Dimet (Siam) Plc (DIMET) produces and sells high-performance protective coating to oil and gas and related industries such as petrochemical plants, refineries, power plants and oil and gas exploration platforms in the Gulf of Thailand as well as timber finishes, architectural and industrial coatings for automotive parts and gas cylinders. Chairman Suraphol Rujikarnchana discusses the company’s strategy and outlook.
What is Dimet’s business model?
Dimet covers many varieties of quality coatings, and we consider ourselves a one-stop paint manufacturing firm. Currently we offer protective, timber, decorative and industrial coatings. We are also the original-equipment manufacturer to Suncoat, our Japanese business partner, and re-export our OEM products to Indonesia and Vietnam.
Who are Dimet’s target customers?
Our customer base ranges depending upon the type of coating. For example, the heavy industrial sector such as oil and gas, PTT offshore platforms and the Electricity Generating Authority of Thailand (Egat) are our main customers within the protective-coating business. However, export-oriented furniture factories require our timber coating, so there is a wide range of customers.
We have also begun targeting customers in light and medium industries and real estate developers, as we see the extension of the customer focus as an opportunity for Dimet’s brand awareness to increase. This in turn could lead to individual consumers purchasing our products via modern trade and general dealers. Last but not least, Dimet also produces special paints for automotive parts including catalytic converters, pickup truck chassis and others.
What is Dimet’s current capacity and utilisation?
Currently our total capacity is 6,000 tonnes a year, and we operate at 60% utilisation. When our sales increase, it is not difficult for us to scale up and increase the capacity by 50% to 9,000 tonnes per year, as we have reasonably good infrastructure.
How does Dimet distribute its products?
We use three distribution channels: direct sales to customers, dealers and modern trade. Via direct sales we go straight to the customers’ projects or factories and supply the coating products that they require. For dealers, we have about 30 local dealers excluding modern trade in some big provinces in Thailand _ for example, in Bangkok, HomePro is our dealer. We also have strategic dealers within certain customer segments such as one dealer that focuses purely on industrial customers reselling Dimet’s products throughout Thailand. And finally, we have the modern trade business, which also provides us a wide market opportunity, and we sell direct to consumers.
What differentiates Dimet from its competitors?
We license our coatings from the top companies and manufacturers globally. For example, the protective coating is from PPG Industries in Pennsylvania. Our timber and industrial coatings and decorative paints are licensed from Valspar Corporation in Minnesota. Both companies are either leaders in their respective products or one of the largest manufacturers globally.
Dimet itself has more than 30 years’ experience within the industry, and we have supplied our protective coatings to Esso, Thaioil, PTG Energy, Egat, Ratchaburi Electricity and several other landmark developments within the industrial segment. We essentially are a local paint company that produces to international standards.
What is Dimet’s current product mix in terms of sales?
Protective coatings represent 40% of total sales, while the remaining portion is evenly split between timber and industrial coatings and exports and decorative paints.
Dimet posted a net loss in the past two years. Why is that?
Recent years has seen an increase in competition and, interestingly, a shift in customer type from the industrial level to individuals as they have shown more interest in our types of products. Thus, we have been focusing on and investing in improving our brand awareness in major provinces such as Chiang Mai, Chiang Rai, Khon Kaen, Udon Thani, Phuket, Surat Thani and Chumphon. With our marketing strategy now completed, our focus is to increase volume via our distribution channels.
What are the biggest risks facing your business?
We have two main risks. First are raw material costs, which are petrochemical-based, and thus if oil prices are volatile, then it’s a risk we have to manage well. Second is labour. The cost of labour in Thailand has risen, and with the country’s low unemployment rate, it is harder to find and retain quality workers.
What effect will the Asean Economic Community have on your business?
The AEC will be positive for the paint and coatings industry, as businesses will expand and naturally our customer base will expand as well.
Where do you expect to see Dimet five years from now?
Quality over quantity will be our focus for the next five years. We intend to be the leading paint manufacturer in Asia in terms of technology, efficiency and new products.
Source: Bangkok Post