The company is a manufacturer and distributor of high-quality specialty chemicals used as components in the production of metal packaging. These include food cans, beverage cans, chemical containers of sizes ranging from 0.5 liters to 200 liters, such as spray cans. The company's products also include aluminum tubes used for pharmaceuticals or cosmetics. The main products of the company are:
- Metal Packaging Coatings (Can Coating) The company's metal packaging coatings, also known as lacquer, are solvent-based (Solvent Base Can Coating) products used for coating both the internal and external surfaces of cans and lids.
- The internal coating must have properties that resist the acidic or alkaline conditions of the packaged product, especially foods with varying acidity levels. This prevents the food from reacting with the packaging material, which could alter the taste, color, or smell of the food. This ensures the product's longevity and quality.
- The external coating provides protection against rust, scratches, and corrosion. It also serves as a primer for further external decoration, such as printing and varnishing, to enhance the visual appeal of the packaging. Therefore, high flexibility is essential. The company aims for comprehensive market coverage, targeting major customer groups such as the food and beverage sectors, as well as the industrial products sector. The company has also begun introducing new products to offer more variety for customers, catering to new demands in different segments. Distribution systems have been developed to ensure complete market coverage within the country (Full Segmentation Coverage).
- Can Sealing Compounds The sealing compounds are rubber sealants used to prevent leakage in metal packaging. Their primary function is to seal the seams between the container and its lids (both top and bottom), which are created during production and after the food or product is filled. This prevents contamination from external sources, thus extending the shelf life of the product inside. Moreover, the sealing compounds must withstand sterilization processes used to preserve the contents during the customer's production cycle.
Revenue Contribution The revenue split is approximately 53% from can coatings and 47% from sealing compounds.
Approximately 90% of the company's production costs are from raw materials, which can be divided into two main categories:
- Production of Metal Packaging Coatings
The majority of raw materials for metal packaging coatings come from the petrochemical industry. These include resins, polymers, solvents, and other chemicals. The company can procure these materials from local manufacturers, local distributors, or directly import them from abroad. However, the prices of these raw materials can fluctuate according to market dynamics. Therefore, the company needs to carefully plan production and procurement in terms of quantity, delivery schedule, and cost to maintain production efficiency, warehouse management, and control production costs.
- Can Sealing Compounds
Most of the raw materials used for sealing compounds are natural products, such as natural rubber. Similar to the coatings, the price of these materials can also fluctuate based on market forces. Although the company can easily source these raw materials from domestic suppliers, the price of natural rubber is subject to global market conditions.
The company's main customer groups are divided into three categories:
- Domestic Customers Domestic customers consist of metal packaging manufacturers that serve the food and beverage industries, as well as other industrial products within the country.
- Customers in the Chinese Market
- Major Customers: The company sells products directly to major customers to quickly and precisely meet their needs.
- Subsidiary in China: The subsidiary distributes products to medium-sized customers and those seeking to purchase within China. The company also provides technical support and after-sales service through its technical and sales teams. Additionally, a sealing compound production unit has been established to efficiently meet growing demand.
- Customers in Other International Markets
- Asia: Myanmar, Philippines, Indonesia, Malaysia, Vietnam, Singapore, Taiwan, South Korea, Hong Kong, Maldives, Bangladesh, Sri Lanka, Pakistan, Turkey, India.
- Australia: Australia, New Zealand.
- Middle East: Iran, Saudi Arabia, United Arab Emirates.
- Africa: Egypt.
- Europe: Italy, Turkey.
- America: Mexico.
- South America: Brazil, Peru, Ecuador, Chile.
Risk of Dependence on Key Raw Material Suppliers
The company uses specialized raw materials in its production, which must comply with food industry regulations and be approved by regulatory agencies (e.g., FDA). Although these raw materials can generally be sourced from multiple suppliers, some are only produced and distributed by a limited number of companies. This dependency might cause risks if the suppliers are unable to deliver on time or as needed, which could impact production.
The company has implemented control measures, such as policies for maintaining adequate safety stock, conducting regular review meetings for material needs, and establishing a diverse supplier base (both local and international). Safety stock policies are documented, and responsibilities are shared among the procurement, production planning, and research and development teams.
