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FAQ

Question in Agenda 2

Q :

Posed 4 questions as follows:

1.Have the repercussions from “First Automobile Project” presently ended?

2.Can the current increase in exports offset the impact from “First Automobile Project”?

3.Does the drop in car sales as a result of an internal (Micro-Economic) or external (Macro-Economic) ? , Impact to The Company? How do you plan to solve this?

4.Is there any way The Company can share the market with Toyota?

A :

1.It’s difficult to say if the repercussions from “First Automobile Project” have completely ended yet. The decline was caused partly by this project and partly by lack of confidence toward the economic conditions. It’s not possible to identify which part has the greater influence. Personally I think that all of these factors continue to remain until this day.

2.Domestic sales until May 2014 have declined by 46% whereas the highest increase in exports was by 10% so it’s not yet possible to offset.

3.To meet the decline in manufacturing for domestic sales, The Company has also decreased its production in the same direction and implemented various measures such as adjusting the internal layout to achieve maximum benefits of machinery and various equipment, maintaining the appropriate amount of stock, use of necessary raw materials, and increase value-added in various areas within the work processes, including activities to eliminate waste and enhance manufacturing efficiency (SNAP Activities – Stanley New Approach for higher Productivity). This leads to reducing Company expenses. Additionally, we continue to keep close track of customer data and market data for the purpose of applying such data appropriately to improve functions and maximize profits.

4.The Company has implemented various operations such as QCD (Quality – Cost – Delivery) to build confidence and trust from customers which will lead to increased orders.

In the Annual Report page 11, under new products, The Company also manufactured VIOS lamps for Toyota last year.

Q :

As The Company primarily sells OEM products for Japanese car manufacturers, does The Company also plan to enter other OEM markets such as European and American groups?

A : The Company has no limits concerning target customer groups and has manufactured products for European groups including Ford, Triumph, and Ducati. The Company is aware of the entrance of various automotive groups and considers markets where QCD is aligned with customers and sufficient manufacturing quantity for worthwhile investment in machinery, molds, and various equipment, including R&D

Question in Agenda 3
Q :

1.Notes to the Financial Statements chapter 8 page 50: Trade and Other Account Receivables Overdue 3 – 6 months had increased to be 20 million baht and overdue 6-12 months had 12 million baht while last year was non  , What has caused this?

2.Notes to the Financial Statements Chapter 10 page 51: Dividends Receivable from Laos Stanley Company Limited was previously received at end of year 31st March 2012  as 2.7 million Baht but the year ended 31st March 2013 these dividends don’t appear. What is the cause?

A :

1.Trade Account Receivables Overdue is caused by economic conditions that impact debtor companies in the same way they affect The Company itself.

Trade Account Receivables Overdue less than 3 months at the amount of 91 million Baht was from the sale of a mold to a customer overseas who has now fully settled the balance.

Trade Account Receivables Overdue 3 – 6 months and 6 – 12 months are customers in India who have been affected from local economic problems. These debtors have responded that they will repay in installments.

Trade Account Receivables Overdue that exceed 1 year which were recorded since last year have been our customers for over 20 years but have encountered financial problems. Nevertheless, they continue to make payments which are apparent in the decreased amount outstanding from the previous year.

 

2.Dividend payments from Laos Stanley Company Limited in 2013 have been announced in April but are not recorded in The Company’s fiscal year ending 31st March 2013.

Q :

1.Notes to the Financial Statements Chapter 10 page 52: Translation Adjustment fiscal year ending 31st March 2012 is (31 million Baht) but fiscal year ending 31st March 2013 is 34 million Baht. What has caused this?

2.Notes to the Financial Statements Chapter 26 page 68: Financial Assets – Japanese Yen for fiscal year ending 31st March 2012 is 4.9 million Yen and in fiscal 31st March 2013 this item has increased to 121 million Yen. Why have the Yen holdings increased?

3.Notes to the Financial Statements Chapter 27 page 72: Product Development and Design Costs in fiscal year ending 31st March 2013 this item has increased to 76 million Baht from fiscal year ending 31st March 2012 at 10 million Baht. The Company has less production but why has this expense increased?

Notes to the Financial Statements Chapter 27 page 72: Agent Commissions has increased to 11 million Baht in fiscal year ending 31st March 2013. What has caused this?

I also propose for The Company to consider a Company visit after the Shareholders’ Meeting.

A :

Concerning the factory visit after the meeting, we aren’t sure exactly when the meeting will be adjourned ,after 17.00hrs. would be inconvenient for a visit because The Company is presently controlling overtime work.

    The difference from changes in the financial statements is because The Company has 2 joint companies: Laos Stanley Co., Ltd. and Vietnam Stanley Electric Co., Ltd. of which Vietnam Stanley Co., Ltd. implements equity method accounting systems and when the VND currency rate changes, book and accounts must change as well.

    Japanese Yen assets originate from Company accounts opened in Yen currency for Yen currency transactions to avoid currency exchange losses. The Company will consider appropriate situational measures as the amount increases.

     Product Design and Development Costs are expenses relevant to future product development, an increase shows that new products are under preparation for launch into the market and this is a good sign.

     Commissions are expenses paid for work that will increase in the future especially global models that receive assistance from  the Stanley Group network and require commission payments accordingly.


