Many firms are usually worried about a shortage of cash at hand, but not BEC World,

the operator of TV Channel 3.

An excess of cash has been a burden for Channel 3 for a decade. So, how does its financial executive remedy this fussy problem?

If it's the right time to invest the money, that's okay. If not, where should it be lodged in order to receive the best return possible? One of the questions you are going to be asked at the company's shareholders meeting will be: why don't you put the money in another financial format, rather than deposits which give you only peanuts?

BEC vice president Chatchai Thiamtong, who oversees the firm's finance, says there has been excess cash flow since the company went public in 1996. BEC received about Bt2.8 billion from selling its 20 million initial public offering shares at Bt142 each.

The company's cash flow accounts for 40 per cent of its assets.

"We want to invest in whatever is related to broadcasting - our core business - and which yields the company a higher rate of return, rather than do nothing," says Chatchai.

But the investment climate was infeasible after the financial crisis of 1997, which he says inevitably lowered opportunities for investment. Moreover, a new investment project before the crisis tore a hole in the firm's purse to the tune of Bt100 million.

Was the company unlucky? Who knows?

BEC might have lost much more money had it not put investments on hold before the crisis.

However, it had a great time with lucrative returns from the debt market during the post-crisis period. "We gained an average of another 2 per cent rate of return on top of fixed rates," Chatchai reveals.

Think about it. Even though he didn't reveal how much money the company gained from these investments, we can roughly calculate that it made a 2-per-cent return annually on Bt2.5 billion to Bt3 billion over a five-year period. This means it could have earned up to Bt150 million during those five years.

Yet, revenue from investments in the debt market is just a minor proportion of its overall income, says Chatchai. "We're only keeping the cash safe for any future investments, if we have a chance [to make them]. So, we don't take this as our main mission," he insists.

Though experiencing some losses from the debt market as many fixed-income mutual funds fled from skyrocketing interest rates three to four years ago, he says BEC still booked a net profit from those funds.

With almost Bt3 billion in cash at the time, Chatchai says up to 90 per cent was allocated to the debt market, while the remainder was in deposit accounts and near-cash instruments such as bills of exchange.

Not to overwhelm a fund with money, he says BEC broke down investments into smaller pieces and put them in more than 10 fixed-income funds. The firm chose only sizeable funds, so that its investments did not exceed to 3 or 4 per cent of each fund's total net asset value.

By following this method, BEC lost a little of the profit that it might otherwise have reaped.

"But we still posted a net profit from the debt market," the finance chief says.

As BEC has no intention of changing its business focus to a finance or investment firm, Chatchai says the company has for several years now not put the bulk of its cash in debt instruments since switching off from them. "Another reason is that interest rates have been fluctuating," he said.

BEC still has about Bt2.4 billion cash on hand, even though it invested more than Bt1 billion in its new headquarters building and equipment. Otherwise, current cash flow would exceed Bt3 billion.

Chatchai says the company currently has Bt1.8 billion in bills of exchange and the rest in three-month fixed-deposit accounts. He adds that the way to reduce the cash pile is to convert it into a dividend format.

The firm has paid dividends of as much as 100 per cent of its net profit annually for the past 10 years. Last year, it posted Bt881 million in net profit and Bt0.44 in earnings per share. This year, it reported a nine-month net profit of Bt901 million, or earnings per share of Bt0.45.

However, Chatchai has high hopes of putting a huge amount of cash over the next few years into new technologies, which will be under the supervision of the National Telecommunications Commission and linked to its core business.

Sasithorn Ongdee

The Nation