Concord Enviro Systems got SEBI approval for IPO – Do you invest?

Concord Enviro IPO
Concord Enviro IPO Review

Concord Enviro IPO – The company and its operation

Concord Enviro IPO – Concord Enviro Systems was started by Kamlesh Kumar Goel as a private limited company in 1991. The headquarter of the company is in Mumbai, Maharashtra, India. The company is an environmental engineering solution firm, with zero water discharge solution from any source. Concord Enviro Systems Private Limited engages in the development, manufacturing, and installation of wastewater treatment and reuse systems. The company claims to be the second largest Indian solutions provider for industrial water recycling and reuse systems.

Concord Enviro Systems is the largest ZLD solutions provider in India in revenue terms. As of March 31, 2022 Concord Enviro Systems had three patents in India. The company also filed three more patent applications. Concord Enviro Systems has two manufacturing facilities located at Vasai in Maharashtra, India, and Sharjah in the UAE. Concord Enviro IPO got SEBI node to list on the stock exchanges.

Concord Enviro System has designed and applied technologies to develop a solution for wastewater treatment and recycling. The company’s solutions include treatment of wastewater using membrane-based systems, ZLD using WHEs and dryers, and desalination of seawater. Concord Enviro Systems Served across the industries such as Pharmaceuticals, Distillery, Textiles, Chemicals, Sugar, Automobile, Food & Beverage, Oil and Gas.

Concord Enviro IPO – The company’s Key Products & Services

Concord Enviro Systems provides water reuse solutions such as zero liquid solutions with a modular solution. The company is the first to launch unique & efficient technology within Reverse Osmosis. It is a low energy driven solution, zero Capex rental solution.

Concord Enviro Systems Subsidiary:

    • Rochem Separation Systems Private Limited (“RSSPL”) engaged in the business of manufacturing, and selling of chemicals, lubricants, pigments, colors, and detergents.
    • Rochem Services Private Limited (“RSPL”) engaged in the business of converting waste products into energy products by use of blue flame or gas technology. The company provided services ancillary to the treatment of wastewater using physical, chemical, or biological processes.
    • Reva Enviro Systems Private Limited (“RESPL”) engaged in manufacturing and suppling of partial or total systems, related to the managing of the global environment in India and elsewhere in the world.
    • Concord Enviro FZE (“CEF”) engaged in the business of water treatment-related activities.
    • Blue Water Trading and Treatment FZE (“BWT”) engaged in the business of water treatment-related activities and manufacturing water filters.
    • Concord Enviro SA De.C.V., Mexico (“CES”) engaged in applying knowledge to the design, development, manufacturing, and sales services of several technological processes of conventional systems of the membrane using reversible osmosis technologies for seawater, saline water, industrial water treatment plant, wastewater treatment plant and plant or systems of any other type of wastewater coming from any sources as authorized by the bylaws of the charter documents.

Concord Enviro IPO – Management Team

The longest-serving directors currently on board are Prayas Goel and Prerak Goel.

Prayas Goel is Chairman and Managing Director of the Company. He holds a bachelor’s degree in mechanical engineering from the University of Mumbai. Prayas associated with the company’s Subsidiary, Rochem Separation Systems (India) Private Limited since June 1, 1998. He has also been part of Concord Enviro Systems Company since May 5, 2009.

Prerak Goel is an executive Director of the Company. He holds a bachelor’s degree in commerce from the University of Mumbai. Prerak is also holding a master’s degree in business management from the Asian Institute of Management. He has over 19 years of experience in organizational and financial strategy, fundraising and investor management, and international sales.

Kamal Shanbhag is an Independent Director of the Company. She is a chartered accountant from the Institute of Chartered Accountants of India. Kamal has been associated with Wonderland Investment Consultants for the past three years. She has over 27 years of experience in financial advisory and consultancy services. Kamal also has been associated with Concord enviro system Company since May 25, 2022.

Prakash Shah is an Independent Director of the Company. He holds a bachelor’s degree in law from the University of Mumbai. Prakash is a solicitor and advocate practicing in Mumbai and has several years of experience.

Concord enviro system financial snapshot:

Total revenue decreased by 8.37% to INR 3.52 billion in FY21 from INR 3.9 billion in FY20. However, the total income increased by 28.31% to reach INR 3.9 billion in FY20 from INR 3 billion in FY19. Profit after tax has increased by over 150% from FY2020 to FY2021. The cost of raw materials and components consumed is the major expense over the year and keeps the profit low. The raw material cost has increased from INR 1364 in FY19 to INR 1,680 in FY20. The raw material cost is almost 50% of the total expenses during those years.

Items (INR Million -Year ended March 31)201920202021
Total Income3000.933850.443528.03
Total Expenses2780.763725.73302.25
Profit after Tax158.5278.6198.12
Source: DHRP document file by Concord Enviro system

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Concord Enviro IPO – Funding in Concord enviro system

Global Environment Fund Management, Sage Capital, and AF holdings are investing in the company. The Concord enviro system is planning for IPO of INR 175 crores. The face value of each equity share is INR 5. The company has got approval from SEBI to come up with Concord Enviro IPO. Concord enviro system is planning for the fresh issues of Equity Shares aggregating up to INR 1,750 million.

The company is also coming up with an offer for the sale of up to 3,569,180 Equity Shares. Promoters are mainly selling their holdings in the offer for sales. The company will utilize the net proceeds to meet the working capital requirements of the company and general corporate purposes. It seems the company is not planning for any expansion using this fund. Looking at the above factors I would prefer not to invest in this company.

Industry Outlook:

The global water and wastewater treatment solutions market is valued at US$760 billion in the year 2021. The global market is expected to grow at a CAGR of 4.7% from the year 2022 to reach US$1,057 billion in the year 2027. The adoption of IoT in the water and wastewater sector in India is currently low and has high growth potential. Increasing urbanization and depletion of groundwater level will drive this market further in the future. In addition, the municipal segment contributed 76% of the revenue amounting to US$580 billion.

The industrial segment accounted for 24% of the revenue generated in the calendar year 2021, amounting to US$180 billion. Contribution of these two segments will further boost the industry in India and abroad.