Business Standard, November 27, 2009
Industrialisation, technology, urban need make commercial water supply a growing opportunity.
The 47.3-hectare Commonwealth Games Village coming up in Delhi on the bank of the Yamuna will house thousands of athletes next October, in 1,100 flats. Thousands of litres of water will be used every day and these will be recycled supply. The village will have the most advanced water treatment plant using membrane technology.
At Panipat, Indian Oil Corporation (IOC)'s new naphtha cracker project, along with downstream polymer units, is using the latest technology to recycle 150 million litres per day of water required for running the plants.
Down south in Chennai, water-starved Chennai Petroleum Corporation Ltd (CPCL) has commissioned a 26.367 million litres per day (MLD) reverse osmosis-based desalination plant to become self-sufficient in its daily water requirements.
"Siemens India is also planning to enter the water treatment business in a big way in India. A few months ago, the company had launched its water treatment solutions in the country. In the coming years, water treatment will contribute a major share of revenue to our business as many projects from the government and municipal sector are coming up in India," said Armin Bruck, managing director of Siemens India.
Water and wastewater treatment, especially in the industrial and municipal sectors, is becoming big business. The country already has a total commercial water market worth around Rs 10,000 crore, growing consistently at 10-12 per cent in the past four-five years, say industry experts.
The point-of-consumption market, which involves localised treatment of water by setting up distribution channels, is a Rs 1,000-crore one, and is growing at over 20 per cent year-on-year, driven by urbanisation.
Industries in the country require normal to ultra-purified water (as with pharmaceutical companies) and this segment has business to the tune of Rs 2,000 crore, growing at 15 per cent annually. According to government estimates, the total requirement for industrial water in 2025 will grow four-fold to 120 billion cubic metres (bcm), from the current 30 bcm.
In the industrial water segment, the major players are Va Tech Wabagh, Thermax, Ion Exchange, Driplex Water Engineering, Indocan Engineering Systems and Projects and Development India.
“The specialised wastewater treatment for industrial use, which is now a nascent business of Rs 500-Rs 800 crore, will grow big in the coming years, considering our industrialisation. But this will depend on how strictly pollution control norms are enforced,” says M S Unnikrishnan, managing director and chief executive of Thermax Ltd.
The Rs 3,300-crore turnover Thermax has big plans for the water business, which currently contributes about Rs 300 crore to the Pune-based power and pollution control equipment maker's sales. Three months earlier, Thermax had teamed with GE Water of the US to bring GE's ultra-filtration and membrane bio-reactor (MBR) technology for wastewater treatment, reuse and processing of water in India's commercial and institutional sectors. The company also has licensing technology from Germany-based Wehrle-Werk AG to purify industrial wastewater.
Chennai-based Va Tech Wabagh, the industry leader in water and water treatment solutions in the country, with a turnover of Rs 1,200 crore, is also planning big growth in India.
“We expect to grow 50 per cent in the country in the next three to four years organically and evaluating acquisitions to access suitable domestic technologies and assets,” says Rajiv Mittal, managing director.
His recent major projects include the Commonwealth Games Village project, Panipat refinery treatment facilities and part of the Yamuna cleaning.
All experts agree the real growth for the sector will come from the municipal water and wastewater treatment business, mainly dependent on government allocations and funds from agencies like the Asian Development Bank, World Bank and Japan Bank for International Cooperation (JBIC).
What has helped is the infrastructure status for water treatment and supply projects, making these eligible for bank finance and a 10-year tax holiday. That the government has allowed 100 per cent foreign direct investment in the infrastructure sector, including water treatment systems, is another incentive for global players to test Indian waters.
Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the fund allocation from the Indian government for improvement of basic services such as water and sanitation in the 2008-09 Budget was Rs 6,865 crore, against Rs 5,482 crore in the previous year. The allocation for JNNURM was stepped up steeply by 87 per cent for 2009-10 to Rs 12,887 crore, which is attracting global players to enter the Indian market. As of May 2009, the government had sanctioned 463 projects requiring an investment of Rs 49,743 crore, mainly for basic urban services like water supply, sewerage and storm-water drainage.
Apart from Va Tech Wabag and Thermax, global players such as US-based major CH2M Hill, the world's largest water company, Veolia Water, and water treatment plant specialist Degremont, have already entered the Indian market.
A few months earlier, Jain Irrigation Systems teamed with Mekorot, the national water company of Israel, to explore projects in India in desalination, water resource management, water supply, municipal water management and wastewater treatment and reclamation projects. Mekorot supplies 80 percent of Israel's drinking water and 70 per cent of its entire water supply, operating 3,000 installations across the country.
“The MoU is yet to proceed to a further business alliance and the partners are yet to finalise the details,” said a source close to Jain Irrigation.
“India has over 3,000 towns and cities and only 200-plus have partial or full wastewater collection and treatment facilities and these cover less than one third of the urban population. This sector has an investment potential of more than $50 million,” said an industry source.
According to Unnikrishnan, at least 100 municipal houses are currently in the process of partly or fully engaging private players to handle water supply and drinking water.