UAB Orion Global Pet, Klaipeda, Lithuania,

Indorama Polymers Public Co Ltd didn’t make much of a global noise in the packaging sector when it quietly listed on the Stock Exchange of Thailand in August, 2005. As a private company playing mainly in the Thai PET polymers and packaging sector floating just 23 percent of its equity it wouldn’t.

But within four years Indorama has expanded beyond its main PET polymers plant; Asia Pet (Thailand) Limited, to acquire and set-up manufacturing plants in Europe with UAB Orion Global Pet, Klaipeda, Lithuania, the USA with StarPet in Asheboro, North Carolina as well as Petform (Thailand) Limited producing PET Preforms, PET bottles and HDPE Closures as a Joint Venture with Serm Suk Public Company Limited, the exclusive Pepsi bottler in its home base Thailand.

According to DK Agarwal, Group COO and CFO “As a group we began in Thailand in 1989 with an investment in chemicals business of around US$40 million, and by 1994 we expanded into wool spinning and became the 2nd largest spun wool manufacturer in the world supplying the European market exclusively to customers like Hugo Boss. The textile and chemicals side of the business is still privately owned.

PET entry

“We originally saw the PET polymers market as being quite limited in scale, and set-up a small plant in Thailand but at that time we didn’t really consider a full fledged integrated operation due to the size of the market, at that time the total Thai market demand was only around 8,000 tons in 1995. But we have seen a lot of growth in the past 12 years, today the market is 110,000 tons”

“We originally saw the PET polymers market as being quite limited in scale, and set-up a small plant in Thailand but at that time we didn’t really consider a full fledged integrated operation due to the size of the market, at that time the total Thai market demand was only around 8,000 tons in 1995. But we have seen a lot of growth in the past 12 years, today the market is 110,000 tons”

In 1997 Joint Venture in preforms with Serm Suk helped develop the Thai market infrastructure, and Indorama began to see growth in the region of 10-15 percent

“Of the total global demand North America consumes about 3.9 million tons, Greater Europe takes up 3.8 million tons while Asia consumes 3.2 million tons, however with 10-15 percent growth it is clearly the market of the future”.

With a total production capacity of 603,000 tons Indorama is on an expansion curve “We are exploring the potential of both expanding existing capacity: We’ve just completed an upgrade of the North Carolina plant to double its capacity to 225,000 tons.”

Indorama’s entry into the European market was a spectacular success when it opened its Lithuanian plant with largest single line in Europe with a production capacity of 198,000 tons.

“From our perspective the European and US markets offer good potential, they are both large PET consumers and growth remains respectable. Lithuania was a carefully planned project; gas and power supply is readily available and labour costs are considerably lower than other parts of Europe – government investment incentives also made it an attractive investment.”

As a new player, in the US and European markets, the Indorama strategy is to set-up up economic size plants with minimum capacity of 200,000– 300,000 tons “This gives us an economy of scale where we can be an effective supplier. Many of our older competitors in those markets have legacy plant and equipment which restricts their growth capacity allowing us to put PET polymers into the market more economically.”

“In Thailand, part of our expansion programme for PET polymers will finish in May, and we have backward integration plant expansion

StarPet in Asheboro, North Carolina

Indorama is currently looking at even more rapid growth “We are considering adding another three or possibly four production plants in the near future, probably in the North American, Europe and Middle East and Asian region” says DK Agarwal confidently.

“Demand in China is 1.4 million tons alone, but we are realistic, we are just too late to enter China.” Agarwal sees no real threat from China “They are a big manufacturer of PET, about 2 million tons, their demand is about 1.4 million tons so China has PET surplus. It exports more than 600,000 tons so they can provide for themselves, and export to Eastern Europe and other countries. They have a large number of plants.

“But the China business is also too fragmented so the bottom-line isn’t attractive. We have to look and operate on a global level and in this business where there is no threat from China, it is not developed enough yet because of supplier fragmentation and quality issues”.

India, on the other hand, with just a slightly lower population than China, is only producing in the region of 100-150,000 tons. But with the coming retail boom, it presents a major outlet for packaging and will change the production future.

“India currently has a feedstock surplus and will be the next attractive foreign investment destination, so we are looking at it. We are always exploring growth opportunities. It’s all dependent on site and opportunity”.

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