Good evening and welcome everyone to this earnings call post-announcement of Q2 and H1 FY 2026 results of VA Tech Wabag Limited. On the call today from the management team, we have Mr. Rajiv Mittal, Chairman and Managing Director; Mr. Skanda Seetharaman, Group Chief Financial Officer; and Mr. Anup Kumar Samal, Head Special Initiative. Kindly note that during this call, the company may make certain forward-looking statements concerning the business prospects and profitability, which may be subject to risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. The conference call will be archived, and a transcript will be made available on the company's website. The company's results update presentation has been uploaded on the website and stock exchanges, which provides an overview about the core offerings and analysis of the results for this period.
We trust that you had an opportunity to look through the same. I now hand the conference over to Mr. Mittal to take you through the key business highlights. Over to you, Sir.
Thank you. Good evening, ladies and gentlemen. A warm welcome to you all on the earnings call following the announcement of Q2 and H1 FY 2026 results of VA Tech Wabag Limited. Your continued encouragement and trust remains invaluable to our growth journey, and we truly appreciate your presence this evening. Joining me today are Mr. Skanda Seetharaman, our Group CFO, and Mr. Anup Kumar Samal, our Head Special Initiatives. We are pleased to report continued profitable growth for the half-year, driven by our disciplined financial management, efficient resource utilization, and unwavering focus on quality execution. Our bottom line grew profitably by 20% year-on-year. We maintained our guided EBITDA margins and continued to deliver healthy top-line growth with a PAT margin of 10%. We further strengthened our balance sheet by reducing debt and sustaining a net cash positive status for the 11th consecutive quarter, reflecting our prudent financial stewardship.
This year, nearly half of our revenues were generated from international projects, underscoring Wabag's leadership and growing stature in the global water industry. In line with our committed strategy, we continue to focus on increased contribution from our O&M business, providing stable, predictable cash flow, and long-term value creation. Our order book continued to expand with significant strategic wins. As of H1 FY 2026, it stands over INR 160 billion, comprising a well-balanced mix of 62% EPC and 38% O&M projects, ensuring strong revenue visibility and deepening client relationships. International projects continue to contribute nearly 50% of the order book, driving margin improvement and reinforcing our global footprint. In addition, Wabag has emerged as a preferred bidder for marquee projects worth over INR 30 billion, which is almost INR 3,000 crores, both in India and overseas.
Among our key wins in this quarter, we bagged two breakthrough orders in the future energy solution sector. We bagged an advanced technology order to deliver ultrapure water, effluent treatment plant, and zero liquid discharge solutions for RenewSys solar cell manufacturing facility in Hyderabad. This aligns with our strategic focus to expand into emerging sectors such as solar, green hydrogen, and semiconductors. Another milestone achievement is our breakthrough project for setting up of biogas upgradation unit for compressed biogas production. The project captures and upgrades raw biogas into clean, renewable CBG fuel, preventing methane emission and replacing conventional fossil fuels. An excellent demonstration of circular economy in action, turning municipal waste into clean, green energy, and our contribution to India's carbon reduction goal. This project will leverage the benefits of SATAT.
SATAT is the Sustainable Alternative Towards Affordable Transportation scheme of Government of India, which offers a very high, attractive framework for CBG producers with both commercial and strategic advantage. The scheme provides government-backed support and assured offtake by public sector oil marketing companies at a benchmark price fixed by Government of India, ensuring consistent demand, stable revenue streams, and sustainable business model with strong growth potential across both urban and rural sectors. In line with our continued focus on long-term O&M portfolio, we also secured a repeat O&M order for five years, valued at BHD 5.12 million , which is approximately INR 1,181 million for 40 MLD Madinat Salman Sewage Treatment Plant in Bahrain. Let me now share a few updates on our ongoing projects.
The Japan International Cooperation Agency-funded 400 MLD Perur desalination plant in Chennai has been doing well, has achieved a major milestone with the completion of all marine activity. Civil construction is progressing well. Key equipment deliveries have commenced. Plant piping prefabrication activities is set to begin shortly, and the project is on schedule. 200 MLD Al Hayr STP project in Saudi Arabia, another prestigious repeat order from NEOM is moving swiftly and all project activities are in full swing. 300 MLD Yanbu mega desalination plant in Saudi Arabia is progressing well. While we await the effective date of commencement, we are significantly ready with our basic engineering package submission to the client. Key personnel have been deployed, and the procurement of long lead equipment has started. Lusaka sanitation project in Zambia, funded by EIB and KfW Germany, is also on track. Construction drawings for major structures are being finalized.
Purchase orders for key equipment are getting issued, and civil subcontractors getting mobilized to site. Under the One City One Operator model, Wabag continues to manage the cities of Agra and Ghaziabad successfully. We recently introduced robotic sewage cleaning system in Ghaziabad, an innovation that enhances safety, efficiency, and hygiene. This initiative underlines our commitment to deliver technology-driven, citizen-centric, and sustainable urban sanitation solutions. We also had a privilege of hosting a national conference on One City One Operator in Agra under the theme of Transforming Cities through Responsibility, One Operator, One Solution, One Future. The event brought together over 100 delegates, including government officials, utility leaders, bureaucrats, industry experts, reaffirming Wabag's role as a thought leader in India's water management space. Looking ahead, we remain steady, fast in our strategy to expand into new markets, advanced technology adoption, maintaining strong financial discipline, and driving sustainable growth.
