working capital in case of late payment of some customers. These preparations are what executives really realize to maintain the operations of the company and continue growing in business even the company has to face with any unpredictable natural disasters in the future.
2. Risk of Management Team 2.1 The major shareholders hold more than 50% of total common stock. On April 29, 2011, Chaisupat group have hold approximate 84% of 500.00 million register capital that could control a major vote to pass all subject in the shareholder meeting; therefore, minority shareholder could be difficult for balancing power with major shareholder’s vote. However, the management team’s (Chaisupat Group) always made decisions and run the business with responsibilities to overall shareholders and best results for the company.
2.2 Risk of Allowing Credit Term for Customers Giving a credit term for selling to customer is an important risk which has been carefully controlled. In case of customer could not make payment or postpones, that might effect with the company’s cash flow. The company has seriously considered for giving a credit line, by checking a payment record and financial statement of customer. Selling to many customers is an efficiency strategy to minimize the risk. However, the allowance for doubtful debt is also set up for reservation.
2.3 Risk of Issuing of Convertible Securities The company issued more common stocks to increase capital in amount of 125 million shares for supporting convertibility of 125 million units of warrants. These warrants issued and sold to the existing shareholders whose name listed in the registration record on December 29, 2006 with proportion of 4 common stocks to 1 warrant. If all warrants holders use their rights, issued and paid-up capital would be increased in amount of 125 million shares or 20% of registered capital after increasing capital. Therefore, the dilution effect would occur for 20% according to such increasing capital. However, the capital that the company gains from such convertible securities will be utilized for financial working capital and other important assets investment for growth of the company in the future.
Annual Report Year 2011
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