MD & A

Overview Summary

In 2016, the Company’s loss from operation was equal to 18.23 million Baht or 4.40% of the total revenue, including the loss on amortization of properties of 4.46 million Baht, loss on the impairment of assets equal to 3.87 million Baht which are accounting transactions. However, the loss from the said operation had increase from the previous year to the total of 20.85 million Baht. This was due to the increase in the costs of productions such as the price of raw materials, the labor costs and including the increase in the costs of sales from the addition of sales persons in the Sales and Marketing Department in order to expand the customers base and increase purchasing orders, and also the costs of management from the adjustment of employees remuneration and the increase in other management costs.
Although the factors that had been affecting the Company’s business operation are relating to the economic situation in the automobile industry, the Company still strives to keep up the stable standard of production including the quality of the products, together with controlling the overall costs of production as well. As for the customers, the Company aims to build a good relationship in order to ensure satisfaction and the confidence in the quality and quantity of the products with on time delivery, and to be a part of various associations and organizations to increase the clients base including expanding to the relating industries and also improving the production technologies to be more advance and widely accepted in the higher level. 


In 2016, the total revenue of the Company was equal to 414.58 million Baht, a 12.38 million Baht decrease from 2015 or 2.90%, due to the continuously slowing down of the economy for the automobile industry both domestically and internationally, leading to a delay in the customers’ orders.

Revenue from Sales and Services

The Company gained its revenue from sales and services, dividing by the industrial groups as follows;
In 2016, the revenue from sales and services in the automobile industry had decreased from the year 2015 equal to 8.45 million Baht or 2.95%, due to the continuously slowing down of the economy for the automobile industry both domestically and internationally, leading to the delays in the customers’ orders.
In 2016, the revenue from sales and services in the bicycle industry had decreased 2.17 million Baht from the year 2015 or 3.41% due to the continuously slowing down of the economy for the bicycle industry both domestically and internationally. 
The revenue from the customers in the electrical goods industry in the year 2014, 2015 and 2016 were equal to 39.44 million Baht, 47.94 million Baht and 43.55 million Baht or 10.82%, 11.23% and 10.50% of the total revenue respectively. The revenue from the customers in the agricultural machinery industry in the year 2014, 2015 and 2016 were equal to 25.84 million Baht, 19.06 million Baht and 24.45 million Baht or 7.09%, 4.43% and 5.89% of the total revenue respectively. The total revenue in both of these industries had been stable in each year, not being affected directly by the slowing down of the economy.

Other Revenue

In 2014, 2015 and 2016, the Company has other income of 7.61 million Baht , 6.45 million Baht and 4.11 million Baht respectively, which is equal to 2.09% , 1.50% of and 1.00% the total revenue respectively. The other income of the Company consists of selling the scraps ingredients from production where the actual profit (loss) from trade does not yet occur, the profit (loss) from the depreciation of the products, the interests and other income.

Costs of Sales and Gross Profit

In 2014, 2015 and 2016, the Company’s costs of sales were 321.50 million Baht, 352.44 million Baht and 349.29 million Baht respectively or 90.08%, 83.81% and 85.10% of the total revenue respectively. This results in the profit of the Company during 2014, 2015 and 2016 at 9.92%, 16.19% and 14.90 % respectively.
The costs of sales fluctuate according to the total sales of the products. However, the fixed costs have already been including into the costs of production.

Selling and Management Expenses

Selling Expenses

In 2016, the Company’s sales expenses had increases 5.77% from 2015. This is due to the adjustment in the sales department adding more employees in order to penetrate the market and acquire client base in foreign countries.

Administrative Expenses

In 2016, the administrative expenses had increased to 14.48 million Baht or 25.20 which had already included the accounting transactions relating to the loss on doubtful debts amounting to 4.47 million Baht or 7.78%, the loss on assets impairment of 3.87 million Baht or 6.74% and the fixed costs in 2016 had also been increased such as the remunerations of the employees.

