Key takeaways of the conference call

The Nemmeli desalination plant was inaugurated on Feb 22, 2013. The plant is currently operating at 70% capacity utilization and the water is currently supplied to flush the distribution pipelines. The commercial supply of water will commence in next 10-15 days. Once the commercial supply of water commences the O&M annuity will start flowing. The company has to ensure the quality and quantity of the water. The power cost is a pass through item subject to maximum power consumption (in term of quantity). Under the O&M contract the operator has to bear the replacement costs including that of membrane. On an average about 5% of membranes has to be replaced every year. The annuity amount roughly works out to Rs 71 crore per year for next 7 years.

With Nemmeli project the company has now a reference project for large sea water desalination projects.

Currently about 70% of the Turnkey contract payments received and there is some delay due to fund flow from Central Government to State Government.

Performance of the company for FY13 is fairly inline with the guidance given at the start of the year i.e. 18% growth in revenue. In fact the company closed the fiscal with highest ever order booking in Wabag Group. The company is in the process of collating figures from various subsidiaries and geographies and it's too early to give the order book figure and year-end consolidated figures.

The company has consistently grown its order book in the range of 20-25% and this will continue in FY14 as well. The company sees order placement scenario improve in Middle East-North Africa. Apart from this the company sees the order inflow to come from geographies such as East Europe i.e. Turkey, Romania as well as CIS countries and Latin America, where the company is entering recently.

Ulhasnagar project which was part of the order book has not seen any progress as the company is yet to get the possession of the land (for water intake). The work will commence once it gets the land possession. As regards the Aurangabad project, the company is making efforts to complete financial closure.

On industrial side the company expects order for water and waste water treatment plant from sectors such as Fertilizers, Petro chemicals and power.

Indian desalination market to grow at a CAGR of 35% over next 5 years (upto 2018). This is compared to 10% CAGR growth expected for water segment for the same period.