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DESCRIPTION
PTL_2012-2013 POLYPLEX (THAILAND) PCL Annual Report 2012-2013TRANSCRIPT
Content
Message from the Chairman 4Board of Directors 6The Board of Director’s Report on its Responsibility to Financial Statements 7
Audit Committee Report 2012-13 8Key Financial Indicators 10Financial Highlights 11
General Information 12Business Overview 15Risk Factors 45Future Projects 57Legal Dispute 61Shareholding Structure & Management 62Good Corporate Governance & Internal Control 76
Financial Position and Operational Performance 86Audited Financial Statements 110Information of Director and Management of the Company 155
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Production facility of Polyplex (Thailand) Plc, at Siam Eastern Industrial Park, RAYONG
The new Thick PET Film line under implementation in Thailand
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Annual Report �0�� - �0�3
Polyplex (Thailand) Public Company Limited
� Polyplex (Thailand) Public Company Limited
THE NEWLY SET UP POLYESTER THIN FILM LINE IN USA
3
3
Production facilities at Polyplex Europa Polyester Film Sanayi Ve Ticaret A.S, TURKEY.
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Annual Report �0�� - �0�3
Polyplex (Thailand) Public Company Limited
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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.
Message from the Chairman
Mr.Manu LeopairoteChairman
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Annual Report �0�� - �0�3
Polyplex (Thailand) Public Company Limited
Board of Directors
Mr. Manu Leopairote Chairman - Board
and Audit Committee
Mr. Sanjiv Saraf Vice Chairman
Mr. Rohit Kumar Vashistha
Managing Director
Mr. Praphad Phodhivorakhun
Director
Mr. Pranay Kothari Director
Mr. Manish Gupta Director
Dr. Virabongsa Ramangkura. Ph.D.
Director and Member - Audit Committee
Mr. Shiraz Erach Poonevala
Director and Member - Audit Committee
� Polyplex (Thailand) Public Company Limited
7
The Board of Directorsû 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
companyûs 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 Mr. Rohit Kumar Vashistha
Chairman Managing Director
8 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
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.
Audit Committee Report - 2012-13
9
8. 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.
9. 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.
10. 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.
11. 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
12. 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.
13. 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).
14. 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.
15. 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 Signature Mr. Manu Leopairote Board Chairman and Audit Committee Chairman Dr. Virabongsa Ramangkura Audit Committee Member Mr. Shiraz Erach Poonevala Audit Committee Member
10 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Key Financial Indicators
EBITDA
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2006
-0720
07-08
2008
-0920
09-10
2010
-1120
11-12
2012
-13
2006
-0720
07-08
2008
-0920
09-10
2010
-1120
11-12
2012
-13
EBIT
DAin m
illion
bah
t
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
EBIT
DA m
argin
(%)
EBITDA - in million BahtEBITDA margin (%)
Net Profits and EPS
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Financial Year
Net P
rofit
sin m
illion
bah
t
0.00
1.00
2.00
3.00
4.00
5.00
6.00
EPS
-Bah
t/Sha
re
Net Profits EPS
2006
-0720
07-08
2008
-0920
09-10
2010
-1120
11-12
2012
-13
Financial YearTotal Revenues Net Profit margin (%)
2006
-0720
07-08
2008
-0920
09-10
2010
-1120
11-12
2012
-13
Financial YearTotal Assets Return on assets %
Total Revenues
1,000
2,500
4,000
5,500
7,000
8,500
10,000
11,500
Tota
l Rev
enue
sin m
illion
bah
t
0%
5%
10%
15%
20%
25%
30%
35%
40%
Net P
rofit
mar
gin
(%)
Total Assets
1,000
2,500
4,000
5,500
7,000
8,500
10,000
11,500
13,000
Tota
l Ass
ets
in m
illion
bah
t
0%
5%
10%
15%
20%
25%
30%
35%
40%
Retu
rn o
n As
sets
(%)
11
2008-09 2009-10 2010-11 2011-12 2012-13
Progression (Thousand Baht)
Net Sales 6,859,738 7,125,366 11,183,174 10,143,111 9,230,018
Total Revenues 7,062,825 7,299,520 11,320,169 10,263,808 9,495,185
Gross Profit 1,800,785 1,731,011 4,680,656 2,311,548 1,355,850
Net Profit (Loss) 1,041,966 1,039,386 3,882,885 1,357,608 373,971
Total Assets 8,880,550 8,866,744 11,932,901 11,938,970 16,456,565
Total Liabilities 4,284,324 3,854,26 3,570,196 3,478,368 8,267,306
Total Shareholderûs equity 4,596,226 5,012,48 8,362,705 8,460,602 8,189,259
Financial Ratios*
Net Profit Margin (%) 14.75% 14.24% 34.30% 13.23% 3.94%
Return on Equity (%) 23.44% 21.72% 58.26% 16.14% 4.49%
Return on Assets (%) 12.13% 11.71% 37.34% 11.37% 2.63%
Per Share Data (Baht)
No. of shares 800,000,000 800,000,000 800,000,000 800,000,000 800,000,000
Dividend per share (Baht) 0.52 0.52 1.94 0.52 0.14*
Earnings per share 1.30 1.30 4.85 1.70 0.47
Par value 1.00 1.00 1.00 1.00 1.00
Note: Above figures and ratios are on consolidated basis, including the Companyûs 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.
1. Financial Highlights
12 Polyplex (Thailand) Public Company Limited
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 75/26, Ocean Tower II, 18th Floor, Sukhumvit Soi 19,
Kwaeng North Klongtoey, Khet Wattana,
Bangkok - 10110
Telephone (662) 665-2706-8
Facsimile (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 0107547000729
Telephone (66) 38 891 352-4
Facsimile (66) 38 891 358
Website http://www.polyplexthailand.com
Registered Capital Baht 960,000,000
Common Shares 960,000,000 shares
Par Value Baht 1.00 per share
Paid-up Capital Baht 800,000,000
Number of Employees 999 including subsidiaries in Turkey, USA and China,
and 577 in Thailand.
13
2.2 Subsidiaries in which the company holds more than 10% share - As at 31st March, 2013
Company Name and Business Registered No. of shares % Type of Address Type Capital held by the shareholding Shares (shares) Company Polyplex (Singapore) Pte Ltd. Investment 100,000 100,000 100% Common 61, Club Street, Holding 300,000 39,100 100% Preference Singapore-069436 Company Polyplex Europa Polyester Film* Manufacturer 1,500,000 1,500,000 100% Common Sanayi Ve Ticaret A.S. Avrupa of Polyester Serbest Bolgesi, 132, Ada, 7 Parsel, Film & Velimese Mevkii, Corlu, Turkey Polyester chips Polyplex Trading (Shenzhen) Distribution $400,000** $400,000** 100% Common Co. Ltd* Room.1309, A block, Company Galaxy Century Building, Caitian South Rd., Futian District, Shenzhen Peopleûs Republic of China Polyplex (Americas) Holding Inc. Investment 10,000 5,924 100% Common Corporation Trust Center Holding 1209 Orange Street Wilmington, Company New Castle County, Delaware - 19801 Polyplex USA LLC*** Manufacturing **** $29,458,824 100% Common 3001 Mallard Fox Drive NW Company Decatur, Alabama - 35601 EcoBlue Limited Manufacturing 1,065,000 852,000 80% Common 60/91, Moo 3 Siam Eastern Company Industrial Park, Marbyangporn Sub- district, Pluk Daeng District, Rayong, THAILAND Polyplex Resins Sanayi Ve Ticaret Manufacturing 4,049,686 2,713,290 67% Common Anonim Sirketi# Company Avrupa Serbest Bolgesi, 132, Ada, 21 Parsel, Velimese Mevkii, Corlu, Turkey * 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 Peopleûs 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
14 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
2.3 Other references (a) Registrar Name Thailand Securities Depository Co., Ltd. Address 62, The Stock Exchange of Thailand Building 4th, 6th-7th Floor, Rachadapisek Road, Klongtoey, Bangkok 10110 Telephone (662) 229-2800, (662) 654-5599 Facsimile (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 Baker & McKenzie Ltd. Address 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 Linklaters (Thailand) Ltd Address 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
15
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 The Company started construction of the factory in July-2002 and
April-2003 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, The Board of Directors resolved for the purchase of another plot of land
2003 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, Commercial production and distribution began for film production line 2.
2003
3. Business Overview
16 Polyplex (Thailand) Public Company Limited
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.
17
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.(çPEé), Turkey, of the shares of Polyplex Resins Sanayi Ve Ticaret A.S (PR), from Polyplex
18 Polyplex (Thailand) Public Company Limited
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 Trading (Shenzhen) Co., Ltd. (PTSL / Polyplex China) CHINA
POLYPLEX GROUP-STRUCTURE
Polyplex Corporation Limited (PCL / Polyplex India)
INDIA
PARLLC (PAR) USA
Polyplex (Asia) Pte.Ltd (PAPL / Polyplex Asia)
SINGAPORE
Public/ Institutional Shareholder
Polyplex USALLC (PU / Polyplex USA) USA
Private Investor
EcoBlue Ltd THAILAND
Polyplex Americas Holding Inc. (PAH) USA
Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE / Polyplex Europa) TURKEY
Polyplex Europe B.V. (PEBV) NETHERLANDS
Peninsula Beverages & Foods Company Private Ltd. (PBF)
INDIA
Polyplex Resins Sanayi Ve Ticaret Anonim Sirketi (PR / Polyplex Resins)
TURKEY
Polyplex (Thailand) Public Co., Ltd. (PTL / Polyplex Thailand)
THAILAND
Polyplex (Singapore) Pte. Ltd. (PSPL) SINGAPORE
FMCG
OUTSIDE INTEREST
INVESTMENT COMPANY
MANUFACTURING COMPANY
TRADING & DISTRIBUTION COMPANY
100% 100%
100%
34.50% 16.50% 33%
49%
100%
100%
100% 100%
67%
100%
20%
80%
100%
19
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. Itûs paid up capital is INR 325.6 million (about Bt. 175 million).
PCL has the following production capacities as at 31st March 2013:-
Product Annual Capacity UOM
Polyester Film 55,000 MT
Polyester Chips 77,600 MT
Metallized Film 20,400 MT
BOPP Film 35,000 MT
Coated Films 260 Million Sqm
Its direct and indirect shareholding in the Company aggregate to 51% of the latterûs 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.
20 Polyplex (Thailand) Public Company Limited
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, PTLûs 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 Companyûs 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.
21
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
membersû 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 PTLûs standalone and consolidated sales value classified by regions is shown below:
STANDALONE 2010-11 2011-12 2012-13
Customers Bt. million % Bt. million % Bt. Million %
Exports
Asia 2288.39 44.74 2,220.06 45.72 1743.81 35.91
North America 955.65 18.68 809.00 16.66 977.46 20.13
Europe 434.98 8.50 418.71 8.62 202.01 4.16
Others 249.91 4.89 141.47 2.91 119.30 2.46
Total exports 3,928.94 76.81 3,589.24 73.91 3042.55 62.66
Domestic Sales 1,013.33 19.81 915.31 18.85 975.67 21.98
Sale of chips/others 1 38.46 0.75 56.09 1.16 187.21 4.22
Total sales revenues 4,980.73 97.38 4,560.65 93.92 4,205.44 94.76
Other revenues 2 134.26 2.62 295.32 6.08 232.72 5.24
Grand total 5,114.99 100.00 4,855.96 100.00 4,438.16 100.00
22 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
CONSOLIDATED 2010-11 2011-12 2012-13
Customers Bt. million % Bt. million % Bt. Million %
Exports
Asia 3,032.33 26.79 2,620.25 25.53 2,011.39 21.18
North America 2,802.47 24.76 2,683.84 26.15 2,571.48 27.08
Europe 3,464.45 30.60 2,745.07 26.75 2,623.76 27.63
Others 289.04 2.55 396.93 3.87 182.13 1.92
Total exports 9,588.29 84.70 8,446.09 82.29 7,388.75 77.82
Domestic sales
- PTL (Thailand) 1,013.33 8.95 915.31 8.92 975.67 10.28
- PE (Turkey) 517.84 4.57 698.93 6.81 743.42 7.83
Total Domestic sales 1,531.17 13.53 1,614.24 15.73 1,719.10 18.10
Sale of chips/others 1 63.71 0.56 82.78 0.81 122.17 1.29
Total sales revenues 11,183.16 98.79 10,143.11 98.82 9,230.02 97.21
Other revenues 2 137.00 1.21 120.70 1.18 265.17 2.79
Grand total 11,320.16 100.00 10,263.81 100.00 9,495.19 100.00
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
Asia North America Europe Thailand Turkey Others
Asia, 22%
Europe, 29%
Thailand, 11%Turkey, 8% Others, 3%
North America, 28%
23
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 Polyplexûs 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. Type of business Date granted
1 1321(2)/2545 PET film 20-May-02 2 1287/(2)/2546 PET film and PET Resin 11-Jun-03 3 1159(2)/2548 Metallized Films 22-Feb-05 4 1261(2)/2550 Thermal Lamination Films 14-Mar-07 5 1044(2)/2551 Metallized Films 10-Jan-08 6 1110(2)/2552 CPP film (Plain and Metallized CPP) 4-Feb-09 7 1719(2)/2553 Silicone Coated Film 14-July-10 8 1705(2)/2555 Thermal Lamination Film (Line 2) 12-May-2012 9 1827(2)/2555 PET Thick Film and PET Resin 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
24 Polyplex (Thailand) Public Company Limited
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.
25
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) Thermal Lamination Film
ë Gloss PET Thermal Film
ë MATTE PET Thermal Film
ë BOPP Thermal Film
ë Metallized Thermal Film
E) 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
F) 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.
G) Thick PET Film - main sub categories are as under:
ë Milky White
ë Clear/Ultra Clear
ë Transparent
ë Hazy Film
3.6.1.1 Characteristic of Product
A) 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
27
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.
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.
B) 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
C) 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
D) 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 2010-11 2011-12 2012-13 Segment Bt. Mn Bt. Mn Bt. Mn % Bt. Mn %
Packaging Use 3,986.67 3,529.79 3,529.79 80.66 3,151.83 78.44 Industrial Use 955.61 974.77 974.77 19.34 866.40 21.56 Electrical Use 0.00 0.00 0.00 0.00 0.00 0.00 Total Film Sales 4942.28 4,504.55 4,504.55 100.00 4,018.23 100.00
CONSOLIDATED SALES 2010-11 2011-12 2012-13 Segment Bt. Mn Bt. Mn Bt. Mn % Bt. Mn %
Packaging Use 8,298.90 74.63 7,651.23 76.05 6,144.72 67.47 Industrial Use 2,666.52 23.98 2,319.52 23.06 2,880.42 31.63 Electrical Use 154.04 1.39 89.57 0.89 82.71 0.91 Total Film Sales 11,119.47 100.00 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.
29
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 lower-
priced 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.
Consolidated Segmentwise Film Sales FY 2012-13
Packaging Industrial Electrical
Industrial, 23%Electrical, 1%
Packaging, 76%
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ANNUAL REPORT 2012 - 2013
Features BOPP BOPET
Water vapour barrier Excellent Fair Gas barrier properties Poor Excellent Break down voltage Poor Excellent Machineability Fair Excellent Printability Fair Excellent Suitability for metallising Poor Excellent Density (gm/cc) Low (0.91) High (1.39) Strength Fair Excellent Temperature Sensitivity Poor Excellent
Polyester film when stretched in both directions gives excellent dimensional
stability, gas barrier properties, break-down voltage etc. BOPP, despite stretching remains a ùlimp filmû. 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 ùcheaperû 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.
31
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.
32 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
ë 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 ùEnd Usersû segment.
