:: Annual Report 2010 - 2011 :: by Phantipa Kwanmuang

Content 04 Board of Directors 05 Message from the Chairman 06 Audit Committee Report 2010 - 2011 08 The Board of Directors没 Report on its Responsibility to Financial Statements 09 Key Financial Indicators 10 Financial Highlights 11 General Information 14 Business Overview 41 Risk Factors 51 Future Projects 55 Legal Dispute 55 Shareholding Structure & Management 67 Good Corporate Governance & Internal Control 75 Financial Position and Operational Performance 96 Audited Financial Statements 127 Information of Director and Management of the Company

Polyplex participates in Interpack 2011 - Germany

Factory Visit Organized in February 2011 for Investors & Analysts.

Celebrating Childrens没 day at Thailand and Turkey

ANNUAL REPORT 2010-2011 POLYPLEX (THAILAND) PUBLIC COMPANY LIMITED

Polyplex donates to the Relief fund for the flood victims in South of Thailand.

PTL Team participating in a Sea Turtle conservation project at Chantaburi.

Mr.Manu Leopairote Chairman - Board and Audit Committee

MESSAGE FROM THE CHAIRMAN In the backdrop of better global economic conditions and an unusual run-up in PET film prices based on robust demand and delayed capacity increases, performance during the year is highlighted by exceptional level of profitability and operational cash flows. The Company没s strategy as well as its leadership position in key markets has helped leverage the favourable market conditions. Sales at Baht 11.18 billion were higher by 57% as compared to the previous year. Profit after tax of Baht 3.89 billion was up by almost 275% over last year. The Company没s investments in Turkey have delivered excellent returns and validate the strategy based on multiple manufacturing and distribution arrangements which provide ready and direct access to a large base of customers and enhance service capabilities. This translates into healthy growth in shareholder value - Book value per share has increased from THB 4.08 as on 31st March 2005 to THB 10.45 as on 31st March 2011, a CAGR of 17%. Our Dividend policy has also ensured that our shareholders get appropriate return on their investments. Over the last 6 years, company has paid tax-free dividends amounting to THB 2.83 per share and has proposed a further THB 1.35 per share as the final dividend for the year 2010-11 for the consideration of the shareholders. Recent investments aimed at downstream integration and diversification into related films like Cast Polypropylene films and Extrusion coated films have also started exhibiting positive signs and would present growth opportunities in the near future.The siliconizing line which will use PET film as an input is currently under advanced stage of implementation and should come on stream towards the middle of this financial year.

ANNUAL REPORT 2010-2011 POLYPLEX (THAILAND) PUBLIC COMPANY LIMITED

MESSAGE FROM THE CHAIRMAN In order to maintain the momentum in growth, the Company has decided to foray into Ă§Thick PET FilmĂŠ segment by starting work on a new film line in Thailand. Further, the decision to relocate the PET Thin film line from Turkey to USA would ensure that the Company has an on-shore manufacturing base in the large and attractive North American market and build upon the platform that has been laid by its fast growing distribution operations. Besides improved customer access, this move would also be cost effective due to significant savings in logistics/related costs. Reducing the CompanyĂťs carbon footprint and maintaining the sustainability of environmental resources has been one of the key areas of focus. Realizing the significance of these factors in the economic value chain and the impact of these initiatives on society and business, the Company has initiated efforts to develop environmental friendly products using renewable raw material sources. While market conditions would inevitably trend downwards from the highs of last year, the business remains robust.Backed by a strong and liquid balance sheet, the Company intends to continuously grow the business by judicious selection of opportunities. I conclude by thanking my colleagues on the Board for their continued support and guidance and our team of dedicated employees. Last but not the least I thank you all for your continued support.

BOARD OF DIRECTORS

Mr. Manu Leopairote

Dr. Virabongsa Ramangkura, Ph.D.

Chairman - Board and Audit Committee

Director and Member - Audit Committee

Mr. Shiraz Erach Poonevala

Mr. Sanjiv Saraf

Mr. Rohit Kumar Vashistha

Director and Member - Audit Committee

Vice Chairman

Managing Director

Mr. Praphad Phodhivorakhun

Mr. Pranay Kothari

Mr. Ranjit Singh

Director

The Board of Directors' Report on its Responsibility to Financial Statements To the Shareholders of Polyplex (Thailand) Public Co., Ltd. In recognition of its duties and responsibilities and in compliance with good corporate governance principles, the Board of Directors has ensured that the financial statements and financial information appearing in the annual report are accurate, complete and adequate. The financial statements are in compliance with the generally accepted accounting practices in Thailand and follow accounting standards and practices that are appropriate to the nature of business. To ensure reasonable confidence in using these financial statements, the Board has instituted and maintained internal control systems, subject to periodic review by the Audit committee and reported to the Board. The company auditor has applied generally accepted auditing standards in auditing the company's financial statements for 2010-11 and is of the view that these financial statements present fairly, in all respects, the financial standing, results of the operations and cash flows for the company, in accordance with generally accepted accounting principles.

Mr. Manu Leopairote Chairman

Mr.Rohit Kumar Vashistha Managing Director

Audit Committee Report - 2010-11 To the Shareholders of Polyplex (Thailand) Public Co., Ltd. Following the company's transformation into a public limited company on August 11, 2004, the shareholders' meeting held on September 2, 2004 decided to constitute an Audit Committee comprising of three independent directors with knowledge, expertise and experience in finance & accounting, industry and business. The appointees were Mr. Manu Leopairote (Chairman of the Audit Committee), Dr. Virabongsa Ramangkura and Mr. Shiraz Erach Poonevala. The Audit Committee performed duties under the delegation of authority set out by the Board of Directors. Among the Audit Committee's responsibilities are to review the quarterly / annual financial results of the company, supervise whether the company was in compliance with the rules and regulations of the Stock Exchange of Thailand (SET) and Securities Exchange Commission (SEC), ensure the transparency of the accounting system, review of internal control systems and promote good corporate governance practices. In the financial year ended March 31, 2011, a total of four Audit Committee meetings were held. The Committee's work can be summarized as below: 1. Reviewed and approved the quarterly and yearly financial statements of the company and its subsidiaries to ensure compliance with the generally accepted accounting standards and disclosure of key information before proposing them for the Board's approval as also prior to submission to SEC and SET. After due consideration and discussion, it is the opinion of the Committee that the above mentioned financial statements are presented fairly in accordance with generally accepted accounting principles and sufficiently disclosed. 2.

Reviewed and monitored the corporate compliance and internal control systems as also risk mitigation measures. The Committee believes that the company's internal control systems are adequate.

Reviewed the disclosure of information on transactions between the company and its affiliates or any transactions, which may have been perceived as potentially causing conflicts of interest.

Reviewed and approved Interim Dividend payment based on profitability for six months period ended on 30th September 2010

Reviewed and approved the Final Dividend payment for the financial year ended on 31st March 2010

Annual Report 2010-2011

8 Polyplex (Thailand) Public Company Limited

Reviewed the new investment proposals (Thick PET film line investment in Thailand) during the financial year and proposed it to the Board of Directors for their consideration and approval.

Reviewed and discussed the letter from the company's auditors Ernst & Young, on their internal audit observations and also acknowledged response from the company to these observations. The committee also reviewed the status of implementation of the Internal Audit recommendations in a subsequent meeting.

