Good evening, and welcome everyone to this earnings call post announcement of Q1 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. Skandaprasad Seetharaman, Group Chief Financial Officer, Mr. Rohan Mittal, Head Strategy and Business Growth, GCC. 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 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. We will start with the opening remarks from the management, post which we will open up for the interactive Q&A. I now hand the conference over to Mr. Mittal to take you all through the key business highlights. Over to you, Mr. Mittal.
Thank you. Good evening, ladies and gentlemen. We extend a very warm welcome to all of you to the earnings call post announcement of our Q1 FY 2026 results of VA Tech Wabag Limited. Your continued support and engagements are invaluable to our growth journey, and we appreciate your presence today. Joining me today are Mr. Skandaprasad Seetharaman, our Group CFO, and Mr. Rohan Mittal, Head Strategy and Business Growth, GCC. We have started the year with a very strong quarter, building on the growth momentum from the last year. This quarter, we have improved on every single parameter. Our top line is higher, our EBITDA is stronger, PAT is growing faster than the top line, denoting profitable growth. Importantly, this quarter marked the tenth consecutive quarter of being net cash positive, a testimony to our disciplined financial management, operational efficiency, and focus on quality execution.
Wabag further reinforced its leadership as a pure play water technology company, expanding across the Middle East, Africa, and Asia, with over 40% of the revenues now from the international market. Our expertise in reuse, industrial effluent management, energy efficient desalination plant continues to give us a competitive edge. We have maintained a balanced revenue mix of 75 % is to 25% between municipal and industrial clients, and progressing steady towards our strategy goal of increasing O&M revenue share, which exceeded 20% this quarter. This healthy mix strengthens earning resilience and ensures geographic diversification. With our continued focus on emerging market and effort to agile go-to market team, we secured two major orders. The first one of INR 380 crores for design, build, operate order from Bangalore Water Supply and Sewerage Board, funded by World Bank, for a state of art energy efficient water reuse facility in Bangalore.
A letter of award for the much anticipated 300 millions of liters per day of seawater desalination plant at Yanbu in the Kingdom of Saudi Arabia, worth about INR 2,332 crores from Saudi Water Authority. As you may recall, last quarter, we informed our preferred bidder status in the project worth INR 30 billion. You can see that we have already converted the majority of the same into firm orders. It does not stop here. We continue actively on our bidding effort for several large orders from India's massive infrastructure investment to Middle East's desalination leadership, Africa's emerging water projects, and Asia's urban industrial growth. Wabag is pursuing a glocal strategy, combining global reach with local depth to capture opportunities across diverse geographies.
As a result of our effort, we have secured preferred bidder status for projects worth over INR 35 billion. Our order book currently stands at over INR 15,750 crores, well balanced between EPC and O&M segments, between municipal and industrial clients, and in India and international market. Importantly, majority of these orders came with adequate payment security. This robust pipeline gives us strong visibility and the confidence in delivering sustainable performance in the coming quarters. Looking ahead, opportunities remain promising, driven by government-led investments in water security, wastewater recycle, and river rejuvenation to raise municipal demands for a sustainable treatment and reuse. Industrial water management needs spurred by ESG commitments and regulatory tightening. International opportunities across the targeted emerging markets where Wabag's references and execution track record position it competitively.
This robust funnel, combined with our disciplined bid selectivity and risk-calibrated commercial models, put us in a strong position to capture these opportunities. I would also like to share update on some of the key projects. The prestigious 400 MLD Perur desalination project in Chennai, funded by JICA, Japan, is progressing well. We have successfully completed the critical marine work, sinking all three marine pipelines. Two in the intake and one in the outfall, each of 2.5-meter diameter, including launch of largest and longest single intake pipeline of 1,151 meters. This milestone stands as testament to our resilience, teamwork, commitment to excellence. Key process civil structures are also moving steadily towards completion. Last year, Wabag secured large repeat orders from Reliance for water treatment systems at Dahej and Nagothane facilities. The basic engineering package has been completed.
