IVL boosting production with M&As

SET-listed Indorama Ventures Plc (IVL), a producer of intermediate petrochemicals, expects 10% growth in revenue this year from 263 billion baht in 2016, with the rise in capacity of high value-added products (HVA).

Dilip Kumar Agarwal, chief executive of feedstock and PET business, said the company expects to expand its purified terephthalic acid (PTA) production capacity through a recent acquisition in Rotterdam, to be completed by mid-year, while its US gas cracker project is expected to start commercial operations this year.

The two additions will help increase production and revenue substantially.

“The company has diversified to produce more high value-added products for more than five years, which is key to boosting total revenue substantially,” said Mr Agarwal.

Sales of the company’s HVA products have continued to grow, particularly in auto parts, hygiene and plastics for industry, he said.

HVA products have contributed around US$3 billion (104 billion baht) with a growth rate of around 7% each year, he added.

Recently, IVL announced it was entering mergers and acquisitions (M&As) with Glanzstoff, a major manufacturer of technical yarns, cords and fabrics for the rubber and composite industries.

IVL’s plan is to become a leading producer of high-tenacity viscose filament yarns for technical applications.

IVL reported total first quarter revenue of 72 billion baht, up 15% from the same period of last year.

Mr Agarwal said the company plans to spend $1.2 billion on identified growth and maintenance related projects during 2017-18.

This excludes the budget for M&As. The company has seven new projects that begin construction during 2017-18, including the US gas cracker, with a capacity of 440,000 tonnes.

The Rotterdam expansion will increase IVL’s PTA capacity by 320,000 tonnes.

The Glanzstoff stock acquisition will give IVL another 25% to add to their existing 75%, giving IVL complete ownership as well as additional capacity.

IVL is also expanding production capacity of HVA automotive fibres in China to 18,000 tonnes per year, and the capacity of the fibres at its Indonesian plant to 200,000 tonnes a year.

“The company is looking for more M&As as it is part of IVL’s strategy to expand business,” he said.