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Published on November 12, 2007

Laos, Cambodia and India are on its radar as it seeks to fill its work book and safeguard future revenues.

Director and executive vice president Prasert Marittana-porn said the company had bid for a four-lane, nine-kilometre motorway contract in Bombay worth Bt4 billion to Bt5 billion and was keeping its eyes peeled for more work there.

It expects a subsidiary's completion of a feasibility study for the Nam Bak I and II hydroelectric projects in Laos in the middle of next year will pave the way for a Bt10-billion construction deal.

It has already completed 40 per cent of its work on the Nam Nguem II hydroelectric station in that country. It is building roads in Cambodia too.

At home it is one of 10 contenders for the Bt8.75-billion Red Line electric-train extension from Bang Sue to Taling Chan.

"We're doing fine, though state construction projects have diminished immensely this year," Prasert said. He said gross-profit margins remained around 10 per cent.

In high times the company's backlog, the value of construction work on hand, is nearly Bt40 billion. At present it is about Bt20 billion and will generate revenue for two years.

Like other large constructors, Ch Karnchang this year resorted to smaller projects like the Bt800-million extension for Pathum Thani Water Supply, a Bt500-million office for the Royal Household Bureau, toll-booth construction worth Bt2.5 and the Bt2-billion Energy Complex Building for PTT Energy.

"The situation should improve next year when a new government pushes forward projects to stimulate the economy," Prasert said.

In the first six months of this year Ch Karnchang made Bt8.7 billion in revenue, and net profit was Bt469.94. In the same period last year net profit was Bt1 billion.

Prasert had high hopes that the Bang Sue-Taling Chan contract could be signed early next year as planned and that a new government would not make major changes to the route.

Meanwhile bids for the Purple Line should follow. "The rail projects will really stimulate the economy, because they require a lot of construction material, labour and lending from financial institutions."

Ahead of bids for the Purple Line, of which civil works are estimated at Bt31.2 billion, several financial institutions approached Ch Karnchang with project financing. With experience in elevated expressways and subway construction, Ch Karnchang is confident of its competitive edge, he said.

Most of its projects are for the state, and these generate between 80 per cent and 85 per cent of its total revenue. The remainder comes from concessions held by its subsidiaries, such as Thai Tap Water, which is going public at the end of the year.

Prasert said diversification overseas would not prevent it bidding for state contracts at home. "These projects carry lower risk. Even with delayed payment, we'll eventually get paid." Some projects offer concessions Ch Karnchang hopes to win after completion, which enhance long-term revenue.

He added that even with fierce competition the company had not resorted to cutting prices. "We focus on project possibility and our winning chances. Price-cutting means no profit and no benefit to the country. Our quotes represent a reasonable margin that will keep us financially afloat."

Achara Deboonme,

Watcharapong  Thongrung

The Nation