Breaking new ground at a national icon

Acquiring top executives from other companies is not the norm for many Thai corporations, who prefer to promote from within. However, Pailin Chuchottaworn was an exception when he was brought into PTT, following the energy giant's acquisition of Bangkok Polyethylene four years ago.

The 53-year-old Pailin has rapidly risen to become the head of the petrochemicals and oil-refining businesses, which include five oil refineries and more than 20 petrochemicals subsidiaries - together contributing to one-third of the profit at Thailand's largest company.

Pailin said he did not take long in making the decision to join PTT. He said: "It's like coming back to my old house."

Pailin is no stranger to PTT. After obtaining his doctorate abroad and teaching at a university for a while, Pailin was recruited by PTT to help it build Thailand's first ethylene-cracking plant.

He left PTT in 1988, to work for Chatsiri Sophonpanich, who is now the president of Bangkok Bank. Chatsiri was also a chemical engineer who had an ambition to build a petrochemicals business for the banking group.

After 17 years with Bangkok Bank, Pailin returned to PTT after its acquisition of Bangkok Polyethylene, where he had been the managing director for several years.

Pailin said another reason that convinced him to return to PTT was his confidence that it still had tremendous potential to expand its petrochemicals business further.

With his 20 years of experience in the petrochemicals market, Pailin also thought he could contribute to PTT, which had largely been an upstream producer.

"PTT had grown from upstream [businesses]. The country found natural gas, and then PTT was set up."

"[Meanwhile,] I had been in the downstream [petrochemicals business], selling plastics. I thought I could contribute with my knowledge and experience," he said.

One of Pailin's first jobs was setting up PTT Polymer Marketing (PTTPM), offering centralised sales and marketing for PTT's petrochemicals subsidiaries, which shifted its focus to manufacturing. The "specialisation", he said, was necessary if PTT wanted to grow and serve its customers better.

"The service-excellence model is different from a manufacturing-excellence model. To grow, manufacturing must be divided into services to create specialisation," Pailin said.

The centralisation also provides savings from economies of scale. PTTPM, which is expected to post sales of Bt32 billion this year, has between 80 and 100 employees.

Even though the company projected sales would shoot up to about Bt100 billion next year, when the group's new ethylene-cracker unit and downstream plants start to come onstream, the target is to keep the staff numbers at no more than 200.

The sales staff have to sell plastic pellets and other petrochemicals products across the world, not only for PTT's chemical companies, but also for products manufactured by non-PTT companies.

PTTPM has set its sights on becoming an international trading company which, besides pushing for domestic sales and exports, is also active on the "out-out" [selling petrochemicals made outside Thailand for other markets] and "out-in" [importing petrochemicals for sale in the country] trading.

"Without [trading incomes], in every year that we did not open a new factory, we would not have growth," he said.

Pailin's next challenge will be to make sure his petrochemicals and oil-refining businesses are able to contribute to PTT chief executive Prasert Bunsumpun's ambitious goal for PTT to be counted among the top 100 companies in the world, receiving 20 per cent of its revenues from overseas by 2012.

Thanks to rising oil prices and its acquisition spree over the past couple of years, PTT has raised its ranking among the Fortune 500 companies from 207 last year to 135. However, it is still predominantly a national oil company with overseas sales contributing only 3 to 5 per cent.

Pailin said to help PTT achieve its goal of becoming an international oil company, the petrochemicals and refining business was hoping to grow its revenues from overseas investments and "out-out" trading from about  zero to 20 per cent within the next four to five years.

"With the [ambitious] target, we would need to have one to two complexes abroad," Pailin said, adding the company was looking at acquiring stakes in petrochemicals complexes in the Middle East and other Southeast Asian countries this year or next.

Pailin said his focus would also be on building more speciality chemicals plants which would help stabilise volatile revenues from cyclic commodity chemicals and to develop projects that could help PTT gain more added value from natural gas.

At present, PTT extracts only ethane and propane from natural gas for its petrochemicals production, and burns out most of the rest for power generation, he said.

"I love to build new projects," Pailin said.