Detail engineering is in advanced state, and civil works of this water treatment and effluent treatment facilities are progressing at full pace. The 200 MLD Pagla STP project in Bangladesh, jointly funded by World Bank and AIIB, is the country's first-of-its-kind plant where biogas engines will generate power from the digested sludge, promoting sustainable wastewater management. The project has achieved significant milestones, including completion of most sand filling work and pile casting currently underway. 200 MLD Municipal Sewage Treatment Plant at Al Haer near Riyadh in Saudi Arabia is a significant repeat order from our esteemed client, Miahona Engineering, Saudi Arabia, and ordering of these supplies are progressing at its peak. Temporary facility at the site are deployed and adequate resources are mobilized. Civil works commenced and gaining momentum.
In Zambia, Wabag is executing a landmark sanitation project for Lusaka Water Supply and Sanitation Company, funded by European Investment Bank and German KfW. Site survey and soil investigations are complete. Engineering is in full swing. Temporary facilities and construction resources are being deployed. On the occasion of centenary year, backed by robust performance and a healthy cash position, board had recommended to the shareholders for approval a dividend of INR 4 per share, 200% of the face value for the year ended March 31, 2025. We are very pleased to share that shareholders have approved this resolution and the disbursement is underway. We remain committed to deliver long-term shareholders value while maintaining a prudent balance between rewarding shareholders and reinvesting in our growth investments.
To sum up, strong start to the year, steady progress on our strategy, robust financial, and a healthy order book that positions us for continued success. Our innovation, partnership, and purpose-driven growth will continue to shape a more sustainable, equitable world, one drop, one community, and one breakthrough at a time. As we embark on the next century, I invite each one of you to join us in this journey. Let us continue to work together to preserve our most precious resource, water, while powering economy and protecting our environment. Our mission has never been more relevant, and our resolve has never been more stronger. In closing, I want to thank each one of you for your continued confidence in Wabag in making a positive environment and societal impact through its mission to deliver sustainable water solutions globally.
With that, I will now hand it over to Rohan to share update on Middle East and Africa. Over to you, Rohan.
Good evening, distinguished investors, partners, and colleagues. Middle East and Africa, a region where the demand for quality, sustainable, and scalable water solutions is rising at an unprecedented pace. For over four decades, Wabag has been present in the Kingdom of Saudi Arabia, delivering marquee projects that have significantly enhanced our brand value in the region. Today, as we celebrate 100 years of global excellence, we are channeling our focus towards the right projects and priority markets, with the Middle East and Africa positioned as a key growth engine in line with our strategy, Vriddhi, and our portfolio continuing to expand with a balanced mix of EPC, O&M, and PPP ventures. Africa's water infrastructure landscape is also undergoing a transformative shift, driven by urgent demand for safe and improved sanitation across urban and rural regions.
The Africa Water Investment Action Plan, which targets USD 30 billion in annual investments by 2030, is catalyzing this momentum. In the UAE and CIS market, we are deepening our engagement through strategic opportunities that strengthen our foothold and reinforce our presence in emerging municipal and industrial sectors. With our legacy, expertise, and strategic focus, Wabag is well-positioned to lead the next wave of water sector transformation across the Middle East and Africa region. Now on to a key order intake development during this quarter. Yanbu Mega Desalination Order represents a defining milestone for VA Tech Wabag. A 300 MLD, USD 272 million EPC contract, and the largest international order in our history from a very esteemed client, Saudi Water Authority, SWA, the kingdom's flagship water utility, and one of the most respected names globally in large-scale desalination, formerly known as Saline Water Conversion Corporation, SWCC.
The plant will incorporate dual media filtration, a two-pass reverse osmosis, and remineralization processes, delivering premium quality portable water. This win is a powerful endorsement of our technological leadership, execution excellence, and competitive edge in the global water sector, secured in one of the most demanding procurement environments in the region. Yanbu 2 was achieved through rigorous value engineering, strategic procurement optimization, and leveraging competitive subcontractor pricing, all while upholding the highest standards of technological innovation and professional reliability. The Yanbu 2 award is a testament to two defining strengths of Wabag: our resilience and ability to secure high-specification desalination projects and our capacity to enhance unit economics without compromising quality. This win reinforces our position as a global water leader and accelerates our growth trajectory in the Kingdom of Saudi Arabia. Now to a quick update on two major projects under execution in the region.
