The Hindu Business Line : VA Tech Wabag bets on overseas markets for growth

Chennai April 6 VA Tech Wabag, the Chennai-based water treatment, recycling and effluent treatment company, expects its overseas market to grow significantly contributing to nearly half its revenue in the coming year.

According to Mr Rajiv Mittal, Managing Director, VA Tech Wabag Ltd, the company in the last few months has set up overseas offices in Indonesia and Dubai. Both these regions, West Asia and South East Asia, are expected to see major growth in water infrastructure, which will give the company significant business opportunities.

The company, which is set to report a turnover of Rs 250 crore - Rs 300 crore in 2006-07, is likely to get about 40 per cent of its revenue from overseas projects in the current year. On its current overseas business, Mr Mittal said the company is on the verge of finishing a wastewater treatment in Oman.

Buying European co

West Asia will be a major market over the next 5-10 years with opportunities in desalination and wastewater treatment. The South East offers opportunities in industrial water treatment and wastewater treatment.

Also, driving the overseas growth will be the acquisition of a European company in total water management. It is a 100-year-old brand with its businesses matching VA Tech's own line of work and is among the largest players in the field. This acquisition, likely to be finalised by the middle of this year, will give VA Tech Wabag a presence in China, Africa, West Asia, Far East, apart from Central and Eastern Europe, he said.

Gets $20 m funding

VA Tech Wabag recently received $20 million fund infusion from GLG Partners, UK, which has taken a stake in the company. Prior to the fund infusion ICICI Ventures held 60 per cent, Siemens 20 per cent and the management team 20 per cent. Each of these will dilute its stake by 10 per cent in favour of GLG, he said.

The funds are to be used for the acquisition of the European company and to finance its growth plans in the domestic market.

The company has opted to grow through acquisitions because it is harder to stabilise in a market when starting from scratch, a lesson VA Tech learnt from its experience in India. So they were targeting medium and large companies that would give them "smooth access to a market and substantial volumes", Mr Mittal said.

Reorganises structure

The company will continue to retain its leadership position in the domestic market. This week it reorganised its structure into four strategic business units each of which would focus on distinct market segments. These are: municipal and wastewater, industries, operation and maintenance business and exports.

VA Tech Wabag sees opportunities in the emerging special economic zones. It is talking to some of the developers to set up water management infrastructure, he said.

More Stories on : Overseas Investments | Water | Infrastructure

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