Content
Message from the Chairman 4 Board of Directors 6 The Board of Director’s Report on its Responsibility to Financial Statements 7 Audit Committee Report 2012-13 8 Key Financial Indicators 10 Financial Highlights 11 General Information 12 Business Overview 15 Risk Factors 45 Future Projects 57 Legal Dispute 61 Shareholding Structure & Management 62 Good Corporate Governance & Internal Control 76 Financial Position and Operational Performance 86 Audited Financial Statements 110 Information of Director and Management of the Company 155
Production facility of Polyplex (Thailand) Plc, at Siam Eastern Industrial Park, RAYONG
The new Thick PET Film line under implementation in Thailand
Annual Report 2012 - 2013
THE NEWLY SET UP POLYESTER THIN FILM LINE IN USA
Polyplex (Thailand) Public Company Limited
Production facilities at Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S, TURKEY.
Annual Report 2012 - 2013
Polyplex (Thailand) Public Company Limited
Message from the Chairman Valued Shareholders, the year gone by was a challenging year for the Polyester Film industry. As anticipated, the new capacities that were added following the extraordinary margins witnessed by the industry in the year 2010-11, created a situation of oversupply and the margins have contracted to historical lows. This has resulted in a sharp decline in the company’s profitability along with a drop in sale revenues. Sales at Baht 9.23 billion were lower by 9.0% as compared to the previous year reflecting the compression in selling prices despite similar volumes. Profit after tax of Baht 374 million was lower by almost 72% over last year. The Company, however, remains confident about the potential of the polyester film industry in the long run, and is committed to all the capital investments announced over the last couple of years. It gives me immense pleasure to share with you that all the projects in Thailand, USA and Turkey are in the last phase of implementation, and would be commencing commercial operations within 2013. While the Company continues to increase its capacity in its core business of Thin Polyester film, through the new manufacturing facility in USA, it also continues to diversify its product range with the Thick Polyester film line in Thailand, Bottle grade PET resin plant in Turkey, Blown PP line in Thailand and the second line for Extrusion Laminated products in Thailand. All these investments would help the Company to diversify Country/Customer/Product risks and bring more stability in earnings. As a part of its commitment to reduce the impact of plastic waste on the environment, the Company has decided to invest in a recycling plant in Thailand, under its subsidiary, EcoBlue Limited. This company would be recycling the process waste of the film industry, including coated films and would strive for finding sustainable solutions for post consumer film waste. Despite doubling its fixed asset base over the last 2 years to about USD 400 million without any dilution in equity, the Company’s balance sheet remains strong with enough liquidity and conservative leverage. Notwithstanding the tough market conditions expected over the next 12-18 months as well as the cash requirement for the ongoing projects, the Directors have proposed dividend of THB 0.14 per share for the year 2012-13 @ 30% of the Company’s consolidated profits. The Company is committed to its social responsibilities and continues to engage in various activities at all locations to help maintaining the society, in which it operates. On behalf of the Board, I would like to thank all the shareholders, business partners and the employees of the Company for their continued support and hard work without which we would not have been able to be among the fastest growing companies in our industry.
Mr.Manu Leopairote Chairman
Annual Report 2012 - 2013
Board of Directors
Mr. Manu Leopairote Chairman - Board and Audit Committee
Mr. Shiraz Erach Poonevala
Dr. Virabongsa Ramangkura. Ph.D.
Director and Member - Audit Committee
Director and Member - Audit Committee
Mr. Sanjiv Saraf
Mr. Rohit Kumar Vashistha
Mr. Praphad Phodhivorakhun
Mr. Pranay Kothari
Mr. Manish Gupta
Managing Director
Director
Polyplex (Thailand) Public Company Limited
Vice Chairman
Director
Director
The Board of Directors没 Report on its Responsibility to Financial Statements To the Shareholders of Polyplex (Thailand) Public Company Limited In recognition of its duties and responsibilities and in compliance with good corporate governance principles, the Board of Directors has ensured that the financial statements and financial information appearing in the annual report are accurate, complete and adequate. The financial statements are in compliance with the generally accepted accounting practices in Thailand and follow accounting standards and practices that are appropriate to the nature of business. To ensure reasonable confidence in using these financial statements, the Board has instituted and maintained internal control systems, subject to periodic review by the Audit committee and reported to the Board. The company auditor has applied generally accepted auditing standards in auditing the company没s financial statements for 2012-13 and is of the view that these financial statements present fairly, in all respects, the financial standing, results of the operations and cash flows for the company, in accordance with generally accepted accounting principles.
Mr. Manu Leopairote Chairman
Mr. Rohit Kumar Vashistha Managing Director
7
ANNUAL REPORT 2012 - 2013
Audit Committee Report - 2012-13 To the Shareholders of Polyplex (Thailand) Public Co., Ltd. Following the companyûs transformation into a public limited company on August 11, 2004, the shareholdersû meeting held on September 2, 2004 decided to constitute an Audit Committee comprising of three independent directors with knowledge, expertise and experience in finance & accounting, industry and business. The appointees were Mr. Manu Leopairote (Chairman of the Audit Committee), Dr. Virabongsa Ramangkura and Mr. Shiraz Erach Poonevala. The Audit Committee performed duties under the delegation of authority set out by the Board of Directors. Among the Audit Committeeûs responsibilities are to review the quarterly / annual financial results of the company, supervise whether the company was in compliance with the rules and regulations of the Stock Exchange of Thailand (SET) and Securities Exchange Commission (SEC), ensure the transparency of the accounting system, review of internal control systems and promote good corporate governance practices. In the financial year ended March 31, 2013, a total of six Audit Committee meetings were held. The Committeeûs work can be summarized as below: 1. Reviewed and approved the quarterly and yearly financial statements of the company and its subsidiaries to ensure compliance with the generally accepted accounting standards and disclosure of key information before proposing them for the Boardûs approval as also prior to submission to SEC and SET. After due consideration and discussion, it is the opinion of the Committee that the above mentioned financial statements are presented fairly in accordance with generally accepted accounting principles and sufficiently disclosed. 2. Reviewed and monitored the corporate compliance and internal control systems as also risk mitigation measures. The Committee believes that the companyûs internal control systems are adequate. 3. Reviewed the disclosure of information on transactions between the company and its affiliates or any transactions, which may have been perceived as potentially causing conflicts of interest. 4. Reviewed and approved the Final Dividend payment for the financial year ended on 31st March 2012 and recommended to the Board for their consideration and approval 5. Reviewed and approved the Annual budget for financial year 2012-13 for the Company and its subsidiaries. 6. Considered and recommended to the Board of Directors to appoint Mr. Termphong Opanaphan (CPA No. 4501) and/or Mr. Supachai Phanyawattano (CPA No. 3930) and/or Ms. Chonlaros Suntiasvaraporn (CPA No. 4523) of Ernst & Young, as the auditors of the Company for the FY 2012-13. 7. Reviewed the proposal for Polyplex (Thailand) Plc to invest up to THB 25 million, for 80% ownership in a Film waste Recycling Plant in Thailand and recommended to the Board for their consideration and approval.
8 Polyplex (Thailand) Public Company Limited
8.
9.
10. 11.
12.
13.
14.
15.
Reviewed the proposal for acquisition of 19.76% of equity shares of Polyplex (Americas) Inc. (çPAé), USA, 9.88% ( 25,000 shares @ USD 12/share or total of USD 300,000) from Polyplex Corporation Ltd (çPCLé) and 9.88% (25,000 shares @ USD 12/share or total of USD 300,000) from the unrelated minority shareholder and the acquisition of Preference shares (32,000 shares @ USD5/Share) from the unrelated minority shareholder and recommended to the Board for their consideration and approval. Reviewed the proposal for 67% acquisition by Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S.(çPEé), Turkey, of the shares of Polyplex Resins Sanayi Ve Ticaret A.S (PR), from Polyplex (Asia) Pte Ltd (PAPL) and recommended to the Board for their consideration and approval. Reviewed the proposal to invest in a PET Bottle Grade Resin line at Polyplex Resins Sanayi Ve Ticaret A.S (PR) and recommended the same to the Board for approval. Reviewed and recommended to the Board of Directors for their approval, an Investment of up to Euro 3 million by Polyplex (Thailand) Plc and/or any of its wholly owned subsidiaries, in setting up a distribution company in EU - Netherlands Reviewed and recommended to the Board of Directors for their approval, a Corporate Guarantee from Polyplex Europa Polyester Film Sanayi ve Ticaret A.S. (PE), for Euro 50.25 million or 67% of the total Working Capital line of Euro 75 million, from various banks, for Projects as well as for general working capital requirement post start up of the project. Reviewed the proposal to invest Equity of Euro 247,941(67% of required Capital infusion) by Polyplex Europa Polyester Film Sanayi ve Ticaret A.S.,(PE) in Polyplex Resins Sanayi ve Ticaret A.S. (PR). Reviewed and recommended to the Board of Directors for their approval, a Corporate Guarantee from Polyplex Europa Polyester Film Sanayi ve Ticaret A.S. (PE), for Euro 27.5 million (which is 67% of the Long term loan of Euro 41 million), to be taken by Polyplex Resins Sanayi ve Ticaret A.S. (PR) for the Project financing. Reviewed and recommended to the Board of Directors for their approval, a Corporate Guarantee from Polyplex (Thailand) Plc, for the working capital line of Baht 15 million, of its subsidiary, EcoBlue Ltd.
Name
Position
Mr. Manu Leopairote
Board Chairman and Audit Committee Chairman
Dr. Virabongsa Ramangkura
Audit Committee Member
Mr. Shiraz Erach Poonevala
Audit Committee Member
Signature
9
ANNUAL REPORT 2012 - 2013
Key Financial Indicators Net Profits and EPS 45%
4,000
4,000
40%
3,500
3,500
35%
3,000
3,000
30%
2,500
4.00
2,500
25%
2,000
3.00
2,000
20%
1,500
15%
6.00
1,500
2.00
1,000
10%
500
5%
500
-
0%
-
1.00
200
200
6-0 7 200 7-0 200 8 8-0 9 2 00 9-1 0 2 01 0 -1 2 01 1 1 -1 2 2 01 2 -1 3
6-0 7 200 7-0 2 00 8 8-0 9 200 9-1 0 2 01 0 -1 2 01 1 1 -1 2 201 2-1 3
0.00
Financial Year
EBITDA - in million Baht EBITDA margin (%)
Net Profits
Total Revenues
EPS
Total Assets 40% 35%
10,000
25%
Net Profit margin (%)
30%
8,500
11,500
35%
10,000
30%
8,500
25%
7,000
20%
5,500
15%
4,000
10%
5,500
15%
4,000
10%
2,500
5%
2,500
5%
1,000
0%
1,000
0%
Financial Year Total Revenues
Net Profit margin (%)
10 Polyplex (Thailand) Public Company Limited
200 6-0 7 200 7-0 8 200 8-0 9 200 9-1 0 201 0-1 1 201 1-1 2 201 2-1 3
20%
Total Assets in million baht
7,000
200 6-0 7 200 7-0 8 200 8-0 9 200 9-1 0 201 0-1 1 201 1-1 2 201 2-1 3
Total Revenues in million baht
40%
13,000
11,500
EPS -Baht/Share
5.00
Financial Year Total Assets
Return on assets %
Return on Assets (%)
1,000
Net Profits in million baht
4,500
EBITDA margin (%)
EBITDA in million baht
EBITDA
1. Financial Highlights Progression (Thousand Baht) Net Sales Total Revenues Gross Profit Net Profit (Loss) Total Assets Total Liabilities Total Shareholder没s equity Financial Ratios* Net Profit Margin (%) Return on Equity (%) Return on Assets (%) Per Share Data (Baht) No. of shares Dividend per share (Baht) Earnings per share Par value
2008-09
2009-10
2010-11
2011-12
2012-13
6,859,738 7,062,825 1,800,785 1,041,966 8,880,550 4,284,324 4,596,226
7,125,366 7,299,520 1,731,011 1,039,386 8,866,744 3,854,26 5,012,48
11,183,174 11,320,169 4,680,656 3,882,885 11,932,901 3,570,196 8,362,705
10,143,111 10,263,808 2,311,548 1,357,608 11,938,970 3,478,368 8,460,602
9,230,018 9,495,185 1,355,850 373,971 16,456,565 8,267,306 8,189,259
14.75% 23.44% 12.13%
14.24% 21.72% 11.71%
34.30% 58.26% 37.34%
13.23% 16.14% 11.37%
3.94% 4.49% 2.63%
800,000,000 800,000,000 800,000,000 800,000,000 800,000,000 0.52 0.52 1.94 0.52 0.14* 1.30 1.30 4.85 1.70 0.47 1.00 1.00 1.00 1.00 1.00
Note: Above figures and ratios are on consolidated basis, including the Company没s subsidiaries in USA, Turkey, Singapore, China and Thailand * Dividend of Bt 0.14 per share as proposed to the Annual General Meeting of Shareholders 2013 for their approval.
11
ANNUAL REPORT 2012 - 2013
2. General Information 2.1 The company
Polyplex (Thailand) Public Company Limited
Stock Exchange of Thailand symbol PTL Registered Head office
Telephone Facsimile
75/26, Ocean Tower II, 18th Floor, Sukhumvit Soi 19, Kwaeng North Klongtoey, Khet Wattana, Bangkok - 10110 (662) 665-2706-8 (662) 665 2705
Factory -1
Siam Eastern Industrial Park, 60/24, Moo 3, Tambol Marbyangporn, Amphur Pluak Daeng, Rayong- 21140
Factory -2
Siam Eastern Industrial Park, 60/91 Moo 3, Tambol Marbyangporn, Amphur Pluakdaeng, Rayong 21140
Factory -3
Siam Eastern Industrial Park, 60/109,Moo 3, Tambol Marbyangporn, Amphur Pluakdaeng, Rayong 21140
Type of Business
Manufacturer of Polyester Thin Film (Plain and Metallized), Polyester Chips, Polyester Thick Film (Plain), Extrusion Coated film, Cast Polypropylene Film (Plain and Metallized), and Silicone Coated Film
Company registration number Telephone Facsimile Website
0107547000729 (66) 38 891 352-4 (66) 38 891 358 http://www.polyplexthailand.com
Registered Capital Common Shares Par Value Paid-up Capital Number of Employees
Baht 960,000,000 960,000,000 shares Baht 1.00 per share Baht 800,000,000 999 including subsidiaries in Turkey, USA and China, and 577 in Thailand.
12 Polyplex (Thailand) Public Company Limited
2.2 Subsidiaries in which the company holds more than 10% share - As at 31st March, 2013 Company Name and Address
Business Type
Polyplex (Singapore) Pte Ltd. 61, Club Street, Singapore-069436
Investment Holding Company
Registered No. of shares % Capital held by the shareholding (shares) Company
Type of Shares
100,000 300,000
100,000 39,100
100% 100%
Common Preference
Polyplex Europa Polyester Film* Manufacturer Sanayi Ve Ticaret A.S. Avrupa of Polyester Serbest Bolgesi, 132, Ada, 7 Parsel, Film & Polyester chips Velimese Mevkii, Corlu, Turkey
1,500,000
1,500,000
100%
Common
Polyplex Trading (Shenzhen) Distribution Co. Ltd* Room.1309, A block, Company Galaxy Century Building, Caitian South Rd., Futian District, Shenzhen People没s Republic of China
$400,000**
$400,000**
100%
Common
10,000
5,924
100%
Common
Manufacturing Company
****
$29,458,824
100%
Common
EcoBlue Limited Manufacturing 60/91, Moo 3 Siam Eastern Company Industrial Park, Marbyangporn Subdistrict, Pluk Daeng District, Rayong, THAILAND
1,065,000
852,000
80%
Common
Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi# Avrupa Serbest Bolgesi, 132, Ada, 21 Parsel, Velimese Mevkii, Corlu, Turkey
4,049,686
2,713,290
67%
Common
Polyplex (Americas) Holding Inc. Corporation Trust Center 1209 Orange Street Wilmington, New Castle County, Delaware - 19801 Polyplex USA LLC*** 3001 Mallard Fox Drive NW Decatur, Alabama - 35601
Investment Holding Company
Manufacturing Company
* **
Indirect holding via PSPL $ 400,000 refers to the registered & paid up Share capital of Polyplex Trading (Shenzhen) Co. Ltd. There is no concept of number of shares or par value per share in People没s Republic of China. *** Indirect Holding via Polyplex Americas Holding Inc. **** There are no shares of Polyplex USA LLC. Capital contribution from PAH is termed as Members Unit and it is 100% by PAH. # Indirect holding via Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi
13
ANNUAL REPORT 2012 - 2013
2.3 Other references (a)
Registrar Name Address Telephone Facsimile
Thailand Securities Depository Co., Ltd. 62, The Stock Exchange of Thailand Building 4th, 6th-7th Floor, Rachadapisek Road, Klongtoey, Bangkok 10110 (662) 229-2800, (662) 654-5599 (662) 359-1259
(b)
Trustee N/A
(c)
Auditing Firm 1) Name Ernst & Young Address 33rd Floor, Lake Rajada Office Complex, 193/136-137 Rajadapisek road Near Queen Sirikit National Convention CentreBangkok 10110, Thailand Telephone (662) 264-0777 Facsimile (662) 661-9190 Auditors* Mr. Termphong Opanaphan (CPA No. 4501) and/or Mr. Supachai Phanyawattano (CPA No. 3930) and/or Ms. Chonlaros Suntiasvaraporn (CPA No. 4523) * Auditors of the company for the FY 2012-13
(d)
Legal Advisors Name Allen & Overy (Thailand) Co. Ltd. Address 22nd Floor, Sindhorn Tower III, 130-132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Telephone (662) 263-7600 Facsimile (662) 263-7699 Contact person Mr. Arkrapol Pichedvanichok Ms. Somporn Manodamrongtham Name Address
Baker & McKenzie Ltd. 990 Abdulrahim Place, 5th floor and 22nd -25th Floors, Rama IV Road,Silom, Bangrak Bangkok 10500, Thailand Telephone (662) 636-2000 Facsimile (662) 636-2110 Contact person Mr. Wittaya Luengsukcharoen
Name Address
Linklaters (Thailand) Ltd 20th Floor, Capital Tower, All Seasons Place, 87/1 Wireless Road Bangkok 10330, Thailand Telephone (662) 305 8000 Facsimile (662) 305 8010 Contact person Mr. Pichitpon Eammongkolchai
(e)
Advisor or manager under management contract N/A
14 Polyplex (Thailand) Public Company Limited
3. Business Overview 3.1 Company profile and key changes and developments Polyplex (Thailand) Plc. (çPTLé or çthe Companyé) was incorporated as a private company on March 26, 2002 to manufacture and distribute PET film (polyethylene terephthalate film or polyester film). In August 2004, the Company was transformed into a Public Company, with a registered capital of Baht 960 million and the IPO was subsequently made in December 2004. The Company is promoted by Polyplex Corporation Limited (PCL) based in India and engaged in the same business as the Company for more than 25 years. As on date, PCL has 51% stake in the Company through both direct and indirect shareholding and the balance 49% is with the general public. Past key changes and developments in the Company are as follows: March-April 2002 PTL was incorporated by PCL, which is a listed company (on the Bombay Stock Exchange as also National Stock Exchange) in India. PTL also acquired a plot of land with an area of 20 rai 22 square wah at Siam Eastern Industrial Park in Rayong Province in order to construct a factory for manufacture of PET film. May 20, 2002
PTL was granted a promotion certificate by BOI for PET film (production line 1) with an approved production capacity of 15,000 tons per year (now increased to 24,000 MT pa).
July-2002 to April-2003
The Company started construction of the factory in July-2002 and completed its plant construction and proceeded with machinery test-run in March, 2003 followed by commercial production from April 2, 2003 when its first sale invoice was recorded.
June 11, 2003
The Company was granted a BOI promotion certificate for production of ë PET film (production line 2) with an approved production capacity of 15,000 tons per year (now increased to 24,000 tons per year). ë PET resin with an approved production capacity of 26,250 tons per year (now increased to 52,500 MT pa)
September 11, 2003
The Board of Directors resolved for the purchase of another plot of land adjacent to the existing land covering 8 rai 28.9 square wah area to produce PET resin which is the raw material in PET film production.
November 12, 2003
Commercial production and distribution began for film production line 2.
15
ANNUAL REPORT 2012 - 2013 July 30, 2004
The shareholdersû meeting resolved for transformation of the Company into a public company, write-down of par value from Bt. 10 to Bt. 5 per share and increase of registered capital by Bt. 1,068 million to make up a total of Bt. 1,728 million requiring issue of additional 213.6 million ordinary shares. The allocation of the increase in capital was as under: ë 133.6 million Shares offered to Polyplex (Asia) Pte. Ltd. (PAPL), a juristic person registered in Singapore, being a 100% subsidiary of PCL, India. ë Up to 80 million shares at part value of Bt. 5 per share, making a total of up to Bt. 400 million as public offering. The meeting also resolved for establishment of a holding company named Polyplex (Singapore) Pte. Ltd.(PSPL), registered in Singapore as a holding company to facilitate investment and business expansion in Turkey.
August 11, 2004 Registration was completed to transform the Company into a public company. September, 2004 Start up on PET resin batch plant in Thailand. December 8, 2004 IPO of 240,000,000 shares at the price of Baht 6.90 per share. February 22, 2005 PTL was granted a promotion certificate by BOI for Metalliser film with an approved production capacity of 7,500 tons per year. February 22, 2005 Startup of Continuous Chips Plant inThailand. August, 2005
Start up of Metallizer Line 1 in Thailand.
December, 2005 Start up of Thin Pet film line 1 in Turkey implemented by subsidiary company with a production capacity of 24,000 MT per annum. March, 2006
Metallizer start up in Turkey with a production capacity of 4,800 MT pa.
December, 2006 Start up of Pet resin plant in Turkey with a production capacity of 57,600 MT per annum March, 2007
PTL was granted a promotion certificate by BOI for Extrusion Coating film project with an approved production capacity of 18,000 MT per annum for two production lines.
October, 2007
Board of Directors of PTL approved a Project for related product diversification in CPP Film manufacture in Thailand.
November, 2007 Total Productive Maintenance (TPM) policy adopted and rolled out by PTL to enhance productivity.
16 Polyplex (Thailand) Public Company Limited
January, 2008
PTL was granted a promotion certificate by BOI for Metallised Film Expansion Project with an approved production capacity of 8,700 MT per annum.
April, 2008
Commencement of commercial production of the Extrusion Coating line.
May, 2008
Commencement of commercial production of the 2nd Thin PET Film line and the 2nd Metallised Film line in Turkey and also the 2nd Metallised Film line in Thailand.
February, 2009
PTL was granted a promotion certificate by BOI for Cast Polypropylene (CPP) film project with an approved production capacity of 15,600 MT for CPP plain and CPP Metallized film.
May, 2009
Board of Directors of PTL approved an Investment in a Silicone Coating line in Thailand. 9
September, 2009 The Trading company in China - Polyplex Trading (Shenzhen) Co. Ltd was set up and capital injected through Polyplex (Singapore) Pte Ltd March, 2010
Commencement of commercial production of the Cast Polypropylene line
July, 2010
PTL was granted a promotion certificate by BOI for the Silicone Coating film project with an approved capacity of 725 million sqm.
February, 2011
Board of Directors of PTL approved an Investment in a Thick PET film line in Thailand.
May, 2011
Board of Directors of PTL approved the investment in a new Thin PET film line in USA, under its 100% subsidiary Polyplex USA LLC (PUL).
July, 2011
Board of Directors of PTL approved an Investment in a Blown PP film line in Thailand.
November, 2011 Board of Directors of PTL approved an Investment in the Second Extrusion Coating line in Thailand. March, 2012
The Silicone Coating plant started the commercial operations.
August, 2012
Board of Directors approved an Investment in a new subsidiary (EcoBlue Limited) in Thailand, for implementing the project for recycling plastic waste.
October, 2012
Board of Directors of PTL approved the proposal for 67% acquisition by Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S.(çPEÊ), Turkey, of the shares of Polyplex Resins Sanayi Ve Ticaret A.S (PR), from Polyplex
17
ANNUAL REPORT 2012 - 2013 (Asia) Pte Ltd (PAPL). A project for investment in a PET Bottle grade resin line is underway at PR. October, 2012
Board of Directors of PTL approved an Investment in an Offline Coater at PE, Turkey.
January, 2013
Board of Directors approved the acquisition of the balance 19.76% from the minority shareholders of Polyplex (Americas) Inc.(PA), USA. Subsequently, PA has been merged with the manufacturing subsidiary PUL.
February, 2013
Board of Directors approved an Investment in setting up a Trading and distribution company in Netherlands.
3.2 Shareholding structure The current shareholding structure of the Polyplex group is: POLYPLEX GROUP-STRUCTURE Polyplex Corporation Limited (PCL / Polyplex India) INDIA
Polyplex (Asia) Pte.Ltd (PAPL / Polyplex Asia) SINGAPORE
100%
16.50% 34.50%
Public/ Institutional Shareholder
49%
PARLLC (PAR) USA
100%
100% Peninsula Beverages & Foods Company Private Ltd. (PBF) INDIA
Polyplex (Thailand) Public Co., Ltd. (PTL / Polyplex Thailand) THAILAND
33%
Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi (PR / Polyplex Resins) TURKEY
80% Polyplex Americas Holding Inc. (PAH) USA
100%
EcoBlue Ltd THAILAND
20%
Private Investor
100% 100%
67%
Polyplex USALLC (PU / Polyplex USA) USA
Polyplex (Singapore) Pte. Ltd. (PSPL) SINGAPORE 100%
FMCG OUTSIDE INTEREST INVESTMENT COMPANY MANUFACTURING COMPANY TRADING & DISTRIBUTION COMPANY
Polyplex Trading (Shenzhen) Co., Ltd. (PTSL / Polyplex China) CHINA
100%
18 Polyplex (Thailand) Public Company Limited
Polyplex Europe B.V. (PEBV) NETHERLANDS
100% Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE / Polyplex Europa) TURKEY
Polyplex Corporation Ltd. (PCL) PCL, the parent company operating for over 25 years since 1988, is one of the major producers and distributor of plastic film in India selling in both the domestic and overseas markets. It has been listed for several years on Bombay Stock Exchange and other Exchanges in India. It没s paid up capital is INR 325.6 million (about Bt. 175 million). PCL has the following production capacities as at 31st March 2013:Product Polyester Film Polyester Chips Metallized Film BOPP Film Coated Films
Annual Capacity 55,000 77,600 20,400 35,000 260
UOM MT MT MT MT Million Sqm
Its direct and indirect shareholding in the Company aggregate to 51% of the latter没s paid up capital. Polyplex has also evolved an equitable policy for distribution of markets, for common businesses, between its Indian, Thailand, Turkey and US operations based on the several factors like product range, delivered cost to customer, supply lead times and preferential duty access. Based on the same, PTL would serve South East Asia, Asia Pacific, China, Australia & New Zealand. PCL would serve South Asia. Turkey will serve, Europe, Middle East, Africa and CIS/Russian markets and US would serve North America and South America. The Polyplex group also has a policy on future investments in polyester film / related areas between the Company and its parent company. Investments in India/SAARC region would be decided and made by PCL and its other subsidiaries (excluding the Company) while investments In Thailand / ASEAN region as well as other countries would be in all likelihood be made by PTL or the subsidiaries in which the Company has a major stake. The above is subject to availability of Investible cash / ability to borrow debt by the existing / preferred Company as per the policy. Polyplex (Asia) Pte. Ltd. (PAPL) PAPL was established as a 100% subsidiary of PCL in July, 2004 and is now a major shareholder of PTL holding 34.5% as on 31st March 2013. The issued and paid up capital of PAPL as of March 31, 2013 stands at USD 1.13 million.
19
ANNUAL REPORT 2012 - 2013 Polyplex (Singapore) Pte. Ltd. (PSPL) PSPL was established as a 100% subsidiary of PTL in July 2004, as a wholly owned investment company. Subsequently, PSPL invested in Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE), through Share capital injection as well as by extending subordinated loans, to set up a manufacturing factory in Turkey so as to serve the demand in European and other proximate markets. In September 2009, PSPL set up a trading company in China, Polyplex Trading (Shenzhen) Co Ltd (PTSL) by investing $ 400,000 as share capital. The issued and paid up capital of PSPL (including Preference Share Capital) as of March 31, 2013 stands at Euro 9.14 million. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE) PSPL had incorporated a 100% owned subsidiary company, PE in Turkey for setting up a Greenfield polyester film plant to cater to the European and other proximate markets. The commercial operations started in December, 2005 with the start up of the first thin PET film line. The first Metallizer plant started production in March, 2006. The PET resin plant commenced commercial production from December, 2006. The second thin PET film line and Metallized Film line commenced commercial production in May 2008.The issued and paid up capital of PE, including Additional Contribution from PSPL, as of March 31, 2013 stands at Euro 8.83 million. Polyplex (Americas) Inc. PTL acquired 80.24% equity stake in Spectrum Marketing Inc. (renamed as Polyplex (Americas) Inc) (PA) with effect from January 1, 2006 to enhance its distribution network in the North American market. PCL, PTL没s parent company also had a 9.88% stake while the balance 9.88% was held by a foreign US-based shareholder. In January 2013, PTL acquired the minority stake from the shareholders to make PA its 100% subsidiary. Post this acquisition, PA was merged with Polyplex USA LLC w.e.f 31st January, 2013. Polyplex Trading (Shenzhen) Co. Ltd (PTSL) In the financial year 2009-10, PTL invested in the setting up of a wholly owned Trading Company in Shenzhen, China, through its 100% held Investment Company in Singapore, PSPL. The decision to invest in the setting up of the Trading Company in China was a strategic initiative to establish the Company没s presence in China, which is one of the largest and the fastest growing market in this industry. The issued and paid up capital of PTSL as at 31st March 2013 is USD 0.4 million.
20 Polyplex (Thailand) Public Company Limited
Polyplex Americas Holding Inc (PAH). In FY 2011-12, PTL invested in setting up a 100% investment holding company in USA. PAH has further invested in Polyplex (USA) LLC, a manufacturing facility, under which a PET Thin Film line project has just been commissioned in April 2013 and a project for manufacture of PET Resin line is still underway. The issued and paid up capital of PAH (including the Additional Paid-In Capital) as on 31st March, 2013 is USD 29.62 million. Polyplex USA LLC (PUL) Polyplex USA LLC was established in FY 2011-12 as a 100% subsidiary of PAH. The thin PET film line along with the PET Resins plant project is being set up under this company in Decatur, Alabama. This project is the first manufacturing base of Polyplex in USA. The members没 contribution which represents the paid up capital as on 31st March, 13 is USD 29.5 million. Polyplex Resins Sanayi Ve Ticaret A.S (PR) Polyplex Resins Sanayi Ve Ticaret A.S (PR) was incorporated in Turkey, in December 2011, as a 100% subsidiary of PAPL. In October 2012, PE acquired 67% stake in PR from PAPL. The PET Bottle Grade Resin line, the first line in the Polyplex group, is under implementation at PR. The Paid up Capital of PR as at 31st March, 2013 is Turkish Lira 20.2 million.
3.3 Revenue structure of the Company PTL没s standalone and consolidated sales value classified by regions is shown below: STANDALONE Customers
2010-11 Bt. million %
2011-12 Bt. million %
2012-13 Bt. Million %
Exports Asia North America Europe Others Total exports
2288.39 955.65 434.98 249.91 3,928.94
44.74 18.68 8.50 4.89 76.81
2,220.06 809.00 418.71 141.47 3,589.24
45.72 16.66 8.62 2.91 73.91
1743.81 977.46 202.01 119.30 3042.55
35.91 20.13 4.16 2.46 62.66
Domestic Sales Sale of chips/others 1 Total sales revenues Other revenues 2 Grand total
1,013.33 38.46 4,980.73 134.26 5,114.99
19.81 0.75 97.38 2.62 100.00
915.31 56.09 4,560.65 295.32 4,855.96
18.85 1.16 93.92 6.08 100.00
975.67 187.21 4,205.44 232.72 4,438.16
21.98 4.22 94.76 5.24 100.00
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ANNUAL REPORT 2012 - 2013 CONSOLIDATED Customers
2010-11 Bt. million %
Exports Asia North America Europe Others Total exports Domestic sales - PTL (Thailand) - PE (Turkey) Total Domestic sales Sale of chips/others 1 Total sales revenues Other revenues 2 Grand total
2011-12 Bt. million %
2012-13 Bt. Million %
3,032.33 2,802.47 3,464.45 289.04 9,588.29
26.79 24.76 30.60 2.55 84.70
2,620.25 2,683.84 2,745.07 396.93 8,446.09
25.53 26.15 26.75 3.87 82.29
2,011.39 2,571.48 2,623.76 182.13 7,388.75
21.18 27.08 27.63 1.92 77.82
1,013.33 517.84 1,531.17 63.71 11,183.16 137.00 11,320.16
8.95 4.57 13.53 0.56 98.79 1.21 100.00
915.31 698.93 1,614.24 82.78 10,143.11 120.70 10,263.81
8.92 6.81 15.73 0.81 98.82 1.18 100.00
975.67 743.42 1,719.10 122.17 9,230.02 265.17 9,495.19
10.28 7.83 18.10 1.29 97.21 2.79 100.00
Note: 1) Sale of chips includes both domestic and export sales. 2) Includes Exchange gain, miscellaneous sales, Export Incentive, interest received, etc.
