BUSINESS OVERVIEW

Sattva Engineering Construction is an ISO 9001:2015, ISO 45001:2018, and ISO 14001:2015 certified Engineering, Procurement, and Construction (EPC) company, specializing in water resource management solutions. The company’s expertise spans across the execution of Water Supply Schemes (WSS) with underground and overhead tanks, Underground Sewerage Systems (UGSS), Sewage Treatment Plants (STP), and Water Treatment Plants (WTP), primarily catering to government authorities and public sector bodies. In addition, the company provides operation and maintenance services for STP projects as part of its EPC contracts.

Under the Water Supply Scheme (WSS), Sattva Engineering Construction undertakes the design and construction of large underground and overhead tanks for potable water storage and supply, coupled with pump houses, pipeline networks, and house service connections, including electromechanical works.

For the Underground Sewerage System (UGSS), the company develops projects that include sewage pipelines, machine holes (pre-cast or cast-in-situ), collection wells, pumping stations, and associated civil structures. These systems integrate electromechanical equipment and instrumentation to ensure efficient sewage collection and disposal.

In the domain of Sewage Treatment Plants (STP), the company designs, engineers, builds, commissions, and operates plants of varying capacities. Typical STP infrastructure includes inlet chambers, screen and grit chambers, primary clarifiers, Sequential Batch Reactor (SBR) basins, chlorine contact tanks, sludge thickeners, digestors, bio-gas tanks, and allied civil and electromechanical structures.

Within the Water Treatment Plant (WTP) segment, Sattva Engineering Construction executes projects for treating river or lake water. These facilities consist of raw water pumping stations, inlet chambers, screen chambers, clariflocculators, filter presses, rapid gravity sand filter beds, chlorinators, and other civil and electromechanical infrastructure.

A key strength of the company lies in its use of Supervisory Control and Data Acquisition (SCADA) systems for real-time monitoring across WSS, STP, and WTP projects. SCADA enables continuous monitoring and analysis of parameters such as discharge per minute, power consumption, and chemical levels, while being directly connected to the central monitoring systems of Pollution Control Boards and customers. This facilitates early fault detection and corrective action, ensuring efficient operations. Additionally, the adoption of SAP Business One (SAP B1) ERP strengthens project management and internal controls.

Since its inception, Sattva Engineering Construction has successfully executed more than 50 projects. As of March 31, 2025, the company’s order book comprised 13 ongoing projects with an aggregate value of approximately ₹30,809.84 lakhs, spanning multiple locations.

Project execution is primarily secured through tender bidding processes initiated by Urban Local Bodies (ULBs), particularly in the state of Tamil Nadu and the Union Territory of Puducherry. Several projects are partly funded by the Central Government under flagship schemes such as the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and the Jal Jeevan Mission (JJM), along with state and ULB contributions. The company’s core presence remains in Tamil Nadu and other southern states of India, where it has established itself as a trusted EPC partner for critical water and wastewater management infrastructure.

As of March 31, 2025, the company have 117 permanent employees. The Bankers to the company are HDFC Bank Limited and Union Bank of India.

INDUSTRY ANALYSIS

Overview of the Construction Sector and EPC Industry in India

The construction sector is one of the largest drivers of the Indian economy, generating a powerful multiplier effect. A unit increase in spending within this sector has the potential to create income up to five times across other industries, making it one of the most influential growth engines. Construction projects are generally categorized based on their scale, type of structures, and purpose and can be divided into real estate construction, industrial construction, and civil & infrastructure construction.

According to the Harmonized Master List of Infrastructure Sub-sectors published by the Ministry of Finance, India’s infrastructure domain is further segmented into transport & logistics and social & commercial infrastructure. With the rise in construction activity, demand is naturally boosted for a range of ancillary services, including project management, EPC services, and architectural consulting.

Understanding EPC: Engineering, Procurement, and Construction

The EPC (Engineering, Procurement, and Construction) industry plays a critical role in India’s infrastructure and industrial development. EPC contracts cover the entire project lifecycle—engineering design, material procurement, and construction—offering a single point of accountability. This model is widely preferred in large-scale projects across the globe because it minimizes the direct involvement of developers, saving them time, labour, and resources.

EPC contracts, however, transfer most project risks to contractors, which can increase overall costs. Developers often seek to balance this by negotiating shared risk clauses, especially for fluctuating material prices. Independent third-party design reviews are also a common safeguard to ensure projects align with specifications, particularly in high-value contracts.

Types of EPC Contracts

Different EPC models suit different project requirements. For example:

• Lump Sum Contracts fix the total cost upfront, ideal for projects with clearly defined scopes such as residential complexes.

