Darco Water Technologies works as a systems integrator - designing, building, operating and maintaining water management processes based on membrane, ion exchange and thermal technologies. To do that, it sources generic components from global suppliers in order to meet its design requirements.
However, the company's success is not just because of its strong technology. It owes a lot to its business model, the service and the solutions it offers, and the in-house knowledge of its staff.
Darco Water Technologies' Chief Executive Officer, Thye Kim Meng says that efficiency is one of the company's core strengths. The company excels in operating, energy and business efficiency. It designs, manufactures and services water and wastewater systems for a wide range of industries, including electronics, petrochemicals, pharmaceuticals and food and beverage.
The company's business efficiency can be seen in its quality maintenance services. It derives 10 - 15 per cent of its income from long-term maintenance services through the service centres that it has established, and these service centres are supported by its trading division, which supplies essential chemicals and other products. This focus on service has helped Darco Water Technologies maintain an excellent record of customer retention - 90 per cent of its customers are repeat customers.
The company aims to provide complete solutions to customers' water problems and it works so that those customers - whether industrial or municipal - can focus on their core business. In order to achieve that, the company has a wide range of capabilities. It has plants in Singapore, Malaysia and China that are capable of fabrication, assembly and integration of systems for water purification, wastewater treatment and water recycling.
To produce water systems at the lowest cost per unit of water delivered, Darco Water Technologies pays great attention to the efficiency of its designs. This means energy efficiency and pump efficiency, and using control systems that focus on minimising the number of people needed to operate the plant.
The company has a strong track record for both industrial solutions and municipal applications. In the industrial sector, many of the contracts won by Darco Water Technologies have been secured on a 'best-offer' basis. In this case there is no tender and the company that wins the contract is the one that offers the best complete solution. This was how Darco Water Technologies won two contracts in Taiwan reaching a total value of S$80 million. For its contracts with municipal customers, its preferred partnership model is the 'BOOT' model - to Build, Own, Operate, and then Transfer the projects to the customer at the end of 25 - 30 years.
In Deqing County, Zhejiang Province, 2.5 hours from Shanghai, the commitment of Darco Water Technologies is to deliver water management solutions that will meet the needs of the community for the next 25 years. For this, it has developed two water treatment plants located at strategic sites in the province. With one producing 60,000 tonnes per day and the second producing 100,000 tonnes, this approximately US$30 million investment forms the first phase of a programme to replace 11 older treatment plants. A second phase is planned to increase the capacity to 320,000 tonnes per day.
Over the years, Darco Water Technologies has quickly grown its business capabilities, sales and expertise. Established in 1999, it became a listed company just 2.5 years later and saw its sales levels increase from S$18 million to S$88 million by the year 2007. Its starting point was in providing water solutions for Singapore-based companies in the PCB, electroplating, and electronics sectors. As the economy develops, the company has kept pace with the changing demands of different industries and cultivated new customers around the region. It has designed and built a number of water treatment plants, with a value of about US$10 million for electronic and semi-conductor plants that require ultra-filtration and a very large amount of water at a high level of purity.
The company's long-term business plan also includes attracting investors by building up Build-Own-Operate (BOO) assets, possibly in the form of Real Estate Investment Trusts (REITs). This will require assets in the region of S$100 - S$200 million and Thye Kim Meng points to his company's experience as proof that it can 'scale up' and deliver such projects.
The Memorandum of Understanding (MOU) signed with the Qatari government is an excellent example of Darco's ability to work on more large-scale projects. This MOU, which could translate into a multi-million dollar project, calls for the company to carry out a feasibility study and design a master plan for several water recovery resource centres serving the small towns and villages of rural Qatar.
Darco employs an active business model to respond to the growth of its business. For instance, when demand increased, the company added more office and factory space, and made sure that its staff was operationally ready so that there would be minimal disruption to operations. The company's maintenance service guarantees consistent revenues, retains key staff and ensures the continuous development of product knowledge. It also provides a pool of talent that the company can call upon when time is short. The result of this is a business model that is well-placed to manage the business cycle.
The company places great value on strategic alliances and has had several successful collaborations with multinational companies. Darco has worked with Kennicott Water Systems to penetrate the power and petrochemical sectors in Southeast Asia, with Showa Engineering (a subsidiary of Showa Denko Group from Japan) to engage the large-scale wastewater market, and with Process Automation of Hong Kong to explore the automotive and plating industries. Its latest strategic partner is EnviDan A/S of Denmark, a leading engineering company in the treatment of high strength organic waste (HSOW).
The company plans to consolidate its operations in the markets it is already established in and develop new markets and new BOT agreements. Darco Water Technologies is exploring markets such as Vietnam and India, especially where its established customers are setting up new operations. The company is well-positioned to undertake BOO projects and is looking to take on much larger ones. Whether customers are industrial or municipal, the company aims to be seen as its customers' best partner in managing all aspects of their water needs.