Considered and recommended to the Board of Directors to re-nominate Mr. Narong Puntawong (CPA No. 3315) and/or Mr. Supachai Phanyawattano (CPA No. 3930) and/or Ms. Siraporn Ouaanunkun (CPA No. 3844) of Ernst & Young to be re-appointed by the shareholders as the auditors of the Company for the FY 2010-11. Name

Position

Mr. Manu Leopairote

Board Chairman and Audit Committee Chairman

Dr. Virabongsa Ramangkura

Audit Committee Member

Mr. Shiraz Erach Poonevala

Audit Committee Member

Signature

Key Financial Indicators

Annual Report 2010-2011

10 Polyplex (Thailand) Public Company Limited

1. Financial Highlights 2010-11

2009-10

2008-09

2007-08

2006-07

7,125,366 7,299,520 1,731,011 1,039,386 8,866,744 3,854,260 5,012,484

6,859,738 7,062,825 1,800,785 1,041,966 8,880,550 4,284,324 4,596,226

6,398,679 6,512,014 1,422,910 813,551 8,299,334 3,970,453 4,328,881

4,718,570 4,808,832 864,177 314,842 5,837,919 2,315,560 3,522,359

Progression (Thousand Baht) Net Sales 11,183,174 Total Revenues 11,320,169 Gross Profit 4,680,656 Net Profit (Loss) 3,882,885 Total Assets 11,932,901 Total Liabilities 3,570,196 Total Shareholder's equity 8,362,705 ○

○

Financial Ratios* Net Profit Margin (%) Return on Equity (%) Return on Assets (%)

○

34.30% 58.26% 37.34% ○

Per Share Data (Baht) No. of shares Dividend per share (Baht) Earnings per share Par value

○

14.24% 21.72% 11.71% ○

○

14.75% 23.44% 12.13% ○

○

12.50% 20.80% 11.51% ○

○

7.11% 9.80% 5.98% ○

○

800,000,000 800,000,000 800,000,000 800,000,000 800,000,000 1.94* 0.52 0.52 0.40 0.17 4.85 1.30 1.30 1.02 0.43 1.00 1.00 1.00 1.00 1.00

Note: Above figures and ratios are on consolidated basis (includes figures for the Company's subsidiary in Turkey which had commenced operations in 2005/06 as also for subsidiary in Singapore which is an investment holding company and subsidiaries in USA & China which are Distribution companies) * Interim Dividend of Bt 0.59 per share paid in November 2010 and Final dividend of Bt 1.35 per share as proposed to the Annual General Meeting of Shareholders, 2011 for their approval.

2. General information 2.1 The company

Polyplex (Thailand) Public Company Limited ○

○

Stock Exchange of Thailand symbol PTL Registered Head office 75/26, Ocean Tower II, 18th Floor, Sukhumvit Soi 19, Kwaeng North Klongtoey, Khet Wattana, Bangkok - 10110 Telephone (662) 665-2706-8 Facsimile (662) 665 2705 Factory -1 Siam Eastern Industrial Park, 60/24, Moo 3, Tambol Marbyangporn, Amphur Pluak Daeng, Rayong - 21140 Factory -2 Siam Eastern Industrial Park, 60/91 Moo 3, Tambol Marbyangporn, Amphur Pluakdaeng , Rayong 21140 Type of Business Manufacturer of Polyester Film (Plain and Metallized), Polyester Chips, Extrusion Coated film and Cast Polypropylene Film (Plain and Metallized) Company registration number 0107547000729 Telephone (66) 38 891 352-4 Facsimile (66) 38 891 358 Website http://www.polyplexthailand.com Registered Capital Common Shares Par Value Paid-up Capital Number of Employees

Annual Report 2010-2011

12 Polyplex (Thailand) Public Company Limited

○

Baht 960,000,000 960,000,000 shares Baht 1.00 per share Baht 800,000,000 647 including subsidiaries in Turkey, USA and China, and 411 in Thailand.

○

2.2 Subsidiaries in which the company holds more than 10% share Company Name and Address

Business Type

Polyplex (Americas) Inc. 12200 Ford Suite A-210 Farmers Branch, Dallas, Texas-75234 Polyplex (Singapore) Pte Ltd. 61, Club Street, Singapore-069436 Polyplex Europa Polyester Film* Sanayi Ve Ticaret A.S. Avrupa Serbest Bolgesi, 132, Ada, 7 Parsel, Velimese Mevkii, Corlu, Turkey Polyplex Trading (Shenzhen) Co. Ltd* Room.1309,A block, Galaxy Century Building, Caitian South Rd., Futian District,Shenzhen People's Republic of China

Distribution Company

○

Registered No. of shares % Type of Capital held by the shareholding Shares (shares) Company 10,000,000 203,000 80.24% Common 5,000,000 800,000 96.15% Preference

○

Investment 100,000 Holding 300,000 Company Manufacturer 1,500,000 of Polyester Film & Polyester chips Distribution $400,000,** Company ○

○

100,000 206,150 ○

○

1,500,000

○

100% 100%

○

$400,000**

○

100%

○

Common Preference ○

○

100%

○

Common

○

Common

* Indirect holding via PSPL ** $ 400,000 refers to the registered & paid up Share capital of Polyplex Trading (Shenzhen) Co. Ltd. There is no concept of number of shares or par value per share in People's Republic of China.

2.3 Other references (a)

Registrar Name Address

Thailand Securities Depository Co., Ltd. 62, The Stock Exchange of Thailand Building 4th, 6th-7th Floor, Rachadapisek Road, Klongtoey, Bangkok 10110 (662) 229-2800, (662) 654-5599 (662) 359-1259

Telephone Facsimile (b) Trustee N/A (c) Auditing Firm 1) Name Ernst & Young Address 33rd Floor, Lake Rajada Office Complex, 193/136-137 Rajadapisek road Near Queen Sirikit National Convention Centre Bangkok 10110, Thailand Telephone (662) 264-0777 Facsimile (662) 661-9190 Auditors* Mr. Narong Puntawong (CPA No. 3315) and/or Mr. Supachai Phanyawattano (CPA No. 3930) and/or Ms. Siraporn Ouaanunkun (CPA No. 3844) * Auditors of the company for the FY 2010-11 and also proposed as Auditors for FY 2011-12, to the Annual General Meeting of Shareholders, 2011 for their approval. (d) Legal Advisors Name Allen & Overy (Thailand) Co. Ltd. Address 22nd Floor, Sindhorn Tower III, 130-132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Telephone (662) 263-7600 Facsimile (662) 263-7699 Contact person Mr. Arkrapol Pichedvanichok Ms. Somporn Manodamrongtham Name Baker & McKenzie Ltd. Address 990 Abdulrahim Place, 5th floor and 22nd - 25th Floors, Rama IV Road, Silom, Bangrak, Bangkok 10500, Thailand Telephone (662) 636-2000 Facsimile (662) 636-2110 Contact person Mr. Wittaya Luengsukcharoen (e) Advisor or manager under management contract N/A ○

○

Annual Report 2010-2011

14 Polyplex (Thailand) Public Company Limited

3. Business Overview 3.1 Company profile and key changes and developments Polyplex (Thailand) Plc. (çPTLé or çthe Companyé) was incorporated as a private company on March 26, 2002 with an initial registered capital of Bt. 400,000 to manufacture and distribute PET film (polyethylene terephthalate film or polyester film). The registered capital of the Company was subsequently increased to Bt. 400 million in April/May, 2002. In August 2004, the Company was transformed into a Public Company and the IPO was subsequently made in December 2004. The Company is promoted by Polyplex Corporation Limited (PCL) based in India and engaged in the same business as the Company for more than 20 years. As on date, PCL has 51% stake in the Company through both direct and indirect shareholding and the balance 49% is with the general public. Past key changes and developments in the Company are as follows: March-April 2002 PTL was promoted by PCL, which is a listed company (on the Bombay Stock Exchange as also National Stock Exchange) in India. PCL took up 100% of the Companyûs registered capital of Bt. 400,000,000, divided into 8,000,000 ordinary shares at a par value of Bt. 10 per share and 32,000,000 preference shares at a par value of Bt. 10 per share. PTL also acquired a plot of land with an area of 20 rai 22 square wah at Siam Eastern Industrial Park in Rayong Province in order to construct a factory for manufacture of PET film. May 20, 2002

PTL was granted a promotion certificate by BOI for PET film (production line 1) with an approved production capacity of 15,000 tons per year.

