Chusak Yongvongphaiboon, managing director of Asia Metal Plc (AMC) and president of the association, said that globally, many M&As have taken place among small- and medium-sized steel producers.

Here, mergers only appear between large steel companies, especially those in the upstream steel industry like smelters.

"But mergers in downstream plants like finished steel products are not to be seen in the short term as they want some time to adjust their corporate cultures," he said.

 AMC has also negotiated deals with other steel makers.

"Now the company is preparing for it by adjusting its corporate culture," he said.

The company is looking for any steel tube producer that has no service centres, so that a marriage could create synergy.

The company planned to increase its annual production capacity to 408,000 tonnes of steel products from the current 170,000 tonnes as plant utilisation has reached 85 per cent.

The company would gradually increase production capacity of 0.5-4-inch steel tubes to 80,000 tonnes from 50,000 tonnes a year. C-channel steel production capacity will be up to 64,000 tonnes from 40,000 tonnes a year. Steel products from its service centres would be increased to 144,000 tonnes from 80,000 tonnes a year.

AMC will also produce its first 6-20-inch steel pipes with an expected production capacity of 120,000 tonnes a year. 

The company has invested Bt625 million in capacity expansion - Bt260 million each for machinery and buildings and Bt105 million for land.

The company has acquired a 105-rai site where the old plant and office building are located in Chon Buri. The land and plant acquired will be developed to produce pipes sized six to 20 inches. "The plant is expected to be operational next year," Chusak said.

The company expects a gross margin of 15-20 per cent from the new product line, compared to 9 per cent from smaller steel pipes.

"The company expects revenue and profit to grow more than 10 per cent next year after all expanded production lines are fully running," he said.

The expansion would be financed by Bt600 million raised on the capital market. The company will increase its capital from Bt400 million to Bt550 million by issuing 150 million new shares - 100 million shares allocated to existing shareholders and the rest reserved for exercises of warrants.

The company will apply for its capital increase to the Securities and Exchange Commission next week and expects to receive approval within two months.

Chalida     Ekvitthayavechnukul

The Nation