Income Tax

Income tax consists of current income tax and deferred income tax, current income tax and deferred tax in accounting balance with the exception to the deferred income tax relating to the transactions of the shareholders for realizing other comprehensive income items. The Company is aware of the effect of the uncertain tax situation and may cause the amount of tax to increase and also the interests that must be paid. The Company believes that the designated income tax payable is sufficient for the future which had resulted from the evaluation of the various factors including the tax law interpretation from the past experience. This evaluation is based on the estimation and assumptions and may involve the decisions on new events in the future. New information may cause the Company to change its decisions, depending on the remaining income tax payable. The change in the income tax payable will reflect the income tax expense in the due that the change occurs. To determine the value of the current income tax and the deferred income tax, deferred tax assets and deferred income tax liabilities can be deducted following the legal actions to take the current income tax assets and deduct it from the current income tax liabilities and this income tax will be evaluated by the same tax collection agency for the same or different tax units. As for the different tax authorities, the Company intends to pay the current liabilities and assets income tax with the net amount or intends to recover the assets and pay the debts at the same time. The deferred tax assets will be recorded only when there is a high possibility that the tax from profit in the future must be adequate for the benefits from the temporal differences. The deferred income tax will be revised on the final day of the report and will be reduced as much as the real tax benefits. In the year 2016, the Company calculated the corporate income tax at the designated rate by the Revenue Department from the accounting profit after adjusting certain terms as indicated in the Revenue Code. The Company recorded the corporate income tax as the total costs each year and recorded the parts that are liabilities in the statement of financial position and the deferred income tax was measured by the tax rate that was estimated to use with the temporal difference. However, the Revenue Code (Issue 42) had been adjusted on the 3rd of March 2016, to reduce the rate of corporate income tax for the accounting period after the 1st of January 2016, effective on the 5th of March 2016 onwards. The Company had calculated the estimated impact on the deferred tax assets of 4.00 million Baht and the deferred income tax liabilities of 4.00 million Baht. Therefore, the Company had no deferred income tax left over. The Company then realized the tax expense in the annual profit and loss statement from the change in the temporal difference of 5.38 million Baht which occurred from the remaining deferred tax assets from the accounting year 2014 (according to the appendix no. 12 and no. 24 of the financial statement).

Return on Equity

As for 2016, the returns on equity had decreased from the same period in the year 2015 due to the slowing down of the economy for the automobile industry both domestically and internationally, which resulted in the loss in operation when compared to the previous year.


The Company, at the end of 2014, 2015 and 2016, has the total assets of 344.99 million Baht, 332.88 million Baht and 304.238 million Baht respectively. The assets of the Company are as follows; The current assets at the end of 2014, 2015 and 2016 were equal to 116.93 million Baht,125.73 million Baht and 124.30 million Baht respectively or 33.89% , 37.78% and 40.86% of the total assets of the Company respectively. Most of the current assets of the Company consist of trade receivables, other receivables and inventories, which match the characteristics of the factory that produces goods for sales. The items of the said current assets will adjust into the same direction as sales. The non-current assets of the Company mostly consist of lands, buildings and equipment. The Company, at the end of 2014, 2015 and 2016, has the total non-current assets of 218.06 million Baht , 207.09 million Baht and 179.94 million Baht or 65.09% ,62.22% and 59.14% of the total assets respectively.

Current Assets

Cash and Cash Equivalents

The Company had cash and bank deposits for operation outstanding at the end of the year 2014, 2015 and 2016 of 7.02 million Baht, 25.17 million Baht and 21.68 million Baht respectively. In 2015, the amount of outstanding cash had increased from 2014 of 18.15 million Baht, due to the Company’s loss from operation in 2014 at 21.90% which was more than 2015 as previously stated. Although in 2015 and 2016, the Company’s cash balance was equal to 25.17 million Baht and 21.68 million Baht, which was sufficient for repaying the Company’s debts, but the Company must retain this amount for the purpose of necessary working capital such as, repaying the trade payables following the agreed terms. The Company had also calculated the risks that may occur in the case that such trade terms were not settled, which would be more severe.

Trade and other receivables and allowance for doubtful accounts

At the end of 2014, 2015 and 2016, the Company’s net trade and other receivables was 49.99 million Baht, 46.48 million Baht and 53.59 million Baht respectively. In the year 2014, 2015 and 2016, the turnover ratio of account receivables was at 7.03 times, 8.72 times and 8.42 times respectively. The Company’s policy regarding credit terms for the customers is between 30 to 60 days, to which the Company will also consider the time of repaying the debts according to the purchasing orders and each customers’ financial status as well. The Company records the doubtful debts by estimating the debts that may occur from uncollected debts per payment terms. However, the Company takes into account of the estimation the past collection experience, outstanding debts and the economic situation at the time by first considering the receivable that had an outstanding debts of more than 365 days and with no movements. This will be evaluated one by one and will be set the allowance for doubtful debts 100% out of the outstanding debt.


