The Hindu : Business : VA Tech brimming with orders

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Business

VA Tech brimming with orders

Corporate Reporter

Enters into an alliance with Sumitomo Corporation of Japan to expand business

CHENNAI: VA Tech Wabag has achieved further progress in the 12 months ended March 31, 2011 with a further build-up in order book position and improvement in profitability. Announcing the results here on Friday, Rajiv Mittal, Managing Director, told reporters that the company's order book position had grown by Rs.1,800 crore to Rs.3,400 crore. Of this 72 per cent to India and 28 per cent related to overseas subsidiaries.

It has bagged an order from National Water Supply and Drainage Board for Greater Dambulla water supply scheme, Sri Lanka. The order valued about Rs. 360 crore, is to be executed in 30 months. It won two orders from Maynilad Water Services, Philippines, for about Rs. 45 crore for construction of two sewage treatment plants, one at Tatalon and another at Bagabad. These will be executed in a year, Mr. Mittal said.

The company also bagged an order from Reliance Industries for its effluent treatment plant refurbishment which was originally built by WABAG during 1998. The order valued at Rs. 18.50 crore is to be completed in 16 months.

The company in consortium with Konark Infrastructure, bagged an order from Ulhas Nagar Municipal Corporation.

The EPC (engineering project construction) value of the prospect to be executed by WABAG is around Rs.100 crore. It also bagged O&M (operation and maintenance) contract for Rs.600 crore is to be executed for 30 years. The project work expected to commence by next year, is to be completed within 18 months.

VA Tech has bagged one more order on BOOT (build, own, operate and transfer) basis in consortium with SPML Infra from Aurangabad Municipal Corporation. The EPC value of the project is Rs. 55 crore and O & M contract for 17 years is Rs. 72 crore. The project work which will commence during the first quarter of 2012, is to be completed within 24 months.

Mr. Mittal said the Rs.1,033-crore desalination project, funded by the Central Government, at Nemmeli, near Chennai, which was inaugurated on February 23, was progressing according to schedule. The company has completed 75 per cent of the work and the plant would commence operations by June 2012.

Regarding Libya project, Mr. Mittal said, with the existing uncertain political situation in Libya, the company had withdrawn its entire expatriate staff. It has adequate credit insurance to cover this risk in Libya apart from valid LC.

Detailing the future initiatives, Mr. Mittal said the company had entered into an alliance with Sumitomo Corporation of Japan to expand business.

These projects are capital-intensive but provide annuity business and higher margins in the long run, Mr. Mittal said. This also accelerates Sumitomo's strategy to have presence in water infrastructure business in India. Wabag has signed a memorandum of understanding with Gujarat government for implementing water recycling and desalination plant at a cost of about Rs. 700-800 crore.

Wabag has tied up with Zawawi, Sultanate of Oman to tap the operation and maintenance business in water space in Oman.

The company floated a subsidiary company in Oman with 30 per cent shareholding by joint venture partner.

Pays Rs. 10 per share

Detailing the financial position, Mr. Mittal said the company was now a debt free company and had a liquidity of Rs. 350 crore in cash balance. With slow growth in infrastructure projects, the company has achieved revenue of Rs. 1,241.80 crore for the year ended March 31, 2011, against Rs. 1,229.50 crore and a profit after tax of Rs. 52.60 crore against Rs. 44.80 crore.

It has declared a dividend of Rs. 10 per share on capital enlarged by the issue of fresh equity through initial public offer.

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