VA Tech Wabag Sees Better Q2 As Construction Activity Picks Up
Operation and maintenance contracts helped revenue growth for VA Tech Wabag Ltd. in the first quarter even as the pandemic hurt the water treatment solutions provider.
Global operations helped mitigate the overall covid impact as the lockdown was not as stringent as it was in India, Rajneesh Chopra, global head of business development of VA Tech Wabag, told BloombergQuint in an interview.
With construction activity picking up and the pandemic’s impact receding, revenue growth would look better in the second quarter ending September, he said, adding that it could be not different from a year earlier.
Operation and maintenance contributes 23% of the revenue for the company and the rest comes from engineering, procurement and construction, according to its investor presentation.
For the O&M contracts, the company says that the nature of ordering has moved from being plant-specific to an entire city being bundled together for drinking and waste water treatment.
Chopra cited the example of O&M contracts for Agra and Ghaziabad worth Rs 150 crore, whereas the order size for a plant-specific contract is Rs 2-3 crore. The company said it’s in touch with other states for similar contracts, and expressed its intent of taking up the size of the O&M contracts to 25% of the total order book.
VA Tech Wabag recently raised Rs 120 crore via a preferential allotment from marquee investors such as Rekha Rakesh Jhunjhunwala, Sushma Anand Jain, Anand Jaikumar Jain and Basera Home Finance.
The fundraising will help VA Tech Wabag in execution, Chopra said, adding that the company will look to raise Rs 400 when the need arises.
Watch the full interview VA Tech Wabag’s Rajneesh Chopra here: