ITD expands investment in resource business

a potash-mining plant. Italian-Thai Development expanded into the energy and resource business in Thailand and abroad in 2006, buying a majority Bt20-billion stake in potash-mining company Asia Pacific Resources.

To celebrate its 50th anniversary, Italian-Thai Development (ITD) president Premchai Karnasuta plans to generate higher income for the group by expanding its investment in the energy and resource business in Thailand and abroad.

On August 28, when ITD will celebrate 50 years of existence, it will create new businesses that will generate higher returns on investment for the group.

Premchai said the construction business generated a lower return on investment at an average of 5-10 per cent, due to intense competition, and also faced risk from rising prices of raw material.

The life cycle of the construction business is also dependent on the country's economic performance and government budget.

Therefore, the company has been looking for ways to diversify. In 2006, it expanded into the energy and resource business in Thailand and abroad, buying a majority Bt20-billion stake in potash-mining company Asia Pacific Resources.

The company also owns a cement plant in Saraburi province and a prefabrication plant in both Pathum Thani and Ayutthaya.

Meanwhile, the company has been increasing its foreign investment since last year. They include investments in the Nam Theun hydropower project in Laos, a 33-per-cent stake in Sino Laos Aluminium - which is a potash plant in Laos - and in the Lao steel industry.

The company also established the Italian-Thai Power with registered capital of Bt100 million. It has set up a joint venture with Ratchaburi Electricity Generating Holding to invest in a power plant in Koh Kong, Cambodia.

Premchai said he learned from the 1997 economic crisis that the company had to balance its portfolio. When there is a downturn in the construction industry, the company can still survive on revenue from other businesses.

At a company shareholders' meeting in April, Premchai said the construction business would remain its main source of revenue.

"Although the construction industry generates lower net margins, it is our main business. The other businesses we have invested in are related to our construction business but will also generate high returns in the long term," he said.

The company reported revenue of Bt46.51 billion for a net profit of Bt1.01 billion last year, up from revenue of Bt39.81 billion for a net loss of Bt2.14 billion in 2006.

In the first half of this year, the company reported revenue Bt11.5 billion for a net profit of Bt66.81 million. As much as 65 per cent of its revenue comes from government and private projects in the domestic market and about 35 per cent from government and private projects abroad.

Premchai said the company expected about 10 per cent of revenue to come from energy and resources next year, which will increase to about 30 per cent in five years.