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EMS Limited
EMS Limited Incorporated in 2012, previously known as EMS Infracon, is engaged in the business of providing water and wastewater collection, treatment, and disposal services.
About EMS
Incorporated in 2012, EMS Limited previously known as EMS Infracon, is engaged in the business of providing water and wastewater collection, treatment, and disposal services.
The company provides Sewerage solutions, Water Supply Systems, Water and Waste Treatment Plants, Electrical Transmission and Distribution, Road and Allied works, operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs) for government authorities/bodies. WWSPs include Sewage Treatment Plants (STPs) along with Sewage Network Schemes and Common Effluent Treatment Plants (CETPs) and WSSPs include Water Treatment Plants (WTPs) along with pumping stations and laying of pipelines for the supply of water.
EMS Limited has its own civil construction team and employs over 57 engineers, supported by third-party consultants and industry experts.
As on March 24, 2023, EMS is operating and maintaining 13 projects including WWSPs, WSSPs, STPs & HAM aggregating Rs. 1,38,909.00 lakhs & 5 O&M projects aggregating to Rs. 9,928.00 lakhs i.e. unbilled amount as of February 28, 2023, spread across five states.
Industry Overview
Water and Wastewater Industry
India is the world’s second most populous country with 1.38 billion people. Out of this, 65% of the population lives in rural area and 35% are connected to the urban centers according to United Nation (2019). The metropolitan cities of the country are seeing major expansion as a result of economic expansions and reforms. This expansion in urban population is unsustainable without efficient planning of cities and provision of utility services especially clean and affordable water. Water allocation in cities are usually done from common pool with multiple sectoral demand.
It is expected that by 2050, about 1450 km3 of water will be required out of which approx. 75% will be used in agriculture, ~7% for drinking water, ~4% in industries, ~9% for energy generation. However, because of growing urbanization, the need for drinking water will take precedence from the rural water requirements. Many of the cities are situated by the bank of rivers from where the fresh water is consumed by the population and the waste water is disposed back into the river, thus contamination of the water source and irrigation water. This has raised serious challenges for urban wastewater management, planning and treatment.
According to the by Central Pollution Control Board (CPCB), the estimated wastewater generation was almost 39,600 million litres per day (MLD) in rural regions, while in urban regions it was estimated to be 72,368 MLD for the year 2020-21. The estimated volume is double in the urban cities is almost double than that of the rural regions because of the availability of more water for sanitation which has increased standard of the living.
Construction Sector:
The construction industry in a country is an important indicator of its development. Broadly, the construction sector can be classified into infrastructure, real estate and industrial construction. Wherein, infrastructure can further be spread across different sectors such as roads and highways, telecom, airports, ports, power, oil and gas and railways. The construction sector contributed around 8% to the national GVA (at constant price) in FY22. Increase in Infrastructure demand & Government initiatives shows the potential for catapulting India to the third largest construction market globally.
Roads and Highway Industry Overview
Robust infrastructure is an essential sign of a developing nation. Development of roads, bridges, airports and railways is crucial for economic development of the country. Out of all modes of transport, road is the only mode which has the ability of last mile connectivity.
Transportation of freight as well as of passengers by road is one of the most cost-effective modes of transport. With a total 63.32 lakh kilometres (kms) of road network, India ranks second in the world after USA. This road network supports movement of 60% of freight traffic in the country and 87% of the total India’s passenger traffic. The Indian road network comprises of National Highways, Expressways, State Highways, Major District Roads, Other District Roads and Village Roads. To get the country in fast forward mode, development of National Highways has been the key focus area, however state highways, district and rural roads continue to be a large part of overall road network.
With improvement in road connectivity over the years between cities, towns and villages, transportation by way of road has gradually increased over the years. Development and maintenance of roads in India are undertaken by various agencies of both Central and State Governments. The primary agency responsible for the development and maintenance of National highways is the Ministry of Road Transport & Highways (MORTH) and it executes the same through the agency of National Highways Authority of India Ltd (NHAI), National Highway Infrastructure Development Corporation Ltd (NHIDCL) and State Public Works Department (PWDs) & Border Roads Organizations etc.
