Techknowgreen Solutions: Pioneering With Their Green Wisdom

Green Earth

About the Company

Techknowgreen Solutions Ltd (TSL) (MCap 195 Cr), earlier known as  “Technogreen Environmental Solutions” was established in 2001 as a partnership firm. It was later converted into a public limited company in 2023. The company is one of the few listed players in the environmental consultation service space. With over 20 years of experience, the management claims that they were one of the pioneers in environmental compliance and consultancy in India before “sustainability” became a popular term.

A great interview to get business insights on the company:

About the Management

Techknowgreen Management Team

Techknowgreen has an experience of over 20 years. They have completed 2500+ projects including 1200 consulting projects, serving more than 350 clients.

Team Strength – 70; plans to grow to around 90 members within the next few months.

Business Verticals

Consultation (Knowledge Partnerships):

Under this vertical, the company operates in two main streams. 

The first one is Regulatory compliance, where the company assists its clients in obtaining all necessary permits and permissions from bodies such as the MIDC, Local Pollution Control Board, and other local authorities. They also offer specialized services like environmental crime investigation and cost-benefit analysis for environmental optimization. The company has recently expanded its expertise by earning the Quality Control of India NABET (National Accreditation Board for Education and Training) qualification, which allows it to handle environmental clearance projects in 13 sectors, up from an earlier 7 sectors. This is a regulatory stream that helps companies comply with the norms for ecological standards. 

Techknowgreen NABET Accreditation
NABET Accreditation

The company also supports urban and rural infrastructure projects by creating Detailed Project Reports (DPRs), pre-feasibility reports, and other project development documents.

The second stream is Sustainability planning/ reporting, where they provide assistance to companies in conducting sustainability reporting in the form of BRSR (Business Responsibility and Sustainability Reporting). This is in line with SEBI’s mandate to the top 1000 companies which requires them to file a BRSR report annually. Techknowgreen is well-positioned to provide such services.  In addition, the company works on carbon capture, carbon credits, and net zero plans. 

Technology:

The second vertical is divided into Implementation and Information Technology.

Under Implementation, the company addresses various pollution problems, including wastewater treatment for both domestic and industrial effluents, air pollution management on urban and industrial scales, solid waste management, and other related services based on new regulations. 

In the IT segment, the company is one of the first to be registered as an environmental IT firm under MSME, linking environmental compliance with IT by developing apps and software for carbon reduction, tracking, and overall environmental compliance.

Research:

This third vertical is divided into: Engineering and Policy.

Under the Engineering segment, the company continually develops new technologies for environmental pollution treatment. They identify problem statements from the market, understand the challenges faced by industries and governments, and apply innovative solutions to address these issues.

In the Policy segment, Techknowgreen conducts policy research and analysis to evaluate the feasibility and benefits of various policies. This includes assessing carbon and climate change policies, performing cost-benefit analyses for alternative fuels, and conducting social impact assessments to determine how policies may benefit the society.

Techknowgreen Services
TSL Services at a glance

Techknowgreen – Revenue Mix

Techknowgreen - Revenue Streams

Order Book

As of May 2024, TSL has an order book of around 35 Cr which they expect to be complete within a year

The company is serving around 80 – 100 customers yearly.

Last year, TSL had a revenue of 24 Cr. So, the ticket size is ~ 24 Lakhs.

Techknowgreen – Notable Projects

  1. Project from Maharashtra Pollution Control Board to prepare carbon action plans for 4,300 cities, aiming for carbon neutrality.
  2. Rejuvenation of Shahdara Jheel by treating sewage by East Delhi Municipal Corporation
  3. In-situ wastewater treatment in Kotawali Sewage/ Drain under rejuvenation of Vashishti river by Maharashtra Pollution Control Board.
  4. Environmental permissions and wastewater treatment design by Aamby Valley City.
  5. Environmental Clearance (EC), Post EC Compliance, and Monitoring services for ESG alignment by Everyonder
  6. TeSL handles all environment-related services for Cipla as their Corporate Environmental Consultant.
  7. Environmental Clearance and Allied Studies, PESO compliance project ST Telemedia Global Data Centres.

Geographical Presence of Techknowgreen

In Consultation, the company mainly operates in Maharashtra and Karnataka.