Consolidated Regionwise Film Sales FY 2012-13 Turkey, 8% Others, 3% Asia, 22% Thailand, 11% Europe, 29%
Asia
North America
22 Polyplex (Thailand) Public Company Limited
North America, 28%
Europe
Thailand
Turkey
Others
3.4 Business Goal The vision of Polyplex is to continuously grow, create value and establish global leadership in the plastic film business through building trusted partnerships with Investors, Customers and Employees. Keeping this vision in mind, Polyplex has been moving towards establishing itself as a Preferred packaging substrate provider as against just a PET thin film supplier, by undertaking expansions for manufacturing BOPP film and CPP film, which are other Packaging substrates used by Converters, in addition to PET thin film. The Thick PET film line in Thailand which will start commercial production in 2013, is Polyplex没s first step into the Thick Film segment which would help in diversifying its product and customer portfolio. The second Extrusion coating line and the Blown PP line projects in Thailand would help in diversifying its product portfolio further. The business goal is to increase market share in various regional markets - through geographically diversified manufacturing presence, increased market penetration in key markets and build a diversified portfolio of products like Metallized films, Clear films, Thermal Lamination films, Silicone Coated film, Chemically Coated films, and other grades of packaging films like CPP, BOPP etc. The new Thin PET film line which has recently started in USA in Q1 2013-14, will help the company to increase its market share in American continent by moving closer to the customers and becoming a preferred on-shore supplier as against an off-shore or near-shore supplier in the past.
3.5 Promotion certificate PTL has been granted nine BOI promotion certificates, details of which are as below: S.No
Certificate No.
1 2 3 4 5 6 7 8 9
1321(2)/2545 1287/(2)/2546 1159(2)/2548 1261(2)/2550 1044(2)/2551 1110(2)/2552 1719(2)/2553 1705(2)/2555 1827(2)/2555
Type of business PET film PET film and PET Resin Metallized Films Thermal Lamination Films Metallized Films CPP film (Plain and Metallized CPP) Silicone Coated Film Thermal Lamination Film (Line 2) PET Thick Film and PET Resin
Date granted 20-May-02 11-Jun-03 22-Feb-05 14-Mar-07 10-Jan-08 4-Feb-09 14-July-10 12-May-2012 21-May-2012
By virtue of the provisions of the Board of Investment Promotion Act B.E. 2520, the Company has been granted certain standard promotional privileges on the manufacturing and distributing the polyester film/resin/Thermal Lamination film/CPP film/ Silicone Coated/ Blown PP film as per the following sections: 25, 26, 27, 28, 31, 34, 35(1), 35(2), 35(3), 36(1), 36(2) and 37 respectively. The Company must comply with certain conditions and
23
ANNUAL REPORT 2012 - 2013 restrictions provided for in the promotion certificate. Details of the privileges of each of the above sections are available at www.boi.go.th
3.6 Business Operations by each product line Manufacture and Distribution of Polyester thin film (Polyethylene Terephthalate Film, also called PET film, sold under the Brand name ùSarafilû), is the core business of the Company, including its subsidiaries. It focuses mainly on 3 key segments - Packaging, Industrial and Electrical. The customers use the companyûs products as raw material to produce their end-products which are then sold to their consumers. Some examples of products made from PET thin film are Coffee/Tea bag, snack bag, softener bag, detergent bag, wire/cable wrap and hot stamping foil.
In April 2008, the company started manufacturing a downstream value added product called ùThermal Lamination filmû. This sold under the brand name ùSaralamû. In this product line, the PET film or BOPP film is used as the base film, and then extrusion coated with adhesive resins like LDPE or EVA, based on the requirement of the end use application to be catered to. Currently, a project for the implementation of the second Thermal lamination line is underway in Thailand and is expected to start in H1 2013-14. In line with its objective of becoming a complete packaging solution provider, rather than just a thin PET film supplier, the company has in March 2010 started the manufacture of Cast polypropylene film. The company manufactures and sells plain CPP film & metallised CPP film under the brand name ùSaraCPPû. In an effort to continue its objective of diversifying the product as well as the customer base, Polyplex set up a Silicone Coating film line is Thailand which commenced commercial operations in Marchû12 under the brand name çSaracoteé.
24 Polyplex (Thailand) Public Company Limited
The ongoing investment in a Blown Polypropylene film line in Thailand is another concentric diversification by the Company in the plastic film business. This film will be mainly used as a base film for the Silicone Coated film, as well as sold to potential customers. The project for manufacture of Thick PET film is under implementation in Thailand and is expected to start commercial production in H1 2013-14. Some of the common applications of Thick PET film are as under:
In line with its strategy to expand in related areas of the plastic industry, the Company is investing in a PET Bottle Grade resin line in Turkey. The project is expected to commence commercial operations in H2 of 2013-14. As a sustainability initiative, the Company is investing in a project to recycle process waste as well as post consumer waste. The project is being implemented in Thailand, under the Companyûs subsidiary - EcoBlue Limited. 3.6.1 Product Description The range of products offered by the company is as under: A) Transparent thin PET films which can divided into 5 sub-categories ë Plain ë Corona or chemically treated ë High adhesion films ë Ultra clear films ë Co-extruded films B) Metallized PET films ë Semi Metallized film (low Optical density) ë High barrier films C) Specialty Films ë Twist films ë Anti static films ë Heat Sealable films ë Isotropic Films, High Friction Films, etc ë Matte films ë Thick films
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ANNUAL REPORT 2012 - 2013 D)
E)
F)
G)
3.6.1.1 A)
Thermal Lamination Film ë Gloss PET Thermal Film ë MATTE PET Thermal Film ë BOPP Thermal Film ë Metallized Thermal Film Cast Polypropylene film - Product range: ë Lamination & Conversion grade film o Transparent film for lamination & surface printing o High hot tack film for candy packing ë Metallizable grade film - Transparent heat sealable film for vacuum metallization ë Twist grade film ë Retort grade film Siliconized Films (Under the brand name ùSaracoteû) in PET and PP films are used in various applications such as: ë Shingle roofing tapes ë Release liner in pressure sensitive labels. ë Release liner in pressure sensitive adhesive tapes. ë Release liner in medical and hygiene products. Thick PET Film - main sub categories are as under: ë Milky White ë Clear/Ultra Clear ë Transparent ë Hazy Film Characteristic of Product Characteristic of PET film PET film characteristic properties are as follows: ë Optically brilliant, clear appearance ë Excellent mechanical strength and toughness ë Good dielectric properties ë Good flatness and coefficient of friction (COF) ë Tear-resistant and puncture - resistant characteristics ë Excellent dimensional stability over a wide range of temperatures ë Very good resistance to most common solvents, moisture, oil, and grease ë Excellent barrier against a wide range of gases
26 Polyplex (Thailand) Public Company Limited
PET film can also be modified with varying degrees of shrinkage, opacity & colors and different surface textures for it to be used over a wide range of applications.
B)
C)
D)
A wide range of chemical treatments (in addition to corona) can be applied to PET film during its manufacture to help it adhere to various coatings. Characteristics of CPP Film ë Excellent Heat sealing properties/ High heat resistance ë Exceptional Optics ë Good dimensional stability and barrier properties ë Excellent printability ë Metallized CPP - Significantly increases barrier properties Characteristics of Thermal Lamination Films ë High gloss & stiffness provide longevity to laminated media ë Coated adhesive forms inseparable bond with inks/papers ë Surface is conducive to add-on processes like Hot stamping, UV coating ë Improves visual appeal of product Characteristics of Silicone Coated Films ë Silicone Coated film is designed to provide excellent carrier to pressure sensitive material ë Single/ Double sided coated film ë Superior tensile strength, dimensional stability and caliper control as compared to other Liners
3.6.1.2 End Use segment Thin PET film can be used in the following 3 key segments ë Packaging - Clear and Metallized thin PET film can be used as part of the outer layer and middle layer of the flexible packaging such as coffee bag, snack bag, softener bag, and detergent bag. ë Industrial -Comprising of Hot stamping foils, flexible air-conditioning ducts, labels /ID cards, lamination products and many more. ë Electrical - Wire and cable wrap, membrane switches, flexible printed circuits, capacitors and motor insulation. Thick PET film is mainly used in the Industrial and Electrical segments ë Electrical - This segment accounts for almost 60% - 65% of Thick PET film market and is driving the growth in demand of Thick PET films. Flat Panel screen, PV panel, insulation etc are the main applications. ë Industrial - Window Film, Laminating Film, Credit & Prepaid Cards, Medical Film etc are the key applications.
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ANNUAL REPORT 2012 - 2013 Thermal Lamination films mainly cater to the following applications: ë Thermal Lamination of documents or printed media ë Reflective Insulation ë Flexible packaging ë Rigid packing using printed corrugated carton board CPP films can be used in the following key segments: ë Packaging - CPP film is used as the inner most layer in food packaging, due to its excellent heat sealing properties. It may also be used in Textile packaging, packaging of health care products/ consumer products etc. ë Industrial - Hot fill bags & liners, Industrial adhesive tapes, Interior automotive trim panels etc. Silicone Coated Films mainly cater to the following applications: ë PET Release liners for labels ë PET Shingle tapes for the roofing industry ë PP release liners for labels/stickers. The segmental break-up of revenue (PTL Standalone and Consolidated) from Film sales (Plain & Metallized PET films, Thermal Lamination/ Silicone Coated Films and CPP film) are as follows: STANDALONE SALES Segment
2010-11 Bt. Mn Bt. Mn
2011-12 Bt. Mn %
2012-13 Bt. Mn %
Packaging Use Industrial Use Electrical Use Total Film Sales
3,986.67 3,529.79 3,529.79 80.66 3,151.83 78.44 955.61 974.77 974.77 19.34 866.40 21.56 0.00 0.00 0.00 0.00 0.00 0.00 4942.28 4,504.55 4,504.55 100.00 4,018.23 100.00
CONSOLIDATED SALES Segment
2010-11 Bt. Mn Bt. Mn
Packaging Use Industrial Use Electrical Use Total Film Sales
8,298.90 2,666.52 154.04 11,119.47
2011-12 Bt. Mn %
2012-13 Bt. Mn %
74.63 7,651.23 76.05 6,144.72 67.47 23.98 2,319.52 23.06 2,880.42 31.63 1.39 89.57 0.89 82.71 0.91 100.00 10,060.33 100.00 9,107.85 100.00
Note: 1) Sales of Thermal lamination film and Silicone Coated Film are included in 2 segments i.e. Packaging segment and Industrial segment, depending on the end use application of each type of product sold.
28 Polyplex (Thailand) Public Company Limited
Consolidated Segmentwise Film Sales FY 2012-13 Industrial, 23%
Electrical, 1% Packaging, 76%
Packaging
Industrial
Electrical
3.6.1.3 Products with similar properties In certain applications like graphics and magnetic recordings, substituting PET film would result in compromising performance characteristics of the product (e.g., strength, flatness, clarity, tear resistance, thermal stability and chemical resistance). However, in other applications, for which certain PET film performance characteristics may not be needed, PET film competes with a wide variety of substitute materials. These applications tend to fall in the low end of the product range, where other plastic films (e.g., polyvinyl chloride, polypropylene, and polyethylene films) and paper may be considered as lowerpriced substitutes. Applications for which a variety of substitute products may exist are primarily packaging and general-purpose industrial applications. BOPP Films (Biaxially Oriented Polypropylene) is one such close substitute product type, which is comparable in terms of its broad physical and mechanical properties to Polyester films. However, there are pros and cons of using PET film or BOPP films and depending upon the application requirements, a choice of the substrate would be made. As a result of this, both PET films and BOPP films have largely demarcated pockets where one is preferred over the other. A Comparison of BOPP Films and BOPET (Polyester) Films Polyester film is considered as the premium plastic film in the flexible packaging industry. This is also reflected by the difference in the volume of the two products.
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ANNUAL REPORT 2012 - 2013 Features Water vapour barrier Gas barrier properties Break down voltage Machineability Printability Suitability for metallising Density (gm/cc) Strength Temperature Sensitivity
BOPP Excellent Poor Poor Fair Fair Poor Low (0.91) Fair Poor
BOPET Fair Excellent Excellent Excellent Excellent Excellent High (1.39) Excellent Excellent
Polyester film when stretched in both directions gives excellent dimensional stability, gas barrier properties, break-down voltage etc. BOPP, despite stretching remains a 霉limp film没. Polyester film has better handling capabilities for fluctuations in temperatures etc. and is therefore also preferred in the less sophisticated markets. In tropical countries PET is also preferred due to its moisture and oxygen barrier properties. In addition products where aroma retention is important require the use of PET; e.g. coffee, tea. On the other hand, the low density of BOPP (0.91 Vs. 1.39 for PET) makes it a 霉cheaper没 alternative in packaging. However, the advantage of density is to some extent offset by the need to typically have a thicker film when using BOPP as compared to PET for the same application. Further, since PET is not ordinarily heat sealable, BOPP is preferred in heat sealable applications. All over the world BOPP and PET have established their respective segments in the packaging market and overlap is insignificant. Even in times of decline in BOPP selling prices few years back, there was no visible impact on the growth in PET films consumption. This establishes the limited substitutability between the two products. 3.6.2 Business Strategy Key elements of the strategy are: Attain cost leadership by way of capacity expansion and vertical integration. Capture high growth markets and build good customer relationship. To build strong global delivery capabilities with a judicious mix of on-shore, near-shore and off-shore strategy. Further broad base the product portfolio by investing in upgrading technical and R&D capabilities. Concentric and related diversification to bring stability in earnings. Consolidate market position in key geographic locations.
30 Polyplex (Thailand) Public Company Limited
Moving in this direction, the following initiatives have been taken by the Company in the past and are planned for future: ë The setting up of 2 successive Thin PET film lines in Thailand was the first step towards achieving cost leadership position along with diversification of customer base. ë With the start up of the second Thin PET film line in Turkey in May 2008, the subsidiary has an even stronger cost effective production base to service its expanding customer base in Europe, Middle East, Africa & CIS/Russia. ë Backward integration into the manufacturing of PET chips has strengthened the cost structure of the Company in Thailand and also of the subsidiary in Turkey. ë With the Extrusion Coating plant in April 2008 and the additional Metallizers in Thailand and Turkey in May 2008, the Company has been able to significantly increase the share of value added products, in its sales portfolio thereby improving its profitability on the whole. ë As a part of its strategy of concentric diversification, the Company has set up a CPP film manufacturing line in Thailand in March 2010. This has helped the Company to establish itself as a complete packaging substrate provider. ë With the start up of the new Silicone Coated film in Thailand in March 2012, the Company has been able to increase its presence in new product segments and thereby reduce the impact of the cyclical nature of the Thin Polyester Film industry. ë The Companyûs decision to invest in a new PET Thin film line in USA is another step towards geographically diversifying its manufacturing base. This would help the Company to participate in the growth in the flexible packaging segment in the American region and increase its market share substantially. ë The PET Thick film line in Thailand would help the company to bring about more stability in earnings, once the line is ramped up to optimum levels, as this segment is generally more stable in comparison to the PET Thin film segment. ë The second Extrusion coating line in Thailand would help the Company to increase its market share in this industry as well as further diversify its product portfolio. ë The Blown PP line would help Polyplex to enter into the Silicone coated PP film market. ë The investment in the PET Bottle Grade Resin line in Turkey is another initiative towards diversification of risk and enhancing of the product range. ë Various types of customer engagement initiatives by the Company have helped it to not only retain key customers, but also increase its customer base across the globe. The wide network of distributors and agents has helped the Company to gain access to all key markets of the world.
31
ANNUAL REPORT 2012 - 2013 毛
The parent company in India has set up a dedicated Research and Development center which works closely with key customers, including end users of convertors to develop specialty and innovative products.
3.6.3 Distribution Channel The Company distributes its products to both domestic and overseas markets, with main focus put on the latter. The product distribution is being made directly to the end users using its own marketing arms in USA, Netherlands and in China as well as commission agents across the globe. The indirect channel is mainly through distributors in designated areas. The sales through distributors and commission agents help support and even boost the sale volumes as these distributors and agents are in close proximity of the target markets, hence allowing for closer service provision to the customers with rapid delivery, and also better market penetration to access small customers. Value of total film sales to end users and distributors are as follows. Sales made through commission agents are included in 霉End Users没 segment. STANDALONE SALES Customers End Users Distributors Total
2010-11 Bt. million % 2,986.43 1,955.84 4,942.28
2012-13 Bt. million %
60% 2,480.96 55.08% 2,290.96 57.01% 40% 2,023.59 44.92% 1,727.27 42.99% 100% 4,504.55 100% 4,018.23 100%
CONSOLIDATED SALES 2010-11 Customers Bt. million % End Users Distributors Total
2011-12 Bt. million %
2011-12 Bt. million %
2012-13 Bt. million %
7,375.54 66.33 6,792.27 67.52 6,009.80 65.98 3,743.93 33.67 3,268.05 32.48 3,098.05 34.02 11,119.47 100.00 10,060.33 100.00 9,107.85 100.00
3.6.4 Markets and competitive environment 3.6.4.1 Global Demand and supply Thin PET Film The growth in packaging has over the years shifted the production and usage patterns of PET films. The Company没s relevant segments of Packaging, Industrial and Electrical constitute 98% of the total demand and the traditional high-end technology segments like magnetic media and imaging segments are reduced to only 2% of the total consumption due to technology transformation. All these years, Polyplex was operating only in the thin PET film segment,
32 Polyplex (Thailand) Public Company Limited
which represents three-fourth of the overall global PET film demand. With the start up of the Thick PET film line in Thailand in H1 of 2013-14, the company plans to diversify by venturing into the Thick film segment as well. Better packaging not only improves the shelf life of the products but is also essential for improving product appeal in a highly competitive consumer goods industry. Flexible packaging also plays a key role in source reduction on the principle of 霉use less waste in the first place没 which has ensured higher-than-GDP growth in the flexible packaging industry across the globe. PET film, being a higherend substrate within packaging, has grown more rapidly than other substrates, growing at an average of about 7%-9% per annum. Demand in packaging is quite resilient as it relates to consumption of food products and consumer staples which are to a large extent non-discretionary in nature. This characteristic of the packaging segment has resulted in steady growth in demand, despite the adverse factors of economic slowdown witnessed in the recent past.
Global PET Thin film demand by End Use 2012-2,360 KMT
2007-1,680 KMT
Packaging & Metallised Films Other Industrial Electrical Magnetic Media Imaging
Source: Company/ Industry estimates
An increase in the purchasing power, coupled with the changing life style of people in the developing countries has brought with it a substantial increase in the per capita consumption of packaging material. As a result of this, Asia (excluding Japan & Korea), is the largest market for PET films with almost one-third of the PET films produced being consumed in this region. At the same time, per capita consumption of packaging material in developing countries is still very low as compared to the mature markets. The key drivers of demand growth in these regions are the increase in the share of organized sector, increasing consumerism, changing demographics and the resulting need for better and more convenient packaging.
33
ANNUAL REPORT 2012 - 2013 A similar trend is also evident on the supply-side with most of the new capacities being added in low-cost developing countries. Most of the new capacity is also focused on the packaging segment, with an emphasis on high productivity and low operating costs. This has adversely impacted the traditionally large producers of PET film operating with high cost structures, who have now been forced to concentrate in the emerging niche technologies in PET films like films for LCDs, solar panels, touch screens and specific highend applications within packaging. While trade defense measures like antidumping and countervailing duties are on the rise in an increasingly competitive market environment, they are unable to address the inherent problems of unproductive assets operating in the developed countries producing regular films. Global Thin PET film demand by Region 2012- 2,360 KMT Europe
2007- 1,680 KMT
North America South America Asia Middle East & Africa
Source: Company/ Industry estimates
During the year 2012, the Thin PET film industry witnessed an oversupply scenario due to excessive capacity addition following the exceptionally high margins witnessed in the PET film industry in 2010. The current situation of oversupply is expected to continue for an extended period of another one to two years. We expect global Thin PET film growth rates to be at about 7% in the next few years, with the demand in the South East Asian region growing at a higher rate of 8-9%. The overall capacity addition in the next 12-18 months is expected to be higher than the growth in demand but the actual timing of the additions will determine the duration of the current oversupply situation. Companies with consistent quality products, diversified product portfolio, access to international customers and a better supply chain model stand a better chance of participating in the market growth and improving/maintaining their margins above the industry averages.
34 Polyplex (Thailand) Public Company Limited
Thick PET Film The demank of Thick PET film is mainly concentrated in the developed economies of the world. Electrical and Industrial are the key segments in Thick film industry. In the last few years the demand of Thick PET film has been growing at a CAGR of about 7.0%. New innovations and usage new applications in the Electrical segments (like Flat Screen panel, PV solar cells etc) have been driving the growth in the past and would help this industry to continue to grow at a healthy CAGR of about 6.0% for the next few years. Global Thick PET film demand by End use 2012- 798 KMT
2007- 549 KMT
Medical / X-Ray Other Imaging Packaging / Lables Flat Panel Screens Photovoltaic cells Other Electrical / Electronics Other Industrial
Similar to Thin Film industry, the additions in the capacity of Thick PET film has been done mainly by countries within Asia like China, South Korea and Japan. However, European and US still continue to have more than 20% of world capacity. Global Thick PET film demand by Region 2012- 798 KMT
2007-549 KMT
Europe North America China Japan South Korea Taiwan Other World
Source: Company/ Industry estimates
35
ANNUAL REPORT 2012 - 2013 3.6.4.2 Industry Situation Global competition The global Thin PET film manufacturers can be classified into 3 main categories by size of their production capacity: (i) World majors with production capacity of over 100,000 tons per year (e.g. Dupont-Teijin, Mitsubishi and Toray, Cifu, Polyplex, Flex, Jindal etc). (ii) Mid-size players with production capacity between 50,000 - 100,000 tons per year and (iii) Small / local producers with production capacity of less than 50,000 tons per year Demand for PET film for magnetic media application has been high in the past, prompting major producers to focus mainly on this segment. Competition in the magnetic media segment is thus confined only to these major ones based on their long and well established expertise and experience. For other PET films including thin film, competition is seen among all groups of producers thanks to the consistently rising demand, especially for thin film which is used in packaging, industrial and electrical segments where healthy growth of demand has been recorded in the past. Thus small, mid-sized and major producers (including Polyplex group) have expanded their capacity to cope with the increasing demand in these segments. This has led to the expectation of higher market share by producers in various countries which have surplus production capacity. Domestic competition Thailand没s PET film market is of small scale as compared to the global PET film market. As per our estimates, demand in Thailand is approximately 30,000 tons per year with growth rate for next few years expected to be about 89%.In the past, domestic producers have put emphasis on producing BOPP film rather than any other types. PTL has principally focused on PET film since its inception in Thailand and started with one PET film line, within nine months set up a second line as well. Over the years, PTL has had several other expansions in film capacity i.e value added films like Metallized film, Thermal Lamination film, Silicone Coated film etc and related product diversification like manufacturing CPP film. The Company is in the process of setting up a Thick PET film line, Blown PP line and second Extrusion Coating line in Thailand, which are expected to commence operations within H1 of 2013-14. It is presently having the largest PET Thin film production capacity in the country.
36 Polyplex (Thailand) Public Company Limited
The film production capacities of the various plastic film producers in Thailand as at 31st March 2013 are as follows: Production line (tons per year) BOPP film PET Thin film CPP film BOPA film Metallized film Blown PP Film PET Thick Film Total Thermal Lamination film Silicone Coated Film
Thai Film Industrials Plc.
A.J. Plast. Plc.
107,000 3,500 3,500 7,000
66,000 31,000 18,000 10,800
124,000 -
125,800 -
PTL* 48,000 **15,600 16,200 4,645 28,800 88,800 365 mn Sqm 725 Mn Sqm
Source: Form 56-1 of A.J.Plast Plc and T.F.I Plc * PTL capacities are as approved by BOI, including ongoing projects. For actual attainable capacities, please refer table below, under section 霉Production Capacity没 ** Combined capacity p.a. as approved by BOI for CPP plain and metalized film
Conclusion on PET film industry The PET film industry has been expanding continuously in the past. The main driving factor for the past five years has been the growth of the packaging, industrial and electrical segments. Meanwhile, PET film producers have boosted their capacity utilization and/or their production capacity aggressively to respond to the increasing growth of demand. During the years 2000 to2012, global average capacity utilization of PET film manufacturers was in the range of 80-90% of rated or nameplate capacity, except in certain years where the utilization rate declined to below 80% due to excess capacity built up in the industry. The levels of 85-90% are considered a high utilization rate being close to the full machinery capacity. In practice, some producers can produce lower than the nameplate capacity due to the long use and hence the poor condition of machinery while some can produce with capacity utilization even higher than 100% of the nameplate capacity using new and modern machinery and based on their long-time expertise and experience.
37
ANNUAL REPORT 2012 - 2013
Glogal Thin Plain PET Film
Demand
Capacity
Capacity Utlization
Note: Data from industry sources/Company Estimates Despite the rising demand for PET film, it is not easy for new entrants to compete with the existing players. It is because it is an industry that needs high levels of know-how, skills and expertise to ensure the exact product size, standard and specifications required by the customers. Project management skills are also needed to enhance efficiency and cost effectiveness that will lead to competitiveness against other producers. Capacity expansion may be unavoidable to attain larger size and hence economy of scale. Polyplex group has accumulated over 25 years experience in the PET film industry. It has been strengthened with consistent expansion in production capacity. Its management is highly competent. Delivery of products is efficient by having geographically distributed production bases and a widely spread sales and distribution network that allow for easy access to the customers. The emphasis on the countries with high demand growth potential, production and cost effectiveness and concentrating on business segments such as packaging, industrial and electrical segments which have recorded healthy growth all along has contributed to the Polyplex group becoming one of the Top 5 producers of thin PET film (excluding capacity for magnetic media). In view of tariff barriers imposed by importing countries such as anti-dumping and anti-subsidy duties, the Company没s parent company based in India has experienced such threat from both the EU and the USA several times. It has thus been keen on the issue, having information on the criteria and inspection process adopted by those countries and knowing how to deal with the problem. It is an outcome of the understanding of the process, that USA has levied zero duties till date under the anti-dumping measure against the company.
38 Polyplex (Thailand) Public Company Limited
As an outcome of the Antidumping investigation by the Government of Brazil against Thailand and Turkey, an Anti Dumping duty of about 28 cents/Kg on imports from Thailand to Brazil and about 6.7 cents/Kg on imports from Turkey to Brazil has been levied. The impact of these duties is not very significant as the Companyûs sales to Brazil are minimal. The company is undertaking all the safeguards to insulate against the risk arising out of anti-dumping duties and other protective barriers imposed by the importing countries. Outlook for the PET film industry: ë Global demand for Thin PET films is expected to grow at a CAGR of about 7% over the next few years. ë Demand growth for the products in the Flexible Packaging segment in the South East Asian region is expected to be about 8-9%. ë Mid size and new producers would increasingly look to diversify their product range from commodity grades to specialty grade films to improve margins. ë Addition to global capacity during the next 12-18 months is expected to be higher than the growth in the demand, and hence the current situation of over supply is expected to remain for another 1-2 years. ë New entrants from China have been increasingly dominating the market for PET film in the last 2-3 years, but their production is expected to mainly fulfill domestic demand which is growing rapidly. ë The cyclical nature of the industry would continue. ë The transitioning of the industry to Asia would pose higher competitive pressure in the years to come. ë Free Trade Agreements being entered between various countries are opening up new opportunities, as well as threats. ë Increasingly, the larger producers are trying to tie up strategic partnerships or acquisitions in order to ensure growth, presence in diversified markets or products or even as a measure to acquire technology for newer and sophisticated product range. 3.6.5 Manufacturing of product 3.6.5.1 Production PTL is having 3 plots of land at Siam Eastern Industrial Park, Rayong Province, with a total area of about 100 Rai on which all the production facilities are built up.
39
ANNUAL REPORT 2012 - 2013 3.6.5.2 Production capacity Capacity of Polyplex group as on 31st March 2013 (including ongoing projects) is as follows:
Polyplex Group Capacity Mn Sqm 1,000
MT 2,500.00
1,500.00
PET-Thin BOPP Blown PP Bottle Grade PET Resin Chemically Coated
PET-Thick CPP PET Chips Metallizer Siliconised/Extrusion Coated
900 800 700 600 500 865
75.00
210,000
400
4,645 10,000
35,000
300
28,800
200
80,500
160
77,600
58,000
55,000
57,600
57,600
42,000 20,400
100
15,200
Base Film RET Film MET Film Coated Resin Film
Base Film PET Film MET Film Resin
INDIA
Product Type PET Thin Plain Film PET Thick Film PET resin PET Metallized Film Bottle Grade PET Resin BOPP Film CPP Plain Film CPP Metallized Film Blown PP Film Coated Films
140 Coated Film
Base Film BG PET PET Film MET Film Coated Resin Resin Film
55,000 77,600 20,400
42,000 28,800 80,500 11,000
58,000 57,600 11,000 210,000
35,000
260
10,000 4,200 4,645 865
140
-
Base Film PET Film MET Film Resin
TURKEY
Thailand* Turkey
100 13,500
11,000
THAILAND
India
31,000
USA
USA
Total
Unit
31,000 186,000 MT 28,800 MT 57,600 273,300 MT 13,500 55,900 MT 210,000 MT 35,000 MT 10,000 MT 4,200 MT 4,645 MT 1,265 Mn Sqm
* Capacities for Thailand above are attainable capacities and capacities approved by BOI based on theoretical output are higher. For BOI approved capacities in Thailand, please refer table above under section 霉Domestic competition没.
The above table includes the capacities for the projects under implementation at Thailand, Turkey and in USA.
40 Polyplex (Thailand) Public Company Limited
The capacity utilization rates for the Plain PET film lines PTL Standalone and Consolidated are as follows:
MT
PET Film Production & Capacity Utilization - Thailand 43,000 42,500 41,000 40,500 39,000 38,000 37,000 36,000 35,000 34,000
101% 98%
95%
94%
95%
97%
90%
101%
120% 98%
42,420 42,446 41,165
100% 80%
40,764
39,989
60% 38,199
40%
37,950 36,877 36,847
20% 0% 04-05
05-06
06-07
07-08
Production (MT)
08-09
09-10
10-11
11-12
12-13
Capacity Utlization (%)
PET Film Production & Capacity Utilization - Consolidated
MT
95% 120% 95% 94% 100,000 92% 90,000 98% 91% 94% 94,843 100% 81% 89% 80,500 94,457 70,000 80% 92,197 95,296 78,032 60,500 66,748 60% 50,000 60,320 40,000 40% 30,000 38,199 41,820 20,000 20% 10,000 0% 04-05
05-06
06-07
07-08
Production (MT)
08-09
09-10
10-11
11-12
12-13
Capacity Utlization (%)
3.6.5.3 Major raw materials PET resin PET Resin (polyethylene terephthalate resin) is the major raw material in the production process for PET films. It has been the strategy of Polyplex to produce its own Resins at all the manufacturing locations. Accordingly every location has its own Resin plant with sufficient capacity to meet its requirement. Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG): The major raw materials for PET resin production are purified terephthalic acid (PTA) and mono ethylene glycol (MEG). To ensure uninterrupted procurement of raw materials the Company has currently tied up with one local supplier each for PTA and MEG for PTL. For the PTA & MEG requirement for the new PET Thick Film line, it will procure PTA from another local supplier, whereas MEG will be sourced from existing supplier. The subsidiary in Turkey is
41
ANNUAL REPORT 2012 - 2013 importing PTA from Europe and MEG from Middle East. For the subsidiary in USA, talks are on with the local suppliers and the contracts will be finalized before the start up of the PET resin line. The company enters into Annual contracts as per which 100% of the company没s requirements would be supplied as per the specified price formula throughout the contractual period(s). Major Raw materials for the Extrusion Coated Film production: Apart from PET film, which comes mostly from the company没s in house production, the major raw materials for the Extrusion Coated film production are BOPP base film and Coating chemicals such as LDPE and EVA. All these are sourced from various manufacturers / traders from within Thailand as well as imports from within the region. For the second Thermal lamination line which is expected to start operations in H1 of 2013-14, the company plans to continue to source its requirement from existing suppliers, while it will also continue to explore other options available within this region. Major Raw materials for the Cast Polypropylene Film production: The major raw materials for the Cast Polypropylene film production are Homo Polymer and Co-Polymer. Homopolymer is being procured locally while CoPolymer is being imported. Major Raw materials for the Silicone Coated Film production: For the Silicone Coating line, the main raw material is PET film which is transferred from the Company没s in house production and also imported from the Parent company in India at Arm没s length pricing. Silicone and other chemicals are being imported from USA and Europe from leading suppliers. Major Raw materials for the Blown PP Film production: For Blown PP film line, the main raw material is PP resins (Homopolymer, CoPolymer and PP Color master batches). We plan to source our requirement from local supplies as well as imports from within this region. The company already has experience of sourcing similar resins (Homopolymer and Copolymer) for the CPP Film line and would leverage on the relationship with existing suppliers, to negotiate favorable terms of supply for its new requirement for the Blown PP film line.
