Much to the delight of the various domestic and foreign operators operating in the Indian water industry, the sector is witnessing an astronomical growth. As per a report by the Ministry of Foreign Affairs of Denmark, the total Indian water market is estimated to be about US $12 billion currently. And, it is said to be growing at 15-20 per cent every year.
On the other hand, as per the figures released by a report from the house of Kotak Institutional Equities, the annual business potential of the water sector in India is estimated at US $30 billion annually. The report further suggests the likelihood of opening up of scores of investment opportunities in the sector with the private sector becoming more involved in what was till now considered as a public good.
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The growing market and it’s potentiality to deliver higher dividends has caught the fancy of many. “The fast rising water industry in the country is expected to attract private investments of around `50,000 crore from Indian and foreign companies,” says H. Subramaniam, CEO of EverythingAboutWater (EA Water), a water management solutions provider.
Demand & Supply
Due to the increasing scarcity of water, and the simultaneous realization of the same among the industrial and domestic sectors, commercial activities around the water industry have witnessed an unprecedented growth. As per the report by Ministry of Foreign Affairs of Denmark, the per capita availability of water in India has been reduced from 5277 cubic meters in 1995 to 1970 cubic meters in 2010. This figure is projected to further slump down to about 1000-1700 cubic meters by 2025, making India’s water condition critical.
And as the rule goes, with the depletion in water resources, the demand has experienced a super-hike. The report says that the demand for water continues to grow and will grow by 40 per cent from 750 billion cubic meters (bcm) currently to 1050 bcm by 2025.
Despite the current situation, about 90 per cent of the total wastewater in India continues to be discharged without any treatment. About 1.3 billion liters of raw sewage and 250 million liters of industrial effluent is added to the Ganges every day, states the report.
Boon in Disguise
While the situation poses a serious threat, it also opens up an array of opportunities for players across the board, especially from the SME (small and medium enterprises) segment. Subramaniam says, “The water industry is highly unorganized and fragmented.” While there are quite a few large companies, the industry has a large number of small and medium enterprises. “There are 1500 SMEs in the water industry,” he says.
The low entry barriers in the industy has enabled the SME segment to build businesses and create impact. In fact, looking at the strong need for reach and local presence rising from the growth of this industry in the Tier II cities many have turned into channel partners and distributors.“We expect the SME sector to continue to be vibrant and atleast 50 per cent of the total business would continue to be served by them in the water sector for the next 10 years,” says Subramaniam.
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Segments & Opportunities
The water industry can be predominantly classified into four categories—Municipal (water supply and sanitation), Industrial, Building/ Institutional (hotels, hospitals, shopping malls, apartment complexes) and Residential (home purifiers). The sector also includes treatment and purification, pumping and water transportation, process water treatment and wastewater treatment/ recycling.
Drinking Water segment
The increased scope in the drinking water segment has attracted several players in the last few years. There are close to 200 bottled water brands in India, of which nearly 80 per cent brands are local.
Increased health consciousness among the masses, the deteriorating quality of water, and increased disposable income has opened up several opportunities for companies working in the area of potable water filtration as well as companies working in the bottled water industry. As per the report, the sale of bottled water grew from $189 million (USD) in 2003 to $599 million in 2008, a growth rate of 216 per cent. And with this figure projected to double in the next five years, India is being seen as one of the fastest growing bottled water markets in the world.
Water/Wastewater Treatment segment
Water pollution is a persistent problem in India. In fact, as per a new study based on an evaluation of environment impact on 179 countries, conducted by researchers in Harvard, Princeton, Adelaide University, and University of Singapore, India was ranked third for water pollution.
India, which has always been rich in its water resources, has been facing some serious water shortages lately. The fact that a large amount of untreated domestic sewage, industrial effluents, and affected water from chemical-intensive agricultural farms go without treatment has been adding up to the shortage.
The issue, however, has heightened the scope of the market. Subramanium says, “The overall water and wastewater sector is estimated to be worth over `60,000 crore, with the treatment market being the most attractive segment at `6,000 crore.”
Several domestic and international players are joining the race. The Indian companies, who score over their foreign counterpart in water-treatment equipment prices, are trying to import some hi-tech designs and technology for water treatment plants.
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| We expect the SME sector to continue to be vibrant and atleast 50 per cent of the total business would continue to be served by them in the water sector for the next 10 years. — H Subramaniam
CEO, EverythingAboutWater |
Indian entrepreneurs see the situation as an opportunity, and therefore, instead of importing municipal and industrial water-treatment equipments, they are equipping themselves with the right technology for manufacturing it in India at a cheaper rate.
However, the maximum scope for SME entrepreneurs is in the installation/ commissioning and servicing of water treatment plants. “There is also a huge unbranded water purifier market of filters, UV and RO systems where SMEs have a strong presence through their local reach and service capability. Design and engineering consulting for water projects is another area where SMEs are doing very well,” says Subramaniam.
Challenges
One of the main challenges for SMEs is related to scaling up of their business and growing above a certain level. However, neither do they have the financial strength or reputation to take projects on BOOT basis ( Build Operate Own Transfer). “They should collaborate with established players in the market to reach that scale,” says Sandeep Dadepogu, Process Engineer, OVIVO.
Also low entry barriers has often led to employees starting their own business.
Conclusion
Water, which was until recently considered a natural resource with no costs attached, has grown dearer with the increased demand in the recent past. With a fleet of industries like cement, chemical, fertilizers, pharmaceuticals, power, etc., depending on water, the water industry players are likely to have a very bright future.
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it is a well paid job with accomodation and food.
1. production manager
2. technical Manager
3. Quality control manager
regards,