annual 2001 life style - ICC · employees will learn to love corporation and feel happy to work for it. Discerning, wise and unemotional leaders will make employees work happily and

. . . � ( )757/10 � 1 � 10120

� : (662) 294-0281, 294-0294 : (662) 294-3024 Internet : http://www.icc.co.th E-mail : [email protected] : � � ( ) 62 � �

4, 6 - 7 10110 � : (662) 359-1200-1 : (662) 359-1259

I.C.C. International Public Company Limited757/10 Soi Pradoo 1, Sathupradit Road, Bangpongpang, Yannawa, Bangkok 10120

Tel : (662) 294-0281, 294-0294 Fax : (662) 294-3024 Internet : http://www.icc.co.th E-mail : [email protected] : Thailand Securities Depository Company Limited, 62 The Stock Exchange of Thailand Building,

4, 6 - 7th Floor, Rachadapisek Road, Klongtoey, Bangkok 10110 Tel : (662) 359-1200-1 Fax : (662) 359-1259

ANNUAL REPORT 2001

( )Contents Disclosure of Information on Financial Position

and Performance(The Securities and Exchange Commission)

4

An Honorary Doctorate is conferred toMr. Boonsithi Chokwatana

6Dr. Thiam Chokwatana’ s Philosophy 7

8Message from the Chairman of the Board 9BSC 10St. Andrews 12

14Company Milestone 17

20Company’s Products Nature of Business

28Risk Factors Risk Factors 30

32Nature of Business Nature of Business 37

I.C.C INTERNATIONAL PLC.

LIFE STYLE

Contents Page

. . . ( )

. .

22 2544

Mr. Boonsithi ChokwatanaChairman of Saha Group,

Vice Chairman ofI.C.C. International Public Company Limited

is conferred withAn Honorary Doctorate in Business Administration

College of CommerceBurapha University

On Saturday December 22 nd, 2001

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annual report 2001

6 2544

w e m a k e p e o p l e h a p p y a n d b e a u t i f u l○

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Dr. Thiam Chokwatana’s Philosophy :

7annual report 2001

2544Righteousness and tranquillity are fundamental elements of human resource management

If you want to be a leader, you will need both work skill and people skill. Experience and insightacquired through hard work will give you the work skill required while good governance will give you the peopleskill.

A leader needs to take care of his subordinates, tending to both their physical and mental needs.Only when they are physically and mentally happy, they will be able to put the whole of themselves into theirwork for him.

A leader must be righteous, exercising fairness, judging right and wrong accordingly. He must beneither credulous nor impartial. He must praise those who perform well and give them moral support. However,he should not humiliate those who cause trouble. He must never censure anyone in a meeting or in public.Such can only expose them to humiliation.

If friction occurs among the employees, he must take action in resolving the conflicts, either by givingproper attention to the persons involved or investigating into the cause of the tension. He must see to it that theproblems are eventually resolved. Remember that conflicts will dissolve only with fair deliberation of theleader.

Righteousness in exercising fairness is fundamental to running a business. Under good governance,employees will learn to love corporation and feel happy to work for it.

Discerning, wise and unemotional leaders will make employees work happily and confidently.As such, they will be able to think clearly and creatively and work productively. A good leader is a person whorenders happiness and support to those with whom he works.

Dr.ThiamChokwatana,sPhilosophy

Doing good is like striding upstream: doing bad is like floating downstream.

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annual report 2001

8 2544

�

Message fromthe Chairmanof the Board

11 2544 . . . ( )

IT on line

. . . 8,378.58 2543 8,922.71 2544 470.62

2543 632.03 2544 34.30 2543. . . . . .

. " " . . . . . .


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9annual report 2001

2544

Looking into the past year's economic scenario, as publicly analyzed and forecast in seminars, lec-tures and media interviews by leading economists, a general sentiment of wariness and anticipation may havearisen ---Thai economy seemed yet to fully recover. Aggravated by the shock of the September 11th, 2001terrorist attack, many shareowners may have had concern and anticipation over possible progress of the I.C.C.International Public Company Limited.

The executive board and I would like to express our gratitude for your earnestness. Together, wemust declare our dedication and firm position in dealing with the impending difficulties. We have neither un-derestimated nor overlooked the wisdom and warnings of those distinguished economists and scholars. Onthe contrary, we have cautiously taken them into serious consideration and come up with proactive policiesand strategies to cope with the challenges so that we were able to survive and move ahead under such diffi-cult circumstances. Overall, the company has opted for carrying on theprevious years' policies, focusing on solidifying the key areas of corporate business. Such policies have strength-ened the business and helped us opening up new prospects and still carrying on business expansion.

The executive board has attentively supervised corporate performance evaluation while closely lookingout for economic changes. We have been able to make optimum use of our resources, including the applica-tion of information technology via online outlet network, thus enabling the management to monitor performanceand expedite sales and marketing decisions promptly and effectively.

The corporate performance in the past year was a success indicator of such policiesand implementations. I have the pleasure in proudly reporting to the shareowners that I.C.C.'s total revenueshave increased from Baht 8,378.58 million, in 2000, to Baht 8,922.71 million, in 2001, and its total net profitshave risen from Baht 470.62 million, in 2000, to Baht 632.03 million, in 2001, an increase of 34.30 percent.

I.C.C.'s proud accomplishment was the result of hard work, perseverance and esprit de corps in itscorporate workforce. As the far-sighted Dr. Thiam Chokwatana once put it, "Perseverance engenders success."Everyone in I.C.C. should be proud of the company's unusual accomplishment. It is your cooperative spiritthat is a driving force behind the progress of our beloved company.

