Crisis offers a rare chance to expand and Indorama says it will not hesitate if the right deal comes along.

Walking into the lavishly designed, dark wood-toned offices of Indorama Polymers on the 37th floor, the visitor is struck by the sight of an eagle and wonders what it has to do with a polyester business.

"This is something we purchased and it was Suchitra (Lohia)'s decision to place it there," says Aloke Lohia, the chief executive officer of Indorama Ploymers Plc (IRP) and chief executive of Indorama Ventures Ltd (IVL).

"An eagle is very focused and can see things from the sky, dive and pick up its prey. Did you know that an eagle can even dive up to one metre in the water to pick up a fish? That's how focused they are," Mr Lohia says with a smile.

Mr Lohia, who turns 50 next Thursday, has had an eagle-eyed focus on polyester chain businesses ever since he first entered the industry by what he called a stroke of luck.

"We are here for the long haul," he says, adding that the Indorama group stands ready to participate in any major opportunity that comes along.

The Lohia family, one of the richest Indian families in Thailand, operates its business through IVL, in which it holds 95% of the shares. The remaining 5% are held by the German development bank Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) and Bangkok Bank Plc. Non-listed IVL is valued at an estimated US$600 million.

The group showed good management acumen by managing to secure funding for various acquisitions in the depths of the economic crisis in 1997-98. As a result, it believes lenders would be receptive even in today's troubled climate if IVL came along with a new proposal.

To prove the point, IVL late last month acquired a majority stake in TPT Petrochemical, a unit of Tuntex (Thailand) Plc, which was undergoing debt restructuring. Tuntex was once one of Thailand's largest PTA makers but had never recovered from 1997.

IVL now holds a majority stake in the SET-listed Tuntex (Thailand), the largest polyester fibre producer in Thailand, with production to resume next weekend.
"We are ready for acquisition from all sides, be it PET or PTA operations, and we have our finances ready to undertake such a move even though some people may have their doubts," says Mr Lohia.

IVL, which holds 70% of IRP, handles all non-PET-related businesses of the group, while IRP handles PET operations in Thailand and elsewhere in the world.

"We want to separate the two businesses. Our aim is to not have any kind of competition between IVL and IRP, and therefore all non-PET issues are handled by IVL," he says. "Businesses that are non-core for IRP should not be a burden on IRP's books; therefore we use IVL to
undertake those ventures."

Currently, IVL has operations in the Netherlands and Ireland apart from Thailand where the firm also has wool, chemical and other businesses.

With markets now in doldrums and liquidity tight, Mr Lohia says acquisition opportunities could be plentiful for strong companies. Any such acquisition by IVL or IRP, he says, would have to be a low-cost producer and located in the strategic market that the group wants to tap.

"Say if the acquisition opportunity comes up in Africa or South America, then we would not touch it, but in case it does come up in the markets we are keen on, then surely we would look at it."

IVL and IRP both have been focusing on the more developed markets such as the United States and Europe. It now has plants in the US, UK, the Netherlands and Lithuania. "Therefore it is not just cheap acquisitions that we are looking at, but they should fit our overall strategic goal," he says.

One such example was the 2003 acquisition of US-based StarPet, which helped the company tap into a market where the PET demand was more than four million tonnes, although Star Pet was producing a mere 50,000 tonnes at the time. By contrast, Thailand's PET demand is only 150,000 tonnes a year.

Mr Lohia says that although IVL has other businesses, 97% of the group's revenues are derived from polyester chain products. Both he and industry analysts at CMAI (Chemical Market Associates Inc) believe that the upside for the polyester chain business is about to return over the next two years.

The reason, they say, is that over the past few years the industry has been on a downtrend, which has discouraged investments in the sector. With a continued rise in demand, capacity utilisation and margins should start to improve in the very near future.