Hyflux Limited and Water Sustainability Treading Blue Oceans

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NANYANG
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the Asian Business Case Centre

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HYFLUX LIMITED AND WATER SUSTAINABILITY TREADING BLUE OCEANS Publication No:ABCC-2009-003 Print Copy Version: 13 Nov 2009

Wee Beng Geok,Ivy Buche with Mark Kroll and Timothy Chua
In 2009, Hyflux Ltd (Hyflwc) was one of Asia,s leading environmental water treatment companies with operations in Singapore,China, the Middle East,North Africa and India. Specialising in membrane technologies,Hyflwc provided integrated solutions for municipal water treatment, industrial manufacturing processes, recycling of spent oils and solvents,as well as production of bio-based specialty materials. The brainchild ofentrepreneur Olivia Lum,who in 1989 left a comfortable job with a multinational pharmaceutical company in Singapore to start a business in water treatment systems, Hyflux was an early mover in the early 1990s into China,s nascent industrial water treatment market. After it moved into the municipal water treatment market sales revenue jumped from S$17.7 million in 2000 to S$554 million in 2008. The 2008 global recession affected Hyflux,s revenue from the industrial segment but the municipal business remained strong, as the company succeeded in securing large-scale high value projects in North Africa. The challenge for Hyflux was to rapidly grow its human capital and organizational capabilities to match its aggressive market penetration strategies. In the past, Hyflux had leveraged on innovative technological development and entrepreneurial drive to grow its business. In 2009, as a player in the global water treatment business Hyflux had to prove that it had what it took to execute these greenfield municipal projects and that it could compete with other global water treatment companies in these new markets. Associate Professor Wee Beng Geok,Professor Mark Kroll,Ivy Buche and Timothy Chua prepared this case based on public sources. As the case is not intended to illustrate either effective or ineffective practices or policies, the information presented reflects the authors,interpretation of events and serves merely to provide opportunities for classroom discussions. COPYRIGHT © 2009 Nanyang Technological University, Singapore. All rights reserved. Not to be reproduced, stored, transmitted or altered in any way without the written consent of Nanyang Technological University. For copies, please write to The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University, Nanyang Avenue, Singapore 639798,Singapore Phone: +65-6790-4864/5706, Fax: +65-6791-6207,E-mail: asiacasecentre@ntu.edu.sg INTRODUCTION

In June 2009,Hyflux Limited (Hyflux), Singapore’s largest water treatment company, announced that it had signed an agreement with Libya’s state-owned General Desalination Company (GDC) to build two water desalination plants in the Tripoli and Benghazi municipalities. The Tripoli plant was slated to be the world’s largest membrane-based desalination plant with a capacity of 500,000 m3per day. Together the two plants would have production capacity of 900,000m3 of refined water daily. Under the contract, which was estimated to be worth more than US$1 billion1, Hyflux would undertake all engineering, procurement and construction (EPC) work. Although many financial and technical details still had to be resolved, Hyflux Deputy CEO Sam Ong expected the two projects, the first phase of Libya’s water desalination programme, to be fast-tracked. Eighty percent of the project cost would be financed in Libya with help from its government.2 A joint venture company between Hyflux and GDC would be formed to operate and maintain the plants for which the Libyan government had committed to a 25-year agreement to offtake the water produced. Hyflux would take a minority stake in this joint venture. Water Management and Environmental Sustainability

Populations worldwide were increasing at a phenomenal rate, causing the...
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