Risk Related to Major Customers
The number of large customers in each country varies. Currently, 15 major customers account for approximately 50% of the company’s total sales. Large customers demand various types of products that the company can provide, while accessing smaller customers requires more resources. However, no single customer contributes more than 10% of total sales, meaning the impact on overall sales would be relatively minor.
The company has control measures in place, such as conducting customer satisfaction assessments for product quality and services, building strong customer relationships, and offering technical support to maintain customer loyalty. Measures also include offering new products to boost sales, appointing distributors and consultants to connect closely with customers, expanding the customer base to medium and small-sized customers, and ensuring rapid response to customer issues. Responsibilities for this are shared across the sales, production planning, research and development, and management teams.
Risk from Changes in Packaging Technology
The company's products are primarily used in metal packaging. If packaging technology shifts to using other materials, it may impact the company’s business. However, alternative packaging technologies still cannot offer the same shelf life or safety as metal packaging, especially for food and beverage products. Metal packaging remains popular, and the company is working on developing new products to accommodate future changes in materials.
Risk from Climate Change
Climate change poses potential risks to the environment and the company’s business. These risks include the increasing frequency of natural disasters, stricter regulations at both national and international levels, and the push for a transition to low-carbon energy solutions. The company acknowledges these risks and, in 2024, initiated climate risk and opportunity assessments following the Task Force on Climate-related Financial Disclosures (TCFD) guidelines. These will be integrated into the overall risk assessments to prepare and mitigate the impact of climate change on the business.
Environmental Risks
As the company manufactures chemical products such as metal coatings and can sealing compounds, the production processes can result in environmental pollution, including odors, chemical vapors, industrial waste, and water contamination. To mitigate these impacts, the company has implemented ISO 14001:2015 environmental management standards. This system helps evaluate environmental impacts and improve processes such as wastewater treatment and reducing resource use (e.g., water, electricity, and fuel). Strict policies have been set to comply with environmental laws, with quality control and production departments responsible for compliance, monitoring, and reporting.
Risk from Changes in Packaging Standards
As a supplier of packaging-related products with clients around the world, changes in global packaging standards inevitably impact the company. Growing emphasis on the contamination of chemicals in food and the environment, such as PFAS (persistent chemicals), has required the company to adjust product quality to meet these evolving standards. The company’s research and development team are actively working on developing new products and improving existing ones to comply with these standards.
Occupational Health and Safety Risks
Due to the chemical nature of its products, the company’s factory environment carries risks of accidents, injuries, or work-related illnesses, which could impact both production efficiency and employee well-being. To address these risks, the company has implemented ISO 45001-2018 standards and policies on quality, environmental, and occupational health and safety, under the supervision of quality systems and production departments.
Production Risks
Although the company uses automated production systems, any malfunctions could cause disruptions. However, the system is designed to allow manual control during production to ensure continuity without affecting output.
Product Quality Risks
Issues with product quality might arise at either the customer’s production facilities or the final customer. To address these risks, the company has implemented Product Liability Insurance to protect against claims from customers worldwide. Technical and sales teams are tasked with working closely with customers to identify and solve problems swiftly, with shared responsibility across the technical, R&D, sales, quality systems, and production departments. The company also has a policy to continuously improve testing equipment to ensure products meet customer standards.
Risk from Raw Material Price Volatility
Key raw materials for the company's metal coatings and sealing compounds are chemicals, accounting for about 80% of total production costs. The prices of these materials fluctuate based on market demand and supply, which also affects production costs. The company manages this risk through policies to review purchase orders, manage inventory levels, make forward contracts for raw materials, closely monitor prices, and maintain strong relationships with suppliers to allow flexibility in pricing. Sales forecasting is also used for long-term planning, with responsibilities shared across procurement, sales, planning, and warehouse departments.
Financial Risks
The company faces foreign exchange risks since over 70% of sales are from exports, while raw material imports are comparatively lower. Exchange rate fluctuations could impact profits. To mitigate these risks, the company uses natural hedging, forward contracts, and Foreign Currency Deposit (FCD) accounts, and employs various financial measures depending on the prevailing situation.
Risk from Corruption
The company strictly rejects any form of corruption across all business activities and in all countries and departments. This includes actions to gain inappropriate advantages. The company has set anti-corruption policies and practices that all board members, executives, employees, and subsidiaries are required to follow.