In 2016, the inventory was equal to 39.20 million Baht, a decrease in value when compared to the year 2015 due to the slowing down of the economic situation for the automobile industry both domestically and internationally. The automobile manufacturers had reduced their production, making the customers delayed their orders. The Company’s inventory turnover ratio during the year 2014, 2015 and 2016 were equal to 7.28 times, 7.50 times and 8.12 times respectively. The inventory turnover rate is very volatile and can be distributed out quickly with not much differences in each year. The Company has no outdates, deteriorated or slow-moving products as can be seen from the policy to set the allowance for the diminution in value of damaged, obsolete, outdated or slow-moving inventories. The Company will consider the net realizable value which is from the difference between the costs and the sales prices. The Company will record the loss from the declining in the products’ value as expenses in the profit and loss statement. However, since the Company operates in a parts manufacturing and distributing business in which the parts are unique to the products of the customers, this resulted in a rather low allowance value of the products. In the year 2014, 2015 and 2016, the Company set the allowance for diminution in value of the inventory to 3.10 million Baht, 1.02 million Baht and 1.15 million Baht or as the ratio to net inventory of 6.57%, 2.18% and 2.93% respectively.

Other Current Assets

At the end of 2014, 2015 and 2016, the Company’s other current assets were equal to 12.71 million Baht, 7.24 million Baht and 9.82 million Baht respectively. This consisted of advance payments for molds that the Company had hired for molds preparation in order to increase the production output. However, the Company had already collected the deposits for the molds from the customers by recording it under other current liabilities, and use it to further hire the mold manufacturer, VAT waiting on tax invoice and credit and under advance payments which fluctuated annually depending on the trade activities (according to the appendix in the financial statement no.8)

Property, Plant and Equipment

At the end of 2014, 2015 and 2016, the Company’s net property, plant and equipment were equal to 193.43 million Baht, 187.55 million Baht and 170.89 million Baht respectively with the ratio to total assets of 57.74%, 56.35% and 56.17% respectively. The difference occurred from the annual amortized depreciation and the amortization of unusable assets, including the increase investment in the property, plant and equipment in order to support the expansion of the operation in the future. In 2014, 2015 and 2016, the Company’s investment in property, plant and equipment were equal to 19.13 million Baht, 15.81 million Baht and 14.23 million Baht As for 2016, the Company had evaluated the machineries by the independent assessor with the rules and procedures following the standards of the Valuers Association of Thailand (VAT) by using the cost approach which resulted in the machineries’ accounting value of 79.92 million Baht had the estimated value of 89.06 million Baht. Although the estimated value is higher than the accounting value, it is discovered from the assessors’ report that some of machineries for production had lower value than the actual accounting price. In order to follow the principles and the accounting standards act 36 under ‘The Depreciation of Assets’, the Company had recorded the depreciation of the machineries equal to 3.86 million Baht which had already been included in the administrative expenses (appendix no.10 of the financial statement).


The Company’s total liabilities in the year 2014, 2015 and 2016 were equal to 207.56 million Baht, 151.57 million Baht and 144.55 million Baht respectively. This consisted of both the short and long terms loans from financial institution, account payables and other payables, short term loans from relating personnel or business, other current liabilities and the employees’ benefits obligations.

Source of Funding

This is the both the short and long term loans from financial institutions, including overdrafts, promissory notes and long term loans with the MOR/MLR/SBOR/MLR interest rates. The lands and buildings had been used as loan collateral. The long term loan’s contract will end in the year 2017. The short term loan from individuals or relating business will use the same interest rates as quoted from the financial institutions and with no collateral. The Company had negotiated and requested to pay in installments by starting within the year and also the liabilities under the financial lease for purchasing machineries and equipment with monthly installments and have already terminated some parts of the contract. However, in 2016, the Company‘s total liabilities had decreased from the previous year. This is due to the loans repayment to financial institutions as indicated in the contracts. At the end of 2014, 2015 and 2016, the Company’s debt to equity ratio was equal to 1.63 times, 0.84 times and 0.91 times respectively. The Company’s debt ratio is less when compared to the shareholder’s equity which leads to a reduction in risks.

Shareholder’s Equity

On the 31st December 2016, the Company’s shareholder’s equity was equal to 159.68 million Baht. The decrease in the shareholder’s equity was due to the Company reducing the accumulated deficit and the premium on ordinary shares of 20.64 million Baht and the regal reserve of 2.21 million Baht. During that time, the Company had also increased the ordinary shares capital in order to issue the warrants of 0.59 million Baht. The Company’s unappropriation retained loss was equal to 23.44 million Baht.

