SCI Annual Report 2015

SCI Electric Public Company Limited
products as well as the service and punctual delivery. The management department will create the good relationship and
close observation to relevant agencies in order to get the job continually. The Company builds the alliance group with
strength in creating the certainty to get the job again in the future. Furthermore, the Company also looked for other fields
of business in the renewable energy. This includes the feasibility study to expand the groups of customers in other countries
in ASEAN in order to make the Company reduce the risk in the unstable income.
2. Risk from the non-stability in the project’s investment especially in the production plant of power supply pole, production
plant of high-voltage pole and communication pole in Republic of the Union of Myanmar (Burma) and the investment in
the wind power plant in Thailand. The business investment in both places has no stability as it is in the process of negotiation
for co-investment and/or searching for the loan source from financial institute. If the investment in both projects is delayed
or unsuccessful, the plan of money spending from the fund raising in this time will not agree with the objectives set forth
which will significantly affect the business expansion plan in the future.
For the investment in Republic of the Union of Myanmar (Burma) on the production plant of high-voltage pole and com
munication pole, the Company has already made the MOU to reserve with Myanmar Japan Thilawa Development. It is
now in the process of company establishment registration following the plan set forth by the Company.
3. Risk from the dependence on the main customers or less customers
The subsidiary (AG&SCIMT) has the income from the customer of high-voltage pole and communication pole. The job of
high-voltage pole and communication pole is supervised by the subsidiary (AG&SCIMT). The subsidiary will receive the job
from the main contractor being able to win the auction from public agencies such as EGAT, PEA, and MEA or receiving
the job from the companies providing the telecommunication services such as TRUE, DTAC, AIS, etc. The customer group
of high-voltage pole depends on the bid job in each year and it is the grand job causing the group of customers in each
year is in less quantities. For the job of communication pole, there are several main contractors in order to have the task
distributed among the group of communication pole producer. Therefore, the Company has the risk in the income if such
customer does not get the job from the auction or gets the job but does not give the job to the Company including the
policy of power productivity expansion and expansion of telecommunication poles of the current concessionaire.
Risk in the Production
1. Risk from the fact that the main raw material’s price fluctuates following the sale and purchase price of the global market.
The main raw materials in the production of the Company and the subsidiary whether the electricity controlling cabinet,
electric wire line, and iron structure pole, are iron sheet, angle bar, and zinc bar. In 2012-2014, the Company used the
iron and zinc calculated in the approximate proportion of 70-80% of the total purchase of raw materials. The Company
purchased iron and zinc from the domestic distributors only. However, as the price of iron and zinc bars will change
following the global price, the fluctuation of price of iron and zinc bars will affect the income, cost, and net profit rate of
the Company in the case that the Company cannot increase the price following the increasing price of raw materials.
As the domestic price of iron and zinc bars is monopolized by few distributors, the distributors can bargain the price
more than the purchasers. However, the Company’s business is mostly quoted for the service as fixed contraction (iron
structure pole business) with the price specified from starting the bidding or taking the job until job completion, during
such period, the price of iron including materials and other equipment may increase. This will affect the higher cost of
operation in each project.
In order to reduce the impact from this risk, the Company will have made the agreement on the price with the seller
before quoting the price to the purchaser from the earlier stage of bidding and the price will be remained until the
production and delivery period. Moreover, the Company will try to gather the amount of orders of purchase from several
projects and make one order in order to increase the bargaining power in purchasing. The Company does not have
policy in hoarding the iron for speculating. The Company has the risk management policy by specifying the selling price
to have the difference of profits in the level which can serve the change of raw material’s price partly. If the iron price is
likely to increase continually, the Company will consider increase the price following the raw material’s price. Moreover,
the Company will observe the iron price closely for predicting the situations and tendency of price and demand for iron
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