First, the technologically advanced Ras Al Khor project has reached an overall 80% completion. Engineering and procurement is complete, with all major equipment ordered and currently in shipment to site. Installation has commenced. The project is progressing well on track. In Wabag's largest EPC order under execution in the region, the Al Haer Wastewater Treatment Plant, basic engineering is complete, and the detailed engineering activities are underway. Site mobilization has also been completed, and construction works have commenced as well and progressing well on track. Notably, sludge treatment will be achieved through solar drying, whilst extensive use of solar PV panels will contribute renewable energy to plant operations, reinforcing Wabag's commitment to environment stewardship. Wabag's future in MEA is focused, strategic, and growth-driven, with client development at the heart of our approach.
The regional transformative agenda led by Saudi Vision 2030 and the upcoming FIFA World Cup 2034 is creating an unprecedented demand for sustainable, large-scale water and wastewater infrastructure. In parallel, Africa's rapid urbanization and industrial growth are driving significant opportunities for advanced water solutions across the continent We are positioned to capitalize on this momentum, actively pursuing opportunities across industrial, municipal, and utility segments in both the regions. Supported by a robust pipeline of greenfield desalination EPC projects, annuity-based O&M contracts, and advanced industrial water solutions. Our strategy is clear: leverage technology as a key differentiator and partner locally wherever required to deliver world-class solutions. This quarter alone, we submitted multiple bids and are evaluating a strong slate of opportunities. Every project we deliver, from mega desalination to advanced reuse, is a step towards cleaner oceans, lower carbon footprints, and a resilient economy for the communities that we serve.
With the region's growth trajectory, VA Tech Wabag is primed to play a pivotal role in shaping its water future. I will hand over to Skanda to share the financial performance.
Thank you, Rohan. Good evening, everyone. I trust you had a chance to review our results update presentation, which has been uploaded on our website and with the stock exchanges. I am pleased to share that we have delivered another profitable growth quarter. Our financial performance reflected disciplined bidding, vigilant cost control, a sharper focus on cash conversion, and prudent risk management across our operating geographies. Profitability remains at the core of our strategy, and the progress we have achieved over the past several quarters and years is translating into stronger earnings quality and healthier balance sheet metrics. Now let me quickly walk you through our performance highlights for the quarter. Our consolidated revenue stood at INR 734 crores, growing by 17% year-over-year. Standalone revenue for the same period stood at INR 640 crores. Our consolidated EBITDA stood at INR 96 crores, growing by around 18% year-over-year.
Standalone EBITDA for the same period stood at INR 86 crores. Consolidated PAT stood at INR 66 crores with a PAT margin of 9%, growing at over 20% year-over-year. Standalone PAT for the same period stood at INR 61 crores. The top-line growth for this quarter was driven primarily by strong progress in several large projects, including the 200 MLD Al Haer Independent Sewage Treatment Plant in Riyadh, the 400 MLD Perur Desalination Plant in Chennai, the Ras Tanura Industrial Water Treatment Plant at the Ras Tanura Refinery Complex in the Kingdom of Saudi Arabia, and the Chennai Petroleum Corporation Limited project in Tamil Nadu. A year ago, we provided a three to five-year medium-term outlook to all investors. We have been working diligently on the same to meet the outlook. The results are evident in our performance of the last year and also in this quarter.
For Q1, top-line grew by 17%, well within our guided range of 15%-20%, while EBITDA margins were maintained in the 13%-15% band as guided. We have delivered this growth profitably in line with our strategic priorities. This performance underscores our operational efficiency, disciplined project execution, and the strength of a well-balanced portfolio across EPC, industrial, and international markets, complemented by a steadily rising contribution from our high-margin O&M business. As of June 2025, our net cash position stands at INR 510 crores, excluding net debt on HAM entities, which is transitory in nature. Considering our asset-light strategy, our net cash position stood at INR 627 crores. We closed the quarter with a gross cash position of INR 815 crores.
As mentioned by Mr. Mittal earlier, this is our tenth consecutive quarter where we close the period with a net cash positive position, primarily driven by disciplined cash flow management and prudent debt control. Our strong cash reserves allows us to swiftly fund projects, accelerate execution timelines, pursue opportunities in new geographies, and invest in enhancing our talent and capabilities. We remain steadfast to our asset-light model, delivering a return on capital employed, ROCE, over 18%. We continued to create long-term shareholder value, generating a return on equity, ROE, of 15%. With the recent order win of INR 380 crores, wastewater treatment and reuse facility for BWSSB, Bengaluru, and INR 2,332 crores, 300 MLD mega desalination plant in Yanbu for Saudi Water Authority. The order book stands at over INR 15,750 crores, approximately five times of our annual revenue.
