COOKING GAS

COOKING GAS

New Picnic managing director faces daunting revival task

Picnic Corp must urgently overhaul its internal controls while revamping its marketing strategy if the company is to remain viable in the market, according to new managing director Sanguan Treejareonwiwat.

The cooking gas distributor, once one of the largest in the market, has seen its fortunes slide steadily since the company's executives were accused of accounting fraud dating back to 2005. Picnic, whose shares have been suspended since early 2008, formally entered court-supervised business restructuring earlier this year and is being run by a new investor group led by Wichai Thongtang and Ploenchit Capital.
Mr Sanguan, who became managing director of Picnic on Aug 9, said the company has to revamp its collection system and internal controls if it is to improve its operations.
Picnic sells around 20,000 tonnes of gas per month, equal to a market share of 4%, or less than half what it used to control before its financial problems.
Bad debt totals 400 million baht. Picnic recently terminated purchase agreements with its delinquent customers, resulting in the loss of sales equal to around 2,000 tonnes per month. "I have two mandates _ turn our operating results from negative to positive and restructure the company," said Mr Sanguan.
Gross profit margins at the company are only around 6% to 7%, compared with an industry average of 10%.
Mr Sanguan said Picnic has set up new audit, credit collection and analysis teams to help cut down on loss-making sales. "We've tried to compensate [for the terminated contracts] by taking new orders at more reasonable prices."
"Still, if Picnic wants to grow, then new money must be found to help meet our gas reserve requirements and for working capital."
Picnic currently is working with trade credits of 240 to 260 million baht from PTT, its sole gas supplier. The funds are sufficient to meet purchasing requirements of up to 24,000 tonnes per month.
By next month, the company must prepare funds of 10 to 20 million baht to help meet legal reserve requirements. Additional funds are also needed to help finance a new gas storage facility.
"For the rest of the year, we don't expect much. Sales won't likely go beyond 24,000 tonnes per month," Mr Sanguan said. "For next year, it depends on the new shareholders."
Mr Sanguan declined to comment on a court battle over the ownership of World Gas, a former Picnic subsidiary that was transferred from the company prior to its entering restructuring in 2008.
The company last Monday notified the Stock Exchange of Thailand it would delay the submission of its 2010 and 2011 first-half financial statements until Oct 31 pending a review following the recent change in the Picnic board.