EAC: The Name of the Company is not the Issue

After recently selling the biggest of East Asiatic Company’s businesses, Nutrition, there has been a lot of talk about how long before the more than a century old Danish business giant EAC cease to exist. However, that discussion is of no interest to the Danish Managing Director, Jan Dam Pedersen. Sitting in his office of the Lumpini Tower in Bangkok, he is eager to tell about the latest expansion of the Industrial Ingredient business and future expansions.  
  “If the Industrial Ingredients business is sold, most likely nothing but the company name will change. We have an annual turnover of 775 million Danish kroner, we consider us to be the leading distributor of the region and we are doing very well. I do not think that a new owner would want to change a lot of things around here. The risk of value damage by making radical changes is just too big,” Jan Dam Pedersen says.
   Knowing that the business can be sold at any time apparently does not affect the Dane.
  “My job is to make sure that Industrial Ingredients is doing as well as possible, and we just have to go on making the business as attractive as possible, and we will continue to expand. Remember that we bought the former ICI trading business in India AFTER selling the Nutrition business,” he explains.
  Industrial Ingredients represents more than 150 suppliers, most of them European, in SEA. Some of the biggest business partners are Danish companies Novozymes and Danisco. According to Jan Dam Pedersen Industrial Ingredients is not just trading chemicals and ingredients for e.g. the Coatings, Food & Beverage and Personal Care industries.
   “We help our customers make new products or improve existing products by making adjustments to the way a certain product is being made. That could be by exchanging one chemical with another giving the product in question the desired characteristics,” he explains.
  The Industrial Ingredients business had it’s origin in Thailand in 1932 and today Thailand remains the biggest market. Throughout the 1990’s Industrial Ingredients established branches in Vietnam, Indonesia, Philippines and Cambodia and in 2002 Malaysia and Singapore. All of the markets are profitable except Singapore, and Jan Dam Pedersen expects Singapore to be profitable within the nearest future.
   “By expanding geographically we reduce our dependency of single markets, but we do want not to expand just for the sake of expanding. We are in this business to make money. That is why we do not plan to go into the Chinese market. A lot of our suppliers run their own operations there and a lot of them are loosing money. We know a lot about SEA, but we do not know enough about the Chinese market. The market is too big for us to cover, so the Chinese market is of no interest to us,“ Jan Dam Pedersen says.
 Staying out of the Chinese market does not mean that Industrial Ingredients is refraining from considering geographic expansion.
   “We consider ourselves to be market leaders in SEA, and we aim to be so in India as well. We want to become that by differing ourselves from our competitors. Most of them are just traders, whereas we import, store, offer credits and are able to provide our clients with technical expertise. On top of that we put a lot of effort into securing safety, health and environment for our employees and for the users of our products. That is really important to the biggest of our suppliers and some of them audit us every two years to make sure everything is done the way it is supposed to be. That makes the confidence in us even bigger,” he explains.
   Getting settled in the Indian market is the next thing on the agenda, but further expansion is being planned.
  “Within the next year we will develop a strategy on how to enter the markets in Sri Lanka, Bangladesh and Pakistan, but we do also see opportunities in increasing business in our current markets, especially Indonesia, the biggest market for chemicals in SEA. 225 million people and by now we do only 15 million US$ worth of business there, so there are great opportunities to increase our Indonesian business through a better and broader distribution than our competitors. A lot of them have one or two offices in Indonesia. We got seven throughout the country,” he enthusiastically explains.
   Jan Dam Pedersen does not think that new owners will change his own situation and keeps his focus on running a profitable business. To the rumours of a management buy-out of Industrial Ingredients, he says:
  “That is most unlikely. EAC is going to sell to those offering the most money. The interest of the share holders is the top priority.”

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