Jindal boosts profile with international partnerships
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Jindal Water’s JV with Manila Water and a new MOU with Kobelco highlight a growing trend for Indian water companies to ally themselves with international partners. Rama Rastogi reports.
Jindal Water Infrastructure Ltd. (JWIL), part of the $10 billion O.P. Jindal conglomerate, has signed two new agreements with foreign partners – a 50/50 joint venture with Manila Water of the Philippines, and an MOU with Japan’s Kobelco.
Signed on 5th February, the JV will be called Jindal Manila Water Development Company Limited, and will focus on pursuing water concessions in the water- scarce and increasingly pro-private sector states of Rajasthan, Gujarat and Maharashtra. It will act purely as a business development vehicle, with each party making an initial equity injection of INR22.5 million ($500,000). A special purpose company will be set up for each project won, with the respective equity stakes being negotiated between the partners on a case- by-case basis.
Speaking to GWI, Ram Sundar, CFO of Jindal Water, said: “Manila Water Company brings expertise and experience to the partnership, while Jindal brings local market knowledge, financial capability, existing business relationships and brand equity. We will focus on NRW reduction, 24/7 water supply, billing and metering.”
MWC and Jindal have worked together before, submitting an ultimately unsuccessful bid for the Haldia wastewater BOT in West Bengal in 2008. While MWC operates a water supply and sewerage project in Tirupur, Tamil Nadu, jointly with Mahindra, it has so far failed to capitalise on opportunities elsewhere in the country.
Nevertheless, MWC’s director of regulation and corporate development Perry Rivera is bullish about the new JV’s prospects. “I’ve never seen so much activity in the Indian water sector as we have seen in the last 15 months,” Rivera told GWI. “All the big players are there – and I can see that partnerships, project by project, are being forged.”
Jindal also recently signed an MOU with the Kobelco Steel Group. According to Sundar, the two will work together primarily on industrial wastewater projects. Jindal is the latest Indian company to collaborate with foreign firms – the newly signed agreements follow partnerships between Veolia and Doshion, Befesa and IVRCL, and Ranhill and Jusco.
Rivera cites several reasons for the surge in interest in India’s water sector, including strong economic growth in key states which require more water infrastructure. “The JNNURM, along with support for the private sector by donor institutions like the ADB and the World Bank, has created a very positive investment atmosphere,” he observes.
Like Sundar, Rivera believes that Jindal and MWC complement each other. “In the water business you need a brand name, and that brand name carries with it a commitment to follow through. Jindal not only has this, but is one of India’s top ten conglomerates,” he enthuses.
MWC and Jindal, along with Hindustan Construction Company, have already been prequalified for a 20-year water services concession in Aurangabad, a city and region of 1.5 million people in Maharashtra. Jindal Water is predicted to book revenues of around $55 million in the 2009-2010 fiscal year.