42 Polyplex (Thailand) Public Company Limited
The value chain for the Company没s PET & CPP film business is depicted below: NATURAL RESOURCES
BASIC PETROCHEMICALS
Ethylene
RAW MATERIALS
PLASTIC AND INTERMEDLATE PRODUCTS
B A S E
PET RESIN Natural Gas
Pare Xylene
C O A T I N G
MEG
PTA
M E T A L L I Z I N G
F I L M S
PP RESIN
I N D U S T R I A L
Polypropylene
B U Y E R S &
END PRODUCTS
C O N V E R T E R S
Oil Polyplex没s area of operation
The value chain for Thermal Lamination film is given below: RAW MATERIALS
PET / BOPP FILMS
EVA / LDPE
PLASTIC AND INTERMEDLATE PRODUCTS
E X T R U S I O N
C O A T I N G P R O C E S S
T H E R M A L F L I A L M M I N A T I O N
P R I N T E R S /
L A M I N A T O R S
E N D C U S T O M E R S
Polyplex没s area of operation
43
ANNUAL REPORT 2012 - 2013
3.6.5.4 Impact on the environment There is a negligible impact on environment caused from the polyester film production process since PET in both film and resins are generally recyclable. For its Polyester resin line, it has the required EIA approval and submits regular reports required as per EIA approval to the concerned authorities. Since its commencement of production in March 2003, PTL has not faced any significant problems relating to the environment. Inspection by the Industrial Factory Department has been undertaken on a regular basis, the result of which has come out that the Companyûs manufacturing process poses no environmental impacts. All our product lines in Thailand have the following certifications: ë ISO 14001:2004 certification on Environment Management system ë ISO 9001:2008 certification on Quality Management system ë OHSAS 18001:2007 certification on Occupational Health and Safety Management system ë ISO 22000:2005 certification on Food Safety standards ë TPM Excellence Award (Category A) All our product lines in Turkey have the following certifications: ë ISO 14001:2004 certification on Environment Management system ë ISO 9001:2009 certification on Quality Management system ë OHSAS 18001:2007 certification on Occupational Health and Safety Management system ë BRC/IoP - certification on Global Standard For Packaging and Packaging Materials (For Plain and Metallized Film lines)
44 Polyplex (Thailand) Public Company Limited
4. Risk Factors Before making a decision to invest in the shares of the Company, investors should prudently consider the information about risk factors described in this section and all information contained herein. Apart from the said risk factors, there are still other unpredictable risks that may adversely impact the Company没s operating results. The key risk factors are:
4.1 Industry Cycle The industry cycle of PET film hinges on the spread between the PET film price and the prices of PTA and MEG which are major raw materials. Whenever the demand supply balance favors the suppliers, the PET film and raw material price spread usually widens, thereby encouraging the manufacturers to increase production by expanding their capacities. On the contrary, if PET film supply is larger than market demand, the film price will drop, hence narrowing the spread between the film and raw material prices. This cyclical nature will inevitably affect every producer没s revenues and profits. The FY 2012-13 witnessed a situation of significant oversupply, thereby resulting in margins contracting to historically low levels. To illustrate the cyclical impact of the PET thin film industry, the movement of profit before tax/sales of PTL (Consolidated), is shown in comparison with that of the prices of PET film and raw materials, as below: Comparison of profit before tax as a % to sales, of PTL on a consolidated basis, with prices of PET film and raw materials (Consolidated - Average for PTL-Thailand and PE-Turkey) 35.06% 22.31%
22.10% 17.11%
12.90%
15.46%
7.37%
13.72%
14.82%
201
2-1
3
2 1-1 201
201
0-1
1
0 9-1 200
200
8-0
9
8 7-0 200
7 6-0 200
200
5-0
6
5 4-0 200
3-0
4
4.06% 200
40% 35% 30% 25% 20% 15% 10% 5% 0%
CONSOLIDATED PBT AS % OF NET SALES
45
ANNUAL REPORT 2012 - 2013
105
97.21 84.67
90 73.68
74.48
75
68.62
70.52
74.97
73.48
69.62
60.41 60 46.98 45
39.07
37.07
43.75
46.35 39.44
37.91
45.46
37.83
35.17
Selling Price / kg
201 2-1 3
201 1-1 2
201 0-1 1
200 9-1 0
200 8-0 9
200 7-0 8
200 6-0 7
200 5-0 6
200 4-0 5
200 3-0 4
30
RM/kg
Source: Company information The cyclical behavior can be seen in the above historic data, which has direct impact on the operating results of PET film producers as well as Polyplex. To mitigate such risk, the Company has sought to undertake the following: ë With high productivity levels and cost control measures, Polyplex believes it is one of the lower cost producers of polyester film in the world which will help it deliver better financial results than the other constituents of the industry. ë Diversify its product portfolio by introducing new products like Extrusion Coated Film (second Extrusion Coated film line expected to start commercial operations in H1 of 2013-14), Cast Polypropylene Film, the Silicone Coating Line, Thick PET Film (expected to commence commercial production in H1 of 2013-14) to mitigate the risk of over dependency on a single product and single industry. ë Polyplex is also investing a PET Bottle Grade resin project in Turkey, under a newly formed company, in which PTL indirectly holds a 67% stake, and balance 33% is held by its parent company in Singapore - Polyplex (Asia) Pte Ltd (PAPL). ë Accessing customers operating across the globe in the flexible packaging and industrial segments by presenting alternative sourcing options from its existing manufacturing locations in India, Turkey and Thailand and from the new manufacturing location in USA where the PET thin film line has recently commenced commercial operations in April 2013 and its warehousing & distribution set up in Europe and China, thereby mitigating the risk of over dependency on few customers. ë Diversified manufacturing and distribution base helps to mitigate the risk of volatile markets. For Eg: South East Asian markets are quite volatile in nature, whereas developed markets of US, Europe, Japan etc are less volatile. Polyplex tries to mitigate such risks by having a diversified sales portfolio.
46 Polyplex (Thailand) Public Company Limited
毛
毛
Increased focus on new product development through R&D or technology acquisitions besides creating a strong technical services team is likely to be additional differentiator between Polyplex and its competition. The project for Offline Coater under implementation at Polyplex Europa (PE), Turkey will help in further enhancing our product offering to customers and reduce the exposure to commodity films没 segments.
4.2 Risks relating to uncertainty in prices of the product and raw material The basic raw material for production of PET film is PET resin, which is in turn produced from Purified Terephthalate Acid (PTA) and Mono Ethylene Glycol (MEG). Since the cost of resin is the single largest component of the total production cost of Polyester film, the fluctuation in the resin price may hurt the Company没s operating margins depending upon the ability of the Company to pass the increase in costs to its customers. As selling prices are usually negotiated on a monthly / quarterly basis, in a balanced demand supply situation, PTL is usually able to adjust the selling prices following any changes in the PET resin cost and other operating costs. The above graph of historic Selling price and Raw material price movement demonstrates the correlation between the raw material cost and the selling prices. In most of the years the movement in the selling prices have been following the trend of the raw material cost except for years where other factors influenced the prices like 2006-07 (down cycle in PET film industry due to imbalance in supply demand situation), 2008-09 when the world economies went through a turmoil and in 2010-11 where due to shortage in supply of PET films, the selling prices increased at extraordinarily high levels. During the FY 2012-13, the Polyester film industry witnessed an excessive over supply situation, brought about by all the additional supplies which came into the market in 2011 and 2012, following the extraordinary high margin levels witnessed in year 2010-11. There was tremendous pressure on the selling prices, due to which the margins of all PET film manufacturers were squeezed to historically low levels. In our estimate, the over supply situation is expected to continue for some more time, and once demand growth catches up with supplies, the markets should witness a more balanced scenario and the margins should rebound to normal levels. Analysis of historical data shows high correlation between PTA/MEG - polyester film prices. The spread between two intermediates would vary depending upon the demand-supply situation of the commodity. Also sudden and sharp movements in raw material prices may affect the correlation for some time.
47
ANNUAL REPORT 2012 - 2013 The chart below shows the past trend in the pricing of PET film and PTA and MEG, in Far East/ US and Europe: PET Film - PTA - MEG Price Trend (Far East)
USD/Kg
5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 PET Film (12 Mic. Corona) PTA MEG VA Over PTA & MEG
1995 4.48 1.15 0.74 3.44
1996 3.51 0.88 0.65 2.50
1997 2.22 0.63 0.65 1.43
1998 1.57 0.44 0.49 1.01
1999 1.48 0.44 0.44 0.93
2000 1.76 0.57 0.58 1.05
2001 1.83 0.49 0.50 1.22
2002 1.94 0.53 0.46 1.31
PET Film (12 Mic. Corona)
2003 2.15 0.59 0.67 1.39
2004 2.07 0.75 0.93 1.07
PTA
2005 1.98 0.81 0.92 0.94
2006 1.88 0.90 0.91 0.75
MEG
2007 2.06 0.88 1.08 0.89
2008 2.54 0.91 1.15 1.33
2009 2.13 0.84 0.69 1.14
2010 3.08 0.97 0.97 1.87
2011 2.61 1.27 1.30 1.02
2012 1.99 1.10 1.18 0.60
2010 3.48 1.06 1.04 2.17
2011 4.22 1.46 1.36 2.44
2012 3.03 1.39 1.24 1.35
2010 2.59 0.89 0.83 1.51
2011 2.85 0.99 1.07 1.59
2012 2.16 0.99 1.01 0.92
VA Over PTA & MEG
PET Film - PTA - MEG Price Trend (US)
USD/Kg
5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 1995 PET Film (12 Mic. Corona) 5.03 0.87 PTA 0.67 MEG 4.03 VA Over PTA & MEG
1996 4.11 0.75 0.61 3.23
1997 3.23 0.61 0.65 2.45
1998 2.43 0.53 0.55 1.76
1999 2.13 0.51 0.48 1.50
2000 2.34 0.63 0.61 1.56
2001 2.51 0.64 0.53 1.75
2002 2.73 0.60 0.50 2.02
PET Film (12 Mic. Corona)
2003 2.98 0.69 0.74 2.10
2004 3.10 0.83 0.97 2.02
PTA
2005 3.02 0.97 0.95 1.82
2006 2.43 1.26 1.09 0.93
MEG
2007 2.52 1.11 1.17 1.11
2008 2.98 1.17 1.20 1.51
2009 2.30 0.96 0.74 1.19
VA Over PTA & MEG
PET Film - PTA - MEG Price Trend (Western Europe)
Euro/Kg
5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 1995 PET Film (12 Mic. Corona) 5.20 1.31 PTA 0.83 MEG 3.88 VA Over PTA & MEG
1996 4.21 1.05 0.68 3.03
1997 3.35 0.77 0.60 2.45
1998 2.54 0.70 0.49 1.74
1999 2.35 0.69 0.45 1.58
2000 2.47 0.79 0.58 1.56
2001 2.25 0.80 0.50 1.36
PET Film (12 Mic. Corona)
Source: Industry information
48 Polyplex (Thailand) Public Company Limited
2002 2.78 0.88 0.50 1.82
2003 3.81 1.11 0.77 2.56 PTA
2004 3.53 1.19 0.91 2.15
2005 3.07 1.20 0.84 1.71 MEG
2006 2.99 0.90 0.82 1.89
2007 2.91 0.90 0.90 1.79
2008 2.19 0.84 0.91 1.12
2009 1.93 0.75 0.56 1.07
VA Over PTA & MEG
The above industry data demonstrates that variations in the raw material prices by and large tend to get passed on to the end-customers. The demand-supply balance of PET films which could vary across regions could impact margins. The spread between the raw material and PET films, especially over the last few years, has moved in a band. PTLรปs contracts with some customers provide for a quarterly/periodic review in pricing which enables it to adjust for any raw material cost movement. The Company monitors world and local input price trends carefully and determines its procurement plans accordingly.
4.3 Risk associated with reliance on only a few raw material suppliers The 2 major raw materials for the company, PTA and MEG are well traded commodities, available from a variety of sources in this region. However, the company is meeting its requirement domestically, by procuring each of these raw materials 100% from a single local supplier, thereby enjoying certain distinct advantages of shorter lead time/lower raw material inventory carrying levels etc. The company has entered into long term / yearly contract for the supply of the raw material to ensure its availability. These contracts also have a supply guarantee clause to ensure that the risk of buying 100% from a single source and also a single plant operation is mitigated. And as far as the pricing is concerned, since it is linked to certain standard international benchmark rates there is high degree of transparency. For the Extrusion Coated film production, apart from PET film which is transferred from the Companyรปs in house production and also imported from the Parent company in India at Armรปs length pricing, the major raw materials are BOPP base film and Coating chemicals such as LDPE and EVA. All these are sourced from various manufacturers / traders from within Thailand as well as imports from within the region. For the second Thermal lamination line which is expected to start operations in H1 of 2013-14, the company plans to continue to source its requirement from existing suppliers, while it will also continue to explore other options available within this region. The major raw materials for the Cast Polypropylene film production are Homo Polymer and Co-Polymer. Homopolymer is being procured locally while Co-Polymer is being imported. For the Silicone Coating line, the main raw material is PET film which is transferred from the Companyรปs in house production and also imported from the Parent company in India at Armรปs length pricing. Silicone and other chemicals are being imported from USA and Europe from leading suppliers. For Thick PET Film line, the major raw material is PET Resin which will be produced in-house post start up of the new resin line in H1 of 2013-14. The major raw material for PET resin is PTA and MEG, availability of which is not a major concern, as already
49
ANNUAL REPORT 2012 - 2013 explained above. PTA will be sourced 100% locally, but from a different supplier, than the one supplying PTA for existing line. This would help to diversify the risk of over dependency on a single supplier. The MEG will be sourced from the same supplier who is supplying for the existing line. The company has entered into annual contracts and also have a supply assurance clause to ensure that the risk of sourcing 100% of its requirement from a single source is mitigated. And as far as the pricing is concerned, since it is linked to certain standard international benchmark rates there is high degree of transparency. For Blown PP film line, the main raw material is PP resins (Homopolymer, Co-Polymer and PP Color master batches). We plan to source our requirement from local supplies as well as imports from within this region. The company already has experience of sourcing similar resins (Homopolymer and Copolymer) for the CPP Film line and would leverage on the relationship with existing suppliers, to negotiate favorable terms of supply for its new requirement for the Blown PP film line.
4.4 Risk from environmental regulatory measures All the production lines of PTL, except for the Polyester resin line, do not require any environmental impact assessment (EIA). For its Polyester Resin line, the Company has the required clearance from the regulatory authorities and utmost care is taken to ensure compliance to the same. For the Silicone Coating line or the Thick Film & PET Resin line under implementation, PTL was not required to get any EIA approval.
4.5 Risk from competition from existing manufacturers and entry of new players With consistently rising demand and healthy growth potential, the PET film industry attracts new capacity investments from existing large manufacturers who are well-established companies with long experience in this industry, as well as medium to small producers and new entrants with strong capital to accommodate investment in PET film plants and machinery. In this industry, it is quite commonly seen that capacity additions happen in bulk, following a period of attractive margins and profits and this disrupts the demandsupply balance for a temporary period of time, until demand growth catches up with new supplies. In certain cases, as witnessed in the last year, the oversupply is so excessive that the down cycle lasts for a prolonged period of 2-3 years. Despite the cyclical nature of this industry, it continues to remain an attractive industry with strong fundamentals and a steady demand growth. Compared to other players, Polyplex没s low cost of production, established quality, geographically diversified manufacturing presence, wide range of products and global
50 Polyplex (Thailand) Public Company Limited
market reach are some of key factors which make Polyplex one of the leading players in this industry. It remains confident of being able to compete against both world leading producers as well as newcomers. The Company has strategically embarked on various expansion projects in Turkey, USA and Thailand over the last few years, including the 2 main projects - PET Thick film line in Thailand (under implementation) and the PET thin film line investment in USA. (Recently started commercial operations in April 2013). This along with the other expansion projects in the pipeline in Thailand and Turkey will further strengthen its competitiveness (Refer Section 3 -Business Overview for details on Projects commenced during the year and Section 5 -Future projects for new projects in the pipeline). The company has been continuously evaluating other growth options in PET film / value added products / related areas like CPP / BOPP/ Silicone Coated Films at all existing locations in Turkey/Thailand/ US, while also continuously evaluating growth options in other new locations/new product lines. The company has also been evaluating possibilities for any acquisitions to further expand its manufacturing base and also to improve its cost structure, product offering and market reach / penetration.
4.6 Risk from trade barrier measures Trade barrier measures taken by various countries are broadly of two major types: a) Anti-dumping (AD): An anti-dumping duty can be imposed on imports if the exfactory prices of such imported products are proved to be lower than the local selling prices of the similar products in the countries of the exporters. For the past few years, the countries adopting this measure are the European Union member countries and the US against such countries as India, China, Brazil and South Korea. b) Anti-subsidy: A countervailing duty (CVD) can be imposed if the government or any government agency provides any benefits or privileges specifically to any company or exporter of such country. Such tax measures will cause import duty on the goods produced and exported from the targeted countries imposed at such a high rate that such goods will carry higher prices and hence have difficulty to compete with the products of the rivals. For manufacturers having a regional manufacturing base in such locations, such trade defense measures can be an opportunity if anti dumping duties are levied against imports from the Asian low cost producers. The company is undertaking all the safeguards to insulate against the risk arising out of anti-dumping duties and other protective barriers imposed by the importing countries. A geographically well-diversified sales portfolio like ours will help mitigate the adverse fall-out of such an action, if any. And by having a local manufacturing presence in USA and Europe, it can take advantage of such trade barriers levied by these countries against imports from Asian countries.
51
ANNUAL REPORT 2012 - 2013 In the year 2008, in the US Anti Dumping petition against producers of PET film from Thailand, China, Brazil and Middle East, there was a negative injury ruling by the International Trade Commission (ITC) against Thailand and consequentially, there is no duty against Thailand imports into the US market. As an outcome of the Anti-Dumping Investigation by Brazil in the year 2007, against Thailand, an Anti Dumping duty of about 28 cents/Kg on imports from Thailand to Brazil had been imposed. However, the impact of this on the Company is minimal, as the sales to Brazil are almost negligible. As an outcome of the Anti-Dumping investigation initiated by the Government of Brazil in December 2010, against UAE, Mexico and Turkey, in respect of PET film imports into Brazil, the government of Brazil imposed anti-dumping duty of USD 67.44 / MT on the Companyûs subsidiary in Turkey (Polyplex Europa), which is however the minimum rate as compared to the rates announced for other countries as well as other producers in Turkey. Polyplex Europaûs exports to Brazil are not a very significant portion of their overall sales volumes and as such, the management does not expect any major impact from the antidumping margin imposed.
4.7 Risks from future projects The major risks associated with any new Projects are as below: ë Market Risk: Since Polyplex has a global reach and an extensive marketing and distribution network, the Company does not foresee any major risk in developing the markets new products. In the case of the PET Thick film, although this is a new product, the Company has already started establishing contacts with key customers in the target markets and remains confident of ramping up sales smoothly. ë Competition Risk: The Company believes that its cost structure would be globally very competitive and will be one of the major advantages to gain an edge over some of the existing producers/new entrants. ë Project Implementation risk: Implementation of the Project within the Budgeted cost and timeline is another critical aspect for the success of any Project. Based on past experiences, it can be very well said that the experienced Projects team at Polyplex should be able to achieve successful implementation of new projects on time and within Budgeted costs except for un-foreseen circumstances. ë Funding Risk: Long term Debt to the extent of 65-75% of the Project cost is generally borrowed by the Company and the balance is funded out of internal accruals. Based on the good relationship with existing banks, the Company is quite confident of raising the required financing for any new future Projects at competitive terms and conditions.
52 Polyplex (Thailand) Public Company Limited
ë
Currency Risk: For any new project, the currency of borrowing is decided, based on the projected operational cash flows of the project. The currency which has the maximum surplus in the operational cash flows is chosen to be the currency for the loan. This creates a natural hedge for the loan repayments, as and when the repayments start. The company also has internal FX guidelines to cover net exposure of Project costs, in various currencies by booking appropriate forward contracts, so that the risk on the initially estimated overall Project cost, on account of currency fluctuations is minimized. With the new borrowings made for the recent expansions in Thailand, the Forex loan portfolio of the Company has gone up to more than 100 Million USD (including equivalent of the Euro denominated loans), thereby exposing the Company to high amounts of unrealized Fx loss/gains on account of the restatement of such loans.
Apart from all the Project specific risks and their mitigation plans as discussed above, the Company would also like to mention here that the overall Project risk of any new Project is covered by taking appropriate Insurance policies to cover various risks such as Erection and Construction all risks, Marine risks, Loss of Profit coverage due to delay in Project Start-up etc.
4.8 Risk from dependence on the parent company Polyplex Corporation Ltd. (PCL), through direct and indirect shareholding, currently controls 51% of the paid up shares in the Company. In the initial 2-3 years of its incorporation, PTLûs core management team consisted of persons who were previously employed by PCL and they played a vital role in successfully establishing PTLûs operations ahead of the schedule and at a lower-than-estimated cost, together with ensuring high productivity levels resulting in the Companyûs ability to produce quality products at a competitive cost. However, after about 4-5 years of running, once operations were fully stabilized, the company successfully implemented a program for reducing the dependence on expatriates by increasing the proportion of local Thai staff in operating/managerial positions and has been managing the production and operations efficiently thereafter. The Companyûs present management team is composed of experienced key personnel in production, marketing, distribution and accounting/finance. It has thus been able to run the business on its own without reliance on the parent company. It is only in the research and development area and the implementation of new projects, where the parent company provides know-how and technical assistance to the Company.
53
ANNUAL REPORT 2012 - 2013 PTLûs business operation is independent from PCL in such undertaking as public offering of equity, borrowing of loans, and other investments in the future, for instance. The parent company need not request any approval from any government bodies except for reporting of significant events to two stock exchanges where it is listed, namely Mumbai Stock Exchange and National Stock Exchange. The Company is confident that there will be no conflict of business interest between PCL and PTL on account of the following: ë It is Polyplexûs policy in business operation that there is an equitable distribution of business between the various manufacturing units aligned to efficient servicing of customers. ë The investment in PTL and its subsidiaries is higher as compared to PCLûs assets, hence the success of PTL being critical for PCL.
4.9 Risk from sponsor group holding about 51% of total shares Currently, PTLûs major shareholder is PCL (As of March 31, 2013 the promoter Mr. Sanjiv Saraf and related parties control 46.93% in PCL), holding 16.50%, and Polyplex (Asia) Pte. Ltd. (çPAPLé) which is wholly owned by PCL, holding 34.50%, thus in aggregate holding 51% of PTL paid-up common shares of Bt. 800 million. Thus, in matters that require a three-fourths majority vote of shareholders, the minority shareholders can successfully oppose corporate actions undertaken or supported by the majority shareholders. However, the parent company will continue to play a vital role in determining the Companyûs policy on business administration and operation. However, PTL has set up a three-member Audit Committee to provide for an audit of the operations and the management. Besides, PCL is listed on the Stock Exchanges in India and abides by the Corporate Governance regulations prevailing for listed companies in India.
4.10 Foreign exchange risk Most of PTLûs products, i.e. about 75-85%, are for exports, which are mostly denominated in US dollars and Euro. As against this, raw material (PTA & MEG) prices are also linked to the US dollar, although their payments are done in Baht and there are Long term loan related interest payments/loan repayments in USD and Euro. On a standalone basis, the company as at March 31st ù13 had Euro loans of about 23 million and USD loans of about 70 million. There are some expenses which are in Thai Baht, i.e. locally procured raw materials, packing materials, salaries, utilities and other administrative expenses which have to be settled by income from domestic sales and from the surplus income from USD/Euro exports. Thus, broadly speaking, PTL has a net surplus US dollar and Euro position on the
54 Polyplex (Thailand) Public Company Limited
trade front, which can be hedged somewhat against repayment of its long-term loans. To the extent possible, the company has been trying to create a natural hedge to mitigate the risk from currency fluctuations. On an ongoing basis, the company also takes forward covers, to cover the net surplus exposure in USD and Euro. Similarly, the Company没s subsidiary in Turkey has a net surplus in USD and Euro currencies whereas they have certain payments in the local currency, which is hedged from time to time by taking appropriate forward covers. The subsidiary in USA has USD revenues and USD payments, so there is a natural hedge. The project financing was also made in USD currency so that there is a natural hedge for loan repayment. The funding for new Projects of the company are also planned based on the future inflows from the Project Operations so that a natural hedge can be created to the extent possible. However, as explained above, the increased Forex loan portfolio of the Company of about USD 100 Million (including equivalent of the Euro denominated loans), exposes the Company to high amounts of unrealized Fx loss/gains on account of the restatement of such loans, thereby resulting in instability in reported net profits of the Company.
4.11 Interest rate risk As of March 31, 2013, the Company没s outstanding long term loans (consolidated basis) were Euro 57.5 million and USD 122.1 million, whereas outstanding short term loans were USD 22.5 million and Baht 385 million. The USD loans amounting to USD 3.6 million (O/S as on March 31st 霉13) have already been swapped to fixed interest rate and the balance loans have floating LIBOR based interest rates. All the Euro loans have floating EURIBOR based rates. The floating interest rate may put the Company at a risk of rising financial cost if the interest rates move up. The company has been constantly monitoring the interest rates and will take interest rate swaps for converting the liability into fixed rates, if considered beneficial.
4.12 Risk from overlap of products and markets The product portfolio of PCL, PTL, PE and PUL is quite similar. In order to mitigate the risk from overlapping of products and markets, Polyplex has also evolved an equitable policy for distribution of markets, between its Indian, Thailand, Turkey and USA operations based on the several factors like product range, delivered cost to customer, supply lead times and preferential duty access. Based on the same, PTL would mainly serve South East Asia, Asia Pacific, China, and Australia & New Zealand. PCL would serve South Asia. Turkey
55
ANNUAL REPORT 2012 - 2013
will serve, Europe, America, Middle East, Africa and CIS/Russian markets. The US manufacturing entity would mainly serve North American and South American markets. The Polyplex group also has a policy on future investments in polyester film / related areas between the Company and its parent company. Investments in India/SAARC region would be decided and made by PCL and its other subsidiaries (excluding the Company) while investments In Thailand / ASEAN region as well as other countries would be in all likelihood be made by PTL or the subsidiaries in which the Company has a major stake. The above is subject to availability of Investible cash / ability to borrow debt by the existing / preferred Company as per the policy.
4.13 Credit risks Credit risk of customers is another significant risk for any business. The Company manages the risk by adopting appropriate credit control policies and procedures. Most of the sales, which are on credit are secured either through a Letter of credit issued by the customer or by taking appropriate credit insurance coverage. The Company also takes extra caution in selection of any new customers and granting of credit.
56 Polyplex (Thailand) Public Company Limited
5 Future Projects 5.1 Future Projects 5.1.1. PET Thick Film Line - Thailand In February 2011, the Board had approved an investment in a Thick Polyester Film Line along with Batch Resin Plant. This project is being implemented in Thailand by partially using the new plot of land purchased in 2010, located close to the existing factory in Siam Eastern Industrial Park. Project Details ë The total Investment in this project is about $ 90 million, including working capital. ë The PET Thick Film Line is of 5.9 meters width, with a capacity of about 28,800 TPA. ë Polyester Batch Process Chips manufacturing facility is with a capacity of about 28,000 TPA. ë The product range from this new film line would be PET thick film in the range of 23-350 micron thickness. ë Funding of the Project is through Long Term Debt borrowing of $ 60 million and balance is funded out of internal cash flows/ WC lines of the Company. ë The expected commercial start up of the project is in H1 of 2013-14. ë The project is promoted by the BOI. 5.1.2. PET Thin Film line - USA The PET thin film line project is being implemented in Decatur, Alabama State, USA, under Polyplex USA LLC (PU). PU is held by Polyplex Americas Holding Inc (PAH) which is 100% held by Polyplex (Thailand) Plc. Project Details ë Total investment is estimated to be about $ 140 million including working capital. ë This would include a PET Thin Film Line of 8.7 meters width with a capacity of about 31,000 TPA, PET Resin line of 57,600 TPA. ë During the year, the US entity has acquired some metalizing assets with an aggregate capacity of 13,500 MT. ë Funding of the Project is through Long Term Debt borrowing of $ 75 million and balance will be funded out of internal cash flows of Polyplex (Thailand) Plc and/or its subsidiaries.
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ANNUAL REPORT 2012 - 2013 ë
The Film line has started commercial production in Q1 of 2013-14 and the Resin plant is expected to start up in H2 of 2013-14. Until then, the chips requirement is being managed through related party supplies as well as external purchase of Polyester chips.
5.1.3. Blown PP Film line - Thailand In July 2011, the Blown PP film line project was approved by the Board. This project is being implemented in Thailand, in the same plot of land in Siam Eastern Industrial Park where Silicone Coating film line was implemented. Project Details ë The total Investment in this project is about $ 10 million, including working capital. ë The company has tied up Long term Debt financing of $ 7 million for financing the project. ë Annual capacity of the Blown PP line will be 4,645 TPA. ë Film will be used mainly as captive input for the silicone coating line, with a view to enable better utilization levels and expand the product mix of the Silicone Coating line. ë BOI approval for the Project has been received, by amending the Silicone Coated Film line approval, to include manufacture of Blown PP Film as base film as well as to include external sales of Blown PP. ë The expected commercial start up of the project is in H1 of 2013-14. 5.1.4. Extrusion Coated Film Line II - Thailand In November 2011, the Extrusion Coated Film line II project was approved by the Board. This project is implemented in Thailand, in the same plot of land in Siam Eastern Industrial Park where Extrusion Coated Film Line I was implemented. Project Details The total Investment in this project is about $ 13 million, including working capital. ë ë The company has tied up Long term Debt financing of $ 6.5 million for financing the project and balance Project cost is funded out of internal accruals/ WC lines of the Company. ë Annual capacity is 215 million Sqm, higher than the capacity of the first line which is 150 million Sqm pa. ë The expected commercial start up of the project is H1 of2013-14. ë Main market for this product would be USA and Europe. ë The BOI promotion certificate has been received.
58 Polyplex (Thailand) Public Company Limited
5.1.5. PET Bottle Grade Resin plant- Turkey A PET Bottle Grade Resin project is being implemented under Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi (PR), in Turkey. This new company is held 67% by Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE), a 100% subsidiary of Polyplex (Thailand) Plc and the balance 33% is held by Polyplex Asia Pte Ltd (PAPL). Project Details ë The total Investment in this project is about $ 80 million, including working capital of $ 8 million. ë The company has tied up Long term Debt financing of Euro 41 million and WC Line of Euro 6 million. The balance Project cost is funded out of Equity investment from PE and PAPL and inter-company loans from PAPL. ë Annual capacity is 210,000 MT per annum. ë The line is expected to start commercial production in H2 of FY 2013-14. Project Rationale: ë Strategic: o It provides an opportunity to create another stream of profitable growth o At the same time, it allows for portfolio risk diversification, thereby reducing the almost complete dependence on the plastic film business. However, the risk of entering a new business is mitigated significantly as it is somewhat related due to the fact that Polyplex currently manufactures film grade PET resin at all locations for its captive needs. Thus the technology and production side risk is quite low. ë Attractive Industry / Product: o High growth industry with regional growth rates higher than corresponding GDP growth rates mainly driven by growth in the usage of fast growing consumer products like Mineral water bottles, Carbonated Soft drinks etc. o PET bottles offer unmatched value along with low cost as compared to glass bottles and PVC polystyrene. o Given the high proportion of raw material cost in the final product price, there is a strong correlation between the two and hence this product is less prone to cyclical swings as the raw material cost is usually a pass through to the customers. o Capacities are spread regionally and regionally short markets are being catered by imports. Capacities are spread over multiple locations in Europe and a significant portion of this capacity is constituted by low capacity older plants (150-300 TPD), thereby negating any benefits of economies of scale vis-à-vis new and larger stand alone capacities like the proposed 600 TPD plant of Polyplex.