With our robust order book, strong pipeline visibility, we are confident of sustaining both revenue growth and profitability while maintaining our net cash positive position as we move ahead in this year. Our focus will remain on emerging market opportunities and advanced technology projects, particularly in desalination, recycling, reuse, and effluent treatment. I once again thank everyone, our shareholders, fellow Wabagites, customers, partners, vendors, bankers, and all the stakeholders for the continued trust and unwavering support over the past century. It is because of you that Wabag stands tall today, ready to face the challenges and capitalize on the opportunities of the future. With that, we now open the floor for the interactive Q&A session.
Thank you, sir. We will now begin 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. The first question comes from the line of Nidhi Shah from ICICI Securities. Please go ahead.
Yes. Thank you so much for taking my question. I would like to congratulate you, sir, on the excellent execution as well as the order inflow. My question is firstly on the project that we have declared L1 in, which is the JV with HEISCO in Kuwait. My understanding is that the order value is close to INR 27 billion. What would be our share of that project?
This is still just an opening result, what you are referring to. We can say other than being a preferred bidder, nothing more of that. We want to make sure that the evaluation is completed. Post-evaluation, they should declare us as a party who gets the award.
Our portion in that consortium will be a little more than 50%, close to about $200 million.
All right. Also another question I had on the order book was the Lusaka Water Supply and Sanitation Company project that we have, which is the 73 MLD project. For the last two quarters, I have noticed that the order value has been increasing. Is there any reason for that? Has the scope increased, or this is just due to exchange rates and inflation, things like that?
Of course, the exchange rate has not increased so much, Nidhi. First part of your guess is right. The client, because it is funded by two international funding agencies, they wanted certain scopes to increase to make it more sustainable and environmental friendly. They have increased the scope by about EUR 7 million, EUR 8 million before we got a start date to the contract. That is how the value has gone up.
All right. My last question on this call now.
I cannot hear you. You have to come closer to your mic, please.
Am I audible now?
Yeah, much better.
My last question is, last quarter you mentioned that there were six active inquiries on the ultra-pure water segment that you were hoping to realize in H2. What is the progress on that? Are we any closer to closing any orders?
Yes, we are. Couple of orders. Our boys are working very hard. They are taking a little longer than what we would have expected, but nothing to be concerned. We are still in this couple of orders. We are progressing well. We would like to believe that we have been positioned well, but in next couple of months, we will know the results.
All right. Thank you so much for taking my questions. I will get back in the queue. Once again, congratulations on a great set of numbers.
Thank you.
Thank you. Participants, please restrict yourselves to two questions. For any more questions, you may rejoin the queue. Our next question comes from the line of Sailesh Raja with B&K Securities. Please go ahead.
Hello, sir. Thanks for the opportunity. Congrats for the great set of numbers. Sir, my first question in the domestic municipal segment, we are seeing a moderate 4% growth in the orders backlog number. Could you explain the reason for this? Since we are focusing more on the industrial segment domestically and on overseas market, have we become more selective in taking orders in the municipal space in the domestic market? Or is the slower growth linked to demand challenges due to overcrowded market?
I think I would not say that we have now become more selective. We were always selective, and we have informed all our investors and potential investors that we have very strict bidding criteria where we take a bid/no bid decision. Top of that criteria is our payment security. If you see most of our order backlog, 98%+ will have a complete payment security, which are funded either by federal government, central government, or by multilateral agencies like World Bank, JICA, KfW, ADB kind of organizations.
We don't bid if this is not available to us. I think also we won't bid unless there is a strategic reason for projects which are funded by the state government. Hence, our selectiveness is very, very robust, and we only go for where we think we have a payment security and also where we have a technological edge. That's all it means, and we are not dependent on any single market. As we have told you before, it's not that every market we have to grow at X percentage. If other markets are giving us a better opportunity, other sectors are giving us better opportunity, we will go for it. Because our execution workforce is common. Whether we deploy them for municipal projects, industrial projects, international projects, it doesn't matter to us. They have a versatility to execute any projects with any standard.