In terms of Technology, they have worked in 18 states. The company also has a strategic tie-up in the Middle East. Additionally, TSL plans to work with USEPA and USAID. They are establishing their presence in Saudi Arabia by setting up an on-ground execution team within 12 months. Furthermore, they plan to expand their expertise to the broader GCC market.

Techknowgreen – Clientele

Techknowgreen - Multinational Clients
Techknowgreen - Gov Clients

Techknowgreen – Financials

Techknowgreen - P&L

Sales have been increasing at a 44% CAGR for the last 3 years.

Margins also seem decent. But this is expected to change as the other streams of businesses take up more chunk of its total revenue.

EBITDA margin has shown decent growth.

Techknowgreen - Cash Flow

The Cash flow from operations has turned negative due to an increase in receivables. This is not necessarily a bad sign for a growing business. 

Techknowgreen’s Presence in the Carbon Credit Market

A carbon credit is like a permission slip that allows a company to generate one metric ton of carbon dioxide (CO2). On the other hand, a carbon offset is a project or action that prevents one metric ton of CO2 from being released into the atmosphere. 

There are two types of Carbon Marketplace where trading of carbon credits/ offsets takes place:

Voluntary market – In these markets, carbon credits are bought willingly by individuals/ businesses. Companies participate in these markets because they are proactive in addressing their carbon footprint.

Mandatory market – In these markets, companies are required by law to offset some of their emissions. These are part of government-regulated systems called ‘cap-and-trade’. Companies must buy and retire a certain number of carbon credits to meet emission reduction targets.

Techknowgreen is active in both the voluntary and mandatory/ compliance carbon markets. They assist companies in optimizing their systems to generate carbon offsets. Additionally, they help other companies calculate their carbon footprint and achieve their reduction targets by purchasing carbon credits. 

The Environmental Consulting Market

Source

The global Environmental Consulting Market is expected to grow from $40 bn in 2023 to $ 86.7 bn in 2033, growing at 8% CAGR. In India, the market size was around $255 mn at the end of 2023 and is expected to grow at 7.5% CAGR through 2030.

Driving Factors

Strengths

  1. Expertise in environmental management with a leadership team of experienced technocrats with more than 20 years of experience in environmental management and related projects.
  2. Techknowgreen is empanelled with the GeM (Government e Marketplace) portal, the Government of Maharashtra for achieving carbon-neutral cities, etc.
  1. Strong financial performance, with EBITDA growth from 14% in FY21 to 44% in FY23.
  2. Accredited by NABET and holds other essential certifications. They have also received numerous awards for their contribution towards a green planet.
  1. The only company registered under the MSME IT regime as an Environmental IT company.
  2. Offers a wide range of services, including research, consultancy, and technology, under one umbrella.
  3. One of the leading players in non-conventional wastewater technology.

Risks

  • The company operates in a high-growth but relatively new segment of environmental consulting.
  • TSL seems to have its hands on quite a few things and may need to narrow its focus to core business drivers.
  • Compliance tasks are repetitive, yet the company has been able to retain only around 30% of its customers.
  • Standardizing services as the company scales could pose a significant challenge for TSL. It will be interesting to see how Techknowgreen overcomes this challenge.
  • There are certain pending litigations involving the company. These are related to Direct and Indirect taxes. The details of these cases can be accessed here.

Why PrudentParrot finds this Company interesting?

  1. Recently, Techknowgreen received a patent for its circular economic wetland technology and developed a product called Yuka Yantra for managing urban air pollution hotspots. This control equipment has been approved by the Maharashtra Technical Committee and is being provided to various CSR and industrial clients.
    Apart from this, they are also in the process of filing another patent. 
  1. The company has a very positive outlook on its future growth aspects. It expects to grow its revenue at a 50% CAGR over the next 2-3 years.
  1. The company is eyeing ways to generate carbon credits through a revenue-sharing mechanism in order to sell these carbon credits in the market.
  1. SEBI has mandated the top 1000 companies to do their sustainable reporting each year, providing an opportunity for an annuity source of revenue for Techknowgreen.

See you next time.

Until then… Stay Prudent!

Disclaimer: This article is provided for informational purposes only and should not be considered as an investment advice

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