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Business Groups

Policy and Overview of Business

 

Furniture Business

          East Coast Furnitech Public Company Limited ("ECF" or "Company") set the business goals and strategies with the aim to occupy the market share as a top furniture exporter of Thailand.  Although in 2018, the Company could not achieve the target growth rate in export due to the baht appreciation during 2018, the export situation began to be improved during the fourth quarter of 2018 and the Company has received advance orders from foreign customers continuously until the first quarter of 2019, this shows a good sign of better export tendency.

          or the year 2018, the Company exported products to many countries around the world, including Japan, Middle East, India, USA, Taiwan, China, and countries in the ASEAN Economic Community (AEC), such as Malaysia, Philippines. The sale growth rate in some countries has continuously increased, especially customers from China.

          In terms of the domestic market situation over the past two years, the distribution of furniture products for wholesale customers and retail stores which the Company sells products to this group of customers under Costa Brand, is steadily growing. The performance indicator was achieved with more customer base. The distribution of furniture products for wholesale customers and retail stores under Costa Brand can achieve the target set for the year 2018 and the customer base was increased at least 50% when comparing to 2017.

           The Company uses the market share information for non-monetary performance indicators . In which manufacturers and distributors of furniture, among furniture manufacturers and distributors, the Company’s market share is ranked in No. 4, still keeping the same position with the market share at 1.5% of the total revenue of furniture business in Thailand, this is referred from the data processing by the Research Center of Government Savings Bank for the year 2017, the topic “Industry Situation/Competitive Situation in Furniture Industry” will show more details.

However, considering from the distribution channels, another important channel for domestic customers is the modern trade stores which purchase the products under the Company's own brand. In 2018, it was found that the sale volume was decreased by 10% when comparing to the same period of previous year. The products sold to modern trade stores are under different brands as follows:

1.House Brand of Tesco Lotus for distribution to Tesco Lotus stores.

2.a7 Brand for distribution to Mega Home

3.HASTA Brand for distribution to Dohome

4.Furniture production for distribution to Winner Brand

        The Company’s decreasing sale volume was caused by the decreasing sale volume of modern trade stores, some stores minimized the space of furniture products and more consumers turn to online shopping. However, due to the above situation, the Company has planned to modify the strategies to increase sale volume, such as the new product models are developed to be more attractive to respond the needs of new generation consumers, or the Company cooperates with modern trade stores in developing sales promotion campaign including selling products through more online channels.

       However, the overall domestic sale growth was increased with the rate of not less than 10% for the year 2018.

       For distribution channel via ELEGA Showroom which is the product distribution channel for middle to upper customer groups, the non-consumption confidence atmosphere and domestic spending as well as the Company’s new distribution channels under the strategy adjustment plan, the Company decided to close 7 branches in ELEGA showrooms that is not cost-effective with fixed expense during 2018, resulted in the decrease of growth rate more than 30% of revenues from distribution via such channels. However, if the domestic economic confidence condition and spending atmosphere recovers again, product distribution channel via ELEGA showroom shall be normally generated continuous growth rate. In addition, the Company will adjust the strategy to prevent fixed costs and expenses from some showrooms that have not achieved the sale target and will find ways to develop and improve the showrooms in a new style to achieve better performance than ever.

       In addition to the business overview in terms of sale revenue which was from the production and distribution of furniture, the Company generated its revenue from selling the foil paper including dried rubber wood which both were used as raw material for furniture production.

       For the foil paper distribution, on 11 May 2011, the Company registered the establishment of VV Décor Co., Ltd. (V V-Décor) as its subsidiary with the Company’s shareholding ration of 99.95%, its registered capital is 1,000,000 บาท (One Million Baht only), divided into 10,000 ordinary shares at a par value of 100 Baht, fully paid-up. V V-Décor is established to operate trading business for ECF as the foil paper distributor to some customers of the Company.

Alternative Energy Business

       The Company registered the establishment of ECF Power Company Limited on 16 January 2017. East Coast Furnitech Public Co., Ltd. is holding 99.99% of total shares, the initial registered capital was Baht 1.00  Million and presently, its registered capital is Baht  547,652,500  divided into  54,765,250  shares with a par value of Baht 10.00 each. The paid-up capital is  547,652,500  Baht

 

- Biomass Power Plant

         In 2017, the Company significantly expanded its investment in the renewable energy business. Later, ECF-P joined the investment in SAFE Energy Holdings Company Limited ("SAFE") in the proportion of 33.37%. Presently, SAFE has a registered capital of Baht 426,000,000, divided into 4,260,000 ordinary shares with a par value of Baht 100 per share, fully paid-up. SAFE was registered and established on 7 February, 2017 with the objective to invest in a biomass power plant.

         Presently, SAFE is investing in many companies related to biomass power plant as following details:

1.Prize of Wood Green Energy Co., Ltd. (“PWGE”) : SAFE has acquired 99.99% of the total issued share capital of PWGE, it currently operates a biomass power plant with the capacity of 7.5 megawatts, located at Waeng District, Narathiwat Province. PWGE power plant project has generated revenue from the sale of electricity since June 27, 2017.

