Engineering and construction company Larsen and Toubro Ltd (L&T) is forming a separate division within the company ahead of a big push into water treatment business as a developer.
M.V. Kotwal, senior executive vice-president and member of the board, L&T, said: “We are planning a big thrust in this area and would bid for water projects as well. Presently, we are only offering turnkey construction services.”
The new division would take care of the water business that will include projects in the areas of water treatment, desalination, recycling and distribution.
The company already has a presence in the sector and offers turnkey construction services involving civil, mechanical, electrical and instrumentation works with single point responsibility, including engineering, design, procurement commissioning, operation and maintenance works.
It now plans to bid for contracts as a developer.
The competition for the Indian water treatment business is growing with companies such as General Electric Infrastructure India, Hyderabad-based IVRCL Infrastructures and Projects Ltd, Doosan of South Korea and Vivendi Water Systems of France being quite active in this space.
“This is a smart move on part of the company (L&T) as the business is still in a very nascent stage. However, distribution will be a difficult area for L&T to enter, as a lot of regulatory issues still need to be sorted out. L&T may start with industrial customers with desalination offering a huge opportunity,” said Arvind Mahajan, executive director at consultant KPMG.
A lot of new opportunities are emerging as states plan to award desalination projects through competitive bidding to be developed on a concession basis involving a water purchase agreement. A case in point being Gujarat, which recently asked for a bid for a 150 million litres per day desalination water plant in Kutch.
Water desalination projects, though expensive, are being offered as an alternative to address the needs of water-starved regions in the country.
According to the United Nations 2006 Human Development Report, around 450,000 Indians die every year from diarrhoea, far more than in any other country. Interestingly, a lot of people who are above the poverty line don’t have access to clean drinking water and good sanitation, which is being viewed as a business opportunity by private sector firms.