Som ChatusripitakChairman

In business, you must keep to the middle path and hang on to a secure post.

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annual report 2001

10 2544

. . . ( ) BSC INTER NATIONAL BRAND

ONE BRAND , ONE STYLE , ONE CONCEPT BSC

BSC

27.8 1999 274 2001 3 BSC 10

BSC ACTIVE

BSC BSC

BSC

BSC 2002 BSC

BRAND LOYALTY INTERNET DIRECT MAIL

BSC


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11annual report 2001

2544From the First Move through to the PresentWith high expertise and experience in manufacturing, marketing and distribution—domestic and overseas, I.C.C.

International Public Company Limited and the Saha Group of Companies have jointly launched the BSC InternationalBrand to respond to consumers’ needs and demand. The brand covers a wide range of product lines, from men’swear, ladies’ wear, children’s wear, leather goods and cosmetics. Consumers can be fully confident of superior productquality, trendy design and reasonable price.One Brand, One Style, One Concept : From Basics to Practicality

All product lines under the BSC brand name are uniquely characterized by cosmopolitan, distinctive andsophisticated styles. They are all exclusively selected and designed with close scrutiny in R & D processes in order torespond to the specific needs of their target consumers.A Boost from 27.8 Million Baht in 1999 to 274 Million Baht in 2001

For only 3 years since BSC was first launched in the market, sales growth has tremendously risen by tenfold,together with continuous extensions of sales outlets and multiple product lines. The latest product line comes underthe name of BSC Active, which specializes exclusively on golf wear and gear. Vigorous advertising and PR strategieshave been used through such effective media as television, magazine, and also the major sponsorship for the MissThailand Pageant to meet BSC concept in supporting the new young generation who are talent and good taste. Onesuccessful activity was conducted by jointly organizing a co-promotion of a combination of BSC product lines throughoutvarious leading department stores which helped strengthen the brand awareness across different target customersand eventually boost the rapid growth of sales.BSC in 2002: A Sustainable Growth.

BSC’s marketing strategy, for this year, aims at directly catering to its customers by providing maximumsatisfaction for products and for pre-sales and after-sales services. It also aims at expanding a clientele of customersin order to ensure brand loyalty. In addition, BSC is looking into developing new channels of sales, such as the Internetor direct-mail, which in turn will add up to new channels of media exposure. Most important of all, BSC pledges itsdedication to product development in answer to the latest fashion trends and to building up brand uniqueness increative design and coordination to suit consumers’ demand. All this will help to solidify the brand image under theslogan: BSC, The Essence of lifestyle.


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Life at school is not the same as life at work.

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annual report 2001

12 2544

St.Andrews . . . ( ) 1997

St.Andrews

5 St.Andrews 2001 St.Andrews St.Bernard St.Bernard Save Lives

Collection Zebra In Trend Collection St.Andrews

2002 St.Andrews

“ St.Andrews Happy Family ”

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2544

A Wide Array of Products for the Happiness of Every Family Member

A distinguishing, superior-quality brand name by I.C.C. International Public Company Limited, St. Andrewswas first launched in 1997 to respond to market needs for better and happier living of every family member. The brandcovers a wide variety of product categories, ranging from men’s wear, ladies’ wear, children’s wear, leather goods, dollsand towels. Endorsed by top quality of the Sahapat Group of Companies and equipped with trustworthy manufacturingexpertise, St. Andrews projects an image that is commonly associated with top-quality products and best valuefor money.

Over 5 long years, St. Andrews has been dedicated to manufacturing under research and development,setting its aim on product quality and design in line with latest and current fashion trends. In 2001, St. Andrews has usedtwo animal themes for its yearly collections——a loving and friendly St. Bernard theme in the St. Bernard SavesLives Collection, and the black and white zebra design in the Zebra In-Trend Collection. Both themes have madethe brand remarkably distinctive, increasingly popular and better-recognized by consumers at large.

In 2002, St. Andrews aims at providing maximum satisfaction to consumers for its service and product quality,and to building up awareness and recognition via advertising, P.R. campaign and sales promotion, so its target groupsshould be constantly reminded of the products’ trends and activities. Most of all, the brand pledges its dedication toproduct development to suit consumers’ needs and demand, under the concept of“ St. Andrews’ Happy Family ” for the happiness of every family member.

St.Andrews

Knowledge is everywhere, depending on whether we see it.


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2544

2534• “

”

• . . .• “ ”

2535•

2536• 500 138.04 • “ ”

4 2537

•

•• 146.88

2538• . ( )• .

•• 147.08

2539• ( ) . . .

( )• . 1

• 8• 290.63

2540• “ ”

“ ”• “ ‘98”

2541•

13• 2

• “BSC” (BEST SELECTED COLLECTION) BSC

• “ 2” “ ”

• .

A good leader must learn to appreciate his subordinates verbally.

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annual report 2001

16 2544

2542• . “ 2541”

( MARKETER OF THE YEAR 1998 )

• 3

• 29 • 9

6

. . 2544• ISO 9002

SGS YARSLEY INTERNATIONAL CERTIFICATION SERVICES SGS UNITEDKINGDOM LTD.

• “BSC” (BEST SELECTED COLLECTION)

2543• ISO 9002 SGS

YARSLEY INTERNATIONAL CERTIFICATION SERVICES 20 2543• 4•

21 2543 29 • 100 “ ”

“ ” 2544• Men’s World Trend 2000-2001

8-9 2543• 31 2543 500 290.63

4,319

2544• 5•

6 . . 2542 2 “

”• 6

. .2542 11 • 36 6

• .

