Polyplex eyes place in world's top three

Polyplex (Thailand) Plc, a listed polyester (PET) film maker, wants to become one of the world's top three producers over the next three to four years despite fiercer competition from new Asian suppliers.

The company planned to add more value to its products and increase supply by setting up new plants near its customers around the world, according to Ranjit Singh, a Polyplex director.

It will also focus more on high-margin markets such as Japan where it can sell products at higher prices.

"We're very strong in the international PET-film market as we are the lowest-cost producer, while our services and deliveries are second to none," he said.

To achieve its goal faster, Mr Singh said that Polyplex, currently number four in the world, would consider possible mergers and acquisitions with companies related to the polyester film business.

"We won't limit ourselves, as the global market is growing by around 7% per year and our customers are more demanding. We have to develop our products and add value to them to compete with the others," he said.

Polyplex plans to spend US$50 million through its wholly-owned subsidiary Polyplex Europa in the second thin-PET-film plant in Turkey with an annual capacity of 24,000 tonnes. The additional supply will also serve Eastern Europe, Soviet satellite states, Turkey, the Middle East and Northern Africa. The project will be financed by debts and internal cash flow.

The second plant is due to start production in 2008. The first PET-film line with a similar capacity of 24,000 tonnes per year began last December.

Polyplex Europa is handling additional investments in a PET-resin plant there, scheduled to start production next month. Apart from PET resin, the Turkish subsidiary also runs a metalliser plant.

Mr Singh said that the business model in Turkey was similar to that in Thailand. It would have integrated production for both upstream and downstream so that the cost structure was more competitive.

Polyplex (Thailand), or PTL, is investing in an extrusion-coating project that is due to open by July next year.

"It's a good time to invest as the market is still over-supplied. If we invest today, when the market picks up, we will have an advantage over others with additional supply," he said.

PTL, established 18 years ago, produces three products: PET film (20,000 tonnes per year), polyester chips (20,000 tonnes per year) and metallised film (4,800 tonnes per year).

Polyplex Corp in India, the parent firm of PTL, holds a 70% stake in the Thai unit. Thailand is the largest operation with the highest revenue and profit among the Polyplex network. PTL would serve the Thai, Asean, Japanese and US markets, while India would become smaller and focus on research and development, Mr Singh said.

From July to September, the second quarter of its 2006 fiscal year, Polyplex posted 75.39 million baht in net profit, up 143.66% from the previous quarter. Total revenue was 1.19 billion baht, up 11.54% from the previous quarter.

He said profit margins declined due to oversupply and high oil prices. But the firm expects margins to improve near the end of this year as oil prices stabilise.

Polyplex (PTL) shares closed on Friday on the SET at 3.64 baht, up two satang, in trade worth 4.1 million baht.

Source: Bangkok Post Monday November 20, 2006