STANDALONE SALES 2010-11 2011-12 2012-13 Customers Bt. million % Bt. million % Bt. million %
End Users 2,986.43 60% 2,480.96 55.08% 2,290.96 57.01% Distributors 1,955.84 40% 2,023.59 44.92% 1,727.27 42.99% Total 4,942.28 100% 4,504.55 100% 4,018.23 100%
CONSOLIDATED SALES 2010-11 2011-12 2012-13 Customers Bt. million % Bt. million % Bt. million %
End Users 7,375.54 66.33 6,792.27 67.52 6,009.80 65.98 Distributors 3,743.93 33.67 3,268.05 32.48 3,098.05 34.02 Total 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 Companyûs 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,
33
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 ùuse less waste in the first placeû which has ensured higher-than-GDP growth in the flexible packaging industry across the globe. PET film, being a higher-end 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.
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.
Global PET Thin film demand by End Use
Other Industrial
Packaging & Metallised Films
Magnetic Media
Electrical
Imaging
2007-1,680 KMT
2012-2,360 KMT
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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 high-end applications within packaging. While trade defense measures like anti-dumping 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.
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.
Global Thin PET film demand by Region
North America
Europe
Asia
South America
Middle East & Africa
2012- 2,360 KMT
2007- 1,680 KMT
35
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.
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.
Source: Company/ Industry estimates
Global Thick PET film demand by End use
2012- 798 KMT
2007- 549 KMT
Other Imaging
Medical / X-Ray
Flat Panel Screens
Packaging / Lables
Photovoltaic cells
Other Electrical / Electronics
Other Industrial
Global Thick PET film demand by Region
2012- 798 KMT
2007-549 KMT
North America
Europe
Japan
China
South Korea
Taiwan
Other World
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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
Thailandûs 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 8-
9%.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.
37
The film production capacities of the various plastic film producers in Thailand
as at 31st March 2013 are as follows: Production line Thai Film A.J. Plast. PTL*
(tons per year) Industrials Plc. Plc.
BOPP film 107,000 66,000 - PET Thin film 3,500 31,000 48,000 CPP film 3,500 - **15,600 BOPA film - 18,000 - Metallized film 7,000 10,800 16,200 Blown PP Film 4,645 PET Thick Film 28,800 Total 124,000 125,800 88,800 Thermal Lamination film - - 365 mn Sqm Silicone Coated Film 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 ùProduction Capacityû ** 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 to-2012, 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.
38 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
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 Companyûs 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.
Glogal Thin Plain PET Film
Demand Capacity Utlization Capacity
39
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.
40 Polyplex (Thailand) Public Company Limited
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:
Product Type India Thailand* Turkey USA Total Unit
PET Thin Plain Film 55,000 42,000 58,000 31,000 186,000 MT
PET Thick Film 28,800 28,800 MT
PET resin 77,600 80,500 57,600 57,600 273,300 MT
PET Metallized Film 20,400 11,000 11,000 13,500 55,900 MT
Bottle Grade PET Resin 210,000 210,000 MT
BOPP Film 35,000 35,000 MT
CPP Plain Film 10,000 10,000 MT
CPP Metallized Film 4,200 4,200 MT
Blown PP Film 4,645 4,645 MT
Coated Films 260 865 140 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 ùDomestic competitionû.
The above table includes the capacities for the projects under implementation
at Thailand, Turkey and in USA.
Polyplex Group Capacity
2,500.00
1,500.00
75.00
-
35,000
55,000
28,800
80,50058,000 57,600
11,00031,000
57,600
13,500140
210,000
15,200
865
10,0004,645
42,000
77,600
20,400 100
160
1,000
900
800
700
600
500
400
300
200
100
-
MT Mn Sqm
PET-ThickCPPPET ChipsMetallizerSiliconised/Extrusion Coated
PET-ThinBOPPBlown PPBottle Grade PET ResinChemically Coated
INDIA
Base Film RET Film MET Film Coated Base Film PET Film MET Film Coated Base Film BG PET PET Film MET Film Coated Base Film PET Film MET FilmResin Film Resin Film Resin Resin Film Resin
THAILAND TURKEY USA
41
PET Film Production & Capacity Utilization - Thailand
MT
04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13
43,00042,50041,00040,50039,00038,00037,00036,00035,00034,000
120%
100%
80%
60%
40%
20%
0%
98%
38,199
36,877 36,847
39,989
37,950
40,764
42,420 42,44641,165
95% 94% 95% 90% 97%101% 101%
98%
Production (MT) Capacity Utlization (%)
PET Film Production & Capacity Utilization - Consolidated
MT
04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13
100,00090,00080,50070,00060,50050,00040,00030,00020,00010,000
-
120%
100%
80%
60%
40%
20%
0%
98%
38,199 41,820
60,32066,748 78,032 92,197 95,296 94,457
94,84391% 89% 94% 81%
92% 95% 94% 95%
Production (MT) Capacity Utlization (%)
The capacity utilization rates for the Plain PET film lines PTL Standalone and
Consolidated are as follows:
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
42 Polyplex (Thailand) Public Company Limited
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
companyûs 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 companyûs 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 Co-
Polymer 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 Companyûs in house production and also imported from
the Parent company in India at Armûs 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, 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.
43
The value chain for the Companyûs PET & CPP film business is depicted below:
The value chain for Thermal Lamination film is given below:
RAW MATERIALS
PLASTIC AND INTERMEDLATE PRODUCTS
EVA / LDPE
PET / BOPP
FILMS
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 L A M I N A T I O N
F I L M
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
Polyplexûs area of operation
NATURAL RESOURCES
END PRODUCTS
PLASTIC AND INTERMEDLATE PRODUCTS
RAW MATERIALS
BASIC PETROCHEMICALS
Ethylene MEG
Pare Xylene
PTA
Polypropylene
PET RESIN
PP RESIN
C O A T I N G
M E T A L L I Z I N G
I N D U S T R I A L
B U Y E R S &
C O N V E R T E R S
B A S E F I L M S
Polyplexûs area of operation
Natural Gas
Oil
44 Polyplex (Thailand) Public Company Limited
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)
45
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 Companyûs 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 producerûs 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)
4. Risk Factors
CONSOLIDATED PBT AS % OF NET SALES
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
2008
-09
2009
-10
2010
-11
2011
-12
2012
-13
40% 35% 30% 25% 20% 15% 10% 5% 0%
22.31% 22.10% 17.11%
7.37% 12.90%
15.46%
14.82%
35.06%
13.72%
4.06%
46 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
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.
105
90
75
60
45
30
73.68 20
03-04
2004
-05
2005
-06
2006
-07
2007
-08
2008
-09
2009
-10
2010
-11
2011
-12
2012
-13
Selling Price / kg RM/kg
84.67 74.48
68.62 70.52 73.48
60.41
97.21
74.97 69.62
37.07 46.98
39.07 43.75 39.44 37.91 35.17 37.83 46.35 45.46
47
ë 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.
ë 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 filmsû 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 Companyûs 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.
48 Polyplex (Thailand) Public Company Limited
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:
Source: Industry information
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00PET Film - PTA - MEG Price Trend (Far East)
USD/
Kg
4.48 3.51 2.22 1.57 1.48 1.76 1.83 1.94 2.15 2.07 1.98 1.88 2.06 2.54 2.13 3.08 2.61 1.991.15 0.88 0.63 0.44 0.44 0.57 0.49 0.53 0.59 0.75 0.81 0.90 0.88 0.91 0.84 0.97 1.27 1.100.74 0.65 0.65 0.49 0.44 0.58 0.50 0.46 0.67 0.93 0.92 0.91 1.08 1.15 0.69 0.97 1.30 1.18
PET Film (12 Mic. Corona)PTAMEGVA Over PTA & MEG 3.44 2.50 1.43 1.01 0.93 1.05 1.22 1.31 1.39 1.07 0.94 0.75 0.89 1.33 1.14 1.87 1.02 0.60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PET Film (12 Mic. Corona) PTA MEG VA Over PTA & MEG
USD/
Kg
PET Film - PTA - MEG Price Trend (US)
PET Film (12 Mic. Corona)PTAMEGVA Over PTA & MEG
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.03 4.11 3.23 2.43 2.13 2.34 2.51 2.73 2.98 3.10 3.02 2.43 2.52 2.98 2.30 3.48 4.22 3.030.87 0.75 0.61 0.53 0.51 0.63 0.64 0.60 0.69 0.83 0.97 1.26 1.11 1.17 0.96 1.06 1.46 1.390.67 0.61 0.65 0.55 0.48 0.61 0.53 0.50 0.74 0.97 0.95 1.09 1.17 1.20 0.74 1.04 1.36 1.244.03 3.23 2.45 1.76 1.50 1.56 1.75 2.02 2.10 2.02 1.82 0.93 1.11 1.51 1.19 2.17 2.44 1.35
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PET Film (12 Mic. Corona) PTA MEG VA Over PTA & MEG
Euro
/Kg
PET Film - PTA - MEG Price Trend (Western Europe)
PET Film (12 Mic. Corona)PTAMEGVA Over PTA & MEG
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.20 4.21 3.35 2.54 2.35 2.47 2.25 2.78 3.81 3.53 3.07 2.99 2.91 2.19 1.93 2.59 2.85 2.161.31 1.05 0.77 0.70 0.69 0.79 0.80 0.88 1.11 1.19 1.20 0.90 0.90 0.84 0.75 0.89 0.99 0.990.83 0.68 0.60 0.49 0.45 0.58 0.50 0.50 0.77 0.91 0.84 0.82 0.90 0.91 0.56 0.83 1.07 1.013.88 3.03 2.45 1.74 1.58 1.56 1.36 1.82 2.56 2.15 1.71 1.89 1.79 1.12 1.07 1.51 1.59 0.92
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PET Film (12 Mic. Corona) PTA MEG VA Over PTA & MEG
49
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. PTLûs 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
Companyûs in house production and also imported from the Parent company in India at Armûs 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 Companyûs in house production and also imported from the Parent company in India at Armûs 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
50 Polyplex (Thailand) Public Company Limited
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 demand-supply 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, Polyplexûs low cost of production, established quality,
geographically diversified manufacturing presence, wide range of products and global
51
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 ex-factory 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.
52 Polyplex (Thailand) Public Company Limited
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 anti-
dumping 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.
53
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.
54 Polyplex (Thailand) Public Company Limited
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
55
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 Companyûs 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 Companyûs 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 ù13) 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
56 Polyplex (Thailand) Public Company Limited
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.
57
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.
5 Future Projects
58 Polyplex (Thailand) Public Company Limited
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
ë The total Investment in this project is about $ 13 million, including working capital.
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.
59
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.
60 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
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.
ë 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.
61
ë Annual capacity is 2,300 MT pa.
ë 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-
62 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
7.1 Shareholding Structure 7.1.1 Securities
PTLûs 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) 131,999,940 16.50
Polyplex (Asia) Pte. Ltd. (PAPL) 275,999,915 34.50
General public 392,000,000 49.00
Existing small shareholders* 145 0.00
Total 800,000,000 100.00
* Beneficial interest held by PCL and PAPL
PCLûs shareholding structure as of March 31, 2013 is shown as below:
Name %
Promoter/Sponsor Group 46.93
Institutional investors 10.69
Indian public (Non Institutional Investors) 31.84
Other shareholders 10.54
Grand total 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 Companyûs 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 2012-
13, 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.
7. Shareholding Structure
63
The following graph shows the comparison of dividend payment for the last 9 years,
since the companyûs public listing in December 2004.
Net profits (Consolidated) Total Dividend Dividend- Bt/Share
Historic Net profits and Dividend Payout
Million Baht
Divid
end
- Bt
per
sha
re
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
64 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
7.2 MANAGEMENT STRUCTURE
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.
Manager - SARALAM
Plant
SE Asia
SE Asia
Head-Production & Engineering- Sarafili / CPP
Corporate Finance
Head Sales & Marketing -
Sarafil Thick Films
Head Sales & Marketing
Audit Committee Company
Secretary Board of Directors
Managing Director
Head Operations
Chief Financial Officer
Others
Others
Quality Assurance & Technical Services
Investor Relations
Europe
Europe
Legal & Tax
America
America
TPM
Domestic market
Domestic market
Information Technology
Head-Saracote Plant
Costing and Accounts
HR & Industrial Relations
Business Head - SARALAM
Purchase & Stores
65
Details of the board of directors and other committees are as follows:
7.2.1 Board of Directors As of March 31, 2013, PTLûs 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 Companyûs 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 Companyûs objectives and Articles of Association, applicable laws and resolutions of the shareholdersû 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 shareholdersû 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.
66 Polyplex (Thailand) Public Company Limited
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.
67
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-of-interest 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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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 PTLûs 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.
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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 Companyûs 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 shareholdersû 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.
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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
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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 individualûs independent judgment, and have no other nature that will hinder the individualûs provision of independent opinions relating to the Companyûs operations.
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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 Amount Approved (Baht) Actual Paid (Baht)
1 Mr. Manu Leopairote Baht 125,000 per month Baht 1,500,000 2 Dr. Virabongsa Ramangkura Baht 75,000 per month Baht 900,000 3 Mr. Praphad Phodhivorakhun Baht 75,000 per month Baht 900,000 4 Mr. Shiraz Erach Poonevala Baht 75,000 per month 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 Janû12-Marû12 period, paid in May 2012.
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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. Mr. Manu Leopairote
2. Dr. Virabongsa Ramangkura
3. Mr. Praphad Phodhivorakhun
4. 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 6 6 4 5 7*
Salaries (In ù000û Baht) 9,389 9,753 7,611 10,054 11,113
Bonus and Others 8,199 10,325 10,292 19,257 14,576
(In ù000û Baht)
Total 17,588 20,078 17,904 29,311 25,689
* Including some persons for part of the year only
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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 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
1. Executives 6 7 4 5 7 2. Production 137 162 161 171 180 3. Commercial, IT,Personnel & Admn. 47 35 37 42 46 4. Sales and Marketing 18 21 25 24 26 5. Chips plant 23 21 22 21 34 6. Metallizer 37 37 37 35 35 7. Extrusion Coating 38 53 46 55 70 8. Cast Polypropylene Project 2 51 56 52 53 9 Silicone Coating Project 23 55 54 10. PET Thick Film Project 6 70 11. Blown PP Film Project 1 2 Total 308 387 411 467 577
Employee (non-executive) remuneration
(Bt. thousand) Remuneration 2008/09 2009/10 2010/11 2011/12 2012/13 (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar)
No. of employees 302 380 407 462 570 Salaries & Wages 71,072 78,272 101,857 111,450 151,656 Overtime pay 6,655 7,350 11,206 13,527 18,120 Bonus 16,233 15,408 27,941 26,182 30,851 Provident fund* 1,841 2,102 2,489 2,928 4,338 Others 42,303 47,183 55,705 62,883 79,809 Total 138.104 150,316 199,198 216,770 284,774
* 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, companyûs contribution is now in the range of 4-7%.
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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.
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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:
ë Re-appointment of Directors retiring by rotation and approval of the Director
remuneration
ë Approval of Auditor appointment and remuneration
ë Approval of dividend payment
8. Good Corporate governance & Internal Control
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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.
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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.
79
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 Executive Non-Executive Audit Directors Directors Committee
Shareholdersû representative Directors 1 3 - Independent Directors - 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
Directorûs 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.
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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 Position Attendance
Mr. Manu Leopairote Board Chairman & Audit Committee 6/6 Chairman Dr. Virabongsa Ramangkura Director & Audit Committee member 5/6 Mr. Shiraz Erach Poonevala Director & Audit Committee member 6/6 Mr. Sanjiv Saraf Vice Chairman of the Board 1/6 Mr.Rohit Kumar Vashistha Managing Director 6/6 Mr. Praphad Phodhivorakhun Director 5/6 Mr. Pranay Kothari Director 3/6 Mr. Manish Gupta Director 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 Directorsû report
The Board of Directors is responsible for the Companyûs financial statements. As a
part of the annual report, the directors have commented on the financial results of
the Company.
