H2O INNOVATION INC.
TSX VENTURE : HEO

H2O INNOVATION INC.

April 06, 2011 08:00 ET

H2O Innovation India Opens Manufacturing Plant-Secured CAN$4.2 Million in Bookings of Industrial Water Treatment Equipment in its First Year of Operation

All amounts in Canadian dollars unless otherwise stated.

QUEBEC CITY, QUEBEC--(Marketwire - April 6, 2011) - H2O Innovation Inc. ("H2O Innovation" or the "Company")(TSX VENTURE:HEO)(ALTERNEXT:MNEMO:ALHEO) announces today that its Indian joint-venture H2O Innovation India Ltd. ("H2O Innovation India"), based in Mumbai, India, has opened its first manufacturing plant near Vadodara, India, and secured $4.2 M in bookings of water treatment systems and equipment for industrial Indian customers within its first year of operation.

Created in February 2010, just over a year ago, H2O Innovation India is a joint venture between Chembond Chemicals Limited ("Chembond") of Mumbai, India and H2O Innovation. Pursuant to the joint venture agreement, Chembond owns 51% of the shares of the joint venture and the Company owns the remaining 49%. During its first year of operation alone, H2O Innovation India was awarded contracts totalling $4.2 M for the supply of industrial water treatment systems and equipment for industrial customers (including the contracts valued at $2.2 M announced on June 8, 2010). As of April 6, 2011, H2O Innovation India's sales backlog stands at $2.6 M for Indian projects only. H2O Innovation India's backlog will now be consolidated into the Company's sales backlog – proportionally to the Company's interest in the joint venture.

Operating out of Mumbai, where its sales, engineering, and service offices are located, H2O Innovation India inaugurated last month a 10,000 sq. ft. manufacturing plant near Vadodara, State of Gujarat, India. The plant's manufacturing capabilities are equivalent to those of the Company's plants located in Ham-Nord, QC and Minneapolis, MN. This new production capacity will enable H2O Innovation India to locally ensure detailed engineering, together with assembly, welding, pipe fitting, in-house performance testing and programming, among other operations. It will also enable H2O Innovation India to have a better control on delivery schedule and to strictly honour its commitments towards its customers. The capital expenditure incurred to build the plant has been assumed by Chembond, and H2O Innovation India has entered into a lease agreement with Chembond.

Now relying on an extended footprint in India through its partner Chembond, coupled with an in-depth knowledge of membrane-based water treatment systems, H2O Innovation India provides water treatment solutions and operation & maintenance services to SAARC(1) countries, among which India. As part of the contracts awarded this year, H2O Innovation India provides custom-designed plants for specialized applications (including water reused from cooling tower blow-down, demineralization and condensate polishing), and also offers packaged units, system optimization and after-sales service. H2O Innovation India already provides full operation & maintenance to a multi-national industrial client in Central India. The Company has partially outsourced to H2O Innovation India three major international membrane filtration projects for industrial customers in the petrochemical, power generation and oil & gas markets.

"We are proud to see that H2O Innovation India has successfully secured these contracts within the first year of operation, while constituting a sizeable backlog and developing a growing sales pipeline in such a short period of time", stated Nirmal V. Shah, Managing Director of H2O Innovation India. "We are confident that H2O Innovation India's devoted team of water treatment experts will build on these contracts and our extended local presence to sustain its growth objectives while focusing on the execution and management of the projects."

An Indian Market Abounding With Opportunities

Firmly open to renewable energy and sustainability, the Indian industrial and commercial water treatment market should give H2O Innovation India the opportunity to actively make use of its advanced water reuse applications to satisfy a necessity driven by water scarcity and cost of water. H2O Innovation India should also be able to make the most of its water treatment expertise through offering advanced membrane filtration systems with high recovery, zero liquid discharge (ZLD) or membrane bioreactors (MBR).

"H2O Innovation India is more than just an outsourcing platform; it is a direct extension of our company's philosophy and quality commitment. And with this local presence in India and our team's deep knowledge of the market, our activities have now reached a truly international level", stated Frédéric Dugré, President and CEO of H2O Innovation. "But H2O Innovation India's success would never have been possible in such a short time and at such a distance without our valued partner Chembond. Its brilliant reputation, its market insight, its local presence, its customer history have all been instrumental to H2O Innovation India's successful startup. Thanks to Chembond, H2O Innovation India has been able to quickly and efficiently secure top-tier industrial customers across India", concluded Frédéric Dugré.

About H2O Innovation India Ltd.

H2O Innovation India Ltd. is a joint venture between H2O Innovation Inc. and Chembond Chemicals Limited of Mumbai, India providing water treatment systems and operation & maintenance services to the fast growing Indian & SAARC industrial, commercial, and institutional markets for the production of high-quality water for use in industrial processes, for reclamation and reuse of industrial waste waters, as well as for treatment of domestic waste waters. Headquartered in Mumbai, India, H2O Innovation India also operates a design center and manufacturing plant near Vadodara, in Gujarat state, India and has close to 30 employees, among which about half are engineers.

About Chembond Chemicals Limited

Founded in 1975, Chembond Chemicals Limited has headquarters in Mumbai and focuses on the speciality chemicals segment. The company is listed on the Mumbai Stock Exchange (BSE: CHEMBOND) and has an established presence across India. It operates four divisions – construction chemicals, coatings, trading, biotechnology and two joint ventures – Henkel Chembond Surface Technologies Ltd. and Chembond Ashland Water Technologies Ltd. for metallic surface treatment and industrial water treatment respectively. Chembond has been growing consistently over the years on the strength of its technology and service capabilities and counts over 700 employees. More information on Chembond Chemicals Limited can be found on Chembond's website at www.chembondindia.com.

About H2O Innovation Inc.

Building on 10 years of experience, H2O Innovation designs, manufactures, and integrates state-of-the-art custom-built water treatment systems for the production of drinking water, the reclamation of water, the treatment of wastewater and industrial process water in the municipal, commercial, industrial, oil & gas, mining, and energy markets. Additionally, the Company offers complete operating and maintenance solutions for membrane filtration and reverse osmosis systems. H2O Innovation has approximately 100 employees and eight offices including three manufacturing plants in Canada and the United States and is a founding partner of H2O Innovation India, a joint venture based in Mumbai, India. Shares of H2O Innovation are listed on the TSX Venture Exchange (HEO) as well as on the NYSE Euronext Alternext Exchange (MNEMO: ALHEO). For more, visit www.h2oinnovation.com.

Prospective disclosures

Certain statements set forth in this press release regarding the operations and the activities of H2O Innovation as well as other communications by the Company to the public that describe more generally management objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of securities legislation. Forward-looking statements concern analysis and other information based on forecast future results and the estimate of amounts that cannot yet be yet determined. Forward-looking statements include the use of the words "expect", "believe", "estimate" and other similar terms as well as those usually used in the future and the conditional, notably regarding certain assumptions as to the success of a venture. Those forward-looking statements involve a number of risks and uncertainties which may result in actual and future results of the Company to be materially different than those indicated. Information about the risk factors to which the Company is exposed is provided in the Annual Information Form dated September 21, 2010 available on SEDAR (www.sedar.com). Unless required to do so pursuant to applicable securities legislation, H2O Innovation assumes no obligation to update or revise forward-looking statements contained in this press release or in other communications as a result of new information, future events and other changes.

(1) SAARC: South Asian Association for Regional Cooperation, including Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor the Alternext Exchange accepts responsibility for the adequacy or accuracy of this release.

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