Our healthy balance sheet, robust order book, and a strong pipeline of opportunities, Wabag is well-positioned to sustain its growth momentum and create enduring value for all stakeholders. Before I close, I would like to thank each one of you for your continued confidence in Wabag and for supporting our mission to deliver sustainable water and environmental solutions globally. With that, I now hand it over to Anup to share his insight on new initiatives. Over to you, Anup.
Thank you, Mr. Mittal. Good evening, everyone. I am delighted to have this opportunity to share our business strategy for the future energy solution segment, and this encompasses solar, green hydrogen, semiconductors, compressed biogas, and data centers. This marks an exciting phase in Wabag's journey as we align our strengths and expertise to serve these fast-evolving high growth sectors that are shaping a sustainable and technology-driven future. Over the past year, we have implemented several strategic initiatives that have already delivered tangible results, including two breakthrough orders to establish an integrated water and wastewater treatment facility for a PV solar manufacturing facility and a compressed biogas treatment system. For over a century, Wabag has partnered with the global clients to deliver sustainable technology-driven water and wastewater solutions.
Our proven expertise in producing demineralized and deionized water using both resin-based and advanced membrane technologies, as well as our long-term operation of zero liquid discharge systems, has provided us with rich experience, forming the foundation for our entry into the ultrapure water segment. Our recent order from RenewSys, Hyderabad, marks a major milestone where we are designing and building an advanced technology plant featuring ultrafiltration, reverse osmosis, and electrodeionization to produce ultrapure water, which is essential for wafer cleaning and conditioning in solar cell manufacturing. The plant will also recycle and evaporate effluent back to ensure zero liquid discharge, fully aligned with the RenewSys sustainability goals. With strong policy support through Make in India and the PLI schemes, India is targeting 130 GW of solar cell manufacturing by 2030, which will drive a demand for over 100 - 150 MLD of UPW or ultra-pure water capacity.
Similar requirements are emerging across green hydrogen, data centers, and semiconductor fabs, where high-purity water and recycling are critical. Our execution capability and track record position Wabag to become a leading player in this fast-growing market. In the CBG segment, we achieved a significant milestone with the latest order to establish a CBG plant from CWG in Uttar Pradesh. The project will convert sludge into biogas through anaerobic digestion, followed by advanced purification to produce fuel-grade methane. This initiative represents our transition from conventional biogas utilization to high-value CBG production, creating a true circular economy. Supported by the government initiatives under the SATAT scheme, India's CBG sector is poised for rapid growth with a vast feedstock potential from existing STPs. We are currently pursuing multiple tenders, and we see a strong opportunity ahead. In the data center segments, we are actively engaging with the market to explore the emerging opportunities.
As major IT players expand their data center capacities across India, the demand for reliable water, particularly for cooling operations, is expected to rise significantly. City administrations can address this sustainably by recycling the treated sewage through advanced membrane technologies and promoting water reuse within data centers. With the proven expertise and award-winning tertiary treatment RO plants in Chennai and Ghaziabad, Wabag is ideally positioned to partner in developing sustainable water infrastructure that enables India's data center growth to remain both resource efficient and environmentally responsible. To conclude, Wabag's strategy for into the ultra-pure water for solar, hydrogen, and semiconductor sectors, comprehensive water management solutions for data centers, and leveraging the surge on biofuels through CBG projects underscores our commitment to sustainability, innovation, and long-term value creation, shaping the next era of green, circular, and future-ready water energy solutions. Thank you again for this opportunity.
I will now hand over to Mr. Skanda.
Thank you, Anup. Good evening, everyone. I trust you have had the opportunity to go through our results update presentation, which is available on our website and has been filed with the stock exchanges. The first half of this fiscal year has been gratifying on multiple fronts. We continued our journey of profitable growth, with PAT growing faster than the top line and margins remaining firmly in line with our midterm outlook, driven by enhanced execution efficiency, quality industrial and international projects, and the increasing contribution from our high-margin O&M business. For H1, our consolidated revenue stood at INR 1,569 crore, marking a growth of over 18% year-over-year, while standalone revenue was INR 1,330 crore. This top-line performance was primarily driven by timely project execution and new and large projects picking up pace.
Our O&M business continues to perform strongly, contributing 19% to the total revenue, while international business accounted for 47% of the revenue during the half-year, further reinforcing Wabag's global leadership in water technology solutions. On the profitability front, consolidated EBITDA for H1 stood at INR 216 crore, with a margin of 13.8%, in line with our target band of 13%-15% EBITDA as per the medium-term outlook. Standalone EBITDA stood at INR 189 crore. Consolidated PAT for H1 stood at INR 151 crore, with a margin of 10%, growing 20% year-on-year. Standalone PAT stood at INR 131 crore.
Consistent with our mantra of profitable growth, over five years, consolidated PAT has had a CAGR of 38%, with the earnings per share more than tripling, 3.6x to be precise, reflecting strong shareholder value creation driven by execution excellence, a quality order book, growth in O&M portfolio, increased international business from marquee industrial clients, and efficient cash management. Turning to our balance sheet. Despite the top-line growth, we maintained control over the net working capital, which compared on a year-on-year basis in H1 was lower despite the growth in top line. This strong control over working capital was further reflected in our net cash positive position for the sixth consecutive year and 11th quarter in a row. As of September 2025, our net cash position stood at INR 561 crore. Excluding the transient debt under our HAM entity, our net cash stood at INR 675 crore.