July-2002 to April-2003 The Company started construction of the factory in July-2002 and completed its plant construction and proceeded with machinery test-run in March, 2003 followed by commercial production from April 2, 2003 when its first sale invoice was recorded. March/April-2003

The shareholdersû meeting resolved for increase of registered capital by another Bt. 260 million through issuance of 20,800,000 preference shares at a par value of Bt. 10 per share and 5,200,000 ordinary shares at a par value of Bt. 10 per share to the existing shareholders

June 11, 2003

The Company was granted a BOI promotion certificate for production of PET film (production line 2) with an approved production capacity of 15,000 tons per year (now expanded to 19,500 tons per year). PET resin with an approved production capacity of 26,250 tons per year ●

●

September 11, 2003

The Board of Directors resolved for the purchase of another plot of land adjacent to the existing land covering 8 rai 28.9 square wah area to produce PET resin which is the raw material in PET film production.

November 12, 2003

Commercial production and distribution began for film production line 2.

December 13, 2003

The Company attained ISO 9001:2000 certification on quality management system.

May 31, 2004

The Company attained ISO 14001:1996 certification on environmental management system.

May to July-2004

The company received approval from the BOI for a restatement of the installed capacity of both its film production lines from 15,000 tons to 19500 tons each per year. The company also applied to the BOI for further increase in the production capacity of both the film lines to 24,000 tons per year each given the significant productivity improvements and additional equipment commissioned by the company.

July 30, 2004

The shareholdersû meeting resolved for transformation of the Company into a public company, write-down of par value from Bt. 10 to Bt. 5 per share and increase of registered capital by Bt. 1,068 million to make up a total of Bt. 1,728 million requiring issue of additional 213.6 million ordinary shares. The allocation of the increase in capital was as under: 133.6 million Shares offered to Polyplex (Asia) Pte. Ltd. (PAPL), a juristic person registered in Singapore, being a 100% subsidiary of PCL, India. Up to 80 million shares at part value of Bt. 5 per share, making a total of up to Bt. 400 million as public offering. The meeting also resolved for establishment of a holding company named Polyplex (Singapore) Pte. Ltd.(PSPL), registered in Singapore as a holding company to facilitate investment and business expansion in Turkey. ●

●

August 11, 2004

Registration was completed to transform the Company into a public company.

September, 2004

Start up on PET resin batch plant in Thailand with an annual production capacity of 7,000 MT per annum.

September 2, 2004

The shareholdersû meeting resolved for decrease of registered capital as under: Redemption of the entire 105.6 million preference shares worth Bt. 528 million, currently held by PCL, by a capital reduction process. ●

Annual Report 2010-2011

16 Polyplex (Thailand) Public Company Limited

Cancellation of the unissued ordinary shares of Bt. 240 million, comprising of 48 million shares, which were to be subscribed by PAPL. The combined reduction as above would make the total registered capital Bt. 960 million of which Bt. 560 million is paid-up. The shareholdersû meeting also resolved to reduce the par value of the shares from Bt. 5 per share to Bt. 1 per share to be registered along with the capital reduction. ●

November 15 -16, 2004

●

Reduced the 105.6 million preference shares worth Bt. 528 million, currently held by PCL, by a capital reduction process. The reduction make the registered capital Bt. 960 of which Bt. 560 is paid-up capital. Changed the par value to Bt. 1 per share

December 8, 2004

IPO of 240,000,000 shares at the price of Baht 6.90 per share.

February 22, 2005

PTL was granted a promotion certificate by BOI for Metalliser film with an approved production capacity of 7,500 tons per year.

February 22, 2005

Startup of Continuous Chips Plant with a production capacity of 45,500 MT per annum.

April 19, 2005 & April 22, 2005

The company received approval from the BOI for a restatement of the installed capacity of both its film production lines from 19,500 tons to 24,000 tons each per year as also for its Chips plant from 26,250 tons to 52,500 tons per year

August, 2005

Start up of Metallizer Line 1 in Thailand with an attainable annual capacity of 4,800 MT per annum.

December, 2005

Start up of Thin Pet film line 1 in Turkey implemented by subsidiary company with a production capacity of 24,000 MT per annum.

March, 2006

Metallizer start up in Turkey with a production capacity of 4,800 MT pa.

December, 2006

Start up of Pet resin plant in Turkey with a production capacity of 45,500 MT per annum

March, 2007

PTL was granted a promotion certificate by BOI for Extrusion Coating film project with an approved production capacity of 18,000 MT per annum for two production lines.

October, 2007

Board of Directors of PTL approved a Project for related product diversification in CPP Film manufacture in Thailand. 17

November, 2007

Start up of Trial run of Extrusion Coating Plant

November, 2007

Total Productive Maintenance (TPM) policy adopted and rolled out by PTL to enhance productivity.

January, 2008

PTL was granted a promotion certificate by BOI for Metallised Film Expansion Project with an approved production capacity of 8,700 MT per annum.

April, 2008

Commencement of commercial production of the Extrusion Coating line.

May, 2008

Commencement of commercial production of the Thin PET Film line and the Metallised Film line in Turkey and also the Metallised Film line in Thailand.

July, 2008

The OHSAS (Occupational Health and Safety Management Systems) 18001:2007 certification was received for all the product lines

February, 2009

PTL was granted a promotion certificate by BOI for Cast Polypropylene (CPP) film project with an approved production capacity of 15,600 MT for CPP plain and CPP Metallized film.

February, 2009

Board of Directors of PTL approved an Investment for setting up a Trading company in China.

May, 2009

Board of Directors of PTL approved an Investment in a Silicone Coating line. The location was decided as Thailand in the Board meeting held in October 2009

September, 2009

The Trading company in China - Polyplex Trading (Shenzhen) Co. Ltd was set up and capital injected through Polyplex (Singapore) Pte Ltd

March, 2010

Commencement of commercial production of the Cast Polypropylene line

May, 2010

Board of Directors of PTL approved the revival of the new thin PET film line investment, which was earlier approved by the Board in May, 2008, but kept on hold due to the global economic crisis.

July, 2010

PTL was granted a promotion certificate by BOI for the Silicone Coating film project with an approved capacity of 725 million sqm.

February, 2011

Board of Directors of PTL approved an Investment in a Thick PET film line in Thailand.

May, 2011

Board of Directors of PTL approved relocation of the Thin PET film line investment from Turkey to USA.