India’s road infrastructure has seen consistent improvement in the last few years. Connectivity has improved and road transportation has become a focus of rapid development. Roads are providing better access to services, ease of transportation and movement to people. Recognizing the significance of a reliable and swift road network in the country and the role it plays in influencing its economic development, MoRTH has taken up the responsibility of building quality roads and highways across the country. Road Transport emerged as the dominant segment in India’s transportation sector with a share of 4.5% in India’s GDP in FY06. As per the Economic Survey, road transport is the dominant mode of transportation in terms of its contribution to Gross Value Added (GVA). In FY18 the share of transport sector in the GVA was about 4.77% of which the share of road transport is 3.06% followed by Railways (0.75%), air transport (0.15%) and water transport (0.06%). Total investment in the roads and highways sector has gone up more than 3 times in five-year period of FY15 to FY19.
Road construction trends in the recent years also give optimism of achieving high targets during next few years, in spite the sector badly hit by the COVID – 19 pandemic and partial lockdowns at various states across India. The sector has clearly shown focus on Bharatmala Pariyojana with added emphasis on multimodal integration, road safety, increasing use of Information Technology applications, augmentation of existing funding sources and emphasis on green initiatives.
EMS Business Overview
The company is in the business of Sewerage solution provider, Water Supply System, Water and Waste Treatment Plants, Electrical Transmission and Distribution, Road and Allied works, operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs) for government authorities/bodies. WWSPs include Sewage Treatment Plants (STPs) along with Sewage Network Schemes and Common Effluent Treatment Plants (CETPs) and WSSPs include Water Treatment Plants (WTPs) along with pumping stations and laying of pipelines for supply of water (collectively, “Projects”).
The treatment process installed at STPs and CETPs is compliant with Ministry of Environment, Forest and Climate Change of India norms and the treated water can be used for horticulture, washing, refrigeration and other process industries. Company bids for tenders issued by CPWD, State Governments and Urban Local Bodies (“ULBs”) for developing WWSPs and WSSPs on EPC or HAM basis. For further details on our Order Book, see “- Order Book”.
The company have an in-house team for designing, engineering and construction which makes us self-reliant on all aspects of our business. The company have a team of 61 engineers who are supported by third-party consultants and industry experts to ensure compliance and quality standards laid down by the industry and government agencies & departments.
The company also have their own team for civil construction works thereby reducing dependence on third parties. The scope of our services typically includes design and engineering of the projects, procurement of raw materials, execution at site with overall project management up to the commissioning of projects. Post commissioning, operations and maintenance of these plants for a certain period of time is generally a part of the award in recent times. The company have a team of dedicated engineers and personnel focused on operations and maintenance of completed projects. As on July 31, 2023, company is operating and maintaining 18 projects including WWSPs, WSSPs, STPs & HAM aggregating of Rs. 1,74,492.00 lakhs & 5 O&M projects aggregating to Rs. 9,928.00 lakhs.
In addition to the execution of projects independently, company also enter into joint ventures with other infrastructure and construction companies to jointly bid and execute projects. Joint ventures or partnerships enable them to achieve pre-qualification, both technical and financial, with our joint venture partner at the time of the bid and where the bid is successful, company also execute the project with their joint venture partner considering the technical skill and qualification of the joint venture partner required to execute a particular project.
Services Offered By The Company
Sewerage and their allied works including design, procurement, laying, jointing, testing, commissioning, operation and maintenance of new sewerage network as well as refurbishment of old/existing sewerage network.
Design, construction, operation and maintenance of Sewage Treatment Plants.
Design, construction, operation and maintenance of Sewage Pumping Stations.