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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 ([email protected]) 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.
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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 Transaction Amount conflict Description of (Million THB) of interest Relationship transaction Pricing policy 2010-11 2011-12 2012-13
Polyplex PCL is the PCL made advance The price of the 1.2 6.9 24.1 Corporation Companyûs major payments on behalf of the transaction Ltd. (PCL) shareholder, Company for administrative between PCL and owning directly and expenses, which were the Company was indirectly the 51% mainly travelling expenses a normal price in of the Companyûs of employees, general business share capital and accommodations for practice and was the two parties employeesû family, the price as have common educational fees for actually paid by directors. employeesû children, PCL in advance insurance claims of for the Company employees, insurance without any extra premium payments, project charge by PCL. 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.
Polyplex PCL is the PTL made payments on The price of the 0.1 0.1 0.14 Corporation Companyûs major behalf of PCL, which were transaction Ltd. (PCL) shareholder, mainly traveling and other between PCL and owning directly and expenses of PCL the Company, PR indirectly the 51% employees and their and PE was a of the Companyûs families. normal price in share capital and general business the two parties practice and was have common the price as directors. actually paid in advance without any extra charge.
Polyplex PCL is the Purchase of Raw material As per Transfer 1,052.2 806.9 533.8 Corporation Companyûs major - Polyester Chips and Pricing policy of Ltd. (PCL) shareholder, Polyester Film by all the PCL (Study done owning directly and subsidiaries of PTL by Ersnt & Young indirectly the 51% including PTL and TNMM of the Companyûs [Transactional Net share capital and Margin] Method the two parties recommended for have common Transfer pricing directors.
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Party having Transaction Amount conflict Description of (Million THB) of interest Relationship transaction Pricing policy 2010-11 2011-12 2012-13
Polyplex PCL is the Sale of Raw material - For Sale of Chips - - 36.6 Corporation Companyûs major Polyester Chips to PCL - to PCL, as per Ltd. (PCL) shareholder, from PTL Transfer Pricing owning directly and policy of PCL indirectly the 51% (Study done by of the Companyûs Ersnt & Young share capital and and TNMM the two parties [Transactional Net have common Margin] Method directors. recommended for Transfer pricing.
Polyplex PAPL is the Payment of interest by Loans carried a 3.9 (Asia) Pte Companyûs major Polyplex Resins Sanayi Ve fixed interest rate Ltd (PAPL) shareholder, Ticaret A.S, on the loans of 4.5% pa until owning directly borrowed from PAPL September 2012, 34.5% of the but have been Companyûs share made interest free capital and the two w.e.f 1st October parties have a 2012. common director.
Polyplex PAPL is the Acquisition by Polyplex At cost to PAPL - - 244 (Asia) Pte Companyûs major Europa Polyester Film Ltd (PAPL) 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.
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.
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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.
85
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 employeesû family, educational fees for employeesû 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.
86 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
9.1 Financial statements Auditor
Year Name of auditor CPA no. Auditing firm
2012/13 (April 1, 2012- Mr. Termphong 4501 Ernst & Young Office Limited
Mar 31, 2013) Opanaphan
2011/12 Mr.Narong Puntawong 3315 Ernst & Young Office Limited
(April 1, 2011-Mar 31, 2012)
2010/11 Mr.Narong Puntawong 3315 Ernst & Young Office Limited
(April 1, 2010-Mar 31, 2011)
2009/10 Mr.Narong Puntawong 3315 Ernst & Young Office Limited
(April 1, 2009-Mar 31, 2010)
2008/09 Mr.Narong Puntawong 3315 Ernst & Young Office Limited
(Apr 1,2008-Mar 31, 2009)
Auditorûs 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.
9. Financial Position and Operational Performance
87
Polyp
lex
(Tha
iland
) Pub
lic C
ompa
ny L
imite
d Ba
lanc
e Sh
eet
Unit:
Bt. 0
00ûs
Unco
nsol
idat
ed
Cons
olid
ated
2010
/201
1 20
11/2
012
2012
/201
3 20
10/2
011
2011
/201
2 20
12/2
013
Ap
ril-M
arch
Ap
ril-M
arch
Ap
ril-M
arch
Ap
ril-M
arch
Ap
ril-M
arch
Ap
ril-M
arch
Amou
nt
%
Amou
nt
%
Amou
nt
%
Amou
nt
%
Amou
nt
%
Amou
nt
%
Asse
ts
Curre
nt A
sset
s Ca
sh a
nd c
ash
Equiv
alent
s 42
,042
0.58
29,64
1 0.4
7 75
,923
0.94
1,231
,009
10.32
1,6
81,81
0 14
.09
1,468
,337
8.92
Curre
nt in
vest
men
ts
164,9
47
2.26
0 -
78,00
0 0.9
6 16
4,947
1.3
8 0
- 94
,001
0.57
Acco
unts
rece
ivabl
e 1,1
81,33
9 16
.17
805,8
76
12.86
76
0,558
9.3
8 1,8
96,15
9 15
.89
1,396
,692
11.70
1,3
84,38
2 8.4
1 Am
ount
s du
e fro
m re
lated
par
ty
- -
- -
- -
221,8
16
1.86
- -
- -
Inve
ntor
ies
470,7
77
6.45
564,6
04
9.01
672,0
36
8.28
1,732
,304
14.52
1,6
23,79
2 13
.60
1,741
,438
10.58
Ot
her c
urre
nt a
sset
s 13
2,752
1.8
2 81
,238
1.30
120,1
78
1.48
212,3
33
1.78
414,6
24
3.47
193,4
24
1.18
Tota
l Cur
rent
Ass
ets
1,99
1,85
7 27
.27
1,48
1,35
9 23
.64
1,70
6,69
5 21
.04
5,45
8,56
8 45
.74
5,11
6,91
8 42
.86
4,88
1,58
2 29
.66
Non-
Curre
nt A
sset
s Re
stric
ted
bank
dep
osits
11
,864
0.07
Inve
stm
ent i
n su
bsid
iary
1,936
,415
26.51
1,3
13,49
2 20
.96
1,355
,547
16.71
0
- 0
- 0
- La
nd, p
rem
ises
and
equip
men
t-net
3,1
15,04
2 42
.65
3,118
,711
49.77
4,9
97,59
5 61
.61
5,979
,206
50.11
6,3
60,04
9 53
.27
11,44
7,677
69
.56
Inta
ngib
le as
sets
-net
-
- -
- -
- 5,2
28
0.04
5,882
0.0
5 10
,175
0.06
Adva
nce
paym
ent f
or p
urch
ases
of a
sset
s 0
- 34
4,485
5.5
0 37
,504
0.46
0 -
447,4
72
3.75
90,62
0 0.5
5 Ot
her n
on c
urre
nt a
sset
s 26
0,825
3.5
7 8,6
04
0.14
14,64
7 0.1
8 48
9,899
4.1
1 8,6
50
0.07
14,64
7 0.0
9 To
tal N
on-c
urre
nt A
sset
s 5,31
2,28
2 72
.73
4,78
5,29
2 76
.36
6,40
5,29
2 78
.96
6,47
4,33
3 54
.26
6,82
2,05
3 57
.14
11,574
,983
70
.34
Tota
l Ass
ets
7,30
4,13
9 10
0.00
6,26
6,65
0 10
0.00
8,11
1,98
7 10
0.00
11
,932
,901
10
0.00
11,93
8,97
0 10
0.00
16
,456
,565
10
0.00
88 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013 Po
lyple
x (T
haila
nd) P
ublic
Com
pany
Lim
ited
Bala
nce
Shee
t Un
it: Bt
. 000
ûs
Un
cons
olid
ated
Co
nsol
idat
ed
20
09/2
010
2011
/201
2 20
12/2
013
2010
/201
1 20
11/2
012
2012
/201
3
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
Am
ount
%
Am
ount
%
Am
ount
%
Am
ount
%
Am
ount
%
Am
ount
%
Li
abilit
ies
& Sh
areh
olde
rsû E
quity
Cu
rrent
Liab
ilities
Ac
coun
ts p
ayab
le 82
1,531
11
.25
602,3
27
9.61
665,0
78
8.20
1,290
,564
10.82
1,3
38,06
6 11
.21
1,178
,378
7.16
Long
-term
loan
s-du
e wi
thin
one
year
25
6,001
3.5
0 27
1,996
4.3
4 37
1,427
4.5
8 38
7,200
3.2
4 36
3,760
3.0
5 45
5,194
2.7
7 Sh
ort-t
erm
loan
s fro
m fi
nanc
ial in
stitu
tions
-
- 80
,000
1.28
385,0
00
4.75
194,4
84
1.63
326,7
45
2.74
1,044
,440
6.35
Inco
me
tax
paya
ble
- -
- -
- -
- -
20,89
1 0.1
7 71
0.0
0 Ot
her c
urre
nt li
abilit
ies
106,4
58
1.46
79,21
5 1.2
6 10
7,546
1.3
3 18
9,958
1.5
9 16
8,621
1.4
1 27
0,272
1.6
4 To
tal c
urre
nt li
abilit
ies
1,18
3,99
0 16
.21
1,03
3,53
8 16
.49
1,52
9,05
1 18
.85
2,06
2,20
6 17
.28
2,21
8,08
3 18
.58
2,94
8,35
4 17
.92
Non-
curre
nt L
iabilit
ies
Long
-term
loan
s fro
m re
lated
par
ty
430,7
32
2.62
Long
-term
loan
s-ne
t of a
mou
nt d
ue
wi
thin
one
year
1,1
20,20
0 15
.34
1,156
,340
18.45
2,5
62,41
8 31
.59
1,504
,733
12.61
1,2
50,51
7 10
.47
4,871
,709
29.60
Ot
her n
on-c
urre
nt li
abilit
ies
- -
6,052
0.1
0 7,4
41
0.09
7,627
0.0
3 9,7
68
0.08
16,51
1 0.1
0 To
tal L
iabi
lities
2,30
4,19
1 31
.55
2,19
5,93
0 35
.04
4,09
8,91
1 50
.53
3,57
4,56
6 29
.13
3,47
8,36
8 29
.13
8,26
7,30
6 50
.24
Shar
ehol
derûs
Equ
ity
Issue
d &
Paid
-up
Shar
e Ca
pita
l Or
dina
ry s
hare
s 80
0,000
10
.95
800,0
00
12.77
80
0,000
9.8
6 80
0,000
6.7
0 80
0,000
6.7
0 80
0,000
4.8
6 Pr
emium
on
ordi
nary
sha
res
1,370
,460
18.76
1,3
70,46
0 21
.87
1,370
,460
16.89
1,3
70,46
0 11
.48
1,370
,460
11.48
1,3
70,46
0 8.3
3 Ot
her c
ompo
nent
s of
sha
reho
lder
sû eq
uity
- -
- -
- -
(316
,111)
(2
.65)
(348
,087)
(2
.92)
(817
,780)
(4
.97)
Lega
l Res
erve
96
,000
1.31
96,00
0 1.5
3 96
,000
1.18
96,00
0 0.8
0 96
,000
0.80
96,00
0 0.5
8 Re
taine
d ea
rning
s (d
efici
ts)
2,733
,489
37.42
1,8
04,26
1 28
.79
1,746
,617
21.53
6,3
81,60
7 53
.52
6,401
,772
53.62
6,6
39,74
3 40
.35
Tota
l Sha
reho
lder
sû E
quity
4,99
9,94
9 68
.45
4,07
0,72
1 64
.96
4,01
3,07
7 49
.47
8,33
1,95
6 69
.69
8,32
0,14
5 69
.69
8,08
8,42
3 49
.15
Mino
rity
Inte
rest
-
- -
- -
- 26
,380
0.22
140,4
57
1.18
100,8
36
0.61
Tota
l Liabi
lities
and
Shar
ehol
ders
û Equ
ity
7,30
4,13
9 10
0.00
6,26
6,65
0 10
0.00
8,11
1,98
7 10
0.00
11
,932
,901
10
0.00
11,93
8,97
0 10
0.00
16
,456
,565
10
0.00
89
Polyp
lex
(Tha
iland
) Pub
lic C
ompa
ny L
imite
d St
atem
ent o
f Inc
ome
and
Reta
ined
Ear
ning
s Un
it: Bt
. 000
ûs
Un
cons
olid
ated
Co
nsol
idat
ed
20
10/2
011
2011
/201
2 20
12/2
013
2010
/201
1 20
11/2
012
2012
/201
3
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
April
-Mar
ch
Am
ount
%
Am
ount
%
Am
ount
%
Am
ount
%
Am
ount
%
Am
ount
%
Re
venu
es
Net s
ales
4,980
,737
97.38
4,5
60,64
7 93
.92
4,205
,440
94.76
11
,183,1
74
98.79
10
,143,1
11
98.82
9,2
30,01
8 97
.21
Othe
r rev
enue
s 58
,745
1.15
295,3
16
6.08
58,88
6 1.3
3 10
6,586
0.9
4 12
0,697
1.1
8 87
,768
0.92
Gain
on fo
reign
exc
hang
e 75
,517
1.48
- -
173,8
36
3.92
30,41
0 0.2
7 -
- 17
7,399
1.8
7 To
tal R
even
ues
5,11
5,00
0 10
0.00
4,85
5,96
2 10
0.00
4,43
8,16
2 10
0.00
11
,320
,169
10
0.00
10,26
3,80
8 10
0.00
9,49
5,18
5 10
0.00
Co
sts
and
Expe
nses
Co
st o
f sale
s 3,1
04,61
6 60
.70
3,831
,385
78.90
3,9
41,03
0 88
.80
6,502
,517
57.44
7,8
31,56
3 76
.30
7,874
,168
82.93
Se
lling
and
adm
inist
rativ
e ex
pens
es
332,0
51
6.49
333,6
06
6.87
372,8
04
8.40
803,9
93
7.10
858,0
32
8.36
1,159
,101
12.21
Lo
ss o
f for
eign
exch
ange
-
- 22
1,776
4.5
7 -
- -
- 12
5,979
1.2
3 -
- To
tal E
xpen
ses
3,43
6,66
7 67
.19
4,38
6,76
7 90
.34
4,31
3,83
4 97
.20
7,30
6,51
0 64
.54
8,81
5,57
3 85
.89
9,03
3,27
0 95
.14
Prof
it (lo
ss) b
efor
e in
tere
st e
xpen
ses
1,67
8,33
3 32
.81
469,19
5 9.66
12
4,32
9 2.80
4,01
3,65
9 35
.46
1,44
8,23
4 14
.11
461,91
6 4.86
In
tere
st e
xpen
ses
(35,5
65)
(0.70
) (3
4,054
) (0
.70)
(45,9
73)
(1.04
) (9
2,728
) (0
.82)
(56,2
10)
(0.55
) (8
6,806
) (0
.91)
Inco
me
Tax
- -
- -
- -
(27,8
82)
(0.25
) (3
4,187
) (0
.33)
(11,6
58)
(0.12
) Ne
t pro
fit (l
oss)
afte
r in
com
e ta
x 1,64
2,76
7 32
.12
435,14
2 8.96
78
,356
1.77
3,89
3,04
9 34
.39
1,35
7,83
8 13
.23
363,45
2 3.83
Ne
t los
s of
mino
rity
inter
est
- -
- -
- -
(10,1
64)
(0.09
) (2
30)
(0.00
) 10
,520
0.11
Net p
rofit
(los
s)
1,64
2,76
7 32
.12
435,14
2 8.96
78
,356
1.77
3,88
2,88
5 34
.30
1,35
7,60
8 13
.23
373,97
1 3.94
Ea
rning
s (lo
sses
) per
sha
re (B
t.)
