This is a study of the finance of Man-made Fibre in Thailand in relation to its financial status. The essential data for this analysis are mainly the financial statements collected from the Department of Commercial Registration, the Ministry of Commerce during 1976 to 1979. The structure of this industry is also taken into account. The major aspects of this study are referred to as follows: With regard to the structure of this industry, the general conditions including manufacturing, marketing, government’s control and support to this particular industry. From production point of view, can be said that originally its main purposes to subsitute the imported fibre, by importing raw material for this production lines later, appeared that there are over production for local demand therefore the surplus tonnages have become an export item. Presently, there are 6 producers, registered capital in the range from 98,000,000 Baths to 548,000,000 Baths. Due to the nature of heavy investment, therefore only two major producers are in position to compete with imported cargo as well as between themselves. Considering the importation imported materials become less and less simply because of local production can meet the demand, moreover there is a surplus tannage for export. Regarding cost of production, the most influent factor is cost of raw material, such as DMT., TPA., EG., and Caprolactam, all have to be imported. Furthermore prices of above items keep going on the high side which automatically affect their production costs. Incidently, government also support and promote this kind of industly by reducing import duty to a very low rate or giving free duty for imported machineries and equipments. At same time, raising the import duty for finished products of such as fibre, from 60 to 80% as per the announcement by Ministry of finance of finance dated March 8,1978. To analyzed financial status, by calculating financial ratio of each company and compare such ratio to the average ratio of each size in order to determine the difference between individual one and the whole industry. The analysis will be divided into 4 parts, liquidity rations, leverage ratios, efficiency ratios and profitability ratios. It reveals that there have been two highly successful producers named Thai Rayon, and Toray Nylon Thai, both medium firms. From the financial analysis point of view, it may be concluded that the medium company stands in a better financial position than the bigger one, in both operating and profitable sides, but less liquidity. The bigger producers, their financial status are not yet in satisfactory level due to low liquidity and high leverage.
At the same time, efficiency in operation and profitability are still lower than the medium sizes. By overall considerations, financial status of the fibre are in good condition, especially in leverage and profitability. The operative efficiency has a increasing trend. Beside that the analysis also indicate the tendency of financial ratio of each product individual one compare to the average ratio of each scale and overall industry in the period of 1976-1979. As to the financial administration in this industry, the analysis on the capital structure and sources and uses of funds statement reveals that the capital structure of the large and medium and the industry is derived from the average liability approximately 84%, 66% and 78% repectively, and most of them are current liabilities. The analysis on the sources and uses of funds statement reveals that the means of financing the industry is not actually conform with the regulations, During 1976-1979 and 1978-1979 financing on capital was obtained from short term loans in order to invest in permanent assets. If this funds managements policy still continue, the higher rate of liquidity might be faced. In the peroid of 1977-1978 funds came from long term loan and has been used in current asset, again this policy might have the lower liquidity but low-rate of return because of high cost of fund. Some important conclusions can be drawn from the study are as follows: Costs of raw materials for production were high. All needs chemical products, with prices fluctuating along the world oil prices, were imported. On the financial aspect of the industry, liquidity was low, efficiency in operations was unsatisfactory. In addition, the fund acquisition policy of the industry was in discord with the assets life. The certain years, funds were acquired from short-term financial sources to invest in permanent assets which may be the high risks. In marketing, competition from imported products were high, and the export markets were hard for domestic product since the export prices were relatively high. This was a result of evaluation of U.S. dollars on which the baths are related strongly. Customers from foreign countries reduced their orders even though Thai government has devaluated Thai currency recently. To cope with the high prices of raw materials, Thai government should promote the establishment of petrochemical plants in the country to produce chemical products needed as raw materials for man-made fibre industry. This will in turn help reduce production costs for the fibre. Manufacturers of the fibre also should improve the efficiency in operations in order to arrive at a highly liquidity condition. Moreover, the fund acquisition policy should be improved to conform with the assets life. For marketing, there should be a government agency responsible for making market study regarding the demand for various type of fibre so that domestic producers could adjust themselves according to the market preference. There should be a base industry for fibre industry such as ready. Made clothing industry to absorb the expansion of fibre industry in the future.
