1.

Water & Wastewater Treatment Market Research

2.1 Introduction
India is facing water demand supply gap issue and is expected to face water scarcity condition in future. As per the various research reports, there is going to be huge demand supply gap in 2050. Per capita water availability is decreasing due to various factors such as increasing population, depletion of ground water, migration of population from rural to urban areas. Many regions in India are facing water scarcity due to low level of ground water and surface water. By 2050, Per capita water availability will decrease to 685 bcm from 977 bcm in 2010.

Water Scarcity*

Fig 1: Per capita water availability projection (in bcm) Water demand in India is projected to rise due to growth in following dependent factors: Increase in Urbanization: India will have 68 cities with population more than 1 million by 2030. Increase in Industrialization: Expansion of water intensive industries like power, Iron & Steel, Chemical will increase water demand in future. Depletion of groundwater level: Groundwater level in the Ganges basin is projected be depleted by 50-75% by 2050. Groundwater levels in the Krishna, Kaveri and Godavari basin are projected to be depleted by ~50% by 2050.

Water demand is projected to reach 1069 bcm in 2050 from 656 bcm in 2010. Irrigation sector is highly water intensive sector and constitute major portion of water demand followed by water for household use and Industrial sector respectively.

* Per capita availability below 1000m is termed as water scarcity condition

Fig 2: Water demand projection (in bcm)

2.2 WWWT Market Overview

In 2011, market size of water & wastewater treatment market was estimated to be 93-98 INR Billion and is growing at CAGR of 14%. Out of this, water treatment market constitutes 40% (37.2-39.2 INR Billion) of the market.

Fig 3: WWWT Market Size projection (in INR Billion) Industrial & Municipal segment accounted for 90% market share in 2011 in both water and wastewater treatment market. Indian water treatment market is highly fragmented with presence of ~ 900 players and top 15 players accounts for 30% market share. Large players are mainly dominant in Industrial and Municipal segments which are capital intensive. Focus sectors for large players includes industrial segments like Power, Oil & Gas and large municipal projects. Medium players dominant in all segments which includes typically light industrial & commercial segments. Small players are dominant in commercial & residential segments and focus sectors include hospitals, hotels & SEZs.

Players Type

No of Players

Sales (INR Billion)

Players

Large Players Medium Players Small Players

15 200-250

33-36 (30%) 55-58 (50%)

VA Tech Wabag, Ion Exchange, Thermax Fontus, Aqua Tech, Doshion Veolia, Chembond Ashland Brisanzia, Akar Impex Pvt. AastoPure

600-650

22-25 (20%)

* Large Players Revenue > 1000 INR Million, Medium Players Between 1000-100 INR Million, Small Players < 100 INR Million

2.3 Project Economics

Average project cost for an integrated wastewater project is about 16-20 INR million/MLD. Additional 0.8-1.3 INR Million per year for 1 MLD plant is incurred as operation and maintenance cost. Cost breakdown incurred in typical wastewater project in industrial and municipal sector is given below: Collection Cost: Collection of sewage from households/industries and transfer to treatment plant. Greater the distance between those two points, higher will be the cost. Typically constitute 50-60% of total project cost. Treatment Cost: Treatment cost involving primary and secondary treatment constitute 3040% of total project cost. Adding tertiary treatment increases cost by 10-20% Disposal Cost: Unusable treated wastewater is disposed off to nearby river. This constitutes 3-5% of total project cost.

Average project cost for an integrated water supply project varies between 25 INR Million/mld to 30 INR million/mld. Operation & maintenance cost accounts for 3-5% of the total project cost. Cost breakdown incurred in typical water supply project is given below: Collection Cost: Collection of raw water from the source (river/lake) and transfer to the treatment plant. Constitute 25-35% of total project cost Treatment Cost: Raw water undergoes a 3-step treatment process. Constitute 15-20% of total project cost Storage Cost: Treated water is transferred to a storage tank. Constitute 15-20% of total project cost Distribution: Water is distributed to households/business. Cost is directly proportional to distance between storage tank and households. Constitute 25-40% of total project cost

2.4 Government Initiatives

Rising water demand and depleting water groundwater level has forced the government to adapt various measures and implement strict regulation to preserve groundwater level and also ensure

availability of water for households. Government has drafted National Water policy 2012 to manage the water resources. Under this policy, water is treated is economic good and water management is done through common pool community resources. Indian government also has implemented National Water Mission (NWM) to increase water efficiency by atleast 20%. This step is expected to result in growth of urban water & wastewater market due to focus on recycling of water. Residential buildings will have sewage treatment and recycling plant. Various government schemes are implemented for urban infrastructure development such as Jawaharlal Nehru National Urban Renewal Mission(JNNURM) under which till date project worth 421 INR Billion has been sanctioned in water sector which includes water supply, sewage treatment, water preservation.

Government Investment Plan

Government spent INR 1207 Billion under 11th 5 year plan on water & sanitation sector and is planning to spend INR 2549 Billion under 12th 5-year plan. Government related projects contribute more than 50% revenue generated by water & wastewater treatment sector and rest by private sector.

605 INR Bn. (Spent)

1207 INR 2549 INR Bn. Bn. (Spent) (Projected)

5 Year Plan spending & projection comparison (in INR Billion)

12th 5 Year wise projection (in INR Billion)

2.5 Market Attractiveness

Commercial & Residential sector is expected to experience higher growth in comparison with industrial & municipal sector. Growth in commercial & residential sector is expected to be 25%. Municipal sector market is organized due to presence of big players. Industrial sector is fragmented with no clear market leader. Commercial segment is fragmented and unorganized due to presence of many small players in this segment. Implementation time, the time required to setup plant, is

typically higher in municipal sector due clearance and approval required from multiple government authorities and large amount of investment involved in these projects. Factors Market Size (INR Billion) Growth Profitability Market Structure Municipal 36.75 Industrial 45.57 Commercial 7.35 Residential 3.43

15% Low Organized, Big Players (Indian & Global) present Low

20% High Fragmented, No clear Market leader

25% Medium Fragmented and unorganized

25% Medium Big established players High

Project Implementation Speed

High

Medium

2.6 Opportunities & Key Drivers

Opportunities
Water & Wastewater treatment is fast growing market with lots of opportunities coming up due to various factors involved: Transition from chemical treatment to MBR: Membrane market is expected to grow at 1012% fueled by growing demand for water. Membrane based technology extensively used in industries like pharmaceutical, petrochemical refineries, Chemical, Food & Beverages, Power and Textiles Zero Liquid Discharge : Due to strict regulation of government regarding discharge, Industries and manufacturing units are adapting advanced technologies like zero liquid discharge system to avoid water pollution JV between Indian & Foreign Players: Many foreign players are entering into Indian market through JV with Indian players. Bluewater Bio International (UK) to enter into Indian water industry through collaboration with Tatva Global Environment Ltd. Spains Aqualia plans to enter into Indian market and looking to bag contract worth INR 5500 Million

Key Drivers
Rapid Urbanization: Increasing per water consumption due to population growth led to increase in water demand. Growth of end users sectors : Expansion of water intensive industries like power, iron & steel, chemical , petrochemical which comprised more than 50% of industrial water treatment market to increase water demand. Scarce groundwater: India uses ~230 Km3 of groundwater per year. Groundwater level in Ganges basin is estimated to be depleted by 50-75% and Krishna, Kaveri and Godavari basin to be depleted by ~50% by 2050. Tax break: Proposed 10 year tax break for industries to save water and reduce dependence on ground and surface water resources.