Water supply works including design, procurement, laying, jointing, testing, commissioning, operation and maintenance of new water supply and distribution networks as well as construction of reservoir and refurbishment of old/existing water supply infrastructures.
Road & Allied works including construction of new road networks as well as repair/renovation of existing road networks.
Design and construction of power transmission and distribution infrastructure.
Design and construction of buildings and allied works.
Design, construction, operation and maintenance of public infrastructure facilities & utilities.
Designing, installing electricity transmissions.
Construction related works
Registration
COVID 19 EFFECT OF THEIR BUSINESS:
The company have not experienced any major effect on the businesses, performance and financials of the Company due to COVID-19. Due to lockdown imposed by the government of India, have not affected so much except our projects got delayed by 6-7 months due to shortage of labours & lockdown but our position & financials was affected neither any penalty was imposed on them by their clients on delay of projects as the reason was nationwide lockdown.
The financial performance of our Company for the Fiscals 2023, 2022 and 2021, are as follows:
Explanation for KPI metrics
Company's Strength
In house designing, engineering and execution team.
The company have been focusing on design capabilities for complex and critical projects such as process description, process calculations, hydraulic calculations, design codes and standards, master drawing schedule, drainage design, STP facilities layout, process flow diagram, hydraulic flow diagram, mass balance diagram, process & instrumentation diagram, tentative single line diagram and electrical load list. This capability enable us to correctly bid with project specifications and provide quality services in a timely and cost-effective manner. Company's engineering expertise and technology driven processes has enabled us to deliver on the projects in accordance with the designs and specifications of the particular project whether it’s a WWSP or WSSP.
Company's in-house engineering and design team of 61 engineers have the necessary skills and expertise in preparing detailed architectural and /or structural designs based on the conceptual requirements of our clients. Our engineering and design team reduces our dependence on outsourcing engineering and design work to third party consultants. Company's quality control managers are responsible for conducting regular inspection and tests at every project site for quality control monitoring and management.
Strong execution capabilities with industry experience.
Since incorporation, Company has completed 67 projects. For the list of executed works by their Company. Apart from this, currently we are handling 18 Projects & 5 O&M Projects together 23 projects, for information. Company's focus is to leverage our strong project management and execution capabilities to complete projects in a timely manner while maintaining high quality of engineering and execution.
Use of traditional technologies in the construction and installation of WWSP or WSSP.
The designing and engineering of projects is technically complex, time consuming and resource intensive because of unique project requirements. We constantly upgrade our technical abilities to offer our clients the full range of services at lower cost and without compromising on quality. Treatment process at most of the STPs and CETPs installed by us are compliant with Ministry of Environment, Forest and Climate Change of India norms and the treated water can be used for horticulture, washing, refrigeration or other process industries.
World Bank Funded Projects.
Our country has 18 percent of the world’s population, but only 4 percent of its water resources, making it among the most water-stressed in the world. A large number of Indians face high to extreme water stress, according to a recent report by the government’s policy think tank, the NITI Aayog. India’s dependence on an increasingly erratic monsoon for its water requirements increases this challenge. Climate change is likely to exacerbate this pressure on water resources, even as the frequency and intensity on floods and droughts in the country increases.
Company's Strategies
Increasing the size of projects and their pre-qualification.
Company's primary focus is to strengthen our prospects in executing WWSP and WSSP projects. The company have started with 4 MLD size of project & increased our capacity to 60 MLD i.e. the maximum capacity of Minimal Liquid Discharge for STPs. We will continue to focus on the designing, construction, operation and maintenance of Projects while seeking opportunities to further increase the size of our projects. We will continue to bid for WWSPs and WSSPs both on EPC and HAM basis. Execution of high capacity projects has lesser competition, better margins, economies of scale and better utilization of sources. We intend to capitalize on our experience and project execution expertise and continue to selectively pursue larger Projects, both independently and in partnership with other players in the industry. Increase in the size of projects will also lead to our Company becoming pre-qualified for larger projects of higher MLD. Large sized projects will require requisite higher level of competencies in designing and execution of such projects.
