Thai President Food Plc (TF), Thailand's largest instant noodle manufacturer, has sought approval from the government of Bhutan to set up a joint venture to make Mama-brand instant noodles there.
TF CEO Pipat Paniengvate (left), and president Suchai Ratanajiacharon show off Mama cup noodles at a briefing yesterday.
If approved, the project will be the first Thai enterprise in the landlocked nation located in the eastern Himalayas.
CEO Pipat Paniengvate said TF is set to use the venture as a springboard for exporting its products to the Indian market.
The Thai side has already submitted the investment proposal to the Bhutanese government, which is expected to take three to four months to make a decision.
He said construction of the production plant would begin immediately after receiving the green light and will take a year to complete.
Overseas expansion is part of the firm's strategy to explore new business opportunities after the local market has been saturated.
Mr Pipat said a new joint-venture company will be set up under with registered capital of US$8 million, of which TF will hold 66%. A Bhutan-based conglomerate will hold 25% while the remaining 9% will belong to Saha Pathana Interholding Plc, ICC International and Saha Phattanapibul Plc, all of which are companies affiliated with TF.
Mr Pipat said TF would stop its investment plan in India once the project in Bhutan materialises. The joint venture in India was not successful due certain barriers, plus the demand for the disclosure of the formula for Mama instant noodles by the Indian partner.
Bhutan is a more favourable choice as the government agreed that all products shipped to India will not have a tariff starting this year.
Under the plan, a 250-million-baht production plant will be built with a capacity to produce 300 packets of instant noodles per minute. Most of the output will be exported to India.
If the project is approved, it will allow TF to export instant noodles from Thailand to Bhutan and re-export them to India without any tax, said Mr Pipat.
TF also expects to complete construction of the new Mama factory in Ghana in the same year as the Bhutan facility. But all of the production in Ghana will serve the domestic market.
Mr Pipat said Thailand's instant noodle industry grew by 3% to 13 billion baht in 2012, marking the lowest growth in five years.
But TF reported the highest profit in its 40 years in business last year. It reported sales of 9.74 billion baht with a net profit of 1.25 billion.
Armed with its own wheat-flour production plant, the firm can afford to maintain retail prices of Mama this year despite higher operating costs for palm oil and wheat.
Some 75% of sales in the overall instant noodles market comes from packet noodles, but with changing consumer lifestyles, TF expects 40% will come from cup noodles in the future.
TF expects sales to rise by 10% to 10.45 billion baht this year.
About the author
- Writer: Pitsinee Jitpleecheep
Position: Business Reporter