• 31 2544 500 290.63 4,638


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2544

CompanyMilestoneFIRST DECADE1964 International Cosmetics (Pias) Limited Partnership is founded with a registered capital of 100,000

baht and 7 employees to distribute “PIAS” cosmetics. Its office is located in Sathupradit Road.1965 Company name is changed to International Cosmetics (Pias) Co.,Ltd.1966 Registered capital is increased to 1.5 million baht.1970 Company begins distribution of “WACOAL” women’s lingeries from Japan.1972 Registered capital is increased to 3 million baht.1973 Company name is changed to International Cosmetics Co.,Ltd. with 1,200 employees.

SECOND DECADE1975 Activities expand to the distribution of “ARROW” men’s wear from the U.S.A.1977 To keep up with the increase in business and improve customer service, branch offices are established.

They are Intanin Chiangmai Co.,Ltd. in Chiangmai, Inter South Co.,Ltd. at Had Yai,and Can Co.,Ltd.in Khon Kaen.

1978 Registered capital of 3 million baht is increased to 12 million baht. Approval is granted by the Ministryof Finance to list the Company’s shares on the Stock Exchange of Thailand.

1979 Registered capital of 12 million baht is increased to 18 million baht.1980 Registered capital of 18 million baht is increased to 24 million baht.1982 Company begins distribution of “ITOKIN” women’s wear.1983 Registered capital of 24 million baht is increased to 36 million baht.

THIRD DECADE1984

• Registered capital of 36 million baht is increased to 48 million baht.• Company begins distribution of “GUY LAROCHE” men’s wear from France.

1987• First debentures issued to the amount of 50 million baht.• Registered capital of 48 million baht is increased to 66 million baht on February 4,1987 and increased

again to 82.5 million baht on October 13,1987.

1988• Company receives “the 2nd TOKYO CREATION AWARD” from Japan for outstanding creativity in

South East Asia for the promotion and development of Thai apparel.• Sun and Sand Co.,Ltd. a new branch office is established in Phuket Province.• Begins distribution of “LACOSTE” men’s wear from France.• Registered capital of 82.5 million baht is increased to 100 million baht on June 21,1988 and is further

increased to 300 million baht with a paid-up capital of 110 million baht as of December 31,1988.• Par value of ordinary shares convert from 100 to 10 baht per share.

1989• First convertible debentures are issued to the amount of 120 million baht.• Registered capital is increased to 500 million baht with a paid-up capital of 120.45 million baht.

Just as the body needs food, the mind needs mental nourishment.

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annual report 2001

18 2544

1990• Second convertible debentures are issued to the amount of 200 million baht.

1991• The “OFFICIER DE L’ORDRE NATIONAL DU MERITE” honor is bestowed on the Chairman,

Mr.Boonsithi Chokwatana, by the President of France for the promotion of French products in Thailand.• Eastern I.C.C. Co.,Ltd., a new branch office is established in Chonburi Province.• Company starts distribution of “MIZUNO”, famous sporting goods used in various international sport

arena to meet the need of the athletes who aim for championship.1992

• Korat Watana Co.,Ltd., a new branch office is established in Nakhon Ratchasima Province.1993

• Registered capital is 500 million baht with a paid-up capital of 138.04 million baht.• Starts distribution of “GUNZE” men’s undergarment from Japan.

FOURTH DECADE1994

• An Honorary Doctorate in Environmental Engineering is bestowed on the Chairman, Mr.BoonsithiChokwatana by Khon Kaen University.

• Company is registered as a public company limited at the Trade Registration Department, CommerceMinistry.

• Paid-up capital is increased to 146.88 million baht.

1995• Dr.Som Chatusripitak becomes Chairman of the Company.• An Honorary Doctorate in Business Administration is bestowed on Dr.Som Chatusripitak by the Faculty

of Commerce and Acountancy of Thammasat University.• Pak Nam Po Watana Co.,Ltd., a new branch office is established in Nakhonsawan Province.• Paid-up capital is increased to 147.08 million baht.

1996• The Company undergoes a change in its logo and name from International Cosmetics Public Company

Limited to I.C.C. International Public Company Limited.• The Knight Grand Cross (First Class) of the Most Admirable Order of the Direkgunabhorn is bestowed

on Vice Chairman, Dr.Boonsithi Chokwatana.• Maharachapruek Co.,Ltd., the 8th new branch office is established in Pitsanulok Province.• Paid-up capital is increased to 290.63 million baht

1997• I.C.C., in cooperation with the Bangkok Metropolitan Authority, organizes “ Thais help Thais to

Strengthen the Baht ” fair at Sanam Luang with the aim of helping fellow Thais by making available awide variety of quality goods at economical prices under the slogan “ Saha Group Thailand Best.”

• With the support of the Department of Export Promotion, I.C.C. joins hands with other companies inthe Saha Group to organize the “Saha Group Export’ 98 Exhibition” which showcases the Group’sproducts to buyers from around the world.

1998• Introduces the Thailand Best Project symbol of quality to fellow Thai manufacturers and invite them

to take part in the project. The Thailand Best symbol is intended as a guarantee of quality for productsproduced in Thailand by Thais. There are 13 companies joining this project.

• Participates in the 2nd Saha Group Export & Trade Exhibition organized at Queen Sirikit NationalConvention Center as a forum for foreign and Thai entrepreneurs aimed at consolidating their effortsin further developing the competitive capabilities of Thai exports.

• Starts launching BSC (Best Selected Collection) products with high manufacturing capabilities to pavethe way for future role as a potential international brand.

