Page 64 - EASTERN POLYMER GROUP | ANNUAL REPORT 2015

rate of 6.9% per year. In addition, the Company’s turnover
is largely depended on automotive industry within Thailand
where it has been supported by the Thai government all along.
Due to high competition in automotive industry, the world
leading automotive companies increase releasing rate in
pushing new models of vehicles or speed up the process
of upgrading the vehicles. As a result, Aeroklas group of
companies have opportunity to produce new products and
continue to generate more income.
Besides, most of the products from Aeroklas group of
companies are for pickup trucks or commercial cars -
which most are used in business and there are constand
demand for car using. For this reason, business
performance of Aeroklas group of companies fluctuate
less than that of companies with focus their business on
personal cars. In addition, prior to change of car models,
new products are always available for Aeroklas in
co-development.
Risks related to business operation of Eastern
Polypack
Risks from termination of contract or not receiving new
contract from major trading partners
Eastern Polypack (EPP) engages in manufacturing of
packaging goods. Such business model requires Eastern
Polypack to have manufacturing contract with world leading
food and beverage companies such as McDonald, CP All, and
Yum Yum.. In some case, no term of contract or fix quantity of
products is specified. As a result, Eastern Polypack faces the
risk from termination of manufacturing contract upon expiration Company will not face any loss in profit during the retraction
by customers and may result in decline of turnover and or a
stage of loss.
Nevertheless, Eastern Polypack’s customers who are world
leading food and beverage companies normally do not
consider changing packaging manufacturers unless there
are other manufacturers who can meet the needs better in
term of price and quality. In addition, To find qualified
manufacturers that meet the specified requirements would
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need a lengthy period required for consideration and
inspection of products’ quality.. As such, said operators face
disruption to the business operation. Mostly, the period
required for screening and planning take a long time since
quality assurance must be certified at all time. Eastern
Polypack has contract manufacturing with more than 30
industrial partners and more than 200 customers from both
domestic and overseas. Therefore, the risk from termination
of contract is mild with no effect on business performance
and profit.
Risks from dependency on local consumption
Eastern Polypack Co., Ltd’s major incomes are from sales
of products to Thai customers. In the event of economic
recession, natural disaster, outbreak, terrorism or political
unrest that may have material adverse effect on Thai
consumers’ demand lead to continual decline in the
Company’s turnover. Particularly, if Eastern Polypack faces
such event over a long period of time and may result in
Eastern Polypack group’s losses.
However, Eastern Polymer Group Public Co., Ltd is aware
of such risk and anticipates that Eastern Polypack
Company will not be affected to the same degree as that
of other companies that solely depend on consumption in
Thailand. This is because Aeroflex group, Aeroklas group
and Eastern Polypack Company have distribution channels
overseas. Between fiscal year ended 2012 - 2015, the
corporate group’s overseas revenues accounted for 40%.
In addition, products made by subsidiaries or joint venture
companies and corporate group are classified as important
products for daily life. Hence, it is believed that the
in consumption in Thailand.
Financial Risks
Risks from Currency Exchange Volatility
Subsidiaries and joint venture companies’ important
incomes and expenses are in foreign currencies such as
revenues from sales of products to overseas customers,