SCG focuses on R&D to launch new products

R&D spending last year was about Bt1.2 billion.

“The budget is allocated also for acquisition of technology. R&D will come from our part and also from our partners,” SCG president Kan Trakulhoon said on the sidelines of the BOI Fair’s CEO Forum.

Kan is upbeat about the huge availability of technology, particularly in the United States. Coupled with collaboration with foreign universities – including Imperial College London and the Massachusetts Institute of Technology – the company is proceeding with its goal to raise revenue from high-value-added (HVA) products from 30 per cent last year to 50 per cent in 2015. This year, the proportion is expected to rise to 35-36 per cent.

“It’s a big challenge. Many products are in the pipeline, waiting for commercialisation,” he said, adding that the challenge was that the HVA portfolio must be increased, while overall revenue had to expand in the years ahead.

HVA products are highlighted as the key to sustain the company’s profitability when petrochemical spreads are below US$400 (Bt12,400) per tonne. Kan attributed strong fourth-quarter results to such products, though the quarterly results have not yet been disclosed. 

Meanwhile, SCG is proceeding with its strategy of mergers and acquisitions to expand the business in the years ahead. Kan indicated that the company might announce its investment budget for this year at a news conference on January 25.

“I don’t want to commit how many deals would be done this year. What if I couldn’t accomplish the goal? M&As take years, like the one for an Indonesian firm,” he said, adding that the deal took the company more than 10 years to complete. 

He ruled out the possibility of SCG extending its operations to cover the United States and Europe. He acknowledged that there were opportunities in the US where economic indicators show signs of improvement, but operations there are considered too far from home. Meanwhile, there is no end in sight to the euro-zone crisis.

 “We’re interested in the acquisition of technology and brands, but not operations,” he said. Personally, he envisaged the disintegration of the euro currency.

 He said SCG was committed to expand in Asean with its vision of becoming the industrial leader in the region. From a ready-mixed-concrete provider in Burma, the company is conducting a feasibility study to invest in a cement plant in the country. Aside from the Dawei port mega-project, the Burmese government highlights the need for new development in Rangoon. That provides huge growth opportunities, Kan said.