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|Q :||While overall sales increased, why did sales of Auto bulbs and Molds in general were down?
Could you please explain the reason behind your land purchase, which has taken place for two consecutive years? I wish to
know whether the company would buy more lands; and, if yes, where and why?
|A :|| There are 2 reasons why sales of Auto bulbs went down.
1.Exports overseas were down since at present, there is an increasing use of LED lighting to replace traditional light bulbs.
2.Domestic markets, which are our replacement markets, suffered year-end economic difficulty due to flood. This in effect slightly affected the sales.
Meanwhile, in relation to sales of molds and designs (from our R&D center), normally, we do not produce masse anyway.
Production and sales are based on customer’s delivery periods. Actually, sales of molds continue to grow as you can see that
we have invested in a new mold factory.
As for our land purchase, we constantly make purchase decisions at a right time and a right price. The purchase is for the
purpose of our expansion and has nothing to do with land speculation. Besides, we focus at buying land adjacent to our
|Q :||What was your production capacity utilization rate in last year and how different was it from your current production level?
Was a higher profit a result of the economy of scale of your production; or was it as result of sales price increase since more
products were shifting to LED?
|A :||Last year, 90% of our production capacity utilization was geared towards automotive lamps. In the case of motorcycle light
bulbs, the production capacity utilization rate invested in this area was 100%. This year, we anticipated production capacity
utilization dedicated to automotive lamps to be close to 100% where we are currently expanding our production plant to
accommodate future orders. Regarding motorcycle lamps, we believe that the productivity this year will exceed 100% for which
we will make additional investments in machinery and plants and we also plan to expand our factory to meet future demands.
Better profit was a result of better sales, which allowed us to have an economy of scale. Besides, it was a result of our
development operation (Kaizen) everyday.
|Q :||What’s a reason of sales increasing so much so that the company needs to expand the factory?|
|A :||Increasing sales were a result of the following:
1.The company had received purchase orders from almost all Japanese car manufacturers. Increasing sales in the future
therefore should come from orders of new car models to be manufactured by these customers.
2.An outlook of the domestic automobile industry is also promising. That’s why we expect car sales that rely upon our products
|Q :||What’s The company’s response to external factors such as a trade war that may affect both the overall economy and your
business in particular?
|A :||At the moment, there is a trade issue looming from the US, of which the effect cannot be clearly assessed just yet. We need to
monitor and assess the situation on a periodical basis. However, The company’s business policy is to be conservative with
back-up plans such as holding cash in hand to ensure that our operation can continue.
|Q :||In Q4 (January-March 2018), how much production capacity utilization did The company use?|
|A :||Our productivity figure that we informed you earlier was an annual average. In Q4, utilized production capacity stood at 10-20%
higher than the average. That’s why we need to increase working hours (i.e. overtime work) and improve our production
capacity to shorten production time. At the other end, we also plan to expand the factory to accommodate future production
activity in two years.
|Q :||Based on your chart in which production of automobiles and motorcycles in 2013 and 2017 were compared with your sales, it
showed that sales in 2017 were much higher than those in 2013. Yet, production quantity in 2017 was instead lower than that in
2013. Why was it lower? Besides, was production capacity utilized in 2013 higher than that in 2017?
|A :||The number of total goods produced in that year did not reflect what The company ’s sales because we did not produce every
model of cars and motorcycles in the market. Meanwhile, higher sales were a result of motorcycle light bulbs shifting towards
LED that had complicated functions, making its sales price per unit higher. In addition, we were able to reduce our production
costs, which eventually led to higher profit; and this is something we have continued to do and will keep doing it cut our
|Q :||On Page 53 of the Annual Report, Notes No. 13 to Financial Statements, Re: Assets and depreciation costs, you indicated that
assets after depreciation cost deduction were around Baht 4,300 million , while depreciation costs amounted to Baht 1,051
million, which accounted for 25%. Yet, when this information was compared with your accounting policy (on Page 38 of the
Annual Report), the life cycle used by your assets for depreciation calculation was around 5-20 years (or 10-20%). It seems that
there is a discrepancy between what you had said in the accounting policy. Did you speed up the number of years (i.e. life cycle)
used in calculating your depreciation cost?
|A :||The increase of our depreciation cost was partly a result of our mold and design asset, whose life cycle depended on
technology. That’s why depreciation cost of this type of asset was higher than others, where the rate was around 25% annually.
Depreciation cost was calculated from the at cost price of our permanent assets. We do not compute it from the Net Asset
Value (NAV). Meanwhile, the at cost price of permanent asset computed in this report consists of an asset value of which
depreciation cost has fully amortized as well as that currently being amortized. The Accounting Department will provide you
additional details relating to this matter after this Meeting.