• Unit Price Contracts are suited for projects with uncertain scopes, such as road construction, where quantities vary.

• Cost-Plus Contracts allow reimbursement of actual costs plus a margin, offering flexibility for projects with evolving specifications.

• Design & Build Contracts integrate design and construction under a single contractor, streamlining delivery of large infrastructure projects like airports.

• Turnkey Contracts deliver fully operational facilities, commonly applied in power, water supply, and industrial sectors.

EPC in Water Resource Management

Water resource management is one of the most promising areas for EPC companies. They deliver end-to-end water infrastructure solutions, from design and feasibility studies to construction and commissioning. This includes water supply schemes (WSS) with underground and overhead tanks, pipeline networks, pumping stations, and treatment plants.

EPC firms add value through optimized procurement strategies, technical expertise, and integration of modern technologies like automation and IoT-based monitoring systems. Increasingly, companies are also focusing on sustainable practices, such as solar-powered water pumping and energy-efficient treatment processes.

Applications of EPC-led water solutions are diverse—ranging from municipal drinking water supply to industrial water systems and agricultural irrigation. In urban development, EPC firms contribute significantly to smart city projects by implementing advanced monitoring and automation.

Scope of EPC in Water and Wastewater Infrastructure

India’s rapid urbanization and industrial expansion have created immense demand for reliable water distribution and wastewater treatment systems. EPC services in this space cover everything from pipeline networks and treatment facilities to sewage systems, drainage infrastructure, and industrial effluent treatment.

In water distribution, EPC companies design pipelines, reservoirs, treatment plants, pumping stations, and pressurized supply systems, ensuring efficiency and compliance with quality standards. In wastewater management, they are responsible for sewage collection systems, stormwater drains, lift stations, and wastewater treatment plants equipped with advanced biological and chemical processes.

For industries, EPC contractors provide customized effluent treatment solutions tailored to specific needs in sectors such as healthcare, dairy, tanneries, and refineries. Rehabilitation and modernization of old pipeline and sewerage networks are also an important part of their services.

Market Outlook

The Indian water and wastewater treatment market is witnessing rapid growth, driven by rising pollution levels, urban migration, and industrial water demand. The market expanded from USD 1.6 billion in 2021 to USD 2.1 billion in 2024, reflecting a strong CAGR of 10.1%. Parallelly, the EPC market for water treatment projects grew from USD 1.4 billion to USD 1.9 billion during the same period, recording an even higher CAGR of 11.4%.

As per the National Infrastructure Pipeline (India Investment Grid), nearly 93% of ongoing water treatment projects are being implemented under the EPC model, highlighting its dominance as the preferred execution method. With water scarcity, sustainability challenges, and smart city initiatives driving demand, the role of EPC firms in shaping India’s water and wastewater infrastructure will continue to expand significantly in the coming years.

Water and Wastewater Treatment Industry in India – An Overview

India is at a critical juncture in addressing its growing water challenges. Rising demand, depleting resources, pollution, and uneven distribution have created a severe water crisis, making sustainable water management an urgent national priority. Although the country has significant water resource potential, effective availability remains low due to wastage, groundwater over-extraction, and poor management practices. With per capita water availability declining by nearly 70% since 1950—now standing at just 1,545 m³ per person, India has already entered the category of a water-stressed nation and is moving closer toward water scarcity.

Industrial and Technological Shifts

On the industrial front, sectors such as power, food and beverage, pharmaceuticals, textiles, and refineries are increasingly adopting advanced treatment solutions. The shift from traditional chemical treatment to membrane technologies like Reverse Osmosis (RO), Sequencing Batch Reactors (SBR), and Membrane Bioreactors (MBR) is becoming widespread. Furthermore, zero liquid discharge (ZLD) and wastewater recycling systems are gaining traction as industries face tighter environmental regulations and sustainability demands.

In parallel, coastal states such as Tamil Nadu and Gujarat have emerged as leaders in establishing desalination plants to bolster drinking water supply and industrial water needs. This trend is supported by industries like power, steel, cement, and fertilizers, which are increasingly adopting the principles of Reuse, Recycle, and ZLD to reduce freshwater dependency.

Water Demand and Stress

India’s water demand is rising in tandem with its growing population, projected to cross 1.4 billion by 2025 and 1.6 billion by 2050. According to estimates, demand will grow from 843 billion cubic meters (BCM) in 2025 to 1,180 BCM by 2050, far outstripping current supply capabilities. Agriculture continues to be the largest consumer, accounting for nearly 80% of water withdrawals, with groundwater fulfilling 60% of irrigation needs. Worryingly, India already extracts nearly one-fourth of the world’s groundwater—more than China and the U.S. combined—making it the largest global user.