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ANNUAL REPORT 2012 - 2013 ë
ë
Competitive Positioning of Polyplex / Project in Turkey: o Our business model is based on strategic location which provides access to large domestic (Turkey) and near shore markets (West & East Europe). o Large target deficit markets like Bulgaria, Ukraine and Romania can be most efficiently served out of Turkey. Significant Fiscal/Duty Advantages: o Exemption from Corporate Income Tax -till Turkey joins the EU. o Customs Union with EU gives Turkey an edge over Asian manufacturers due to nil customs duty on exports from Turkey to the EU as compared with a normal duty rate of 6.5% or preferential duty rate under GSP of 3% applicable to other Imports. o In addition, the local industry is protected by way of trade measures like AD/CVD measures applicable on exporters from specific countries. Currently such measures are applicable against India and other Asian/ Middle East producers on imports in EU.
5.1.6. Recycling of plastic waste- Thailand As another sustainability initiative, the Company is working on a project to recycle film waste. The project, is being implemented in Thailand, under a 80% held subsidiary of Polyplex Thailand, named EcoBlue Limited. The project cost is USD 2.1 million, including USD 0.3 million for working capital. The project will be financed by Long term loan borrowing to the extent of USD 1.26 million and balance is funded out of equity from shareholders. Project Rationale: ë Availability of captive waste helps in the ability to segregate various kinds of waste at source, ability to handle the material better, minimizing the contamination and reduce the dependence on external sources for materials. ë Co-location with PTLûs units would result in savings in capital costs and at an operational level savings in freight, packing & inventories. This project is expected to commence commercial operations in H2 of 2013-14. 5.1.7. Off Line Coater - Turkey In October 2012, the Board approved an investment in an Offline Coater at Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE), Turkey. Project Details: ë The total Investment in this project is about Euro 5 million. ë The funding of the project is being done out of internal cash accruals of PE.
60 Polyplex (Thailand) Public Company Limited
ë ë
Annual capacity is 2,300 MT pa. The line is expected to start commercial production in H1 of 2013-14.
Project Rationale: ë Provides an opportunity for profitable deployment of cash surpluses at PE. ë Enhance our existing product offering and value proposition for the customer at low capital cost. ë Help enhance PEûs leadership position in its natural markets, as PE shall be able to provide their customers a platform to jointly develop products and innovate along with PE. ë The project can leverage the research and development capabilities and coating skill sets available within the Polyplex group. ë There are no domestic producers in Turkey for PVDC coated and Peelable / peelable-sealable films which gives PE an edge over competition in domestic market. ë Turkey has an edge over other Indian / Asian manufacturers on customs duty on exports to EU / Turkey, as also lower logistics costs from Turkey to Europe as against Asia to Europe.
5.2 Other Capital Expenditure As an ongoing effort to improve productivity, reduce losses, develop products and enhance quality control, PTL and its subsidiaries in Turkey/USA undertake several small/medium capital expenditures on the basis of cost benefit analysis. The total outlay over the next 12-15 months for such projects is estimated at about Bt. 400-500 million which includes normal insurance spares and miscellaneous equipments for upkeep of the machinery.
6. Legal Dispute -None-
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ANNUAL REPORT 2012 - 2013
7. Shareholding Structure 7.1 Shareholding Structure 7.1.1 Securities PTL没s current registered capital is Bt. 960 million of which, Bt. 800 million is paid up, divided into 800 million ordinary shares each of Bt. 1 par value. 7.1.2 The shareholding structure of PTL as on 31st March 2013 is as follows: Name
Ordinary shares
Polyplex Corp. Ltd. (PCL) Polyplex (Asia) Pte. Ltd. (PAPL) General public Existing small shareholders* Total
131,999,940 275,999,915 392,000,000 145 800,000,000
% 16.50 34.50 49.00 0.00 100.00
* Beneficial interest held by PCL and PAPL PCL没s shareholding structure as of March 31, 2013 is shown as below: Name Promoter/Sponsor Group Institutional investors Indian public (Non Institutional Investors) Other shareholders Grand total
% 46.93 10.69 31.84 10.54 100.00
PAPL is 100% held by PCL and together PAPL and PCL hold 51% of PTL. 7.1.3 Dividend payment policy As per the dividend policy stated in the prospectus, dividend is paid out at rate of about 40% of the annual net profit, taking into account economic conditions, growth plans, future deployment opportunities, the Company没s financial position and liquidity and subject to the approval by the shareholders. The Board of PTL has recommended a dividend of Baht 0.14 per share for FY 201213, which will be paid on 22nd, August 2013, post approval by the Shareholders in the Annual General meeting to be held on 26th, July 2013.
62 Polyplex (Thailand) Public Company Limited
The following graph shows the comparison of dividend payment for the last 9 years, since the company没s public listing in December 2004.
Dividend - Bt per share
Historic Net profits and Dividend Payout
Million Baht
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Net profits (Consolidated) Total Dividend Dividend- Bt/Share
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ANNUAL REPORT 2012 - 2013
7.2 MANAGEMENT STRUCTURE Company Secretary
Board of Directors
Audit Committee
Managing Director
Chief Financial Officer
Head Operations
Head Sales & Marketing
Head Sales & Marketing Sarafil Thick Films
Corporate Finance
Head-Production & EngineeringSarafili / CPP
SE Asia
SE Asia
Costing and Accounts
Head-Saracote Plant
Domestic market
Domestic market
Information Technology
TPM
America
America
Legal & Tax
HR & Industrial Relations
Europe
Europe
Investor Relations
Quality Assurance & Technical Services
Others
Others
Business Head - SARALAM Manager - SARALAM Plant
Purchase & Stores
PTL has a board of directors and an audit committee. There is a provision to appoint other need-based committees as may be appointed by the shareholders or the board of directors from time to time. The board members and executive officers are qualified persons with complete qualifications as per Section 68 of the Public Limited Companies Act B.E. 2535 and as per the Notification of the Securities and Exchange Commission (SEC) No. KorJor. 12/2543 Re: Application for Permission and Permission to Sell Newly Issued Shares dated March 22, 2000.
64 Polyplex (Thailand) Public Company Limited
Details of the board of directors and other committees are as follows: 7.2.1 Board of Directors As of March 31, 2013, PTLรปs Board of Directors is composed of eight members as follows: 1. Mr. Manu Leopairote Board chairman and Audit Committee Chairman 2. Dr. Virabongsa Ramangkura Director (and Audit Committee member) 3. Mr. Shiraz Erach Poonevala Director (and Audit Committee member) 4. Mr. Sanjiv Saraf Vice Chairman 5. Mr. Praphad Phodhivorakhun Director 6. Mr. Pranay Kothari Director 7. Mr. Manish Gupta Director 8. Mr. Rohit Kumar Vashistha Managing Director Mrs.Supritha Pai Kasturi is the secretary to the Board of Directors Authorized signatories Any one of the four authorized signatories, namely Mr. Sanjiv Saraf, Mr. Pranay Kothari, Mr. Manish Gupta, and Mr. Rohit Kumar Vashistha are empowered to sign with the Companyรปs seal affixed. Power and duties of the board of directors (the Board) The Board of Directors has the powers, duties and responsibilities to faithfully and prudently conduct the operations of the Company in accordance with the Companyรปs objectives and Articles of Association, applicable laws and resolutions of the shareholdersรป meetings, for the benefit of the Company. A summary of the substantial duties and responsibilities of members of the Board of Directors is set out below: 1. to hold the annual general meeting of shareholders within 4 months from the close of the accounting period; 2.
to call the meeting of the Board of Directors at least once every calendar quarter;
3.
to arrange for the preparation and submission of the audited balance sheet and profit and loss statement at the end of each accounting period to the shareholdersรป meeting for its consideration and approval;
4.
to authorize any one or several directors to perform any action on behalf of the Board of Directors under the supervision of the Board of Directors, or granting the power-of-attorney to such designated director(s) to perform any action within the specified time as the Board of Directors may think fit; provided, however, that the Board of Directors has the sole discretion to revoke or modify such designated director or power-of-attorney as the Board of Directors may think fit.
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ANNUAL REPORT 2012 - 2013 For this purpose, the Board of Directors may authorize the Executive Committee, if any, to conduct any activities within the specified scope of work, duties and responsibilities of the Executive Committee. No authorization will entitle the Executive Committee to consider and approve the transaction which may cause a conflict of interest between the Executive Committee or any related person or interested person as the one party and the Company or its subsidiary companies as the other party. However, an exception is granted where the transaction conforms to the approved policies and rules of the Board of Directors; 5.
to determine the goals, prospects, policies, business plans and budgets of the Company, and to ensure that the management work performed by the Executive Committee, if any complies with the set policies. However, the Board of Directors needs to obtain the resolution of the shareholdersû meeting before entering into these legal transactions, for instance, increase or reduction of capital, issue of bonds, sale or transfer of all or any substantial parts of the Companyûs businesses to any third party, purchase or acceptance of transfer of other businesses, amendment to the Memorandum of Association, and so on. The Board of Directors is also responsible for ensuring the Companyûs compliance with the securities and exchange law and rules of the SET, for instance, rules concerning the entry into connected transactions and concerning purchase or sale of substantial assets, including any law governing the Companyûs business;
6.
to review the management structure and appoint the Executive Committee, General Manager and any subcommittees, as it deems appropriate;
7.
to ensure that the Companyûs performance follows the business plans and budgets at all times;
8.
to refrain from conducting any similar or competitive business, participating as partner in an ordinary partnership or partner with unlimited liability in a limited partnership or director in a private company or in any other firm, company or corporation operating the business similar to or in competition with the Company, regardless of whether for his/her own benefit or for othersû benefit. However, an exception is granted where the director provides notice to the shareholdersû meeting in advance of his/her effective appointment as director of the Company; and
9.
to notify the Company without delay of the event of likelihood that the director may have direct or indirect interests as a result of (i) the Companyûs entry into any agreement; and (ii) his/her increased or decreased holding of shares or bonds in the Company or its subsidiary companies.
66 Polyplex (Thailand) Public Company Limited
7.2.2 Audit Committee The Companyûs Audit Committee comprises of: 1. Mr. Manu Leopairote Audit Committee Chairman 2. Dr. Virabongsa Ramangkura Audit Committee member 3. Mr. Shiraz Erach Poonevala Audit Committee member Mrs.Supritha Pai Kasturi is the secretary to the Audit Committee. Power and duties of the Audit Committee 1. to review the sufficiency, credibility and objectivity of the financial reporting of the Company by coordinating with the external auditors and management responsible for preparing the quarterly and yearly financial reports. The Audit Committee may suggest issues or matters to be included for review or audited by the external auditors during its audit of the Company; 2.
to review the adequacy and effectiveness of internal control systems and internal audit functions by coordinating with the external auditors and internal auditors (if any);
3.
to review compliance with the Securities and Exchange Acts, Regulations of the SET, and any other relevant laws;
4.
to consider and advise on the appointment of the external auditor including the audit fee, taking into account the creditability of the external auditor, the adequacy of its resources, the firmûs audit engagements, and the experience of its supervisory and professional staff; as well as to have a meeting with the external auditor, once a year without the presence of the Executive directors or any other member of the management team.
5.
to review the connected transactions and ensure proper compliance with all the SET regulations and also to ensure adequate disclosures or conflict-ofinterest disclosures;
6.
to take care of any other matters assigned to it by the Board of Directors, such as reviewing the Companyûs financial and risk management policies, reviewing compliance with the Code of Corporate Conduct of the management, and reviewing with the companyûs management, all important reports which must be disclosed to the public according to the law (e.g. Management Discussion and Analysis (MD&A), etc.);
7.
to report the activities of the Audit Committee in the companyûs annual report, which must be signed by the chairman of the Audit Committee, and to express in such annual report the Audit Committeeûs opinion on (i) the
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ANNUAL REPORT 2012 - 2013 accuracy and completeness of the procedures for the preparation of the report and information disclosure, (ii) the sufficiency of the internal control system of the Company, (iii) opinion on the suitability of the external auditor and appointment for another term, (iv) the number of Audit committee meetings held in the previous year and the attendance of each member in such meetings, (v) opinion on the connected transactions and any transactions that may lead to conflict of interest (vi) the compliance by the Company with rules and regulations of SET, SEC and other applicable laws, and report on any information that the shareholders and investors should be aware of under the scope of power of the duty that has been assigned by the Board of Director; 8.
to report the performance of the Audit Committee to the Board of Directors at least once every calendar quarter; and
9.
to express its opinion on the performance, appointment, removal and determination of remuneration of the internal auditor.
7.2.3 Management PTL没s senior management during 2012-13 consisted of seven persons as below: 1. Mr. Rohit Kumar Vashistha Managing Director 2. Mr. Vinod Sureka Chief Financial Officer 3. Mr. Manav Singh** Business Head - SARALAM division 4. Mr. Suresh Sundaraman* Head - Operations 5. Mr. Ashish Ghosh Head - Sales & Marketing 6. Mr. Manoj Sinha* Head - Sales & Marketing -Thick PET film 7. Mr. Ramesh Gupta* Business Head - SARALAM division * Joined in the mid of year ** Has been transferred to Polyplex USA LLC as Head of Sales & Marketing. Power and duties of Managing Director 1. to monitor and supervise the day-to-day business operations and management of the Company. 2.
to undertake or perform duties in line with the policy, plan and budget approved by the board of directors and/or the Executive Committee (if any) of the Company.
3.
to perform as the authorized person of the Company in administering the business in line with the objective, regulations, policy, rules, stipulations, orders and resolutions of the meeting of the Board and/or resolutions of the meeting of shareholders.
68 Polyplex (Thailand) Public Company Limited
4.
to appoint and manage the performance of the working committees to ensure benefit and efficiency as well as transparency in management, and be authorized to appoint and/or assign any person to specifically perform on his behalf. Such delegation of power and authority shall come under the purview of such certain authorization letter and/or comply with the regulations, stipulations or orders issued by the board of directors and/or the Company.
5.
to determine mission, objectives, framework and policy of the Company including orders and supervision in overall for optimum benefit in administration.
6.
to follow up and assess the Company没s operational results on a regular basis to cope with both internal and external risks.
7.
to consider and approve expenditure spending in the normal course of business operations, such as transacting with banks regarding deposit accounts or procurement of raw materials for production.
8.
to consider the recruitment and employment of personnel as well as transfer, rotation across functional lines/departments/divisions, or termination of employment of personnel, and determine rate of wages, remuneration, bonus and welfare package relating to personnel.
9.
to issue orders, regulations, announcements and memorandum to ensure the operations come out in line with the policy and for the benefit of the Company as well as to maintain discipline in the organization.
10.
to perform any other duties as occasionally assigned by the Board of Directors.
Power to approve any transactions (i) which may cause a conflict of interest with the Company or its subsidiary; or (ii) in which the interests of the Managing Director or other interested person may be in conflict with the Company or its subsidiary, under the applicable rules and regulations of the SET, do not fall within the scope of the powers and authorities of the Managing Director to act at his/her own discretion or to designate any person to act on his/her behalf. Typically, these transactions need the consideration and approval of the Board of Directors and/or the shareholders没 meeting in accordance with the Articles of Association of the Company and subject to applicable laws. 7.2.4 Role of Company Secretary The Company has appointed Mrs. Supritha Pai Kasturi as the Company Secretary. She is a qualified Chartered Accountant from the Institute of Chartered Accountants of India and has the requisite knowledge and experience to perform this function. She also performs the role of the Secretary to the Board of Directors and to the Audit Committee.
69
ANNUAL REPORT 2012 - 2013 Responsibilities of Company Secretary: ë Arrange the Board of Directorsû Meetings, Audit Committee Meetings and the Shareholdersû Meeting in accordance with the relevant laws and regulations. ë Prepare the Agenda/ supporting documents for the above meetings and ensure that the same is circulated to the concerned members, at least a week in advance of the meeting date, to allow sufficient time to review the documents. ë Prepare the Minutes of all the above Meetings and monitor subsequent compliance with the resolutions of those Meetings. ë Ensure that disclosures of information to regulatory agencies (SET/SEC and other relevant regulatory agencies) are made in accordance with the applicable laws and regulations. ë Execute any additional duties assigned by the Board of Directors from time to time 7.2.5 Selection of members of the board of directors, independent directors and the audit committee The Company has no Nomination Committee to select and nominate any persons to be appointed as directors of the Company. In this regard, the Board will undertake the selection process, taking into account the experience, expertise and competency of the prospective persons and the qualifications required as per the criteria prescribed in the Public Limited Companies Act B.E. 2535 and as announced by the SEC and relevant agencies, as also the provisions of Articles of Association of the company. Nomination will be made at the shareholdersû meeting and election made under the procedures prescribed in the Companyûs regulations as below: I) Selection of members of the Board of Directors a) The Company is required to have a board of directors consisting of at least 5 persons. The board of directors must elect one of their members to be the Chairman and may elect another member to be a Vice-Chairman and any other positions as they see fit. At least one-half of the directors must reside in Thailand. A director need not be a shareholder of the company. b) A meeting of shareholders must elect the directors in accordance with the following procedures and rules:a. Each shareholder has one vote for each share held; b. Each shareholder may exercise the votes in electing one or more persons to be the directors but the votes are indivisible; and
70 Polyplex (Thailand) Public Company Limited
c. The person who obtains the highest votes will be elected as a director in respective order according to the required number of directors, but if two or more persons obtain equal votes, the Chairman must exercise a casting vote. c) At every general meeting of shareholders, one-third (1/3) of the directors, or if it is not a multiple of three, then number nearest to one-third (1/3) must retire from office. d) There must be a drawing by lots to determine the directors retiring on the first and second years following the registration of the company. In each subsequent year, the directors who occupy the position for the longest period must retire. A retiring director is eligible for re-election. II)
Selection of members of the Audit Committee/Independent Director Audit Committee is composed of at least three independent directors with an office term of 2 years. The Company has a policy to select and nominate Audit Committee / Independent director in compliance with the SEC Notification no. KorJor. 12/2543 regarding application for and approval of offering of newly issued shares, with each of whom to have the following qualifications: a) Hold shares not exceeding 5% of the total shares with voting rights of the Company, an affiliated company, a subsidiary company, an associated company or a juristic person that may have conflict of interest, b) Not be an employee or a staff member or an advisor who receives a regular salary or a person with controlling power of the Company, an affiliated company, a subsidiary company, an associated company or a juristic person that may have conflict of interest, c) Not be a person having blood relation or legal relation in the manner of being any family member or spouse thereof of the executives, the major shareholders, the persons with controlling power or any persons to be nominated to the managerial positions or the persons with controlling power of the Company or a subsidiary company. d) Have no business relation with the Company, an affiliated company, a subsidiary company, an associated company or any juristic person that may have conflict of interest in the manner that may hinder the use of individual没s independent judgment, and have no other nature that will hinder the individual没s provision of independent opinions relating to the Company没s operations.
71
ANNUAL REPORT 2012 - 2013 In addition, at least one independent director appointed as an Audit Committee member must have sufficient knowledge and experience in finance and accounting areas so that he/she can review the reliability of the financial statements. Other qualifications must also be taken into account, comprising business experience, expertise in the field related to the business and ethical qualifications, to ensure maximum benefits to the Company. The appointment of Audit Committee members is subject to the same criteria and procedures as those in the appointment of directors of the Board. The vacating Audit Committee member upon completion of his/her office term of 2 years may be re-appointed by the Board of Directors for another term. In the event that there is a vacancy on the grounds other than the completion of office term, the Board shall select and appoint the person who possesses the required qualifications to fill the vacancy to complete the number of the Audit Committee members as prescribed by the Board. The newly appointed Committee member shall be in the office only for the remaining period of the office term of the vacating member. 7.2.6 Remuneration for management a. Monetary remuneration Directors Before the transformation into a public company, PTL had five directors. These directors did not receive any meeting allowance from the Company. Since transformation into a Public Company in 2004, the Company has 8 Directors on the board. Until FY 2007-08, the Directors had renounced their right to receive any remuneration. However, from FY 2008-09, the independent directors are receiving remuneration as approved by the shareholders in the Annual General Meeting of the Company. For the FY 2012-13, The actual remuneration paid to the Independent Directors for FY 2012-13 is Baht 4,200,000 as against the amount approved in the Shareholder meeting of Baht 4,200,0000. Details of the same are given under: S.No
Name of Director
1 2 3 4
Mr. Manu Leopairote Dr. Virabongsa Ramangkura Mr. Praphad Phodhivorakhun Mr. Shiraz Erach Poonevala
Amount Approved (Baht) Actual Paid (Baht) Baht 125,000 per month Baht 75,000 per month Baht 75,000 per month Baht 75,000 per month
Baht 1,500,000 Baht 900,000 Baht 900,000 Baht 900,000
Note: The total payment made in FY 2012-13 is Baht 5,250,000 which includes the remuneration of Baht 1,050,000 for Jan没12-Mar没12 period, paid in May 2012.
72 Polyplex (Thailand) Public Company Limited
In addition to the above remuneration, meeting sitting fees of Baht 10,000 per meeting attended has been paid to the Audit Committee members, which is as per the amount proposed and approved in the Shareholder meeting in July 2012. For the FY 2013-14, it is proposed to fix a remuneration of Baht 75,000 per month, same as in the previous year, to all the independent directors as mentioned below: 1. 2. 3. 4.
Mr. Manu Leopairote Dr. Virabongsa Ramangkura Mr. Praphad Phodhivorakhun Mr. Shiraz Erach Poonevala
Mr.Manu Leopairote, in his capacity as the Chairman of the Board of Directors and the Chairman of the Audit Committee would be entitled to an additional remuneration of Baht 25,000 per month, for each role. For the Audit Committee, each member would be entitled to a sitting fee of Baht 10,000 per meeting attended. The above remuneration package, to the Independent directors and Audit committee members, would be proposed to the Shareholder meeting to be held in July 2013 for their consideration and approval. The remuneration details of the senior management, including 1 executive director of PTL is as below : Remuneration (In ù000 Baht) 2008/09 2009/10 2010/11 2011/12 2012/13 (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) Number of executives Salaries (In ù000û Baht) Bonus and Others (In ù000û Baht) Total
6 9,389 8,199
6 9,753 10,325
4 7,611 10,292
5 10,054 19,257
7* 11,113 14,576
17,588
20,078
17,904
29,311
25,689
* Including some persons for part of the year only
73
ANNUAL REPORT 2012 - 2013 b.
Other remuneration Directors None Executives None
7.2.7 Personnel As of March 31, 2013, PTL had a total workforce of 577 persons, 536 of whom are personnel at the plant in Rayong Province and 41 at the head office in Bangkok. The Company also has 52 expatriates, 13 of whom are at the head office in Bangkok and the remaining 39 in Rayong. Department
1. 2. 3. 4. 5. 6. 7. 8. 9 10. 11.
Executives Production Commercial, IT,Personnel & Admn. Sales and Marketing Chips plant Metallizer Extrusion Coating Cast Polypropylene Project Silicone Coating Project PET Thick Film Project Blown PP Film Project Total
Number of employees As of As of As of As of As of Mar 31, Mar 31, Mar 31, Mar 31, Mar 31, 2009 2010 2011 2012 2013 6 137 47 18 23 37 38 2
7 162 35 21 21 37 53 51
4 161 37 25 22 37 46 56 23
308
387
411
5 171 42 24 21 35 55 52 55 6 1 467
7 180 46 26 34 35 70 53 54 70 2 577
Employee (non-executive) remuneration (Bt. thousand) Remuneration No. of employees Salaries & Wages Overtime pay Bonus Provident fund* Others Total
2008/09 2009/10 2010/11 2011/12 2012/13 (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) 302 71,072 6,655 16,233 1,841 42,303 138.104
380 78,272 7,350 15,408 2,102 47,183 150,316
407 462 101,857 111,450 11,206 13,527 27,941 26,182 2,489 2,928 55,705 62,883 199,198 216,770
570 151,656 18,120 30,851 4,338 79,809 284,774
* The Company started contributing to the provident fund since September 2004. The contribution of the employee and employer was 4% until FY 2010-11. Since 2011-12, the company revised the PF contribution rates and depending on the length of service, company没s contribution is now in the range of 4-7%.
74 Polyplex (Thailand) Public Company Limited
There has been no labor dispute for the past years. HRD Policy The company realizes the importance of its staff as they are valuable assets and play a major role in the success and growth of the company. Therefore it has a policy to develop the efficiency, knowledge and skills of its staff at all levels by having well organized training programs on a periodic basis. Training programs are designed to improve various aspects of work life like technical competence, team building, and enhancement of leadership skills, time management skills etc thereby improving the quality of the working life of the employees. Feedback of employees participating in such trainings is taken in order to help improvement of quality of seminars and trainings to be conducted in future.
75
ANNUAL REPORT 2012 - 2013
8. Good Corporate governance & Internal Control 8.1 Corporate governance 8.1.1 Policy on Corporate governance Polyplex realizes the significance of good corporate governance and makes every effort to implement the Corporate Governance principles laid down by the Stock Exchange of Thailand. The company has firm belief in transparency, accountability and ethical conduct in carrying out its operations. Accordingly, the Company has formulated a policy which emphasizes regular disclosures to the public and the shareholders. In addition, the Company adopts strict internal controls and audits in recognition of their importance. It also has several risk management policies, keeping in mind a good relationship and business ethic towards business partners, shareholders and all concerned parties. 8.1.2 Rights of shareholders The Company recognizes the importance of equal rights of all shareholders and considers all the shareholders as owners of the Company irrespective of the percentage of shares owned. The Company has a policy to report to shareholders regularly on progress of operations, either directly or through the Stock Exchange of Thailand or through information on its website after listing. Shareholders will be given fourteen days advance notice of all shareholder meetings, including the meeting agenda and related information. The shareholders would be encouraged to participate in the general meetings and their views and comments would be noted and followed up. In accordance with the good governance practice relating to equitable treatment of shareholders, the company also invites the shareholders to propose additional agenda for the Annual general meeting of the shareholders and gives sufficient time (about 30 days) to propose the Agenda. The shareholders also have the following rights which are exercised in the Annual Shareholding meetings: ĂŤ Re-appointment of Directors retiring by rotation and approval of the Director remuneration ĂŤ Approval of Auditor appointment and remuneration ĂŤ Approval of dividend payment
76 Polyplex (Thailand) Public Company Limited
8.1.3 Rights of stakeholders PTL has always provided equal importance to the requirements of all its stakeholders as under: ë Personnel: PTL considers all its personnel to be valuable assets, critical to the success and growth of the organization. The Company is committed to providing a quality oriented work environment, with special emphasis on safety, along with fair and equitable remuneration. Apart from basic salary, Performance linked Bonus, Provident Fund contribution and Social Security Contribution, the Company also provides certain other benefits to its employees such as Overtime pay, Housing Allowance, Transport Allowance, Telephone allowance, Medical Insurance, Life Insurance coverage etc. ë
Business partners: It has always been the policy of PTL to develop long standing and growing relationships with all its business partners based on mutual benefit and guided by good business ethics. The company values the long standing relationship with its business partners, whether it is the banks that support the trade finance and project financing requirements of the Company, or the strong Distributors/Agent network across various parts of the globe, which help in market development and ensure smooth continuity of the business operations for the company.
ë
Competitors: PTL will always abide by the framework of fair competition and would work towards market development and growth to the mutual benefit of the industry.
ë
Creditors: To abide by the loan covenants and provide all information about the progress of the Company to its creditors as may be required for smooth business dealings.
ë
Customers: PTL is committed to creating customer satisfaction by ensuring consistency in the quality of its products and offering value proposition to its global customer base.
ë
Shareholders: PTL strives to conduct its business in a transparent and efficient manner with a view to constantly strive to enhance shareholder value. New project investments will be evaluated prudently to ensure good returns and increase value to the shareholders.
77
ANNUAL REPORT 2012 - 2013 ë
Community/Society: PTL realizes and cares for the safety of society, environment and quality of life of people. It places priority on activities relating to the community and the society and also by compliance of applicable laws and regulations relating to the same. During FY 2012-13, the company organized Blood donation camps and encouraged employees to donate blood, organized Seedling plantations to promote nature conservation and gave donations to Orphanage.
8.1.4 Shareholdersû meetings The Company has a policy to enable shareholders to attend meetings without undue effort. It endeavors to organize the shareholdersû meeting with equitable treatment for all participants and in strict accordance with legal procedures, from meeting invitations, proxy form for those who are unable to attend the meeting, and distribution of meeting documents to inform all concerned of the meeting agendas. The meeting venue and time will be convenient while the meeting session will allow adequate time for shareholders to ask questions on business operations or voice their opinion. 8.1.5 Leadership and vision The Board of Directors is the forum for review of plans, vision, strategies and key policies. Elaborate budgets have been formulated for all functional areas in the Company and a system of Key Result Areas (KRAs) has also been implemented for each department and individual as also at the corporate level to align interests and priorities across the organization. The Board of Directors would play a leading role in regular review of the actual operations vis-à-vis budgets as well as other key perf ormance indicators.
78 Polyplex (Thailand) Public Company Limited
8.1.6 Conflict of interest The policy is based on the principle that any decision to be made by personnel at all levels in business operations must be in the best interest of the Company. It is the duty of all personnel to avoid any transactions and/or dealings which could result in financial losses to the Company and result in personal monetary benefit. The Audit Committee is entrusted to watch over and review the internal controls and audit function to ensure their efficiency and also ensure adequate disclosures to be made as per the SEC/SET guidelines. 8.1.7 Business ethics PTL has a code of conduct for all personnel who emphasize observance of ethical practices, honesty and accountability. Responsibility towards all stakeholders and external agencies is encouraged in order to foster a good corporate culture and social responsibility. 8.1.8 Check and balance by non-executive directors The Company has altogether eight directors as detailed below: Status Shareholders没 representative Directors Independent Directors
Executive Directors 1 -
Non-Executive Audit Directors Committee 3 1
3
8.1.9 Integration or delegation of title and authority The Chairman of the Board of Directors is an independent director and is also the Chairman of the Audit Committee. Independent directors constitute 50% of the Board of Directors and thus composition of the Board would ensure fair and effective management monitoring. The Managing Director is the CEO in charge of day-to-day operations and has specified powers with certain key decisions requiring approval by the Board of Directors. 8.1.10 Remuneration for directors and executives The remuneration of the Board of Directors and the Audit Committee is proposed to the Shareholder meeting for their consideration and approval. The Managing Director没s remuneration is fixed by the Board of Directors in discharge of duties as the CEO of the Company. The remuneration of the management is open for review by the shareholders who may set the appropriate policies and guidelines on this matter.
79
ANNUAL REPORT 2012 - 2013 8.1.11 Board meetings The meetings of the Board of Directors are usually convened at least once every quarter to review the operations / quarterly financial results and other matters. There were six Board meetings conducted during the FY 2012-2013.Attendance of directors is as follows: Name Mr. Manu Leopairote Dr. Virabongsa Ramangkura Mr. Shiraz Erach Poonevala Mr. Sanjiv Saraf Mr.Rohit Kumar Vashistha Mr. Praphad Phodhivorakhun Mr. Pranay Kothari Mr. Manish Gupta
Position Board Chairman & Audit Committee Chairman Director & Audit Committee member Director & Audit Committee member Vice Chairman of the Board Managing Director Director Director Director
Attendance 6/6 5/6 6/6 1/6 6/6 5/6 3/6 3/3*
* Attendance for meetings held after 31st October, 2012, after being appointed as a Director in the place of Mr. Ranjit Singh who retired.
8.1.12 Supporting committees or sub-committees The Board of Directors has recommended and shareholders have approved an Audit Committee consisting of three independent directors. The Audit Committee members have the requisite qualifications under the relevant SET rules & guidelines. The powers and allocation of work have been clearly defined by the shareholders and include review of internal control systems, review of financial reports, connected transaction or transaction involving conflict of interest. The term of the Audit committee is 2 years and may be renewed by the Board of Directors every 2 years. 8.1.13 Internal control and audit system The Board of Directors exercises control through setting of annual budgets and operational objectives, periodical review of which is done from time to time. Meanwhile, the Audit Committee oversees the internal controls and audit in the Company and suggests measures for improvement. 8.1.14 Board of Directors没 report The Board of Directors is responsible for the Company没s financial statements. As a part of the annual report, the directors have commented on the financial results of the Company.