The financial statements have been audited by our auditor. Shareholders should rest assured that there is no violation of any
criteria or accounting policies for details shown there.
|Q :||I wish to know about The company’s level of cash in hand that you consider enough for your operation. Based on investment
data and operation cash inflow each year, The company will likely have too much cash in hand in the near future. This will push
shareholder’s equity higher, which, in effect, will drive Return on Equity (ROE) down and in terms of investment, this is not good
|A :||Having abundant cash in hand has pros and cons. There are two reasons why The company holds a lot of cash in hand – for
our operation safety based on our experience battling a financial crisis in the past and for investment purpose. We don’t need to
invest an equal amount each year because investment decisions will depend on thorough and prudent consideration. Yet, this
year, we plan to spend cash in order to pay more dividends and to continue investing.
I wish to further elaborate our main investment plan this year. As you may witness our construction activity at the moment,
based on the automotive industry’s potential growth, our automobile clients plan to launch more and more new models of
vehicles. Besides, there are new and more developments in automotive lamp and light bulb areas, which will require us to
increase our production and investment in equipment and plants.
We wish to show you our organization chart and an expansion unit of our Lamp 7 Plant. Total investment in both the factory
itself and equipment amount to Baht 1,345 million. Another Baht 862 million will be invested in a new mold factory and
equipment to accommodate the mold production for motorcycle lamps that come with a lot more functions as witnessed in the
increasing use of the LED. In addition, our manufacturing format will be revised to reduce production cost of the mold. With
potential growth in this industry, we are likely to receive more orders from customers. With our current production capacity
situation, that’s why we consider making additional investments, which we will inform shareholders as soon as we have clearer
information. In short, we will effectively spend ourinvestment for maximum benefit.
|Q :||What should be a sound level of cash in hand in your opinion?|
|A :||Thank you for your suggestion. We do not set any level at the moment. But we will discuss this issue at the Board of
|Q :||With huge amount of cash in hand, I wish to suggest that you pay more dividends in future years to come to shareholders
because as an investor, we only get 2% return from the share’s market price. In addition, we get access to hardly any corporate
information of your company. Investors may have a negative impression for your inclination to hoard too much cash in hand i.e.
questioning about the management’s corporate governance. Yet, by paying 70% as a dividend , shareholders will enjoy an
increasing return of approximately 7%, which will be extremely satisfactory, while the company itself will still have cash inflow
and remain strong financially.
|A :||Thank you for your advice.|
|Q :||To what extent do you have retained earnings resulted from 30% tax payment? Actually, you may use retained earnings from
different rates of tax payment to pay us a dividend.
|A :||Based on our dividend payment policy, the payment will come from net profit each year. In other words, no past profit would be
calculated for dividend payment. We do understand the principle of paying a dividend from retained earnings. However, we
continue to comply with our policy where dividend is paid out of our annual net profit. Thank you however for your suggestion.
|Q :||Mr. Katsutochi Iino attended the meeting only three times out of seven meetings. I wish to know the reason behind his
|A :||Mr. Katsutochi Iino is a director who works in Japan. Normally, we maintain contacts each month. He continues to give us
advices, which is considered collaboration between us and him. In other words, work should not be limited to attending the
meeting only. Other directors have businesses elsewhere. Mr. Iino in particular has been our director for a long time. During the
1999 financial crisis, he was a key person providing us valuable advices. We consider him very qualified as our director.
|Q :||What’s a reason behind an increase of auditing fee by 5.37%?|
|A :||The Audit Committee convened and considered this issue several times before approving and allowing PricewaterhouseCoopers
ABAS Ltd to increase its auditing fee by 5%. This was because the firm had audited our books for so long, was highly competent
and had no interest in our company nor with any of our shareholders . Besides, the auditing fee had not been increased during
the past five years. We also enjoyed higher profit this year.
|Q :||Do The Audit Committee require an auditing firm to propose an auditing fee that will be valid every 3 or 5 years; or do you let
other auditing firms with similar competency submit quotations for comparison purpose?
|A :||We had surveyed fees from other auditing firms, we have found their fees much higher.|
|Q :||Do your associated companies overseas use the same auditing firm as The company’s?|
|A :||Vietnam Thai Stanley Electric Co., Ltd. uses the same auditor as us. For others, they use other auditing firms.|
|Q :||I would like to suggest that the entire group use the same auditing firm so that the same auditor is responsible for information
of the entire group of companies, which will also benefit your corporate governance.
|A :||Thank you for your advised.|