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— Bijoy Ghosh

Mr Rajiv Mittal, Managing Director, VA Tech Wabag Ltd.

R. Balaji

Chennai, June 13 VA Tech Wabag, the international water management company headquartered in Chennai, has set its focus on emerging markets to grow its business.

The Rs 1,250-crore company will also expand its India-based engineering services business to support its international operations and move towards a decentralised structure to enhance competitiveness.

VA Tech Wabag has completed the first full year of operations following a consolidation in September 2007 when VA Tech Wabag India acquired VA Tech Wabag, Austria, formerly its parent.

Mr Rajiv Mittal, Managing Director, VA Tech Wabag Ltd and CEO of its global operations, said the company is looking at emerging markets – regions demonstrating higher than average growth – such as India, China, North Africa, Eastern Europe, Turkey, Iraq, West Asia and South East Asia.

In 2008-09, Wabag floated a subsidiary in China, where it needs a local presence to exploit the significant investments happening in water projects. China operations will come under the Indian business unit for competitiveness and utilise its access to European technology.

China’s market potential is several multiples of Indian operations and even a 2-3 per cent market share will mean it could emerge bigger than Wabag’s Indian business. The company will target projects by public sector water utility and water treatment and recycling projects by the industry.

Similarly, North Africa also represents another large potential. Initially, the new companies would report to India or Austria but the operations would be decentralised in stages to enhance competitiveness, Mr Mittal said.

The company has also set up an international engineering centre with 30-40 engineers in Pune as back office support for engineering services for its international businesses.

This centre would also handle the peak load and specialised skills for Indian operations and enable cost advantage for its international business operations. In India, the cost of such a service would be a fourth of European centre but the skills are comparable.

The company has exceeded the growth targets in business in 2008-09 with a turnover of Rs 1,250 crore with India accounting for approximately half the business and its international operations contributing the balance. Profit after tax was about 4 per cent.

On the outlook for the coming year, Mr Mittal said the company has a comfortable order book with a two-year backlog of orders valued at about Rs 2,270 crore. This includes about Rs 1,270 crore – representing about two years’ revenue for Wabag in India – and Rs 1,000 crore with Wabag International.

Wabag is also focussing on operation and maintenance of water treatment facilities for which intensive marketing has started, he said.

Prior to the acquisition in 2007, the Indian company was (till 2005) a subsidiary of VA Tech Wabag, Austria. In 2005, Siemens acquired the Austrian company while ICICI Ventures took a majority stake in the Indian company along with a management group headed by Mr Mittal. Following the acquisition in 2007, the management group and ICICI hold about a third of the stake and rest is held by a group including GIC, Singapore; GLG, UK; Sattva, Hong Kong; and Passport Capital, USA.

More Stories on : Outlook | Water | Engineering

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