Companies dealing with severe economic challenges know that conserving cash is critical, but they can still grow if they just spend smarter.

The new biodiesel plant of SET-listed Rayong Purifier Plc (RPC) is an example.

Even though the economy was faltering, the company decided to move forward with major expansion projects, and it turns out the timing was right. Falling construction costs meant the plant cost about 500 million baht, half the cost of similar operations built by RPC's peers.

Careful capital management by using an in-house design and construction team were the keys to success, Banlue Sripodok, managing director of the oil refining and service station operator.

The biodiesel unit, with a daily capacity of 300,000 litres, began operations early this year.

"Thanks to the experience in 1997 financial crisis, the liquidity squeeze had forced us to build an oil refinery using our own adapted techniques in a bid to save as much money as possible," he said.

In addition, RPC's top executives were all veteran engineers with high profiles from leading petroleum and chemical firms such as ExxonMobil, Bangchak Petroleum and PTT.

"Most of them started their careers during the early age of the oil refinery and petrochemicals industry in the country. Therefore they had experience in building the production units," Mr Banlue said.

"We had learned a lot from our own working experiences and that helped us a lot also when we built our own refinery."

The company developed its cost-saving method starting from the design process. The main change was that instead of using turnkey construction as others did, it separated contractors for major parts of the oil refining plant. As a result, it was able to cut unnecessary expenses by as much as one billion baht to 4.27 billion baht, he said.

RPC diversified into alternative fuel two years ago through wholly owned Pure Biodiesel Co. Its biodiesel production plant was also built using the same approach the company took for its oil refinery.

It selected technology for equipment and machinery from Belgium-based Desmet Ballestra, a global leader in vegetable oil technology.

The project was also designed and built by the company's local staff, who were later transferred to the operational unit and back office.

"It was like building a new house," said Mr Banlue. "We bought land and built our house with our own design instead of buying a unit in a housing project.

"Although it took a lot of hard effort by our staff, it was much cheaper. Furthermore, it was a good opportunity to improve our technology knowledge,"

Domestic demand for biodiesel is currently around 52-55 million litres per day. Demand for palm methyl ester (B100) is one million litres a day and is expected to rise to 2.5 million in 2011, when biodiesel B5, a blend of 5% B100 in diesel, will replace the B2 blend now in use.

RPC shares closed on Friday on the Stock Exchange of Thailand at 1.93 baht, up five satang, in trade worth 121,000 baht.