The Hampshire-based railway equipment supplier has secured a major export deal to work on the Bangkok metro railway.
Engineering firm Design and Projects International ltd has landed a lucrative export deal to supply railway maintenance equipment for the Bangkok purple line.
The Hampshire company was approached by the Bangkok Mass Transit Authority who offered the work on the US$12m contract to the company.
However, in return, the buyer required both advance payment and performance bonds from Design and Projects’ bank to act as guarantees that they would deliver.
Design and Projects also wanted to offer the client warranty bonds as guarantees of the quality of its goods after delivery.
In order to issue these bonds, banks often require businesses to put down a sizable cash deposit to offset the risk the bank must take on.
Due to the value of the contract and the number of bonds required, the size of the deposit that Design and Projects needed to put up would have restricted its cash flow and capacity to fulfil the contract.
Luckily, they were able to turn to UK Export Finance (UKEF) for support. UKEF was able to help by offering Design and Projects’ bank guarantees for 80% of the value of all three bonds, significantly reducing the size of the deposit they would have to pay.
This gave Design and Projects the flexibility and control over its cashflow to both secure the bonds and finance work towards delivery at the same time. The company was able to secure a significant source of revenue, employ more engineers and establish a strong business relationship with its Bangkok client, leading to further valuable business in the region.
Colin Brooks, managing director, said: “UKEF’s help has been really significant for our company. Before working with UKEF, we could only get partial cover for the bonds we needed from our bank, which left us stumping up large sums of cash which put a strain on our finances.
“Since working with UKEF, we can get the financial support we need much more easily and this has allowed us to compete for major international projects, which before, we didn’t have the financial flexibility to do even though we knew we had the capability.
“In the last few years, UKEF has helped us to secure significant exporting business and double our personnel size. Off the back of this success, we are now setting up an office in Thailand so that we can continue to grow our exporting business and take advantage of the opportunities in the Far East.
“I’m very grateful for all the support we’ve received from UKEF and look forward to working with them again in future.”
Design and Projects has subsequently secured two additional contracts with the same customer to build the Bangkok red metro line. UKEF has agreed to offer support for both deals, of combined value around £23m, under its Bond Support Scheme.
The company was founded 22 years ago and has since grown to an annual turnover of £8m thanks to successes both at home and abroad, with projects completed across Europe, Asia and the Middle East.