Union Mosaic eyes spin-off

The move follows improved confidence in the economy as a result of the new government being formed after the May 22 coup.

With UMI looking to turn around the fortunes of the debt-ridden TTC quicker than expected, it is aiming to fulfil its product-range goal spanning from middle, upper-middle and high-end market segments.

"If things are unchanged, TTC is expected to book a net profit for two straight years in 2015 and 2016 in accordance with the recovery plan," said UMI president Paweena Laowiwatwong.

She said UMI, which has a 89-per-cent stake in TTC, planned to list TTC’s shares on the Market for Alternative Investment in 2017 and on the Stock Exchange of Thailand in 2018, when it hopefully showed a better bottom line.

After acquiring the stake in TTC, a Ceragres-branded high-end ceramic tile maker, and a 32-per-cent stake in Royal Ceramic Industry, a porcelain tile maker, two years ago, UMI has been able to provide customers with a wide range of wall and floor tiles.

Its core products are the Duragres and Duragres Lila brands

Paweena said UMI booked Bt3.7 billion in consolidated sales last year, up from Bt2.6 billion in 2011.

She said the company’s market share rose from 10 per cent to 15 per cent in that period, compared to market leaders SCG (55 per cent) and Dynasty Ceramic (40 per cent).

"What we are doing now is putting our entire effort into the recovery of TTC first, after all the snatch problems with existing shareholders were cleared up," she said.

She said UMI had wasted two years in its attempts to fix up TTC because it was blocked by existing shareholders, which did not allow the rehabilitation plan to proceed as scheduled.

But now that the group had complete control of TTC, it had injected the subsidiary with Bt1 billion in working capital and debt repayment.

"The debt burden has been reduced to Bt750 million, from Bt6-7 billion at the beginning of it being acquired," she said.

If running at 60 per cent capacity, TTC could turn into a profitable unit," she said, adding that TTC currently operated at 40 per cent capacity.

Despite the issues, Paweena said the investment in TTC was worthwhile as UMI had acquired it to purchase its debt at 80 per cent of the debt value and then converted the debt into equity following the implementation of the rehabilitation plan, giving UMI its 89-per-cent stake.

The group would now launch new products every quarter and resume exports, especially for Cergres products, with the focus Asean, Australia and the European Union. It expected Cergres exports would rise to 30 per cent of UMI’s total sales, or 11-12 per cent of the group’s total sales.

Paweena said UMI recently issued a three-year debenture of Bt1 billion and the proceeds were used on unloading its debt burden and working capital. However, it was seeking between Bt300 million and Bt400 million in new funds to expand through recapitalisation or through a new strategic partner.

She said UMI had a production capacity of 37 million square metres of wall and floor ceramic tiles a year. Its total domestic production was worth Bt36 billion.