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EXECUTIVE Q&A: UNIQUE PRODUCTS AND FOCUSED SERVICE SET BSM APART

BackDec 07, 2012

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Sunchai: Expects 30% revenue growth

BuilderSmart Plc (BSM) was established on July 20,1999 as BuilderSmart Distribution Centre Ltd. It manufactures and distributes high-quality building materials to the commercial, office and residential sector for interior designers, architects, contractors and developers.In October 2007, BuilderSmart Distribution Centre became a public limited company and changed its name to BuilderSmart Public Company Limited.On Feb 14,2008 it was listed on the Market for Alternative Investment with the aim of expanding its business not only in Thailand but also in Asia. Managing director Sunchai Nuengsit discusses the company's strategy and outlook.

What is BSM's business model?

The company is a value-added building products manufacturer, with manufacturing locations in Samut Sakhon (anodised finishing plant) and Samut Prakan (steel roll-forming, door and window manufacture). Our product range includes:

Alloy-brand partitioning systems: we manufacture and distribute aluminium and glazed partitioning systems for the commercial interiors, healthcare and retail market segments.

Gypsum wall and ceiling products,accessories and metal systems, and distribution of Gyproc plasterboard and accessories by Saint-Gobain Thai Gypsum.

BSM Fletcher high-performance doors and windows, manufactured and distributed under licence.

Please explain the relationship between BSM and Fletcher.

Fletcher is a large company in New Zealand, and it has a division that designs and manufactures doors and windows.We saw their products and approached them five years ago to represent one range of their product groups in Thailand.Then in 2009 we wanted to reduce the lead time and pricing and requested a licence to manufacture. The response in the market for this product has been very good, as it is unique in that it offers the ability to produce large doors and windows, even as high as six metres.One key feature is that it is top-rollingbased, which is much more effective for sliding doors.

Who are BSM's customers and where are they located?

We deal with three groups of customers developers, architects and contractors and organise our businesses to suit their needs. BSM Thailand focuses on the Thailand market,BSM International looks after the Indian and Asean markets, and InstallDirect does the installation work of our products on behalf of developers and contractors.Our Alloy products traditionally were supplied only to commercial offices, but we're beginning to see demand from the condominiummarket, as developers are looking to create rooms within 30-square-metre units. It is not feasible to use a solid wall because the space would look too small, so we've created a sliding door system for this market.

How does BSM distribute its products?

We manage distribution in-house, and for our customers in the Bangkok area we are able to provide same-day delivery.

What differentiates BSM from its competitors?

It's a combination of product quality and customer service. Product quality,as mentioned earlier, allows contractors,developers and architects to be more creative and provides good features such as heat resistance, noise reduction and safety. For customer service we have a showroom for contractors and subcontractors, Gyproc Center, that can be used as a business centre for them to use with their clients. We provide company profiles, product information and presentations for their use.

Also, because we are integrated with our manufacturing facility we can confirm prices and volumes with clients for 12 months, which is something that a standard distributor cannot offer.Competition is always an issue in an industry, but we've positioned ourselves to be a specialist versus a "jack of all trades", and regardless competition does help to expand and educate the market about the quality of products available.

BSM's gross profit margins have improved from 22% in 2010 to 29% for the first half of 2012. Why is this?

Our margins have improved because we started to promote our own Allo- brand products,and these provide us with a higher margin.

BSM has had a retained earnings loss for the past few years. Why is this the case?

As of this year's third quarter, we recovered from a retained earnings loss that stemmed mainly from our investment in a new a manufacturing facility in 2010 and a few issues with inventory management.But we saw the investment as necessary,as the manufacturing facility has provided our business with greater flexibility when dealing with our customers.

What are the biggest risks facing your business?

There were several risks in the past,and we learned from our mistakes such as by improving our inventory management, which had negatively affected us in 2010. As well, we're being more selective in terms of product offerings for the market and our customers. We still have to monitor potential bad debts carefully, as some of our clients are subcontractors, and if there are delays in the project, then there may be a potential delay in receiving payment, so all these issues we must closely monitor.

Where do you see BSM in five years?

Our plan until 2015 is to grow in terms of revenue and profitability by at least 30% per year to achieve revenue of 1 billion baht. Also, we want to be the leader in the gypsum business, in the wall and ceilings and doors and windows business, and be recognised within Asean as experts in both these businesses.

The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region, with more than 400 listed clients. This interview was conducted by Pon Van Compernolle, editor of www.thaicapitalist.com. For more information, e-mail pon@thaicapitalist.com or supat@shareinvestor.com or visit www.thailistedcompany.com

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