VA Tech Wabag charts two-pronged strategy to drive strong growth

G Balachandar Chennai | Updated on September 24, 2020

Carries highest order book in its 24-year history

VA Tech Wabag plans to achieve strong growth going forward supported by a two-pronged strategy — to be a total water solutions provider at competitive rates and to give a deeper focus on emerging markets for profitability.

The company, a leading global player in the water treatment space, continues to see order flow amid challenging times. During the first quarter of this fiscal, it secured orders worth ₹4,440 crore. Now, it has a total order book of more than ₹11,110 crore (including framework contract), the highest in its 24-year history in India, the company said.

“We are confident that we would be delivering strong growth on the back of the strong order book. Moving towards water smart infrastructure, we intend on leveraging our geographical and inter-cluster synergies to provide total water solutions at competitive prices. Also, we would be focussing deeply on emerging markets for increasing business profitability,” Rajiv Mittal, Managing Director and Group CEO, said in the company’s latest annual report.

The ₹2,557-crore (consolidated) company offers a range of solutions and business models in water treatment space. Its positioning as a total solution provider in the water space is expected to augur well in view of favourable growth prospects for water and waste treatment projects from municipal and industrial users, supported by the Centre’s enhanced focus on boosting urban municipal infrastructure as well river clean-up projects. Also, increasing need to treat waste water in the industrial segment will provide a business opportunity.

With the Jal Shakti Ministry planning to replicate the model of Clean Ganga to another 11 rivers across India, Wabag foresees a great business opportunity like the one it executes in Uttar Pradesh under the Clean Ganga mission.

It also expects desalination to gradually gain scope in Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh as there will be a necessity to set up low-cost desalination plants to solve acute water shortage problems.

Foreign markets

The company expects growth prospects in its target markets such as West Asia, Africa, Europe and Latin America to remain strong. It recently secured a $48-million contract to build sewage treatment plant contract at the new Jeddah airport in Saudi Arabia.

“Despite the working capital issues, largely related to dues from power entities, the company has progressed well in terms of new order wins during last 12 months. The company intends to deploy ₹120 crore raised from high net worth investors in execution of backlog,” says a report of Cholamandalam Securities.

Published on September 24, 2020

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