Saw pressure mainly from India business: Va Tech Wabag

In an interview with CNBC-TV18’s Ekta Batra and Mangalam Maloo, Rajiv Mittal, MD and Group CEO, VA Tech Wabag, discussed the company’s fourth quarter results.

Va Tech Wabag reported a consolidated total income from operations of Rs 907.73 crore (versus Rs 897.66 crore year-on-year) and a net profit of Rs 70.50 crore (vs Rs 71.39 crore) for the quarter ended Mar 2015.

Below is the transcript of the interview on CNBC-TV18.

Ekta: It is just a subdued growth of around 1 percent odd this quarter. Can you just tell us where exactly the pressure was felt in terms of maybe geographies as well as segments and what could Q1 of FY16 deliver?

A: As a company VA Tech Wabag has been in diverse geographies and the pressure has been mainly in India, whereas the rest of the world has done pretty well for us. Also on the margin front the rest of the world has done pretty well. More or less our results were inline with the guidance except that there was a translation adjustment required because lot of our business comes from the European markets where the euro was very weak. So that gave us a 10 percent jolt. Otherwise the result was well within our expected results.

Mangalam: A word on your finance cost, this quarter our finance cost are up about 161 percent also for the year the finance cost are up about 150 percent? Your debt is up, your long-term liability are up as well, a word on that?

A: As we have said in the previous quarters also that generally we have a business model which is asset light model. We don’t invest in assets, but last year in Namibia we had invested in one of the projects which is a long-term 20 year concession in Namibia. As you know, we have been in Namibia already for 15 years producing potable water from waste water.

This was a fantastic opportunity where we had waste water coming from various industries and we had opportunity to showcase our technology being a technology led company. We had invested about 12-13 million euro in this build, operate and transfer (BOT) project and that is a reason you see our debt little bit higher. Also our interest cost being higher. It is only because of this single project.

Ekta: So what is your expectation on maybe order inflows going into next fiscal?

A: We don’t see a lot of transactions happening in India. India will remain probably subdued and we see a lot of activities in the rest of the world especially in the South East Asia and Middle East and recently we also have moved into Latin.

We also see good enquiries coming in from Latin and we will see about 65 percent of our business coming from the rest of the globe and about 35-40 percent only from India at least for FY16.

Mangalam: Recently the government also said that they have deployed about Rs 38,000 crore for the Namami Gange project. Any orders which have come in from there?

A: It was very heartening to see. There was a lot of discussion happening on various flagship initiatives taken by this government, one of which was Namami Gange. Other than that, there was Swachh Bharat initiative and also there are smart cities.

Mangalam: So any orders that have come in, quantifiable?

A: Yes, if you watch last three weeks back there were discussion on Namami Gange. Earlier a figure of Rs 51,000 crore was allocated for that but recently already what has been approved is about Rs 20,000 crore Namami Gange and also for smart cities we have another Rs 50,000 crore coming in. For Swacch Bharat, as you said this is that AMRUT (Atal Mission for Urban Renewal) is another Rs 48,000 crore. So it all put together is in last two three weeks we have seen the government allocating almost Rs 1.20 lakh crore.