Whether they are large, complex, they are geared up to do that.
Okay. Since you spoke about the payment, regarding the 100 MLD solar desalination project, since Indosol Solar is a new entity, how do they plan to arrange the funding for the project?
I think the funding is already in place. The reason for delay is because there was a change of government and the land which was allocated to them had to be reallocated. So they had to do all the environmental studies and because of the change of location. They lost about six months. Now, I believe they have got all this in place, and within a month or two, it will kick-start again that project, and we would like to see this moving really at a brisk pace.
How this project is funded, sir?
I think they have investors who are funding this, and we are not privy to that. I think they have a financial closure on that project.
Okay, sir. Sir, on the plan to set up 100 biogas to CNG units, could you elaborate on the business opportunity here? Will this be developed as a standalone vertical or through any partnerships to achieve scale and secure funding? What business scale are you targeting over the next three years, and when is the project expected to commence? Also, how this raw material, that solid waste, will be procured, and what is the payback that you're expecting?
First and foremost, this was announced almost a year and a half back that for this venture, we have partnered with Peak Ventures as a funding agency. They will partner us in funding these projects, and this we'll develop, and we'll be the technical partner and a minority investor in that. This is again, a concept selling. This was not available in the country, and only recently large corporates are investing in it. They are securing the raw material. It is not our business to get the raw material. They will secure raw material and hand it over to us. Our business is to take that raw material and produce this compressed biogas. This is what we will again sell it at the tariffs which are fixed by the government of India, which are very, very attractive tariff.
Again, it is all going into sustainability, clean environment, and circular economy. Very well fits into our strategy. Hence, we are there. Anything like this, which are concept selling, is always slow to take. Initially, there are small-sized plants coming up, which we are giving it a path, and once we see a medium to large opportunities, we will jump in.
Okay. Great, sir. So one last question.
I am sorry to interrupt, Sailesh. Those were your two questions. Could you please fall back into the queue?
Yeah, okay.
Thank you. The next question comes from the line of Sabil Dabhoya from Unifi Capital. Please go ahead.
Yes, sir. Congratulations on a great set of numbers. My first question was around the investment platform. Could you please update us on the progress of the same? If you could please call out any existing , Hello?
Yeah. Go ahead, Sabil.
Yeah. If you could please call out any existing HAM projects which will be transferred to the investment platform.
Yeah. As we informed in the last quarter, the due diligence is already underway, and we are close to getting a sign-off on that from the investor's side. Once that is done, since these are large international investors, they will go through their internal processes, and then we will move into the signing of definitive agreements and making the platform effective. As we told you in the last quarter, obviously our interest would be to monetize as much of the investments as possible into this platform, which can include also the existing projects.
Okay, sure. Thank you. My second question was on the, I understand that we do not guide on a short-term basis for revenue EBITDA margin, but just structurally, because our O&M revenue also went up and we are entering into the EP stage for some of our large projects, is it fair to assume a directionally better margin for FY 2026 as a whole?
See, the margins are always, our endeavor is to improve. That is the reason last year we have given a direction to you for the next three to five years. We have not given for six months or for a year. So that shows the confidence in our order book, what we have, that enables us to give for three to five years a direction so that you can do your modeling. And obviously, I think our aim is always now, as we said before, to improve the margins and improve the cash flow. And top line is evident. With this kind of order backlog, the top line is inevitable that it will grow. There is no doubt about it. We just have to focus on margins and cash flow.
Okay, sir. Thank you. I will fall back in the queue.
Thank you. The next question comes from the line of Aniket Jain with Yes Securities. Please go ahead.
Good evening, sir. Actually, I had two questions. In the last presentation, you mentioned you were the preferred bidders on orders of about INR 3,000 crores without the Yanbu project, if I remember correctly, of which I think we have won INR 380 crores from the Bengaluru. Now, we are preferred bidders of about INR 3,500 crores. I wanted to check if we are expecting finalization on some of them in this quarter, that is Q2. What is the status on the remaining INR 2,500 crores of orders which are pending from the last bidding pipeline? That is question number one. I can ask question two later on.