We closed the half-year with a robust gross cash balance of INR 798 crore. Through disciplined cash management and prudent debt control, we have consistently reduced debt levels year after year. This focused approach has turned our net interest cost into a net interest income scenario. Remaining true to our asset-light model, we continue to deliver strong returns with a return on capital employed of around 18.5% and return on equity of 15%, reaffirming our commitment to long-term value creation for all stakeholders. All our efforts on profitability improvement, excellence in execution, and robust balance sheet status has also reflected in consistent upgrades in our credit rating profile and outlook over the last five years. As highlighted by Mr. Mittal and Anup, this year we have secured two breakthrough orders in the emerging future energy solution sector, further opening new strategic venues for growth.
This is a sector where we have taken a decadal view of growth and expansion, and we remain steadfast in our focus to build and develop specialist teams to win and execute orders for leadership in this niche space. During the first half, we achieved new order intakes almost worth INR 3,500 crore. Consequently, our order book position rose by 17% since the start of the year to reach over INR 16,000 crore as of September 2025, supported by strong payment securities. The order book continues to reflect a high quality and robust backlog with a balanced mix, 38% comprising of O&M contracts that ensures steady cash flows and predictable long-term revenues. International orders accounting for nearly 50% of the total order book further reinforce Wabag's position as a global leader in water technology solutions.
With a strong order pipeline, robust financial position and continued execution excellence, we are well-positioned to sustain our growth momentum while remaining firmly aligned with our midterm guidance. Guided by our RUDY strategy, we continue to focus on profitable growth, maintaining a net cash positive position and creating long-term value for our shareholders. Before I conclude, I want to take this opportunity to thank our bankers, investors, customers, vendors, subcontractors, partners, and all our Wabagites for their unwavering trust and support. With this, we will now open the floor for the interactive question and answer session. Over to the moderator.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. I request each participant to ask two questions only. The first question is from the line of Kishore Kumar from Unifi Capital. Please go ahead.
Yeah. Good evening, Sir, and thanks for the opportunity. Sir, my first question is on the gross margin impact. Is it because of the EP versus the EPC proportion and that change actually led to some impact at the gross margin levels?
Kishore. Yes. You have seen that even in our midterm guidance, we did mention about growth and it is obviously a case of mix of projects. You have seen we presented last year that our EP mix in the EPC was about 1/3, but it is an average over a period. So, it is based on mix of projects. But again, with volume, we have guided this band of 13%-15%, within which we are firmly there. We are at 13.8% with the growth. So I do not see any impact. If at all, we are only growing the margins year-over-year.
Got it, Sir. A follow-up on this, actually. Is similar mix expected in the coming quarter as well, Sir?
Yes, of course. If H1 is good, we should know that H2 is much better on revenues. It should only be better.
Got it, Sir. My second question is on the Forex gain, actually, for this quarter. If I look at the USD-INR rate, the depreciation is about 4% -4.5%. If I convert it into USD revenues, whatever we actually got it from the rest of the world, the growth is about 20%. But the gain is about INR 30 crores compared to INR 9 crores in the previous year, Q2. How should I look at it, Sir, actually? Is it because of any one-time impact or because the number is very huge? How should I look at it, actually?
First, we want to confirm to you there is no one-time impact. Our business is spread over 27 countries.
As you know, we said even today that around 50% of our revenues come international and 50% come to the local Indian business. Naturally, if we do an invoicing on a certain date and we receive a payment on another date, that is what will go into Forex gain. Exactly we cannot measure what is the exchange, and we have to see the date of invoicing and the date of payment receipt. These two dates will decide what is the exchange gain. That gain, what you have seen, is fully based on this Forex gain. Again, I repeat, there is no one-time gain in this.
Got it, Sir. Do we hedge 100% of the invoicing value whenever we raise invoice for the overseas projects, Sir?
See, we only hedge the delta. You must understand that as we receive our money, we also have a liability to pay.
Yeah.
Sometimes we also take a packing credit in US dollar.
Hmm.
So this becomes a natural hedge for us. If you take a packing credit in US dollar, also the payments we have to make to contractors and suppliers are also in Forex. So we do not hedge the full amount. If there is a small residual amount, that is the only amount we hedge. Otherwise, we mostly depend on natural hedge. As we get paid, we will pay to our suppliers and contractors.
Got it, Sir. It is clear. I have one more question, if I can ask. Sir, any update on the monetization of the existing HAM projects to the investment platform that we created? I also see that we have mentioned the biogas project as BOT. Is it through that platform that we are actually proceeding?
Yes, Sir. We told earlier also, because we have market international investors into the platform, their due diligence and getting the agreements finalized and signed. We are in a very advanced stages of finalizing these agreements. Once these agreements are finalized and the platform is in place, which should happen very soon, then only we can think of transferring some of our assets into the platform, including the present CBG project.
Okay. So this is through our own standalone entity. It is not through the platform, the biogas BOT.
As of today, yes, you are right.
Got it, Sir. Thank you so much for your time.
Thank you. I request each participant to ask two questions only. The next question is from the line of Priya from BNK Securities. Please go ahead.
Hi, Sir. I hope I am audible. Congratulations for the results, and thank you for the opportunity. My question is on the follow-up of the previous participant. Sir, can you provide us out of the overall order backlog of INR 160 billion, INR 92.1 billion stands for the EPC. Can you just explain between the EP and the EPC?
