December 14, 2010

Thai-German Meat Product Co to establish new plant

Thai-German Meat Product Co will start the building of a second plant in the New Year after postponing it for two years.

The project requires a loan of 50% of the total investment of THB1 billion (US$33.29 million).

The company delayed setting up the new plant because of the global economic slowdown and the local political trouble. During the delay, ThaiGerman purchased machines for its existing plant to increase production capacity, said managing director Jantana Puapatanakajorn.

The stronger baht will enable purchase of machines at lower prices, she said. The company allocated more than THB30 million (US$1 million) this year for new machines, which can help raise production efficiency.

However, the current facility cannot handle customer demand or market expansion in the near future. Moreover, increased interest rates are a factor behind the company's move to construct a second plant quickly.

"We are talking with banks to help reduce the lending rate. We might ask at least two banks for loans for the investment," she said.

The company is considering dividing construction into two phases, Jantana said.

"We might invest about THB600 million (US$19.97 million) for the first phase, of which about THB300 million (US$10 million) will be from a bank loan, and we will use the revenue from the operation of the new plant to pay debts before deciding to go ahead the second phase. This solution will help us to have working capital and cash flow," she said.

The company aims for sales revenue next year to grow by 15% from the expected THB1.2 billion (US$0.04 billion) this year, thanks to domestic consumption. The domestic market contributes 90% of sales, with the rest from export markets, Jantana said.

Currently the airline supply business generates only 5% of sales revenue.