’


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2544

• In cooperation with the Bangkok Metropolitan Authority, organizes ”the 2nd Thais Help Thais toStrengthen the Baht” fair at Sanam Luang to make available to the Thai public a wide variety ofeconomically-priced quality products under the Saha Group Thailand Best scheme.

• The Prime Minister’s Trade Award is bestowed on Dr. Boonsithi Chokwatana, Vice Chairman by PrimeMinister of Japan to honor him as a Thai entrepreneur who helps promote trade relationship betweenThailand and Japan.

1999• Vice Chairman Dr. Boonsithi Chokwatana is honored as “Marketer of the year1998” for marketing

innovation, corporate performance, competence in adapting marketing theories and ethics.• The 3rd Saha Group Export &Trade Exhibition is held at Queen Sirikit National Convention Center

to promote export of the Saha Group products and to establish a network of communications indomestic and international trade.

• A network of the Thailand Best Project is expanded to include additional membership of 29 companies.• A charity march is organized in 9 provinces on behalf of companies in Saha Group and the Thailand

Best project, to commemorate the sixth cycle of His Majesty the King’s Birthday Anniversary. Theproceeds of the event without cost deductions, is presented to the King for His personal expenses in 2001.

• The company is acredited with ISO 9002 for its standard of quality management systems in GreaterBangkok and surrounding areas by SGS Yarsley International Certification Services, a division of SGSUnited Kingdom Ltd.

• The BSC (Best Selected Collection) product lines are extended to include men’s apparel andundergarment, men’s leather goods, ladies’ boutique and lingerie, ladies’ footwear, swimwear,children’s garments, babies’ goods, toys, dolls and towels.

2000• On August 20, 2000, the Company receives nationwide ISO 9002 certification for the standard quality

management system of all its products from SGS Yarsley International Certification Services, United Kingdom.

• The Company participates in the 4th Saha Group Export and Trade Exhibition held at Queen SirikitNational Convention Center.

• A seminar for Thailand Best corporate members is organized on April 21, 2000 in order to fosterproject cooperation and commitment, with a total of 29 participating companies attending.

• Activities to commemorate the centennial anniversary of the late Princess Mother are held under the“Wacoal’s Pink Ribbon Fights Breast Cancer Project”, and HRH Princess Mother’s handicrafts arepublished in the Company’s 2001 calendar.

• The Men’s World Trend Fair is held to present new trends in fashion, design and color schemes 2000-2001 at Queen Sirikit National Convention Center during September 8-9, 2000.

• As of December 31, 2000, the Company has a registered capital of 500 million baht, 290.63 millionbaht of which has been fully paid, and a total of 4,319 employees.

2001• Participates in the 5th Saha Group Export & Trade Exhibition held at Queen Sirikit National Convention Center.• A sum of 2 million baht from partial proceeds of the charity march, in commemoration of the sixth

cycle of His Majesty The King’s Birthday Anniversary, in 1999, is bestowed to the Crown Prince MahaChakri Sirindhorn, to be used as an endowment for the “ School Establishment Project in Cambodia “.

• A sum of 11 million baht from the proceeds of the charity march, in commemoration of the sixth cycleof His Majesty The King’s Birthday Anniversary, in 1999, is bestowed to His Majesty.

• A network of the “ Thailand Best “ Project is further expanded to include 36 additional business alliesunder 6 product categories, namely household and office appliances, vehicles and machinery, foodand beverage, cosmetics and toiletry, hotel and services and department stores.

• Dr. Boonsithi Chokwatana, Vice Chairman, is conferred with an Honorary Doctorate in BusinessAdministration from the College of Commerce, Burapha University.

• As of December 31, 2001, the company has a registered capital of 500 million baht, 290.63 millionbaht of which has been fully paid, and a total of 4,638 employees.

It’s hard to cultivate a person who always puts the blame on others.

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annual report 2001

24 2544

HouseholdProducts

Children,s

Apparel

1982

2000

1999

1999

1982

1999

1980

1997

1997

1975

1994

1980

1989

1991

19841984

1985


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2544

SportingGoods

1990

Leather Goods& Accessories

Company,s Products

1985

1999

1983

1985

1999

1984

1986

19891984

1996

1975

1985

A man should be able to look up without humiliation and look down without shame.

. :

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annual report 2001

28 2544

1.

1 –2

INTERFACE AGREEMENT

ISO 9002

2.

DISCOUNT STORE

DISCOUNT STORES ( )

NPL

3. 36

58.22 40

371.75 2 371.75

58.22 313.53 4.

2542 500 3 22 2545 MLR ( . ,

. , . . ) + 0.50%


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2544

2544 2543 30 5

--

6,000 31 2544 3 2,377.58 31 2543 3 2,464.99 87.41 3

2,377.58 = 24.16 % = 30.56 %5.

144 20

6. 36 2544 23 2544

1,700.00 2

2 2543 2 > 50%

> 1 ABSOLUTE VALUE 1,800 50% 2541

2 1,263.90 2541 60% 2544 2 1,800 1,700

31 2544 11 289.56 32 671.29 960.82 2

2543 = 24%

Togetherness creates better understanding and good work.

