Thai-Lysaght, a wholly owned subsidiary of Univentures, will spend Bt270 million on setting up a plant at Rojana Industrial Park in Ayutthaya to boost its annual production capacity of zinc-oxide powder from the current 15,000 tonnes to 18,000 tonnes.
Ornruedi na Ranong, presi?dent of Univentures, yesterday said Thai-Lysaght would bor?row Bt150 million for the proj?ect, with the remainder funded from its cash flow.
She said Thai-Lysaght had decided to construct the plant at a different location from the existing facility at Rangsit because it wanted to reduce fuel costs.
"We will use natural gas for production instead of fuel oil. Moreover, the company wants to upgrade to automated machinery," she said.
Using natural gas will save the company Bt12 million a year, she said, adding that con?struction of the plant would commence next month. Completion is expected within six months.
Korntawat Kingngoen, managing director of Thai-Lysaght, said the company tar?geted sales of 18,000 tonnes next year in line with growth in domestic demand for tyres, especially from the auto indus?try. Orders from auto-tyre mak?ers account for 70 per cent of the company's revenue.
Thai-Lysaght has upped its forecast for 2010 sales, from the previous 13,000 tonnes to 15,000 tonnes.
Korntawat said that when the new factory was completed, the company hoped to increase the revenue contribution from exports to more than 10 per cent. However, its main focus will remain the domestic mar?ket, because of the strength of the baht and rising auto-sector demand, particularly for eco-cars.
He said the company expect?ed sales of 8,000 tonnes in the second half, against 7,000 tonnes in the first six months of the year.
Domestic zinc-oxide con?sumption this year is expected to rise to 30,000 tonnes from last year's 25,000 tonnes, in line with industrial growth, said Korntawat, adding that future demand is expected to grow by 10 per cent a year.
The price of zinc ingot this year is expected to stabilise at US$2,000 (Bt62,860) per tonne. In the first half, the price soared to $2,157 from $1,172 last year.
Thai-Lysaght enjoyed rev?enue of Bt533 million during the first six months, up by 68.3 per cent from the same period last year.
Ornruedi said Univentures still attached importance to the zinc business even though its major revenue contributor was currently its property business. The former helps maintain overall revenue at times of little or no income from property, she said.
The company's property business will not generate any revenue in the current half-year, as it transferred all units to clients in the first half.
The revenue proportion of zinc and property this year is 40:60, levelling out to 50:50 next year when Univentures starts to realise revenue from two new condominium proj?ects, she said.
Univentures recorded rev?enue of Bt1.7 billion in the first six months of the year, and a profit of Bt106 million.