President Kittichai Raktakanit yesterday said the company was changing direction after losing its market share in the construction business to large contractors.

Kittichai said the company had terminated its construction operations, which accounted for about Bt450 million of last year's total revenues, adding that it did not want to compete with its trading partners, including Italian-Thai Development, CH Karnchang, Sino-Thai Engineering and Construction and Tuntex (Thailand).

"Construction might affect our core business, because of a lack of experience in risk management for projects," said Kittichai.

He said sales of its prestressed concrete piles represented about 60 per cent of last year's total revenues of Bt990 million.

Although the gross margin from sales of this product is only 3-4 per cent, the company plans to increase that to 6-8 per cent this year.

"The way to increase the margin is by adjusting the company's production process and reducing its defect rate," said Kittichai, adding that this year the company would not focus on revenues, but rather on net profit.

He said about 90 per cent of contracts came from the private sector, which generated more net profit than did the government sector.

"However, the company has tried to maintain a total backlog value of about Bt400 million," he said.

He also predicts an increasing trend of builders using prestressed concrete piles this year, because of the large number of new residential projects, especially condominiums.

"If the company can reduce its production costs, it should not be hard to compete with other rivals," said Kittichai.

Watcharapong Thongrung

The Nation