Annual Report 2010-2011

18 Polyplex (Thailand) Public Company Limited

3.2 Shareholding structure The current shareholding structure of the Polyplex group is: Polyplex Corporation Ltd. (PCL) 16.5% 9.88%

100%

Polyplex (Asia) Pte. Ltd. (PAPL) 34.5%

Polyplex (Thailand) Plc. (PTL)

49%

80.24%

General Public 100% Polyplex 100% Trading (Shenzhen) Co. Ltd. (PTSL)

Polyplex (Americas) Inc. (PA)

Polyplex (Singapore) Pte. Ltd (PSPL)

9.88% Foreign Share holder

100% Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE)

Polyplex Corporation Ltd. (PCL) PCL, the parent company operating for over 20 years since 1988, is one of the major producers and distributor of plastic film in India selling in both the domestic and overseas markets. It has been listed for several years on Bombay Stock Exchange and other Exchanges in India. Itûs paid up capital is INR 319.8 million (about Bt. 214 million). PCL has the following production capacities as at 31st March 2011:Product Polyester Film Polyester Chips Metallized Film BOPP Film

MT p.a 51,000 77,600 11,800 35,000

○

Its direct and indirect shareholding in the Company aggregate to 51% of the latterûs paid up capital. Polyplex has also evolved an equitable policy for distribution of markets, for PET film business, between its Indian, Thailand and Turkey operations based on the several factors like product range, delivered cost to customer, supply lead times and preferential duty access. Based on the same, PTL would serve North America, South East Asia, Asia Pacific, China, Australia & New Zealand. PCL would serve South Asia, and South America. Turkey will serve, Europe, America, Middle East, Africa and CIS/Russian markets The Polyplex group also has a policy on future investments in polyester film / related areas between the Company and its parent company. Investments in India/SAARC region would be decided and made by PCL and its other subsidiaries (excluding the Company) while investments In Thailand / ASEAN region as well as other countries would be in all likelihood be made by PTL or the subsidiaries in which the Company has a major stake. The above is 19

subject to availability of Investible cash / ability to borrow debt by the existing / preferred Company as per the policy.

Polyplex (Asia) Pte. Ltd. (PAPL) PAPL was established as a 100% subsidiary of PCL in July, 2004 and is now a major shareholder of PTL holding 34.5% as on 31st March 2011. PAPL was incorporated as an investment vehicle of PCL for its overseas investments (including PTL). The issued and paid up capital of PAPL as of March 31, 2011 stands at USD 1.13 million.

Polyplex (Singapore) Pte. Ltd. (PSPL) PSPL was established as a 100% subsidiary of PTL in July 2004, as a wholly owned investment company. Subsequently, PSPL invested in Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE), through Share capital injection as well as by extending subordinated loans, to set up a manufacturing factory in Turkey so as to serve the demand in European and other proximate markets. In September 2009, PSPL also set up a trading company in China, Polyplex Trading (Shenzhen) Co Ltd (PTSL) by investing $ 400,000 as share capital. During the financial year 2010-11, PTL has redeemed USD 4.7 million of its Preference Shares in PSPL, out of the funds received from PE, by way of loan repayment. The issued and paid up capital of PSPL (including Preference Share Capital) as of March 31, 2011 stands at Euro 35.3 million.

Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE) PSPL had incorporated a 100% owned subsidiary company, PE in Turkey for setting up a Greenfield polyester film plant to cater to the European and other proximate markets. The commercial operations started in December, 2005 with the start up of the first thin PET film line. The first Metallizer plant started production in March, 2006. The PET resin plant commenced commercial production from December, 2006. The second thin PET film line and Metallized Film line commenced commercial production in May 2008.The issued and paid up capital of PE, including Additional Contribution from PSPL, as of March 31, 2011 stands at Euro 8.84 million.

Polyplex (Americas) Inc. PTL acquired 80.24% equity stake in Spectrum Marketing Inc. (renamed as Polyplex (Americas) Inc) with effect from January 1, 2006 to enhance its distribution network in the North American market. PCL, PTL没s parent company also has a 9.88% stake while the balance 9.88% is held by a foreign US-based shareholder. The issued and paid up equity capital of PA as of March 31, 2011 stands at USD 1.265 million. Apart from this the Preference Share capital, which is owned by PTL (96.15%) and a foreign US-based shareholder (3.85%) stands at USD 4.16 million as on March 31, 2011. Annual Report 2010-2011

20 Polyplex (Thailand) Public Company Limited

Polyplex Trading (Shenzhen) Co. Ltd (PTSL) In the financial year 2009-10, PTL invested in the setting up of a wholly owned Trading Company in Shenzhen, China, through its 100% held Investment Company in Singapore, PSPL. The decision to invest in the setting up of the Trading Company in China was a strategic initiative to establish the Companyûs presence in China, which is one of the largest and the fastest growing market in this industry. The issued and paid up capital of PTSL as at 31st March 2011 is USD 0.4 million.

3.3 Revenue structure of the Company PTLûs standalone and consolidated sales value classified by regions is shown below: STANDALONE Customers ○

○

Exports Asia North America Europe Others Total exports Domestic sales Sale of chips/others1 Total sales revenues Other revenues2 Total Revenues ○

○

2008-09 Bt. million % ○

○

CONSOLIDATED Customers Exports Asia North America Europe Others Total exports Domestic sales - PTL (Thailand) - PE (Turkey) Total Domestic sales Sale of chips/others1 Total sales revenues Other revenues2 Grand total

○

2009-10 Bt. million % ○

1,242.90 36.86 579.87 17.20 289.64 8.59 268.75 7.97 2,381.15 70.61 590.37 17.51 265.09 7.86 3,236.61 95.98 135.62 4.02 3,372.23 100.00

○

2010-11 Bt. Million % ○

1,354.06 40.15 443.51 13.15 290.81 8.62 192.12 5.70 2,280.50 67.63 584.03 17.51 310.12 9.30 3,174.66 95.18 160.69 4.82 3,335.35 100.00

○

2,288.39 44.74 955.65 18.68 434.98 8.50 249.91 4.89 3,928.94 76.81 1,013.33 19.81 38.46 0.75 4,980.73 97.38 134.26 2.62 5,114.99 100.00

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2008-09 2009-10 2010-11 Bt. million % Bt. million % Bt. Million %

○

1,409.09 1,730.26 1,845.54 645.32 5,630.21

○

19.95 24.50 26.13 9.14 79.72

○

1,811.37 1,565.58 2,169.96 357.92 5,904.84

○

24.81 21.45 29.73 4.90 80.89

○

590.37 8.36 584.03 8.00 436.58 6.18 479.45 6.57 1,026.95 14.54 1,063.48 14.57 202.59 2.87 157.04 2.15 6,859.74 97.12 7,125.36 97.61 203.09 2.88 174.15 2.39 7,062.83 100.00 7,299.52 100.00 ○

○

3,032.34 2,802.47 3,464.45 289.04 9,588.30

○

26.79 24.76 30.60 2.55 84.70 ○

○

1,013.33 8.95 517.84 4.57 1,531.17 13.53 63.71 0.56 11,183.17 98.79 137.00 1.21 11,320.17 100.00 ○

○

Note: 1) Sale of chips includes both domestic and export sales. 2) Includes Exchange gain, miscellaneous sales, Export Incentive, interest received, etc.

