SHAREINVESTOR
Universal Adsorbents & Chemicals Plc (UAC) was established to supply chemicals, base oils and equipment to the petrochemical, oil and gas, polymer,plastic and power plant industries. It was listed on Oct 9 last year on the Market for Alternative Investment after raising 120 million baht in an IPO of 30 million shares at 4 baht each. Founder and managing director Kitti Jivacate discusses the company's strategy and outlook.
BUSINESS:
Please explain UAC's business model.
UAC is an importer and distributor of more than 200 products for chemical materials and equipment for offshore gas production refineries, upstream petrochemicals, liquid chemicals,chemical and solvent products, base oil and additives, and power and utility companies.We also have recently expanded into alternative energy and utility projects.
What is the working relationship between UAC and its customers?
We have been in this business for 15 years, and we work very closely with our customers understanding their needs. Thus we have both long-term and short-term contracts with our customers.
UAC has expanded into water projects. Can you provide more information on this?
UAC Utilities Co Ltd is the investment arm of UAC in water purification systems to supply water to our customers. For example we are now working on many projects in the Map Ta Phut area and a lot of the factories there are disposing treated water from waste-water treatment plants to the public sewage system. So we propose to install a filtering and treatment system at their site to treat this water for a fee so they can use it again. This benefits everyone because it keeps the environment clean by not releasing the water to the public sewage system and is cost-effective for our customers. We hope to sign at least 10-year agreements with our customers.
UAC has also expanded into a JV with Bangchak. Can you provide more information o this?
Bangchak Bio Fuel is a JV between us and Bangchak in which we hold 30%.This plant has a capacity of 300,000 litres per day biodiesel (B100) production and has been operating for 18 months.We have an offtake agreement with Bangchak to buy 60% of the product with the remainder sold to oil companies in Thailand. We are pleased with this investment as the plant has a very high yield of 99%.
UAC has also announced investments into alternative energy projects.
We own a compressed biomethane gas project in Chiang Mai that is promoted and supported by the Ministry of Energy. The plant takes waste from pig farms, creates biogas, passes it through purification and gas composition adjustment to be similar as CNG or NGV, then compresses it. We expect the project to be completed by the first quarter of 2012, and PTT signed an offtake agreement with us for 15 years.We are looking at a few more of these.
INDUSTRY:
What differentiates UAC from its competitors?
We don't have direct competitors in the market; no one has exactly the same type of product range. In addition to being a trading company, we also support our customers via technical services. Our salespeople have to know our customers and how they're going to use our products, as well as what our new products are to provide suggestions.We follow up constantly with our customers to see if they have any concerns, and we have support from our suppliers who send their technical people to talk with our customers, so we provide a two-pronged solution to our customers.
MISCELLANEOUS:
What are the biggest risks facing UAC's business today?
The change in the use of energy and petrochemicals. Perhaps in 10 or 15 years the products we currently supply will have changed, and as a company we have to be constantly aware of this.This is why we maintain a close relationship with our customers to understand their needs, informing our principals/suppliers what products may be needed in the next few years. This is why we have expanded into investing into renewable energy projects. Another risk is politics in Thailand, because the growth of our core business distributing chemical products depends on new projects being launched in Thailand or the expansion of current projects. If another issue similar to Map Ta Phut arises, then our growth will be stalled.So we've expanded our product range to include products for downstream petrochemical plants.
Where do you see UAC in five years?
Renewable energy and utilities will represent half our business, with the rest our core business now. The projects we have invested in are machineries that we already sell and distribute, so we have begun evolving our business model to be more than just distribution.
The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region with more than 400 listed clients. The interview is conducted by Pon Van Compernolle, the vice-president of Merchant Partners. For more information,e-mail gancanapol@merchant.co.th or howard@shareinvestor.com or visit www.thailistedcompany.com
Bangkok Post
24 June 2011