Thailand: Asia Cement maps out big plans for the future

Thailand: Asia Cement maps out big plans for the future
Published: 04 March 2011

Asia Cement, the manufacturer of Lotus brand cement, has earmarked THB1.4bn (US$47.7m) this year for its waste-heat recovery (WHR) project and another THB200m for aggressive marketing in a bid to boost its profit margin and build brand awareness.

Co-managing director Mario Bracci said that the company’s profit margin would improve from the second half of 2012, once the WHR project is completed. The WHR project will cut the cost of energy by a third, because it will generate electricity from the heat released while producing cement. It will also reduce the heat emitted from the plant.

The project, to be funded from the company’s cash flow, will be used in Asia Cement’s major production lines that produce 5500-7500tpd, Bracci said. He added that the other way of boosting the company’s profit margin was by aggressively marketing the Lotus brand, and building brand awareness and loyalty among regular and new customers.

"Our target is not to increase our market share from the current 13-14%. We can grow in line with the cement market as long as our regular clients are happy with our products. But if we build brand awareness, we can compete with other competitors, which means we can sell at a competitive price," he said.

The company has two major shareholders , Bangkok Bank and Italy’s largest cement maker, the Italcementi Group.

Co-managing director Napadol Ramyarupa said Asia Cement would consolidate its brand with Jalaprathan Cement’s Cobra and Naga brands, creating the Lotus Cobra and Lotus Naga. The two firms have combined their management team since 2003 to strengthen their production efficiency, and their marketing strategy this year would focus on the brand consolidation.

Napadol said Asia Cement and Jalaprathan had a combined production capacity of 7Mta. At present, both manufacturers are running at only 60% of their total capacity, producing about 4Mta, 700,000t of which is exported to neighbouring countries such as Cambodia, Burma and Laos. However, jointly boosting their production will make them the fourth-largest cement makers in Thailand after Siam Cement, Siam City Cement and TPI Polene.

"Now, we’re focusing on marketing because we want to differentiate our brands from the competitors. Though we can’t beat our competitors where production output is concerned, we aim to become one of the top cement makers in terms of brand image," he said.

Bracci added that Asia Cement was also looking for possible opportunities in neighbouring countries such as Cambodia, because revenue contributed by those markets has been growing by 10% each year. However, he admitted that the company needed to evaluate the future demands, market growth and strategic partners carefully before making a decision.

Asia Cement expects this year’s revenue to grow by 5% from THB7bn in 2010, and the sales volume to grow by 5% from around 4Mt last year.