3.4 Business Goal The vision of Polyplex is to continuously grow, create value and establish global leadership in the plastic film business through building trusted partnerships with Investors, Customers and Employees. Keeping this vision in mind, Polyplex has been moving towards establishing itself as a Preferred packaging substrate provider as against just a PET thin film supplier, by undertaking expansions for manufacturing BOPP film and CPP film, which are other Packaging substrates used by Converters, in addition to PET thin film. The company has in February 2011, announced an investment in a Thick PET film line in Thailand, which is in line with the overall strategy of continuously growing and also diversifying its business risk, by expanding its product portfolio. The business goal is to increase market share in various regional markets - through geographically diversified manufacturing presence, increased market penetration in key markets and build a diversified portfolio of products like Metallized films, Clear films, Thermal Lamination films, Silicone Coated film, Chemically Coated films, and other grades of packaging films like CPP, BOPP etc. With a view to further diversify its manufacturing base, the Board has recently in May 2011, approved relocation of the Thin PET film line expansion from Turkey to the USA. This would help the company to increase its market share in American continent by moving closer to the customers and becoming a preferred on-shore supplier as against an off-shore or near-shore supplier in the past.

3.5 Promotion certificate PTL has been granted seven BOI promotion certificates, details of which are as below: S.No Certificate No. Type of business Date granted 1 1321(2)/2545 PET film 20-May-02 2 1287(2)/2546 PET film and PET Resin 11-Jun-03 3 1159(2)/2548 Metallized Films 22-Feb-05 4 1261(2)/2550 Thermal Lamination Films 14-Mar-07 5 1044(2)/2551 Metallized Films 10-Jan-08 6 1110(2)/2552 CPP film (Plain and Metallized CPP) 4-Feb-09 7 1719(2)/2553 Silicone Coated Film 14-July-10 Annual Report 2010-2011

22 Polyplex (Thailand) Public Company Limited

By virtue of the provisions of the Board of Investment Promotion Act B.E. 2520, the Company has been granted certain standard promotional privileges on the manufacturing and distributing the polyester film/resin/Thermal Lamination film/CPP film/ Silicone Coated film as per the following sections: 25, 26, 27, 28, 31, 34, 35(1), 35(2), 35(3), 36(1), 36(2) and 37 respectively. The Company must comply with certain conditions and restrictions provided for in the promotion certificate. Details of the privileges of each of the above sections are available at www.boi.go.th

3.6 Business Operations by each product line PTL is Thailandûs leading producer and distributor of Polyester thin film (Polyethylene Terephthalate Film, also called PET film, sold under the Brand name ùSarafilû), with most of the companyûs production being exported to the foreign countries. PTL focuses mainly on 3 key segments Packaging, Industrial and Electrical. PTLûs customers use the companyûs products as raw material to produce their end-products which are then sold to their consumers. Some examples of products made from PET thin film are Coffee/Tea bag, snack bag, softener bag, detergent bag, wire/cable wrap and hot stamping foil.

In April 2008, the company started manufacturing a downstream value added product called ùThermal Lamination filmû. This sold under the brand name ùSaralamû. In this product line, the PET film or BOPP film is used as the base film, and then extrusion coated with adhesive resins like LDPE or EVA, based on the requirement of the end use application to be catered to. In line with its objective of becoming a complete packaging solution provider, rather than just a thin PET film supplier, the company has in March 2010 started the manufacture of Cast polypropylene film. The company manufactures and sells plain CPP film & metallised CPP film under the brand name ù SaraCPPû. A project for manufacture of Silicone Coated film, another value added product is under implementation in Thailand and is expected to start commercial production in Q3 of FY 2011-12. A project for manufacture of Thick PET film is under implementation in Thailand and is expected to start commercial production in H2 of FY 2012-13. Some of the common applications of Thick PET film are as under: 23

3.6.1 Product Description The range of products offered by the company is as under: A.) Transparent thin PET films which can divided into 5 sub-categories Plain Corona or chemically treated High adhesion films Ultra clear films Co-extruded films ● ● ● ● ●

B.) Metallized PET films Semi Metallized film (low Optical density) High barrier films ● ●

C.) Specialty Films Twist films Anti static films Heat Sealable films Isotropic Films, High Friction Films, etc Matte films Thick films ● ● ● ● ● ●

D.) Thermal Lamination Film Gloss PET Thermal Film MATTE PET Thermal Film BOPP Thermal Film Metallized Thermal Film ● ● ● ●

E.) Cast Polypropylene film - Product range: Lamination & Conversion grade film - Transparent film for lamination & surface printing - High hot tack film for candy packing Metallizable grade film - Transparent heat sealable film for vacuum metallization Twist grade film Retort grade film ●

●

● ●

F.)

Siliconized PET Films (Under the brand name ùSaracoteû) in Plain, Matte, and Metallized are used in various applications such as: Shingle roofing tapes Release liner in pressure sensitive labels. ● ●

Annual Report 2010-2011

24 Polyplex (Thailand) Public Company Limited

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Release liner in pressure sensitive adhesive tapes. Release liner in medical and hygiene products.

3.6.1.1Characteristic Product a) Characteristic of PET film PET film characteristic properties are as follows: - Optically brilliant, clear appearance - Excellent mechanical strength and toughness - Good dielectric properties - Good flatness and coefficient of friction (COF) - Tear-resistant and puncture - resistant characteristics - Excellent dimensional stability over a wide range of temperatures - Very good resistance to most common solvents, moisture, oil, and grease - Excellent barrier against a wide range of gases PET film can also be modified with varying degrees of shrinkage, opacity & colors and different surface textures for it to be used over a wide range of applications. A wide range of chemical treatments (in addition to corona) can be applied to PET film during its manufacture to help it adhere to various coatings. b)

Characteristics of CPP Film - Excellent Heat sealing properties/ High heat resistance - Exceptional Optics - Good dimensional stability and barrier properties - Excellent printability - Metallized CPP - Significantly increases barrier properties

Characteristics of Thermal Lamination Films - High gloss & stiffness provide longevity to laminated media - Coated adhesive forms inseparable bond with inks/papers - Surface is conducive to add-on processes like Hot stamping, UV coating - Improves visual appeal of product

3.6.1.2End Use segment Thin PET film can be used in the following 3 key segments 1. Packaging : Clear and Metallized thin PET film can be used as part of the outer layer and middle layer of the flexible packaging such as coffee bag, snack bag, softener bag, and detergent bag. 2. Industrial : Comprising of Hot stamping foils, flexible air-conditioning ducts, labels /ID cards, lamination products and many more. 3. Electrical : Wire and cable wrap, membrane switches, flexible printed circuits, capacitors and motor insulation. 25

Thermal Lamination films mainly cater to the following applications: 1. Thermal Lamination of documents or printed media 2. Reflective Insulation 3. Flexible packaging 4. Rigid packing using printed corrugated carton board CPP films can be used in the following key segments: 1. Packaging : CPP film is used as the inner most layer in food packaging, due to its excellent heat sealing properties. It may also be used in Textile packaging, packaging of health care products/ consumer products etc 2. Industrial : Hot fill bags & liners, Industrial adhesive tapes, Interior automotive trim panels etc Note : Currently, the company is selling its CPP film only to the packaging segment The segmental break-up of revenue (PTL Standalone and Consolidated) from Film sales (Plain & Metallized PET films, Thermal Lamination/ Silicone Coated Films and CPP film) are as follows: STANDALONE SALES Segment

○

Packaging Use Industrial Use Electrical Use Total Film Sales ○

○

2008-09 Bt. Mn %

2009-10 Bt. Mn %

2,546.14 85.68 423.14 14.24 2.24 0.08 2,971.52 100.00

2,407.62 84.05 3,986.67 456.92 15.95 955.61 0.00 0.00 0.00 2,864.54 100.00 4,942.28