80 Polyplex (Thailand) Public Company Limited
8.1.15 Relationship with investors The Company places significance on the timely disclosure of accurate information to its shareholders and investors. It participates in the SET Opportunity day to disseminate information about the Company and its operations to investors and analysts. The company also organizes factory visit for the shareholders, analysts and potential investors, through the SET. In the FY 2012-13, the factory visit had to be postponed due to the several ongoing expansions at the factory site. The company plans to organize the visit in the Julyû13-Septû13 quarter. As regards investor relations, the Company has a well-developed IR section in the company website. Investor queries can be sent to the IR website (investorrelations@polyplexthailand.com) and will be responded to by the management of PTL. The Investors/ Analysts can also register their e-mail IDûs and receive an IR alert message, when any information is updated on the Companyûs website. Further information regarding the Company may be obtained by contacting at tel. +66 26652706 - 8. Measures to prevent use of internal information for executivesû personal benefit The Company has a policy on supervision of usage of internal company information by its directors and management for their own benefit. The directors and management who come to possess internal company information are not permitted to buy or sell the securities of the Company for a specified period prior to its announcement of operating results.
8.2 Internal Controls At the 3/2013 board of directorsû meeting of PTL held on May 27, 2013 with all three audit committee members also attending, the board assessed PTLûs internal control by means of making inquiries with its management. Based on the assessment of PTLûs internal control system in five aspects, namely organization and environment, risk management, control of the executivesû operation, information technology system & information communication and follow-up system, the board viewed that PTL has adequate internal control with regard to the making of transaction with its major shareholders, directors, executives, or persons connected with the above mentioned persons. The board considered that the Companyûs adequate and appropriate internal control and follow-up of the operations would be able to safeguard its assets against any illegitimate use by the executives.
81
ANNUAL REPORT 2012 - 2013
8.3 Connected Transactions 8.3.1 A summary of the connected transactions between PTL and the connected parties during the past three years is as follows Party having conflict of interest
Relationship
Description of transaction
Transaction Amount (Million THB) Pricing policy 2010-11 2011-12 2012-13
Polyplex PCL is the PCL made advance Corporation Companyûs major payments on behalf of the Ltd. (PCL) shareholder, Company for administrative owning directly and expenses, which were indirectly the 51% mainly travelling expenses of the Companyûs of employees, share capital and accommodations for the two parties employeesû family, have common educational fees for directors. employeesû children, insurance claims of employees, insurance premium payments, project related expenses etc. The Company has given the appropriate accounting treatment to these expenses and/or collected these amounts from the employees and paid them back to PCL.
The price of the transaction between PCL and the Company was a normal price in general business practice and was the price as actually paid by PCL in advance for the Company without any extra charge by PCL.
1.2
6.9
24.1
Polyplex PCL is the PTL made payments on Corporation Companyûs major behalf of PCL, which were Ltd. (PCL) shareholder, mainly traveling and other owning directly and expenses of PCL indirectly the 51% employees and their of the Companyûs families. share capital and the two parties have common directors.
The price of the transaction between PCL and the Company, PR and PE was a normal price in general business practice and was the price as actually paid in advance without any extra charge.
0.1
0.1
0.14
Polyplex PCL is the Purchase of Raw material Corporation Companyûs major - Polyester Chips and Ltd. (PCL) shareholder, Polyester Film by all the owning directly and subsidiaries of PTL indirectly the 51% including PTL of the Companyûs share capital and the two parties have common directors.
As per Transfer 1,052.2 Pricing policy of PCL (Study done by Ersnt & Young and TNMM [Transactional Net Margin] Method recommended for Transfer pricing
806.9
533.8
82 Polyplex (Thailand) Public Company Limited
Party having conflict of interest
Relationship
Description of transaction
Transaction Amount (Million THB) Pricing policy 2010-11 2011-12 2012-13
Polyplex PCL is the Sale of Raw material Corporation Companyûs major Polyester Chips to PCL Ltd. (PCL) shareholder, from PTL owning directly and indirectly the 51% of the Companyûs share capital and the two parties have common directors.
For Sale of Chips to PCL, as per Transfer Pricing policy of PCL (Study done by Ersnt & Young and TNMM [Transactional Net Margin] Method recommended for Transfer pricing.
Polyplex (Asia) Pte Ltd (PAPL)
PAPL is the Payment of interest by Companyûs major Polyplex Resins Sanayi Ve shareholder, Ticaret A.S, on the loans owning directly borrowed from PAPL 34.5% of the Companyûs share capital and the two parties have a common director.
Loans carried a fixed interest rate of 4.5% pa until September 2012, but have been made interest free w.e.f 1st October 2012.
Polyplex (Asia) Pte Ltd (PAPL)
PAPL is the Acquisition by Polyplex At cost to PAPL Companyûs major Europa Polyester Film shareholder, Sanayi Ve Ticaret A.S, owning directly from PAPL, a 67% stake 34.5% of the in Polyplex Resins Sanayi Companyûs share Ve Ticaret A.S capital and the two parties have a common director.
-
-
36.6
3.9
-
-
244
8.3.2 Necessity and reasonableness of the connected transaction The connected transaction involved the advance payments made by PCL on behalf of the Company and its subsidiaries for administrative expenses. The payments were made for such expenses as transportation, accommodations for employeesû family, educational fees for employeesû children, insurance claims of employees, project related expenses etc. The Company and its subsidiaries have given the appropriate accounting treatment to these expenses and/or collected these amounts from the employees and paid them back to PCL. The reimbursement of advances/expenses was to PCL was at the actual prices incurred without any extra charge by PCL. The connected transaction also involved the advance payments made by the Company and its subsidiaries on behalf of PCL for administrative expenses, which were later re-imbursed by PCL.
83
ANNUAL REPORT 2012 - 2013 During the year, the connected transaction also involved some purchases of Raw materials i.e Polyester Chips and Polyester Film from PCL. All purchases were made at Armûs Length Pricingas recommended in the Transfer Pricing study carried out by external agencies at various locations. Apart from the above, the connected transactions during the year also involved the acquisition by Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S.(çPEé), of 67% of shares of Polyplex Resins Sanayi Ve Ticaret A.S (çPRé), Turkey, from Polyplex (Asia) Pte Ltd (çPAPLé). PAPL is holding 34.5% stake in the Company and this transaction is hence, considered to be a connected party transaction as per SEC guidelines. All disclosures and compliances in relation to the SEC and SET guidelines for connected party transaction have been complied with. The interested Directors abstained from voting on this Agenda relating to the connected transaction. The Audit Committee and the Board of Directors are of the opinion that the entry into this transaction is reasonable and at a fair value and would enable shareholders of PTL to benefit from this new business opportunity and also diversify the risks and cyclicality associated with Polyester Film industry. 8.3.3 Measures or procedures for approval of the connected transaction The audit committee of PTL has examined the connected transaction described in the table above and viewed that it is in accordance with the normal business practice. For the transaction of share acquisition described above, which is not a normal business transaction, prior approval of the Board of Directors was taken before execution of the transaction. For all normal business transactions in the future such as purchase and sale of material, reimbursement of expenses, the Company can undertake the transactions and inform the audit committee and the Board of Directors on a quarterly basis. For any other future connected transactions, which are not normal business transactions, the Company will assign the concerned units to gather the relevant information and provide it to the audit committee to be used as a basis for its consideration on those transactions as to whether they are consistent with the normal business practice and the market price. The Company would ensure that it follows the applicable regulations of the SEC and SET in this regard. The audit committee has to consider and inform the board of directors for the approval. The directors who have a conflict of interest may not partake in the giving of comments on those connected transactions.
84 Polyplex (Thailand) Public Company Limited
8.3.4 Policy for potential connected transactions For any connected transactions that may take place in the future, the Company has a policy to set appropriate conditions on the said transactions based on the reasons and necessity of the Company. The connected transactions performed over the past period were advance payments, made for such expenses as transportation, accommodations for employees没 family, educational fees for employees没 children, insurance claims of employees etc and also some raw material procurements as explained above. There were no extra charges by the parent company regarding such cost and expenses as brand name and R & D, and so on. In performing any future connected transactions, PTL board of directors will comply with the law governing securities and exchange and the regulations, notifications and orders of the Stock Exchange of Thailand, as well as the regulations regarding disclosure of information about connected transactions and acquisition or disposal of core assets of companies or subsidiary companies according to the accounting standards defined by the Institute of Certified Accountants and Auditors of Thailand. Where the connected transaction involves any person who may have a conflict of interest, the Company will arrange for the audit committee to give opinion on the necessity and appropriateness of that transaction. In case the audit committee has no expertise in any such transaction, the Company will have an independent expert or its external auditor provide opinion on that transaction to be used as a basis of decision-making by the board of directors or the shareholders, as the case may be. The Company will disclose such connected transactions in the notes to the financial statements duly audited by its external auditor.
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ANNUAL REPORT 2012 - 2013
9. Financial Position and Operational Performance 9.1 Financial statements Auditor Year
Name of auditor
CPA no.
Auditing firm
2012/13 (April 1, 2012Mar 31, 2013) 2011/12 (April 1, 2011-Mar 31, 2012) 2010/11 (April 1, 2010-Mar 31, 2011) 2009/10 (April 1, 2009-Mar 31, 2010) 2008/09 (Apr 1,2008-Mar 31, 2009)
Mr. Termphong Opanaphan Mr.Narong Puntawong
4501
Ernst & Young Office Limited
3315
Ernst & Young Office Limited
Mr.Narong Puntawong
3315
Ernst & Young Office Limited
Mr.Narong Puntawong
3315
Ernst & Young Office Limited
Mr.Narong Puntawong
3315
Ernst & Young Office Limited
Auditor没s report For all the past years, including the year ended on March 31st 2013, the Auditors have given an unqualified opinion that the financial statements were fairly presented and prepared in accordance with generally accepted accounting principles. The financial statements of last 3 years, for both Consolidated and Standalone, latest being the year ended on 31st March 2013, have been given for the purpose of comparison and for the appreciation of the change in revenues and profitability over the years.
86 Polyplex (Thailand) Public Company Limited
87
Assets Current Assets Cash and cash Equivalents Current investments Accounts receivable Amounts due from related party Inventories Other current assets Total Current Assets Non-Current Assets Restricted bank deposits Investment in subsidiary Land, premises and equipment-net Intangible assets-net Advance payment for purchases of assets Other non current assets Total Non-current Assets Total Assets 1,313,492 20.96 3,118,711 49.77 344,485 5.50 8,604 0.14 4,785,292 76.36 6,266,650 100.00
1,231,009 164,947 1,896,159 221,816 1,732,304 212,333 5,458,568
10.32 1.38 15.89 1.86 14.52 1.78 45.74
2010/2011 April-March Amount %
1,681,810 0 1,396,692 1,623,792 414,624 5,116,918
14.09 11.70 13.60 3.47 42.86
Consolidated 2011/2012 April-March Amount %
1,355,547 16.71 0 0 4,997,595 61.61 5,979,206 50.11 6,360,049 53.27 5,228 0.04 5,882 0.05 37,504 0.46 0 - 447,472 3.75 14,647 0.18 489,899 4.11 8,650 0.07 6,405,292 78.96 6,474,333 54.26 6,822,053 57.14 8,111,987 100.00 11,932,901 100.00 11,938,970 100.00
0.94 0.96 9.38 8.28 1.48 21.04
2012/2013 April-March Amount %
0.47 75,923 78,000 12.86 760,558 9.01 672,036 1.30 120,178 23.64 1,706,695
Unconsolidated 2011/2012 April-March Amount %
0.58 29,641 2.26 0 16.17 805,876 6.45 564,604 1.82 81,238 27.27 1,481,359
1,936,415 26.51 3,115,042 42.65 0 260,825 3.57 5,312,282 72.73 7,304,139 100.00
42,042 164,947 1,181,339 470,777 132,752 1,991,857
2010/2011 April-March Amount %
Polyplex (Thailand) Public Company Limited Balance Sheet
8.92 0.57 8.41 10.58 1.18 29.66 11,864 0.07 0 11,447,677 69.56 10,175 0.06 90,620 0.55 14,647 0.09 11,574,983 70.34 16,456,565 100.00
1,468,337 94,001 1,384,382 1,741,438 193,424 4,881,582
2012/2013 April-March Amount %
Unit: Bt. 000没s
Liabilities & Shareholdersû Equity Current Liabilities Accounts payable Long-term loans-due within one year Short-term loans from financial institutions Income tax payable Other current liabilities Total current liabilities Non-current Liabilities Long-term loans from related party Long-term loans-net of amount due within one year Other non-current liabilities Total Liabilities Shareholderûs Equity Issued & Paid-up Share Capital Ordinary shares Premium on ordinary shares Other components of shareholdersû equity Legal Reserve Retained earnings (deficits) Total Shareholdersû Equity Minority Interest Total Liabilities and Shareholdersû Equity
88 Polyplex (Thailand) Public Company Limited 29.60 0.10 50.24 800,000 4.86 1,370,460 8.33 (817,780) (4.97) 96,000 0.58 6,639,743 40.35 8,088,423 49.15 100,836 0.61 16,456,565 100.00
10.47 4,871,709 0.08 16,511 29.13 8,267,306
2.62
430,732
800,000 6.70 1,370,460 11.48 (348,087) (2.92) 96,000 0.80 6,401,772 53.62 8,320,145 69.69 140,457 1.18 11,938,970 100.00
12.61 1,250,517 0.03 9,768 29.13 3,478,368 800,000 6.70 1,370,460 11.48 (316,111) (2.65) 96,000 0.80 6,381,607 53.52 8,331,956 69.69 26,380 0.22 11,932,901 100.00
31.59 1,504,733 0.09 7,627 50.53 3,574,566
800,000 9.86 1,370,460 16.89 96,000 1.18 1,746,617 21.53 4,013,077 49.47 8,111,987 100.00
18.45 2,562,418 0.10 7,441 35.04 4,098,911
7.16 2.77 6.35 0.00 1.64 17.92
2012/2013 April-March Amount %
Unit: Bt. 000ûs
11.21 1,178,378 3.05 455,194 2.74 1,044,440 0.17 71 1.41 270,272 18.58 2,948,354
Consolidated 2011/2012 April-March Amount %
10.82 1,338,066 3.24 363,760 1.63 326,745 20,891 1.59 168,621 17.28 2,218,083
2010/2011 April-March Amount %
8.20 1,290,564 4.58 387,200 4.75 194,484 1.33 189,958 18.85 2,062,206
2012/2013 April-March Amount %
9.61 665,078 4.34 371,427 1.28 385,000 1.26 107,546 16.49 1,529,051
800,000 12.77 1,370,460 21.87 96,000 1.53 1,804,261 28.79 4,070,721 64.96 6,266,650 100.00
15.34 1,156,340 6,052 31.55 2,195,930
1,120,200 2,304,191
800,000 10.95 1,370,460 18.76 96,000 1.31 2,733,489 37.42 4,999,949 68.45 7,304,139 100.00
11.25 602,327 3.50 271,996 80,000 1.46 79,215 16.21 1,033,538
Unconsolidated 2011/2012 April-March Amount %
821,531 256,001 106,458 1,183,990
2009/2010 April-March Amount %
Polyplex (Thailand) Public Company Limited Balance Sheet
ANNUAL REPORT 2012 - 2013
89
Revenues Net sales Other revenues Gain on foreign exchange Total Revenues Costs and Expenses Cost of sales Selling and administrative expenses Loss of foreign exchange Total Expenses Profit (loss) before interest expenses Interest expenses Income Tax Net profit (loss) after income tax Net loss of minority interest Net profit (loss) Earnings (losses) per share (Bt.)
Unconsolidated 2011/2012 April-March Amount % 2012/2013 April-March Amount %
2010/2011 April-March Amount %
Consolidated 2011/2012 April-March Amount %
2012/2013 April-March Amount %
Unit: Bt. 000没s
3,104,616 332,051 3,436,667 1,678,333 (35,565) 1,642,767 1,642,767 2.05
60.70 3,831,385 6.49 333,606 - 221,776 67.19 4,386,767 32.81 469,195 (0.70) (34,054) 32.12 435,142 32.12 435,142 0.54
78.90 3,941,030 6.87 372,804 4.57 90.34 4,313,834 9.66 124,329 (0.70) (45,973) 8.96 78,356 8.96 78,356 0.10
88.80 8.40 97.20 2.80 (1.04) 1.77 1.77 -
6,502,517 803,993 7,306,510 4,013,659 (92,728) (27,882) 3,893,049 (10,164) 3,882,885 4.85
57.44 7.10 64.54 35.46 (0.82) (0.25) 34.39 (0.09) 34.30 -
7,831,563 858,032 125,979 8,815,573 1,448,234 (56,210) (34,187) 1,357,838 (230) 1,357,608 1.70
76.30 7,874,168 8.36 1,159,101 1.23 85.89 9,033,270 14.11 461,916 (0.55) (86,806) (0.33) (11,658) 13.23 363,452 (0.00) 10,520 13.23 373,971 0.47
82.93 12.21 95.14 4.86 (0.91) (0.12) 3.83 0.11 3.94 -
4,980,737 97.38 4,560,647 93.92 4,205,440 94.76 11,183,174 98.79 10,143,111 98.82 9,230,018 97.21 58,745 1.15 295,316 6.08 58,886 1.33 106,586 0.94 120,697 1.18 87,768 0.92 75,517 1.48 - 173,836 3.92 30,410 0.27 - 177,399 1.87 5,115,000 100.00 4,855,962 100.00 4,438,162 100.00 11,320,169 100.00 10,263,808 100.00 9,495,185 100.00
2010/2011 April-March Amount %
Polyplex (Thailand) Public Company Limited Statement of Income and Retained Earnings
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited Cash Flow Statement Unit: Bt. 000没s Unconsolidated Consolidated 2010/2011 2011-2012 2012-2013 2010/2011 2011-2012 2012-2013 April-March April-March April-March April-March April-March April-March Cash flow from operating activities Profit before tax Adjustments to reconcile profit of net cash provided by operating activities Depreciation and amortization Doubtful debts (doubtful debts recovery) Allowance for diminution in value of inventories (reversal) Dividend income Interest Expense Unrealized losses (gains) on foreign exchange Exchange loss on the redemption of investment in subsidiary Provision for long-term employee benefits Gains on sales of current investments Loss (gain) from disposal of F/A Profit (Loss) from operation before changes in operating assets and liabilities Accounts receivable Balance due from a related company Inventories Other current assets Other non-current assets Accounts payable Other current liabilities Payment of long-term employee benefits Income tax paid Cash flow from (used in) operating activities
1,642,767
435,142
78,356
3,920,931
1,392,024
375,109
190,413
196,282
234,512
357,538
369,432
411,977
(233)
(25)
-
783
279
3,720
(17,289) (9,858) 33,934
2,720 (217,596) 33,003
13,192 (9,484) 44,981
(17,289) 76,002
2,720 45,147
13,192 55,832
(99,795)
20,508
(142,670)
(97,579)
19,969
(150,338)
37,407
253,268
-
-
253,268
-
(472) (402)
1,682 (3,538) -
1,673 (539) 13,811
(472) (610)
7,270 (3,538) (2)
12,905 (539) 26,070
1,776,472 (528,037)
721,445 371,036
233,834 30,498
4,239,304 (723,653)
2,086,570 496,000
747,928 444
(41,599) (89,258) 3,994 156,367 26,492
(96,548) 51,514 1,222 (78,613) (27,381)
(120,625) (27,331) (6,043) 46,860 24,879
(161,170) (598,525) (105,941) 3,997 281,323 38,614
105,741 22,992 1,221 (56,597) 5,730
(130,693) 219,309 (5,996) 68,428 108,648
-
-
(283) -
(1,199) (14,624)
(4,988) (42,530)
(5,524) (30,601)
1,304,431
942,676
181,788
2,958,128
2,614,138
971,944
90 Polyplex (Thailand) Public Company Limited
Polyplex (Thailand) Public Company Limited Cash Flow Statement Unit: Bt. 000没s Unconsolidated Consolidated 2010/2011 2011-2012 2012-2013 2010/2011 2011-2012 2012-2013 April-March April-March April-March April-March April-March April-March Cash flow from Investing activities Decrease (Increase) in restricted bank deposits Decrease (increase) in current investments Decrease (increase) in investments in subsidiaries Dividend from subsidiary Increase in advance payment for purchases of assets Increase (decrease) in accounts payable for purchases of fixed assets Purchases of property, plant and equipment Proceeds from sales of property, plant and equipment Increase in intangible assets Net cash used in investing activities Cash flow from financing activities Interest Paid Increase (Decrease) in short term loans from financial institutions Increase in long-term loans from related party Increase/(decrease) in long-term loans Dividend paid to minority shareholders Cash receivable capital increase Dividend payment Dividend paid to non-controlling interests of subsidiary Cash received from non-controlling interests of subsidiaries Cash provided from financing activities Currency Translation changes Increase in cash and cash equivalents Cash and cash equivalents at the beginning of period (April 1) Cash and Cash equivalents at the end of period (March 31)
-
-
-
-
-
(11,864)
(164,475)
168,485
(77,461)
(164,475)
168,485
(93,462)
139,665 9,858
369,655 217,596
(42,055) 9,484
-
-
(266,837) -
(182,321)
(93,486)
306,981
(411,349)
32,556
356,851
-
(145,631)
18,539
161,359
(145,631)
19,780
(192,207) (2,110,207)
(760,722)
(914,563) (5,898,755)
623 1,718 (731) 324,412 (1,894,096) (1,174,201)
70,089 15,209 (1,433) (5,275) (790,497) (5,884,353)
(676,237) 411 (711,739) (34,285)
(40,538)
(58,875)
(74,766)
(54,135)
(134,916)
(50,000)
80,000
305,000
142,218
132,261
717,695
36,838
41,049
1,648,465
(778,852)
(275,697)
430,732 3,987,139
(612,000) (1,360,000)
(136,000)
(278) 349,546 (612,000) (1,360,000)
(136,000)
-
-
-
-
(2,187)
(543)
-
-
-
-
-
9,033
1,758,590 (1,323,679) (1,210,213) 59,342 (162,626) 46,282 519,590 450,801
4,873,141 (174,205) (213,473)
(659,447) (1,279,489) (66,755) (12,401) 108,797
42,042
29,641
711,418
1,231,009
1,681,810
42,042
29,641
75,923
1,231,009
1,681,810
1,468,337
91
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited Financial Statement Unit: Bt. 000没s Unconsolidated Consolidated 2010/2011 2011-2012 2012-2013 2010/2011 2011-2012 2012-2013 April-March April-March April-March April-March April-March April-March Liquidity Ratios Current ratio Quick ratio Cash flow current ratio Receivable current ratio Avg. debt collection period Inventory turnover period Avg. selling period Payable current ratio Loan repayment period Cash cycle Profitability Ratios Gross profit margin Operating profit margin Other profit margin Cash to profit margin Net profit margin Return on equity Efficiency Ratios Return on assets Return on fixed assets Asset turnover Financial Policy Ratios Debt to equity ratio Interest coverage ratio Commitment coverage ratio (cash basis) Pay out ratio
(time) (time) (time) (time) (day) (time) (day) (time) (day) (day)
1.68 1.17 1.29 5.46 65.99 88.87 4.05 5.73 62.78 7.25
1.43 0.81 0.85 4.59 78.43 97.18 3.70 6.27 57.40 24.73
1.12 0.60 0.14 5.37 67.05 78.84 4.57 6.22 57.89 13.73
2.65 1.60 1.66 7.30 49.31 15.68 22.96 6.86 52.50 19.77
2.31 1.39 1.22 6.16 58.44 14.37 25.05 7.18 50.16 33.32
1.66 1.00 0.38 6.64 54.24 14.84 24.27 6.93 51.95 26.56
(%) (%) (%) (%) (%) (%)
37.67% 31.42% 1.15% 74.53% 32.12% 36.63%
15.99% 8.68% 6.08% 123.80% 8.96% 9.59%
6.29% -2.58% 1.33% 91.23% 1.77% 1.94%
41.85% 35.10% 0.94% 69.25% 34.30% 58.06%
22.79% 14.33% 1.18% 141.20% 13.23% 16.14%
14.69% 2.13% 0.92% 98.12% 3.94% 4.49%
(%) (%) (time)
24.63% 63.83% 0.77
6.41% 20.26% 0.72
1.09% 7.71% 0.62
37.34% 73.13% 1.09
11.37% 27.99% 0.86
2.63% 8.83% 0.67
(time) (time)
0.46 52.54
0.54 19.54
1.02 7.81
0.43 47.03
0.42 32.33
1.02 10.19
(time) (%)
1.50 40%
2.10 31%
0.08 31%
2.44 40%
2.01 31%
0.16 31%
92 Polyplex (Thailand) Public Company Limited
9.2 Explanation and analysis of operational performance and financial status 9.2.1 Operational performance PTL, a subsidiary of PCL, was incorporated on March 26, 2002 to engage in the production and distribution of PET film (Polyethylene Terephthalate Film or Polyester Film) mainly for export markets focusing on packaging, industrial and electrical segments. The Company commenced operations from its first production line on April 2, 2003 and the second production line on November 12 of the same year. Since then, the Company has expanded its operations significantly, both within and outside Thailand. In Thailand, the Company has invested in Extrusion Coating lines, Cast Polyproplene line, Silicone Coating line, Thick PET film line and Metallizers. Apart from this the Company has also set up manufacturing subsidiaries in Turkey (2005) and in USA (2012) and trading companies in Europe and China. All our operational product lines in Thailand have the following certifications: ë ISO 14001:2004 certification on Environment Management system ë ISO 9001:2008 certification on Quality Management system OHSAS 18001:2007 certification on Occupational Health and Safety Management ë system ë ISO 22000:2005 certification on Food Safety standards ë TPM Excellence Award (Category A) All our product lines in Turkey have the following certifications: ë ISO 14001:2004 certification on Environment Management system ë ISO 9001:2008 certification on Quality Management system OHSAS 18001:2007 certification on Occupational Health and Safety Management ë system ë BRC/IoP - certification on Global Standard For Packaging and Packaging Materials (For Plain and Metallized Film lines) Polyplex group aims to become one of the world market leaders in plastic film industry by continuously expanding its market share through regular expansions in capacity and diversification in its product portfolio. The new Thin PET film line in US has added another 31,000 MT per annum in the Companyûs combined capacity. By venturing into the manufacture of related products such as BOPP film (In India) and CPP films (In Thailand), which are other Packaging substrates, used by Converters, in addition to PET thin film, Polyplex aims to become a preferred packaging substrate provider as against just a PET thin film supplier. Apart from this, in order to further diversify its product range, the group has regularly been expanding into
93
ANNUAL REPORT 2012 - 2013 value added products such as Silicone coated film (In India - 2007, Thailand - 2012), Extrusion coated films (In Thailand - 2008) and Metallized films. Company没s decision to invest in Thick PET film line along with a Blown PP line and the second line of Extrusion coating would help the Company to diversify further and establish itself as a leading plastic film supplier. All these projects in Thailand are expected to commence operations in H1 of 2013-14. The recycling project in Thailand is being set up to find sustainable solution for process as well as post consumer plastic waste. The Company is also investing in a bottle grade PET resin plant in Turkey which would be Company没s first project in this industry. The project is expected to commence commercial operations in H2 of 2013-14 Polyplex group has set out clear business strategies: 1) Focus on product development and technical services to penetrate high growth and high margin markets, 2) Optimal Cost of Production 3) Boosting delivery efficiency through focus on distributed manufacturing and logistics 4) Diversifying the product portfolio to minimize the risk of cyclical impact of the PET film industry, to increase stability of Earnings 5) Customer satisfaction through supply of consistent quality products 6) Judicious mix of On-shore, Off-shore and Near-shore strategy. During the year 2012, the Thin PET film industry witnessed an oversupply scenario due to excessive capacity addition following the exceptionally high margins witnessed in the PET film industry in 2010. This resulted in a significant drop in selling prices, thereby squeezing the margins to historically low levels. Apart from this, on account of to the implementation of multiple projects at Thailand, USA and Turkey, the associated administrative costs went up significantly, resulting in a sharp drop in the profitability for the current year. The highlights of the year没s performance are as follows: TOTAL REVENUES Consolidated: Sales Revenue: The consolidated sales revenue has decreased to Baht 9,230 million, (Baht 913 million or 9% decline over previous year). Decrease in revenues is mainly on account of a significant drop in selling prices of Polyester films due to the excessive oversupply situation as explained above. Additional sales volumes from the new
94 Polyplex (Thailand) Public Company Limited
Silicone Coating line (which commenced commercial production in March 2012) have helped to partly offset the impact of lower selling prices of PET films Table illustrating consolidated sales revenue from Exports and Domestic sales is as below: 2009-10 Bt. million %
Market Exports Domestic sales Total
2010-11 Bt. million %
2011-12 Bt. million %
2012-13 Bt. Million %
5,965.27 83.72 9,611.07 85.94 8,495.31 83.75 7,438.18 80.59 1,160.09 16.28 1,572.10 14.06 1,647.80 16.25 1,791.84 19.41 7,125.36 100.00 11,183.17 100.00 10,143.11 100.00 9,230.02 100.00
Note: Sales made by the distribution company in the US/China has been considered as Exports.
The value additions [VA = Selling price - Raw Material Cost] during the year for PTL and PE are shown below. During the current year, value additions have significantly dropped due to the market scenario of oversupply, as explained above. VA trend-Plain & Met. PET Film (PTL-Thailand) 2.50 2.25 2.00 1.75 $/Kg
1.50 1.25 1.00 0.75 0.50
FY 2008-09
FY 2009-10
FY 2010-11
FY 2011-12
FY 2012-13
Plain Film $ /Kg
0.97
0.71
1.78
0.99
0.69
Met.Film $ /Kg
1.64
1.30
2.30
1.50
1.26
VA trend-Plain & Met. PET Film (PTL-Turkey) 2.15 1.90 1.65 1.40 Euro/ Kg
1.15 0.90 0.65 0.40
Plain Film Euro /Kg Met.Film Euro /Kg
FY 2008-09 0.80 1.28
FY 2009-10 0.58 1.09
FY 2010-11 1.52 1.98
FY 2011-12 0.82 1.31
FY 2012-13 0.67 1.12
95
ANNUAL REPORT 2012 - 2013 Other Income: The other income has decreased from Baht 120.69 million to Baht 87.77 million, a drop of Baht 32.93 million, mainly due to higher other income last year at Thailand on account of some creditor balances written off and also due to lower export incentive income in current year due to lower selling prices. The company earned an exchange gain of Baht 177.4 million in this year as compared to an exchange loss of Baht 125.98 million in the previous year. The net exchange gains are mainly at Thailand on account of Forex Loan restatements, due to strengthening of the Baht against the USD as well as Euro. The net impact of all the above factors have contributed to an overall decrease in total revenue by Baht 768.62 million or 7.5% to Baht 9,495.19 million, over the previous year. Standalone: Sales Revenue: The Company没s total sales revenue is mainly driven by Exports, with 75-80% of its total sales revenue coming from exports. Table illustrating the Company没s sales revenue from export and domestic sales is below: Market Exports Domestic sales Total
2009-10 Bt. million %
2010-11 Bt. million %
2011-12 Bt. million %
2012-13 Bt. Million %
2,496.48 78.64 3,950.99 79.33 3,640.71 79.83 3,165.86 75.28 678.17 21.36 1,029.75 20.67 919.94 20.17 1,039.58 24.72 3,174.65 100.00 4,980.74 100.00 4,560.65 100.00 4,205.44 100.00
In the financial year 2012-13, the Company achieved total sales revenues of Baht 4,205.44 million, a decrease of Baht 355.21 million or 7.8%, mainly on account of a sharp drop in selling prices, as compared with the previous year, due to the oversupply situation in the market, as explained above. The current year also included sales of Silicone Coated Film which commenced commercial production in March 2012, which have helped to partly offset the impact of lower sales realization on overall sales revenue. Other Income: The Company has recorded an Exchange gain of Baht 173.84 million as against an Exchange loss of Baht 221.78 million in the previous year. The gain is mainly on account of the restatement of USD and Euro term loans, as explained earlier.
