Ocean Glass considers how to invest expansion funds

Thailand“s Ocean Glass Plc (OGC), a glassware manufacturer and exporter, is looking to expand its product lines with a THB 2 billion investment, said managing director Supawan Kanyaprasith.
However,…

Thailand“s Ocean Glass Plc (OGC), a glassware manufacturer and exporter, is looking to expand its product lines with a THB 2 billion investment, said managing director Supawan Kanyaprasith. However, the company is still pondering whether the investment would involve producing new glass products or expanding existing lines. The source of funding was also still under consideration, she said. The company recently received shareholder approval to issue subordinated debentures worth up to THB 2 billion. The details, including interest, amount and maturity, would depend on the market situation, but were expected to be finalised in April 2006. The new funds might be used not only for investment, she added, but also to refinance the company“s short-term debts. Besides debentures, the company was also looking into new loans since its debt-to-equity ratio was quite low at 0.55 times, Mrs Supawan said. “With the low D/E ratio, financial institutions would probably provide loans for us if we wanted,” she said. The company has total debt of THB 774 million, THB 358 million of which is short-term debt. The company completed a glassware capacity expansion in 2005, an increase of approximately 10%, with a THB 550 million investment, which pushed up total debts. OGC has a total capacity of 150 million items per year. In 2006, net profit may fall slightly, said Mrs Supawan. This was because of higher energy costs, the depreciation of its new production facilities and rising interest payments for additional debts. Although its margin might fall, the company expected sales to grow in 2006 by 10% in line with increased capacity. Suphote Sriudomporn, an executive director, said the company“s sales growth was likely to be at the same rate as 2005, as 68% of sales came from a growing export market. First quarter sales would probably be on target, the company said, due to additional capacity. In 2005, the company reported revenue of THB 1.45 billion, up from THB 1.33 billion in 2004, with a net profit of THB 185 million, compared with THB 180 million in the previous year.