See, this will, of course, vary with period. I would probably put it at more 80-20, 85-15 at this point. But yeah, as you would know, when new orders come, the mix keeps changing. But for us-
Okay
Every order is the same. We look at benchmark margins irrespective of what is the scope of the project.
Okay, Sir. Understood. The next question that I have is, in the previous calls, as mentioned, the Saudi National Water Company long-term O&M contract was agreed. You have mentioned that there is a very good business opportunity in that segment. Can you please explain what is the status on these O&M projects? Also, in the Middle East region, in the near to the medium term, in which region you see more business opportunities in these projects coming up?
Yeah, true. I think as we have mentioned, probably we were the first company in India who gave enough emphasis on O&M, both in India and now we are continuing the same emphasis internationally. We mentioned this opportunity, which is Saudi is more towards privatization. These are the existing assets which they have. They want to upgrade it and also do renovation, because some of them are old assets. They want to renovate it, and also they need to upgrade the plants to the present standards. They want this small investment to be funded by a private sector, and then they give you a long-term O&M, and that is a reason they call it LTOM, Long-Term Operation and Maintenance, where the investments are small, but the O&M revenues over 15 years is a huge number.
We have participated in some of these projects, and definitely it is a matter of time. We will secure one and experiment it, but there is a big pipeline of projects which are expected in next couple of years.
Okay. Thank you, Sir. Just one last question.
Sorry, but I request you to rejoin the queue for the follow-up as there are many participants left in the queue.
Yeah. Thank you.
Thank you. The next question is from the line of Hardik from YES Securities. Please go ahead.
Hello. Thanks, Sir. I am Hardik. Hello.
Mr. Hardik, hi Sir.
Yes, Hardik. Can you be a little loud?
I just had one question. Why has other income increased materially?
Hardik, we can't hear you. You have to come closer to the speaker and speak up because we can't hear you.
Can you hear me now?
Yeah, better.
I just wanted to ask why has other income increased materially?
Sorry.
Why has other income increased materially?
We just said, it is basically only Forex. Rest everything is interest income and all have been standard. The main difference last quarter was Forex loss and this quarter is Forex gain. That is the only material change in other income. As we explained, being an international company, global company with presence in more than 27 countries and 50% of our revenue is coming in foreign exchange. So this foreign exchange income or losses is part of our business. That is how I explained to the earlier participant how do we manage this Forex gain and loss in our business. So that is the nature of our business.
Thank you so much.
Thank you. The next question is from the line of Anupam Goswami from SUD Life. Please go ahead.
Hi, Sir.
Hi.
Sir, first question is on the margins. When you say margins without the other income, then we see a dip, right? From year-over-year as well as quarter-over-quarter. So what is the reason behind it? I think it is percolating due to lower gross margin as well. So what is that impact for us?
My friend, not true. If you would have concentrated on the few of the other participants who asked questions before you, all this we discussed. The only difference is the other income which consists of Forex. If you just take the Forex part, which I just explained why it is a business income or loss for us, if you take that, we are well within guided margin of 13%-15%. There is no drop of margin and there is no drop of our operating margin or gross margin.
Okay. I will take that in offense, Sir. Sir, also if you can give us a little color on what kind of orders we have in our pipeline in the second half, and how do you look at the order inflow versus last year? Last year we did about INR 5,600 crore. How do you think we could end up this year?
See, I think as earlier it was told to the participant and also in our interview. We have a very solid order pipeline where we are already a preferred bidder, like L1 bidder, both in India and internationally. We have a good INR 3,000 crores or INR 1.5 billion of order. Sorry, INR 3 billion. INR 30 billion, INR 3,000 crores of solid backlog of orders which are in pipeline, which can get converted in next few months. So that is very solid, and this includes some seawater desalination, includes sewage treatment plants, includes some industrial plants for oil and gas. Also includes one unique technology we are using for brackish water reverse osmosis, where we are using ceramic membranes. So all this pipeline is good.
Another at least INR 2,000 crores, which we are very sure in next couple of months we should get a good position in that which is under evaluation. We are very hopeful of those projects also getting closed. Some of them again, even are in Indian oil and gas sector where we are very bullish about our success.
Sir, mostly are these domestic or international orders?
As I told you, some of them are international orders. Large ticket orders are international, but there are orders which are in India, both on the municipal side and also on the oil and gas side, where we are placed well. Some of them are already in a preferred status. Some of them we are expecting in next couple of months to get into the preferred status.
Okay, Sir. Lastly, on the HAM platform that we have invested, are we getting any traction so far?
I agree. Can you emphasize exactly what do you mean by traction? In which area you are looking for?
The partner in hand that we have tied up with, are we seeing any new inquiries or other pipeline building?
Partners we take are not strategic partners. Because from a qualification perspective, from execution perspective, from long-term O&M perspective, everything is done by our company. We are looking mainly for financial partners, and that is what we have so far. Even in the platform which we are creating, which is a $100 million platform, there also we will have financial partners. We would only leverage their financial experience, management experience, but all the technical experience, domain expertise will remain with Wabag.
Okay, Sir. Thank you. I will return back.
Thank you. I request each participant to ask two questions only. The next question is from the line of Harshil Parekh from Acuitas Capital. Please go ahead.
