CONNECTIONS CREATE GROWTH FOR THAI OPTICAL

       By some measures, Thai Optical Group, a listed lens manufacturer, may look like any other original equipment manufacturer. But its special relationship with major retailers of glasses in Thailand and the UK tells a different story.
       According to Thai Optical Group (TOG) chairman Sawang Pracharktam, the company is expecting a "jump in business" in the next three years. This is because a 25-per-cent stake in TOG was bought last year by Specsavers, the biggest optical retailer in UK, and Specsavers is planning to increase its number of stores around the world from 1,500 to 2,000 over the next few years. The expansion is likely to demand more lenses from TOG.
       When Specsavers bought the stake in TOG, it also revealed plans to increase its lens purchases from TOG from 30 per cent of its needs at present to 50 per cent.
       Sawang said the increase would take time and Specsavers had already sent its experts to help TOG to improve its production lines and efficiency, in order to meet the firm's pricing and volume targets.
       Specsavers bought the controlling stake in TOG because it wanted to ensure that it wouldn't be bought by other companies, he said. TOG remains one of a handful of independent lens manufacturers that have survived competition and takeovers in the world market.
       TOG reported flat growth in sales revenue in the first half of this year, although profit rose by 14.67 per cent to Bt74.5 million. The firm suffered an 11-per-cent slide in sales and profit during the second quarter because political unrest in April led to the cancellation of small orders requiring a short delivery time of four days.
       Due to advancements in technology, and in order to reduce their costs, some retailers of glasses in developed countries have begun ordering prescribed lenses for individual customers from cheaper foreign sources like TOG.
       "We can ship them back the lenses, complete with the frame, within four days of the order being placed - the same lead time they would get if they ordered from a local laboratory," he said.
       TOG's laboratory now supplies several thousand pairs of glasses per day to individual customers in France, Germany, Australia and the Netherlands, through local retailers.
       Sawang said the firm had no plans yet to provide direct services to individual customers in foreign countries, because such a move might not be ethical.
       TOG still relies on original-equipment manufacturing for 80 per cent of its revenue, with the rest coming from its own brand.
       Sawang said distribution channels had increased in recent years. As an independent manufacturer, TOG can sell its lenses to brand owners, other manufacturers, independent laboratories and chain stores, as well as selling its own brand lenses through some of the same channels.
       The group's major strategy over the next few years will include building its own sales channels, enabling it to reach customers in potentially rich markets such as Vietnam, Singapore and Malaysia, where it plans to establish lens laboratories next year.
       TOG will reap benefits from its special relationship with Better Vision, one of Thailand's largest retailers of glasses, which has already opened 12 retail shops in Malaysia and 13 in Singapore, he said. Better Vision, or Hor Waen in Thai, is run by the same family that formed TOG.
       In Thailand, TOG sells its lenses through its exclusive distributor Nam Sin Thai, also run by the Pracharktam family, which resells the lenses to Better Vision.
       Sawang said a financial adviser was studying a possible merger between Better Vision and TOG.
       TOG is expected to grow by 8 per cent this year, down from 15 per cent, which has been its annual target for many years. Nevertheless, the firm is aiming to increase its sales revenue and net profit to more than Bt2.5 billion and Bt300 million, respectively, in 2014, he said.
       Last year, it booked a net profit of Bt143.38 million from revenue of Bt1.52 billion.