SCG has high hopes for its Indonesian acquisitions
The successful acquisition of Indonesian firms Keramika Indonesia Assosiasi and Kokoh Inti Arebama is helping SCG to make the most of the tiles and construction materials market overseas through local leading brands.
Keramika Indonesia Assosiasi (KIA) has already registered about 15-per-cent growth to Bt2.5 billionthis yearafter reporting Bt620 million in the first quarter.
In addition, it plans to increase its production capacity from 19.5 million square metres last year to 23 million square metres this year and plans to achieve 28 million square metres according to its five-year plan.
The acquisition, which went through mid last year, allows SCG a 94-per-cent majority stake in exchange for an investment of US$200 million (Bt6.3 billion).
This deal has allowed the group to leap into the tile manufacturing and marketing industry, especially now that three of KIA’s factories have been renovated and made more efficient.
In addition, it recently opened a new showroom in Jakarta called "KIA Home", which will be used not just to display new products but also to become a meeting point for homeowners, architects and contractors.
Cherdsak Niyomsilpa, president of KIA, said demand for tiles in Indonesia is projected to rise by 10 per cent to 260 million square metres this year.
This forecast is based on the belief that the market will grow further at an average rate of 6 to 8 per cent per year. He added that SCG had to focus on key points after acquiring a stake in KIA, namely improving the work process in the factories, because they have been showing losses, boosting human resources and control systems, putting in place a safety system and keeping marketing costs low.
"Indonesia’s middle-income population is rising, accounting for 30 to 40 per cent of the country’s total population, so our business plans to capture more buyers in the higher-purchase group," Cherdsak said.
Wichai Pokinwong, president director of Kokoh Inti Arebama, said his company was aiming to become a top distributor in Indonesia and will support SCG products among other brands. In addition, it will consider appointing authorised dealers instead of opening new shops.
After acquisition, SCG took over all 19 branches under the Kokoh brand, but had to shut down three of the outlets due to low efficiency.
Kokoh has reported total sales of Bt655 million, while its net income skyrocketed by 984 per cent to Bt22 million year on year in the first quarter this year.