96 Polyplex (Thailand) Public Company Limited
The other income has decreased to Baht 49.40 million from Baht 77.72 million, as last year included an extra ordinary item of income from write off of an old creditor balance and also due to lower export incentive income in current year due to lower selling prices. The dividend income has decreased to Baht 9.5 million from Baht 217.6 million, as there is no dividend income from the Singapore subsidiary this year and also, the dividend from the US subsidiary was lower due to lower profits in FY 2011-12 as compared to FY 2010-11. The net impact of all the above factors have contributed to an overall decrease in total revenue by Baht 417.8 million or 8.6% to Baht 4,438.16 million, as compared to the previous year. TOTAL EXPENSES Consolidated The key elements of the Company没s cost structure are raw materials, packing, electricity & fuel, depreciation, staff cost and selling & administrative expenses. Cost of sales (COS) amounted to Baht 7,874 million as compared to Baht 7,832 million of previous year, representing 87.17% of the total expenses lower than 88.84% of the previous year. Cost of sales includes mainly the raw material costs, packing costs, utilities, depreciation on building and machinery, staff costs etc. A broad break up of COS is given below: Description Raw materials and consumables used (incl.change in inventory) Depreciation (in COS) Salaries, wages and other employee benefits (in COS) Utilities (Power/Natural Gas/ Chilled water etc) Others
2012-13
2011-12
2010-11
76.0% 5.1%
79.2% 4.6%
78.2% 5.1%
6.9% 7.6% 4.4% 100.0%
5.5% 6.2% 4.5% 100.0%
5.7% 7.2% 3.8% 100.0%
The increase in the COS in absolute terms is Baht 42.6 million (or 0.54%), which is mainly on account of lower prices of most of the raw material, partly offset by higher volumes from the Silicone Coated film line.
97
ANNUAL REPORT 2012 - 2013 The selling expenses have been higher by about Baht 49.59 million or 8.54% due to higher sales volumes, including additional volumes of the silicone coated film. The freight rates have also been higher this year. The administrative expenses have been higher by Baht 251.48 million or 90.74% due to overall increase in scale of operations on account of new businesses and also higher administrative expenses at the subsidiaries, particularly the subsidiaries in the USA and Turkey, where new projects没 implementation is underway. Apart from the increase in administrative expenses due to the project implementations (mainly salaries of service staff), the subsidiary in USA had higher administrative expenses due to the operating costs of the metalizing assets acquired in the mid of the year. The major increase is in salary expense due to increase in the number of employees to manage the new operations. There is also an increase in legal and professional charges on a consolidated basis, due to additional legal opinions taken this year (For merger of Polyplex (Americas) Inc, acquisition of Polyplex Resins etc). The finance costs, on consolidated basis, during the year were Baht 86.81 million, an increase of Baht 30.60 million or 54.43% over the previous year. The key reason for the increase in finance charges is the higher short term borrowing at Thailand and the subsidiaries at USA and also the interest on the Silicone Coated film loan, which was under project implementation phase in previous year. This is partly offset by the term loan repayments made during the year. There was a significant increase in finance charges at the Turkey subsidiary, due to the charges associated with the execution of the term loan agreement for the PET bottle grade project financing. Standalone Cost of sales (COS) amounted to Baht 3,941 million representing 91.4% of the total expenses, higher than Baht 3,831 million, or 87.4% of the previous year. The higher cost of sales is due to additional volumes of silicone coated film this year, partly offset by lower volumes in other businesses as well as lower raw material costs. A broad breakup of the COS is given below: Description Raw materials and consumables (incl.change in all inventory) Depreciation (in COS) Salaries, wages and other employee benefits (in COS) Utilities (Power/Natural Gas/ Chilled water etc) Others
98 Polyplex (Thailand) Public Company Limited
2012-13
2011-12
2010-11
77.3% 5.7%
79.4% 4.9%
78.3% 5.8%
7.8% 8.2% 1.0% 100.0%
6.4% 7.5% 1.8% 100.0%
6.8% 7.9% 1.2% 100.0%
The selling expenses have been higher due to higher sales volumes of silicone coated film and also higher freight charges, as silicone coated film is exported mainly to Europe and US which have higher freight rates. The administrative expenses have been higher by 6.31% due to overall increase in scale of operations. The finance charges have increased from Baht 36 million to Baht 46 million, due to higher working capital borrowing and also the interest on the Silicone Coated film loan, which was under project implementation phase in previous year. This is partly offset by the term loan repayments made during the year. Profit margins - Gross Profit, Operating Profit and Net profit ratios Gross profit margin on a consolidated basis has been 14.69% as compared to 22.8% of previous year. On a standalone basis, The Company had a gross profit margin of 6.29% as compared to 16% in the previous year, mainly due to drop in the sales realization coupled with increase in costs. On a consolidated basis, the operating profit margin in the current year has decreased from 14.3% to 2.13%. And on a standalone basis, it has decreased from 8.7% to a loss of 2.58%, mainly due reasons of lower average sales realization and higher operating costs during the year, as explained above. Net profit margin on a consolidated basis has been 3.9%, as compared to 13.2% of the previous year and on a standalone basis it has been 1.8% as compared to 9% of previous year. 9.2.2 Financial status TOTAL ASSETS As at 31st March 2013, The Company没s consolidated total assets were Baht 16,456 million, higher by 37.84% as compared to Baht 11,939 million in the previous year. On a Standalone basis, the total assets as at 31st March 2013 were Baht 8,112 million, higher by about 29.45% compared to Baht 6,267 million of previous year. The main components of Total Assets are Current assets, Fixed assets, Investments and other non-current assets. A brief summary of the movement in the various components of total assets is given below: Accounts receivable The Company没s consolidated Net Accounts Receivables as of March 31, 2013 stood at Baht 1,384 million which is lower compared to Baht 1,397 million as of March 31, 2012 or a marginal decrease of 0.88%.
99
ANNUAL REPORT 2012 - 2013 The Companyûs Standalone Net Accounts Receivables as of 31st March, 2013 were Baht 761 million, as against Baht 806 million in the previous year, or a decrease of 5.6%. The decrease in receivables is mainly due to the significant decrease in selling prices, partly offset by the additional sales volumes of the Silicone Coated film line in Thailand. The average debt collection period has also reduced compared to previous year for Standalone as well as Consolidated. Inventories On a consolidated basis, the total inventories have increased to 1,741 million from Baht 1,624 million, an increase of Baht 118 million or 7.3%. On a standalone basis, there is an increase from Baht 565 million to Baht 672 million or 19.03%. The increase in inventory levels is mainly due to higher stock of finished goods and work in process inventory, higher stock of stores and spares at Thailand and higher raw material inventory at the US subsidiary to plan for the start up of the new PET film line in Q1 of 2013-14. Net Fixed Assets Consolidated Net Fixed Assets (including capital work in progress -CWIP, Goodwill and Other Intangible Assets) have increased by Baht 5,092 million from Baht 6,366 million to Baht 11,458 million, due to the net impact of the following: ë Increase due to net additions to fixed assets/Intangible assets - Baht 5,947 million, mainly on account of the Capital work in progress relating to projects under implementation in Thailand, Turkey and USA, apart from other normal CAPEX. Decrease on account of Translation adjustment - Baht 443 million (net of translation impact on accumulated depreciation), mainly due to translation of subsidiaries Net Fixed Assets, denominated in Euro, USD and RMB, into THB for the purpose of consolidation. Decrease on account of depreciation charged during the year - Baht 412 million ë The Company (standalone) Net Fixed Assets have increased by Baht 1,879 million, from Baht 3,119 million to Baht 4,998 million, due to the net impact of the following: ë Increase due to net addition to fixed assets - Baht 2,114 million mainly on account of capital work in progress relating to the PET Thick Film project, Blown PP and Extrusion Coated Film projects and Normal CAPEX in existing plants Decrease on account of depreciation charged during the year - Baht 235 million ë
100 Polyplex (Thailand) Public Company Limited
Investment in subsidiaries During the year, the Companyûs subsidiary Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S. (PE) invested Euro 5.9 million in acquiring 67% stake in Polyplex Resins Sanayi Ve Ticaret A.S (PR) from Polyplex (Asia) Pte Ltd. Thereafter in February 2013, PE made an additional investment of Euro 0.2 million in PR. During the year, the Company invested Baht 19.3 million in its 80% held subsidiary EcoBlue Limited in Thailand, under which a project for recycling of film waste is being implemented. In January 2013, the Company invested USD 0.7 million in acquiring the balance stake of 19.76% in Polyplex (Americas) Inc (PA) from the minority shareholders. Thereafter PA was merged with Polyplex USA LLC (PUL), another 100% owned subsidiary of PTL. Return on assets On a consolidated basis, the return on assets has been 2.63% as compared to 11.37% in the previous year. On a Standalone basis, the Companyûs return on assets has been 1.09% as compared to 6.41% in the previous year. Decrease is mainly due to decline in profitability during the current year and also the significant increase in asset base due to the investment in projects. 9.2.3 Liquidity Cash flow For the year 2012-13, the Company and its subsidiaries generated net cash from operating activities amounting to Baht 972 million. The deployment of this cash was as under: ë Baht 11.9 million had to be kept aside as restricted bank deposit, for servicing the loan repayment, as part of the Loan covenants of the US subsidiaryûs term loan for the PET film line project. ë Baht 93.5 million was invested in current investments ë Baht 266.8 million was cash paid for subsidiariesû acquisition (Baht 244 million acquisition by Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S.(çPEé), Turkey, of the shares of Polyplex Resins Sanayi Ve Ticaret A.S (PR), from Polyplex (Asia) Pte Ltd (PAPL) and Baht 22.8 million paid by the Company for acquiring the balance stake of 19.76% from the minority shareholders of Polyplex Americas Inc (PA). ë Net additions to fixed assets, including advances paid for project machinery & equipments - Baht 5,512 million. This includes the amount expended on various ongoing projects in Thailand, USA and Turkey.
101
ANNUAL REPORT 2012 - 2013 Apart from cash generated from operating activities as explained above, the company and its subsidiaries had net cash inflow of Baht 4,873 million due to following: ë Drawdown of Short term loan for WC financing - Baht 717.7 million ë Drawdown of Long term loans from banks, for new projects (net of the scheduled repayments of older loans) - Baht 3,987.1 million ë Drawdown of Long term loan from related party - Baht 430.7 million ë Cash Received from minority shareholders in subsidiaries - Baht 9 million ë Cash paid for interest on term loans and short term loans - Baht 135 million ë Dividend payment - Baht 136 million ë Dividend payment to minority interest of subsidiaries - Baht 0.5 million The deficit thereof, along with the reduction on account of translation adjustment of Baht 174 million, and opening balance of Baht 1,681.8 million resulted in a net closing balance of Baht 1,468.3 million. During the year 2012-13, the Company, on a standalone basis, had generated net cash from operating activities of Baht 181.8 million [dividend from the US subsidiary of Baht 9.5 million], and Baht 1,953.5 million net inflow on account of loan movement (long term and short term bank borrowings). The deployment of this cash is as under: ë Investment in subsidiaries - Baht 42.1 million (Bt 20 million in EcoBlue Limited in Thailand and Baht 22 million in acquiring the minority stake in Polyplex Americas Inc(PA), ë Baht 77.5 million was invested in current investments. ë Net additions to fixed assets, including advances paid for project machinery & equipments - Baht 1,784.1 million. ë Cash paid for interest on term loans and short term loans - Baht 58.9 million ë Dividend payment - Baht 136 million. The surplus thereof together with the opening balance of Baht 29.6 million resulted in a net closing balance of Baht 75.9 million. Liquidity ratio In 2012-13, consolidated current ratio was 1.66 and quick ratio was 1.00. The Companyûs (standalone) current ratio and quick ratio were 1.12 and 0.60 respectively. Consolidated average debt collection period during 2012-13 was 54 days along with Account payables period of 52 days and average selling period of
102 Polyplex (Thailand) Public Company Limited
24 days, resulting in a cash cycle of 27 days as against a cash cycle of 33 days of previous year. The average debt collection period of the Company (standalone) during 2012-13 was 67 days along with Accounts payable period of 58 days and average selling period of 4 days resulting in cash cycle of 14 days as against a cash cycle of 25 days in previous year. 9.2.4 Sources of funds Sources of funds consist of long term and short term loans from financial institutions and shareholdersû equity. TOTAL LIABILITIES Current Liabilities As at 31st March, 2013, consolidated current liabilities stood at Baht 2,948 million, an increase of Baht 730 million from Baht 2,218 million in the previous year, mainly due to the following movements: ë Increase in short term borrowings at the Company and its subsidiary in USA Baht 717.7 million. ë Increase in Trade and other payables by Baht 84.4 million due to increase in scale of operations. ë Increase in other liabilities by Baht 101.6 million. ë Increase in current portion of long term loans by Baht 91.4 million due to overall increase in loans becoming due for repayment, after expiry of initial grace period. ë Decrease in Payable for subsidiary acquisition - Baht 244 million (PR acquisition by PE from PAPL, as explained above under 9.2.3 on ùLiquidityû, under deployment of cash generated. ë Decrease in Income tax payable by Baht 20.8 million, mainly due to lower tax in the subsidiary in the USA due to lower taxable profits this year. As at 31st March, 2013, The Companyûs Standalone current liabilities stood at Baht 1,529 million, an increase of Baht 495 million from Baht 1,034 million in the previous year, mainly due to the following: ë Increase in Short term borrowings by Baht 305 million ë Increase in Trade and other payables Baht 62.7 Million ë Increase in other current liabilities Baht 28.3 Million ë Increase in current portion of loans Baht 99.4 Million
103
ANNUAL REPORT 2012 - 2013 Term Debts On a consolidated basis, the term debt (net of current portion) has increased by Baht 4,052 million, including Baht 430.7 million of term loans from related party. The increase in consolidated debt is mainly on account of new loans drawn by the Company and its subsidiaries in USA and Turkey for the ongoing expansions. This is partially offset by repayments made during the year and net exchange gain on loan restatements in Thailand. The Company没s term debt (net of current portion) has increased by Baht 1,406 million due to additional borrowings at Thailand for financing the ongoing projects. This is partly offset by loan repayments during the year and also due to the exchange gain on the Euro/USD loan restatements, due to the strengthening of the THB against these currencies. Leveraging & interest coverage ratio The net debt equity ratio (debt only - short term and long term, including current portion, after netting off cash & cash equivalents and current investments) of 0.47 on a consolidated basis and 0.69 for the Company standalone, although higher than previous year, are still quite comfortable. Debt equity ratio (for total debt, including current + non-current liabilities), is 1.02 on a consolidated basis as well as for the Company standalone. The consolidated interest coverage ratio was 5.32 times as against 25.76 in previous year. The Company没s standalone interest coverage ratio was 2.7 times as against 13.8 times in previous year. Decrease in the interest coverage ratio is mainly due to decrease in EBITDA during the current year and increase in interest expense due to higher average borrowings. Commitments As at 31 March 2013, company had the following commitments and contingent liabilities: (a) As at 31 March 2013, the Company had commitments totaling Baht 197.0 million under various service agreements (2012: Baht 221.0 million). These agreements expire between April 2013 and September 2016. (b) The Company没s foreign exchange contracts outstanding at 31 March 2013 are summarized below.
104 Polyplex (Thailand) Public Company Limited
Foreign currency
Bought Sold amount amount (Million) (Million)
US dollar
2.08
19.39
Swiss franc Euro
0.30 0.57
1.09
-
60.06
Japanese yen
Contractual exchange rate Bought Sold (Baht per 1 foreign currency unit) Baht 29.4650 - 30.2650 per USD 1 Baht 32.8089 per CHF 1 Baht 37.9000 - 39.5700 per EUR 1 -
Baht 29.5920 - 30.9750 per USD 1 Baht 38.0200 - 40.8268 per EUR 1 Baht 0.3121 - 0.3254 per JPY 1
The Company没s subsidiary in Turkey had the following forward exchange contracts outstanding at 31st March, 2013: Bought amount Contractual exchange rate YTL 3.5 million YTL 1.8005 - 1.8231 per USD 1 YTL 0.5 million YTL 2.3860 per EUR 1 (c)
(d)
(e)
(f)
(g)
As at 31 March 2013, The Company and its subsidiaries had capital commitments of approximately Baht 736.4 million relating to the construction of building and acquisition of machinery and equipment for the upcoming projects. For the Company Standalone, the capital commitments amounted to Baht 263.9 million. As at 31 March 2013, the Company is committed for rentals (under Operating Lease agreements) as follows: Million Baht Payable within: 1 years 8.1 2 to 5 years 6.1 As at 31 March 2013, the Company has provided guarantee of USD 75 million for the long-term loans obtained by its subsidiary (Polyplex USA LLC). As at 31 March 2013, the outstanding balance of this subsidiary没s loan was USD 52.1 million. As at 31 March 2013, the Company has provided guarantee of EUR 2.3 million (2012: EUR 4.5 million) for the long-term loans obtained by its subsidiary (Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi). Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi has provided guarantee for the long-term loans obtained by Polyplex Resins Sanayi Ve
105
ANNUAL REPORT 2012 - 2013
(h)
(i)
Ticaret Anonim Sirketi to the extent of EUR 27.5 million. As at 31 March 2013, the outstanding balance of this loan was EUR 20.7 million, of which EUR 13.9 million was guaranteed by Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi. The Company has provided guarantee of Baht 15.0 million for credit facilities obtained by its subsidiary (EcoBlue Limited). As at 31 March 2013, the subsidiary has yet to utilise these credit facilities. As at 31 March 2013, there were outstanding bank guarantees of approximately Baht 0.7 million and EUR 15.7 million (2012: Baht 63.8 million and EUR 25.9 million) issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of businesses
Shareholdersรป equity The Companyรปs shareholdersรป equity on a consolidated basis reduced from Baht 8,320 million to Baht 8,088 million, which is after accounting for Translation adjustment loss of Baht 473 million, dividend payment of Baht 136 million by the Company for FY 2011-12, partly offset by Net profits during the year of Baht 374 million and surplus on acquisition of minority stake in Polyplex (Americas) Inc ( Baht 3.3 million). On a standalone basis, the decrease in shareholder equity is Baht 57.6 mainly due to dividend payout of Baht 136 during the year, partly offset by profits during the year of Baht 78 million. Return on equity On a consolidated basis, the Return on equity has been 4.49% as compared to 16.14%, in the previous year due to decrease in profitability. The ROE of the Company Standalone was 1.94% as compared to 9.59% in previous year mainly due to decrease in profitability for the year. The Company has a policy to pay dividend at 40% of consolidated net profits, taking into account economic conditions, growth plans, future deployment opportunities, the Companyรปs financial position and liquidity and subject to the approval by the shareholders. For the year 2012-13, the Companyรปs board has proposed a dividend of Baht 0.14 per share payable in August 2013, subject to the approval of shareholders in the Annual General meeting in July 2013. The lower than 40% dividend payout ratio for current year is keeping in mind the lower profitability achieved in this year and the necessity to conserve cash for deployment in ongoing expansion projects, including increased working capital requirement due to various new projects starting in 2013.
106 Polyplex (Thailand) Public Company Limited
9.3 Main factors which may affect the future operational performance and financial position In comparison with the previous year, the FY 2012-13 was a very challenging year for the Polyester Film industry with excessive oversupply resulting in a sharp decline in selling prices and thereby squeezing the margins to historically low levels. The key challenges for the company in the coming year would be the following: Raw material price volatility and any significant upward movement in prices, which the company might not be able pass on to the end customers in the current weak market scenario. Successful implementation and ramp up of the Thick PET film line, Blown PP and Thermal Lamination Line 2 in Thailand and the PET Bottle plant in Turkey. Successful Ramp up of the Thin PET film line in USA. Given the recent volatility of THB against USD and Euro, the Impact of FX fluctuations on profits of the company will be one of the major concerns. The company is exposed to 2 types of risks, one on the operational profits as well as the restatement of the assets/ liabilities of the company on a standalone basis and secondly, on the conversion of the subsidiaries没 P&L accounts, which are denominated in USD, Euro and RMB, into THB currency for the purpose of consolidation. With the new USD and Euro Loans drawn for the ongoing expansions, the Forex loan portfolio of the Company has increased to almost USD 100 million (including USD equivalent of Euro loans), thereby exposing the company to significant FX fluctuation risks on the Forex loan restatements. In the long run, the Company still remains confident of retaining its competitive edge due to various reasons: 1. Benefit from its various projects, the past projects and the ones under implementation as under: a. PTL and PE have both derived significant benefits from the captive PET resin production to serve its raw material demand on costs, quality and security of availability. The main advantages of a captive resin plant are lower cost of production because of efficiencies in raw material sourcing as also a lower conversion cost besides ensuring timely availability of raw material for the film plants. Easy availability of PTA and MEG would reduce the supply risk although cost of the same still remains a matter of concern for any PET film manufacturer as it has a direct impact on the margins of every manufacturer. Captive production of resin would also allow the
107
ANNUAL REPORT 2012 - 2013 company to develop new specialty film products. In line with the above strategy, the manufacturing unit in USA will also have its own resin plant. b. Metallizer plants in Thailand and Turkey have helped improve the product mix by increasing the share of specialty film in the overall sales portfolio. In Thailand PET as well CPP films are being Metallized whereas in Turkey and in US, the Metallizers are used to metalize PET films. c. The Extrusion coating plant in Thailand, which commenced operations in April没08, has further helped the company to reduce their exposure to commodity grades of film and increase the proportion of value added films and other specialty grades of film. The second Extrusion Coating line under implementation in Thailand will provide an opportunity to the company to meet the growing demand in Europe and USA. d. The CPP line which started in Thailand in March 2010 has helped the company broad base its product offerings to the converters and move towards becoming a complete packaging solution provider for its customers, rather than just a PET film supplier. e. The Silicone Coating project which commenced commercial production in March 2012 and the Blown PP line under implementation in Thailand, will further diversify the product portfolio of the company and add a highly value added product in its portfolio. f. The Thick PET film line, under implementation in Thailand will also help further diversify the product portfolio and mitigate the risk associated with the cyclical nature of the Thin PET film industry, as Thick PET film is a relatively more stable industry. g. The Company has successfully implemented the project for Thin PET film line in the USA in Q1 2013-14. With its extensive market reach in the North American region, the Company remains confident that this decision, backed by its near shoring strategy will enable it to service its customers in a more efficient manner. h. The Bottle grade plant in Turkey which is currently in the implementation phase will be the Company没s first project in the PET bottle industry. 2.
Polyplex has been deriving benefits from the larger size and distributed manufacturing operations across 4 existing locations whereby it has qualified as a preferred global supplier with many multinational and large customers with global operations.
108 Polyplex (Thailand) Public Company Limited
3.
Polyplex has been able to establish itself as a reliable supplier of consistent quality products.
4.
Polyplex had also invested significantly in distribution, through the acquisition of a company in USA (Polyplex (Americas) Inc. (PA), [which has now been merged with Polyplex USA LLC (PUL), the manufacturing entity in USA], the investment in Polyplex (Trading) Shenzhen Co Ltd, China, setting up of the trading company in Netherlands in April 2013 and by establishing warehouses across Europe for better distribution.
9.4 Remuneration for auditor/s 1.
Audit fee The Company paid audit fee as below: A total of Baht paid to the auditor/s for the past fiscal year; and -
2.
A total of Baht 2,175,000.00 paid to the accounting firm the auditor/s work for, or the person or business related to the auditor/s and the accounting firm for the past fiscal year.
Non-audit fee The Company made payment for other services, i.e. examination of compliance with conditions of promotion certificates, and legal and tax advisory services, including BOI and tax audit services, as follows: A total of Baht paid to the auditor/s for the past fiscal year and Baht payable in the future for the service not yet fully done for the past fiscal year; and -
A total of Baht 238,500 paid to the accounting firm the auditor/s work for, or the person or business related to the auditor/s and the accounting firm for the past fiscal year, and Baht 560,000 payable in the future for the service not yet fully done for the past fiscal year.
109
ANNUAL REPORT 2012 - 2013
Independent Auditorûs Report To the Shareholders of Polyplex (Thailand) Public Company Limited I have audited the accompanying consolidated financial statements of Polyplex (Thailand) Public Company Limited and its subsidiaries, which comprise the consolidated statement of financial position as at 31 March 2013, and the related consolidated statements of income, comprehensive income, changes in shareholdersû equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, and have also audited the separate financial statements of Polyplex (Thailand) Public Company Limited for the same period. Managementûs responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditorûs responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorûs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entityûs preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entityûs internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
110 Polyplex (Thailand) Public Company Limited
Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Polyplex (Thailand) Public Company Limited and its subsidiaries and of Polyplex (Thailand) Public Company Limited as at 31 March 2013, their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards. Emphasis of matter I draw attention to Note 2.2 to the financial statements, during the current year a subsidiary invested in another subsidiary. The investment was considered to be a business combination under common control, and so the Company has to restate the consolidated financial statements of prior periods. The Company has therefore presented consolidated statements of financial position as at 31 March 2012 and 1 April 2011 for comparative purposes. My opinion is not qualified in respect of this matter. Other matter The consolidated financial statements of Polyplex (Thailand) Public Company Limited and its subsidiaries, and the separate financial statements of Polyplex (Thailand) Public Company Limited for the year ended 31 March 2012 were audited in accordance with Thai Standards on Auditing by another auditor of our firm who expressed an unqualified opinion on those statements, under his report dated 18 May 2012.
Termphong Opanaphan Certified Public Accountant (Thailand) No. 4501 Ernst & Young Office Limited Bangkok: 20 May 2013
111
ANNUAL REPORT 2012 - 2013
Statements of financial position Polyplex (Thailand) Public Company Limited and its subsidiaries As at 31 March 2013 (Unit: Baht)
Consolidated financial statements
Assets Current assets Cash and cash equivalents Current investments Trade receivables Inventories Advance payment for purchase of goods Input tax refundable Other current assets Total current assets Non-current assets Restricted bank deposits Investments in subsidiaries Property, plant and equipment Goodwill Other intangible assets Advance payment for purchases of assets Other non-current assets Total non-current assets Total assets
Note
31 March 2013
31 March 2012 (Restated)
7
1,468,336,634 94,001,000 1,384,382,467 1,741,438,402 48,280,243 63,352,128 81,791,180 4,881,582,054
1,681,809,653 1,396,691,807 1,623,791,836 305,064,743 34,110,004 75,449,714 5,116,917,757
8 9 6
10 11 12 13
31 March 2013
31 March 2012
1,231,008,609 75,923,455 29,641,023 164,946,931 78,000,000 1,896,159,409 760,557,602 805,875,522 1,732,304,430 672,036,481 564,604,348 327,520,752 6,063,441 6,962,067 24,098,204 63,346,522 34,110,004 82,530,148 50,767,931 40,165,682 5,458,568,483 1,706,695,432 1,481,358,646
11,864,119 - 1,355,546,732 11,447,677,121 6,360,048,887 5,979,205,759 4,997,594,675 7,038,679 3,874,351 3,874,351 3,136,482 2,007,443 1,353,643 90,620,407 447,471,579 480,027,593 37,503,914 14,646,635 8,650,268 9,871,557 14,646,635 11,574,983,443 6,822,052,528 6,474,332,903 6,405,291,956 16,456,565,497 11,938,970,285 11,932,901,386 8,111,987,388
The accompanying notes are an integral part of the financial statements.
112 Polyplex (Thailand) Public Company Limited
1 April 2011
Separate financial statements
1,313,491,892 3,118,710,965 344,484,861 8,604,003 4,785,291,721 6,266,650,367
Statements of financial position (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries As at 31 March 2013 (Unit: Baht)
Consolidated financial statements Note
Liabilities and shareholders没 equity Current liabilities Short-term loans from financial institutions Trade and other payables Accounts payable from subsidiary没s acquisition Current portion of long-term loans from financial institutions Income tax payable Other current liabilities Total current liabilities Non-current liabilities Long-term loans from related party Long-term loans from financial institutions, net of current portion Provision for long-term employee benefits Total non-current liabilities Total liabilities
14 15 2.2 17
6 17 16
31 March 2013
31 March 2012 (Restated)
Separate financial statements
1 April 2011
31 March 2013
1,044,440,125 326,744,800 194,483,944 1,178,378,311 1,094,006,167 1,290,563,859 -
244,060,137
-
31 March 2012
385,000,000 665,078,137
80,000,000 602,326,785
-
-
455,193,839 363,759,992 387,200,147 371,427,309 271,996,222 70,650 20,891,111 25,767,349 270,271,567 168,621,255 164,190,477 107,545,810 79,215,427 2,948,354,492 2,218,083,462 2,062,205,776 1,529,051,256 1,033,538,434 430,732,393
-
-
-
-
4,871,708,643 1,250,516,899 1,504,733,243 2,562,418,211 1,156,339,503 16,510,578 9,767,671 7,627,140 7,441,312 6,051,667 5,318,951,614 1,260,284,570 1,512,360,383 2,569,859,523 1,162,391,170 8,267,306,106 3,478,368,032 3,574,566,159 4,098,910,779 2,195,929,604
The accompanying notes are an integral part of the financial statements.
113
ANNUAL REPORT 2012 - 2013
Statements of financial position (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries As at 31 March 2013 (Unit: Baht)
Consolidated financial statements Note
Shareholders没 equity Share capital Registered 960,000,000 ordinary shares of Baht 1 each Issued and fully paid 800,000,000 ordinary shares of Baht 1 each Share premium Retained earnings Appropriated - statutory reserve 18 Unappropriated Other components of shareholders没 equity Equity attributable to owners of the Company Non-controlling interests of the subsidiaries Total shareholders没 equity Total liabilities and shareholders没 equity
31 March 2013
960,000,000
31 March 2012 (Restated)
960,000,000
960,000,000
31 March 2013
960,000,000
31 March 2012
960,000,000
800,000,000 800,000,000 800,000,000 800,000,000 800,000,000 1,370,460,000 1,370,460,000 1,370,460,000 1,370,460,000 1,370,460,000 96,000,000 6,639,743,223 (817,780,293) 8,088,422,930 100,836,461 8,189,259,391 16,456,565,497
96,000,000 6,401,772,010 (348,086,777) 8,320,145,233 140,457,020 8,460,602,253 11,938,970,285
The accompanying notes are an integral part of the financial statements.
114 Polyplex (Thailand) Public Company Limited
1 April 2011
Separate financial statements
96,000,000 6,381,606,683 (316,111,008) 8,331,955,675 26,379,552 8,358,335,227 11,932,901,386
96,000,000 1,746,616,609 4,013,076,609 4,013,076,609 8,111,987,388
96,000,000 1,804,260,763 4,070,720,763 4,070,720,763 6,266,650,367
Income statements Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013 (Unit: Baht)
Note
Revenues Sales Exchange gains Dividend income Other income Total revenues Expenses Cost of sales Selling expenses Administrative expenses Exchange losses Total expenses Profit before finance cost and income tax expenses Finance cost Profit before income tax expenses Income tax expenses Profit for the year
21 11
20
Profit attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries
Basic earnings per share 22 Profit attributable to equity holders of the Company
Consolidated financial statements
Separate financial statements
2013
2013
2012 (Restated)
2012
9,230,018,464 177,398,836 87,768,151 9,495,185,451
10,143,110,995 120,696,524 10,263,807,519
4,205,439,768 173,836,044 9,483,705 49,402,782 4,438,162,299
4,560,646,524 217,596,131 77,719,578 4,855,962,233
7,874,168,461 630,475,704 528,625,632 9,033,269,797
7,831,562,679 580,889,370 277,142,763 125,978,536 8,815,573,348
3,941,029,982 297,878,785 74,924,889 4,313,833,656
3,831,384,958 263,126,493 70,479,707 221,775,751 4,386,766,909
461,915,654 (86,806,412) 375,109,242 (11,657,723) 363,451,519
1,448,234,171 (56,209,821) 1,392,024,350 (34,186,625) 1,357,837,725
124,328,643 (45,972,797) 78,355,846 78,355,846
469,195,324 (34,053,722) 435,141,602 435,141,602
373,971,213 (10,519,694) 363,451,519
1,357,607,818 229,907 1,357,837,725
78,355,846
435,141,602
0.47
1.70
0.10
0.54
The accompanying notes are an integral part of the financial statements.
115
ANNUAL REPORT 2012 - 2013
Statements of comprehensive income Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013 (Unit: Baht)
Profit for the year
Consolidated financial statements
Separate financial statements
2013
2013
2012
2012 (Restated)
363,451,519
1,357,837,725
78,355,846
435,141,602
Other comprehensive income: Exchange differences on translation of financial statements in foreign currency Other comprehensive income for the year
(484,507,192) (484,507,192)
(27,406) (27,406)
-
-
Total comprehensive income for the year
(121,055,673)
1,357,810,319
78,355,846
435,141,602
(99,033,704) (22,021,969) (121,055,673)
1,356,895,765 914,554 1,357,810,319
78,355,846
435,141,602
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries
The accompanying notes are an integral part of the financial statements.
116 Polyplex (Thailand) Public Company Limited
117
The accompanying notes are an integral part of the financial statements.