2.05
- 0.5
4 -
0.10
- 4.8
5 -
1.70
- 0.4
7 -
90 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited Cash Flow Statement
Unit: Bt. 000ûs 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 1,642,767 435,142 78,356 3,920,931 1,392,024 375,109 Adjustments to reconcile profit of net cash provided by operating activities Depreciation and amortization 190,413 196,282 234,512 357,538 369,432 411,977 Doubtful debts (doubtful debts recovery) (233) (25) - 783 279 3,720 Allowance for diminution in value of inventories (reversal) (17,289) 2,720 13,192 (17,289) 2,720 13,192 Dividend income (9,858) (217,596) (9,484) - - - Interest Expense 33,934 33,003 44,981 76,002 45,147 55,832 Unrealized losses (gains) on foreign exchange (99,795) 20,508 (142,670) (97,579) 19,969 (150,338) Exchange loss on the redemption of investment in subsidiary 37,407 253,268 - - 253,268 - Provision for long-term employee benefits - 1,682 1,673 - 7,270 12,905 Gains on sales of current investments (472) (3,538) (539) (472) (3,538) (539) Loss (gain) from disposal of F/A (402) - 13,811 (610) (2) 26,070 Profit (Loss) from operation before changes in operating assets and liabilities 1,776,472 721,445 233,834 4,239,304 2,086,570 747,928 Accounts receivable (528,037) 371,036 30,498 (723,653) 496,000 444 Balance due from a related company - - - (161,170) - - Inventories (41,599) (96,548) (120,625) (598,525) 105,741 (130,693) Other current assets (89,258) 51,514 (27,331) (105,941) 22,992 219,309 Other non-current assets 3,994 1,222 (6,043) 3,997 1,221 (5,996) Accounts payable 156,367 (78,613) 46,860 281,323 (56,597) 68,428 Other current liabilities 26,492 (27,381) 24,879 38,614 5,730 108,648 Payment of long-term employee benefits - - (283) (1,199) (4,988) (5,524) Income tax paid - - - (14,624) (42,530) (30,601) Cash flow from (used in) operating activities 1,304,431 942,676 181,788 2,958,128 2,614,138 971,944
91
Polyplex (Thailand) Public Company Limited Cash Flow Statement
Unit: Bt. 000ûs 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 - - - - - (11,864) Decrease (increase) in current investments (164,475) 168,485 (77,461) (164,475) 168,485 (93,462) Decrease (increase) in investments in subsidiaries 139,665 369,655 (42,055) - - (266,837) Dividend from subsidiary 9,858 217,596 9,484 - - - Increase in advance payment for purchases of assets (182,321) (93,486) 306,981 (411,349) 32,556 356,851 Increase (decrease) in accounts payable for purchases of fixed assets - (145,631) 18,539 161,359 (145,631) 19,780 Purchases of property, plant and equipment (676,237) (192,207) (2,110,207) (760,722) (914,563) (5,898,755) Proceeds from sales of property, plant and equipment 411 - 623 1,718 70,089 15,209 Increase in intangible assets - - - (731) (1,433) (5,275) Net cash used in investing activities (711,739) 324,412 (1,894,096) (1,174,201) (790,497) (5,884,353) Cash flow from financing activities Interest Paid (34,285) (40,538) (58,875) (74,766) (54,135) (134,916) Increase (Decrease) in short term loans from financial institutions (50,000) 80,000 305,000 142,218 132,261 717,695 Increase in long-term loans from related party - - - - - 430,732 Increase/(decrease) in long-term loans 36,838 41,049 1,648,465 (778,852) (275,697) 3,987,139 Dividend paid to minority shareholders - - - (278) - - Cash receivable capital increase - - - - 349,546 - Dividend payment (612,000) (1,360,000) (136,000) (612,000) (1,360,000) (136,000) Dividend paid to non-controlling interests of subsidiary - - - - (2,187) (543) Cash received from non-controlling interests of subsidiaries - - - - - 9,033 Cash provided from financing activities (659,447) (1,279,489) 1,758,590 (1,323,679) (1,210,213) 4,873,141 Currency Translation changes - - - 59,342 (162,626) (174,205) Increase in cash and cash equivalents (66,755) (12,401) 46,282 519,590 450,801 (213,473) Cash and cash equivalents at the beginning of period (April 1) 108,797 42,042 29,641 711,418 1,231,009 1,681,810 Cash and Cash equivalents at the end of period (March 31) 42,042 29,641 75,923 1,231,009 1,681,810 1,468,337
92 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited Financial Statement
Unit: Bt. 000ûs 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 (time) 1.68 1.43 1.12 2.65 2.31 1.66 Quick ratio (time) 1.17 0.81 0.60 1.60 1.39 1.00 Cash flow current ratio (time) 1.29 0.85 0.14 1.66 1.22 0.38 Receivable current ratio (time) 5.46 4.59 5.37 7.30 6.16 6.64 Avg. debt collection period (day) 65.99 78.43 67.05 49.31 58.44 54.24 Inventory turnover period (time) 88.87 97.18 78.84 15.68 14.37 14.84 Avg. selling period (day) 4.05 3.70 4.57 22.96 25.05 24.27 Payable current ratio (time) 5.73 6.27 6.22 6.86 7.18 6.93 Loan repayment period (day) 62.78 57.40 57.89 52.50 50.16 51.95 Cash cycle (day) 7.25 24.73 13.73 19.77 33.32 26.56 Profitability Ratios Gross profit margin (%) 37.67% 15.99% 6.29% 41.85% 22.79% 14.69% Operating profit margin (%) 31.42% 8.68% -2.58% 35.10% 14.33% 2.13% Other profit margin (%) 1.15% 6.08% 1.33% 0.94% 1.18% 0.92% Cash to profit margin (%) 74.53% 123.80% 91.23% 69.25% 141.20% 98.12% Net profit margin (%) 32.12% 8.96% 1.77% 34.30% 13.23% 3.94% Return on equity (%) 36.63% 9.59% 1.94% 58.06% 16.14% 4.49% Efficiency Ratios Return on assets (%) 24.63% 6.41% 1.09% 37.34% 11.37% 2.63% Return on fixed assets (%) 63.83% 20.26% 7.71% 73.13% 27.99% 8.83% Asset turnover (time) 0.77 0.72 0.62 1.09 0.86 0.67 Financial Policy Ratios Debt to equity ratio (time) 0.46 0.54 1.02 0.43 0.42 1.02 Interest coverage ratio (time) 52.54 19.54 7.81 47.03 32.33 10.19 Commitment coverage ratio (cash basis) (time) 1.50 2.10 0.08 2.44 2.01 0.16 Pay out ratio (%) 40% 31% 31% 40% 31% 31%
93
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
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 9001:2008 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)
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
94 Polyplex (Thailand) Public Company Limited
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. Companyûs 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 Companyûs 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 yearûs 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
95
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 2010-11 2011-12 2012-13 Market Bt. million % Bt. million % Bt. million % Bt. Million %
Exports 5,965.27 83.72 9,611.07 85.94 8,495.31 83.75 7,438.18 80.59
Domestic sales 1,160.09 16.28 1,572.10 14.06 1,647.80 16.25 1,791.84 19.41
Total 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)
VA trend-Plain & Met. PET Film (PTL-Turkey)
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
$/Kg
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
FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13
0.40
0.65
0.90
1.15
1.40
1.65
1.90
2.15
Euro/ Kg
Plain Film Euro /Kg 0.80 0.58 1.52 0.82 0.67
Met.Film Euro /Kg 1.28 1.09 1.98 1.31 1.12
FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13
96 Polyplex (Thailand) Public Company Limited
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 Companyûs total sales revenue is mainly driven by Exports, with 75-80% of its
total sales revenue coming from exports.
Table illustrating the Companyûs sales revenue from export and domestic sales is below: 2009-10 2010-11 2011-12 2012-13 Market Bt. million % Bt. million % Bt. million % Bt. Million %
Exports 2,496.48 78.64 3,950.99 79.33 3,640.71 79.83 3,165.86 75.28
Domestic sales 678.17 21.36 1,029.75 20.67 919.94 20.17 1,039.58 24.72
Total 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.
97
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 Companyûs 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 2012-13 2011-12 2010-11
Raw materials and consumables used
(incl.change in inventory) 76.0% 79.2% 78.2%
Depreciation (in COS) 5.1% 4.6% 5.1%
Salaries, wages and other employee benefits
(in COS) 6.9% 5.5% 5.7%
Utilities (Power/Natural Gas/ Chilled water etc) 7.6% 6.2% 7.2%
Others 4.4% 4.5% 3.8%
100.0% 100.0% 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.
98 Polyplex (Thailand) Public Company Limited
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 projectsû 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 2012-13 2011-12 2010-11
Raw materials and consumables (incl.change in all inventory) 77.3% 79.4% 78.3% Depreciation (in COS) 5.7% 4.9% 5.8% Salaries, wages and other employee benefits (in COS) 7.8% 6.4% 6.8% Utilities (Power/Natural Gas/ Chilled water etc) 8.2% 7.5% 7.9% Others 1.0% 1.8% 1.2% 100.0% 100.0% 100.0%
99
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 Companyûs 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 Companyûs 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%.
100 Polyplex (Thailand) Public Company Limited
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.
ë Decrease on account of depreciation charged during the year - Baht 412 million
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
ë Decrease on account of depreciation charged during the year - Baht 235 million
101
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.
102 Polyplex (Thailand) Public Company Limited
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
103
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
104 Polyplex (Thailand) Public Company Limited
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 Companyûs 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 Companyûs 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 Companyûs foreign exchange contracts outstanding at 31 March 2013 are
summarized below.
105
Foreign Bought Sold Contractual exchange rate
currency amount amount Bought Sold
(Million) (Million) (Baht per 1 foreign
currency unit)
US dollar 2.08 19.39 Baht 29.4650 - 30.2650 Baht 29.5920 - 30.9750
per USD 1 per USD 1
Swiss franc 0.30 - Baht 32.8089 per CHF 1
Euro 0.57 1.09 Baht 37.9000 - 39.5700 Baht 38.0200 - 40.8268
per EUR 1 per EUR 1
Japanese yen - 60.06 - Baht 0.3121 - 0.3254
per JPY 1
The Companyûs 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) 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.
(d) 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
(e) 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 subsidiaryûs loan was USD
52.1 million.
(f) 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).
(g) Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi has provided
guarantee for the long-term loans obtained by Polyplex Resins Sanayi Ve
106 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
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.
(h) 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.
(i) 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
Shareholdersû equity The Companyûs shareholdersû 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 Companyûs financial position and liquidity and subject to the approval by the shareholders. For the year 2012-13, the Companyûs 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.
107
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 subsidiariesû 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
108 Polyplex (Thailand) Public Company Limited
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
Aprilû08, 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 Companyûs 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.
109
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
- 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.
2. 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.
Polyplex (Thailand) Public Company Limited 110
ANNUAL REPORT 2012 - 2013
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.
Independent Auditorûs Report
111
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
Polyplex (Thailand) Public Company Limited 112
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited and its subsidiaries
As at 31 March 2013
Statements of financial position
The accompanying notes are an integral part of the financial statements.
(Unit: Baht) Consolidated Separate financial statements financial statements Note 31 March 31 March 1 April 31 March 31 March 2013 2012 2011 2013 2012 (Restated)
Assets
Current assets
Cash and cash equivalents 7 1,468,336,634 1,681,809,653 1,231,008,609 75,923,455 29,641,023
Current investments 94,001,000 - 164,946,931 78,000,000 -
Trade receivables 8 1,384,382,467 1,396,691,807 1,896,159,409 760,557,602 805,875,522
Inventories 9 1,741,438,402 1,623,791,836 1,732,304,430 672,036,481 564,604,348
Advance payment for purchase of goods 6 48,280,243 305,064,743 327,520,752 6,063,441 6,962,067
Input tax refundable 63,352,128 34,110,004 24,098,204 63,346,522 34,110,004
Other current assets 81,791,180 75,449,714 82,530,148 50,767,931 40,165,682
Total current assets 4,881,582,054 5,116,917,757 5,458,568,483 1,706,695,432 1,481,358,646
Non-current assets
Restricted bank deposits 10 11,864,119 - - - -
Investments in subsidiaries 11 - - - 1,355,546,732 1,313,491,892
Property, plant and equipment 12 11,447,677,121 6,360,048,887 5,979,205,759 4,997,594,675 3,118,710,965
Goodwill 7,038,679 3,874,351 3,874,351 - -
Other intangible assets 13 3,136,482 2,007,443 1,353,643 - -
Advance payment for purchases of assets 90,620,407 447,471,579 480,027,593 37,503,914 344,484,861
Other non-current assets 14,646,635 8,650,268 9,871,557 14,646,635 8,604,003
Total non-current assets 11,574,983,443 6,822,052,528 6,474,332,903 6,405,291,956 4,785,291,721
Total assets 16,456,565,497 11,938,970,285 11,932,901,386 8,111,987,388 6,266,650,367
113
Polyplex (Thailand) Public Company Limited and its subsidiaries
As at 31 March 2013
Statements of financial position (continued)
The accompanying notes are an integral part of the financial statements.
(Unit: Baht) Consolidated Separate financial statements financial statements Note 31 March 31 March 1 April 31 March 31 March 2013 2012 2011 2013 2012 (Restated)
Liabilities and shareholdersû equity
Current liabilities
Short-term loans from financial institutions 14 1,044,440,125 326,744,800 194,483,944 385,000,000 80,000,000
Trade and other payables 15 1,178,378,311 1,094,006,167 1,290,563,859 665,078,137 602,326,785
Accounts payable from
subsidiaryûs acquisition 2.2 - 244,060,137 - - -
Current portion of long-term loans from
financial institutions 17 455,193,839 363,759,992 387,200,147 371,427,309 271,996,222
Income tax payable 70,650 20,891,111 25,767,349 - -
Other current liabilities 270,271,567 168,621,255 164,190,477 107,545,810 79,215,427
Total current liabilities 2,948,354,492 2,218,083,462 2,062,205,776 1,529,051,256 1,033,538,434
Non-current liabilities
Long-term loans from related party 6 430,732,393 - - - -
Long-term loans from financial institutions,
net of current portion 17 4,871,708,643 1,250,516,899 1,504,733,243 2,562,418,211 1,156,339,503
Provision for long-term employee benefits 16 16,510,578 9,767,671 7,627,140 7,441,312 6,051,667
Total non-current liabilities 5,318,951,614 1,260,284,570 1,512,360,383 2,569,859,523 1,162,391,170
Total liabilities 8,267,306,106 3,478,368,032 3,574,566,159 4,098,910,779 2,195,929,604
Polyplex (Thailand) Public Company Limited 114
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited and its subsidiaries
As at 31 March 2013
Statements of financial position (continued)
(Unit: Baht) Consolidated Separate financial statements financial statements Note 31 March 31 March 1 April 31 March 31 March 2013 2012 2011 2013 2012 (Restated)
Shareholdersû equity
Share capital
Registered
960,000,000 ordinary shares of Baht 1 each 960,000,000 960,000,000 960,000,000 960,000,000 960,000,000
Issued and fully paid
800,000,000 ordinary shares of Baht 1 each 800,000,000 800,000,000 800,000,000 800,000,000 800,000,000
Share premium 1,370,460,000 1,370,460,000 1,370,460,000 1,370,460,000 1,370,460,000
Retained earnings
Appropriated - statutory reserve 18 96,000,000 96,000,000 96,000,000 96,000,000 96,000,000
Unappropriated 6,639,743,223 6,401,772,010 6,381,606,683 1,746,616,609 1,804,260,763
Other components of shareholdersû equity (817,780,293) (348,086,777) (316,111,008) - -
Equity attributable to owners of the Company 8,088,422,930 8,320,145,233 8,331,955,675 4,013,076,609 4,070,720,763
Non-controlling interests of the subsidiaries 100,836,461 140,457,020 26,379,552 - -
Total shareholdersû equity 8,189,259,391 8,460,602,253 8,358,335,227 4,013,076,609 4,070,720,763
Total liabilities and shareholdersû equity 16,456,565,497 11,938,970,285 11,932,901,386 8,111,987,388 6,266,650,367
The accompanying notes are an integral part of the financial statements.
