VA Tech Wabag, which has bagged a $350-million desalination plant contract as part of an international consortium in Oman, sees a revival of opportunities in West Asia.
The Rs 1,925-crore project also marks the launch of Wabag’s tie-up with the Sumitomo Corporation over a year back to tap global opportunities in water infrastructure projects.
A statement from the company said the Oman Power and Water Procurement Co has awarded the 192-million-litre-a-day seawater desalination project in Muscat to a developer consortium which includes Malakoff International Ltd, Malaysia; Sumitomo Corporation, Japan; and Cadagua, Spain. Oman Power will also enter into a water purchase agreement with the project company to be formed shortly.
VA Tech Wabag, along with Cadagua and Galfar of Oman, will float a joint venture to handle the Engineering-Procurement-Contract to set up the plant to come up on a build-own-operate basis.
Rajiv Mittal, Managing Director, said the deal is significant as it is the first after its tie-up with the Japanese conglomerate to tap utility scale projects. Wabag’s expertise will be involved with the international developer consortium bringing in the funds.
Also, the order is an indication of the revival of the West Asia and North Africa markets, after the political upheaval caused by the Arab Spring in the region resulted in the market “going cold on us”, he said.
At that time the company had over €50-60 million (Rs 300-350 crore) order backlog in the region with Letters of Credit awaited for an additional €120 million. All of these were stalled and “revenues stopped abruptly,” he said.
But now order flow has started from Libya, Tunisia, and by December-end from Egypt. From the first quarter of 2013-14, the market will be fully stabilised, he said. This will fully benefit the top line, Mittal said.
A silver lining for Wabag was that the company tapped into new markets such as Turkey, Istanbul, Romania and the Philippines.
Net profit doubles
For the second quarter ended September 30, VA Tech Wabag has more than doubled its net profit compared with the corresponding quarter last year. The net profit was Rs 17.58 crore (Rs 7.05 crore) in an income of Rs 217.98 crore (Rs 168.95 crore). The order backlog is over two years at Rs 4,025 crore.
balaji.ar@thehindu.co.in