SRITHAI SUPERWARE PLC, the world’s largest melamine producer, has adopted a merger and acquisitions growth strategy to replace its organic growth model based on its green-field operations.The company believes the M&A strategy will allow it to achieve its target of doubling annual sales from the Bt9.9 billion posted last year to Bt20 billion in 2020.
Sanan Angubolkul, Srithai's chairman and president, said the company had recently invested about Bt100 million in acquiring a local plastic-pallet manufacturing plant in Thailand. The acquisition will generate income from the fourth quarter, he added.
He said the company was applying the M&A strategy for the first time in its 52-year history.
He said Srithai was interested in acquiring companies, which produced the same products as it did including plastic pallets and food and beverages.Sanan said the new business model aimed to be a short cut to growth, unlike the green-field strategy.
He added that the M&A strategy would be used in Thailand and Vietnam, where the company had a plant producing plastic containers and a plant producing melamine-ware products.As part of its plan to double its sales by 2020, Srithai aims to generate 60 per cent of its sales from plastic products, 30 per cent from its melamine business and the remainder from other businesses, including trading and direct sales.Sanan said the company's sales this year were expected to grow less than the 7 per cent targeted at the beginning of this year. He said this was due to the relocation of its operation for mould and machinery preforms from Thailand to Hanoi. Normal manufacturing will be resumed this month, he added.
"We, however, expect our bottom-line performance to be better this year. We expect to achieve 18-per-cent growth in gross profit this year," he said.