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annual report 2001

30 2544

1. Production-related risksConcerning corporate dependency on a few major suppliers:The company has only a few major suppliers for each product category. In the event that there

arose factors preventing or disabling those suppliers from due delivery, it would surely have seriousimpacts on the sales volume and marketing opportunity. However, the company is aware of suchpertaining risks and has arranged interface agreements with the suppliers to guarantee promptness ofdelivery. On the other hand, those suppliers are all enterprises operating under ISO 9002, whichwould make them cautious of their trustworthiness and would have direct effects on their businessoperations in case they failed to deliver on time. Another key factor is that those suppliers belong inthe Saha Group and have long-standing and close affiliations. In addition,they have adopted a policyof mutual support to strengthen market competitiveness, have worked together with commitment indeep-rooted relationships and continual coordination.These would contribute to their extreme precautionfor factors that would likely delay production and would ensure mutual cooperation to find immediatesolutions to obtaining sale-promotional products and to reducing loss of marketing opportunity. Hence,the risk factors are deemed relatively low.2. Risks in distribution channel

The company has operated via the key distribution channel of the department stores of large, mediumand small scales. During the past year, discount stores have remarkably grown in Bangkok and upcountry.As a result, medium and small department stores, particularly upcountry, have suffered major loss, closureor inability to operate under normal circumstances. The condition is neither beneficial to domesticretailing business nor to the company itself, as the debts incurred on those outlets would becomebad or non-performing. Moreover, the company’s distribution channel would be narrowed down andthe bargaining power of the discount stores (all of which belong to foreign investors) increasing. Thecompany has set a policy of revitalizing these small and medium retailers’ ability to stay in business bymeans of regular supply of goods. Precaution is taken on provision of selected, well-selling items,provision of continuous sales promotion and payment-collection visit by the company’s cashier. This hasresulted in the retailers’ more fluent cash flow, circulating product inventory and ability to keep theirbusiness going until better times of recovery or renewal of strength. Among these establishments,only a small number of the outlets under the revival plans are severely indebted with NPL. Thus, the riskremains very low.3. Repercussions from Accounting Standard

According to the IAS No. 36 on the Loss from Impairment of assets, the company suffered lossesfrom the impairment of investments and other assets in total of 58.22 million baht, as shown in theStatement of Income.

According to the IAS 40 on the accounting for Investment in Debt and Equity Securities, thecompany gained profits from securities reassessment by 371.75 million baht, as shown under Shareowners’Equity in the Balance Sheet.

When combined with the above two transactions, the Company gained profit of Baht 371.75 millionfrom asset price adjustment which was higher than the loss from impairment of investment of Baht58.22 million at the total amount of Baht 313.53 million.4. Financial Risk

In 1999, the Company issued unsubordinated, unsecured and no owners’ representative debenturesat a total amount of Baht 500 million for 3 year-maturity which were valid until April 22, 2002 at MLRfloat rate ( average rate officially announced by Bangkok Bank Public Co.,Ltd., Siam Commercial BankPublic Co.,Ltd., Thai Farmers Bank Public Co.,Ltd. and Krung Thai Bank Public Co.,Ltd.) plus 0.50 % per annum.

Risk Factors


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2544

The Baht 30 million and Baht 5 million debentures were redeemed during the years 2001 and 2000respectively.So long as any of the debenture remains outstanding, the Company must- rank debenture pari passu with all existing and future liabilities.- maintain aggregate amount of loan to related company and investment exposure and guarantee

exposure as stated in quarterly financial statement, not more than Baht 6,000 million.As of December 31, 2001, the Company’s loan to related company, investment and guarantee

exposures amounted Baht 2,377.58 million compared with the total amount of Baht 2,464.99 million asof December 31, 2000, decreasing Baht 87.41 million. The Company’ s above three facilities totalingBaht 2,377.58 million represented 24.16 % total asset and 30.56 % shareowners’ equity.5. Investment

The Company has invested in the business of other 144 affiliated companies at the shareowningratio not over 20% of registered capital of each certain company. The shareowning is in the crisscrossor reverse manner among the affiliated companies and the Company has no authority to take control ofany business in the invested company. The business administration of such company depends oneach company’s Board of Director to manage and make decisions.

The Company’s investment is in the manner of business joint-venture in related business or businesssynergy and also for risk balance management. The Company gains profit through the investment inthe form of dividends. In case any investing company has suffered from loss, the allowance for lossfrom impairment of investment accounted shall be in the statement of income. Such shareowning structurehas not affected the Company’s share of incomes and shall not contribute to any differences from thecurrent financial statement.6. Loan and guarantee

A resolution from the 36th General Shareowners’ Meeting 2001, held on April 23, 2001 was passed toallocate loans and guarantees to related companies at the amount not exceeding Baht 1,700 million.

The Company has the policy to mitigate the risks of both facilities and to encourage affiliated companiesto be able to stand alone on their own feet. The amount of unnecessary guarantee facilities has beenreduced and the responsible affiliated companies have been allowed to guarantee the credit lines inplace of the Company. Provision of loans has been reduced for which all loans shall be directly soughtout from the financial institutes by each company.

According to the policy to reduce liabilities on the above – said facilities, in 2000 the company had changedthe provision criteria for both facilities from loan provision > 50% of shareowners’ equity

and guarantee provision > 1 time of total assetsto the absolute value of Baht 1,800 million representing 50% of the amount used in 1998. This resultedthe amount of two categories totalling Baht 1,263.90 million, a decrease of 60% from 1998.

In 2001 the Company has decreased the amount facilities of both categories from Baht 1,800 millionto Baht 1,700 million. As of December 31, 2001 the Company has provided loans at the amount of Baht289.56 million to 11 companies and guarantee facilities to 32 companies for the amount of Baht 671.29million. The amount of these two facilities totaled Baht 960.82 million, decreasing 24% from 2000.

Don’t be too selfish or you become one without good morale.

