Union Intraco gains face with expansion into cosmetics and personal care

Union Intraco Plc (UIC) is a MAI-listed trader, developer and distributor of specialty chemicals. Chief executive Perajad Suwannapasri discusses the company’s outlook. 

What is UIC’s business model?

2014 is a year of change for UIC in terms of future plans. In the past, we were newly listed on the Market for Alternative Investment, a new company and with limited capital. Over the past few years, through organic growth, we have been able to increase our capital base, which allows us to look at new opportunities to expand our company.

We are a distributor of specialty petrochemical products, with nearly 200 today, a large increase from a few years ago when we distributed only 120. We have expanded into cosmetics and personal care products, which now represent most of our business.

Why has UIC decided to expand into cosmetics and personal care?

The market in cosmetics and personal care is very sustainable compared with the industrial products market. With the latter, the ability to have consistent margins is difficult because of the demand-supply characteristics and how the market reacts to new items. With the cosmetics market, even though it is smaller, we are able to have more consistent margins, while the industry has good growth potential.

This expansion has allowed us to balance our portfolio of products and ensure that our company reports consistent margins.

How is 2014 a year of change for UIC?

As we now have more cash on hand, we are able to look at new opportunities and today we are considering three.

Firstly, we can continue to expand organically, with both the industrial and cosmetics and personal care industries achieving consistent growth.

Second, we are expanding into food supplements in the premium segment. We recently purchased a manufacturing facility for 25 million baht that makes collagen, a raw material for beverages such as energy drinks and health drinks. The supplement market is also very interesting due to its dynamics and growth potential, and perhaps once we have gained the necessary know-how, we will be able to develop our brand of beverages.

Third, the renewable energy industry is very interesting because it will become more and more important to Thailand. Thailand today does require more investment in energy and we have already seen a big expansion in renewables.

However, we are not necessarily focusing on investing in a power plant but more on the technology element. We are waiting to see the new government framework, direction and policies before deciding on our next steps.

What differentiates UIC from its competitors?

It is difficult to differentiate ourselves other than by ensuring that our quality, deliverables and service are of high levels. Our competitors produce similar products. The key factor in the industry is customers’ behaviour, as their policies have shifted in the past decade from purchasing from 30 suppliers to only 10 suppliers, and UIC is among the top 10 in the industry.

In effect, we are gaining more market share because of this change, and to continue to compete we have to ensure that our quality and service levels remain high for our customers.

What impact will the AEC have on your business?

There is no direct impact on us because our customers are based in Thailand. However, as our customers expand throughout the region, we have to prepare in terms of funding, space and people to ensure that our quality of service remains high.

What are the biggest risks facing your business today?

Commodity prices are not a big risk because our products are far down the value chain and movements in commodity prices do not affect us. However, because we are an importer, the currency is an issue. In the past, we did not manage our currency, but last year we experienced our first loss on currency movements and now are more prudently managing this exposure to ensure that we minimise losses in the future.

Where do you see UIC five years from now?

UIC is now at the point where we have the financial strength and network to look at opportunities for business expansion. In previous years, UIC never had a Plan B, as we had to focus upon our core business. With our additional strength, we have options for where to invest further.

We have already expanded into the food sector in a small way and will expand further in the supplements category with the acquisition of a factory.

Furthermore, the renewables industry is very interesting because the role of renewables in Thailand is only going to grow and become more prominent. UIC will focus on the best expansion possible that provides the best return possible for our shareholders.

Source: Bangkok Post