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TOA Paint partners with Japanese firm in first JV since 1997 crisis

TOA Paint (Thailand) yesterday announced its first joint venture since the 1997 financial crisis, partnering with Japan's Isamu Paint to manufacture auto refinishing paint in Thailand.

Published on July 4, 2007

TOA Paint has a 55-per-cent stake in TOA-ISM Paint (Thailand), whose factory is located at TOA's production complex on Bang Na-Trat Road. Isamu Paint holds the remaining 45 per cent. Registered capital is Bt120 million.

The facility has the capacity to produce more than 400 tonnes of paint per annum in the initial period.

Under the joint-venture agreement, TOA will also have the right to export as well as expand manufacturing facilities throughout Asia, excluding Japan and South Korea. TOA is expected to open its first manufacturing plant for auto refinishing paint in China in the next two to three years.

"The move is our first joint-venture agreement since the 1997 financial crisis, which weakened the company's financial condition," said Prachak Tangkaravakoon, honourable consultant of TOA Group of Companies.

He said that 20 years ago TOA had joined with DuPont of the United States in an equally owned manufacturing plant for auto refinishing paint, located on Bang Na-Trat Road. However, after TOA came under pressure during the financial crisis, DuPont decided to withdraw from the partnership and ran the business on its own.

"The new move proves that we are not a new face in the auto paint market, but have had strong experience for 20 years," said Prachak, adding that it was the right time for the company to reinvest again in the business.

Isamu Paint president and CEO Seiji Shiozaki said that 18 years ago, Isamu had started to export its auto refinishing paints to Thailand to serve the local car maintenance market and posted annual sales of about 100 million yen (Bt25.9 million) on average.

"Under the joint-venture facility, we want to increase our sales of auto refinishing paint in Thailand, benefiting from TOA's strong local distribution network. The paint products will be also exported from Thailand to all potential markets in East Asia, such as Vietnam," said Shiozaki.

Nattavuth Tangkaravakoon, managing director of TOA Paint (Thailand), said the new joint-venture facility would cater to the increasing volume of cars in the marketplace.

"The total market for car refinishing paint was worth about Bt3.8 billion last year and is expected to grow by 7 per cent this year. DuPont, which is the leader in this market segment, has a market share of between 24 per cent and 25 per cent," said Nattavuth.

He added that under the joint venture, the company expects to increase its market share to 25 per cent in the next five years.

TOA also formed a partnership with Shinto Paint of Japan in 1989 to set up a local joint venture, TOA-Shinto Thailand, to produce anti-rust and electro-deposited paints to supply auto-makers under original equipment manufacturing (OEM) contract agreements.

TOA-Shinto is now one of top three suppliers in the Bt4.5-billion auto paint OEM market segment, alongside Kansai and Nippon. With its plant at Bang Na-Trat Road Km 23, the company has supplied paints to several Japanese carmakers - including Toyota, Nissan, Isuzu, Mazda and Mitsubishi - and Thai Summit.

Kwanchai Rungfapaisarn

The Nation


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