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annual report 2001

32 2544

3.3.1

- COUNTER

SALE BRAND BSC PURE CARE 20 PRESTIGE CATEGORY SKIN CARE

WHITENING , ANTI - AGING

1.-

2507 PIAS BRAND 2533 BRAND PURECARE SKIN CARE 80% BRAND SHEENE 2536

BRAND ARTY PROFESSIONAL 2540 HONEI V 2542 2543 BRAND BSC PURE CARE PURE CARE BRAND BRAND

BRAND FOLTENE 2531

- ICC 7 WACOAL, BSC, ELLE,

VARIANCE, VANITY FAIR, POP LINE,

- BRAND ARROW , EXCELLENCY ,

GUY LAROCHE , GUY DE GUY LAROCHE , DAKS , LOUIS FERAUD , ELLE HOMME , LACOSTE ,GETAWAY , ZAZCH , NEW MAN , BSC , BSC 2001 , ST.ANDREWS , MARINER , GUNZE , MIZUNO ,LE COQ SPORTIF

2.

4,629.45 54.17 4,257.59 53.00 3,856.01 53.69 3,907.92 45.73 3,762.16 46.83 3,316.94 46.19 8.73 0.10 14.15 0.17 8.72 0.12 8,546.10 100.00 8,033.90 100.00 7,181.67 100.00

3

2544 2543 2542

% % %


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2544

BASIC CATEGORY MAKE UP ITEM POWDER CAKE, LIPSTICK-

1.

VALENTINE,2.

3. CON-VENIENCE STORE BRAND SHEENE

BRANDSHEENE 200 .

4. SET

IMC (INTEGRATED MEDIACOMMUNICATION) BRAND SHEENE

BRAND AWARENESS 5.

-

BRAND

- BRAND 90 %

( ) ISO 9002 10

- 18,000 10 - 15 %

1. COUNTER SALE

BRAND IMAGE BRAND AWARENESS

Study the nature of each person to be able to delegate the right job.

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annual report 2001

34 2544

2. DIRECT SALE. .

3. SELF SELECTION

DISCOUNT STORE SALE VOLUME & VISUAL

PRESENTATION BRAND

3.2-

BRAND BSC-

1. FIRST BRA

, YOUNG , MISSY

MATERNITY SPORT 2.

MARGIN

3. (COUNTERSALE) 2

- (DEPARTMENT STORE) , , - (MODERN TRADE) DISCOUNT STORE , ,

4.- MASS MEDIA

, , -

- "

"

5.


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2544

-1.

2.BRAND BRAND IMAGE

BRAND AWARENESS

ICC

BRAND ( COST LEADERSHIP )-

BRAND 7 BRAND 2

1. ( ) BRAND WACOAL , POP LINE2. BRAND VARIANCE , , VANITY FAIR , BSC , ELLE

TEXTILE PRESTIGE , THAI TAKEDA LACE ISO 9002 WORKING GROUP

- 7,000

2544 LIFE STYLE

3.3-

BRAND BSC-

( MARKET ORIENTED) 1.

TREND FASHION

2.

3.

The success of work depends on the quality of people.

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annual report 2001

36 2544

4.

5.

-

3 %

1. PORTFOLIO SEGMENT

2.3.

( )-

5 1. ( )2. ( )3.4.5.

3 BOI -


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2544

Those with smiling faces will be loved by all.

1.Corporate Nature of Business- Cosmetics and Perfumeries Industry

From the start of its in corporation in 1964, the company’ s core business has been involved incosmetics sale under the Japanese brand name Pias. In 1990, Pure Care was launched and targetedon 80% of the skin care segment. The brand Sheene’ was introduced in 1993, followed by Arty Professionalin 1997 and Honei V in 1999. The latest brand was launched in 2000 under the name BSC Pure Careto replace the original Pure Care in view of brand strengthening and repositioning as the house brandof the Saha Group. The company has also imported the Italian brand Foltene for haircare since1988.

- Lingerie IndustryThe company has distributed 7 brands of lingeries, namely Wacoal, BSC, Elle, Variance,Vanity

Fair, Pop Line and Kullastri, all of which are famous brand from Japan, USA, France and Thailand.Thailand has long been regarded for her expertise and continuous development of lingeries which aremodern in style, and well-responding to customer demand with quality control for raw material to meetthe international standard.

- Men’s Wear IndustryThe company is the distributor of men’s wear under the brands Arrow, Excellency, Guy Laroche,

Guy de Guy Laroche, Daks, Louis Feraud, Elle Homme, Lacoste, Getaway, Zazch, New Man, BSC, BSC2001, St Andrews, Mariner, Gunze, Mizuno and Le Coq Sportif. The main distribution channels are madevia department stores in Bangkok and upcountry with regular sales personnels to provide product adviceand after-sales service. A new distribution channel has been expanded into discount stores.

2.Revenue Structure

3.Major Changes in the Nature of Business of the past year3.1 Cosmetics and Perfumeries Industry

- Product BrandAfter the launch of the new cosmetic product via counter sale under the brand BSC Pure

Care, focusing on the 20 year up target group and carrying a prestige product image in the previousyear, the skin care category has for the past year been expanded and diversified to cover a wider rangeof target consumer segmentation. Whitening and anti-aging categories have been included into thebasic category, as well as the much-needed make-up items, such as powder cake and lipsticks.

- MarketingThe company is still focusing on a customer-oriented marketing policy in order to maintain

the existing customer base while creating a new clientele.

Revenue Structure in the past three years

Bangkok 4,629.45 54.17 4,257.59 53.00 3,856.01 53.69Province 3,907.92 45.73 3,762.16 46.83 3,316.94 46.19Abroad 8.73 0.10 14.15 0.17 8.72 0.12Total 8,546.10 100.00 8,033.90 100.00 7,181.67 100.00

2001 2000 1999Millions Baht % Millions Baht % Millions Baht %Sales

Nature of Business

. :

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annual report 2001

38 2544

1. Product strategy: The company aims at product development and product image enhancementwith constant introduction of new seasonal colors, as well as introducing new products to answer tocustomer need on different occasions and festivities, such as Valentine‘s Day or Mother’s Day.

