Lohakit Metal will invest US$2 million (Bt65 billion) in a venture to supply stainless-steel exhaust pipes to the aftermarket and directly to auto-makers in India.
Managing director Prasarn Akarapongpisak said yesterday that the company and its Indian partner would set up a distribution centre to manage the supply chain for stainless exhaust pipes for Suzuki automobiles and Honda motorcycles.
Lohakit will hold more than 50 per cent of the joint venture, which is to start operating in January. The company has been exporting auto exhausts to India for six months, reaching sales of about Bt10 million a month.
"The export market is only 3 per cent of total revenue. We plan to increase export sales to more than 5 per cent in the near future," Prasarn said.
Lohakit buys 80 per cent of its stainless steel from ThaiNox Stainless and 20 per cent from overseas to manufacture integrated products for many industries.
The auto industry accounts for 35 per cent of its total sales, followed by electronic appliances with 32 per cent, construction 9 per cent, computers 4 per cent and agricultural and food industries the rest.
Lohakit will also sell at least 49 per cent of its wholly owned subsidiary Auto Metal to Mory Industries Inc, which the company believes will help Lohakit get more auto clients in Japan. The deal is to be completed this month.
The company plans to acquire an auto-related business to build synergy with its stainless-steel business. That deal is to be finalised within six months.
The company has hired two financial advisers to study the acquisition. They have picked four or five firms for the company's consideration.
The company has enough cash to buy such a firm.
The bright outlook for the auto and electronics industries this year is good for the stainless business as well.
The company projects its revenues to grow by 15-20 per cent in the 2010 fiscal year ending March from Bt2.1 billion last year.
Earnings will also improve on last year because of the rising sales volume, Prasarn said.