Millcon Steel Industries Plc, controlled by a member of the Leeswadtrakul family, will conclude its acquisition of Thai Special Steel Industry this quarter, raising its turnover by THB 6 to THB 7 billion in 2013.
Mr Sittichai Leeswadtrakul president & CEO of Millcon Steel Industries Plc said that Millcon is in the process of completing its legal diligence on TSSI, which was founded by Prachai Leophairattana of Thai Petrochemical Industry.
Millcon's board of directors endorsed the purchase of TSSI's assets for THB 3.06 billion in 2011. Its shareholders approved its plan to raise capital by THB 1.5 billion and seek a THB 1.5 billion loan to finance the acquisition in November 2011
With annual capacity of 500,000 tonnes of special grade wire rods, TSSI's plant in Rayong stopped operation in 2007 due to lack of funding.
Mr Sittichai said that Millcon expects to spend another 3 to 4 months to revamp TSSI's plant and resume production in the second half of 2012. Domestic demand for wire rods is 1.3 million tonnes per year, of which 800,000 tonnes are imported.
He added that "In a full year of operations, TSSI will add THB 6 to THB 7 billion to our top line next year. Some of the output will be exported to Southeast Asia."
Meanwhile, Millcon's Electric Arc Furnace, the so called Green Mill project, is scheduled to commence commercial operation next month. A maximum capacity of 500,000 tonnes of billets will be utilized in the first year of operation. Millcon produces 550,000 tonnes per year of steel bars and 300,000 tonnes of structural steel now.
The backward integration to produce billets from steel scraps instead of imports will help improve Millcon's margin. Billets are now priced at USD 650 per tonne compared with USD 450 per tonne of scrap.
Mr Sittichai said that the facility will also enable Millcon to produce high value added products such as round bars used in forging and the auto parts industry. He added that "By lowering production costs and adding value to our products, Millcon will stay competitive as the ASEAN Economic Community comes into focus."
This year, Millcon aims to increase its turnover by 10% to 15% from nearly THB 15 billion in 2011. Its plant on Rama II Road in Bangkok stopped operation for two weeks due to the threat of floods.
Net profit was THB 116 million in 2010 with revenue of THB 9.78 billion. Domestic demand for every kind of steel is projected to return to 2010 levels of 14 to 15 million tonnes in 2012. Due to the floods and a general election, which slowed infrastructure projects, steel consumption dropped to 13 to 14 million tonnes in 2011.
(Sourced from www.bangkokpost.com)