2. Price strategy: The corporate policy is insistent upon reasonable pricing in relation to quality,rather than competitive price-cutting. The company aims at providing products for customer satisfactionand making the existing distribution channels fair and competitive without price-cutting.

3. Distribution strategy: The company has tried opening up a new distribution channel viaconvenience store late last year, using the brand Sheene’ to respond to a different segment of consumersand to stay in competition in this fast-growing channel. In the past year, the brand Sheene’ succeededin expanding into some 200 branches in Bangkok which are now undergoing a stage of market experimentation.

4. Sales promotion strategy: The company has focused on a direct sale to the customers usingactivities of more premiums and special-price set offers, with more publicity and P.R., so as to benefitdirectly the consumers and maintain credibility in product quality. In addition, it has made use of an integratedmedia communication for the brand Sheene’ to create brand awareness and boost sale volume in thepowder cake category.

5. Service and guarantee: This is in view of optimum customer satisfaction with speedy andprompt service and after-sale service.

- State of CompetitionLast year has seen higher, more substantial competition in the cosmetics business, as seen

in the more powerful roles and strong, diverse distribution channels of the imported brands. Owing to theweakening of the Thai currency and a fair amount of purchasing power in the consumers, the companyhas adopted strategies to reinforce its sales promotion and speed up its on-going development ofproduct innovations. Consumers seemed to be relying more on the psychology of cosmetics sales,ascompared to the past year, despite a seemingly more stable economy overall.

To stay competitive, the company has distinctively repositioned all its brands, making useof the multitude of brands it carries, to cover a wide range of product consumer segmentation anddistribution channel.

- Product AcquisitionCurrently, 90% of the cosmetics under the company brands are locally manufactured, mostly

by the International Laboratories Corp., Ltd. and S & J International Enterprise Public Company Limited,both belonging to the Saha Group, under the production standard of ISO 9002. While 10% are imported.

- Industrial Trend and Future CompetitionThe overall cosmetics market is valued at 18,000 million baht, an increase of 10-15%. The

trends can be seen as follows:1. Counter sale

New appearances in the market are still imported brands from the same old major competitors,namely Image Brand and Awareness Brand. Despite some small, direct impact on the company’s marketshare, they had oblique repercussions on the company as they have taken on proportionate prime areasin the same department stores, thus decreasing the company’s bargaining power, by the number of brandsor by each brand alone.

2. Direct saleNew brands still carried advantages and opportunities, as they could easily escape FDA’s

control by direct sale, which is still a relatively easy income earner for small-scale salesgirls.3. Self selection

Competition abounds not only among the brands within the same segments but amongthe fast-growing discount store retailers with lucrative gains on premiums and higher budget on salespromotion. The company’s brands have had to compete with foreign cosmetics brands. Even with higher


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2544

Nobody dies from hard work.

sale volume and improved visual presentation, the brands need constant improvement to gain competitiveedges in the business.

More new brands have entered this channel. As a result, competition is higher in locationand space selection for image positioning and sales.

3.2 Lingerie Industry- Product Brand

The company has launched a new brand of lingerie under the name BSC.- Marketing

The company makes substantial use of product-oriented marketing. It has created products ofhigh value, based on consumer behavior & need research and a study of the physique of Thai womento answer to the real need of Thai consumers.

1. Product strategy : The company aims at developing quality products that can coverthe consumer need in all ages, sizes and body builds. Products have extended to different segments,such as First Bra as lingerie for correct pubescent body frame undergoing physical changes, Youngas lingerie for trendy teens, Missy as lingerie for trendy, working women and Maternity as lingerie forpregnant mothers-to-be and Sport as lingerie for athletic and physical exercise, etc.

2. Pricing strategy : To gain a marketing edge, pricing should not depend on one particularfactor, but should be considered as a whole, incorporating the target segment, product image, productioncost and profit margin for advertising and for corporate gain. All these are in view of reaching a commonground for pricing that would satisfy the consumers and would be worth the production.

3. Sales and distribution strategy : Focus is on counter sale distribution, with sales personsgiving recommendation on lingerie wear at the lingerie counters nationwide. Market access is madevia two main distribution channels, as follows:

- The department store such as Central’s, the Mall’s, Robinson’s, etc.- The modern trade discount store such as Lotus, Makro, Big C, etc.

4. Advertising and Sales Promotion Strategy- Advertising: To boost product image and to create confidence in product, focus is

on the mass media such as television, bus stop, magazine.- Sales promotion: To boost sales volume at the outlet, focus is on setting appealing

store ambience that will prompt consumers’ purchase decision.- Special event activity : This aims at fostering social events and good relationships

between the company and consumers by organizing a special seminar at the hospital under the title“ Get Yourself Prepared to Be a Mother with Wacoal Maternity. “ A panel of obstetricians and gynecologistswere invited to provide education for mothers-to-be on a range of issues from pregnancy to post-delivery.

5. Service and guarantee strategy : Salesgirls with expertise in women’s physique will provideservice in choosing the right lingerie to fit female physicality so as to achieve the highest customer satisfaction inproduct quality, in welcoming product exchange or in making alteration to obtain optimum customersatisfaction.

