Infrastructure developer Welspun Enterprises is looking to grow its total order book to Rs 250 billion in the next two years time, according to top officials from the company. As a part of its corporate strategy, the company plans to look at water sector opportunities and limit itself to high-value orders in the road and infrastructure segment.
“Over the next couple of years, Rs 200 billion in roads as orders we will expect and in water, in the next couple of years, I would expect we would be somewhere around Rs 50 billion. We wish to grow the water business gradually,” said Sandeep Garg, Managing Director for Welspun Enterprices.
At present, the company has an outstanding order book of Rs 70 billion, a large part of which is contributed from the roads segment. Going forward, Garg expects water projects will also contribute to the company’s overall order book.
“It is important we have some diversification in an area which is adjacent and it is also synergistic as a group we have exposure to the pipes business. We have knowledge and information which we can leverage on,” Garg said, explaining the company’s plans to look at water sector projects. Welspun Enterprises, Garg added, will look at projects across the water supply chain, including bulk water transmission, water treatment and inland waterway projects.
As part of the company’s larger strategy, Welspun also plans to limit itself to high-value orders both in the water and road segment. “We have repositioned the company in the last five years, to do away with anything that is small for our corporatization purposes,” Garg said. He added, the company will aim at orders in the value range of Rs 10 billion to Rs 20 billion. However, the company official added, orders worth Rs 5 billion and more would also be considered.
In April, rating agency Crisil in its report stated, “Awarding of highway construction projects rocketed 70% to an all-time annual high in fiscal 2018, spanning Rs 7,400 km and valued at Rs 1.2 Trillion, data from the National Highways Authority of India (NHAI) showed. That compares with Rs 4,300 km projects worth Rs 59,000 crore awarded in fiscal 2017.”
Garg from Welspun expects the water sector alone to throw up opportunities worth Rs 500 billion to Rs 700 billion over next one year under HAM. Of this, Garg added, around Rs 120 billion - 130 billion are already at various stages of bidding under the HAM segment for water projects. Further, Garg added the water sector will have EPC opportunities worth Rs 2 trillion in the next twelve months time.
At present, Welspun has three engineering, procurement and construction (EPC) project, one hybrid annuity model (HAM) projects and five build operate and transfer (BOT) projects as ongoing across various segments including water and roads.
Part of its asset light strategy, the company is expected to focus on HAM projects both in the water and road sectors going ahead. Company officials added, Welspun remains open to consider an option to monetize its various assets as and when they complete the development stage.