Despite ₹8,000-cr order book, Wabag braces for challenging times globally

With an ₹8,000-crore order book that ensures revenue for the next three years is “completely visible”, VA Tech Wabag is well set, but it has its share of challenges, according to MD and Group CEO Rajiv Mittal.

For Wabag, a Chennai-based multinational player in water and waste water treatment and recycling, over the past two years, there has been an upswing in order flow from the industry, but these are largely from international markets. Order flows from the domestic market have been slow.

The company operates in four major geographical clusters — India and South-East Asia, Europe, West Asia and North Africa, and Latin America, a new market.

In an interaction with BusinessLine , Mittal said: “Even in 2015-16 our order intake was at a historical high of over ₹5,140 crore and at the end of 2016-17 we were at over ₹8,000 crore,” he said.

In a presentation to investors, for FY18, Wabag has given a guidance of ₹ 3,800-4,000 crore in revenue (₹3,207 crore in FY17) and an order intake of ₹4,300-4,500 crore (₹3,620 crore).

Whatever the economic situation, drinking water is a priority across markets, though sewage treatment may be put on the backburner or project size cut, he said.

For Wabag, the macroeconomic challenge is that the political situation is not at its best in West Asia or elsewhere. Also, there is a fear of global slowdown with China not doing too well, oil and gas prices down and investment mood muted.

“We need to manage that and still get business that is not too risky. We need to take our share from a smaller canvas, we need to be sharper in a more competitive market,” said Mittal.

But he is confident Wabag’s experience in tough markets such as Iran, Libya and Saudi Arabia will stand it in good stead.

On India, where industry and public sector order flows are down, Mittal said: “We are still optimistic but that does not convert into numbers on our profit and loss statement.”

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