- State of Competition1. State of competition: In the past year, the customers’ purchasing power has going up,

compared to the times of severe economic crisis, paving the way for manufacturers to boost the market via marketing activities. Pricing competitiveness remains a key factor for manufacturers. The other importantfactors include balancing of product inventories and consistent cooperation between research andoperation departments to launch new products and new materials for the industry. The company hasset up a section to deal with problem and trend analysis for restructuring and updating corporatepolicy in accordance with the government policy.

2. Corporate competitive potentiality: The fact that the company is carrying a number of lingerie

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annual report 2001

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brands makes it difficult for new competitors to enter the market. In addition to creating brand image, theremust be enough brand awareness to achieve satisfactory sales volume in relation to space managementwithin the department store. The advantageous edge rests on the company’s ability to positionproduct value in the consumer mind, over and above the expenditure incurred in product creation andlaunch. For this, ICC has been remarkably successful for offering highly competitive products at cheaperprices, so much so that it has attained cost leadership over the other brands.

- Product AcquisitionThe lingerie brands under the company comprise 7 names, as produced by two major manufacturers:1. Thai Wacoal Plc. , manufacturer of Wacoal and Pop Line2. Pattaya Manufacturing Co.,Ltd., manufacturer of Variance, Kullastri, Vanity Fair, BSC and

Elle.These two companies have as suppliers of material Textile Prestige Co.,Ltd. and Thai Takeda LaceCo.,Ltd. both of which belong in the Saha Group under ISO 9002. They have formed working groupsto carry out joint research and development for new material that will give an advantage to the companiesin selection of quality material and speedy production as well as lower production cost.

- Industrial Trend and Future CompetitionThe lingerie market is valued at approximately 7,000 million baht. The market has continually

grown, owing to the fact that market leaders in lingerie business all offer to customers the latest innovations inmaterial and design. For the past year (2000), lingerie has undergone constant development to bettersuit the lifestyle of the new generation of women who are active, dynamic and self-styled. Hence, thematerial has become more important in the development of the industry. Design is also crucial incomplimenting outer garment and to obtain optimum customer satisfaction.

3.3 Men’s Wear Industry- Product Brand

The company has launched a new brand of men’s wear to include teens’ and men’s undergarmentunder the brand BSC.

- MarketingThe company has a market-oriented policy with focus on a means of obtaining customer

satisfaction on the following key strategies:1. Product strategy: Focus is on the development of quality product in cutting and sewing,

styling, comfortable-wear and suitable material as well as fashion trend in response to the target market need.2. Pricing strategy: Focus is on maintaining the right proportion between price and quality.

A competitive pricing policy is mainly used on outdated products, so as to give consumers confidencein the company’s products.

3. Distribution strategy : Arrangement is made to see that products are thoroughly distributed atleading department stores nationwide to reach the target market. Focus is on presentation of innovativeproduct value, fashionability, prime quality, reasonable pricing, attractive display and provision of sales personsto recommend products and give after-sale service.

4. Sales promotion strategy: Focus is on advertising and public relations of new products inseason or product innovations to constantly reach the target market’s awareness via the mass mediaand point-of-sale activities with emphasis on product image, quality and credibility.

5. Service and guarantee: To achieve customer satisfaction, the company focuses onprompt and impressive after-sale service as well as on welcoming exchange of goods in case of anydissatisfaction found in product quality.

- State of CompetitionIn the past year, the country’s economy has become somewhat stable. The market growth

for men’s wear amounted to a mere 3%. Consumers were still making rational purchase. Price competition


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2544

It takes a hundred years to grow a large tree; it takes 10 years to build a good man.

remained a key actor for manufacturers. Discount production was still the practice of the day and evenincreased further. Regular counter merchandise also employed a dramatic discount strategy.

Besides, changes in distribution channel have started to shift from the department store saleto the fast-growing discount store sale. Manufacturers are inclined toward developing production efficiency tominimize production cost and to produce suitable products via this channel. Hence, strong anddominant products must be reputation-oriented while management flexible and cost efficient in orderto gain long-term advantages.

In so far as the state of competition is concerned, the company still has some advantages,as follows:

1. The company has created a portfolio of men’s wear to include the whole target marketin many segments, resulting in good distribution of men’s wear market and producing negotiating balancein distribution.

2. The company’s products are well-known and well-accepted for their reputation and quality.3. The company’s products have undergone development and successfully launched

innovations into the market owing to support from major suppliers (who belong in the Group.)- Product Acquisition

The company has acquired products from 5 major suppliers, namely:1. Thanulux Plc., manufacturer of shirts, T-shirts, suits and leather goods2. People’s Garment Plc., manufacturer of T-shirts and trousers3. Champ Ace Co.,Ltd., manufacturer of undergarments4. Thai Itokin Co.,Ltd., manufacturer of shirts, T-shirts and trousers5. Bangkok Nylon Co.,Ltd., manufacturer of socksManufacturing technology is medium-ranged, with a fair number of work force and modern

use of automated machinery for higher production efficiency.Moreover, the manufacturing group has set up factories within the BOI-promoted Zone 3,

resulting in a decisive advantage on the production cost.- Industrial Trend and Future Competition

Owing to the industry’s stabilization, competition will be more ferocious in order to snatchthe slow-growing market share. Competitors who cannot secure an advantage on production cost mayhave to quits the market. New, emerging competitors must be flexible in management and focus onlow price and good quality strategies. Besides, more important factor is to establish competitive edgethrough innovative and attractive promotional activities that can meet customers’ satisfaction. These areregarded as more important than using only price strategy.

Documents

annual 2001 life style - ICC · employees will learn to love corporation and feel happy to work for it. Discerning, wise and unemotional leaders will make employees work happily and