Hi, Sir. Thanks for the opportunity. Sir, my question is on your preferred order book, which we mentioned last year when we were a lowest bidder in Doha desalination plant. Sir, what is the status update on that project?
First, I would say it is not last year, it is last quarter. Okay. This is a project which is in Kuwait for the ministry, and we are a declared L1 bidder. This is under the evaluation process. Generally, it takes about four to five months. I would say that they are in advanced stage of evaluation. Post-evaluation, they will recommend to the ministry for acceptance, and post that they will announce the order announcement. Then I think we can inform you if that happens in next couple of months. We are hoping for, we can make a order intake announcement.
Fair enough, Sir. Sir, the second question is more targeted towards our other expenses line item. Q2, if we see, Q2 is usually better than Q1 in terms of revenues. However, if I look at the other expenses part, the other expenses have declined drastically from INR 48 crores in Q1 to INR 23 crores in Q2. Sir, what is the reason for that?
See, you will have to, and that is why I would urge you to look at the investor presentation where we have separately disclosed the Forex part. When it is a loss on account of Forex, which was the case in quarter one, it gets reported under other expenses. When it is a gain, which is the case in quarter two, it gets reported under other income. So other expenses of Q1 and Q2 do not have comparable elements. Please look at the investor presentation. That will give you a better view.
Fair enough, Sir. Thank you.
Thank you.
Thank you. The next question is from the line of Raghav from Kamayakya Wealth Management . Please go ahead.
Hi, good evening.
Good evening.
Yes. I had a couple of questions, Sir. First is about the order book turnaround time, specifically asking for the EPC orders.
This is, as we have said many times, generally it is about 3 - 3.5 years, depending on the size and the complexity of the project.
Okay, Sir. Also, just to understand a bit better, is there any upper cap on the order intake that the management feels that, yeah, this should be the upper cap?
I think I can only tell you, "Dil Maange More," that there is no upper cap. We only have a criteria for shortlisting our tenders where we like to bid. So we have a very strong screening process, which bidders, which bids we should bid, which we should let go. If it is cleared that, then there is no upper cap, because financially and technically we are able to handle much more than this. You have seen that the starting of the company, it was almost like a startup for more than 25 years back. We just started as six people. Today we are more than 1,500. We started with a revenue which was in lakhs. Today we are talking about moving towards 4,000. So I think we know how to scale up, and we have a demonstrated track record of that.
We do not put unnecessarily cap on things which can grow profitably.
Understood, Sir. Any competition you are facing because there are so many entrants in this industry?
I do not know any industry where you do not have competition, especially water industry, water sector, which is booming. Competition is welcome and we see competition. A lot of non-expert players, general contractors are trying to enter.
I think that will happen to any sector which sees attraction. So we welcome that competition, and we are happy that more and more companies are focusing on water.
Okay, Sir. Thank you so much, Sir, and best of luck.
Thank you. The next question is from the line of Kaushik Poddar from KB Capital Markets. Please go ahead.
Yeah. I want to draw your attention to the management comment on the last line, in which you are quoted as saying, "We are poised to accelerate our growth trajectory." So what do you mean by accelerate? Is it beyond that 15%-20% that you have guided?
Obviously. I think that is always an endeavor, Kaushik.
Okay.
Because we have been a growing company, an aspiring company. We don't go for consolidation. We've always looked at growth. Today the sector is offering that kind of opportunities. So our endeavor and our message to our team is always: look for growth, don't stop. Like the previous question, whether we are going to stop. Are we going to put a cap? Answer is no, we are not. When market is offering, as long as your selection criteria is good, I think we are just going to go for it. If all the orders which we are talking about, they come, we have no choice but to go beyond that 15%-20%.
Okay. That's quite reassuring. Thank you.
Thank you. The next question is from the line of Randeep Sen from MAS Capital. Please go ahead.
Thank you for the opportunity. I wanted to understand more about the ultrapure water opportunity. I understand semiconductors, solar are big areas of focus, and with so much of traction between both these sectors happening in India, can you allude some light into the opportunity size that we have? Given we have industry leadership, any early wins, any indications you would like to share?
Sure, Randeep. See, we are talking about a major growth in the PV solar manufacturing, battery cell manufacturing, and semiconductor. As well as we are also seeing good potential in the emerging field of green hydrogen. Okay? We are talking about setting up around 130 GW of solar cell manufacturing by 2030, and currently we are at 25 GW. That gives an opportunity to set up PV solar cell manufacturing of around 105 GW by 2030. You can say that on a complete basis, you can say that 1 GW will require approximately one MLD of ultrapure water, which means that we are talking somewhere around 100 - 150 MLD of ultrapure water in the next three to five years' timeline. Roughly, you can say that this will be a market of around, say, INR 3,500 crores.
Okay. Thank you. Thank you for that. My second question. I read in an article that only seven states and union territories presently have policies to reuse domestic wastewater. This is in the context that the country is home to 17% of the global population, but holds only 4% of the world's water stock. Any traction from a government side, from a policy perspective that you're seeing, and which quantifies this opportunity?
Yes. I think from the government side, if you think they have taken the right steps. I think if you see the NITI Aayog report, which is almost seven, eight years back, then followed by government's directive about reuse of water, they have gone very clear on especially the industrial or commercial water, being very clear. If you have an industry which is in a radius of 50 km from a wastewater treatment plant, then you will not be given fresh water. You will have to depend on recycled water. This is a clear direction from the government. But in our country, the implementation of that direction is very slow, and that's what is happening. But the good news is, at least in recent past, things are picking up because it's not only because of directive from the government, it's also commercially making sense for industries to go for it.
