Indorama eyes foreign acquisitions
Indorama Polymers is intent on expanding by acquisitions and organic growth in the United States, Europe and Asia in a bid to join the ranks of the world's top three PET polymer manufacturers by 2009.
"We will take over other companies in a country that has oversupply because we don't want to bring up total capacity in the market. That means that each acquisition will boost our market share, too," CEO Aloke Lohia said yesterday. The local company will boost its annual production capacity from 603,000 tonnes this year to 1.22 million tonnes in two years, which should increase its global market share from 4.5 per cent now to 7 per cent. Lohia said acquisitions would also broaden the company's customer base. Indorama will establish new plants in areas where supply has yet to meet demand. Starting from scratch is preferable in terms of controlling the budget and designing the plant's specifications, he added. Pramod Dubey, assistant vice president for marketing, said the company was in discussions with an unnamed company in the US about acquiring a plant with PET (polyethylene terephthalate) production capacity of 300,000 tonnes per year. The negotiations should be completed next quarter. The maximum that Indorama could offer for each acquisition is about US$350 (Bt12,250) per tonne of capacity. "We are interested in acquisitions. But the price must not be too high," he said. Indorama Polymers is the parent of StarPet in the US, OrionPet in Europe, and AsiaPet and Petform in Thailand. DK Agarwal, chief financial officer and chief operating officer, said the firm's production capacity this year would be 603,000 tonnes, rising from 206,000 tonnes last year, thanks to the expansion of its plant and last month's start-up of StarPet's operation with a capacity of 225,000 tonnes per year. The $7-million expansion of its plant from 90,000 tonnes to 180,000 tonnes is expected to go on-stream next month. Its actual production will be about 540,000 tonnes this year. Indorama's board approved capital expenditure of $15.5 million to increase AsiaPet's annual capacity from 126,000 tonnes to 180,000 tonnes. The project is scheduled to be completed next quarter. Indorama informed the Stock Exchange of Thailand that last year it had earned a consolidated net profit of Bt784 million, up 2 per cent from 2005, on revenue of Bt11.86 billion, up 5 per cent. It expects an improved profit margin this year thanks to its cost-reduction plan. Chalida Ekvitthayavechnukul The Nation
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