Domestic engineering and construction companies are expecting deals in water-related projects to pick up.
The Centre formed a new water ministry — Jal Shakti — in May in a bid to bring various water schemes under one roof.
Almost three months later, while orders are yet to fructify, construction companies see the formation of the ministry as an indication of greater investment in the natural resource.
Welspun Enterprises, for instance, expects water projects to contribute in a big way to its current order book of Rs 5,240 crore. “Over the next two years, Welspun Enterprises will look to build a robust order book of between Rs 3,000 crore and Rs 5,000 crore under the water infrastructure vertical,” said Sandeep Garg, managing director and chief executive officer (CEO), Welspun Enterprises. Others, like KEC International have now reactivated their water vertical team. “Our earlier experience was not great because there were issues like delays. We had then decided not to quote for water projects,” said Vimal Kejriwal, managing director (MD) & CEO, KEC International. The company has now changed its strategy and has also hired officials for its water verticals team.
“We have now merged the water projects team with the civil team and reactivated the team with new hires,” Kejriwal added. The company plans to participate in the water sector orders again.
Larsen & Toubro (L&T) has been one of the largest beneficiaries of water projects in India so far. According to the company’s annual report for FY2018-19, it added six new customers in the last financial year alone and is currently executing around 150 projects on the domestic water infrastructure front. Concerned officials at L&T refused to comment on this.
Officials at newly formed entities like Adani Water are also hopeful that order inflow will improve, going forward. “We currently have two projects under the Namami Gange scheme. We are expecting orders to pick up with the creation of the ministry,” said a company official from Adani Water.
Clearances, both green and land, however could be a challenge, the companies add. “The challenges likely to be encountered may primarily include environmental issues as some of the projects, particularly interlinking of rivers, may involve rehabilitation and resettlement,” Garg said.
L&T, in its annual report, also lists clearances as risks for its water business.
“The major risks for the business are delay in obtaining right of way, work front approvals or clearances, volatility in commodity prices (mainly steel) and longer operation and maintenance periods,” it said.
Others are hopeful that with the Centre’s intervention, issues related to payments and clearances may get ironed out.
“If they want large orders to be executed and for private companies to come in, we are more comfortable with the central government’s orders as there are environmental and other issues to deal with,” Kejriwal added.