Number one, they're not depending on domestic water, which is given by local bodies. Because always whenever there is a drought, this water goes for domestic users and not for industries, and then industries will have to close down. This is not a very smart thing after investing hundreds and thousands of crores, they have to shut their industry for one month, six weeks, or more. So reliability of this water. Recycle is a drought-proof water. As long as you have domestic population in that vicinity, you will always produce wastewater. So it's an anti-drought, drought-proof water resource. Industry is self-reliant. They produce themselves lot of wastewater, and if they do this internal recycle, that itself is serving almost 80% of their water need.
So it is no longer they are waiting for government directive because it makes business sense to go for recycle. I think slowly the industry is aware of it, like the oil and gas industry. If you take a case like IOCL, GAIL, BPCL kind of organization, they have become a state of art. All their wastewater treatment plants, not a drop will go out. They are mostly going for zero liquid discharge, and all their used water is getting recycled. So these kind of things are emerging. Now, we saw we did a few years back something for the steel industry.
I think oil and gas, as I told you, is a state-of-art technology to do that. I think slowly this is becoming popular, and also that day is not far when this recycled water will be used for potable purpose. When there will not be any choice, they will have to use for either direct potable or indirect potable, and that is the future of this recycled water. We see it.
Sure. Appreciate the long response, and thank you for the context. If I can just squeeze in one last question. A lot of new cities are in the making, be it the future city in Hyderabad or Visakhapatnam taking a lot of stance. Are there proposals from the management to state government in terms of in the lines of a One City One Operator model being pitched to these new cities which are coming, which are state of art? Just wanted to check on management's thought on this aspect.
You are very right, and that is definitely a focus area, growth area. Earlier, this initiative used to be called as smart cities. Some of the existing cities got the name of smart cities, and lot of investment went into that. Similarly, this now new cities initiative, we are in touch with the state governments, and water will definitely play a huge role to have the sustainability and give a secure water resource. See, water security is going to be one of the major things which city is going to be successful, both from a commercial industrial demand of water as well as a domestic demand. So water security will play, and we depend on manufactured water, like Visakhapatnam has said. It's right on the coast.
We have a suggestion to the government, have a combination of seawater desalination as well as recycle of water to bring in water sustainability and security.
Appreciate all the responses. Thank you so much. Wishing you all the best.
Thank you. The next question is from the line of Santhosh from SKKHUS. Please go ahead.
Thank you so much for giving me a chance. Am I audible?
Yes, you are audible.
Okay, good. Great. Sir, I have one question about debtors level, trade receivables. I can see that in a consolidated balance sheet, the debtor level is something like INR 2,950 crore. Is this a business which is very receivable intensive, or are we looking at getting this reduced over time? Because if you see our turnover, it is over 75% of our consolidated turnover rate. What is the reason? Is this because of government contracts, payment security issues in getting the coverings?
See, I think there are two, three main aspects you have to see. Number one, look at debtors as current and non-current as a first step. Non-current is an inherent part of the contracting structure. When we go for large projects, especially municipal projects which are funded by multilaterals, there is a retention clause that is there, which is payable at the COD commissioning PGTR or at the end of the defect's liability period. So, these are deducted from each bill, and it is paid at the end. Number two, there are advances that we receive at the start of the project. That has to be because of the reporting requirement. It has to be shown separately, and it is not netted off against receivables. Number three, you also have to see that there is a natural connection between our receivables and payables because they are broadly back-to-back.
Most of the vendors clearly understand that if I have to collect from the customer, the customer has to certify my invoice, and unless they certify my invoice, my vendor also do not get paid. We would encourage that instead of just seeing the asset side alone, look at it from a net worth capital basis and that will give a better answer to this question. Number four, with larger projects that we are undertaking, especially with multilaterals, especially with sovereign guarantees, you see, there is a process of approval. There is work that is done. We submit an invoice, it goes for a quantity survey, the client has to approve, then the client checks tax, all other compliances, then they have to forward it to the funding agency.
The funding agency has to again approve this invoice, release money under an LC, it comes to the customer, and then the customer pays us. So, this is a cycle that you will have to also see. Number five, you also have to see that most of these billing happen towards the end of the quarter, end of the half year, because these deliveries are done sequentially, and there is approval process. So usually, you will see more bulks towards the end. But I would take an example, there is one billing which we did towards the end of the last quarter.
Even as I speak, we have collected 100% of it, and it's a large project, large international project. This is a cycle you have to see. Variables of payables, receivables, advances, the timeline for collection, and the retention, all these factors have to be seen in tandem. You can see, if we do not manage these well, how would we have a net cash position of close to INR 700 crore? We're sitting on a INR 700 crore net cash position for our annual turnover of INR 3,000, INR 3,500 crore. These have to be seen in tandem instead of seeing only receivable on an isolated basis.
Thank you so much. That's very comprehensive. Just one more question connected with this. Along with the more push of O&M contracts coming our way, can we see that receivables will be at the same level, or it will go down? Because what I understand is that O&M contracts are not as capital-intensive or as your billing would be assured and then regularized by someone from the client. How does it work out for O&M contracts? My question is that, are we expecting a reduction at the level of debtors in times to come?
