TPI Polene Plc (TPIPL), Thailand’s third-largest cement producer, said it plans to spend about $150m in its project to expand its cement production capacity by 3.3Mta to service the increasing demand for cement boosted by the government’s infrastructure development projects. TPIPL currently has a total production capacity of 9.9 million tonnes annually.
The company’s senior executive vice president, Prasert Itthimekin, said the production capacity increase plan will be proposed to TPIPL’s creditors committee meeting for approval soon after this since the Central Bankruptcy Court had yesterday endorsed TPIPL’s revised rehabilitation plan. Under the revised plan, TPIPL’s creditors are eligible to receive the 5 billion baht unpaid loan interest from TPIPL in cash instead of swapping the debt into shares as originally stated in the TPIPL’s first rehabilitation plan. The revised plan also allows a one-year extension of the plan’s completion timeframe to the end of 2005 from the end of this year.
“We want to increase our cement production capacity since we believe that the demand for cement would substantially increase on the back of the increase in number of government infrastructure and utilities development projects,” Prasert said. He added that domestic demand for cement will continue to further expand over the coming years in line with the country’s economic growth. According to him, more than 90 percent of TPIPL’s cement was sold locally, a substantial increase from about 80 percent the firm reported last year. He projects that the capacity increase would help raise TPIPL’s domestic sales volume, which offers higher profit margins. He also projects that TPIPL’s 2004 income would be higher than last year’s due to the increase in the domestic sales volume.
However, Prasert did not provide details on when his company will start increasing its production capacity but just said that the construction of TPIPL’s fourth cement plant is now completed and once the shareholders approve the plan, TPIPL will purchase machinery and its start production lines after the completion of machinery installation. He said TPIPL also plans to increase the production capacity of its finished-cement line by 1.5Mta, a project that requires the company to ask creditors for a credit line increase to 400 million baht from the current 200 million baht.