Liquidity and Cash Flows

Cash flows from operations

In 2016, the Company’s net cash from operation was equal to 27.67 million Baht, which derived from the loss from operation before income tax of 18.23 million Baht. The said loss had included the unrelated cash items as follows; depreciation and amortization of 27.52 million Baht, loss from reducing the value of inventory of 0.14 million Baht, loss from assets depreciation of 3.87 million Baht, loss from amortization of 4.47 million Baht, and the increase in working capital circulation which consisted of an increase in trade and other receivables of 7.11 million Baht, reduction in inventory of 7.50 million Baht, increase in other assets of 2.59 million Baht, an increase in account payables and other payables of 6.85 million Baht and also an increase in other current liabilities of 0.24 million Baht.

Cash flows from investment activities

In the year 2014, 2015 and 2016, the Company used cash for the investment activities according to the financial statement of 18.79 million Baht, 15.96 million Baht and 15.81 million Baht respectively with significant items such as purchasing machineries and equipment to replace old and damaged machineries and new machineries for expanding the production capacity in order to produce the parts and deliver them to the customers on time and also to purchase intangible assets for the purpose of improving and developing the technology to be more up-to-date.

Cash flows from funding activities

In the year 2014, 2015 and 2016, the Company used cash for funding activities according to the financial statement of 8.87 million Baht, 9.24 million Baht and 16.75 million Baht respectively due to the repayment of overdrafts, the short and long term loans from the financial institutions, repaying the debts from the financial lease, repaying the interests and also receiving cash from issuing ordinary shares.

Liquidity Ratio

The Company had current assets consisting of cash, debtors and inventories in 2014, 2015 and 2016 of 104.21 million Baht, 118.49 million Baht and 114.48 million Baht which were less than current liabilities in each year of 197.48 million Baht, 138.02 million Baht and 137.95 million Baht respectively, which may lead to insufficient liquidity of the Company. However, the Company had already considered the effects and risks that could occur in order to proceed with the business. In the year 2014, 2015, and 2016, the Company’s liquidity ratio was equal to 0.59 times, 0.01 times and 0.90 times respectively and the quick ratio at the same period of time of 0.35 times, 0.57 times and 0.62 times respectively. The liquidity ratio of the Company shows that the normal business operation of the Company has more current liabilities than current assets. Although the Company had faced difficulties in repaying the short term loans due to the liquidity ratio of the Company, if not including the short term loans from individuals or relating businesses, the Company was still able to repay the short term loans. In 2014, 2015 and 2016, the Company’s average debts collection period was equal to 51.92 days, 41.86 days and 43.37 days respectively which were in line with the policy to allow the credit time for the customers between 30 to 60 days. The Company may use the revenue following this policy to proceed with the operations, purchase raw materials and repay the debts on time. Most of the Company’s trade receivables are excellent customers that always repay the credit when due on time. In the year 2014, 2015 and 2016, the Company’s average sales period were equal to 50.14 days, 48.67 days and 44.95 days respectively. The duration of product turnover was at the level that the goods can be produced and delivered on time, with no slow moving products since the Company had planned the products manufacturing process always according to the customers’ demands with definite delivering time. In 2014, 2015 and 2016, the Company’s average debts repayment were 101.39 days, 80.04 days and 69.95 days respectively. The repayment duration was in line with the Company’s policy of repaying between 30 to 90 days.

Factors and influences that may affect the operation or financial status in the future

Factors and influences that may affect the operation or financial status of the Company in the future, other than the risk factors stated, are the continuous economic slowdown of the automobile industry both domestically and internationally in the past years which may decrease the purchasing powers of the producers in this industry. However, the Company had also expanded the market to countries that are the foundation of automobile parts producers all over the world by increasing more orders. However, the Company may face certain risks with the fluctuation of the various currencies. The Company had studied and paid attention to the possible effect of the severe currency fluctuation with various methods that the financial institutions and the Company had decided to use. In terms of the market, the automobile parts manufacturing industry has a very high competition. The Company also has many competitors as well. However, the Company has researched and found measures to motivate the responsible department to improve the technologies, create connections and alliances with the similar business groups, including maintain good friendship with the original customers. The Company also plans to expand the productions that covers other industries more, for example, water pumps impeller, long-tail boat impeller and wax casting which are in the middle of research and development, including designing new productions for other companies such as color coating and molds repairing. In terms of quality and the on-time delivery of the products, the Company still maintains the standards and adapts new technologies to use in the production process for more efficiency following the trusts and confidence that the customers have given to the Company for producing their parts. As for production costs and administrative costs that have risen up according to the economic situation and the inflation, the Company hurries to find measures and campaigns to control and save the costs as much as possible, for example, in terms of energy, the Company is in the middle of installing solar cells for the purpose of reducing the energy costs for the production, and in terms of labor, the Company plans to allocate the employees efficiently in order to prepare for the business expansion.