Battery-maker focuses strategy on maintaining cash flow

"We need to maintain cash flow as much as we can," said the company's managing director Veerawat Korphaibool.

Currently the company has enough cash flow, with accumulated profit of between Bt700 million to Bt800 million.

He said the company could accept the loss for next few years but could not accept the cash-flow crunch, which could lead to closure of the business. To maintain cash flow, it will focus more on selling products directly to the retail channel and on cash basis, instead of through the dealers and on credit basis.

He added the company has adjusted the strategy since the second quarter, knowing that the affects from the global economic downturn and the country's political unrest would be unavoidable.

This year the company expected sales revenue to drop by 10 per cent from last year when it posted sales of over Bt5 billion.

During the first nine months of this year, the company recorded revenue of over Bt3 billion, down 8.38 per cent over the same period last year. The falling revenue is a result of soaring cost of lead and the price cut of its products in response to the local slowing economy.

Veerawat said that the price of lead continues to increase which now was US$100-200 per ton, adding even the lead price is likely to low, the company could not forecast the level of lower prices.

Moreover, the sales of automobile in the next year is expected to face a drop of 30 per cent, which would pressure the company to reduce production capacity by 20 per cent or 250,000 units a month from 350,000 units.

He said export sales had dropped by 20 per cent from the third quarter. Moreover, the domestic sales were affected as well because of the lower purchasing power.

Veerawat, however, noted that its sales will lower than the industry because it have replacement market that can compensate the declined of original equipment manufacturer (OEM) sales.

The company expected to reduce sales proportion from export to 50 per cent from 60 per cent in the next year.