No problem. You can wait for us to finish the answer. See, I think it is not about Yanbu was in or not. When we give this direction, we were confident, and we have informed you that whatever restructuring the client wants to do on Yanbu, we will get it back. That was a kind of a confidence the team has exhibited. When we give you a preferred status, that is included in it, that we will get Yanbu, no doubt about it. Again, we are giving you a guidance that we are INR 3,500 crores. We are preferred bidder as we speak, which includes some of them we are already, like somebody had asked a question on Kuwait project, we are already declared as one.
Some other projects are also there, which at the moment we cannot disclose the names, but we are very confident that maybe by the time we meet you next fall, we should be having most of them in our order backlog.
Understood, sir. Probably second one would be, as per the facilities, Yanbu project was mentioned at INR 2,332 crores, while in presentation it is mentioned at INR 2,038 crores. I just wanted to check what is the differential. Is it tax or something else?
Your guess is right. It is the VAT portion. Because what we take in our sales is excluding VAT, and what is the project value is including VAT. So it is only the VAT portion.
Sure, sir. I had a couple more, but I will get back into the queue. Thank you so much for the answers and best of luck.
Thank you.
Thank you. The next question comes from the line of Jainam Jain with ICICI Securities. Please go ahead.
Thank you for the opportunity. My first question is, we have seen execution on the Indosol Solar order has been slower than expected. Can you just help us understand what are the factors causing the delay?
I just answered to one of our friends, investors, who had raised this question that there was a slowdown of about six to seven months because of the change of land. Because their land, which was allocated to them, and they had finished all the studies and environmental studies and soil investigation survey and everything, was taken it back by the government for some other priority project. Instead of that, they were allocated another land, which last six to eight months, they finished all the environmental studies and investigation, geotechnical surveys. Having done that, I understand from next month, this project will get kick-started again, and you will see the progress picking up in the next few quarters.
Okay, sir. My next question is, sir, the order value of the Yanbu desalination project has dropped from INR 23 billion- INR 20 billion this time around. Is this because of McKinsey's exit or there has been any change in scope of work?
I think it's a combination of few things as we have said before. One, some of the scopes have changed, but also because of the experience, because we had six months of this order in our books, our team had worked. The execution, the basic engineering, detail engineering we had already started, and we have already started collecting quotations from the market. There is also a part of value engineering which has gone into this project, which is making us more competitive. But you must also know that we have just won this project by just 0.27%. 0.27%. That shows how competitive we are and how we could judge this, and this six months of getting this engineering before it was reinvited for bidding has really helped us to do value engineering.
Okay, sir. That answers my question. Thank you so much, and all the best.
Thank you. The next question comes from the line of Kaushik Poddar from KB Capital Markets Private Limited. Please go ahead.
Yeah. This year we have already won something like INR 26 billion, and we are preferred bidder for INR 35 billion, so that makes it around INR 60 billion. Can we end the year around INR 80 billion of order book? New order.
I think we love all this. I think the more positive we speak, the more positivity will come to the company. We are always very bullish. The team has been working very hard. Even in last couple of months, we have submitted bids worth more than $1 billion. Yes, market is very conducive. Sector is looking up, not only in India but globally. We are keeping our fingers crossed.
This $1 billion is on top of the INR 35 billion, rather?
No, some of them are also included in this.
Okay.
We did not say that, but one of you asked this question on Kuwait. Kuwait was also bid as a part of this $1 billion.
Okay. Thanks.
Thank you. The next question comes from the line of Sri Harsha K.J. from Alpha Capital Ventures. Please go ahead.
I have just one question. I want to know the translation reserve of INR 321 million, which is classified under other comprehensive income.
Yes, this is primarily coming from translation of assets and liabilities for the change in exchange rates, and it happens every quarter. This is required as per the accounting standards. But what you have to look at is what passes through the P&L, which is basically the profit after tax attributable to owners.
Okay. Thank you, sir.
Thank you. The next question comes from the line of Sailesh Raja with B&K Securities. Please go ahead.
Yeah. Thank you. Sir, could you please talk about the opportunity in NWC second phase LTOOM package number 16, 17, 18, 19. So there are 72 STPs are there. If tendering has started?
