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Published on April 23, 2008

Nalin Viboonchart

The Nation

Thai-German Products is seeking a capital infusion from passive foreign investors to expand its manufacturing capacity for stainless -steel pipe, as it is already highly leveraged. The company's debt-to-equity ratio is now at 12, while its plant is running at 30 per cent of total capacity of 50,000 tonnes a year.

Domestic consumption of stainless steel averages growth of 3-5 per cent each year, but the company forecasts that demand will rise faster in the next three-to-five years as a result of the government's huge investment in mega-projects as well as the tax incentives to stimulate the real estate market.

Managing director Rachata Leelaprachakul said the company was also dealing with local banks for loans to finance its production expansion.

"We've talked with foreign investors such as in Singapore since last year but no deal has been reached. I admit that it's quite difficult to convince them to be our partner because this is business and they have to consider many factors before making a decision. We have more chance to conclude a deal with local banks and I'll try to wrap it up this year," he said.

About Bt800 million is needed to increase annual production of stainless-steel pipes to the maximum level of 35,000 tonnes, but Bt1.2 billion is required if the company wants to run at full capacity to serve international markets.

To celebrate its 35th anniversary, the company would introduce new polished stainless steel sheets with a protective film to replace the old ones used in various applications such as making home appliances and constructing the Skytrain and subway systems.

"We'll add value to the new product and it'll generate a higher gross profit margin than last year's, which was at 13.5 per cent. Thus, we hope the [company-wide] gross profit margin will be improved this year," he said.

The company expects its sales to rise this year by 5-10 per cent over last year's Bt1.9 billion.