Industrial demand for water to surge 57% in parched India

Industrial demand for water in India, the most water-stressed among the Group of 20 nations, could surge as much as 57 per cent by 2025 amidst increasing shortage of potable water, according to estimates by HSBC Holdings Plc.

Water availability in India per person dropped by 15 per cent to 1,545 cubic liters in a decade, according to a 2011 census.

India's demand for clean water by 2030 may exceed supply by 50 per cent while pollution is making what's available unfit for human consumption, industrial or farm use, according to McKinsey & Co. forecasts and a government report.

This has forced the government to increase allocation for water and related progammes in the 12th Five Year Plan (2012-17). Still, the planned spending on water projects accounts for just 2 per cent of the $1 trillion needed to be spent on infrastructure in the five years ending March 2017.

Countries across the world, including major emerging economies such as China and India, are investing huge sums to boost basic infrastructure facilities to support economic growth and political stability.

The S&P Global Water Index (SPGTAQD) of 50 companies has surged 162 per cent since 30 November 2001. In contrast, the S&P Global Oil Index (SPGOGUP) has risen 137 per cent in the same period and the S&P/TSX Global Gold Sector Index (SPTSGD) has climbed about 40 per cent, according to a Bloomberg report.

This also opens up huge opportunities for infrastructure sector industries to enter the business of water.

Suez Environment, Europe's third-largest water company by market value, won 41 million euros ($54 million) of contracts to build and operate water-treatment units in New Delhi, a city of 17 million people, and Bangalore, according to a March 13 statement.

Thermax Ltd. (TMX), a Pune-based company that produces water-recycling equipment, has climbed 30 per cent in the past year, compared with the benchmark S&P BSE Sensex's 10 per cent advance.

VA Tech Wabag Ltd. (VATW), the nation's biggest builder of water-treatment plants, has risen 11 per cent in the same period.

Work, including sewage treatment and waste water management will help boost revenue as much as four-fold for VA Tech and double it for Thermax in five years, according to the companies' chief executive officers.

''We will participate in projects where there's need for technology to treat water,'' MS Unnikrishnan, CEO of Thermax, said in an April 9 interview. ''Sewage treatment is getting increasing importance from the government.''

VA Tech plans to spend as much as 50 million euros to buy two companies in Europe to help it gain access to new markets and technology, managing director Rajiv Mittal said in an interview on 17 April.

Thermax's revenue from its environment business, which includes water, rose to a record Rs1.17 crore in the year ended 31 March 2012. VA Tech Wabag's net income climbed 36 per cent to Rs75.12 crore in the 12 months and sales rose to Rs1,000 crore, both an all-time high. Pretax profit margin in the quarter ended 31 December was 11.18 per cent compared with 10.24 per cent a year earlier.