Making business sense of water

It is almost a year since Aqua Designs India, a Chennai-based water and wastewater treatment company, got its first infusion of private equity funding. Its Managing Director, Mr S. Suthakar, is convinced that the investment of Rs 55 crore by Peepul Capital, a leading private equity firm, will catapult Aqua Designs India Pvt Ltd into the big league in the water treatment industry.

Only a part of the PE funding has been drawn and Mr Suthakar, who will turn 40 next month, is confident that he will not need any more funding for the next year or so. Peepul Capital has picked up a substantial stake in Aqua Designs and all that Mr Suthakar will tell you that it is a “significant stake.”

Peepul Capital has representation on Aqua Designs' board and that is another big plus point for the eight-year-old company.

For, says Mr Suthakar, it will bring greater recognition and help the company when it bids for larger projects and also when it negotiates more joint ventures with leading global and domestic players in the water and wastewater treatment industry.

“The PE investment will give us the financial strength and visibility needed to bid for larger projects,” he adds.

Looking at EPC entry

Aqua Designs now plans to get into the EPC (engineering, procurement and construction) business, especially from local bodies across the country. Thanks to the PE investment, says Mr Suthakar, vendors to Aqua Designs will feel more comfortable dealing with the company and may be prepared to extend the credit period. Financing costs will come down and all this will help Aqua Designs quote for larger projects.

He sees business growing and the opportunities increasing. Last financial year, Aqua Designs' revenues amounted to Rs 70 crore and it hopes to more than double it to Rs 160-170 crore this year.

For the Mechanical Engineering graduate, this is a dream come true. A first generation entrepreneur, Mr Suthakar's four-year work experience in a water treatment company fired his desire to do something on his own in the sector.

The beginnings

He started Aqua Designs in 2003 with a seed capital of Rs 1.30 lakh, mainly from his provident fund savings, with three employees and a rented office space. He recalls taking a loan of Rs 90,000 from a nationalised bank to buy a laptop.

Aqua Designs now employs more than 350 people, has its own office space spread over nearly 28,000 sq ft and it enjoys a credit limit of nearly Rs 50 crore with a leading bank.

Hailing from southern Tamil Nadu and born to teacher parents, Mr Suthakar's attitude can best be described as buoyant and confident. He realised early on when he started off on his own that to break into the market, he had to do things differently. Which is what he did.

He offered his clients a whole range of services – right from doing environmental impact assessment studies to designing and erecting treatment plants to operating and maintaining them to supplying consumables to run the systems.

He realises he is up against some big names in the business, but being a young company, comparatively small and nimble, gives Aqua Designs the ability to compete with the larger players.

Joint ventures

Already he has forged joint ventures with different companies for technology for large capacity water treatment plants – up to 300 million litres a day capacity.

As the opportunities increase, there are many more players willing to forge joint ventures. He is confident of nearly doubling turnover in the next four years.

The investment by Peepul Capital is a definite turning point as far as Aqua Designs and Mr Suthakar are concerned.

After all, he says, there have been just a handful of PE investments in the water and wastewater treatment industry in the last decade or so.

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