to 40 in FY 2016.

Future strategy for Engineering business:

The company plans to increase exposure in international markets.

It will be selectively targeting projects in the infrastructure and municipal segments.

It will increase applications coverage of resins and membrane technologies.

New government initiatives such as Swachh Bharat Mission, lean Ganga, Smart Cities and National Rural Drinking Water Program will result in more explorable opportunities.

Future Strategy for Chemical business:

This business will focus on export of resins and developing new products for the US and Europe markets.

It will also focus on resins for pharmaceutical industries.

It will introduce new specialty chemicals.

It will continue to invest in R&D.

Future Strategy for Consumer Product business:

New initiatives by the government to improve infrastructure for Indian railways and special focus on defence have opened new avenues for the business.

Increased thrust on rural drinking water will benefit the company.

The company is planning to introduce surface water treatment solutions by closely working with Public Health Engineering Departments (PHEDs) and Rural Water Supply Departments of various states.

Focus will be on expansion of ground water treatment solutions by tailoring products to meet the requirement of specific markets.

Other details

In 2015 Ion Exchange was awarded by Sri Lanka Water Board to execute water supply project worth US$ 194 million. EXIM bank recently sanctioned actual loan agreement with Sri Lanka Government. The project had suffered delay due to change in Sri Lankan government. The project has become live since now the loan agreement has been signed by EXIM Bank. Maximum this project will start in two months. Partial execution of project will be in FY 2017. It's a three year project.

In India water is subsidized except in Chennai and Bangalore where water is very costly compared to other regions in India. This is the reason why desalinization is not economically viable. If water is sold at economic rates, desalinization will be possible.

In Engineering, EPC business is a low margin business. The company is thus choosy in taking orders. It will not go behind increasing sales at the expense of profits.

EPC business has better margins outside India and so the company is focusing on export markets.

Some of the subsidiaries are more like investment to be present in a particular country. The company has to be present in various countries to be present in one form or the other. This is the reason some are making losses.

Power sector was slow that is why chemical business was slow. But power sector is expected to grow fast so chemical business can also grow fast. Same with oil and Gas industry.

The shares are traded in T group due to physical holding held by the promoters. This is a legal issue. The management will try to sort out the issue and it is expected to be out of T segment hopefully in FY 2017.

The company is suffering loss in Indian subsidiaries in chemical business as there was no conducive environment. Also some project had financial overruns. The situation should however improve now.

The company would focus on Industrial business. Even though Consumer product business is loss making the company has no plans to sell it off.

It is not focusing more on consumer product business because Industry water treatment is its core business.

The company expects good traction from domestic markets from Q3 onwards.

Trade payable of Rs 330 crore is due to creditors in EPC business.

The company does not see any substantial write offs in receivables which is in the range of Rs 300-400 crore.

Industrial sector is expected to be growing at a CAGR of 6-7% while waste water treatment projected CAGR is 8-10% through 2015-2020.

The global ion exchange resins market is projected to grow at a CAGR of 5-6%.

The water purifier market in India is expected to see good growth since the focus is now on rural markets which is highly un-penetrated.