         At present, PWGE has a registered share capital of Baht 85,000,000 divided into 8,500,000 ordinary shares with a par value of Baht 10 each, fully paid up.

2.SAFE Biomass Co., Ltd. (“SAFE-B”): SAFE is holding 99% of total registered capital of SAFE-B, at present, it operates wood chopping plant business to supply as material such as Wood Chip to PWGE power plant for using as raw material in power generation.

       Presently SAFE-B has registered capital at 100,000,000 Baht, divided into 10,000,000 ordinary shares at par value of 10 Baht each, fully paid-up.

 3.Bina Puri Power (Thailand) Co., Ltd. (“BINA”): SAFE holds share for 49 % of total registered capital in BINA, presently, it was registered the new name as Safe Energy (Phrae) Co., Ltd. ("SAFE-P") on 24 December 2018 and SAFE invests with the ratio of 49%. Presently, SAFE-P is the juristic person holding power distribution license by selling power to the Provincial Electricity Authority, its license is categorized in biomass power plant business with gasification system. BINA presently operates 2 projects, 1 megawatt production capacity each, the 1st project is located in Long District, Phrae Province and already started of commercial power sale since 1 August 2018, the 2nd project is located in Sung Men District, Phrae Province and under the construction. Presently, BINA has registered capital of 55,000,000 Baht, divided into 5,500,000 ordinary shares at par value of 10 Baht, fully paid-up.

- Solar Power Plant

         During 2017, the Company expanded its investment in solar power plants with the total installed capacity at 220 MW and has a capacity of 170 MW for Green Earth Power (Thailand) Co., Ltd. ("Minbu Power Plant Project" or "GEP") located in Minbu City, Magwe District, Republic of the Union of Myanmar ("Myanmar"). ECF Power Co., Ltd. ("ECF-P"), a 99.99% subsidiary of the Company, invested to buy shares of this project in the portion of 20%.

         The Company purchased the existing ordinary shares of GEP for 51,512 shares or representing 20% of GEP's total paid-up shares, as approved by the Extraordinary General Meeting of Shareholders No. 1/2017 held on 31 May 2016, with value of USD 9 Million. The total value of the Minbu power plant project is USD 292.62 Million, with a debt to equity ratio of 65: 35. Therefore, ECF-P has the obligation to increase its capital in accordance with the shareholding proportion at 20% or USD 20.22 Million.

 

          Presently, GEP has registered capital of 125,755,800 Baht, divided into 1,257,558 shares at a par value of 100 Baht per share and the paid-up registerd capital is equal to 62,755,800 Baht, its project is under construction of solar power plant at Magwe District, Minbu City, Myanmar with the installed production capacity of 220 Megawatts. It is expected to start generating revenue from commercial electricity for 50 megawatts, which is the first phase within the third quarter of 2018, from all four phases which will be gradually constructed over a period not exceeding 4 years or by 2021.

          GEP has one subsidiary, namely, GEP (Myanmar) Co., Ltd. ("GEP-Myanmar"), which is a sole investment in GEP-Myanmar. GEP-Myanmar was incorporated as a national company of Myanmar with a registered capital of USD 500 Million. These shares are divided into 500,000,000 ordinary shares with a par value of USD 1 each. Its paid-up capital is USD 5.398 Million, or approximately Baht 176.29 Million in accordance with the exchange rate announced by the Bank of Thailand as of December 29, 2017. GEP has a 100% shareholding in GEP-Myanmar or 100.00% of total paid-up registered capital. The objective is to operate business in developing and managing Solar power plant project In Myanmar, the total installed capacity is 220 MW and the production capacity is 170 MW.

         GEP-Myanmar entered into the Power Purchase Agreement (PPA) with Electric Power Generation Enterprise (“EPGE”) (previously, Myanmar Electric Power Enterprise) which is an organization under the Ministry of Electricity and Energy of Myanmar. Main content of agreement is to develop, construct, seek for fund source, manage and administer, maintain and transfer of business, EPGE will purcahse electricity from the solar power plant project with install production capacity of 220 MW or the ratio of maximum power purchase at 170 MW, the plant is located in Minbu City, Magwe District, Myanmar, for 30 years from the Commercial Operation Date (“COD”) of the Phase 1 project from total 4 phases. The rate of power price is fixed at  0.1275  USD per unit throughout the term of PPA including the renewal of PPA which may be occurred. The power generation will be divided into 4 phases based on the maximum ratio of power geenration which will be generated in each phase as follows:

Phase 1 Maximum trading ratio: 40 MW from installed production capacity of 50 MW.

Phase 2 Maximum trading ratio: 80 MW from installed production capacity of 100 MW.

Phase 3 Maximum trading ratio: 120 MW from installed production capacity of 150 MW.

Phase 4 Maximum trading ratio: 170 MW from installed production capacity of 220 MW.

        After the first phase started COD, following phases are expected of their COD by 360 days.

        For the investment in the solar power plant business for other additional projects, the resolution of the Board of Director Meeting No. 15/2017 on 18 December 2017 approved the feasibility study on the investment of solar power plant project of CR Solar Co., Ltd. (“CRS”) with capacity of 1 megawatt, located in Thoen District, Lampang Province instead of the investment in biomass power plant project of True Energy Power Lopburi Co., Ltd. (“TRUE-P”). The Company had made the feasibility study but it is impossible to make a deal of investment.

