Samchai Steel's shareholders approved the merger with Inter Steel at their annual meeting on April 28 last year. The move will transfer Bt1.08 billion worth of Inter Steel assets to Samchai Steel. To pay for those assets, the company will issue 60 million new common shares to Inter Steel shareholders at Bt18 apiece.

Disapong will then be the biggest shareholder in Samchai Steel.

However, Samchai Steel director Patchawat Khunchayangkul said Disapong would not become personally involved with the company's management, but rather would only help expand its markets.

Patchawat said his company expected revenues of Bt6 billion this year. After the merger, Samchai Steel will have a higher margin of 30-35 per cent, up from 16 per cent now, due to economy of scale. It will become Thailand's No-1 manufacturer of steel pipe and structural steel for construction.

He said Samchai Steel currently enjoyed annual production capacity of 430,000 tonnes and had no plans to expand that.

It will, however, boost annual production capacity for its new 18-inch steel pipe, from the current 3,000-5,000 tonnes to 10,000 tonnes, but not until after improving its quality even further.

The new 18-inch steel pipe has met with a positive response from customers and enjoys a profit margin of 15 per cent. The company has invested Bt900 million in the product and expects to break even on it within the next six years.

Patchawat said the company's third-quarter revenues would not grow much more than they did during the second quarter, as the steel sector was affected by political tensions and slow growth in the property sector. He said that the company planned to keep its debt-to-equity ratio below 1.5, compared with the current 1.09.

Siriporn Chanjindamanee

The Nation