Crisis taught former steel tycoon how to manage risks

SAWASDI believes he has become a better businessman since the 1997 experience.

But the lessons from the 1997 crisis have been well learned.

"I've become a better businessman who can manage risks for survival," says Sawasdi.

Now only chairman of the real-estate company Hemaraj Land and Development Plc, Sawasdi says the crisis taught him to be more aware of business risks before making new investments.

Sawasdi, like many Thai businessmen, had lived on easy money. Back in the old days when there were fewer investors, they were the darlings of financial institutions. Sawasdi's business career rose quickly. Starting in the steel industry at the age of 25, he formed Krung Thai Steel Works with his elder brother. Later he expanded his business by establishing the Nakornthai Steel Works, which later became the NTS Steel Group. He enjoyed great success following the construction boom and became a rich man.

Sawasdi expanded his business again by setting up the NTS Steel Group and finally listed it on the Stock Exchange of Thailand. He foresaw no risks in expansion, focusing only on the growth potential as Thailand was moving towards becoming the Detroit of Asia with the establishment of many auto companies in Thailand.

"I got only a high-school degree, but my steel business was worth up to Bt100 billion. That was the biggest honour of my business career," he says.

Money was not the problem then. Three years before the crisis, both local and foreign banks approached him to support his steel projects. Nearly all bankers knocked his office door to offer the best loan conditions, he said. This increased his confidence and led him to believe there were no investment risks and that his expansion would generate enough income to cover the investment within 10 years.

But his steel businesses collapsed in the aftermath of the 1997 economic crisis. Suddenly he was transformed into a debtor who shouldered Bt100 billion in debts. At that time Sawasdi accepted he was in a state of shock. Ringing in his head was not the dream of making money, but thousands of survival strategies. He eventually announced that he had no money and would not repay debts but would not run away. It became the trademark of this debtor, which brought great anxiety to his creditors.

"I said that because I wanted to reduce banks' pressure for immediate debt repayment," he said.

After the announcement, he did not sit still. Sawasdi started analysing his business empire to single out the good businesses which should be supported while ready to let others go. He realised that his steel business, consisting of NTS Steel and Nakornthai Strip Mill (NSM), was the one to be abandoned due to huge debts. Sawasdi decided to keep the real-estate firm, Hemaraj, no matter what. He was then ready to sell stakes in other companies to raise funds for Hemaraj.

"Personally, I don't like grey areas. I wanted to see things worked out clearly in black and white before I made the decision to negotiate with my creditors," he said.

Nine years after the economic crisis, Sawasdi managed to strike a debt-restructuring deal with his creditors and has reduced his debt from up to Bt100 billion to Bt1.2 billion.

Today NTS Steel is owned by India-based Tata Steel, and Nakornthai Strip Mill was taken over by G-Steel Plc. But he still keeps his major stake in Hemaraj and Sri Racha Harbour Co Ltd.

"I've lost NSM and NTS, but I'm happy. I know that they will remain in business, even without me. I'm also satisfied that I could steer Hemaraj out of crisis. Now my business is strong, and I'm ready to expand our investments again," said the 65-year-old, who believes he has enough energy to pursue the life of an active businessman, though not as a steel tycoon.

Somluck Srimalee

The Nation