        The Company will review the status of the Company for 60 days from the date that the Company received the complete information from CRS, such as financial statements, power purchase agreements and licenses, and will conduct a feasibility study and decide on the investment in such solar power plant projects as following stages. The Company will enter into the Takeover Agreement within 3 months from the date of signing the memorandum of understanding signed between the Company and CRS on December 22, 2017.

        The 1st amendment record was done on 30 March 2018 to extend the business inspection period to be within 31 August 2018 and the Acquisition Agreementexecution is extended to be within 30 September 2018, the fact is that the Company already inspected the status of the business but the Company has not yet received some important documents which CRS is in the process with the relevant government agencies to completely obtain such documents. In principle, such documents will spend several months to obtain, the Company and CRS agreed to extend the business inspection period to be within 28 February 2019 and extend the Acquisition Agreement execution to be within 31 March 2019.

         Presently, the Company is still considering the feasibility of the investment in renewable energy business for additional projects, if those projects are feasible with proper return on investment and worth to invest when considering many risk factors, the Company considers these projects with carefulness and caution before making decision on investment.

         Subsequently, the Board of Directors' Meeting No. 1/2018 held on 23 January 2018 had a resolution to approve the sale of existing shares that East Coast Furnitech Public Company Limited invested in Planet Board Co., Ltd. ("Planet") as a subsidiary, totaling 43% of a total registered capital of Planet by offering to following persons: Mr. Khomwit Boonthamrongkit (25%), Ms. Kritchanok Pattamasattayasonthi (3.75%), Ms. Pichapim Patamasatayasonthi (3.75%), Mr. Eakalak Patamasatayasonthi (3.75%), Mr. Ekaridhi Patamasatayasonthi (3.75%), and Mr. Warattakrit Pornjamsai (3%), the shareholding structure was therefore, changed as follows:

  1. East Coast Furnitech Public Co., Ltd.                5,700,000 shares, or 57%
  2. Khomwit Boonthamrongkit                                 2,500,000 shares, or 25%
  3. Kritchanok Pattamasattayasonthi                         375,000 shares, or 3.75%
  4. Pichapim Patamasatayasonthi                              375,000 shares, or 3.75%
  5. Eakalak Patamasatayasonthi                                375,000 shares, or 3.75%
  6. Ekaridhi Patamasatayasonthi                                375,000 shares, or 3.75%
  7. Warattakrit Pornjamsai                                          375,000 shares, or 3%

        Later, in April 2018, Planet allocated shares in the Management group of Index Living Mall Co., Ltd. as a shareholder of Planet Board Co., Ltd., by increasing one more shareholder from 4 shareholders with a total 15% of shareholding to be 5 shareholders. The new shareholder is Mr. Kunthong Udommahuntisuk and the ratio of shareholding is maintained at 15% of the total shares, the shareholding structure is changed as follows: East Coast Furnitech Public Co., Ltd. (57%), Mr. Khomwit Boonthamrongkit (25%), Mr. Kunthong Udommahuntisuk (3%), Ms. Kritchanok Pattamasattayasonthi (3%), Ms. Pichapim Patamasatayasonthi (3%), Mr. Eakalak Patamasatayasonthi (3%), Mr. Ekaridhi Patamasatayasonthi (3%), and Mr. Warattakrit Pornjamsai (3%). The increase of registered capital amounting 400 Million Baht was also approved and is under the process, so a total registered capital is 450 Million Baht, the shareholding structure was therefore, changed as follows:

  1. East Coast Furnitech Public Co., Ltd.                5,700,000 shares, or 57%
  2. Khomwit Boonthamrongkit                                 2,500,000 shares, or 25%
  3. Kunthong Udommahuntisuk                                  300,000 shares, or 3%
  4. Kritchanok Pattamasattayasonthi                          300,000 shares, or 3%
  5. Pichapim Patamasatayasonthi                              300,000 shares, or 3%
  6. Eakalak Patamasatayasonthi                                300,000 shares, or 3%
  7. Ekaridhi Patamasatayasonthi                                300,000 shares, or 3%
  8. Warattakrit Pornjamsai                                          300,000 shares, or 3%

        The Board of Directors' Meeting No. 7/2018 held on 27 June 2018 had a resolution to approve the Company to invest in Planet Board Co., Ltd. by holding 57% of the total registered capital with the aim to operate the business of MDF boards, Planet will spend the initial investment amounting 1,456.31 Million Baht.

        At present, Planet is in the process of surveying the details of operations in terms of surveying in land that is suitable for the plant construction, many factors to be considered include raw material sources, transportation distance of raw materials, transportation distance of products from the factory to customers, etc. in order to providing the worth return on investment with utmost benefits. It is expected that the construction period will be 2 years after completing the selection of land.

 

Presently, the structure of East Coast Furnitech Group can be summarized as follows:


         

 

 

 

 

 

 

 
 
 
 
 


30 April 2019

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