Companies

With strong order book, VA Tech Wabag eyes growth curve from FY22

Our Bureau Chennai | Updated on December 24, 2020

Its positioning as a total solutions provider in the water space would provide an edge in the emerging business models such as ‘one city one operator’ (OCOP)

Va Tech Wabag, a home-grown global player in the water treatment space, hopes to get back to the growth curve next fiscal following the slowdown in businesses across the globe this year.

The company posted consolidated revenue of ₹2,557 crore in FY20 compared to ₹2,781 crore in FY19. In 2017-18, its revenue was ₹3,457 crore. With the current order book at ₹11,050 crore and eyeing better prospects, revenues are expected to cross ₹3,000 crore next fiscal.

“We are not aiming for any big growth this fiscal due to reasons beyond our control. This year is more of a consolidation period for us. We will end this fiscal with flat or marginally higher revenue,” said Rajiv Mittal, Managing Director & Group CEO of the company.

Also read: VA Tech Wabag moves High Court against Delhi Jal Board debar order

The Chennai-headquartered company sees strong potential for growth in the coming years due to strong order book, which is four times its revenue, improved prospects for water treatment and conservation in the post-Covid-19 period and United Nations’ framework for clean water goals (SDG6 and ESG), among others.

Mittal said the company’s positioning as a total solutions provider in the water space would provide an edge in the emerging business models such as ‘one city one operator’ (OCOP). The company was the first to introduce this in India after successful implementation of the same in Turkey.

As a test case, the Government of India has adopted OCOP in four projects, of which Va Tech Wabag secured two. The company has demonstrated the economic benefits of this model in its projects and expects this model to gather pace in the coming years. The hybrid annuity model (HAM), in which government invests 40 per cent and private players bring in 60 per cent, is also emerging in the water space.

Meanwhile, government projects offer immense scope due to enhanced focus on recycling and reusing. Apart from the Central government, five Indian states have clear water reuse policies. Also, massive allocation under Jal Jeevan Mission, Namami Ganga and the proposed desalination projects for a cumulative capacity of 1,000 MLD in India are expected to offer huge business opportunities for the company, going forward.

In the post-Covid-19 era, the heightened sense of hygiene due to the pandemic has led to an increase in water consumption. Also, water joined gold, oil, and other commodities traded on Wall Street, highlighting the fact that water may become scarcer across the world.

Mittal said the company is adequately capitalised and its cash flow position has become significantly better in the last 12-15 months, supported by the recent fund-raising of ₹150 crore from a marquee investor and the new businesses secured.

Rajneesh Chopra, Global Head – Business Development, VA Tech Wabag, pointed out that the company would rely on technology and digital adoption to capitalise on the emerging opportunities in water treatment.

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

The company has vowed to grow the share of the operation & maintenance (O&M) business in the overall revenue to 25 per cent from 19-20 per cent now, as that will help improve the margins and profits.

Published on December 24, 2020

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