VA Tech WABAG to resume growth curve from this fiscal

Even as the company moots ‘One City One Operator’ concept for sewage treatment projects, VA Tech WABAG, a prominent player in water treatment projects, hopes to get back to growth path from this fiscal after a blip last year.

After demonstrating several benefits through “One City One operator” (OCOP) concept in Istanbul (Turkey), the company will be implementing the ₹1,477-crore sewage treatment project in Ghaziabad and Agra as part of the Clean Ganga mission. The contract includes operation, management and maintenance of sewage treatment and network infrastructure for 10 years.

The OCOP concept integrates building of treatment plants and maintenance of infrastructure under one operator for the entire city/zone.

Benefits of OCOP model

“One City One operator concept has several benefits. It compresses cost, cuts delays and helps in faster implementation. Large metros and big cities can be broken up into zones and the model can be adopted. It has taken a lot of time for us to adopt this model and everybody across the country is watching the implementation. Once they start seeing results, others will also follow this,” Rajneesh Chopra, Global Head – Business Development, VA Tech WABAG Ltd.

With growing importance for recycling and reuse of water, the company sees a strong growth momentum. Its order book was ₹11,500 crore as of September 30, 2019 and it has been growing at a CAGR of 13 per cent in the past five to six years.

“We will be back onto a growth path this year and we have given a revenue guidance of ₹3,000 crore for the current fiscal,” said Chopra. In 2018-19, the company’s revenue was ₹2,781 crore, down from ₹3457 crore in 2017-18.

Bets on O&M

Though the company has a good mix in its order book, it bets on O&M (operation and maintenance) orders to grow its botttomline. O&M constitutes 20 per cent-plus of the outstanding order book. It contributes 15 per cent to the revenue and is expected to grow to 20 per cent next year. Its objective is to derive one-fourth of the revenue from O&M services.

As of now, the company produces over 25,000 mld (millions of litre per day) of water and treats over 30,000 MLD of waste water. In the next two years, it is expected to add over 2,400 MLD.