The Hindu Business Line : VA Tech Wabag on expanding track; orderbook at Rs 2,000 cr

Chennai, May 17 VA Tech Wabag, the Chennai-based multinational water treatment company, is aggressively expanding its business with a focus on desalination, water recycling and operation and maintenance projects globally.

Following the acquisition of Siemens’ stake in VA Tech Wabag (Austria) last September, VA Tech Wabag, an ICICI Ventures company, is among the top three companies globally in water management with operations spread across Europe, Africa, India, Australia and the South East.

Mr Rajiv Mittal, Managing Director, VA Tech Wabag Ltd, says an indication of the hardsell is that over a year’s worth of orders, about Rs 1,000 crore, were booked between January and March after the acquisition. It now has over two years’ worth of work — about Rs 2,000 crore in value — in its order books.

VA Tech Wabag has been in India for over a decade in water treatment in the public and private sector. Its business covers municipal water and wastewater treatment, industrial water treatment, operation and maintenance. Half its business is from Indian operations and the surrounding region and the balance from Europe.

A year or two down the line, the closely held company will consider coming out with a public issue, he said.

ICICI Ventures leads a group of investors including GIC Singapore; GLG, UK; Sattva, Hong Kong; and Passport Control of the US who hold a two-third stake in the company. The rest is with the management and staff. Wabag is a Rs 1,200-crore company with more than 1,250 employees in Vienna, Switzerland, Czech Republic, Africa and Germany, apart from India.

Integration focus

Mr Mittal says the company is now looking at integrating the global operations to work seamlessly, exploit the strengths — the advanced technology and R&D capability available in Europe and the low cost operations possible in India — and expanding its business operations. The group headquarters would be in Chennai and the European operations’ headquarters in Vienna.

VA Tech Wabag plans to handle the engineering services out of India for its global operations. Manpower availability and costs are a big issue in Europe. The company can save Rs 4-5 crore a year even if 10-15 per cent of the engineering operations are handled out of India. Wabag has set up an engineering centre in Pune, where its industry business unit is located; the other business units are in Chennai.

Another area of integration would be in global procurement. Instead of individual companies within VA Tech Wabag handling their own procurement, the process would be bundled to increase volume and control costs. The sourcing would be from ‘low cost’ countries like India, China and East Europe, he said.

Marketing restructure

The company is also restructuring its marketing. While the local team would identify projects, a common team would draw upon the expertise available at various centres — for instance, the Chennai centre has its strength in sewage treatment, Vienna in high technology and Switzerland for ultraclean water.

The Indian company was till 2005 a subsidiary of VA Tech Wabag, Austria, when Siemens acquired the Austrian company and ICICI Ventures the majority stake in the Indian company. The management group headed by Mr Mittal held a minority stake. Last September, VA Tech Wabag acquired Siemens’ stake and effectively, the Indian subsidiary took over the parent.