115
Polyplex (Thailand) Public Company Limited and its subsidiaries
For the year ended 31 March 2013
Income statements
(Unit: Baht) Consolidated Separate financial statements financial statements Note 2013 2012 2013 2012 (Restated)
Revenues
Sales 21 9,230,018,464 10,143,110,995 4,205,439,768 4,560,646,524
Exchange gains 177,398,836 - 173,836,044 -
Dividend income 11 - - 9,483,705 217,596,131
Other income 87,768,151 120,696,524 49,402,782 77,719,578
Total revenues 9,495,185,451 10,263,807,519 4,438,162,299 4,855,962,233
Expenses
Cost of sales 7,874,168,461 7,831,562,679 3,941,029,982 3,831,384,958
Selling expenses 630,475,704 580,889,370 297,878,785 263,126,493
Administrative expenses 528,625,632 277,142,763 74,924,889 70,479,707
Exchange losses - 125,978,536 - 221,775,751
Total expenses 9,033,269,797 8,815,573,348 4,313,833,656 4,386,766,909
Profit before finance cost
and income tax expenses 461,915,654 1,448,234,171 124,328,643 469,195,324
Finance cost (86,806,412) (56,209,821) (45,972,797) (34,053,722)
Profit before income tax expenses 375,109,242 1,392,024,350 78,355,846 435,141,602
Income tax expenses 20 (11,657,723) (34,186,625) - -
Profit for the year 363,451,519 1,357,837,725 78,355,846 435,141,602
Profit attributable to:
Equity holders of the Company 373,971,213 1,357,607,818 78,355,846 435,141,602
Non-controlling interests of the subsidiaries (10,519,694) 229,907
363,451,519 1,357,837,725
Basic earnings per share 22
Profit attributable to equity holders of the Company 0.47 1.70 0.10 0.54
The accompanying notes are an integral part of the financial statements.
Polyplex (Thailand) Public Company Limited 116
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited and its subsidiaries
For the year ended 31 March 2013
Statements of comprehensive income
The accompanying notes are an integral part of the financial statements.
(Unit: Baht) Consolidated Separate financial statements financial statements 2013 2012 2013 2012 (Restated)
Profit for the year 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 (484,507,192) (27,406) - -
Other comprehensive income for the year (484,507,192) (27,406) - -
Total comprehensive income for the year (121,055,673) 1,357,810,319 78,355,846 435,141,602
Total comprehensive income attributable to:
Equity holders of the Company (99,033,704) 1,356,895,765 78,355,846 435,141,602
Non-controlling interests of the subsidiaries (22,021,969) 914,554
(121,055,673) 1,357,810,319
117
Polyp
lex (T
haila
nd) P
ublic
Com
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ited
and
its s
ubsid
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For t
he y
ear e
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31
Mar
ch 2
013
Stat
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egra
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he fi
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To
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equit
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800,0
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0 1,3
70,46
0,000
96
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6,381
,606,6
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8) -
- (31
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8,331
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26,37
9,552
8,3
58,33
5,227
To
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e for
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- -
1,357
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- -
(712,0
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1,356
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Divid
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23)
- -
- (1,3
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0,000
) -
- -
- (1,3
60,00
0,000
) - (
1,360
,000,0
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Divid
end
paid
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ubsid
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- -
- -
- -
- -
- (2,
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(2,18
7,204
) Ef
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tion
unde
r com
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contr
ol (N
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- -
- 22
,557,5
09
- (31
,263,7
16)
- (31
,263,7
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(8,70
6,207
) 11
5,350
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43,91
1 Ba
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at 3
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Cumu
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- 18
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ted
800,0
00,00
0 1,3
70,46
0,000
96
,000,0
00
6,401
,772,0
10
(316,8
23,06
1) (31
,263,7
16)
- (34
8,086
,777)
8,320
,145,2
33
140,4
57,02
0 8,4
60,60
2,253
To
tal c
ompr
ehen
sive
incom
e for
the
year
- -
- 37
3,971
,213
(473,0
04,91
7) -
- (47
3,004
,917)
(99,03
3,704
) (22
,021,9
69)
(121,0
55,67
3) Di
viden
d pa
id (N
ote 2
3) -
- -
(136,0
00,00
0) -
- -
- (13
6,000
,000)
- (13
6,000
,000)
Divid
end
paid
by s
ubsid
iary
- -
- -
- -
- -
- (54
2,636
) (54
2,636
) Ad
dition
al inv
estm
ents
in su
bsidi
aries
-
- -
- -
- -
- -
9,032
,647
9,032
,647
Acqu
isitio
n of
inves
tmen
ts in
subs
idiary
from
non-
contr
olling
inter
ests
(Note
11)
- -
- -
- -
3,311
,401
3,311
,401
3,311
,401
(26,08
8,601
) (22
,777,2
00)
Balan
ce a
s at
31
Mar
ch 2
013
800,0
00,00
0 1,3
70,46
0,000
96
,000,0
00
6,639
,743,2
23
(789,8
27,97
8) (31
,263,7
16)
3,311
,401
(817,7
80,29
3) 8,0
88,42
2,930
10
0,836
,461
8,189
,259,3
91
Polyplex (Thailand) Public Company Limited 118
ANNUAL REPORT 2012 - 2013
Polyplex (Thailand) Public Company Limited and its subsidiaries
For the year ended 31 March 2013
Statements of changes in shareholdersû equity (continued)
(Unit: Baht) Separate financial statements Retained earnings Issued and Appropriated - fully paid Share statutory share capital premium reserve Unappropriated Total
Balance as at 1 April 2011 800,000,000 1,370,460,000 96,000,000 2,729,119,161 4,995,579,161
Total comprehensive income for the year - - - 435,141,602 435,141,602
Dividend paid (Note 23) - - - (1,360,000,000) (1,360,000,000)
Balance as at 31 March 2012 800,000,000 1,370,460,000 96,000,000 1,804,260,763 4,070,720,763
Balance as at 31 March 2012 800,000,000 1,370,460,000 96,000,000 1,804,260,763 4,070,720,763
Total comprehensive income for the year - - - 78,355,846 78,355,846
Dividend paid (Note 23) - - - (136,000,000) (136,000,000)
Balance as at 31 March 2013 800,000,000 1,370,460,000 96,000,000 1,746,616,609 4,013,076,609
The accompanying notes are an integral part of the financial statements.
119
(Unit: Baht) Consolidated Separate financial statements financial statements 2013 2012 2013 2012 (Restated) Cash flows from operating activities Profit before tax 375,109,242 1,392,024,350 78,355,846 435,141,602 Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation 411,977,123 369,431,898 234,512,345 196,282,069 Doubtful debts (doubtful debts recovery) 3,719,807 279,485 - (24,912) Decrease of inventory to net realisable value 13,192,437 2,719,948 13,192,438 2,719,948 Gains on sales of current investments (538,611) (3,538,306) (538,611) (3,538,306) Losses (gains) on sales of property, plant and equipment 26,070,300 (2,000) 13,811,241 - Provision for long-term employee benefits 12,904,832 7,270,420 1,673,050 1,682,185 Unrealised losses (gains) on exchange rate (150,338,484) 19,968,774 (142,669,550) 20,508,036 Exchange loss on the redemption of investment in subsidiary - 253,267,774 - 253,267,774 Dividend income - - (9,483,705) (217,596,131) Interest expenses 55,831,760 45,147,468 44,980,673 33,002,697 Profit from operating activities before changes in operating assets and liabilities 747,928,406 2,086,569,811 233,833,727 721,444,962 Operating assets (increase) decrease Trade receivables 444,110 495,999,770 30,498,118 371,036,374 Inventories (130,693,211) 105,740,733 (120,624,571) (96,547,579) Other current assets 219,308,852 22,992,017 (27,331,465) 51,514,424 Other non-current assets (5,996,367) 1,221,289 (6,042,632) 1,222,109 Operating liabilities increase (decrease) Trade and other payables 68,428,271 (56,597,215) 46,859,648 (78,613,381) Other current liabilities 108,647,576 5,729,781 24,879,002 (27,380,864) Payment of long-term employee benefits (5,523,533) (4,988,344) (283,405) - Cash from operating activities 1,002,544,104 2,656,667,842 181,788,422 942,676,045 Cash paid for corporate income tax (30,600,596) (42,529,867) - - Net cash from operating activities 971,943,508 2,614,137,975 181,788,422 942,676,045
Polyplex (Thailand) Public Company Limited and its subsidiaries
For the year ended 31 March 2013
Cash flow statements
The accompanying notes are an integral part of the financial statements.
Polyplex (Thailand) Public Company Limited 120
ANNUAL REPORT 2012 - 2013
(Unit: Baht) Consolidated Separate financial statements financial statements 2013 2012 2013 2012 (Restated) Cash flows from investing activities Increase in restricted bank deposits (11,864,119) - - - Decrease (increase) in current investments (93,462,389) 168,485,237 (77,461,389) 168,485,237 Cash paid for investments in subsidiaries (266,837,337) - (42,054,840) (675,954,680) Cash received from the redemption of investments in subsidiary - - - 1,045,609,865 Dividend received from subsidiaries - - 9,483,705 217,596,131 Decrease (increase) in advance payment for purchases of assets 356,851,172 32,556,014 306,980,947 (93,486,006) Increase (decrease) in other payables for purchases of fixed assets 19,780,187 (145,630,991) 18,538,945 (145,630,991) Proceeds from sales of property, plant and equipment 15,209,296 70,088,959 623,364 - Purchases of property, plant and equipment (5,898,754,709) (914,563,223) (2,110,206,906) (192,207,407) Increase in goodwill (3,164,328) - - - Increase in other intangible assets (2,111,021) (1,433,493) - - Net cash from (used in) investing activities (5,884,353,248) (790,497,497) (1,894,096,174) 324,412,149 Cash flows from financing activities Increase in short-term loans from financial institutions 717,695,325 132,260,856 305,000,000 80,000,000 Increase in long-term loans from related party 430,732,393 - - - Increase (decrease) in long-term loans from financial institutions 3,987,139,137 (275,697,230) 1,648,464,960 41,049,022 Cash paid for interest expenses (134,915,535) (54,135,336) (58,874,776) (40,538,000) Proceeds from increase in share capital - 349,545,812 - - Dividend payment (136,000,000) (1,360,000,000) (136,000,000) (1,360,000,000) Dividend paid to non-controlling interests of subsidiary (542,636) (2,187,204) - - Cash received from non-controlling interests of subsidiaries 9,032,647 - - - Net cash from (used in) financing activities 4,873,141,331 (1,210,213,102) 1,758,590,184 (1,279,488,978) Decrease in translation adjustments (174,204,610) (162,626,332) - - Net increase (decrease) in cash and cash equivalents (213,473,019) 450,801,044 46,282,432 (12,400,784) Cash and cash equivalents at beginning of year 1,681,809,653 1,231,008,609 29,641,023 42,041,807 Cash and cash equivalents at end of year 1,468,336,634 1,681,809,653 75,923,455 29,641,023
Polyplex (Thailand) Public Company Limited and its subsidiaries
For the year ended 31 March 2013
Cash flow statements (continued)
The accompanying notes are an integral part of the financial statements.
121
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.
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.
2. 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):
Polyplex (Thailand) Public Company Limited and its subsidiaries
For the year ended 31 March 2013
Notes to consolidated financial statements
122 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Companyûs name Nature of business Country of Percentage of incorporation shareholding 2013 2012 Percent Percent
EcoBlue Ltd. Manufacture and distribution Thailand 80.00 - of recycle products Polyplex (Singapore) Pte. Ltd. Investment holding company Singapore 100.00 100.00 Polyplex America Holdings Inc. Investment holding company United States 100.00 100.00 of America Polyplex (Americas) Inc. Distribution of plastic film United States - 80.24 of America Polyplex Europa Polyester Film Sanayi Manufacture and distribution Turkey 100.00 100.00 Ve Ticaret Anonim Sirketi (100% owned of polyester film and chips by Polyplex (Singapore) Pte. Ltd.) Polyplex Trading (Shenzhen) Co., Ltd. Distribution of plastic film The Peopleûs 100.00 100.00 (100% owned by Polyplex (Singapore) Republic of China Pte. Ltd.) Polyplex USA LLC (100% owned by Manufacture and distribution United States 100.00 100.00 Polyplex America Holdings Inc.) of polyester film of America Polyplex Resins Sanayi Ve Ticaret Anonim Manufacture and distribution Turkey 67.00 67.00 Sirketi (67% owned by Polyplex Europa of polyester resins Polyester Film Sanayi Ve Ticaret Anonim Sirketi)
b) 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. c) The financial statements of the subsidiaries are prepared using the same significant
accounting policies as the Company. d) 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.
e) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements.
f) 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.
g) 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
123
Baht 31 million, was therefore recorded as çSurplus on business combination under common controlé and separately presented in the consolidated statements of changes in shareholdersû 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 5,927 Net book values of assets and liabilities as at the acquisition date Cash and cash equivalents 3,049 Other current assets 137 Property, plant and equipment 23,402 Intangible assets 3 Other non-current assets 1,843 Short-term loans from bank (7,762) Trade and other payables (1,102) Other current liabilities (307) Loans from related party (11,553) Other non-current liabilities (2) Total net assets 7,708 Less: Non-controlling interests of subsidiary (2,544) Net assets of equity holders of the Company 5,164 Surplus on business combination under common control 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
124 Polyplex (Thailand) Public Company Limited
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 149,637 Increase in other current assets 2,880 Increase in property, plant and equipment 91,477 Increase in advance payment for purchases of assets 102,156 Increase in trade and other payables 1,074 Increase in accounts payable from subsidiaryûs acquisition 244,060 Increase in other current liabilities 4 Increase in unappropriated retained earnings 18,487 Decrease in other components of shareholdersû equity 31,349 Increase in non-controlling interests of the subsidiaries 113,874 Statement of income Increase in administrative expenses 2,325 Increase in exchange losses 3,680 Increase in finance cost 70 Decrease in profit for the year 6,075 Decrease in profit attributable to equity holders of the Company 4,070 Decrease in profit attributable to non-controlling interests of the subsidiaries 2,005 Decrease in basic earnings per share (Baht) 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 Companyûs shareholding in Polyplex (Americas) Inc.
125
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 The separate financial statements, which present investments in subsidiaries under
the cost method, have been prepared solely for the benefit of the public. 3. 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 Companyûs 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 subsidiariesû
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.
126 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Effective date
Financial Reporting Standard:
TFRS 4 Insurance Contracts 1 January 2016
Accounting Standard Interpretation:
TSIC 29 Service Concession Arrangements: Disclosures 1 January 2014
Financial Reporting Standard Interpretations:
TFRIC 1 Changes in Existing Decommissioning, Restoration 1 January 2014
and Similar Liabilities
TFRIC 4 Determining whether an Arrangement contains a Lease 1 January 2014
TFRIC 5 Rights to Interests arising from Decommissioning, 1 January 2014
Restoration and Environmental Rehabilitation Funds
TFRIC 7 Applying the Restatement Approach under 1 January 2014
TAS 29 Financial Reporting in Hyperinflationary Economies
TFRIC 10 Interim Financial Reporting and Impairment 1 January 2014
TFRIC 12 Service Concession Arrangements 1 January 2014
TFRIC 13 Customer Loyalty Programmes 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.
