L

arge-scale Thai conglomerate, Siam Cement Group (SCG), announced on Tuesday that its subsidiary had acquired a majority stake in a domestic corrugated box manufacturer to tap into the country'€™s growing packaging industry.

SCG president and CEO, Kan Trakulhoon, said that their subsidiary, Thai Containers Group Co. Ltd. (TCG), purchased a 90 percent stake in Indonesian corrugated container manufacturer, PT Primacorr Mandiri, through a share purchase agreement valued at THB 395 million, or equal to US$12.4 million.

'€œThe remaining 10 percent stake is held by existing shareholders,'€ he said through a release.

Primacorr, which has a plant in Tangerang, has a combined capacity of 37,000 tons per year and registered sales of $14.4 million in 2012.

TCG has been manufacturing corrugated containers in their plants in Vietnam, Malaysia, Singapore and Thailand. Their latest investment in Indonesia will increase their total production capacity by 3.8 percent to 1,013,000 tons per year from 976,000 tons per year.

TCG itself is a joint venture company of which 70 percent belongs to SCG Paper Plc, with the other 30 percent attributable to Japan-based Rengo Co. Ltd.

Out of the six units under SCG, SCG Paper specializes in the paper-centric businesses of packaging paper, corrugated containers, paper pulp, writing paper and printing paper.

According to Trakulhoon, SCG Paper focused on two strategic chains: the packaging chain and the fibrous chain.

'€œThis investment by TCG in Primacorr is part of the expansion of the packaging chain,'€ he said.

'€œAnd it is SCG'€™s first strategic entry into the Indonesian packaging market, which is expected to grow rapidly, driven by local consumption and foreign investments,'€ he further pointed out.

Trakulhoon expressed plans to expand into the paper industry in Indonesia during his mid-year visit to Jakarta. At that juncture, Trakulhoon had pointed out that the conglomerate was working on acquiring a domestic company in the paper-based business.

'€œOur first step into the industry is through acquisitions,'€ he said, adding that this strategy allowed SCG to move into a new industry at a faster pace.

'€œWe already have the technology it takes to do this business in Indonesia,'€ he further pointed out.

SCG plans to invest roughly $7 billion in the next 5 years, more than half of which would go outside Thailand. Indonesia, where the conglomerate has assets roughly worth $1 billion as of the first quarter, would be a prime beneficiary of funds for countries outside Thailand.