Eco-car policy a major boost for thai summit

Thai Summit Autoparts Industry expects to nearly double its revenue from Bt38 billion last year to more than Bt60 billion in 2013 thanks to the government's policy to support domestic eco-car production, as well as the company's overseas business expansion.

Thailand's annual vehicle production is expected to reach

1.8 million units in 2013, com-

pared to 1.2 million last year, executive vice president Thanathorn Juangroongruangkit told The Nation in an interview last week.

"We have to outperform the market. I believe that Thai Summit has the potential to grow by 100 per cent," he said.

He feels Thai Summit has very good chances of winning new supply contracts from eco-car producers.

"To prepare for this, the company this year will invest Bt2.8 billion, mostly in domestic business expansion and production improvement," said Thanathorn, adding that the investment is the company's biggest in seven years.

The company's five-year plan targets revenue of Bt50 billion in 2012, but Thanathorn believes it will reach the target much sooner than expected.

Thai Summit expects revenue of Bt42 billion-Bt43 billion this year, up from Bt38 billion last year. The company generated revenue of Bt6.1 billion in the first quarter, up 7 per cent from the same period last year, while earnings before interest, taxes, depreciation and amortisation increased by 23 per cent due to productivity improvement, Thanathorn said.

He said the company had performed well overseas, particularly in India and Indonesia. Three years after entering India, the Thai Summit has five plants there that generated revenue of Bt2.4 billion last year. Revenue from the Indian operations this year is expected to reach Bt3 billion.

"India is a huge market. Our revenue jumped from Bt200 million in the first year of operation to Bt1.2 billion in 2006 and Bt2.4 billion last year. Therefore, the target of Bt5 billion is not difficult for us to achieve by 2011," he added.

He said Indonesia also had strong growth potential thanks to the large market base. Demand for new vehicles in the country is 300,000-400,000 units per year. Besides, rival Japanese and European companies are too focused on operations in Thailand to invest there.

However, the business volume of the Indonesian operations is small compared to other countries that Thai Summit has invested in, Thanathorn acknowledged.

"We estimate this year's revenue at Bt100 million. However, we see Indonesia as a potential market and will absolutely plan long-term investment in that country," he said.

Thai Summit recently concluded a deal with a Japanese partner to form a 49:51 joint venture in China to produce auto parts for Mercedes-Benz. The project requires an investment of Bt1.5 billion. The company sees China as a huge market, but with a tough business environment due to great government control.

Thanathorn said 70 per cent of the targeted revenue increase of Bt5 billion this year would come from local production and the rest from overseas.

"Our goal is to balance the revenue proportion at 50:50," he added.