○

CONSOLIDATED SALES Segment

○

Packaging Use Industrial Use Electrical Use Total Film Sales ○

○

2010-11 Bt. Mn %

○

2008-09 Bt. Mn %

2009-10 Bt. Mn %

4,878.10 73.28 1,565.96 23.52 213.10 3.20 6,657.16 100.00

5,465.07 78.43 8,298.89 1,369.20 19.65 2,666.52 134.05 1.92 154.04 6,968.32 100.00 11,119.45

○

80.66 19.34 0.00 100.00 ○

○

2010-11 Bt. Mn %

○

74.63 23.98 1.39 100.00 ○

○

Note :1) Sales of Thermal lamination film by Thailand are included in 2 segments i.e. Packaging segment and Industrial segment, depending on the end use application of each type of product sold. 2) Sales of CPP film by Thailand are included in the packaging segment, as the company is currently catering only to this segment. 3) Sales of Silicone Coated film by Polyplex Corporation Limited, India in the US market, through the distribution company - Polyplex (Americas) Inc. are included in the Industrial application. Annual Report 2010-2011

26 Polyplex (Thailand) Public Company Limited

3.6.1.3Products with similar properties In certain applications like graphics and magnetic recordings, substituting PET film would result in compromising performance characteristics of the product (e.g., strength, flatness, clarity, tear resistance, thermal stability and chemical resistance). However, in other applications, for which certain PET film performance characteristics may not be needed, PET film competes with a wide variety of substitute materials. These applications tend to fall in the low end of the product range, where other plastic films (e.g., polyvinyl chloride, polypropylene, and polyethylene films) and paper may be considered as lower-priced substitutes. Applications for which a variety of substitute products may exist are primarily packaging and general-purpose industrial applications. BOPP Films (Biaxially Oriented Polypropylene) is one such close substitute product type, which is comparable in terms of its broad physical and mechanical properties to Polyester films. However, there are pros and cons of using PET film or BOPP films and depending upon the application requirements, a choice of the substrate would be made. As a result of this, both PET films and BOPP films have largely demarcated pockets where one is preferred over the other. A Comparison of BOPP Films and BOPET (Polyester) Films Polyester film is considered as the premium plastic film in the flexible packaging industry. This is also reflected by the difference in the volume of the two products. Features Water vapour barrier Gas barrier properties Break down voltage Machineability Printability Suitability for metallising Density (gm/cc) Strength Temperature Sensitivity

BOPP Excellent Poor Poor Fair Fair Poor Low (0.91) Fair Poor

BOPET Fair Excellent Excellent Excellent Excellent Excellent High (1.39) Excellent Excellent

Polyester film when stretched in both directions gives excellent dimensional stability, gas barrier properties, break-down voltage etc. BOPP, despite stretching remains a ùlimp filmû. Polyester film has better handling capabilities for fluctuations in temperatures etc. and is therefore also preferred in the less sophisticated markets. In tropical countries PET is also preferred due to its moisture and oxygen barrier properties. In addition products where aroma retention is important require the use of PET; e.g. coffee, tea. On the other hand, the low density of BOPP (0.91 Vs. 1.39 for PET) makes it a ùcheaperû alternative in packaging. However, the advantage of density is to some extent offset by the need to typically have a thicker film when using BOPP as compared to PET for the same application. Further, since PET is not ordinarily heat sealable, BOPP is preferred in heat sealable applications. All over the world BOPP and PET have established their respective segments in the packaging market and overlap is insignificant. Even in times of decline in BOPP selling prices few years back, there was no visible impact on the growth in PET films consumption. This establishes the limited substitutability between the two products. 3.6.2 Business Strategy Key elements of the strategy are: Attain cost leadership by way of capacity expansion and vertical integration. Capture high growth markets and build good customer relationship. To build strong global delivery capabilities with a judicious mix of on-shore, near-shore and off-shore strategy. Further broad base the product portfolio by investing in upgrading technical and R&D capabilities. Concentric and related diversification to bring stability in earnings. Consolidate market position in key geographic locations. Moving in this direction, the following initiatives have been taken by the Company in the past and are planned for future: The setting up of 2 successive Thin PET film lines in Thailand was the first step towards achieving cost leadership position along with diversification of customer base. With the start up of the second Thin PET film line in Turkey in May 2008, the subsidiary has an even stronger cost effective production base to service its expanding customer base in Europe, Middle East, Africa & CIS/Russia. Backward integration into the manufacturing of PET chips has strengthened the cost structure of the Company in Thailand and also of the subsidiary in Turkey. ● ● ●

●

● ●

●

Annual Report 2010-2011

28 Polyplex (Thailand) Public Company Limited

●

With the Extrusion Coating plant in April 2008 and the additional Metallizers in Thailand and Turkey in May 2008, the Company has been able to significantly increase the share of value added products, in its sales portfolio thereby improving its profitability on the whole. As a part of its strategy of concentric diversification, the Company has set up a CPP film manufacturing line in Thailand in March 2010. This has helped the Company to establish itself as a complete packaging substrate provider. The new project to manufacture Silicone Coated film in Thailand will help the Company to increase its presence in new product segments and thereby reduce the impact of the cyclical nature of the Thin Polyester Film industry. Various types of customer engagement initiatives by the Company have helped it to not only retain key customers, but also increase its customer base across the globe. The wide network of distributors and agents has helped the Company to gain access to all key markets of the world. The parent company in India has set up a dedicated Research and Development center which works closely with key customers, including end users of convertors to develop specialty and innovative products. The Companyûs decision to relocate the investment in the new PET Thin film line from Turkey to USA is another step towards geographically diversifying its manufacturing base. This would help the Company to participate in the growth in the flexible packaging segment in the American region and increase its market share substantially.

3.6.3 Distribution Channel The Company distributes its products to both domestic and overseas markets, with main focus put on the latter. The product distribution is being made directly to the end users using its own marketing arms in USA and in China as well as commission agents across the globe. The indirect channel is mainly through distributors in designated areas. The sales through distributors and commission agents help support and even boost the sale volumes as these distributors and agents are in close proximity of the target markets, hence allowing for closer service provision to the customers with rapid delivery, and also better market penetration to access small customers. Value of total film sales to end users and distributors are as follows. Sales made through commission agents are included in ùEnd Usersû segment.

○

STANDALONE SALES 2008-09 2009-10 Customers Bt. Mn % Bt. Mn % End Users 1,384.94 46.61 1,773.03 61.90 Distributors 1,586.57 53.39 1,091.50 38.10 Total Film Sales 2,971.52 100.00 2,864.54 100.00 ○

○

CONSOLIDATED SALES Customers End Users Distributors Total Film Sales ○

○

2008-09 2009-10 Bt. Mn % Bt. Mn % 3,984.70 59.86 4,391.10 63.02 2,672.46 40.14 2,577.23 36.98 6,657.15 100.00 6,968.32 100.00 ○

○

2010-11 Bt. Mn % 2,986.43 60.43 1,955.84 39.57 4,942.28 100.00 ○

○

2010-11 Bt. Mn % 7,375.53 68.50 3,743.92 31.50 11,119.45 100.00

○

3.6.4 Markets and competitive environment 3.6.4.1Global Demand and supply The growth in packaging has over the years shifted the production and usage patterns of PET films. The Companyûs relevant segments of Packaging, Industrial and Electrical constitute 98% of the total demand and the traditional high-end technology segments like magnetic media and imaging segments are reduced to only 2% of the total consumption due to technology transformation. Polyplex currently produces only thin PET films, which represents three-fourth of the overall global PET film demand. The Company has also decided to foray into the Thick PET film segment by putting up a manufacturing line in Thailand, which is under implementation. Better packaging not only improves the shelf life of the products but is also essential for improving product appeal in a highly competitive consumer goods industry. Flexible packaging also plays a key role in source reduction on the principle of ùuse less waste in the first placeû which has ensured higher-than-GDP growth in the flexible packaging industry across the globe. PET film, being a higher-end substrate within packaging, has grown more rapidly than other substrates, growing at an average of about 8-10% per annum. Demand in packaging is quite resilient as it relates to consumption of food products and consumerstaples which are to a large extent non-discretionary in nature. This moderated the impact of the global economic recessionary environment on the industry in 2008, as compared with some of the other segments like industrial and electrical which had been impacted more and had witnessed a contraction in demand in 2008. The revival of demand growth in 2009 and 2010 has also been faster in the packaging application as compared to other applications of Thin PET films.