Wastewater Management – A Pressing Challenge

India generates over 72,000 million liters per day (MLD) of sewage, but only around 44% is treated, leaving more than 40,000 MLD of untreated wastewater flowing into rivers and lakes. Major urban centers like Delhi, Mumbai, and Chennai have established sewage treatment plants, but smaller cities and rural areas remain severely underserved. Regional disparities are stark, with states like Maharashtra, Tamil Nadu, and Gujarat having better treatment capacities compared to Uttar Pradesh, Bihar, and northeastern states, which face acute infrastructure shortages.

Pollution of rivers such as the Ganga, Yamuna, and Godavari highlights the consequences of weak enforcement and inadequate treatment facilities. Industrial effluents from textiles, pharmaceuticals, and chemical industries further aggravate the problem, with many units either bypassing effluent treatment plants (ETPs) or relying on underperforming common facilities.

Infrastructure Transformation and Monitoring

The Jal Jeevan Mission has transformed rural water access, with tap water coverage rising from just 17% in 2019 to nearly 74% of rural households by early 2024. Grassroots involvement is emphasized through the certification of villages as ‘Har Ghar Jal’. Urban areas, under AMRUT, are witnessing modernization of water supply systems to reduce leakages and ensure equitable distribution.

To address challenges of quality and transparency, IoT-based monitoring systems, geo-tagging of assets, and third-party inspections are being deployed. These digital interventions ensure accountability and provide real-time progress tracking through platforms like the JJM Dashboard and mobile app.

Market Outlook and Opportunities

India’s water and wastewater treatment market is projected to reach USD 3.7 billion by 2030, growing at a CAGR of 11% between 2024–2030. Within this, the EPC segment for water treatment is expected to rise from USD 1.8 billion in 2024 to USD 3.5 billion by 2030, registering a CAGR of 11.4%.

This growth will be driven by:

• Stringent effluent treatment regulations

• Rapid urbanization and industrialization

• High demand from emerging industries like hydrogen and semiconductors

• Government initiatives ensuring sustainable water access and wastewater recycling

Despite being a fragmented market with over 180 EPC participants, the sector offers immense potential for consolidation and innovation. Large players are well-positioned to capture high-value, complex projects, while small and mid-sized firms continue to address localized needs. Digital tools such as IoT, smart water meters, and BIM (Building Information Modelling) are expected to enhance efficiency and sustainability in upcoming projects.

Conclusion

India’s water and wastewater treatment industry stands at a pivotal point. While the government’s massive investments and flagship schemes are transforming water infrastructure, challenges such as groundwater depletion, untreated sewage discharge, and regional disparities persist. However, with sustained focus on policy reform, private sector participation, advanced technologies, and smart water management, the sector is poised for rapid growth.

The coming decade will not only reshape India’s water infrastructure but also define its ability to balance economic growth with sustainable water security

BUSINESS STRENGTHS

1. Strong execution capabilities supported by in-house expertise
Sattva Engineering Construction possesses robust in-house design, engineering, and execution capabilities, enabling successful delivery of complex and critical projects. The team’s expertise includes process description, hydraulic calculations, drainage design, STP facility layouts, process flow diagrams, instrumentation diagrams, and electrical load analysis. These capabilities ensure accurate bidding, cost-effective execution, and adherence to project specifications, resulting in consistent and timely project delivery. Since inception, the company has successfully executed more than 50 projects, with an order book of 13 ongoing projects valued at approximately ₹30,809.84 lakhs as of March 31, 2025.

2. Adoption of advanced technologies in STP and WTP projects
Project execution is supported by advanced technologies such as the Supervisory Control and Data Acquisition (SCADA) system, which enables real-time monitoring of parameters like discharge rate, power consumption, and chemical levels. The system is directly linked to Pollution Control Board monitoring platforms and client systems, ensuring compliance, fault detection, and operational efficiency. Additionally, the company has implemented SAP Business One (ERP) for improved project management and internal controls. With continuous investment in technology-driven processes, value engineering, and innovative solutions, the company remains competitive in addressing customized project requirements across diverse geographies.

3. Projects backed by international financial institutions
Several projects have been funded under Central Government schemes such as AMRUT and Jal Jeevan Mission, along with contributions from states and Urban Local Bodies (ULBs). Additionally, projects funded by international agencies such as the World Bank and Asian Development Bank provide strong financial security and credibility. These institutions’ rigorous ESG-focused selection processes not only ensure timely payments and negligible bad debts but also endorse the company’s technical and execution capabilities, enabling it to undertake larger and more complex projects with stronger margins.

