Pranda Jewellery, one of Thailand's leading jewellery and ornament manufacturers, has lost as much as Bt90 million this year because of the appreciation of the baht, and it is bringing contracts forward to hedge at an exchange rate of 35 to the US dollar.

Director Sunanta Tiasuwan said a suitable level for the baht, so that it supports exports next year, would be 38 to the dollar.

Pranda has bought forward contracts to cover the currency risk at a level of 35 per dollar, because it believes that this is the level at which the authorities are most likely to step in to control the currency's appreciation.

If the baht becomes stronger than 35 next year, Pranda will be directly affected because its US dollar revenue represents as much as 80 per cent of its total income.

Sunanta said the baht had strengthened significantly, from 41 to the dollar to about 35, or a 15-per-cent appreciation, this year. The company recorded Bt88 million in losses from the exchange rate in the first nine months, and this is expected to rise to around Bt90 million by the end of the year.

"Personally, I think the baht should be at 38 to the dollar. That is suitable for exports. If the baht drops to 40 to the dollar, that would be positive for exports. I've talked to fashion-related business operators, and they believe the baht should not grow stronger than 35. Therefore, we brought forward contracts at 35," she said.

Excluding the foreign-exchange loss, Pranda is expected to record a net profit of Bt300 million this year. Over the first nine months, it recorded total revenues of Bt2.89 billion, a rise of 17.6 per cent year on year, and a net profit of Bt211 million, up 4.1 per cent. The company's sales for the whole year should be around Bt4 billion, exceeding the 12-per-cent growth estimate for 2006.

Next year, Pranda plans to grow 12 per cent, mainly by increasing sales to existing customers. This excludes the first profits that are expected to come from two years of investment in the Chinese and Indian markets.

Sunanta said Pranda invested Bt30 million in China two years ago and that the operation was expected to reach the break-even point next year.

In India, the company has not established a production base, but has created a market.

Next year, Pranda also plans to expand its markets into Central and Eastern Europe, including Germany Russia and Romania.

Siriporn Chanjindamanee

The Nation