127
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 shareholdersû 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 - 20 and 50 years Machinery and equipment - 4 - 20 years Furniture, fixtures and office equipment - 3 - 10 years Motor vehicles - 5 - 7 years
Depreciation is included in determining income.
No depreciation is provided on land, machinery in transit, and assets under
installation and construction.
128 Polyplex (Thailand) Public Company Limited
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.
129
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 assetûs 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 fundûs assets are held in a separate trust fund and the Companyûs 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.
130 Polyplex (Thailand) Public Company Limited
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.
131
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 Pricing policy
2013 2012 2013 2012
Transactions with subsidiaries
(eliminated from the consolidated financial statements)
Sales of goods - - 981.4 724.4 With reference to market prices
Dividend income - - 9.5 217.6 As declared
Purchases of raw materials - - 2.1 - With reference to market prices
Transactions with related companies
Sales of goods 36.6 - 36.6 - With reference to market prices
Purchases of raw materials 533.8 806.9 99.4 58.5 With reference to market prices
Other expenses 24.1 6.9 7.0 4.0 With reference to market prices
Interest expenses 3.9 - - - 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 Companyûs 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.
132 Polyplex (Thailand) Public Company Limited
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 Separate financial statements financial statements 2013 2012 2013 2012 Trade receivables - related parties (Note 8) Subsidiaries - - 248,470 220,341 Advance payment for purchases of goods - related party Parent company 31,584 218,211 - - Trade payables - related party (Note 15) Parent company 5,645 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 Balance as at Increase Decrease Balance as at Short-term loans 31 March during the during the 31 March to related party Related by 2012 year year 2013 Polyplex USA LLC Subsidiary - 334,119 (334,119) -
(Unit: Thousand Baht)
Consolidated financial statements Balance as at Increase Decrease Balance as at Long-term loans 31 March during the during the 31 March from related party Related by 2012 year year 2013 Polyplex (Asia) Pte. Ltd. Major shareholder - 430,732 - 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.
133
Directors and managementûs 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 Separate financial statements financial statements 2013 2012 2013 2012
Short-term employee benefits 93.6 64.1 31.1 33.3
Post-employment benefits 0.3 0.3 - -
Total 93.9 64.4 31.1 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 Separate financial statements financial statements 2013 2012 2013 2012 (Restated)
Cash 2,387 2,154 740 716
Bank deposits 1,465,950 1,679,656 75,183 28,925
Total 1,468,337 1,681,810 75,923 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).
134 Polyplex (Thailand) Public Company Limited
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 Separate financial statements financial statements 2013 2012 2013 2012
Trade receivables - unrelated parties
Not yet due 1,223,317 1,334,328 464,042 565,916
Past due
Up to 3 months 135,132 54,482 47,899 13,683
3 - 6 months 21,365 8,704 75 5,935
Over 6 months 11,482 2,755 1,234 1,162
Total 1,391,296 1,400,269 513,250 586,696
Less: Allowance for doubtful debts (6,914) (3,577) (1,162) (1,162)
Net 1,384,382 1,396,692 512,088 585,534
Trade receivables - related parties
Not yet due - - 244,661 220,341
Past due
3 - 6 months - - 3,809 -
Total - - 248,470 220,341
Total trade receivables - net 1,384,382 1,396,692 760,558 805,875
9. Inventories
(Unit: Thousand Baht) Consolidated financial statements Reduce cost to
Cost net realisable value Inventories - net
2013 2012 2013 2012 2013 2012
Finished goods 544,403 528,827 (7,578) (4,125) 536,825 524,702
Work in process 253,504 197,822 (11,720) (2,128) 241,784 195,694
Raw materials 546,170 512,851 - - 546,170 512,851
Spare parts and factory supplies 235,748 179,796 - - 235,748 179,796
Goods in transit 180,911 210,749 - - 180,911 210,749
Total 1,760,736 1,630,045 (19,298) (6,253) 1,741,438 1,623,792
135
(Unit: Thousand Baht) Separate financial statements Reduce cost to
Cost net realisable value Inventories - net
2013 2012 2013 2012 2013 2012
Finished goods 71,489 34,480 (4,794) (1,195) 66,695 33,285 Work in process 156,162 107,807 (11,721) (2,128) 144,441 105,679 Raw materials 312,075 314,284 - - 312,075 314,284 Spare parts and factory supplies 144,160 94,000 - - 144,160 94,000 Goods in transit 4,665 17,356 - - 4,665 17,356 Total 688,551 567,927 (16,515) (3,323) 672,036 564,604
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 Dividend received Shareholding for the years Companyûs name Paid-up capital percentage Cost ended 31 March 2013 2012 2013 2012 2013 2012 2013 2012 Percent Percent
Ordinary shares Polyplex (Singapore) Pte. Ltd. EUR EUR 0.8 million 0.8 million 100.00 100.00 41,440 41,440 - 191,316 Polyplex (Americas) Inc. USD - 1.3 million - 80.24 - 41,661 1,920 4,673 Polyplex America Holdings Inc. USD USD 29.6 million 22.0 million 100.00 100.00 880,249 675,954 - - EcoBlue Limited Baht 20.1 million - 80.00 - 19,277 - - - 940,966 759,055 1,920 195,989 Preference shares Polyplex (Singapore) Pte. Ltd. EUR EUR 8.4 million 8.4 million 100.00 100.00 414,581 414,581 - 3,192 Polyplex (Americas) Inc. USD - 4.2 million - 96.15 - 139,856 7,564 18,415 414,581 554,437 7,564 21,607 Total investments in subsidiaries 1,355,547 1,313,492 9,484 217,596
136 Polyplex (Thailand) Public Company Limited
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 Companyûs 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 shareholdersû equity in the consolidated statement of
changes in shareholdersû 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 non-
participative 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.
137
12.
Prop
erty
, pla
nt a
nd e
quip
men
t (U
nit: T
hous
and
Baht
)
Co
nsol
idat
ed fi
nanc
ial s
tate
men
ts
Build
ings
and
Furn
iture
,
Asse
ts u
nder
build
ing
Mac
hine
ry a
nd
fixtu
res
and
Mot
or
inst
allatio
n an
d M
achi
nery
La
nd
impr
ovem
ents
eq
uipm
ent
offic
e eq
uipm
ent
vehi
cles
co
nstru
ctio
n in
tran
sit
Tota
l Co
st
1 Ap
ril 20
11
323,4
57
1,017
,129
5,700
,902
76,92
5 33
,563
567,4
36
16,27
8 7,7
35,69
0
Purc
hase
s - r
esta
ted
120,3
18
5,582
19
,155
14,32
5 7,1
78
748,0
05
- 91
4,563
Disp
osals
(7
0,021
) -
- (1
91)
- -
- (7
0,212
)
Trans
fer i
n/(Tr
ansfe
r out
) -
207,8
31
568,5
64
5,103
1,5
21
(766
,741)
(1
6,278
) -
Capi
talis
ed in
tere
st
- -
- -
- 7,7
43
- 7,7
43
Trans
lation
adj
ustm
ent
- r
esta
ted
(2,24
6)
(22,6
35)
(111
,697)
(1
,714)
(5
23)
4,190
-
(134
,625)
31 M
arch
201
2 - r
esta
ted
371,5
08
1,207
,907
6,176
,924
94,44
8 41
,739
560,6
33
- 8,4
53,15
9
Purc
hase
s -
890
59,64
7 14
,473
16,35
9 5,8
05,14
9 2,2
36
5,898
,754
Disp
osals
-
- (1
7,491
) (5
21)
(12,8
26)
(22,5
50)
- (5
3,388
)
Trans
fer i
n/(Tr
ansfe
r out
) -
1,059
27
,156
2,258
10
,663
(41,1
36)
- -
Capi
talis
ed in
tere
st
- -
- -
- 84
,175
- 84
,175
Trans
lation
adj
ustm
ent
(13,2
99)
(48,5
27)
(244
,272)
(4
,808)
(2
,052)
(2
13,43
6)
- (5
26,39
4)
31 M
arch
201
3 35
8,209
1,1
61,32
9 6,0
01,96
4 10
5,850
53
,883
6,172
,835
2,236
13
,856,3
06
138 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
(Unit
: Tho
usan
d Ba
ht)
Co
nsol
idat
ed fi
nanc
ial s
tate
men
ts
Build
ings
and
Furn
iture
,
Asse
ts u
nder
build
ing
Mac
hine
ry a
nd
fixtu
res
and
Mot
or
inst
allatio
n an
d M
achi
nery
La
nd
impr
ovem
ents
eq
uipm
ent
offic
e eq
uipm
ent
vehi
cles
co
nstru
ctio
n in
tran
sit
Tota
l Ac
cum
ulat
ed d
epre
ciat
ion
1 Ap
ril 20
11
- 13
5,640
1,5
47,47
5 49
,143
24,22
6 -
- 1,7
56,48
4
Depr
eciat
ion fo
r the
yea
r -
34,44
9 31
8,673
10
,362
5,238
-
- 36
8,722
Disp
osals
-
- -
(125
) -
- -
(125
)
Trans
lation
adj
ustm
ent
- (2
,189)
(2
8,362
) (9
52)
(468
) -
- (3
1,971
)
31 M
arch
201
2 -
167,9
00
1,837
,786
58,42
8 28
,996
- -
2,093
,110
Depr
eciat
ion fo
r the
yea
r -
43,43
0 34
4,559
13
,843
9,411
-
- 41
1,243
Disp
osals
-
- (1
,725)
(4
59)
(9,92
6)
- -
(12,1
10)
Trans
lation
adj
ustm
ent
- (5
,662)
(7
4,429
) (2
,628)
(8
95)
- -
(83,6
14)
31 M
arch
201
3 -
205,6
68
2,106
,191
69,18
4 27
,586
- -
2,408
,629
Net b
ook
valu
e
31 M
arch
201
2 - r
esta
ted
371,5
08
1,040
,007
4,339
,138
36,02
0 12
,743
560,6
33
- 6,3
60,04
9
31 M
arch
201
3 35
8,209
95
5,661
3,8
95,77
3 36
,666
26,29
7 6,1
72,83
5 2,2
36
11,44
7,677
Depr
eciatio
n fo
r th
e ye
ar
2012
(Bah
t 344
.5 m
illion
inclu
ded
in m
anuf
actu
ring
cost
, and
the
balan
ce in
sell
ing a
nd a
dmini
stra
tive
expe
nses
)
368,7
22
2013
(Bah
t 379
.5 m
illion
inclu
ded
in m
anuf
actu
ring
cost
, and
the
balan
ce in
sell
ing a
nd a
dmini
stra
tive
expe
nses
)
411,2
43
139
(Unit
: Tho
usan
d Ba
ht)
Se
para
te fi
nanc
ial s
tate
men
ts
Build
ings
and
Furn
iture
,
Asse
ts u
nder
build
ing
Mac
hine
ry a
nd
fixtu
res
and
Mot
or
inst
allatio
n an
d M
achi
nery
La
nd
impr
ovem
ents
eq
uipm
ent
offic
e eq
uipm
ent
vehi
cles
co
nstru
ctio
n in
tran
sit
Tota
l Co
st
1 Ap
ril 20
11
196,6
27
441,5
82
2,883
,365
33,58
5 18
,158
565,0
49
16,27
8 4,1
54,64
4
Purc
hase
s -
5,582
19
,155
13,22
0 4,6
61
149,5
90
- 19
2,208
Disp
osals
-
- -
(29)
-
- -
(29)
Trans
fer i
n/(Tr
ansfe
r out
) -
206,3
97
522,4
67
- -
(712
,586)
(1
6,278
) -
Capi
talis
ed in
tere
st
- -
- -
- 7,7
43
- 7,7
43
31 M
arch
201
2 19
6,627
65
3,561
3,4
24,98
7 46
,776
22,81
9 9,7
96
- 4,3
54,56
6
Purc
hase
s -
890
13,44
1 2,9
92
9,896
2,0
80,75
3 2,2
35
2,110
,207
Disp
osals
-
- (1
4,347
) (1
08)
(1,62
4)
(880
) -
(16,9
59)
Trans
fer i
n/(Tr
ansfe
r out
) -
1,050
30
0 27
6 -
(1,62
6)
- -
Capi
talis
ed in
tere
st
- -
- -
- 17
,624
- 17
,624
31 M
arch
201
3 19
6,627
65
5,501
3,4
24,38
1 49
,936
31,09
1 2,1
05,66
7 2,2
35
6,465
,438
140 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
(Unit
: Tho
usan
d Ba
ht)
Se
para
te fi
nanc
ial s
tate
men
ts
Build
ings
and
Furn
iture
,
Asse
ts u
nder
build
ing
Mac
hine
ry a
nd
fixtu
res
and
Mot
or
inst
allatio
n an
d M
achi
nery
La
nd
impr
ovem
ents
eq
uipm
ent
offic
e eq
uipm
ent
vehi
cles
co
nstru
ctio
n in
tran
sit
Tota
l Ac
cum
ulat
ed d
epre
ciat
ion
1 Ap
ril 20
11
- 86
,453
915,2
75
26,25
2 11
,622
- -
1,039
,602
Depr
eciat
ion fo
r the
yea
r -
23,11
5 16
3,397
5,8
33
3,937
-
- 19
6,282
Disp
osals
-
- -
(29)
-
- -
(29)
31 M
arch
201
2 -
109,5
68
1,078
,672
32,05
6 15
,559
- -
1,235
,855
Depr
eciat
ion fo
r the
yea
r -
32,75
2 19
0,438
6,3
54
4,968
-
- 23
4,512
Disp
osals
-
- (1
,235)
(4
5)
(1,24
4)
- -
(2,52
4)
31 M
arch
201
3 -
142,3
20
1,267
,875
38,36
5 19
,283
- -
1,467
,843
Net b
ook
valu
e
31 M
arch
201
2 19
6,627
54
3,993
2,3
46,31
5 14
,720
7,260
9,7
96
- 3,1
18,71
1
31 M
arch
201
3 19
6,627
51
3,181
2,1
56,50
6 11
,571
11,80
8 2,1
05,66
7 2,2
35
4,997
,595
Depr
eciatio
n fo
r th
e ye
ar
2012
(Bah
t 186
.5 m
illion
inclu
ded
in m
anuf
actu
ring
cost
, and
the
balan
ce in
sell
ing a
nd a
dmini
stra
tive
expe
nses
)
196,2
82
2013
(Bah
t 223
.2 m
illion
inclu
ded
in m
anuf
actu
ring
cost
, and
the
balan
ce in
sell
ing a
nd a
dmini
stra
tive
expe
nses
)
234,5
12
141
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.
Million USD
Trade receivables 2.8
Inventories 1.7
Machinery and equipment 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 5,084
Purchases 1,433
Translation adjustment (232)
31 March 2012 6,285
Purchases 2,111
Disposals (276)
Translation adjustment (646)
31 March 2013 7,474
142 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
(Unit: Thousand Baht) Consolidated financial statement
Accumulated amortisation
1 April 2011 3,730
Amortisation expenses for the year 710
Translation adjustment (162)
31 March 2012 4,278
Amortisation expenses for the year 734
Disposals (276)
Translation adjustment (398)
31 March 2013 4,338
Net book value
31 March 2012 2,007
31 March 2013 3,136
Amortisation expenses for the year
2012 710
2013 734
14. Short-term loans from financial institutions
(Unit: Thousand Baht) Interest rate Consolidated Separate
(percent per annum) financial statements financial statements
2013 2012 2013 2012 2013 2012
Short-term loans LIBOR + 1.5%
from banks and
LIBOR + 2.0% LIBOR + 1.5% 659,440 246,745 - -
Promissory notes
(packing credits) 3.45% - 3.55% 3.45% 385,000 80,000 385,000 80,000
Total 1,044,440 326,745 385,000 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.