Yes. Very clearly, that is an affirmative yes. With O&M, there will obviously be better receivable cycles because it is a cash and carry business, high margin, low asset, and quick turnarounds. Number two, with larger projects, as the cycle moves, the collection cycles will also improve. With more international and industrial projects, the profile of the order book or the quality of the order book keeps improving with every day. All these factors, and you rightly said, O&M is an important contributor, will also add to ensuring that our receivable cycles come down and our cash collection cycles are better and our working capital cycles are efficient.
Thank you so much. Have a good day.
Thank you.
Thank you.
The next question is from the line of [Ashwini Kumar from Stat Fintech]. Please go ahead.
Hello, Sir. Good evening. My question is that on the USD 100 million municipal platform with no fund, what is the potential project pipeline we are looking at? Could it scale to 3x -4x of the fund size? Say, INR 3,000 or INR 4,000 crore over time?
Yeah, I think it should be much more than that because you know that we have a mantra in Wabag that we want to remain asset light, which means we will never invest more than 25%. From platform, if we invest 25% or even 50%, our share in the platform will be less than or equal to maximum 25%. You can see we can easily get 8 to 10x investments, and that is what we want to remain in this field. We also don't want to make our balance sheet debt heavy, hence the platform.
Will the margins be the same, like 12%, 13%? Or since this is municipal projects, the margin should be. Will the ledged margin then go to 17%, 18% for the entire company?
We are not focusing on so many funded projects. Our main bread and butter would come from EP, EPC, and O&M. This will be an addition. I think it can go up over a period of time. We have to see how many good projects which are bankable are released by the government, and based on the bankability, we may decide to bid for those projects.
Okay. Thank you, Sir. Thank you.
Thank you. The next question is from the line of Priya from BNK Securities. Please go ahead.
Thanks for the opportunity again. Sir, could you please talk about the industrial segment business opportunity in the MENA and CIS region? In the overseas market, we are largely taking desalination and STP projects. What is the likelihood of the business for the industrial segment in overseas market? Also, can you please let us know the initiatives that you are taking to win this business?
Yeah, you have seen this, Priya, that we as a company have excelled in industrial projects. Probably there is no comparable company, not only in India, but globally, when we talk about the mega complex challenging industrial projects, which mainly is coming from oil and gas sector. Take an example of projects we do for PETRONAS. We did about 10 years back. That was successfully completed. Take a project we did in Dangote, which was recently completed. Also, before this war broke out between Russia and Ukraine, we took a project in Russia, which is again, a mega oil and gas project with technology focus. Again, we have completed our supplies. They are in the final stage of erection and commissioning. So there is no equal company to us who has this kind of a track record.
Whenever there's an opportunity to go for something which is challenging, large ticket orders, we are always ahead of the queue, and always we would be preferring that. Even if you see the Indian segment today, the oil and gas sector is booming with a lot of investment coming from BPCL , IOCL kind of organizations, where they're investing a lot of money. Of course, Reliance Industries Limited is always ahead of the queue, and they are also our preferred company that we work with. So, there is a lot of opportunities in oil and gas, and as Anup mentioned to you, there's also now developing new opportunities in PV solar cells. You talk about semiconductor, and it's only a matter of time, hydrogen also will become very popular. So, all this, we are extremely focused, and I don't think anybody is better than us or we are second to anybody.
Okay. Thank you for this.
Thank you. The next question is from the line of Sanjay from VT Capital. Please go ahead.
Hello. Good evening, Sir. Thank you for the opportunity. Sir, as we talk, like we are going for the clean water projects for different sectors like hydro, all these semiconductor data center, all these things. So what kind of margins could actually get impacted because of that? Are we thinking of getting higher margins if we just slowly shift on to those segments going forward?
See, it will be a kind of a normal margin, which we see across all the industrial sector. It will be something similar only.
Okay. What could be the timeline for execution of our order book, which is standing at INR 16,000 crore?
The EPC, as Mr. Mittal mentioned earlier, the EPC would be anywhere between three to three and a half years. Some of them even shorter, some of them longer, depending on the size of the project and the scope of the project. O&M would be more long-term because we have five, seven, 10, 15, and even 20-year O&M. This would be in different phases. Average may be seven, 10 years of O&M, if I have to take a very blind average, would be about, say, INR 500 crore-INR 600 crore a year from the current order.
Got it. Got it, Sir. Thanks so much for the time, Sir. Wish you all the best.
Thank you. The next question is from the line of Sanjay Kohli from Gold Stone Capital. Please go ahead.
Good evening. Namaskar to all. Thank you for the opportunity. Mr. Mittal, you had mentioned about the platform for HAM and the impending transfer of the assets which will take place. Can we get a flavor on where these marquee investors are from, even if you cannot reveal the names?
Do you have a particular country preference?
No. Purpose being, you always would have had the alternative to. But you mentioned in the past that you wanted to be asset-light, so you do not want to take it on your balance sheet because the currency being there and now you have a very decent cash balance. So why go in for any sort of equity dilution? That sort of option is always there or some sort of reward in the way of some traditional rights issue, which the Tatas used to do. So, one is curious to know whether they are large Indian investors who are really lining up and want to partner with us.
