“Now going forward, our endeavour will be definitely to look at how do we increase our overseas order intake. And as you mentioned, one of the key areas geographically is Middle East and Africa where we are targeting,” says Rajneesh Chopra, VA Tech Wabag.
There are some announcements, of course, big ones, India-Middle East in their recent meets. I want to understand from you, from a company standpoint, what kind of revenue potential or what kind of order potential are you expecting on the back of these tie-ups for say water-infra-related orders?
See, as you said, the outlook for the water sector per se has been pretty good, both in India as well as overseas. If you particularly talk about VA Tech, I think we are at all-time high order backlog and we have a good mix of India as well as overseas orders. One of the key orders which in recent past you have seen is 400 MLD desalination plant in India and a major breakthrough in Bangladesh for a wastewater treatment plant.
Now going forward, our endeavour will be definitely to look at how do we increase our overseas order intake. And as you mentioned, one of the key areas geographically is Middle East and Africa where we are targeting.
Recently we signed an MOU with one of the major developers in Saudi Arabia, when their minister was here after the G20. So, we had a strategic MOU signed with them. We are strategically tying up because the market has transitioned in GCC to more on the BOT basis.
So, we are in the process of having a strategic tie-up with other developers from Saudi Arabia, from Japan and UAE, so where we can definitely look forward to being a preferred EPC partner.
Now the size of the orders in GCC is pretty high. We have our some current bids under evaluation and being large bids obviously takes time, so we are keeping our fingers crossed about it.
But if I have to give you some idea, I think we are very well placed in orders worth around Rs 1500 crores currently in India and probably we look forward to order book by the end of March 2024 which will be higher than what we are going to execute this year.
And given that you already have some projects in the Middle East for water treatment, what kind of revenue exposure do you have in total and can you share some of the growth outlook for the ongoing projects?
See, as I told you, our ongoing projects, we have projects in Qatar. We have a project going on in Saudi. We have projects going on in northern part of Africa which is Senegal and Tunisia. These are some of the major projects which we are executing. So, as you would have seen, our revenue breakup, I think almost around 48% of our revenue is coming from overseas currently and we hope that going forward also, I think 50% of our revenue should be contributed by our overseas projects and 50% will come comfortably from India.
Also, I would like to highlight here that if you see our order book, we have a very-very strong order book of O&M projects, so these are design-build-operate projects, these are one city, one operator projects and that is another segment which is giving us a pretty good visibility both on the growth and definitely will aid us.
I also want to talk about the domestic projects which are currently on. Tell me what is the status on the progress of the desalination project in Chennai?
A pretty good question. I think you must have seen that our Honourable Chief Minister, Mr MK Stalin, I think around two weeks, two-and-a-half weeks back, he laid the foundation stone for that project. Now, the engineering is already going on for this particular project. I think at the site, we have just initiated our work and I think in third and fourth quarter this project will start contributing a good amount of revenue and also it happens to be an EPC project.
Currently, a lot of our revenues are coming from overseas EP projects, so definitely, it will aid our top line aspect. And same is the case for another project in Bangladesh which is a wastewater treatment plant funded by the World Bank and the Honourable Prime Minister of Bangladesh has laid the foundation, so the work has already begun.
So, in the second half, probably we hope that both these EPC projects, the execution will pick up and it will start aiding our top-line also.
So, give me a colour on what the order book is going to look like, and I am purely talking about domestic here, say a year from now, what are the demand trends looking like, the geographies, the segments, where you expect higher order visibility than the rest?
VA Tech Wabag has been a pure play water technology company and going forward our focus, if I look at the domestic segment, it is on high technology projects which is primarily desalination. It talks about recycle, reuse and also effluent treatment plants including zero-liquid discharge for large industrial projects.
Now if I have to give you just a small example, I think today recycle, reuse is something which has become a necessity. Five states have come with a firm policy on recycle, reuse where they intend to recycle 70% minimum and maximum 100% of their treated wastewater and Wabag has probably strongest credentials both in India and globally on this front.
Similarly, desalination, there are a lot of industries which are going for captive desalination for water security so that at no point of time their production gets suffered.
And treating all the effluent, especially we focus on oil and gas and metals and mining we are going in for a zero-liquid discharge.
So, all this is going to definitely help increase our revenue as well as these high technology we expect that they will give us a better margin than a typical municipal project.
