Water crises are both a dark threat to the world and an increasingly
bright investment opportunity......& why it makes sense to Buy L&T,
IVRCL and HCC.

THE NEW OIL MAY BE WATER. According to Global Water In-telligence,
aU.K. consultancy, by December total assets under management in water
funds could hit a record $20 billion this year, a 53 percent increase
from 12 months earlier.

No wonder: since 2001, shares in global water companies have gone up
150 per-cent, according to Thomson Financial. That compares with a 50
percent rise in international blue chips.

The reason is simple: there is profit in scarcity. Buffeted by
constant news of dying rivers, droughts and water shortages from China
to Mexico, investors are in-creasingly aware that water is a
threatened resource. With more and more governments handing public
water systems over to the big multinationals like the U.K.'s Veolia
Environment and Thames Water, profits are rising.

One of the top companies, France's Suez, saw global sales from its
water unit increase 11.7 per-cent, helped by a 20.3 percent rise in
revenue from China.

These days, savvy asset-management companies have turned water
shortage anxieties into a burgeon-ing investment-fund business. Like
the rest of the market, water stocks have fallen recently, but a lot
less than, say, U.S. equities.

While the Standard & Poor's index plunged by a tenth in the last few
weeks, shares in global water companies are down only about 3 percent,
helped by international business exposure and

the view that cash-generating utilities busi-nesses are a good defense
in a downturn.

This year, much of the new money pouring into water funds is coming
from Asia, where ethical investing is very new. It may also simply be
that Asia is the only developing region that has a combination of
remarkably acute water crises and particularly rapid growth, creating
a new crop of investors who are intimately familiar with the water
threat.

Only seven months into 2007, there are now 27 inter-national water
funds, more than double the number compared with 2006. Of the 15 new
products, nine target Asian investors in Hong Kong, Seoul, Tokyo and
Sydney.

Since April, when Societe Gene-rale's Lyxor Asset Management unit
began inundating Hong Kong with ads touting its new water fund, it has
raised $320 million from mom-and-pop investors alone, well beyond its
expectations.

The price of any company's stock reflects its estimated future
earnings, and the potential to make money fixing water problems is
huge. In developing markets where affluence is growing, and hundreds
of millions of people are set to move from rural to urban areas, water
resources are under assault.

The Chinese government estimates that demand will increase by 120
percent in the next 25 years, while in India, urban water needs will
rise 100 percent in the coming two decades.

"We see a combination of exploding demand for water per capita,
growing scarcity of supply and massive pollution," says Anthony
Wilkinson, co-principal of the CLSA Clean Water Asia Fund, which
started in May, and invests most of its money in Asia-listed
companies.

For major water-treatment specialists, the biggest new projects are in
China. Some 1,000 wastewater plants are to be built over the next five
years, as the government has pledged more than $125 billion to address
the natural-resource shortage.

Hundreds of billions more are expected to come from the private
sector. A recent report from Macquarie, the investment bank, pegged
earnings growth for Singapore-listed water-treatment com-panies like
Epure and Hyflux, which target the China market, at between 37 and 40
percent over the next three years.

The hottest investment bets include companies engaged in

desalination, recy-cling or infrastructure, which have the highest

margins and potential profit growth. Utilities are less attractive,

because water prices anywhere are usually regulated by the

government and not subject to mar-ket conditions.

Dieter Kuffer, a senior portfolio manager with Sustainable Asset
Man-agement in Zurich—which has the second biggest water fund in the
world, worth $1.6 billion—says: "We think earnings growth in water
stocks overall will be 14 percent over the next five years, and Asian
water-stock growth will be 50 to 100 percent."

Investors pouring money into water funds may find, as they say in
China, double happiness. The stocks themselves have had a good run.
But investing in sustainability may have a larger payoff.

Many economists now see environmental issues as the biggest stumbling
block to continued fast growth in Asia. Already, Beijing estimates
economic losses due to water shortages at $25 billion a year.
Investors buying into liquid assets could help secure Asia's larger
economic future.