Established on April 30, 1999 as a distributor of innovative chemicals, Union Intraco Plc (UIC) is a Thai-owned company headquartered in Bangkok. Initially, UIC specialised in the domestic market. However, as it earned a reputation for its innovative approach, it secured distribution agreements with chemical manufacturers and suppliers worldwide. It eventually became a public limited company with authorised capital of 130 million baht in 2010 and listed on the Market for Alternative Investment in June 2011. CEO Perajed Suwannapasri discusses the company’s strategy and outlook.What is UIC’s business model?
UIC is a trader, developer and distributor of specialty chemicals that are used in several industries such as cosmetics, healthcare, printing, food and plastics. We classify our products into two groups: liquid chemicals that comprise alcohol-, ester- and glycol-based products; and chemical powders, comprising additives and pigment products.
Who are UIC’s target customers?
Our largest customer groups are makers of cosmetics and healthcare products, followed by printing ink and varnishing, foods and medical supplies, plastics and containers, and others. In the past couple of years we have been able to increase our sales to the printing ink and varnishing group the fastest, but we have seen double-digit growth among all of our different customer segments. As well, sales from the chemical powder segment grew strongly in 2011 and we will focus more on this because we have been able to build strong relationships with our customers. From here we will be able to sell more specialty chemical products.
UIC is a subsidiary of Union Petrochemical Plc (UKEM). Why did the group decide to venture into UIC?
UKEM is focused on commodity chemicals, which can be subject to the volatility of commodity prices globally, while UIC focuses more on specialty chemical products, which tend to be less affected by fluctuations in commodity prices. Specialty chemical product prices are driven far more by demand and supply for the end product instead of the cost of the raw materials.
How important are UIC’s relationships with its suppliers?
We distribute several hundred types of products and our relationships with suppliers are crucial. For example we are a distributor of titanium dioxide which is manufactured by a subsidiary of Huntsman International in Malaysia. The value of the sales from these products accounted for nearly 30% of our total revenue in 2011. So our aim is to continue to foster the relationships with our suppliers and to help them expand their markets in Thailand.
Why did UIC decide to make an IPO?
We wanted to raise funds to expand our business further. The majority of the funds raised are used for working capital, and this has allowed us to meet the growing demand from our current customers and to go out and get new business.
UIC’s net profit doubled in 2011. How was this achieved?
Customer focus. First, we saw that our customers required more of the specialty chemical products that we distribute. Second, we saw that the industrial sector here offered strong opportunities for several other specialty chemical products, which is why we began to distribute chemical powder. Third, as a newly public company with additional funds for working capital, we have been able to meet this demand.
What are the biggest risks facing your business today?
Our biggest risk is our own inability to seize the opportunities that are available. We are a small company that has been able to double in size over the past two years and for us to maintain this strong growth we have to focus on our customers and ensure that we deliver our products in an efficient manner.
How would integration under the Asean Economic Community affect your business?
The AEC is a great opportunity for the region and we will first focus on strengthening our business here in Thailand so that it can withstand any new competition from abroad.
Where do you see UIC five years from now?
In five years from now UIC will continue to be a distributor of specialty chemical products within Thailand. We will look to expand our existing portfolio of specialty chemicals that will enable us to sell a wider variety of products to our ever-growing customer base.
The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region, with more than 400 listed clients. This interview was conducted by Pon Van Compernolle, the editor of www.thaicapitalist.com.
Originally published in the Bangkok Post 12/05/2012