VA TECH WABAG

Water treatment company. Bought out by Rajiv Mittal and his colleagues with private equity assistance. Took over its parent to become an India-based global player.
Secret Sauce VA Tech Wabag's Austrian roots and local management gives it a twin advantage of global technology and economical costs.
Financial Dashboard This has been one of ICICI Ventures best investment ever. It sold a part of its stake realising an annualised return of over 240 percent over five years.
What the Smart Set Saw A competent management, a bunch of patents and a growing opportunity.

Many years ago, Rajiv Mittal was just another employee in UK-based Wabag Water Engineering, which later became VA Tech Wabag. A quirk of circumstances and the early leadership lesson saw Mittal stave off big competition from the likes of engineering giant Larsen and Toubro to buy the Indian arm of VA Tech in 2005. Another set of events finally culminated in Mittal buying out the Austrian parent in 2007, overnight making him a global player with a presence in 19 countries and a large research establishment in Vienna.

 

The demand for water industry is exploding. The desalination business is expected to grow at 26 percent per year. It is this opportunity Mittal is poised to tap.

Mittal and his colleagues, who had invested Rs. 10 crore for a minority stake in 2007, are worth more than Rs. 400 crore for their current 38 percent stake. Investors like Singapore Investment Board, Passport Capital and Satra have latched on to the story buying 30 percent in the last one year. ICICI Ventures, which helped Mittal in the management buyout, made its biggest ever return when it sold a part of its stake. As Mittal and ICICI Venture mull an initial issue of shares in the coming months, VA Tech may well be poised to be the next hot stock on the block.

 

VA Tech has a great presence in the government sector — cleaning up sewage water in cities and fixing drinking water supplies. Mumbai, which now sends its sewage into the Arabian sea, is set to put out a $1billion contract in the next couple of years to treat it and reuse the water for non-potable purposes. Mittal has been making his rounds to the city and is confident of winning a few contracts. Recently, his firm won the biggest desalination project in Chennai, with IDE as its partner.

 

However, the opportunity is attracting serious competition already. Having managed to set up a Indian multinational leader, VA Tech now has to defend it turf, retain its talent and keep its cost competiveness to stay remain the leader in its business. Mittal is already tied up with Chennai-based Anna University to do local research and is also setting up a local research centre to augment its existing centre in Austria. Says Mittal: "Water technology is still evolving and we have as much as an opportunity as anyone else in the business."