143
15. Trade and other payables (Unit: Thousand Baht)
Consolidated Separate financial statements financial statements 2013 2012 2013 2012 (Restated)
Trade payables - related party 5,645 13,504 5,645 13,504
Trade payables - unrelated parties 1,035,298 1,018,140 540,480 527,535
Other payables 59,920 1,074 41,438 -
Other payables for purchases of fixed assets 77,515 61,288 77,515 61,288
Total trade and other payables 1,178,378 1,094,006 665,078 602,327
16. Provision for long-term employee benefits Provision for long-term employee benefits, which is compensations on employeesû
retirement, was as follows: (Unit: Thousand Baht)
Consolidated Separate financial statements financial statements 2013 2012 2013 2012
Defined benefit obligation at
beginning of year 9,768 7,627 6,052 4,370
Current service cost 12,393 6,769 1,429 1,501
Interest cost 512 501 244 181
Benefits paid during the year (5,524) (4,988) (284) -
Translation adjustment (638) (141) - -
Provisions for long-term employee
benefits at end of year 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 Separate financial statements financial statements 2013 2012 2013 2012
Current service cost 12,393 6,769 1,429 1,501
Interest cost 512 501 244 181
Total expense recognised in profit or loss 12,905 7,270 1,673 1,682
144 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Principal actuarial assumptions at the valuation date were as follows: (Unit: Thousand Baht)
Consolidated Separate financial statements financial statements 2013 2012 2013 2012 (% per annum) (% per annum) (% per annum) (% per annum)
Discount rate 4.2 and 10.0 4.2 and 10.0 4.2 4.2 Future salary increase rate (depending on age of employee) 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) Repayment Consolidated Separate Loans schedule financial statements financial statements 2013 2012 2013 2012 Floating rate loans Repayable as from (Euribor + 0.6% to 3.8%) April 2006 to August 2019 1,738,993 349,312 872,905 163,371 Floating rate loans Repayable as from (Libor + 1.50% to 2.95%) October 2009 to July 2020 3,481,310 1,115,105 1,954,340 1,115,105 Fixed rate loans Repayable as from (3.83% to 5.54%) April 2006 to July 2016 106,600 149,860 106,600 149,860
Total 5,326,903 1,614,277 2,933,845 1,428,336
Less: Current portion (455,194) (363,760) (371,427) (271,996)
Long-term loans - net of current portion 4,871,709 1,250,517 2,562,418 1,156,340
The Companyûs loan facilities are secured by the mortgage of land, premises and
machinery of the Company. The subsidiaryûs 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.
145
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 Separate financial statements financial statements 2013 2012 2013 2012
Salaries, wages and other employee
benefits 805,098 553,559 310,463 249,981
Depreciation and amortisation 411,977 369,432 234,512 196,282
Loss on diminutions in value of inventories 13,192 2,720 13,192 2,720
Raw materials and consumables used 5,704,793 5,688,152 3,070,983 3,040,290
Changes in inventories of finished goods
and work in process (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.
146 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
The Companyûs 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 Total
2013 2012 2013 2012 2013 2012
Sales Domestic sales 977,049 917,290 50,323 3,329 1,027,372 920,619 Export sales 3,165,864 3,619,290 12,204 20,737 3,178,068 3,640,027 Total sales 4,142,913 4,536,580 62,527 24,066 4,205,440 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 Separate financial statements financial statements 2013 2012 2013 2012 (Restated)
Profit for the year (Thousand Baht) 373,971 1,357,608 78,356 435,142 Weighted average number of ordinary shares (Thousand shares) 800,000 800,000 800,000 800,000 Earnings per share (Baht per share) 0.47 1.70 0.10 0.54
23. Dividends
(Unit: Baht) Dividends Approved by Total dividends Dividend per share
Final dividends for 2011 Annual General Meeting of the shareholders on 28 July 2011 1,080,000,000 1.350 Interim dividends for 2012 Board of Directorsû meeting on 26 July 2011 280,000,000 0.350 Total dividends for fiscal year 2012 1,360,000,000 1.700 Final dividends for 2012 Annual General Meeting of the shareholders on 27 July 2012 136,000,000 0.170 Total dividends for fiscal year 2013 136,000,000 0.170
147
24. Segment information The Company and its subsidiariesû 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)
Elimination of
inter-segment
Thailand Overseas countries revenues Consolidation 2013 2012 2013 2012 2013 2012 2013 2012 (Restated) (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 6,461.4 3,241.3 (11.3) - 11,447.7 6,360.0 Intangible assets - - 3.1 2.0 - - 3.1 2.0 Unallocated assets 5,005.8 5,577.0 Total assets 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.
148 Polyplex (Thailand) Public Company Limited
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 2012
Payable: In up to 1 year 8.1 4.8 In over 1 and up to 5 years 6.1 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 subsidiaryûs 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.
149
e) 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.
f) 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.
150 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
Co
nsol
idat
ed fi
nanc
ial s
tate
men
ts
As
at 3
1 M
arch
201
3 As
at 3
1 M
arch
201
2
Fi
xed
inter
est r
ates
Flo
ating
No
n-
Fixe
d int
eres
t rat
es
Float
ing
Non-
W
ithin
1-5
Over
5
inter
est
inter
est
With
in 1-
5 Ov
er 5
int
eres
t int
eres
t
1
year
ye
ars
year
s ra
te
bear
ing
Tota
l In
tere
st ra
te
1 ye
ar
year
s ye
ars
rate
be
aring
To
tal
Inte
rest
rate
(M
illion
Bah
t)
(%
p.a.
)
(M
illion
Bah
t)
(%
p.a.
) Fin
ancia
l Ass
ets
Cash
and
cas
h eq
uivale
nts
- -
- 1,2
33.3
235.0
1,4
68.3
See
Note
7
- -
- 1,3
40.5
341.3
1,6
81.8
See
Note
7
Curre
nt in
vestm
ents
- -
- -
94.0
94.0
- -
- -
- -
- -
Trade
rece
ivable
s -
- -
- 1,3
84.4
1,384
.4 -
- -
- -
1,396
.7 1,3
96.7
-
- -
- 1,2
33.3
1,713
.4 2,9
46.7
-
- -
1,340
.5 1,7
38.0
3,078
.5
Finan
cial l
iabilit
ies
Shor
t-ter
m lo
ans
from
fina
ncial
insti
tutio
ns
385.0
-
- 65
9.4
- 1,0
44.4
See
Note
14
80.0
- -
246.7
-
326.7
Se
e No
te 1
4
Trade
and
oth
er p
ayab
les
- -
- -
1,178
.4 1,1
78.4
- -
- -
- 1,0
94.0
1,094
.0 -
Acco
unts
paya
ble fr
om s
ubsid
iaryûs
acq
uisitio
n -
- -
- -
- -
- -
- -
244.1
24
4.1
-
Long
-term
loan
s fro
m re
lated
par
ty -
- -
- 43
0.7
430.7
Se
e No
te 6
-
- -
- -
- -
Long
-term
loan
s fro
m fi
nanc
ial in
stitu
tions
35
.9 70
.7 -
5,220
.3 -
5,326
.9 Se
e No
te 1
7 37
.7 11
2.2
- 1,4
64.4
- 1,6
14.3
See
Note
17
420.9
70
.7 -
5,879
.7 1,6
09.1
7,980
.4
117.7
11
2.2
- 1,7
11.1
1,338
.1 3,2
79.1
151
Se
para
te fi
nanc
ial s
tate
men
ts
As
at 3
1 M
arch
201
3 As
at 3
1 M
arch
201
2
Fi
xed
inter
est r
ates
Flo
ating
No
n-
Fixe
d int
eres
t rat
es
Float
ing
Non-
W
ithin
1-5
Over
5
inter
est
inter
est
With
in 1-
5 Ov
er 5
int
eres
t int
eres
t
1
year
ye
ars
year
s ra
te
bear
ing
Tota
l In
tere
st ra
te
1 ye
ar
year
s ye
ars
rate
be
aring
To
tal
Inte
rest
rate
(M
illion
Bah
t)
(%
p.a.
)
(M
illion
Bah
t)
(%
p.a.
) Fin
ancia
l Ass
ets
Cash
and
cas
h eq
uivale
nts
- -
- 74
.2 1.7
75
.9 Se
e No
te 7
-
- -
27.5
2.1
29.6
See
Note
7
Curre
nt in
vestm
ents
- -
- -
78.0
78.0
- -
- -
- -
- -
Trade
rece
ivable
s -
- -
- 76
0.6
760.6
-
- -
- -
805.9
80
5.9
-
- -
- 74
.2 84
0.3
914.5
- -
- 27
.5 80
8.0
835.5
Finan
cial l
iabilit
ies
Shor
t-ter
m lo
ans
from
fina
ncial
insti
tutio
ns
385.0
-
- -
- 38
5.0
See
Note
14
80.0
- -
- -
80.0
See
Note
14
Trade
and
oth
er p
ayab
les
- -
- -
665.1
66
5.1
- -
- -
- 60
2.3
602.3
-
Long
-term
loan
s fro
m fi
nanc
ial in
stitu
tions
35
.9 70
.7 -
2,827
.2 -
2,933
.8 Se
e No
te 1
7 37
.7 11
2.2
- 1,2
78.4
- 1,4
28.3
See
Note
17
420.9
70
.7 -
2,827
.2 66
5.1
3,983
.9
117.7
11
2.2
- 1,2
78.4
602.3
2,1
10.6
152 Polyplex (Thailand) Public Company Limited
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 subsidiariesû 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 Companyûs balances of financial assets and liabilities denominated in foreign
currencies are summarised below.
Financial assets Financial liabilities Average exchange rate Foreign currency as at 31 March as at 31 March as at 31 March
2013 2012 2013 2012 2013 2012
(Million) (Million) (Million) (Million) (Baht per 1 foreign
currency unit)
US dollar 15.33 13.78 71.29 41.88 29.3085 30.8431
Euro 1.17 3.01 23.53 4.28 37.5712 41.1741
Japanese yen 42.09 35.93 0.20 2.42 0.3115 0.3755
Swiss franc - - - 2.70 30.8765 34.1646
The Companyûs foreign exchange contracts outstanding are summarised below. As at 31 March 2013
Bought Sold Contractual exchange rate
Foreign currency amount amount Bought Sold
(Million) (Million) (Baht per 1 foreign currency unit)
US dollar 2.08 19.39 Baht 29.4650 - 30.2650 Baht 29.5920 - 30.9750
per USD 1 per USD 1
Swiss franc 0.30 - Baht 32.8089 per CHF 1 -
Euro 0.57 1.09 Baht 37.9000 - 39.5700 Baht 38.0200 - 40.8268
per EUR 1 per EUR 1
Japanese yen - 60.06 - Baht 0.3121 - 0.3254
per JPY 1
153
As at 31 March 2012
Bought Sold Contractual exchange rate
Foreign currency amount amount Bought Sold
(Million) (Million) (Baht per 1 foreign currency unit)
US dollar 1.62 18.98 Baht 30.4600 - 32.0863 Baht 30.5146 - 32.2094
per USD 1 per USD 1
Swiss franc 1.35 - Baht 31.6988 - 40.9692 -
per CHF 1
Euro 0.68 2.53 Baht 41.1600 - 41.6000 Baht 40.5600 - 41.7100
per EUR 1 per EUR 1
Japanese yen - 35.97 - Baht 0.3753 - 0.3756
per JPY 1
A subsidiary had forward foreign exchange contracts as follows:
As at 31 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
As at 31 March 2012
Bought amount Contractual exchange rate
YTL 1.70 million YTL 1.8220 - 1.8370 per USD 1
EUR 1.00 million USD 1.3084 - 1.3085 per EUR 1
27.2 Fair values of financial instruments
Since the majority of the Company and its subsidiariesû 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 armûs 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.
154 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
28. Capital management The primary objective of the Companyûs 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 Groupûs debt-to-equity ratio was 1.01:1 (2012: 0.41:1) and
the Companyûs 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 Companyûs authorised
directors on 20 May 2013.
155
1 M
r.Man
u Le
opair
ote
Boar
d Ch
airm
an &
70
ë
Bach
elorûs
deg
ree
Econ
omics
-
- 20
04-P
rese
nt
Boar
d Ch
airm
an &
Cha
irman
Po
lyplex
(Tha
iland
) Plc.
Audit
Com
mitt
ee
(Hon
s.), T
ham
mas
at U
niver
sity
of
the
Audit
Com
mitt
ee
Chair
man
ë M
aste
rûs d
egre
e M
.Sc.
(Eco
n.),
2003
-Pre
sent
Co
unse
lor o
f Sta
te
The
Coun
cil o
f Sta
te (T
rade
and
Un
iversi
ty of
Ken
tuck
y, US
A
Ind
ustry
)
ë Ph
.D in
Bus
iness
Adm
inistr
ation
20
05-2
010
Chair
man
Ne
ighbo
ring
Coun
tries
Eco
nom
ic
(H
onor
ary),
Tha
mm
asat
Univ
ersit
y
De
velop
men
t Age
ncy
ë Ce
rtific
ate,
Indus
trial
Deve
lopm
ent,
2010
-Pre
sent
Ch
airm
an
ARIP
Pub
lic C
ompa
ny L
imite
d
Na
goya
, Jap
an
2004
-Pre
sent
Ch
airm
an
Khon
Kae
n Su
gar I
ndus
try P
ublic
ë Th
e Na
tiona
l Defe
nse
Colle
ge,
Com
pany
Lim
ited
Cl
ass
34
2006
-Pre
sent
Ch
airma
n of
Audit
Com
mitte
e Si
am S
teel
Inter
natio
nal P
ublic
ë Ce
rtific
ate,
Thai
Instit
ute
of
Com
pany
Lim
ited
Di
rect
ors
(IOD)
20
04-P
rese
nt
Indep
ende
nt D
irect
or/
Thai
Beve
rage
Pub
lic C
o. Lt
d
ë Th
e Ro
le of
Cha
irman
Pro
gram
Audit
Com
mitt
ee M
embe
r (S
ingap
ore
Stoc
k m
arke
t)
(R
CM),
Clas
s 3/
2001
20
11-P
rese
nt
Chair
man
T.M
.C In
dustr
ial P
ublic
Co.L
td
ë Di
rect
ors
Certi
ficat
ion P
rogr
am
(D
CP),
Clas
s 30
/200
3
Info
rmat
ion
of D
irect
or a
nd M
anag
emen
t of t
he C
ompa
ny
Na
me-
Surn
ame
Posit
ion
Age
Re
latio
n am
ong
% o
f W
orkin
g Ex
perie
nces
in th
e 5
prec
eding
yea
rs
(Y
ears
) Ed
ucat
ion/
Train
ing
fam
ily w
ithin
Shar
ehol
ding
Pe
riod
Posit
ion
Com
pany
/ Ty
pe o
f Bus
iness
Com
pany
156 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
2 M
r.San
jiv S
araf
Dire
ctor
& V
ice
55
ë Ba
chelo
rûs d
egre
e -
- M
ay 2
011-
Pres
ent
Gene
ral M
anag
er &
CEO
Po
lyplex
(Asia
) Pte
. Ltd
.
Chair
man
Ag
ricult
ural
Engin
eerin
g,
20
04-P
rese
nt
Dire
ctor
& C
hairm
an
Polyp
lex E
urop
a Po
lyeste
r Film
Ind
ian In
stitu
te o
f Tec
hnolo
gy,
Sana
yi Ve
Tica
ret A
nonim
Sirk
eti,
Kh
arag
pur
Turk
ey
2002
-July
201
0 M
anag
ing D
irect
or
Polyp
lex (T
haila
nd) P
lc.
July
2010
-Pre
sent
Vice
- Ch
airm
an
Polyp
lex (T
haila
nd) P
lc.
