Srithai Superware, the world's largest maker of melamine tableware, is negotiating with a local melamine-tableware manufacturer on a possible takeover.
The acquisition is part of Srithai's efforts to increase production capacity to cater to higher-than-expected orders from China and fellow Asean members.
Chairman Sanan Angubolkul yesterday said the deal, which should be concluded by next week, would increase Srithai's production capacity by 2,000 tonnes a year.
Srithai Superware now uses its entire production capacity of 10,000 tonnes of melamine kitchenware products per year.
"We did not expect orders from Asean members and China to increase so dramatically after the Asean Free Trade Agreement |[AFTA] and the China-Asean Free Trade Agreement [CAFTA] took effect on January 1, so we did not prepare ourselves for this sudden surge in demand for our products," he said.
Sanan said while Srithai was thinking about expanding production capacity, a local manufacturer had approached Srithai to take over the company. This is good for Srithai, because it could start operations immediately.
Sanan declined to disclose details of the takeover deal.
Srithai also plans to increase |production capacity at its existing plant.
"The import tax on melamine kitchenware products between China and Thailand was 30 per cent before, while that among Asean countries was 10 per cent. Now that AFTA and CAFTA have taken effect, there is no tax. Srithai's melamine tableware products are in great demand, and there is a huge jump in import orders from China and Asean members," Sanan said.
He said if the takeover deal was successful, the company would be able to increase capacity by the second quarter. The company may raise its revenue target for this year once the deal is completed.
Srithai is targeting Bt5.6 billion revenue this year, up 16.67 per cent from Bt4.8 billion last year. The company expects the proportion of revenue from exports to exceed the present 25 per cent, due to benefits from AFTA and CAFTA.
Sanan said Srithai was also doubling the production capacity of its single-piece high-density polyethylene (HDPE) caps from 600 million pieces a year to 1,200 by the third quarter. It spent Bt150 million last year to expand output and will spend another Bt150 million this year.
The single-piece HDPE cap is an innovative product used for carbonated drinks, and Srithai is the sole manufacturer in Asean. The cap can reduce plastic use 20 per cent and shorten the recycling process.
The company collaborated with SCG Polyolefins to develop it.
The single-piece HDPE cap has been granted a licence by UK-based Universal Closure, a design and development company providing innovative bottle-closure designs. The caps are distributed in 12 Asian markets, plus Australia and New Zealand.
Srithai at present exports the cap to five countries: the Philippines, Bangladesh, Cambodia, Vietnam and Australia.
Srithai supplies the cap to Coke both in Thailand and other Asian countries. It has also approached Pepsi and is awaiting approval. About 60 per cent of the output is exported and the number could rise to 70 per cent after the capacity is expanded to 1,200 pieces.
"The demand in the 14 markets exceeds 10,000 million caps annually. We expect to limit production to 5,000 caps a year. If demand outpaces our capacity, we can sublicense other companies to manufacture this innovative cap," said Sanan.
Srithai expects revenue of Bt300 million to Bt400 million this year from the cap.
