VA Tech Wabag has restructured its business verticals to target desalination and water recycling, which it believes will generate significant business volumes.
The Chennai-based integrated water and waste water management company with an international presence, has segmented its businesses under municipal water projects, which is its largest business segment, industrial, desalination and operation and maintenance.
Desalination is the new focus segment, created in the place of international businesses.
The objective is to better focus on the major opportunities in the domestic and international markets. VA Tech Wabag is a multinational with its headquarters in Chennai and over 20 international subsidiaries.
The move is in line with the emerging trends in the water sector, says the Rs 1,000-crore company's Managing Director, Mr Rajiv Mittal.
This will enable it to sustain its targeted growth rates of about 15-20 per cent in top line and order inflow and a bottom line growth of about 30 per cent.
The company is implementing a Rs 1,033-crore desalination project for the Chennai Metrowater, a public sector utility. The 100-million litres a day project will convert seawater to freshwater for supply to South Chennai. It will be commissioned in September.
Mr Mittal said this project, the second desalination facility for Chennai, will open up the desalination projects by utilities in various States. Kerala, Gujarat, Maharashtra and other coastal States have evinced interest in the project.
The company's Executive Director – Finance, Mr S. Varadarajan, said this project will further drive the operation and maintenance business as the seven-year maintenance of the project will generate revenue of about Rs 70 crore a year. Operation and Maintenance business is another area of focus, he says.
This segment now accounts for about 15 per cent of the order book of about Rs 3,731 crore. About four-five years back it accounted for just about four-five per cent.
Margins are higher in operation and maintenance as compared with construction contracts. This is good for the company and revenues are also more predictable, he said.
rbalaji@thehindu.co.in