Expansion of our footprint.
The company have successfully completed 67 projects as on July 31, 2023 including partnership firm namely M/s Satish Kumar which was taken over by this company on June 30, 2012. across states of Bihar, Uttarakhand, Madhya Pradesh, Rajasthan, Haryana. company gradually intend to expand their business operations to other regions of the country, especially the North-East and South India. The company plan to continue their strategy of diversifying and expanding their presence in these regions for the growth of their business. The company are selective in expanding to new locations and look at new geographies where they can deliver quality services without experiencing significant delays and interruptions due of local considerations. Through further diversification of our operations geographically, we hope to hedge against risks of operations in only specific areas and protection from fluctuations resulting from business concentration in limited geographical areas.
The state wise revenue generated in last 3 financial years:
Capitalize on Government policy initiatives in WWTP and WSSP sectors.
India is the world’s second most populous country with 1.38 billion people. Out of this, 65% of the population lives in rural area and 35% are connected to the urban centers according to United Nation (2019). The metropolitan cities of the country are seeing major expansion as a result of economic expansions and reforms. This expansion in urban population is unsustainable without efficient planning of cities and provision of utility services especially sewerage, clean and affordable water. Water allocation in cities are usually done from common pool with multiple sectoral demand. It is expected that by 2050, about 1450 km3 of water will be required out of which approx. 75% will be used in agriculture, ~7% for drinking water, ~4% in industries, ~9% for energy generation. However, because of growing urbanization, the need for drinking water will take precedence from the rural water requirements. Many of the cities are situated by the bank of rivers from where the fresh water is consumed by the population and the waste water is disposed back into the river, thus contamination of the water source and irrigation water. This has raised serious challenges for urban wastewater management, planning and treatment. According to the by Central Pollution Control Board (CPCB), the estimated wastewater generation was almost 39,600 million liters per day (MLD) in rural regions, while in urban regions it was estimated to be 72,368 MLD for the year 2020-21. The estimated volume is double in the urban cities is almost double than that of the rural regions because of the availability of more water for sanitation which has increased standard of the living.
Swot Analysis
Strength
World Bank Funded Projects through Local/ State governments.
Scheme like Atal Bhujal Yojana launched by Government of India are been aided by the World Bank. The Scheme outlay is about Rs. 6,000 Crore which is focused on community participation and sustain ground water level in identified water stressed areas during five-year duration. Our Company has participated in such projects. We are participating in other Government Schemes such as Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Namami Gange Programme etc.
More than 3 decades of experience in the industry.
Company incorporated on December 21, 2010 having business of Sewerage solution provider, Water Supply System, Water and Waste Treatment Plants, Electrical Transmission and Distribution, Road and Allied works, operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs) for government authorities/bodies. Our Promoters, Mr. Ram Veer Singh and Mr. Ashish Tomar are qualified professionals with an individual experience of more than 3 & 1 decades respectively in the water & waste-water treatment industry and have been instrumental in driving our growth since inception of our business.
Professionally managed & experienced leadership.
Company is managed by our Promoters including our Top Management has wide experience in the infrastructure sector. Our promoter and Chairman, Mr. Ramveer Singh has more than Thirty-five years of experience in in the water & waste-water treatment industry, civil, construction industry and business development. Also, our Promoter and Managing Director, Mr. Ashish Tomar is a Civil Engineer having vast knowledge and experience in the field of projects like Sewerage work, Electricity Transmission & Distribution work. He is currently looking after Projects execution areas of our Company. Likewise, our top leadership has good experience and expertise.