Okay. Now, to be on a serious note, I think common sense would say Indian investors' expectation of return would always be much higher than an international investor. Okay? Only I can tell you, these are international investors. Either they come from Europe, central Western Europe, or they come from U.S. So these are the investors who will be on the platform, and they would be long-term investors with a reasonable expectation of return. And they leave this expertise work of executing the project and also managing during the operation and maintenance period completely on us. So that's the agreement and that's what is getting finalized now with the lawyers, and I am sure very soon we should sign.
Oh, congratulations. One question on, I live in Delhi, our office is in Gurgaon, and I am in South Delhi. This so-called posh area, people do not see it, there's essentially a water crisis over here. So, you must have approached the government that something is happening for Delhi, something is happening in this area. With the announcement of the Yamuna cleanup and the Namami Gange projects, in this area, and the Noida, the DND area, what's happening over here? The government's attitude towards, are they still the old, has the government's attitude mobilized or is it still squeezing the bidders towards this L1 business?
I think as long as government is there and they have to maintain the transparency and they are answerable to various departments like vigilance and all that, the L1 business will continue. The only thing is, with the requirement, like you said, of reused water, recycle of resources. Obviously, there are few players who have those experiences and capabilities, and that will come. I think slowly things are changing. Like we used to in earlier days before this government, we used to say, "Good days are coming." So, let's hope good days will come.
Let's hope. Absolutely. Thank you so much, Sir.
Thank you. The next question is from the line of Hrishikesh Shah from Alchemy Capital. Please go ahead. As there is no response, I will take the next question from Sandeep, who is an individual investor. Please go ahead.
Is this question for me?
Yes, Sandeep. Is it Sandeep?
Yeah. Hi.
Hi, Sandeep.
I just see operationally, your company's been doing very well. I think there's some confusion among a lot of the media as well as analyst community as to the operating margins of the company because many of the people don't realize that what you report as other income is actually translation, which is part of the business income. Many in the media actually reported your operating margins as some 10.7%, and I think that's created a lot of confusion in the minds of investors. I think you need to make the investor community in general aware of the fact that this is because of the accounting standards as they are, and the operating profit margins are actually 13.75%.
Sandeep, first, Skanda will answer. Negative news sells in our country. Negative news, media, print media, it is fun to publish. We are not a new company to the market. We have been there for 15 years. We have continuously explained we are a company with 50% of our revenues come from international business, international projects. Still they want to beat us on something which is not true. What can you do? You can keep repeating it. Today also, we repeated at least 10 x. But if this is what they want, then I don't know whether it's lack of understanding or not wanting to understand, I don't know.
Yeah. Thank you, Mr. Mittal. I think Mr. Mittal has answered your question largely. We see a lot of people wanting to see the glass half empty. We always see the glass half full. This is what you see even in our communication, in our press release or in our investor presentation, in our interaction with analysts. We've been very clear, and I think we're also thankful to analysts who understand and who have appreciated our position. We are a truly global company. 50% of our revenue is coming from outside India. Forex is completely operational. We will continue to keep telling this till probably the last investor understands. Thank you for that suggestion. We'll surely take it, and we'll keep repeating this. Unfortunately, as of today, the reporting standards require us to report it in this manner.
The earlier Clause 41 had an allowance to put Forex separately. Then it was a little easier. But now, because of the standard reporting structure, it is coming through like this. But yes, we will continue to keep informing and interacting with investors till this is very clear to people who do not understand.
One suggestion I had was that, see, you have been coming out with a press release every quarter with the company results, which is standard one and a half page. Which exactly just replaces the numbers which are there with some comments replaced from Mr. Mittal, and exactly the same thing is put out. In that, if you could put out a small explanation of the fact that what out of that income report is operational income and what is actually treasury income. I think that will go a long way in addressing the concerns of many people.
Appreciate that.
Thank you.
Appreciate the suggestion, Sandeep. We will take it on board.
Sure. Thank you. Bye.
Thank you.
Thank you. The next question is from the line of Tanubhab from [TIFS]. Please go ahead.
Good evening, Sir. Thank you for taking my question, and congratulations on a good set of numbers. My first question was, sometime back, the company had received demand from the customs department to the tune of INR 87 crores. Is there any update on that, Sir?
Yeah. Tanubhab, we also disclosed in the same announcement that we will take appropriate legal or other recourse, which we are currently pursuing. Once we have an important milestone that we expect in the next few months maybe, subject to how soon the courts or the appellate authority hear it, we will surely put that out. But as of now, as we have mentioned also in the announcement, we are very confident that this demand is not something that would stand, and there is very good chances that we will be able to argue our position and turn this over.
Right. Thank you for that, Sir. Secondly was a question cum suggestion. Since company have completed 100 years and is also consistently generating free cash flow, is there any bonus issue in the offering?
I think, well, very clear. If anything like this is there, I'm sure the shareholders like you should be the first one to know about it. Yes, we have definitely discussed many times at the board level, and I'm sure this discussion will continue. As soon as we have some good news, you will be the first one to hear about it.
All right. Thank you, Sir, and all the best.
Thank you. As there are no further questions, I now hand the conference over to Mr. Mittal for closing comments.
Thank you once again. I think it was a little longish call and appreciate your active participation in this Q2 H1 FY 2026 earnings call. The analyst presentation is available on our website. In case you have any further queries, you may get in touch with our Adfactors IR team, or you can also feel free to reach out to us directly. Thank you once again and have an enjoyable evening. Bye-bye.
On behalf of VA Tech Wabag, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.