3,311,401 3,311,401 3,311,401 (26,088,601) (22,777,200) 3,311,401 (817,780,293) 8,088,422,930 100,836,461 8,189,259,391
26,583,049 8,359,589,751
96,000,000 6,639,743,223 (789,827,978) (31,263,716)
- (316,737,834) 8,333,006,702
115,350,118 106,643,911 140,457,020 8,460,602,253
26,379,552 8,358,335,227 914,554 1,357,810,319 - (1,360,000,000) (2,187,204) (2,187,204)
- (31,348,943) (12,861,469) 113,873,971 101,012,502 - (348,086,777) 8,320,145,233 140,457,020 8,460,602,253 - (473,004,917) (99,033,704) (22,021,969) (121,055,673) - (136,000,000) - (136,000,000) (542,636) (542,636) 9,032,647 9,032,647
-
- (31,263,716) (8,706,207) - (348,086,777) 8,320,145,233
- (316,111,008) 8,331,955,675 (712,053) 1,356,895,765 - (1,360,000,000) -
Equity attributable to noncontrolling interests Total of the shareholders没 subsidiaries equity
(Unit: Baht)
- 18,487,474 (85,227) (31,263,716) 96,000,000 6,401,772,010 (316,823,061) (31,263,716) - 373,971,213 (473,004,917) - (136,000,000) -
96,000,000 6,383,284,536 (316,737,834)
- 22,557,509 - (31,263,716) 96,000,000 6,401,772,010 (316,823,061) (31,263,716)
800,000,000 1,370,460,000
-
96,000,000 6,381,606,683 (316,111,008) - 1,357,607,818 (712,053) - (1,360,000,000) -
800,000,000 1,370,460,000 -
Balance as at 31 March 2012 - as previously reported 800,000,000 1,370,460,000 Cumulative effect of adjustment of surplus on business combination under common control (Note 2.2) Balance as at 31 March 2012 - restated 800,000,000 1,370,460,000 Total comprehensive income for the year Dividend paid (Note 23) Dividend paid by subsidiary Additional investments in subsidiaries Acquisition of investments in subsidiary from non-controlling interests (Note 11) Balance as at 31 March 2013 800,000,000 1,370,460,000
Balance as at 1 April 2011 Total comprehensive income for the year - restated Dividend paid (Note 23) Dividend paid by subsidiary Effect of adjustment of surplus on business combination under common control (Note 2.2) Balance as at 31 March 2012 - restated
Consolidated financial statements
Equity attributable to the owners of the Company Other components of shareholders没 equity Other comprehensive income Excess of cost Exchange of investment differences Surplus on in subsidiary on translation business over the Total other Total Retained earnings of financial combination carrying components equity Issued and Appropriated statements under amount of of attributable fully paid Share statutory in foreign common the interest shareholders没 to owners of share capital premium reserve Unappropriated currency control acquired equity the Company
Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013
Statements of changes in shareholders没 equity
ANNUAL REPORT 2012 - 2013
Statements of changes in shareholders没 equity (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013 (Unit: Baht)
Separate financial statements Issued and fully paid share capital
Retained earnings Appropriated Share statutory premium reserve Unappropriated
Total
Balance as at 1 April 2011 Total comprehensive income for the year Dividend paid (Note 23) Balance as at 31 March 2012
800,000,000 1,370,460,000 800,000,000 1,370,460,000
96,000,000 2,729,119,161 4,995,579,161 - 435,141,602 435,141,602 - (1,360,000,000) (1,360,000,000) 96,000,000 1,804,260,763 4,070,720,763
Balance as at 31 March 2012 Total comprehensive income for the year Dividend paid (Note 23) Balance as at 31 March 2013
800,000,000 1,370,460,000 800,000,000 1,370,460,000
96,000,000 1,804,260,763 4,070,720,763 78,355,846 78,355,846 - (136,000,000) (136,000,000) 96,000,000 1,746,616,609 4,013,076,609
The accompanying notes are an integral part of the financial statements.
118 Polyplex (Thailand) Public Company Limited
Cash flow statements Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013 (Unit: Baht)
Cash flows from operating activities Profit before tax Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation Doubtful debts (doubtful debts recovery) Decrease of inventory to net realisable value Gains on sales of current investments Losses (gains) on sales of property, plant and equipment Provision for long-term employee benefits Unrealised losses (gains) on exchange rate Exchange loss on the redemption of investment in subsidiary Dividend income Interest expenses Profit from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade receivables Inventories Other current assets Other non-current assets Operating liabilities increase (decrease) Trade and other payables Other current liabilities Payment of long-term employee benefits Cash from operating activities Cash paid for corporate income tax Net cash from operating activities
Consolidated financial statements
Separate financial statements
2013
2013
2012
2012 (Restated)
375,109,242
1,392,024,350
78,355,846
435,141,602
411,977,123 3,719,807 13,192,437 (538,611)
369,431,898 279,485 2,719,948 (3,538,306)
234,512,345 13,192,438 (538,611)
196,282,069 (24,912) 2,719,948 (3,538,306)
26,070,300 12,904,832 (150,338,484)
(2,000) 7,270,420 19,968,774
13,811,241 1,673,050 (142,669,550)
1,682,185 20,508,036
55,831,760
253,267,774 45,147,468
(9,483,705) 44,980,673
253,267,774 (217,596,131) 33,002,697
747,928,406
2,086,569,811
233,833,727
721,444,962
444,110 (130,693,211) 219,308,852 (5,996,367)
495,999,770 105,740,733 22,992,017 1,221,289
30,498,118 (120,624,571) (27,331,465) (6,042,632)
371,036,374 (96,547,579) 51,514,424 1,222,109
68,428,271 108,647,576 (5,523,533) 1,002,544,104 (30,600,596) 971,943,508
(56,597,215) 5,729,781 (4,988,344) 2,656,667,842 (42,529,867) 2,614,137,975
46,859,648 24,879,002 (283,405) 181,788,422 181,788,422
(78,613,381) (27,380,864) 942,676,045 942,676,045
The accompanying notes are an integral part of the financial statements.
119
ANNUAL REPORT 2012 - 2013
Cash flow statements (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013 (Unit: Baht)
Cash flows from investing activities Increase in restricted bank deposits Decrease (increase) in current investments Cash paid for investments in subsidiaries Cash received from the redemption of investments in subsidiary Dividend received from subsidiaries Decrease (increase) in advance payment for purchases of assets Increase (decrease) in other payables for purchases of fixed assets Proceeds from sales of property, plant and equipment Purchases of property, plant and equipment Increase in goodwill Increase in other intangible assets Net cash from (used in) investing activities Cash flows from financing activities Increase in short-term loans from financial institutions Increase in long-term loans from related party Increase (decrease) in long-term loans from financial institutions Cash paid for interest expenses Proceeds from increase in share capital Dividend payment Dividend paid to non-controlling interests of subsidiary Cash received from non-controlling interests of subsidiaries Net cash from (used in) financing activities Decrease in translation adjustments Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year
Consolidated financial statements
Separate financial statements
2013
2013
2012
(11,864,119) (93,462,389) (266,837,337)
168,485,237 -
(77,461,389) (42,054,840)
168,485,237 (675,954,680)
-
-
9,483,705
1,045,609,865 217,596,131
356,851,172
32,556,014
306,980,947
(93,486,006)
19,780,187 15,209,296 (5,898,754,709) (3,164,328) (2,111,021) (5,884,353,248)
(145,630,991) 70,088,959 (914,563,223) (1,433,493) (790,497,497)
18,538,945 623,364 (2,110,206,906) (1,894,096,174)
(145,630,991) (192,207,407) 324,412,149
717,695,325 430,732,393
132,260,856 -
305,000,000 -
80,000,000 -
3,987,139,137 (134,915,535) (136,000,000) (542,636)
(275,697,230) (54,135,336) 349,545,812 (1,360,000,000) (2,187,204)
1,648,464,960 (58,874,776) (136,000,000) -
41,049,022 (40,538,000) (1,360,000,000) -
9,032,647 4,873,141,331 (174,204,610) (213,473,019) 1,681,809,653 1,468,336,634
(1,210,213,102) (162,626,332) 450,801,044 1,231,008,609 1,681,809,653
1,758,590,184 46,282,432 29,641,023 75,923,455
(1,279,488,978) (12,400,784) 42,041,807 29,641,023
The accompanying notes are an integral part of the financial statements.
120 Polyplex (Thailand) Public Company Limited
2012 (Restated)
Notes to consolidated financial statements Polyplex (Thailand) Public Company Limited and its subsidiaries For the year ended 31 March 2013
1.
General information Polyplex (Thailand) Public Company Limited (çThe Companyé) is a public company incorporated and domiciled in Thailand. Its parent company is Polyplex Corporation Limited, which was incorporated in India. The Company is principally engaged in the manufacture and distribution of polyester films, metallized films, extrusion coated films, cast polypropylene films, silicone coated films and PET resins. The registered addresses of the Companyûs head office and factories are as follows: Head office: 75/26 Ocean Tower II, 18th Floor, Soi Sukhumvit 19, Sukhumvit Road, Kwaeng North Klongtoey, Khet Wattana, Bangkok.
2.
Factory 1:
Siam Eastern Industrial Park, 60/24 Moo 3, Tambol Mabyangporn, Amphur Pluakdaeng, Rayong.
Factory 2:
Siam Eastern Industrial Park, 60/91 Moo 3, Tambol Mabyangporn, Amphur Pluakdaeng, Rayong.
Factory 3:
Siam Eastern Industrial Park, 60/109 Moo 3, Tambol Mabyangporn, Amphur Pluakdaeng, Rayong.
Basis of preparation 2.1
The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Professions Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 28 September 2011, issued under the Accounting Act B.E. 2543. The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.
2.2
Basis of consolidation a) The consolidated financial statements include the financial statements of the Company (çthe Companyé) and the following subsidiary companies (çthe subsidiariesé):
121
ANNUAL REPORT 2012 - 2013 Companyûs name
EcoBlue Ltd.
d)
e) f)
g)
Manufacture and distribution Thailand of recycle products Investment holding company Singapore Investment holding company United States of America Distribution of plastic film United States of America Manufacture and distribution Turkey of polyester film and chips
Percentage of shareholding 2013 2012 Percent Percent -
100.00 100.00
100.00 100.00
-
80.24
Polyplex Europa Polyester Film Sanayi 100.00 Ve Ticaret Anonim Sirketi (100% owned by Polyplex (Singapore) Pte. Ltd.) Polyplex Trading (Shenzhen) Co., Ltd. Distribution of plastic film The Peopleûs 100.00 (100% owned by Polyplex (Singapore) Republic of China Pte. Ltd.) Polyplex USA LLC (100% owned by Manufacture and distribution United States 100.00 Polyplex America Holdings Inc.) of polyester film of America Polyplex Resins Sanayi Ve Ticaret Anonim Manufacture and distribution Turkey 67.00 Sirketi (67% owned by Polyplex Europa of polyester resins Polyester Film Sanayi Ve Ticaret Anonim Sirketi)
100.00
Polyplex (Americas) Inc.
c)
Country of incorporation
80.00
Polyplex (Singapore) Pte. Ltd. Polyplex America Holdings Inc.
b)
Nature of business
100.00
100.00 67.00
Subsidiaries are fully consolidated, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Company. The assets and liabilities in the financial statements of overseas subsidiary companies are translated to Baht using the exchange rate prevailing on the end of reporting period, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of çExchange differences on translation of financial statements in foreign currencyé in the consolidated statements of changes in shareholdersû equity. Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements. Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated profit or loss and within equity in the consolidated statement of financial position. On 5 November 2012, the Companyûs subsidiary, Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (çPolyplex Europaé), acquired 67% of the ordinary shares of a subsidiary of the major shareholder, Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi (çPolyplex Resinsé), which was established on 2 December 2011. This acquisition was considered to be a business combination under common control, and the difference between the cost of this business combination under common control and the net book value of the equity of Polyplex Resins, amounting to EUR 0.76 million or equivalent to
122 Polyplex (Thailand) Public Company Limited
Baht 31 million, was therefore recorded as çSurplus on business combination under common controlÊ and separately presented in the consolidated statements of changes in shareholdersÝ equity. Because this acquisition was a business combination under common control, the Company has treated Polyplex Resins acquired in November 2012, as if it had been a subsidiary of Polyplex Europa since it was established (2 December 2011). Therefore, the consolidated statements of income and comprehensive income for the year ended 31 March 2013 included the operating results of Polyplex Resins as from 1 April 2012, ignoring the actual date of the business combination under common control (the date the shares of the subsidiary were acquired). The operating results of Polyplex Resins for the period as from 1 April 2012 to 5 November 2012, which were included in the consolidated statements of income and comprehensive income for the current year, were loss amounting to approximately Baht 27 million (loss attributable to equity holders of the Company was Baht 18 million). The net book values of assets and liabilities as at the acquisition date and the cash payment made to purchase the investment in subsidiary are summarised below. Thousand Euro Cash payment for purchase of investment in subsidiary Net book values of assets and liabilities as at the acquisition date Cash and cash equivalents Other current assets Property, plant and equipment Intangible assets Other non-current assets Short-term loans from bank Trade and other payables Other current liabilities Loans from related party Other non-current liabilities Total net assets Less: Non-controlling interests of subsidiary Net assets of equity holders of the Company Surplus on business combination under common control
5,927 3,049 137 23,402 3 1,843 (7,762) (1,102) (307) (11,553) (2) 7,708 (2,544) 5,164 763
The Company restated the consolidated financial statements for the year ended 31 March 2012, which is presented herein for comparative purposes, as if Polyplex Resins had been a subsidiary of Polyplex Europa since it was established. In addition, the Company recorded the accounts payable as a result of the acquisition of Polyplex Resins, amounting to EUR 5.9 million or equivalent to Baht 244 million, in the consolidated statement of financial
123
ANNUAL REPORT 2012 - 2013 position as at 31 March 2012, in order to reflect the surplus resulting from the business combination. This amount represents payment made by Polyplex Europa in November 2012 for the purpose of investment in Polyplex Resins. The amounts of adjustments affecting the consolidated statement of financial position as at 31 March 2012 and the consolidated statement of income for the year then ended are summarised below. Thousand Baht Statement of financial position Increase in cash and cash equivalents Increase in other current assets Increase in property, plant and equipment Increase in advance payment for purchases of assets Increase in trade and other payables Increase in accounts payable from subsidiary没s acquisition Increase in other current liabilities Increase in unappropriated retained earnings Decrease in other components of shareholders没 equity Increase in non-controlling interests of the subsidiaries Statement of income Increase in administrative expenses Increase in exchange losses Increase in finance cost Decrease in profit for the year Decrease in profit attributable to equity holders of the Company Decrease in profit attributable to non-controlling interests of the subsidiaries Decrease in basic earnings per share (Baht)
149,637 2,880 91,477 102,156 1,074 244,060 4 18,487 31,349 113,874 2,325 3,680 70 6,075 4,070 2,005 0.005
The consolidated statement of financial position as at 1 April 2011, which is presented herein for comparative purposes, was not restated, because Polyplex Resins had yet to be established on that period. In addition, in February 2013 Polyplex Europa made an additional investment in Polyplex Resins amounted to EUR 0.2 million, or equivalent to Baht 10.2 million. h)
In January 2013, the Company acquired additional ordinary shares and preference shares of Polyplex (Americas) Inc., as described in Note 11 to the financial statements. As a result, the Company没s shareholding in Polyplex (Americas) Inc.
124 Polyplex (Thailand) Public Company Limited
has increased from 80.24 percent to 100 percent. Subsequently, Polyplex (Americas) Inc. was merged with Polyplex USA LLC, and Polyplex (Americas) Inc. ceased to exist. 2.3
3.
The separate financial statements, which present investments in subsidiaries under the cost method, have been prepared solely for the benefit of the public.
New accounting standards not yet effective The Federation of Accounting Professions issued the following new/revised accounting standards that are effective for fiscal years beginning on or after 1 January 2013. Accounting standards: TAS 12 Income Taxes TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates Financial Reporting Standard: TFRS 8 Operating Segments Accounting Standard Interpretations: TSIC 10 Government Assistance - No Specific Relation to Operating Activities TSIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets TSIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders Accounting Treatment Guidance for Transfers of Financial Assets The Company没s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied, except for the following accounting standard: TAS 12 Income Taxes This accounting standard requires an entity to identify temporary differences between the carrying amount of an asset or liability in the statement of financial position and its tax base and recognise the tax effects as deferred tax assets or liabilities subjecting to certain recognition criteria. The management of the Company expects the adoption of this accounting standard to have the effect of increasing the Company and its subsidiaries没 brought-forward retained earnings of the fiscal year 2014 by approximately Baht 54 million (the Company only: approximately Bath 54 million). In addition, the Federation of Accounting Professions issued the following new/revised accounting standards that are effective for fiscal years beginning on or after 1 January 2014 and 2016.
125
ANNUAL REPORT 2012 - 2013 Effective date Financial Reporting Standard: TFRS 4 Insurance Contracts Accounting Standard Interpretation: TSIC 29 Service Concession Arrangements: Disclosures Financial Reporting Standard Interpretations: TFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities TFRIC 4 Determining whether an Arrangement contains a Lease TFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds TFRIC 7 Applying the Restatement Approach under TAS 29 Financial Reporting in Hyperinflationary Economies TFRIC 10 Interim Financial Reporting and Impairment TFRIC 12 Service Concession Arrangements TFRIC 13 Customer Loyalty Programmes
1 January 2016 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014
The management of the Company has assessed the effect of the above financial reporting standard, accounting standard interpretation and financial reporting standard interpretations and believes that they are not relevant to the business of the Company or do not have any significant impact on the financial statements.
4.
Significant accounting policies 4.1 Revenue recognition Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances. Interest income Interest income is recognised on an accrual basis based on the effective interest rate. Dividends Dividends are recognised when the right to receive the dividends is established. 4.2 Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.
126 Polyplex (Thailand) Public Company Limited
4.3 Trade receivables Trade receivables are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debt aging. 4.4 Inventories Finished goods and work in process are valued at the lower of cost (average method) and net realisable value. Cost includes all production costs and attributable factory overheads. Raw materials, spare parts and factory supplies are valued at the lower of cost (average method) and net realisable value and are charged to production costs whenever consumed. 4.5 Investments Investments in subsidiaries are accounted for in the separate financial statements using the cost method. The weighted average method is used for computation of the cost of investments. In the event the Company reclassifies investments from one type to another, such investments will be readjusted to their fair value as at the reclassification date. The differences between the carrying amount of the investments and their fair value on the date of reclassification are recorded in profit or loss or recorded as other components of shareholders没 equity, depending on the type of investment that is reclassified. 4.6 Property, plant and equipment/Depreciation Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation of buildings and building improvements, machinery and equipment is calculated by reference to their costs on the straight-line basis. Depreciation of other equipment is calculated on the sum of the year digits basis. The estimated useful lives of plant and equipment are as follows: Buildings and building improvements Machinery and equipment Furniture, fixtures and office equipment Motor vehicles
-
20 and 50 years 4 - 20 years 3 - 10 years 5 - 7 years
Depreciation is included in determining income. No depreciation is provided on land, machinery in transit, and assets under installation and construction.
127
ANNUAL REPORT 2012 - 2013 4.7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 4.8 Intangible assets Intangible assets acquired through business combination are initially recognised at their fair value on the date of business acquisition while intangible assets acquired in other cases are recognised at cost. Following the initial recognition, the intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to profit or loss. A summary of the intangible assets with finite useful lives is as follows: Useful lives Computer software 3 - 5 years 4.9 Goodwill Goodwill is initially recorded at cost, which equals to the excess of cost of business combination over the fair value of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination, the excess is immediately recognised as gain in profit or loss. Goodwill is carried at cost less any accumulated impairment losses. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. 4.10 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company and its subsidiaries, whether directly or indirectly, or which are under common control with the Company and its subsidiaries. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company and its subsidiaries that gives them significant influence over the Company and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of the operations of the Company and its subsidiaries.
128 Polyplex (Thailand) Public Company Limited
4.11 Long-term leases Leases of property, plant or equipment which do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term. 4.12 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the end of reporting period. Gains and losses on exchange are included in determining income. 4.13 Impairment of assets At the end of each reporting period, the Company and its subsidiaries perform impairment reviews in respect of the property, plant and equipment and other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. The Company and its subsidiaries also carry out annual impairment reviews in respect of goodwill. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset没s fair value less costs to sell and its value in use, is less than the carrying amount. An impairment loss is recognised in profit or loss. 4.14 Employee benefits Short-term employee benefits Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred. Post-employment benefits and other long-term employee benefits Defined contribution plans The Company and its employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Company. The fund没s assets are held in a separate trust fund and the Company没s contributions are recognised as expenses when incurred. Defined benefit plans and other long-term employee benefits The Company has obligations in respect of the severance payments it must make to employees upon retirement under labor law and other employee benefit plans. The Company treats these severance payment obligations as a defined benefit plan. In addition, the Company provides other long-term employee benefit plan, namely long service awards.
129
ANNUAL REPORT 2012 - 2013 The obligation under the defined benefit plan and other long-term employee benefit plans is determined by a professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method. For the first-time adoption of TAS 19 Employee Benefits in 2011, the Company elected to recognise the transitional liability, which exceeds the liability that would have been recognised at the same date under the previous accounting policy, through an adjustment to the beginning balance of retained earnings in 2011. 4.15 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 4.16 Income tax Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.
5.
Significant accounting judgements and estimates The preparation of financial statements in conformity with financial reporting standards at times requires management to make subjective judgements and estimates regarding matters that are inherently uncertain. These judgements and estimates affect reported amounts and disclosures; and actual results could differ from these estimates. Significant judgements and estimates are as follows: Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgement and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Property plant and equipment/Depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and residual values of the plant and equipment and to review estimate useful lives and residual values when there are any changes. In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses when it is determined that their recoverable amount is lower than the carrying amount. This requires judgements regarding forecast of future revenues and expenses relating to the assets subject to the review.
130 Polyplex (Thailand) Public Company Limited
Post-employment benefits under defined benefit plans and other long-term employee benefits The obligation under the defined benefit plan and other long-term employee benefit plans is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate.
6.
Related party transactions During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties. (Unit: Million Baht) Consolidated Separate financial statements financial statements 2013 2012 2013 2012 Transactions with subsidiaries (eliminated from the consolidated financial statements) Sales of goods Dividend income Purchases of raw materials Transactions with related companies Sales of goods 36.6 Purchases of raw materials 533.8 806.9 Other expenses 24.1 6.9 Interest expenses 3.9 -
981.4 9.5 2.1 36.6 99.4 7.0 -
Pricing policy
724.4 With reference to market prices 217.6 As declared - With reference to market prices 58.5 4.0 -
With reference to market prices With reference to market prices With reference to market prices 4.5 percent per annum
Purchases of investments in subsidiaries from related parties During the current year, Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi, a subsidiary, acquired investments in Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi from Polyplex (Asia) Pte. Ltd., the Company没s major shareholder, as described in Note 2.2 to the financial statements. In addition, as described in Note 11 to the financial statements the Company acquired additional ordinary shares and preference shares of Polyplex (Americas) Inc. amounting to Baht 23 million, of which Baht 9 million was acquired from Polyplex Corporation Limited.
131
ANNUAL REPORT 2012 - 2013 As at 31 March 2013 and 2012, the balances of the accounts between the Company and those related parties are as follows: (Unit: Thousand Baht)
Consolidated financial statements 2013
Separate financial statements
2012
Trade receivables - related parties (Note 8) Subsidiaries Advance payment for purchases of goods - related party Parent company 31,584 Trade payables - related party (Note 15) Parent company 5,645
2013
2012
-
248,470
220,341
218,211
-
-
13,504
5,645
13,504
Short-term loans to related party and long-term loans from related party As at 31 March 2013 and 2012, the balance of loans between the Company and the related parties, and the movement of these loans are as follows: (Unit: Thousand Baht)
Separate financial statements Short-term loans to related party Polyplex USA LLC
Related by Subsidiary
Balance as at 31 March 2012
Increase during the year
-
334,119
Decrease Balance as at during the 31 March year 2013 (334,119)
-
(Unit: Thousand Baht)
Consolidated financial statements Long-term loans from related party Polyplex (Asia) Pte. Ltd.
Related by Major shareholder
Balance as at 31 March 2012
Increase during the year
-
430,732
Decrease Balance as at during the 31 March year 2013 -
430,732
As at 31 March 2013, long-term loans from related party represent interest-free loans of a subsidiary. The loans are repayable within 1 year and 3 months. If on the maturity date, the subsidiary is unable to repay the loans in full, the loans shall be extended for additional period of 1 years and 3 months.
132 Polyplex (Thailand) Public Company Limited
Directors and management没s remuneration During the years ended 31 March 2013 and 2012, the Company and its subsidiaries had employee benefit expenses payable to their directors and management as below. (Unit: Thousand Baht)
Consolidated financial statements 2013 Short-term employee benefits Post-employment benefits Total
2012 93.6 0.3 93.9
64.1 0.3 64.4
Separate financial statements 2013
2012
31.1 31.1
33.3 33.3
Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 26.4 to the financial statements.
7.
Cash and cash equivalents (Unit: Thousand Baht)
Consolidated financial statements 2013 Cash Bank deposits Total
2,387 1,465,950 1,468,337
2012 (Restated) 2,154 1,679,656 1,681,810
Separate financial statements 2013 740 75,183 75,923
2012 716 28,925 29,641
As at 31 March 2013, bank deposits in saving accounts and fixed deposits carried interests between 0.05 and 7.15 percent per annum (2012: between 0.05 and 10.10 percent per annum).
133
ANNUAL REPORT 2012 - 2013
8.
Trade receivables The balances of trade receivables as at 31 March 2013 and 2012, aged on the basis of due dates, are summarised below. (Unit: Thousand Baht)
Consolidated financial statements Trade receivables - unrelated parties Not yet due Past due Up to 3 months 3 - 6 months Over 6 months Total Less: Allowance for doubtful debts Net Trade receivables - related parties Not yet due Past due 3 - 6 months Total Total trade receivables - net
9.
Separate financial statements
2013
2012
2013
2012
1,223,317
1,334,328
464,042
565,916
135,132 21,365 11,482 1,391,296 (6,914) 1,384,382
54,482 8,704 2,755 1,400,269 (3,577) 1,396,692
47,899 75 1,234 513,250 (1,162) 512,088
13,683 5,935 1,162 586,696 (1,162) 585,534
-
-
244,661
220,341
1,384,382
1,396,692
3,809 248,470 760,558
220,341 805,875
Inventories (Unit: Thousand Baht)
Consolidated financial statements Cost 2013 Finished goods 544,403 Work in process 253,504 Raw materials 546,170 Spare parts and factory supplies 235,748 Goods in transit 180,911 Total 1,760,736
134 Polyplex (Thailand) Public Company Limited
2012 528,827 197,822 512,851 179,796 210,749 1,630,045
Reduce cost to net realisable value 2013 2012 (7,578) (11,720) (19,298)
(4,125) (2,128) (6,253)
Inventories - net 2013 2012 536,825 241,784 546,170 235,748 180,911 1,741,438
524,702 195,694 512,851 179,796 210,749 1,623,792
(Unit: Thousand Baht)
Separate financial statements Reduce cost to net realisable value 2013 2012
Cost 2013
2012
71,489 156,162 312,075 144,160 4,665 688,551
34,480 107,807 314,284 94,000 17,356 567,927
Finished goods Work in process Raw materials Spare parts and factory supplies Goods in transit Total
(4,794) (11,721) (16,515)
Inventories - net 2013 2012
(1,195) (2,128) (3,323)
66,695 144,441 312,075 144,160 4,665 672,036
33,285 105,679 314,284 94,000 17,356 564,604
10. Restricted bank deposits These represent fixed deposits amounting to USD 404,802 million, pledged with the bank as per terms and conditions of the long-term loan facility of Polyplex USA LLC.
11. Investments in subsidiaries These represent investments in ordinary shares and preference shares in the following subsidiary companies: (Unit: Thousand Baht)
Separate financial statements Company没s name
Paid-up capital 2013 2012
Shareholding percentage 2013 2012 Percent Percent
Cost 2013
2012
Dividend received for the years ended 31 March 2013 2012
Ordinary shares Polyplex (Singapore) Pte. Ltd.
EUR EUR 0.8 million 0.8 million Polyplex (Americas) Inc. USD - 1.3 million Polyplex America Holdings Inc. USD USD 29.6 million 22.0 million EcoBlue Limited Baht 20.1 million Preference shares Polyplex (Singapore) Pte. Ltd. Polyplex (Americas) Inc.
EUR EUR 8.4 million 8.4 million USD - 4.2 million
Total investments in subsidiaries
100.00
100.00
41,440
41,440
-
80.24
-
41,661
1,920
4,673
100.00 880,249 675,954
-
-
100.00 80.00
100.00 -
-
19,277 940,966 759,055
100.00 414,581 414,581 96.15
- 139,856 414,581 554,437 1,355,547 1,313,492
- 191,316
1,920 195,989
-
3,192
7,564 18,415 7,564 21,607 9,484 217,596
135
ANNUAL REPORT 2012 - 2013 During the current year, the Company invested Baht 19 million in ordinary shares of EcoBlue Limited, in accordance with a resolution of the meeting of the Board of Directors of the Company held on 8 August 2012. The Company has an 80% interest in this company. In accordance with a resolution of a meeting of the Board of Directors of the Company held on 7 January 2013, in January 2013 the Company made an additional investment in Polyplex (Americas) Inc., comprising 19.76% of all ordinary shares and 32,000 preference shares (equivalent to 3.85% of all preference shares), with a total acquisition cost of USD 0.76 million, or equivalent to Baht 23 million. After the acquisition, the Company没s interest in the ordinary shares and preference shares of Polyplex (Americas) Inc. increased to 100%. The difference between the cost of the additional investment and the carrying amount of the non-controlling interests acquired, amounting to Baht 3.3 million, has been presented in other components of shareholders没 equity in the consolidated statement of changes in shareholders没 equity. After the above additional investment in Polyplex (Americas) Inc., Polyplex (Americas) Inc. was merged with Polyplex USA LLC, whereby Polyplex America Holdings Inc. issued 1,524 ordinary shares with a par value of USD 0.01 each to the Company at USD 7.6 million to replace the ordinary shares and preference shares of Polyplex (Americas) Inc., which were cancelled. As at 31 March 2013 and 2012, the Company had investments in 39,100 preference shares of Polyplex (Singapore) Pte. Ltd. These preference shares are non-cumulative and nonparticipative preference shares. The Company is entitled to receive dividend at a rate not to exceed 7% per annum, in the year in which dividend is declared.