Weakness
Dependence on Union & State Government policies
As we are 100% dependent on government projects, our company is mainly in the business of government contracts like Sewerage solution provider, Water Supply System, Water and Waste Treatment Plants, Electrical Transmission and Distribution, Road and Allied works, operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs). WWSPs include Sewage Treatment Plants (STPs) along with Sewage Network Schemes and Common Effluent Treatment Plants (CETPs) and WSSPs include Water Treatment Plants (WTPs) along with pumping stations and laying of pipelines for supply of water (collectively, “Projects”) which are acquired largely from the government tenders, therefore, due to changes in government policies it may have impact on the delay or completion of the projects which in turn have impact on the profitability of our company and in non-compliances thereof it may bring penalties as well.
Core focus on limited segment
We have an in-house team for designing, engineering and construction which makes us self-reliant on all aspects of our business. We have a team of 61 engineers who are supported by third-party consultants and industry experts to ensure compliance and quality standards laid down by the industry and government agencies & departments, therefore main focus of our company is on Water Supply System and Water and Waste Treatment Plants. They are areas where our company needs to improve to remain competitive.
Opportunities
Increasing in Government expenditure:
A policy decision being ensured that whenever there is an expansion of the Government, there should be a commensurate increase in the Opportunities for organization as well. The budgetary allocation by the central government which can boost our business is as under:
Threats
Increase in Competition and entry of new market players.
As the Government spending on infrastructure sector is increasing in unprecedented way new players are invited. The entry of new players will increase the competition and eventually affect our top and bottom line negatively.
Certain big players in market like L & T (only water segment) specifically in similar segment of our business
The presence of big player like L&T having big size and financial power may make acquiring big projects difficult. Also, there may be stress in the margins as we need to spend more financial resources to acquire projects.
Delay in projects due to Lock out, Strikes, Management Lay-outs.
Any delay due Lock out, Strikes, Management Lay-outs any impede our project which may hurt us financially and otherwise. However, so far, we have not witnessed any Lock out, Strikes, Management Lay-outs.
Order Book
Order Book for Ongoing Projects is Rs. 1,74,492.00 Lakhs unbilled amount as on July 31, 2023. The following table sets forth the break-up of our Order Book for all the Ongoing Projects:
Management Of The Company
Mr Ramveer Singh - Chairman cum Executive Director
Mr. Ramveer Singh, aged 60 years is the founding Promoter and is currently designated as Chairman and Director of our Company. He was appointed as the First Director on the Board of our Company at the time of incorporation of our Company on December 21, 2010. He is an Engineer by qualification. He has more than Thirty-five years of experience in civil, construction industry and business development. In past he has joined the partnership firm M/s Satish Kumar after taking VRS from Uttar Pradesh Jal Nigam in 2006 & later incorporated a private limited company in the year 2010, named EMS Infracon Private Limited. Under his leadership. in the year of 2012, the partnership firm M/s Satish Kumar has been taken over by the EMS Infracon Private Limited. He is looking after Projects biding, Marketing, overall management and financials areas of our Company. Under his experience our Company has successfully completed cost effective projects. His such vast & great experience has grown the company at very large level & made very reputed & believable image of the company.
Mr Ashish Tomar - Managing Director
Mr. Ashish Tomar, aged 34 years is the also founding Promoter and is currently designated as Managing Director of our Company. He was appointed as the First Director on the Board of our Company at the time of incorporation of our Company on December 21, 2010. He is a Civil Engineer. He is also having vast knowledge and experience in the field of projects like Sewerage work, Electricity Transmission & Distribution work. He is currently looking after Projects execution areas of our Company.
Ms. Kritika Tomar, aged 29 years and is currently designated as Whole Time Director of our Company. She is a postgraduate in MSc. Biotech from Mody University, Rajasthan. She is associated with the company from October 17, 2022 & looks after the administrative work of the company.
Financial Performance
Balanace Sheet
Profit and Loss
Cash Flow Statement
Risk Factors
Increasing Cost Prices
If low spends by the government
Increasing competition leads to impact on profirtability
Objects of the issue
IPO Details
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
Source - Company's RHP and Website. Disclaimer - Given analysis in the IPO is for the knowledge purpose only, do not consider as a recommendation.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
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