Material benefits

opinion September 15, 2012 00:00

By Nophakhun Limsamarnphun

Petrochemical executive Chakramon Pasukvanich sees worldwide opportunities and growth in plastics and related products

Chakramon Pasukvanich, director of Indorama Ventures plc (IVL), one of the SET-50 companies listed on the Stock Exchange of Thailand, says the Bangkok-based petrochemical giant aims to be the world’s No 1 operator in its field. 

“We are now the world’s biggest producer of PET [polyethylene terephthalate], the raw material used in beverage containers and other products. Coke, Pepsi and other well-known brands are among our customers. Beer companies also have started to use PET bottles, but most PET bottles worldwide are used for drinking water.
“Therefore, we’re not worried about the economic slowdown, since everyone has to drink water. Company-wise, the issue is about the cost of raw materials. IVL’s philosophy is to be a cost-saving champion.
“I joined the IVL board four years ago, as they integrated PET, polyester and feedstock into one operation. The mergers and acquisitions over the past few years have allowed the company to further integrate its operation.
“Now, IVL has 39 factories in 15 countries on four continents. In addition to PET bottles, there are many other products derived from this material. We also produce polyester fibres for clothing and other items.
“Mr Aloke Lohia, the IVL CEO, is a visionary and highly competent in terms of expanding the IVL business worldwide. 
“By diversifying our operations worldwide, we can minimise cost and manage risks better, via different geographic locations. Some places such as Eastern Europe have lower labour costs and strong demand for our products, while other areas may have higher costs.
“For example, our operation in Dubai is more expensive compared to others, but it’s necessary. Our competitive advantages lie in cost-saving efforts in sourcing raw materials and other operational aspects, adaptable technology, and increased efficiency resulting from the synergies of our M&As around the world.
“So far the euro-zone impact has been relatively minimal on our operation. Since our operations are diversified around the world, we have benefitted from the use of cheaper shale gas in our US operation, resulting in lower costs and a higher profit margin. Sales in Europe are not yet affected, but the impact will be inevitable if the economy is down for a long time,” he says.
Last week, Chakramon and other IVL directors and executives visited Poland, where IVL last year acquired a PET factory. IVL also held a top-level executive conference covering its global PET business.
“I was there about 30 years ago when I worked for the National Economic and Social Development Board. It was then a communist country in the Soviet bloc. At nighttime, many Poles would come out, smoke and drink in despair. In the countryside, farmers lacked incentives to work hard because they all got the same ration coupons regardless of how hard they worked.
“People lived day by day and were equally poor due to the lack of incentives. Back in Thailand, we also had national development plans like communist Poland, except that the Polish plans were centrally administered.
“While I was there 30 years ago, our group visited a huge iron smelting plant, which went out of business, and the chief of the Polish national development agency was later punished due to the failure of this plant. The plant was too big and Poland lacked the expertise at the time. In fact, it was a failure of the entire system. 
“Today, Poland is a capitalist society where there are more incentives for people to work harder and livelihoods seem to be much better than the old days,” says Chakramon, who was the former secretary-general of Thailand’s National Economic and Social Development Board.