Other Questions
Q :

1.Long-term growth prospects of Thailand’s automotive industry, according to the Opportunity Day event, include expectations that companies in the automotive industry will produce 3 million cars in 2017.

 

2.What does The Company think about this?

 

3.What is the expected budget allocated for current production capacity and the 2014 investment plan?

 

4.Please give information on The Company’s  new competitor

 

5.From the Annual Report page 54: Notes to the Financial Statements Chapter 10 concerning operational performance of joint companies, particularly Vietnam Stanley Company Limited, when comparing the profits to revenue ratio, the net profit is higher than that of The Company’s. Why is this? And how does The Company plan to achieve a similar ratio?

A :

The Company believes that a production expectation of 3 million cars within 2017 is highly possible with positive factors from the ECO Car 2 Project. But it may require further time and investment since the project has conditions to produce 100,000 cars in its fifth year. Presently, a new committee has been appointed to promote investment and one of the projects has already been approved.

A :

The Company has decreased its production capacity to meet the current decline in the automotive industry. At present we are at 75% capacity for lamp production with 60% allocated to automotive lamps whereas light bulbs are at the original capacity.

The amount of investment has yet to be clearly defined. The Company has plans to invest in PQC Building, which is currently under construction. We plan to expand the factory to support future production, including LED lights which are likely to be used more widely in lighting products.

The  new competitor company ,their market share is still unclear but when taking production data into account, it’s rather insignificant.

A :

It’s difficult to compare the net profit of Vietnam Stanley Electric Co., Ltd. because of contrasting local internal factors. The Company is presently faced with a difficult situation with little profit. Additionally, the product mix factors are different which causes the profit ratio to differ accordingly; the tax structure is also another matter directly relevant to net profit. The Company tries its best to generate maximum profits by implementation of SNAP and other various activities previously mentioned.

Q :

1.Various carmakers (Toyota and Honda) have postponed their new models launches; Honda has postponed the opening of their new factory in Thailand however they’ve opened their new factory in Indonesia. How will this affect The Company in the long-term?

 

2.Bank deposit information from Laos show high interest rates available of up to 12 – 13%. With joint company Laos Stanley, how does The Company plan to seize this financial management opportunity for maximum benefits?

 

3.Following the joint automotive launch of CP with Peoples’ Republic of China, does The Company plan to enter this project?

 

4..Where is the investment into land and what are the objectives?

 

5.Please elaborate into future projects mentioned by the President that require additional R&D. Are these projects long-term or short-term?

A :

The new model launches are considered our client’s confidentiality. However, the Company will continue its operations to enable new purchase orders from clients. The Company has little knowledge of Honda’s decision to postpone the new factory opening. But presently our client uses their original production plant , thus The Company has not been affected. When Honda opens its new factory in the future, The Company is fully prepared to support accordingly

A :

Regarding the interest rates in Laos, The Company invested in Laos twenty years ago when the exchange rate was 1 Baht for 32 Kip. The current exchange rate is 1 Baht to 250 Kip which is high-risk. At present, Laos Stanley Company trades in Baht and US Dollar currencies. Any cash transactions have the primary objective to invest prudently and immediately with a secondary objective to ensure safety of The Company and employees. The Company has many employees and must provide security to employees’ families in case of crisis.

The Company sees the new car model launch by CP Group as risky since it has no production base in Thailand. The domestic automotive market is influenced by many factors of which The Company will continue to keep track of.

The additional plot of land purchased is near the waste management building which is adjacent to The Company’s land and has been purchased to support future expansion.

 

New projects that have incurred additional R&D expenses and agent commissions

 

will be gradually released in sequence following the many stages within new product launch cycle.

Q :

1.I wish to ask about future growth plans for joint companies and does The Company have plans to invest in Myanmar?

2.Please give a progress update on the Anti-Corruption United Front Project.

A :

All joint companies, including both Laos Stanley Co., Ltd. and Vietnam, are favorable. Vietnam continues to grow with some minor slowdowns but is considered likely to grow further and will become a strong future supporter of The Company. Concerning investment in Myanmar, The Company is studying prospects and consulting with our parent company. At present, we haven’t decided anything yet.

Concerning the announcement of our intentions to combat corruption, although The Company has not announced its intentions as a United Front but The Company has officially announced in rules and regulations which all employees and directors are required to strictly follow accordingly.

Q :

I propose to send the Annual Report (in book format) promptly before the meeting in order to have sufficient time to read it and I request to adjust the stage to ensure that all directors are clearly visible.

A :

We welcome the suggestions for future improvement.

Q :

Concerning the quarterly performance meeting held at The Company and attended mostly my analysts and institutional investors; I propose to also organize similar events in other forms such as Opportunity Day or Web Class on The Company’s website to keep smaller investors up-to-date.

A :

 

Thank you kindly for your suggestions.

 

Q :

I wish to inform the progress of Thai Investor Club who have participated in financial market activities among neighboring countries and ask the following questions:

1. How will AEC affect The Company?

2. Minimum labor wage in Laos and Vietnam.

3. I propose for The Company to participate and announce its intention to anti corruption.

4. I propose to hold the meeting earlier to allow more time for discussion and factory visit.

A :

 

Thank you for your various suggestions, particularly to anti corruption, The Company considers this an important matter and has announced in Company regulations.

As far as I understand, the minimum wages in Laos and Vietnam are low but volatile. The Company will perform due diligence and we apologize if unable to give a clear answer at this time.