4. Experienced leadership and management team
The company benefits from the guidance of promoters and directors, S. Seshadri and R. Sekar, who bring over three decades of experience in water and wastewater treatment. Their strategic vision, technical expertise, and leadership have been pivotal in driving growth. Supported by a qualified and experienced senior management team, the leadership ensures efficient project execution, client relationship management, and operational excellence.

5. Strong and diversified order book
As of March 31, 2025, the company maintains a diverse order book of 13 ongoing projects across WSS, UGSS, STPs, and WTPs, with an aggregate value of ₹30,809.84 lakhs. This order book reflects the company’s proven track record in bidding and winning projects, driven by technical strength, financial stability, cost competitiveness, and timely delivery. Post-commissioning, the inclusion of operations and maintenance (O&M) contracts ensures steady cash flows and contributes significantly to profitability.

BUSINESS STRATEGIES

1. Executing large-scale projects and enhancing execution capabilities
The company aims to strengthen its presence in Water Supply Projects (WSPs) and Sewage Treatment Plants (STPs) by targeting larger projects ranging from 12.5 MLD to 60 MLD and beyond. Focus remains on designing, construction, operation, and maintenance, with selective pursuit of high-capacity projects that offer better margins, economies of scale, and resource optimization. Successful execution of larger projects will enhance pre-qualification for higher-capacity tenders and reinforce competencies in design and execution.

2. Expanding geographical footprint
With 50 completed projects in Tamil Nadu, the company is now diversifying into other states while continuing to strengthen its base in Tamil Nadu. Registration as a Class I contractor in Karnataka provides eligibility to execute larger and more complex projects. Expansion into new regions will reduce dependency on a single geography, mitigate risks from local market fluctuations, and enable access to diverse growth opportunities across India. The strategy emphasizes careful selection of markets to ensure smooth project delivery and sustained growth.

3. Leveraging government policy initiatives
The business is positioned to benefit from multiple government schemes such as Jal Jeevan Mission, AMRUT 2.0, Smart Cities Mission, PM Krishi Sinchayee Yojana, Atal Bhujal Yojana, National Water Mission, and Dam Rehabilitation Programme. These initiatives focus on urban and rural water supply, irrigation efficiency, sustainable groundwater management, and climate-resilient water solutions. Strong execution capabilities, proven track record, and experienced leadership enable the company to capitalize on emerging opportunities in water and wastewater management sectors.

4. Strengthening financial efficiency through working capital management
Efficient working capital management remains central to sustaining growth in the water infrastructure sector. The company emphasizes timely receivables collection, strategic inventory management, and favorable supplier terms, supported by flexible banking arrangements. This approach ensures strong cash flows, operational efficiency, and financial stability. Additionally, part of the net proceeds from the Issue will be directed toward long-term working capital requirements, enabling execution of larger infrastructure projects, expansion of service capabilities, and strengthening of the order book position.

BUSINESS RISK FACTORS & CONCERNS

1. High dependence on government projects
Revenue is largely derived from contracts awarded by government bodies or government-funded entities under schemes such as AMRUT and Jal Jeevan Mission (JJM). Any reduction in budgetary allocation, policy changes, administrative delays, or change in government could significantly impact project availability, bidding cycles, or execution timelines.

2. Exposure to regulatory scrutiny and receivable delays
Contracts with government agencies involve technical audits, internal approvals, and policy-linked delays. Deferred payments or cancellation of contracts can adversely affect cash flows, liquidity, and working capital, directly impacting profitability.

3. Geographic concentration risk
Operations are currently concentrated in Tamil Nadu, with more than 50 completed projects and 13 ongoing. Failure to expand successfully into other states, such as Karnataka, could expose the company to risks from regional economic, political, or regulatory changes.

4. Dependence on consortium partners
For certain government projects, bidding is done in consortium arrangements. Any failure of partners to meet obligations could impose additional financial and performance liabilities on the company, given the joint and several liability structure of such arrangements. This may result in reduced profitability or significant losses.

5. Volatility in material and labour costs
Execution of WSPs, UGSS, STPs, and WTPs requires substantial use of raw materials, equipment, and labour. Increases in construction material prices, labour costs, or works contract charges could materially impact project costs, margins, and overall financial condition.

Summary :
The business is primarily dependent on government-funded projects in the water supply and wastewater management sector. This exposes operations to risks such as policy changes, delays in receivables, project execution challenges, reliance on consortium partners, and cost escalations. Geographic concentration in Tamil Nadu and high dependence on tenders further increase exposure to market, financial, and operational uncertainties.