136 Polyplex (Thailand) Public Company Limited
137
Cost 1 April 2011 Purchases - restated Disposals Transfer in/(Transfer out) Capitalised interest Translation adjustment - restated 31 March 2012 - restated Purchases Disposals Transfer in/(Transfer out) Capitalised interest Translation adjustment 31 March 2013 1,017,129 5,582 207,831 (22,635) 1,207,907 890 1,059 (48,527) 1,161,329
(2,246) 371,508 (13,299) 358,209
(111,697) 6,176,924 59,647 (17,491) 27,156 (244,272) 6,001,964
5,700,902 19,155 568,564 (1,714) 94,448 14,473 (521) 2,258 (4,808) 105,850
76,925 14,325 (191) 5,103 (523) 41,739 16,359 (12,826) 10,663 (2,052) 53,883
33,563 7,178 1,521 -
Motor vehicles
4,190 560,633 5,805,149 (22,550) (41,136) 84,175 (213,436) 6,172,835
567,436 748,005 (766,741) 7,743
Assets under installation and construction
Consolidated financial statements Buildings and Furniture, building Machinery and fixtures and improvements equipment office equipment
323,457 120,318 (70,021) -
Land
12. Property, plant and equipment
2,236 2,236
16,278 (16,278) -
Machinery in transit
(134,625) 8,453,159 5,898,754 (53,388) 84,175 (526,394) 13,856,306
7,735,690 914,563 (70,212) 7,743
Total
(Unit: Thousand Baht)
Accumulated depreciation 1 April 2011 135,640 1,547,475 49,143 Depreciation for the year 34,449 318,673 10,362 Disposals (125) Translation adjustment (2,189) (28,362) (952) 31 March 2012 167,900 1,837,786 58,428 Depreciation for the year 43,430 344,559 13,843 Disposals (1,725) (459) Translation adjustment (5,662) (74,429) (2,628) 31 March 2013 205,668 2,106,191 69,184 Net book value 31 March 2012 - restated 371,508 1,040,007 4,339,138 36,020 31 March 2013 358,209 955,661 3,895,773 36,666 Depreciation for the year 2012 (Baht 344.5 million included in manufacturing cost, and the balance in selling and administrative expenses) 2013 (Baht 379.5 million included in manufacturing cost, and the balance in selling and administrative expenses)
Land
Buildings and Furniture, building Machinery and fixtures and improvements equipment office equipment
560,633 6,172,835
24,226 5,238 (468) 28,996 9,411 (9,926) (895) 27,586 12,743 26,297
Motor vehicles
Assets under installation and construction
Consolidated financial statements
138 Polyplex (Thailand) Public Company Limited 2,236
Machinery in transit
368,722 411,243
6,360,049 11,447,677
1,756,484 368,722 (125) (31,971) 2,093,110 411,243 (12,110) (83,614) 2,408,629
Total
(Unit: Thousand Baht)
ANNUAL REPORT 2012 - 2013
139
Cost 1 April 2011 Purchases Disposals Transfer in/(Transfer out) Capitalised interest 31 March 2012 Purchases Disposals Transfer in/(Transfer out) Capitalised interest 31 March 2013 196,627 196,627 196,627
Land
441,582 5,582 206,397 653,561 890 1,050 655,501
2,883,365 19,155 522,467 3,424,987 13,441 (14,347) 300 3,424,381
33,585 13,220 (29) 46,776 2,992 (108) 276 49,936
Buildings and Furniture, building Machinery and fixtures and improvements equipment office equipment
18,158 4,661 22,819 9,896 (1,624) 31,091
Motor vehicles
565,049 149,590 (712,586) 7,743 9,796 2,080,753 (880) (1,626) 17,624 2,105,667
Assets under installation and construction
Separate financial statements
16,278 (16,278) 2,235 2,235
Machinery in transit
4,154,644 192,208 (29) 7,743 4,354,566 2,110,207 (16,959) 17,624 6,465,438
Total
(Unit: Thousand Baht)
Accumulated depreciation 1 April 2011 86,453 915,275 26,252 Depreciation for the year 23,115 163,397 5,833 Disposals (29) 31 March 2012 109,568 1,078,672 32,056 Depreciation for the year 32,752 190,438 6,354 Disposals (1,235) (45) 31 March 2013 142,320 1,267,875 38,365 Net book value 31 March 2012 196,627 543,993 2,346,315 14,720 31 March 2013 196,627 513,181 2,156,506 11,571 Depreciation for the year 2012 (Baht 186.5 million included in manufacturing cost, and the balance in selling and administrative expenses) 2013 (Baht 223.2 million included in manufacturing cost, and the balance in selling and administrative expenses)
Land
Buildings and Furniture, building Machinery and fixtures and improvements equipment office equipment
9,796 2,105,667
11,622 3,937 15,559 4,968 (1,244) 19,283 7,260 11,808
Motor vehicles
Assets under installation and construction
Separate financial statements
140 Polyplex (Thailand) Public Company Limited 2,235
Machinery in transit
196,282 234,512
3,118,711 4,997,595
1,039,602 196,282 (29) 1,235,855 234,512 (2,524) 1,467,843
Total
(Unit: Thousand Baht)
ANNUAL REPORT 2012 - 2013
As at 31 March 2013, certain equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation) of those assets amounted to approximately Baht 38.9 million (2012: Baht 42.6 million) (The Company only: Baht 25.4 million, 2012: Baht 20.3 million). The Company and its subsidiaries have pledged their assets amounting to approximately Baht 2,465.8 million (2012: Baht 2,128.7 million) as collateral against credit facilities received from financial institutions (The Company only: Baht 2,379.9 million, 2012: Baht 1,944.6 million). In July 2012, Polyplex USA LLC acquired a group of assets used in its metallized film business from a company, with the acquisition cost of approximately USD 6.3 million. The acquired group of assets are summarised below. Trade receivables Inventories Machinery and equipment
Million USD 2.8 1.7 1.8
The acquired machinery and equipment of USD 1.8 million, or equivalent to Baht 54.8 million, was already included in the movements of the property, plant and equipment account during the year.
13. Intangible assets Details of intangible assets (computer software) are as follows: (Unit: Thousand Baht)
Consolidated financial statement Cost 1 April 2011 Purchases Translation adjustment 31 March 2012 Purchases Disposals Translation adjustment 31 March 2013
5,084 1,433 (232) 6,285 2,111 (276) (646) 7,474
141
ANNUAL REPORT 2012 - 2013 (Unit: Thousand Baht)
Consolidated financial statement Accumulated amortisation 1 April 2011 Amortisation expenses for the year Translation adjustment 31 March 2012 Amortisation expenses for the year Disposals Translation adjustment 31 March 2013 Net book value 31 March 2012 31 March 2013 Amortisation expenses for the year 2012 2013
3,730 710 (162) 4,278 734 (276) (398) 4,338 2,007 3,136 710 734
14. Short-term loans from financial institutions (Unit: Thousand Baht) Interest rate (percent per annum) 2013 2012 Short-term loans from banks Promissory notes (packing credits) Total
LIBOR + 1.5% and LIBOR + 2.0% LIBOR + 1.5% 3.45% - 3.55%
3.45%
Consolidated financial statements 2013 2012
Separate financial statements 2013 2012
659,440
246,745
-
-
385,000 1,044,440
80,000 326,745
385,000 385,000
80,000 80,000
Short-term loans from banks as at 31 March 2013 represent the US dollar loans of USD 22.5 million (2012: USD 8.0 million) obtained by subsidiaries. These loans were guaranteed by the Company.
142 Polyplex (Thailand) Public Company Limited
15. Trade and other payables (Unit: Thousand Baht)
Consolidated financial statements 2013 Trade payables - related party Trade payables - unrelated parties Other payables Other payables for purchases of fixed assets Total trade and other payables
5,645 1,035,298 59,920 77,515 1,178,378
2012 (Restated) 13,504 1,018,140 1,074 61,288 1,094,006
Separate financial statements 2013
2012
5,645 540,480 41,438 77,515 665,078
13,504 527,535 61,288 602,327
16. Provision for long-term employee benefits Provision for long-term employee benefits, which is compensations on employees没 retirement, was as follows: (Unit: Thousand Baht)
Consolidated financial statements 2013 Defined benefit obligation at beginning of year Current service cost Interest cost Benefits paid during the year Translation adjustment Provisions for long-term employee benefits at end of year
2012
Separate financial statements 2013
2012
9,768 12,393 512 (5,524) (638)
7,627 6,769 501 (4,988) (141)
6,052 1,429 244 (284) -
4,370 1,501 181 -
16,511
9,768
7,441
6,052
Long-term employee benefit expenses included in the profit or loss was as follows: (Unit: Thousand Baht)
Consolidated financial statements 2013 Current service cost Interest cost Total expense recognised in profit or loss
12,393 512 12,905
2012 6,769 501 7,270
Separate financial statements 2013 1,429 244 1,673
2012 1,501 181 1,682
143
ANNUAL REPORT 2012 - 2013 Principal actuarial assumptions at the valuation date were as follows: (Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 (% per annum) (% per annum) (% per annum) (% per annum) Discount rate Future salary increase rate (depending on age of employee)
4.2 and 10.0
4.2 and 10.0
4.2
4.2
3.0 - 8.0
3.0 - 8.0
3.0 - 8.0
3.0 - 8.0
17. Long-term loans from financial institutions (Unit: Thousand Baht)
Loans
Repayment schedule
Floating rate loans Repayable as from (Euribor + 0.6% to 3.8%) April 2006 to August 2019 Floating rate loans Repayable as from (Libor + 1.50% to 2.95%) October 2009 to July 2020 Fixed rate loans Repayable as from (3.83% to 5.54%) April 2006 to July 2016 Total Less: Current portion Long-term loans - net of current portion
Consolidated financial statements 2013 2012
Separate financial statements 2013 2012
1,738,993
349,312
872,905
163,371
3,481,310
1,115,105
1,954,340
1,115,105
106,600 5,326,903 (455,194) 4,871,709
149,860 1,614,277 (363,760) 1,250,517
106,600 2,933,845 (371,427) 2,562,418
149,860 1,428,336 (271,996) 1,156,340
The Company没s loan facilities are secured by the mortgage of land, premises and machinery of the Company. The subsidiary没s loan facilities are secured by the mortgage of its land and premises and the pledge of its machinery and bank deposits, and are guaranteed by the Company as described in Note 26.4 to the financial statements. The loan agreements contain covenants that, among other things, require the Company and its subsidiaries to maintain a certain debt to equity ratio and debt service coverage ratio, and require a subsidiary to maintain a particular current ratio. As at 31 March 2013, the Company had two interest rate swap agreements with a bank, under which the Company agreed to swap a floating interest rate of LIBOR for a fixed interest rate of 2.61 percent per annum on outstanding principal of USD 1.6 million and to swap a floating interest rate of LIBOR for a fixed interest rate of 3.54 percent per annum on outstanding principal of USD 2.04 million. The swap agreements will mature on 31 July 2016.
144 Polyplex (Thailand) Public Company Limited
18. Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. At present, the statutory reserve has fully been set aside.
19. Expenses by nature Significant expenses by nature are as follows: (Unit: Thousand Baht)
Consolidated financial statements Salaries, wages and other employee benefits Depreciation and amortisation Loss on diminutions in value of inventories Raw materials and consumables used Changes in inventories of finished goods and work in process
Separate financial statements
2013
2012
2013
2012
805,098 411,977 13,192 5,704,793
553,559 369,432 2,720 5,688,152
310,463 234,512 13,192 3,070,983
249,981 196,282 2,720 3,040,290
(71,258)
92,955
(85,364)
2,836
20. Income tax No corporate income tax was payable for the years since the Company has been granted promotional privileges under the Investment Promotion Act B.E. 2520 by the Board of Investment and has tax loss brought forward in excess of profit from non-promoted operations for the years. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi, a subsidiary and being a manufacturing company which operates in a Free Trade Zone, is eligible to benefit from corporate tax exemptions, until the end of the financial year of full membership of Turkey to the European Union. However, this exemption is limited to the earnings related to the sale of manufactured goods.
21. Promotional privileges The Company has received promotional privileges from the Board of Investment for the manufacture of polyester films, metallized films, extrusion coated films, cast polypropylene films, silicone coated films and PET resins. As a promoted company, the Company must comply with certain conditions and restrictions provided for in the promotional certificates.
145
ANNUAL REPORT 2012 - 2013 The Company没s sales for the years ended 31 March 2013 and 2012 divided according to promoted and non-promoted operations are set out below. (Unit: Thousand Baht)
Separate financial statements Promoted operations Non-promoted operations 2013 2012 2013 2012 Sales Domestic sales Export sales Total sales
977,049 3,165,864 4,142,913
917,290 3,619,290 4,536,580
50,323 12,204 62,527
3,329 20,737 24,066
Total 2013
2012
1,027,372 3,178,068 4,205,440
920,619 3,640,027 4,560,646
22. Basic earnings per share Basic earnings per share is calculated by dividing profit for the year attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year. The computation of basic earnings per share has details below. (Unit: Thousand Baht)
Consolidated financial statements 2013 Profit for the year (Thousand Baht) Weighted average number of ordinary shares (Thousand shares) Earnings per share (Baht per share)
2012 (Restated)
Separate financial statements 2013
2012
373,971
1,357,608
78,356
435,142
800,000 0.47
800,000 1.70
800,000 0.10
800,000 0.54
23. Dividends (Unit: Baht)
Dividends Final dividends for 2011 Interim dividends for 2012
Approved by Annual General Meeting of the shareholders on 28 July 2011 Board of Directors没 meeting on 26 July 2011
Total dividends for fiscal year 2012 Final dividends for 2012 Total dividends for fiscal year 2013
146 Polyplex (Thailand) Public Company Limited
Annual General Meeting of the shareholders on 27 July 2012
Total dividends Dividend per share 1,080,000,000
1.350
280,000,000 1,360,000,000
0.350 1.700
136,000,000 136,000,000
0.170 0.170
24. Segment information The Company and its subsidiaries没 operations involve principally a single industry segment, the manufacture and distribution of polyester films, metallized films, extrusion coated films, cast polypropylene films and PET resins, and are carried on in two geographic areas in Thailand and overseas countries, as operated by subsidiaries. The financial information of the Company and its subsidiaries by geographical segment, for the years ended 31 March 2013 and 2012 are as follows: (Unit: Million Baht)
Thailand 2013 2012
Overseas countries 2013 2012 (Restated)
Elimination of inter-segment revenues 2013 2012
Consolidation 2013 2012 (Restated)
Sales to external customers 3,224.0 3,836.2 6,006.0 6,306.9 - 9,230.0 10,143.1 Inter-segment sales 981.4 724.4 804.7 972.5 (1,786.1) (1,696.9) Total sales 4,205.4 4,560.6 6,810.7 7,279.4 (1,786.1) (1,696.9) 9,230.0 10,143.1 Segment operating profit 124.3 469.2 365.4 1,176.3 (27.8) (197.3) 461.9 1,448.2 Unallocated income and expenses: Finance cost (86.8) (56.2) Income tax expenses (11.6) (34.2) Non-controlling interests of the subsidiaries 10.5 (0.2) Profit for the year attributable to equity holders of the Company 374.0 1,357.6 As at 31 March 2013 and 2012 Property, plant and equipment 4,997.6 3,118.7 Intangible assets Unallocated assets Total assets
6,461.4 3,241.3 3.1 2.0
(11.3) -
- 11,447.7 6,360.0 3.1 2.0 5,005.8 5,577.0 16,456.6 11,939.0
Transfer prices between segments are as set out in Note 6 to the financial statements.
25. Provident fund The Company and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company contributed to the fund monthly at the rates of 4 - 7 percent (2012: 4 - 7 percent) of basic salary. The fund, which is managed by a licensed fund manager, will be paid to employees in accordance with the fund rules. During the year ended 31 March 2013, the Company contributed Baht 4,706,804 (2012: Baht 3,663,926) to the fund.
147
ANNUAL REPORT 2012 - 2013
26. Commitments and contingent liabilities 26.1 Capital commitments As at 31 March 2013, the Company and its subsidiaries had capital commitments of approximately Baht 736.4 million (2012: Baht 2,081.8 million), relating to the construction of building and acquisition of machinery and equipment (The Company only: Baht 263.9 million, 2012: Baht 1,178.1 million). 26.2 Operating lease commitments The Company has entered into several lease agreements in respect of the lease of office building space and equipment. Future minimum rentals payable under these leases are as follows: (Unit: Million Baht)
As at 31 March 2013 Payable: In up to 1 year In over 1 and up to 5 years
2012 8.1 6.1
4.8 4.8
26.3 Service agreements As at 31 March 2013, the Company had commitments totaling Baht 197.0 million under various service agreements (2012: Baht 221.0 million). These agreements expire between April 2013 and September 2016. 26.4 Guarantees a) As at 31 March 2013, the Company has provided short-term guarantee worth USD 30.0 million (2012: USD 20.0 million) for working capital facilities obtained by a subsidiary, Polyplex USA LLC. b) As at 31 March 2013, the Company has provided guarantee of USD 75 million for the long-term loans obtained by its subsidiary (Polyplex USA LLC). As at 31 March 2013, the outstanding balance of this subsidiary没s loan was USD 52.1 million. c) As at 31 March 2013, the Company has provided guarantee of EUR 2.3 million (2012: EUR 4.5 million) for the long-term loans obtained by its subsidiary (Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi). d) Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi has provided guarantee for the long-term loans obtained by Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi to the extent of EUR 27.5 million. As at 31 March 2013, the outstanding balance of this loan was EUR 20.7 million, of which EUR 13.9 million was guaranteed by Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi.
148 Polyplex (Thailand) Public Company Limited
e)
f)
The Company has provided guarantee of Baht 15.0 million for credit facilities obtained by its subsidiary (EcoBlue Limited). As at 31 March 2013, the subsidiary has yet to utilise these credit facilities. As at 31 March 2013, there were outstanding bank guarantees of approximately Baht 0.7 million and EUR 15.7 million (2012: Baht 63.8 million and EUR 25.9 million) issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of businesses (The Company only: Baht 0.7 million, 2012: Baht 63.8 million).
27. Financial instruments 27.1 Financial risk management The Company and its subsidiariesû financial instruments, as defined under Thai Accounting Standard No. 107 çFinancial Instruments: Disclosure and Presentationsé, principally comprise cash and cash equivalents, trade and other receivables, investments, trade and other payables, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade receivables and other receivables. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and considering credit insurance contracts from time to time, and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables and other receivables as stated in the statements of financial position. Interest rate risk The Company and its subsidiariesû exposure to interest rate risk relates primarily to its cash at banks, bank overdrafts, and short-term and long-term borrowings. Most of the Company and its subsidiariesû financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate. In addition, the Company considers interest rate swap agreements from time to time so as to reduce exposure to the interest rate risk. Significant financial assets and liabilities classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.
149
70.7 70.7
-
Financial liabilities Short-term loans from financial institutions 385.0 Trade and other payables Accounts payable from subsidiary没s acquisition Long-term loans from related party Long-term loans from financial institutions 35.9 420.9
Financial Assets Cash and cash equivalents Current investments Trade receivables
150 Polyplex (Thailand) Public Company Limited - 659.4 - 1,178.4 - 430.7 - 5,220.3 - 5,879.7 1,609.1
1,044.4 See Note 14 1,178.4 430.7 See Note 6 5,326.9 See Note 17 7,980.4
80.0 37.7 117.7
112.2 112.2
-
Total Interest rate (% p.a.)
- 246.7 - 326.7 See Note 14 - 1,094.0 1,094.0 - 244.1 244.1 - 1,464.4 - 1,614.3 See Note 17 - 1,711.1 1,338.1 3,279.1
- 1,340.5 341.3 1,681.8 See Note 7 - 1,396.7 1,396.7 - 1,340.5 1,738.0 3,078.5
As at 31 March 2012 Fixed interest rates Floating NonWithin 1-5 Over 5 interest interest Total Interest rate 1 year years years rate bearing (% p.a.) (Million Baht)
- 1,233.3 235.0 1,468.3 See Note 7 94.0 94.0 - 1,384.4 1,384.4 - 1,233.3 1,713.4 2,946.7
As at 31 March 2013 Fixed interest rates Floating NonWithin 1-5 Over 5 interest interest 1 year years years rate bearing (Million Baht)
Consolidated financial statements
ANNUAL REPORT 2012 - 2013
151
Financial liabilities Short-term loans from financial institutions Trade and other payables Long-term loans from financial institutions
Financial Assets Cash and cash equivalents Current investments Trade receivables
385.0 35.9 420.9
70.7 70.7
-
74.2 74.2
- 2,827.2 - 2,827.2
-
75.9 See Note 7 78.0 760.6 914.5 80.0 37.7 117.7
112.2 112.2
-
27.5 27.5 - 1,278.4 - 1,278.4
-
29.6 See Note 7 805.9 835.5
Total Interest rate (% p.a.)
80.0 See Note 14 602.3 602.3 - 1,428.3 See Note 17 602.3 2,110.6
2.1 805.9 808.0
As at 31 March 2012 Fixed interest rates Floating NonWithin 1-5 Over 5 interest interest Total Interest rate 1 year years years rate bearing (% p.a.) (Million Baht)
- 385.0 See Note 14 665.1 665.1 - 2,933.8 See Note 17 665.1 3,983.9
1.7 78.0 760.6 840.3
As at 31 March 2013 Fixed interest rates Floating NonWithin 1-5 Over 5 interest interest 1 year years years rate bearing (Million Baht)
Separate financial statements
ANNUAL REPORT 2012 - 2013 As at 31 March 2013, the Company had interest rate swap agreements with a bank to swap floating interest rate to fixed interest rate, as described in Note 17 to the financial statements. Foreign currency risk The Company and its subsidiaries没 exposure to foreign currency risk arise mainly from trading transactions and borrowings that are denominated in foreign currencies. The Company and its subsidiaries seek to reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year. The Company没s balances of financial assets and liabilities denominated in foreign currencies are summarised below. Foreign currency
Financial assets
Financial liabilities
Average exchange rate
as at 31 March 2013 2012 (Million) (Million)
as at 31 March 2013 2012 (Million) (Million)
as at 31 March 2013 2012 (Baht per 1 foreign currency unit)
US dollar Euro Japanese yen Swiss franc
15.33 1.17 42.09 -
13.78 3.01 35.93 -
71.29 23.53 0.20 -
41.88 4.28 2.42 2.70
29.3085 37.5712 0.3115 30.8765
30.8431 41.1741 0.3755 34.1646
The Company没s foreign exchange contracts outstanding are summarised below.
Foreign currency
As at 31 March 2013 Bought Sold Contractual exchange rate amount amount Bought Sold (Million) (Million) (Baht per 1 foreign currency unit)
US dollar
2.08
Swiss franc Euro
0.30 0.57
Japanese yen
152 Polyplex (Thailand) Public Company Limited
-
19.39 Baht 29.4650 - 30.2650 Baht 29.5920 - 30.9750 per USD 1 per USD 1 - Baht 32.8089 per CHF 1 1.09 Baht 37.9000 - 39.5700 Baht 38.0200 - 40.8268 per EUR 1 per EUR 1 60.06 Baht 0.3121 - 0.3254 per JPY 1
Foreign currency
As at 31 March 2012 Bought Sold Contractual exchange rate amount amount Bought Sold (Million) (Million) (Baht per 1 foreign currency unit)
US dollar
1.62
Swiss franc
1.35
Euro
0.68
Japanese yen
-
18.98 Baht 30.4600 - 32.0863 Baht 30.5146 - 32.2094 per USD 1 per USD 1 - Baht 31.6988 - 40.9692 per CHF 1 2.53 Baht 41.1600 - 41.6000 Baht 40.5600 - 41.7100 per EUR 1 per EUR 1 35.97 Baht 0.3753 - 0.3756 per JPY 1
A subsidiary had forward foreign exchange contracts as follows:
Bought amount YTL 3.5 million YTL 0.5 million
As at 31 March 2013 Contractual exchange rate YTL 1.8005 - 1.8231 per USD 1 YTL 2.3860 per EUR 1 As at 31 March 2012
Bought amount YTL 1.70 million EUR 1.00 million
Contractual exchange rate YTL 1.8220 - 1.8370 per USD 1 USD 1.3084 - 1.3085 per EUR 1
27.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries没 financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the statements of financial position. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm没s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.
153
ANNUAL REPORT 2012 - 2013
28. Capital management The primary objective of the Company没s capital management is to ensure that it has appropriate capital structure in order to support its business and maximise shareholder value. As at 31 March 2013, the Group没s debt-to-equity ratio was 1.01:1 (2012: 0.41:1) and the Company没s debt-to-equity ratio was 1.02:1 (2012: 0.54:1).
29. Approval of financial statements These financial statements were authorised for issue by the Company没s authorised directors on 20 May 2013.
154 Polyplex (Thailand) Public Company Limited
155
1 Mr.Manu Leopairote
Name-Surname
Board Chairman & Audit Committee Chairman
Position
70
Age (Years) ë Bachelorûs degree Economics (Hons.), Thammasat University ë Masterûs degree M.Sc. (Econ.), University of Kentucky, USA ë Ph.D in Business Administration (Honorary), Thammasat University ë Certificate, Industrial Development, Nagoya, Japan ë The National Defense College, Class 34 ë Certificate, Thai Institute of Directors (IOD) ë The Role of Chairman Program (RCM), Class 3/2001 ë Directors Certification Program (DCP), Class 30/2003
Education/Training -
-
Relation among % of family within Shareholding Company
2011-Present
2004-Present
2006-Present
2010-Present 2004-Present
2005-2010
2003-Present
2004-Present
Period
Information of Director and Management of the Company Company / Type of Business
Board Chairman & Chairman Polyplex (Thailand) Plc. of the Audit Committee Counselor of State The Council of State (Trade and Industry) Chairman Neighboring Countries Economic Development Agency Chairman ARIP Public Company Limited Chairman Khon Kaen Sugar Industry Public Company Limited Chairman of Audit Committee Siam Steel International Public Company Limited Independent Director/ Thai Beverage Public Co. Ltd Audit Committee Member (Singapore Stock market) Chairman T.M.C Industrial Public Co.Ltd
Position
Working Experiences in the 5 preceding years
Director & Vice Chairman
Director
Director
3 Mr.Pranay Kothari
4 Mr. Manish Gupta
Position
2 Mr.Sanjiv Saraf
Name-Surname
156 Polyplex (Thailand) Public Company Limited
44
54
55
Age (Years)
ë Masterûs degree MBA, India of Institute of Management, Bangalore
ë Fellow Chartered Accountant - Institute of Chartered Accountants of India ë Qualified Company Secretary - The Institute of Company Secretaries of India
ë Bachelorûs degree Agricultural Engineering, Indian Institute of Technology, Kharagpur
Education/Training
-
-
-
-
-
-
Relation among % of family within Shareholding Company Position
Managing Director Vice - Chairman Chairman Director
Director Executive Director Director
Polyplex (Singapore) Pte. Ltd. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi, Turkey Polyplex (Thailand) Plc. Polyplex Corporation Ltd. Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi
Polyplex (Asia) Pte. Ltd. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi, Turkey Polyplex (Thailand) Plc. Polyplex (Thailand) Plc. Polyplex Corporation Ltd. Polyplex America Holding Inc.
Company / Type of Business
March 2008 Group CFO-Polyplex group Polyplex Corporation Ltd. -Present November 2012 Director Polyplex (Thailand) Plc. -Present
2002-Present 1996-Present 2011-Present
2004-Dec 2011 Director 2004-Present Director
2002-July 2010 July 2010-Present May 2002-Present 2011-Present
May 2011-Present General Manager & CEO 2004-Present Director & Chairman
Period
Working Experiences in the 5 preceding years
ANNUAL REPORT 2012 - 2013
157
Position
5 Dr.Virabongsa Ramangkura Director & Audit Committee member
Name-Surname
70
Age (Years) ë Bachelorûs degree First Class Honors, B.A. in Political Science, Chulalongkorn University ë Masterûs Degree Economics, University of Pennsylvania, U.S.A. ë Ph.D.(Econonmics), University of Pennsylvania, U.S.A. ë Doctor of Law (Honorary), Webster University, USA ë Decoration - Knight Grand Cordon (Special Class) of the most Exalted Order of the White Elephant - Knight Grand Cordon (Special Class) of the most Noble Order of the Crown of Thailand
Education/Training -
-
Relation among % of family within Shareholding Company Position
Company / Type of Business
Director & Audit Committee Polyplex (Thailand) Plc. member Nov 2011-Present Chairman Strategic Formulation Committee for Reconstruction and Future Development (SCRF) 1994-Present Chairman Bangkok Expressway Public Co., Ltd. 1995-Present Chairman of the Double A (1991) Public Co., Ltd. Executive Board 2004-Present Chairman Thai-Lao Association for Friendship 2005-Present Chairman Finansa Co., Ltd. 2006-Present Chairman South East Asia Energy Co., Ltd. 2005-Present Chairman Bang-Mod Hospital Co., Ltd. 2000-Present Chairman Nam Ngum 2 Power Company Limited Present Director Thailand Development Research Institute Foundation 2008-Present Chairman of the Advisory King Power International Co., Ltd. Board 2004-Present Advisory Chairman Areeya Property Public Co., Ltd.
2004-Present
Period
Working Experiences in the 5 preceding years
49
7 Mr.Shiraz Erach Poonevala Director & Audit Committee Member
Age (Years)
67
Position
6 Mr.Praphad Phodhivorakhun Director
Name-Surname
158 Polyplex (Thailand) Public Company Limited ë Bachelor of Commerce Sydenham College of Commerce, India ë Master of Commerce Sydenham College of Commerce, India ë Associate Chartered Accountant Institute of Chartered Accountants of India
ë HND in Business Administration from Sheffield College of Technology, Sheffield, England. ë Master Degree Business Administration (MBA), Public Administration (MPA) Ramkhamhaeng University ë Honourary Doctorate Degree in Business Administration Rajabhat University of Lampang
Education/Training
-
-
-
-
Relation among % of family within Shareholding Company Position
March 2008 -Present
2004-Present
Director & Audit Comittee member Director - Investment
Director Chairman of Board of Directors Chairman of Board of Directors Chairman of Board of Directors July 1996-Present Chairman of Board of directors July 1994-Present Director
2004-Present October 1999 -Present November 1995 -Present May 2005-Present
Period
G.P. Group of Companies Limited
Polyplex (Thailand) Pcl.
Yokohama Rubbers (Thailand) Co., Ltd. Kulthorn Kirby Public Company Limited
Mitsubishi Electric Kang Yong Wattana Co., Ltd. Siam City Leasing and Factoring Pcl.
Polyplex (Thailand) Plc. Kang Yong Electric Pcl.
Company / Type of Business
Working Experiences in the 5 preceding years
ANNUAL REPORT 2012 - 2013
159
Business Head - SARALAM
10 Mr. Ramesh Gupta
46
38
Chief Financial Officer
9 Mr.Vinod Sureka
Age (Years)
42
Position
8 Mr.Rohit Kumar Vashistha Managing Director
Name-Surname
B Tech, REC Allahabad, University of Allahabad - INDIA PGDBM - Marketing, Management development Institute, Gurgaon - INDIA
ë Bachelor of Commerce, Calcutta University, INDIA, ë Chartered Accountant, The Institute of Chartered Accountants of India (ICAI)
ë Bachelorûs degree in Metallargy, IT -BHU, India ë Masterûs degree International business, Indian Institute of Foreign Trade, India ë Directors Certification Program (DCP) Class 123/2009, IOD
Education/Training
-
-
-
-
Relation among % of family within Shareholding Company
January 2013 -Present July 2010December 2012 January 2008June 2010
August 2008 -Present June 2009 -Present Sept 2011-Present Dec 2011-Present October 2012 -Present
October 2012 -Present
May 2010-Present May 2008April 2010 Mar 2008-Present May 2008-Present June 2009-Present
Period
Company / Type of Business
Polyplex Trading (Shenzhen) Co. Limited. Polyplex (Asia) Pte. Limited. Polyplex (Singapore) Pte. Limited. EcoBlue Limited
Director
General Manager - Project Management General Manager Renewable Energy
Luminous Power Technologies Pvt Ltd
Bhilwara Energy Limited
Business Head - SARALAM Polyplex (Thailand) Plc
Director Director Director
Polyplex (Thailand) Plc
Polyplex (Asia) Pte. Limited. Polyplex (Singapore) Pte. Limited. Polyplex Trading (Shenzhen) Company Limited EcoBlue Limited
Chief Financial Officer
Director
Director Director Chairman
Managing Director Polyplex (Thailand) Plc. Director & Profit Center Head Polyplex (Thailand) Plc.
Position
Working Experiences in the 5 preceding years
Head - Sales & Marketing
Head -Operations
Head - Sales & Marketing - Thick PET Films
12 Mr. Suresh Sundaram
13 Mr. Manoj Sinha
Position
11 Mr. Ashish Ghosh
Name-Surname
160 Polyplex (Thailand) Public Company Limited
54
53
47
Age (Years)
ë Masterûs degree in Business Administration - Indian Institute of Foreign Trade
ë Bachelorûs Degree in Chemical Engineering, A.C. College of Technology, Madras University, INDIA
ë Bachelorûs / Masterûs Degree in Science - Jiwaji University, Gwalior - INDIA ë Masterûs degree in Business Administration - BIT Ranchi, INDIA
Education/Training
-
-
-
-
-
-
Relation among % of family within Shareholding Company Position
January 2013 -Present September 2012 -December 2012 May 2003 -August 2012
July 2012-Present December 2011 -June 2012 June 2011 -November 2011 September 1994 -May 2011 Head - Sales & Marketing - Thick PET Films AVP - Sales & Marketing - Thick PET Film Sr. Manager - Global Marketing Operations
Deputy General Manager
Vice President
Head - Operations Chief Operating Officer
November 2009 Head - Sales & Marketing -Present December 1995- AVP - Marketing November 2009
Period
Garware Polyester Ltd
Polyplex Corporation Limited
Polyplex (Thailand) Plc
Polyplex (Thailand) Plc Tuticorin Alkali Chemicals and Fertilisers limited Aditya Birla Grasun Chemicals Limited, P.R. China Thai Acrylic Fiber Co. Ltd
SRF Limited -Manufacture of Polyester Film, Nylon Tyre Chord fabric, Engineering plastics
Polyplex (Thailand) Plc
Company / Type of Business
Working Experiences in the 5 preceding years
ANNUAL REPORT 2012 - 2013
Content
Message from the Chairman 4 Board of Directors 6 The Board of Director’s Report on its Responsibility to Financial Statements 7 Audit Committee Report 2012-13 8 Key Financial Indicators 10 Financial Highlights 11 General Information 12 Business Overview 15 Risk Factors 45 Future Projects 57 Legal Dispute 61 Shareholding Structure & Management 62 Good Corporate Governance & Internal Control 76 Financial Position and Operational Performance 86 Audited Financial Statements 110 Information of Director and Management of the Company 155