May
200
2-Pr
esen
t Ch
airm
an
Polyp
lex C
orpo
ratio
n Lt
d.
2011
-Pre
sent
Di
rect
or
Polyp
lex A
mer
ica H
olding
Inc.
3 M
r.Pra
nay
Koth
ari
Dire
ctor
54
ë
Fello
w Ch
arte
red
Acco
unta
nt
- -
2004
-Dec
201
1 Di
rect
or
Polyp
lex (S
ingap
ore)
Pte
. Ltd
.
- I
nstit
ute
of C
harte
red
20
04-P
rese
nt
Dire
ctor
Po
lyplex
Eur
opa
Polye
ster F
ilm
A
ccou
ntan
ts of
India
Sa
nayi
Ve T
icare
t Ano
nim S
irket
i,
ë Qu
alifie
d Co
mpa
ny S
ecre
tary
Tu
rkey
- T
he In
stitu
te o
f Com
pany
20
02-P
rese
nt
Dire
ctor
Po
lyplex
(Tha
iland
) Plc.
S
ecre
tarie
s of
India
19
96-P
rese
nt
Exec
utive
Dire
ctor
Po
lyplex
Cor
pora
tion
Ltd.
2011
-Pre
sent
Di
rect
or
Polyp
lex R
esins
San
ayi V
e Tic
aret
Anon
im S
irket
i 4
Mr.
Man
ish G
upta
Di
rect
or
44
ë M
aste
rûs d
egre
e M
BA,
- -
Mar
ch 2
008
Grou
p CF
O-Po
lyplex
gro
up
Polyp
lex C
orpo
ratio
n Lt
d.
Ind
ia of
Insti
tute
of M
anag
emen
t,
-Pre
sent
Ba
ngalo
re
Nove
mbe
r 201
2 Di
rect
or
Polyp
lex (T
haila
nd) P
lc.
-Pre
sent
Na
me-
Surn
ame
Posit
ion
Age
Re
latio
n am
ong
% o
f W
orkin
g Ex
perie
nces
in th
e 5
prec
eding
yea
rs
(Y
ears
) Ed
ucat
ion/
Train
ing
fam
ily w
ithin
Shar
ehol
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Pe
riod
Posit
ion
Com
pany
/ Ty
pe o
f Bus
iness
Com
pany
157
5 Dr
.Vira
bong
sa R
aman
gkur
a Di
rect
or &
Aud
it 70
ë
Bach
elorûs
deg
ree
-
- 20
04-P
rese
nt
Dire
ctor
& A
udit
Com
mitt
ee
Polyp
lex (T
haila
nd) P
lc.
Com
mitt
ee m
embe
r
Fir
st Cl
ass
Hono
rs, B
.A.
m
embe
r
in
Politi
cal S
cienc
e,
Nov
2011
-Pre
sent
Cha
irman
St
rate
gic F
orm
ulatio
n Co
mm
ittee
for
Ch
ulalon
gkor
n Un
iversi
ty
Re
cons
truct
ion a
nd F
utur
e
ë M
aste
rûs D
egre
e Ec
onom
ics,
Deve
lopm
ent (
SCRF
)
Un
iversi
ty of
Pen
nsylv
ania,
U.S
.A.
1994
-Pre
sent
Ch
airm
an
Bang
kok
Expr
essw
ay P
ublic
Co.,
Ltd
.
ë Ph
.D.(E
cono
nmics
),
19
95-P
rese
nt
Chair
man
of t
he
Doub
le A
(199
1) P
ublic
Co.,
Ltd
.
Un
iversi
ty of
Pen
nsylv
ania,
U.S
.A.
Ex
ecut
ive B
oard
ë Do
ctor
of L
aw (H
onor
ary),
20
04-P
rese
nt
Chair
man
Th
ai-La
o As
socia
tion
for F
riend
ship
W
ebste
r Univ
ersit
y, US
A
20
05-P
rese
nt
Chair
man
Fin
ansa
Co.,
Ltd
.
ë De
cora
tion
2006
-Pre
sent
Ch
airm
an
Sout
h Ea
st As
ia En
ergy
Co.,
Ltd
.
- K
night
Gra
nd C
ordo
n (S
pecia
l
20
05-P
rese
nt
Chair
man
Ba
ng-M
od H
ospit
al Co
., Ltd
.
C
lass)
of th
e m
ost E
xalte
d
2000
-Pre
sent
Ch
airm
an
Nam
Ngum
2 P
ower
Comp
any
Limite
d
O
rder
of t
he W
hite
Eleph
ant
Pres
ent
Dire
ctor
Th
ailan
d De
velop
men
t Res
earc
h
- K
night
Gra
nd C
ordo
n (S
pecia
l
Ins
titut
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unda
tion
C
lass)
of th
e m
ost N
oble
Orde
r
20
08-P
rese
nt
Chair
man
of t
he A
dviso
ry
King
Pow
er In
tern
ation
al Co
., Ltd
.
o
f the
Cro
wn o
f Tha
iland
Boar
d
2004
-Pre
sent
Ad
visor
y Ch
airm
an
Aree
ya P
rope
rty P
ublic
Co.,
Ltd
.
Na
me-
Surn
ame
Posit
ion
Age
Re
latio
n am
ong
% o
f W
orkin
g Ex
perie
nces
in th
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prec
eding
yea
rs
(Y
ears
) Ed
ucat
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ing
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ily w
ithin
Shar
ehol
ding
Pe
riod
Posit
ion
Com
pany
/ Ty
pe o
f Bus
iness
Com
pany
158 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
6 Mr
.Prap
had
Phod
hivor
akhu
n Di
rect
or
67
ë HN
D in
Busin
ess
Adm
inistr
ation
-
- 20
04-P
rese
nt
Dire
ctor
Po
lyplex
(Tha
iland
) Plc.
fro
m S
heffie
ld Co
llege
of
Octo
ber 1
999
Chair
man
of B
oard
of
Kang
Yon
g Ele
ctric
Pcl.
Te
chno
logy,
Shef
field,
Eng
land.
-Pre
sent
Di
rect
ors
ë M
aste
r Deg
ree
Nove
mbe
r 199
5 Ch
airm
an o
f Boa
rd o
f M
itsub
ishi E
lectri
c Ka
ng Y
ong
Bu
sines
s Ad
mini
strat
ion (M
BA),
-P
rese
nt
Dire
ctor
s W
atta
na C
o., L
td.
Pu
blic
Adm
inistr
ation
(MPA
)
M
ay 2
005-
Pres
ent
Chair
man
of B
oard
of
Siam
City
Lea
sing
and
Fact
oring
Pcl.
Ra
mkh
amha
eng
Unive
rsity
Di
rect
ors
ë Ho
nour
ary
Doct
orat
e De
gree
in
July
1996
-Pre
sent
Cha
irman
of B
oard
of
Yoko
ham
a Ru
bber
s (T
haila
nd)
Bu
sines
s Ad
mini
strat
ion
dir
ecto
rs Co
., Ltd
.
Ra
jabha
t Univ
ersit
y of
Lam
pang
Ju
ly 19
94-P
rese
nt D
irect
or
Kulth
orn
Kirb
y Pu
blic
Com
pany
Limite
d 7
Mr.S
hiraz
Era
ch P
oone
vala
Dire
ctor
& A
udit
49
ë
Bach
elor o
f Com
mer
ce
- -
2004
-Pre
sent
Di
rect
or &
Aud
it Co
mitt
ee
Polyp
lex (T
haila
nd) P
cl.
Com
mitt
ee M
embe
r
Sy
denh
am C
olleg
e of
Com
mer
ce,
m
embe
r
Ind
ia
M
arch
200
8 Di
rect
or -
Inves
tmen
t G.
P. G
roup
of C
ompa
nies
Limite
d
ë M
aste
r of C
omm
erce
-P
rese
nt
Sy
denh
am C
olleg
e of
Com
mer
ce,
Ind
ia
ë As
socia
te C
harte
red
Acco
unta
nt
Ins
titut
e of
Cha
rtere
d Ac
coun
tant
s
of
India
Na
me-
Surn
ame
Posit
ion
Age
Re
latio
n am
ong
% o
f W
orkin
g Ex
perie
nces
in th
e 5
prec
eding
yea
rs
(Y
ears
) Ed
ucat
ion/
Train
ing
fam
ily w
ithin
Shar
ehol
ding
Pe
riod
Posit
ion
Com
pany
/ Ty
pe o
f Bus
iness
Com
pany
159
8 M
r.Roh
it Ku
mar
Vas
histh
a M
anag
ing D
irect
or
42
ë Ba
chelo
rûs d
egre
e in
Met
allar
gy,
- -
May
201
0-Pr
esen
t M
anag
ing D
irect
or
Polyp
lex (T
haila
nd) P
lc.
IT
-BHU
, Ind
ia
M
ay 2
008-
Di
rect
or &
Pro
fit Ce
nter
Hea
d Po
lyplex
(Tha
iland
) Plc.
ë M
aste
rûs d
egre
e
Ap
ril 20
10
Int
erna
tiona
l bus
iness
, Ind
ian
Mar
200
8-Pr
esen
t Di
rect
or
Polyp
lex (A
sia) P
te. L
imite
d.
Ins
titut
e of
For
eign
Trade
, Ind
ia
M
ay 2
008-
Pres
ent
Dire
ctor
Po
lyplex
(Sing
apor
e) P
te. L
imite
d.
ë Di
rect
ors
Certi
ficat
ion P
rogr
am
June
200
9-Pr
esen
t Ch
airm
an
Polyp
lex T
radin
g (S
henz
hen)
(D
CP) C
lass
123/
2009
, IOD
Co
mpa
ny L
imite
d
Octo
ber 2
012
Dire
ctor
Ec
oBlue
Lim
ited
-Pre
sent
9
Mr.V
inod
Sure
ka
Chief
Fina
ncial
38
ë
Bach
elor o
f Com
mer
ce,
- -
Augu
st 20
08
Chief
Fina
ncial
Offic
er
Polyp
lex (T
haila
nd) P
lc
Offic
er
Calcu
tta U
niver
sity,
INDI
A,
-Pre
sent
ë Ch
arte
red
Acco
unta
nt,
June
200
9 Di
rect
or
Polyp
lex T
radin
g (S
henz
hen)
Co.
Th
e Ins
titut
e of
Cha
rtere
d
-Pre
sent
Limite
d.
Ac
coun
tant
s of
India
(ICA
I)
Se
pt 2
011-
Pres
ent
Dire
ctor
Po
lyplex
(Asia
) Pte
. Lim
ited.
Dec
2011
-Pre
sent
Dire
ctor
Po
lyplex
(Sing
apor
e) P
te. L
imite
d.
Octo
ber 2
012
Dire
ctor
Ec
oBlue
Lim
ited
-Pre
sent
10
Mr.
Ram
esh
Gupt
a Bu
sines
s He
ad
46
B Te
ch, R
EC A
llaha
bad,
Ja
nuar
y 20
13
Busin
ess
Head
- SA
RALA
M
Polyp
lex (T
haila
nd) P
lc
- SAR
ALAM
Unive
rsity
of A
llaha
bad
- IND
IA
-Pre
sent
PGDB
M -
Mar
ketin
g, M
anag
emen
t
Ju
ly 20
10-
Gene
ral M
anag
er -
Proje
ct
Bhilw
ara
Ener
gy L
imite
d
deve
lopm
ent I
nstit
ute,
Gurg
aon
Dece
mbe
r 201
2 M
anag
emen
t
- IND
IA
Janu
ary
2008
- Ge
nera
l Man
ager
-
Lum
inous
Pow
er T
echn
ologie
s
June
201
0 Re
newa
ble E
nerg
y Pv
t Ltd
Na
me-
Surn
ame
Posit
ion
Age
Re
latio
n am
ong
% o
f W
orkin
g Ex
perie
nces
in th
e 5
prec
eding
yea
rs
(Y
ears
) Ed
ucat
ion/
Train
ing
fam
ily w
ithin
Shar
ehol
ding
Pe
riod
Posit
ion
Com
pany
/ Ty
pe o
f Bus
iness
Com
pany
160 Polyplex (Thailand) Public Company Limited
ANNUAL REPORT 2012 - 2013
11 M
r. As
hish
Ghos
h He
ad -
Sales
47
ë
Bach
elorûs
/ M
aste
rûs D
egre
e -
- No
vem
ber 2
009
He
ad -
Sales
& M
arke
ting
Polyp
lex (T
haila
nd) P
lc
& M
arke
ting
in Sc
ience
- Jiw
aji U
niver
sity,
-P
rese
nt
Gw
alior
- IN
DIA
Dece
mbe
r 199
5-
AVP
- Mar
ketin
g SR
F Lim
ited
-Man
ufac
ture
of
ë M
aste
rûs d
egre
e in
Busin
ess
No
vem
ber 2
009
Po
lyeste
r Film
, Nylo
n Ty
re C
hord
Ad
mini
strat
ion -
BIT
Ranc
hi, IN
DIA
fabric
, Eng
ineer
ing p
lastic
s 12
Mr.
Sure
sh S
unda
ram
He
ad -O
pera
tions
53
ë
Bach
elorûs
Deg
ree
in Ch
emica
l -
- Ju
ly 20
12-P
rese
nt H
ead
- Ope
ratio
ns
Polyp
lex (T
haila
nd) P
lc
En
ginee
ring,
A.C.
Coll
ege
of
Dece
mbe
r 201
1 Ch
ief O
pera
ting
Offic
er
Tutic
orin
Alka
li Che
mica
ls an
d
Te
chno
logy,
Mad
ras
Unive
rsity,
-J
une
2012
Ferti
liser
s lim
ited
IN
DIA
June
201
1 Vic
e Pr
eside
nt
Adity
a Bi
rla G
rasu
n Ch
emica
ls
-Nov
embe
r 201
1
Limite
d, P.
R. C
hina
Sept
embe
r 199
4 De
puty
Gene
ral M
anag
er
Thai
Acryl
ic Fib
er C
o. Lt
d
-May
201
1 13
Mr.
Man
oj Si
nha
Head
- Sa
les &
54
ë
Mas
terûs
deg
ree
in Bu
sines
s -
- Ja
nuar
y 20
13
Head
- Sa
les &
Mar
ketin
g
Polyp
lex (T
haila
nd) P
lc
Mar
ketin
g - T
hick
Ad
mini
strat
ion -
Indian
Insti
tute
-P
rese
nt
- Thic
k PE
T Fil
ms
PET
Film
s
of
For
eign
Trade
Se
ptem
ber 2
012
AVP
- Sale
s &
Mar
ketin
g
Polyp
lex C
orpo
ratio
n Lim
ited
-Dec
embe
r 201
2 - T
hick
PET
Film
May
200
3 Sr
. Man
ager
- Gl
obal
Garw
are
Polye
ster L
td
-Aug
ust 2
012
Mar
ketin
g Op
erat
ions
Na
me-
Surn
ame
Posit
ion
Age
Re
latio
n am
ong
% o
f W
orkin
g Ex
perie
nces
in th
e 5
prec
eding
yea
rs
(Y
ears
) Ed
ucat
ion/
Train
ing
fam
ily w
ithin
Shar
ehol
ding
Pe
riod
Posit
ion
Com
pany
/ Ty
pe o
f Bus
iness
Com
pany
Content
Message from the Chairman 4Board of Directors 6The Board of Director’s Report on its Responsibility to Financial Statements 7
Audit Committee Report 2012-13 8Key Financial Indicators 10Financial Highlights 11
General Information 12Business Overview 15Risk Factors 45Future Projects 57Legal Dispute 61Shareholding Structure & Management 62Good Corporate Governance & Internal Control 76
Financial Position and Operational Performance 86Audited Financial Statements 110Information of Director and Management of the Company 155