VA Tech Wabag moves away resources from North Africa

The uncertain political climate in some countries of North Africa has made Chennai-based water treatment firm VA Tech Wabag turn its attention to other markets, said managing director Rajiv Mittal.

The company has operations in Tunisia, Algeria and Libya in the region.

Protests by the masses against their governments in North African and Arab countries began in Tunisia.

They subsequently spread to other countries such as Algeria, Egypt, Libya, Bahrain and Syria.

Algeria is Wabag’s biggest market in North Africa with about 150 of its employees working there. It has about 15-20 people each in Tunisia and Libya.

“We have pulled out about five people from Libya. Business is now normal in Tunisia and Algeria but we are also using our resources there to enter new markets,” Mittal said. The company will be using its design team in these two countries to mark its foray into the Philippines and Turkey.

It’s also ramping up its presence in Saudi Arabia and
China.

“We entered Saudi Arabia six months back and in China we have had only a branch office for the last 25 years, but now we’ll have a company there that will bid for projects,” Mittal said.

He said the North African market is currently not very significant for the company, accounting for less than 10% of its total order backlog of Rs3,300 crore as on December 31. “But the market potential is huge but we don’t know how things will pan out.”

As per a Global Water Markets report in 2008 referenced in Wabag’s latest investor presentation, the size of the water market in Algeria and Libya in 2007 was $933 million and $835 million, respectively. They are said to grow to $2.7 billion and $1.96 billion by 2016.

The Chinese and Turkish markets are said to be worth $8 billion and $3.9 billion by the same year.

The company recently bagged a $28 million order in Libya but work on it is stalled at the moment, Mittal said.

Other than countries mentioned above, Wabag has a presence in Indonesia, Qatar, Oman and certain European markets, besides India, which accounts for 60% of Wabag’s order book. Mittal said the order backlog number will be 8-10% higher for the fiscal ended March 31.

He said Wabag is on track to achieving its targeted growth.
Mittal had in January said the company would clock a 10-15% rise in its revenues and a 30-40% jump in its bottomline. The same in 2009-10 were Rs1,220 crore and Rs45 crore, respectively.