Hi. This is a full block from 10 to 19. We have received tenders for 10, 11, and 12. The 13th is under discussion. In fact, the 14th is under discussion. The rest would follow. We have already received the 10th, where the company has bid within a partnership. The 11th we have also bid. The 12th is currently under preparation. The 13th is unlikely to come or not come. It's a discussion between their board. The 14th is positively going to come in, say, two months.
Okay. That's great.
The bottom line is we are qualified for all these LTOOM tenders, and it is up to us to do the review and check if we will bid for all of them.
Okay. Great, sir. Sir, in the BLUESEED division, is there any update on finalizing the new technology? Also, are there any plans to venture into B2C water chemical business? As you know, recently, chemical company Atul Limited, they have tied up with Bachmann Labs for delivering advanced water treatment solution. Since VA Tech Wabag has strong expertise in desalination, that is a process involving significant chemistry and extensive experience in this domain. So why not consider launching any water chemical solution products so that will help diversify the portfolio and also make the business less volatile?
One thing is, we are very satisfied with what we do. We have a very clear focus on what we want to do, and we do not want to look right or left because others are doing. Others may have expertise in what they do. We have certain expertise, and we want to leverage our expertise in what we do. We want to be second to none in the projects and the business we run. Hence, also keeping in mind our strategic goal of remaining asset light, and you would have noticed that we have one of the lightest balance sheet in this sector. We want to continue that and not invest into manufacturing and consumer selling. That is not our business. We are into large, complex, technically challenging projects, and I think at least in foreseeable future, we will like to remain focused on that.
Okay, sir. Thank you, sir. All the best. Yeah.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from Aniket Jain with Yes Securities. Please go ahead.
Sir, you recorded one of the strongest gross margins of about 28.7% over the last 25 quarters, exceptionally well gross margins that you recorded this time. Just wanted to check, is this mainly because of lower component deliveries in this quarter? I think last quarter was impacted by high component deliveries. Or are we expecting some structurally higher margins going forward?
See, Aniket, this is always a mix of projects, right? Projects in different stages. If you see the kind of projects we had, we had Al Haer, which is in early engineering stage, and just started. We had Ras Tanura. Ras Tanura is an EP project. We had CPCL, which again is in early delivery stage. We had the Perur Desalination, which is in an advanced stage of engineering completion and deliveries have begun. So it's a mix, and that is why we recommend that you do not look at us quarter-over-quarter, because it can be very different. You have to look at it on a multiannual basis, which is a three to five year range, and that's how we would recommend you to compare the margins. There can be quarters which can be one-offs, like even the last quarter as well as this quarter.
On an average, our margins will fairly remain stable, and we will continue to keep growing.
Understood, sir. Probably second one, if I can squeeze in. Your other expenses increased sharply, so as a percentage of sales, these are 6.6% as of now, right? I assume some of this is impacted by higher Forex. Is there something else that also led to higher other expenses? That is my second question.
Largely it is Forex, and of course, you know we had also the centenary ESOP in the last year, and we will have to accrue some expenses on account of that, which is below the contribution margin. These are the larger ones. But largely, you would see ESOP. Apart from that, the regular expenses and few provisions, which is normal and what requires us to be made as per our accounting policy. But largely it is Forex because of the kind of movement that has happened in the exchange rates year-over-year, period-over-period.
Understood. ESOPs, we won't be accruing this in future quarters, right? Is it largely done or do we expect some more?
No, it will be staggered because it started in the last year. You're seeing that this year there is an ESOP accrual. As it moves forward, it will taper. The first two, three years are a little higher because it's a four-year accrual that we have to do. But it will happen every quarter.
Understood, sir. Thank you so much for my turn.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from Sabil Dabhoya with Unifi Capital. Please go ahead.
Sir, thank you for the opportunity but my questions have been answered.
Thank you, Sabil.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Rajiv Mittal for the closing remarks.
Thank you, friends, for your active participation in this Q1 FY 2026 earnings call. We have uploaded the analyst presentation in our website. In case you have further queries, you may get in touch with Adfactors IR, or feel free to get in touch with us directly. Thank you once again. Enjoy your evening. Bye-bye.
Thank you, sir. Ladies and gentlemen, on behalf of VA Tech Wabag Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.