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1. Company

1.1 Technological Background

The genesis of the Fabrica opportunity was Dr. Sathit Putthachalyong's decision some dozen years ago to develop a loom that would let the Thai textile industry-burdened with increasingly high labor costs and obsolescent plant-compete more vigorously by providing prospective customers with exact fabric samples quickly and at the lowest possible cost. After ten iterations of the design-build-analyze cycle, the result was the KS 16 loom, a 16-harness dobby loom6 that can handle to 6 colors of weft, using virtually any type of fiber and weight of yarn, with a maximum width of 10 inches. In other words, it can weave anything from white-on-white fleur-de-lys on the finest cambric, to the little ducks on sportsmen's neckties, to a heavy Royal Stewart tartan, not to mention ordinary striped and checked shirting. (An illustration of its successor, the KS 24, appears in Appendix C).

Lengthwise warp threads are run through heddles, enabling some (for example the odd-numbered ones) to be lifted above others, and then wound onto the beam, and the free end fastened to the take-up roller. A harness (also called a shaft) lifts up some of the heddles, and the shuttle carries the filling yarn or weft between the lifted and unlifted warp strands, and action called picking in shuttleless loom. The reed compressed the new strand of weft against the cloth already woven, and the take-up roller winds the cloth in as the beam lets off warp yarn.

There is no closely comparable loom in the world market today: other small dobby looms are hand-powered, and aimed at the artisanal craft weaver rather than at duplicating industrial loom output on a small scale. They come nowhere near the KS loom's high output speed or precise control of warp and fill tension, and are basically unsuitable for ordinary skilled workers, they need the skills of a master weaver to produce fine results.

1.2 Fabrica Co., Ltd.

1.2.1. Origins and structure

Monday, June 22, 1998 Fabrica founder and Managing Director Anan Wongmasa was intrigued to read of Dr. Sathit's invention in a local newspaper. Already the COO of his family's garment and knitted fabric businesses, he immediately recognized the potential of the KS loom. He had already heard of Dr. Sathit, a well-known figure in Thailand's textile community; what was surprising was that only 18 of the looms had been sold.

It soon developed that Dr. Sathit had very limited working capital, and because of the historically weak protection of intellectual property rights 'in Thailand, was reluctant to sell a loom to anyone who was not of unimpeachable probity. Very much more a visionary than an entrepreneur, living comfortably on his 'income as a professor at the Rajamangala Institute of Technology, Dr. Sathit sets an absolute priority on maintaining control of the KS loom and the inventions it 'incorporated.

In consultation with classmates in his Thammasat University Master's in Marketing program, Anan decided that the key to reaping the potential of the KS loom within the constraints of Dr. Sathit's concerns was to build a business around selling a service-quick, exact, low-cost samples-rather than a machine. A licensing system would permit all looms to remain under Fabrica's ownership, and confining sample production to a handful of specialized centers would greatly simplify many aspects of the organization.

Dr. Sathit accepted this basis for cooperation enthusiastically, and Fabrica Co., Ltd. was accordingly registered in Bangkok on December 14, 1998, becoming a juristic person the same in all important respects as a US corporation.

1.2.2. Mission and goals

Fabrica's mission is to become the standard for fabric sample production, and to make a Fabrica sample an essential part of an order/quote for quality-critical fabric. We would like to achieve a position roughly analogous to that occupied by Panton® color-specification systems in the printing industry.

Our goal is to grow with all possible speed to cover all major textile-producing countries, achieving an order from 20% of all woven-pattern production runs after five years in each, and establishing such wide brand recognition in the international textile trade as to constitute a serious barrier to the inevitable competitive entry. We will consider that we have succeeded.

1.3 Scope of startup

Our startup operation will be a 29-loom, 500 m2 (5,382 square feet) facility in Bangkok, with a 2-shift capacity of 30,000 samples per year if we can meet our target of 166,000 samples in 2004. From here we will serve the Thai market and overseas licensees during their first year of sales, after which each licensee will set up a domestic production center for its market. Essentially all the capital cost of expansion beyond the Bangkok center will be funded by licensees.

6 See Appendix B for a glossary of textile terms.
Fabrica Co., Ltd.
Table of ContentsAppendices
0. Executive Summary
1. Company
2. People
3. Product
4. Market
5. Marketing Strategy
6. Operations Strategy
7. Financial Plan
8. The Deal
Sample Production Costs
Glossary of Terms
Patentable Features
Sample Order Flow
Financial Assumptions
Investment Structure
Yearly Income Statement
Yearly Cash Flow
Yearly Balance Sheet
Monthly & Quarterly
Proprietary to Fabrica Co., Ltd.