Annual Report 2010-2011

30 Polyplex (Thailand) Public Company Limited

An increase in the purchasing power in the developing countries has brought with it a large rise in the per capita consumption of packaging material. As a result of this, Asia (excluding Japan & Korea), is the largest market for PET films with almost one-third of the PET films produced being consumed in this region. At the same time, per capita consumption of packaging material in developing countries is still very low as compared to the mature markets. The key drivers of demand growth in these regions are the increase in the share of organized sector, increasing consumerism, changing demographics and the resulting need for better and more convenient packaging.

Source: Company/Industry estimates A similar trend is also evident on the supply-side with most of the new capacities being added in low-cost developing countries. Most of the new capacity is also focused on the packaging segment, with an emphasis on high productivity and low operating costs. This has adversely impacted the traditionally large producers of PET film operating with high cost structures, who have now been forced to concentrate in the emerging niche technologies in PET films like films for LCDs, solar panels, touch screens and specific high-end applications within packaging. While trade defense measures like anti-dumping and countervailing duties are on the rise in an increasingly competitive market environment, they are unable to address the inherent problems of unproductive assets operating in the developed countries producing regular films. During the year 2010, the Thin PET industry witnessed a Demand supply imbalance scenario due to the following main reasons:

Market Developments Demand continued to grow despite the Economic Crisis in 2008-09. There had been inadequate matching capacity additions. â&#x2014;? â&#x2014;?

New applications Optical industry /Photovoltaic (PV) industry in Advanced World. â&#x2014;?

The above factors ensured that the demand for Thin PET film globally in the year 2010 remained more than the supplies, thereby increasing the selling prices to historic highs. This in turn significantly improved the operating margins of most of the manufacturers in this industry. These exceptionally high margins have attracted a lot of new investments in the Thin PET film industry. Most of these planned expansions are expected to come online in later half 2011 and throughout 2012. We expect global PET film growth rates to be at about 8-10% in the year 2011, with the demand in the South East Asian region growing at a higher rate of 10-12%. The overall capacity addition in 2011 and 2012 is expected to be higher than the growth in demand but the actual timing of the additions will determine whether there will be a temporary oversupply situation for an interim period of 6-9 months. Companies with consistent quality products, access to international customers and a better supply chain model stand a better chance of participating in the market growth and improving/maintaining their margins above the industry averages. 3.6.4.2Industry Situation Global competition The global Thin PET film manufacturers can be classified into 3 main categories by size of their production capacity: (i) World majors with production capacity of over 100,000 tons per year (e.g. Dupont-Teijin, Mitsubishi and Toray, Cifu, Polyplex, Flex, Jindal etc). (ii) Mid-size players with production capacity between 50,000 - 100,000 tons per year (e.g. Kolon, SKC, etc.) and (iii) Small / local producers with production capacity of less than 50,000 tons per year Demand for PET film for magnetic media application has been high in the past, prompting major producers to focus mainly on this segment. Competition in the magnetic media segment is thus confined only to these major ones based on their long and well established expertise and experience. Annual Report 2010-2011

32 Polyplex (Thailand) Public Company Limited

For other PET films including thin film, competition is seen among all groups of producers thanks to the consistently rising demand, especially for thin film which is used in packaging, industrial and electrical segments where healthy growth of demand has been recorded in the past. Thus small, mid-sized and major producers (including Polyplex group) have expanded their capacity to cope with the increasing demand in these segments. This has led to the expectation of higher market share by producers in various countries which have surplus production capacity. Domestic competition Thailandûs PET film market is of small scale as compared to the global PET film market. As per our estimates, demand in Thailand is approximately 25,000 tons per year with growth rate for 2011 expected to be about 8-10%.In the past, domestic producers have put emphasis on producing BOPP film rather than any other types. PTL has principally focused on PET film since its inception in Thailand and started with one PET film line, within nine months set up a second line as well. Over the years, PTL has had several other expansions in film capacity i.e value added films like metallized film, Thermal Lamination film, Silicone Coated film (under implementation) etc and related product diversification like manufacturing CPP film. The Company has also announced a project for Thick PET film in Thailand. It is presently having the largest PET Thin film production capacity in the country. The production capacities of the various plastic film producers in Thailand are as follows:

○

Production line (tons per year) BOPP film PET film CPP film BOPA film Metallized film Thermal Lamination film Other coated films Total Silicone Coated Film

Thai Film A.J. Plast. Industrials Plc. Plc. 107,000 66,000 3,500 31,000 3,500 8,000 7,000 10,800 3,000 124,000 115,800

PTL*

○

48,000 **15,600 16,200 9,000 88,800 725 Mn Sqm ○

○

Source: Form 56-1 of A.J.Plast Plc and T.F.I Plc * PTL capacities are as approved by BOI. For actual attainable capacities, please refer table below, under section ùProduction Capacityû **Combined capacity p.a. as approved by BOI for CPP plain and metalized film 33

Most of PTL没s production is intended for exports while the other PET film producers have been more focused on the domestic markets. Despite the disparity between domestic supply and demand, PTL does not foresee any specific threat due to its diversified sales portfolio. Conclusion on PET film industry The PET film industry has been expanding continuously in the past. The main driving factor for the past five years has been the growth of the packaging, industrial and electrical segments. Meanwhile, PET film producers have boosted their capacity utilization and/or their production capacity aggressively to respond to the increasing growth of demand. During 2000-2010, global average capacity utilization of PET film manufacturers was in the range of 80-90% of rated or nameplate capacity, except in certain years where the utilization rate declined to below 80% due to excess capacity built up in the industry. The levels of 80-90% are considered a high utilization rate being close to the full machinery capacity. In practice, some producers can produce lower than the nameplate capacity due to the long use and hence the poor condition of machinery while some can produce with capacity utilization even higher than 100% of the nameplate capacity using new and modern machinery and based on their long-time expertise and experience.

