India’s Essar Eyes Water Projects, Desalination Plants

Essar Group, owned by the billionaire brothers Shashi and Ravi Ruia, plans to increase its India water revenue more than fourfold by 2017 to meet the rising demand for water-treatment and supply projects.

Essar intends to bid for desalination plants, water distribution and sewage facility works in Asia’s third-largest economy, where the government has set aside 1.1 trillion rupees ($18 billion) for water projects, said Neeraj Sanghi, chief executive officer of Essar Concessions India Ltd.

“We expect this sector to be more organized over the next three to five years,” Sanghi said in a phone interview from Mumbai. “We want to be present when it reaches the tipping point, which is now coming closer.”

Essar and Indian rivals including Larsen & Toubro Ltd. (LT) are competing with Veolia Environnement (VIE) and Va Tech Wabag Ltd. (VATW) for water projects in India. Clean water demand by 2030 may exceed national supplies by half as pollution and contamination makes what’s available not fit for human, industrial or farm use, according to McKinsey & Co. forecasts and a government report.

The company, an arm of the construction unit Essar Projects Ltd., expects to close the financial year ending March 2014 with revenue of 2 billion rupees, Sanghi said. He expects that to reach about 10 billion rupees in five years.

Desalination Projects

India has sanctioned 1,053 projects valued at 589 billion rupees to build water supply, drainage and sewage plants under the Jawaharlal Nehru National Urban Renewal Mission to meet clean-water demands. Per person water availability in India dropped by 15 percent in a decade, according to the government.

Essar won a contract worth 700 million rupees this month to build a 70 million-liters-a-day treatment plant at Jamnagar in the western state of Gujarat. The company will invest 800 million rupees to build a pipeline to carry treated water to industrial customers including its own refinery, Sanghi said.

The company also plans to bid for more water-treatment projects auctioned by municipalities and is looking to work with foreign companies to build desalination plants, he said.

To contact the reporter on this story: Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net

To contact the editor responsible for this story: Randall Hackley at rhackley@bloomberg.net

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