Note: Data from industry sources/Estimates Despite the rising demand for PET film, it is not easy for new entrants to compete with the existing players. It is because it is an industry that needs high levels of know-how, skills and expertise to ensure the exact product size, standard and specifications required by the customers. Project management skills are also needed to enhance efficiency and cost effectiveness that will lead to competitiveness against other producers. Capacity expansion may be unavoidable to attain larger size and hence economy of scale. Annual Report 2010-2011

34 Polyplex (Thailand) Public Company Limited

Polyplex group has accumulated over 20 years experience in the PET film industry. It has been strengthened with consistent expansion in production capacity. Its management is highly competent. Delivery of products is efficient by having geographically distributed production bases and a widely spread sales and distribution network that allow for easy access to the customers. The emphasis on the countries with high demand growth potential, production and cost effectiveness and concentrating on business segments such as packaging, industrial and electrical segments which have recorded healthy growth all along has contributed to the Polyplex group becoming one of the Top 5 producers of thin PET film (excluding capacity for magnetic media). In view of tariff barriers imposed by importing countries such as anti-dumping and anti-subsidy duties, the Company没s parent company based in India has experienced such threat from both the EU and the USA several times. It has thus been keen on the issue, having information on the criteria and inspection process adopted by those countries and knowing how to deal with the problem. It is an outcome of the understanding of the process, that USA has levied zero duties till date under the anti-dumping measure against the parent company. As regards Thailand, an Anti Dumping petition was launched by the USA manufacturers of PET film against PET imports from 4 countries i.e. China, Brazil, Thailand and UAE in September 2007. In the final determination by the International Trade Commission (ITC) in October 2008, a negative injury ruling was given in favor of Thailand, whereas the anti-dumping duty rates were notified against the other countries没 imports. In March-2007, the Government of Brazil had initiated an anti dumping investigation against Thailand besides India, against imports of PET films into Brazil. The company as also its parent company in India had fully cooperated with the same and submitted their detailed questionnaire responses. As a final outcome of this investigation, an Anti Dumping duty of about 28 cents/Kg on imports from Thailand to Brazil and about 9 cents/Kg of Anti Dumping and Countervailing Duty on imports from India to Brazil has been levied. The Company没s export sale to Brazil is insignificant as compared to the total sales volumes. As such, the adverse fall out of the investigation by the Government of Brazil has had a minimal impact on its sales. In December 2010, the Government of Brazil initiated an anti dumping investigation against UAE, Mexico and Turkey, in respect of PET film imports into Brazil. The company没s subsidiary in Turkey (Polyplex Europa) submitted responses to the questionnaires, as required by the Brazilian Government and 35

also cooperated in providing the required data during the onsite verification at Turkey in Juneû11. The preliminary determination of the investigation is expected to be known over the next few months. Currently, Polyplex Europaûs exports to Brazil are not a very significant portion of their overall sales volumes and as such, the management does not expect any major impact from any adverse fall out of this investigation. The company is undertaking all the safeguards to insulate against the risk arising out of anti-dumping duties and other protective barriers imposed by the importing countries. Outlook for the PET film industry: Global demand for Thin PET films is expected to grow at a CAGR of 8-10% over the next 4-5 years. Demand growth for the products in the Flexible Packaging segment in the South East Asian region is expected to be about 10-12% in 2011 and 2012. Mid size and new producers would increasingly look to diversify their product range from commodity grades to specialty grade films to improve margins. Addition to global capacity during the next 1-2 years is expected to be higher than the growth in the demand, thereby correcting the demand-supply imbalance witnessed in 2010. New entrants from China have been increasingly dominating the market for PET film in the last 2-3 years, but their production is expected to mainly fulfill domestic demand which is growing rapidly. The cyclical nature of the industry would continue. Dominance of the existing 3-4 large producers with market share of about 25-35% is likely to continue though with a reducing share. However, decline in their traditional market segments and slower growth in their home markets has constrained their ability to improve their PET film operations. Lowering production cost through acquisitions and joint ventures with low-cost Asian countries, rationalization of capacity and continued emphasis on technology intensive niche products could be an important strategic response. The transitioning of the industry to Asia would pose higher competitive pressure in the years to come. Increasingly, the larger producers are trying to tie up strategic partnerships or acquisitions in order to ensure growth, presence in diversified markets or products or even as a measure to acquire technology for newer and sophisticated product range. ●

●

● ●

●

Annual Report 2010-2011

36 Polyplex (Thailand) Public Company Limited

3.6.5 Manufacturing of product 3.6.5.1Production PTL is having 2 plots of land, one at No. 60/24 Moo 3, Siam Eastern Industrial Park, Rayong Province, with an area of 28 rai 50.9 square wah and the second one is located opposite to this plot, at 60/91 Moo 3, Siam Eastern Industrial Park, Tambol Marbyangporn, Amphur Pluakdaeng, Rayong 21140 having an area of 35 rai, 2 nang, 54.80 square wah. The Company没s PET thin film lines, Metallized film lines and the Polyester Chips plant are located on the first plot of land. The Extrusion Coating line, the Cast Polypropylene (CPP) line and the Silicone Coating line (under implementation) are on the second plot of land. During the year, the Company invested in a new plot of land, adjacent to the existing factory in Rayong, with an area of 35 rai, 2 Nang and 66.5 square wah, for facilitating future expansion projects. 3.6.5.2Production capacity PTL currently has two PET film production lines, two Metallized film lines, one Continuous Processing PET resin manufacturing plant, one Batch processing PET resin plant, one Extrusion Coating line, one CPP plain and one CPP metalized film line. A project for setting up Silicone Coating line is underway and is expected to start operations by Q3 2011-12.Capacity of Polyplex group as on 31st March 2011 is as follows:

Note : BF = Base Film MF= Metallized Film CF= Coated Film

○

Product Type PET Plain Film PET resin Metallized Film BOPP Film CPP Plain Film CPP Metallized Film Thermal Lamination Film Silicone Coated Film ○

○

India 51,000 77,600 11,800 35,000 ○

○

Thailand* 42,000 52,500 11,000 ○

○

10,000 4,200 150 160 ** ○

○

Turkey Total Unit 58,000 151,000 MT 57,600 187,700 MT 11,000 33,800 MT 35,000 MT 10,000 MT 4,200 MT 150 Mn Sqm 160 Mn Sqm ○

○

* Capacities for Thailand above are attainable capacities and capacities approved by BOI based on theoretical output are higher. For BOI approved capacities in Thailand, please refer table above under section ùDomestic competitionû. **Silicone Coating Project with an attainable capacity of 600 Mn Sqm is under implementation and expected to commence commercial production within Q3 of FY 2011-12. The capacity utilization rates for the Plain and Metallized film lines in Thailand and in Turkey are as follows:

Annual Report 2010-2011

38 Polyplex (Thailand) Public Company Limited

3.6.5.3Major raw materials PET resin PET Resin (polyethylene terephthalate resin) is the major raw material in the production process for PET films. In beginning, the company had procured most of its PET resin requirements from two unrelated suppliers. The requirement of procuring PET resin from outside suppliers have gone down since 2004/05 after the company commenced production of its captive PET resin in two phases. The Company没s subsidiary in Turkey also has an in-house production facility for PET resins. Purified Terephthalic acid (PTA) and mono ethylene glycol (MEG): The major raw materials for PET resin production are purified terephthalic acid (PTA) and mono ethylene glycol (MEG). To ensure uninterrupted procurement of raw materials the Company has currently tied up with one local supplier each for PTA and MEG for PTL. The subsidiary in Turkey is importing PTA from Europe and MEG from Middle East. The company enters into Annual contracts as per which 100% of the company没s requirements would be supplied as per the specified price formula throughout the contractual period (s). Major Raw materials for the Extrusion Coated Film production: Apart from PET film, which comes mostly from the company没s in house production, the major raw materials for the Extrusion Coated film production are BOPP base film and Coating chemicals such as LDPE and EVA. The company has been meeting its BOPP film requirement by procuring from a local manufacturer. However, the company is also exploring other options for importing BOPP film from Korea / other countries in the ASEAN region. The coating chemicals i.e LDPE and EVA are being imported from Malaysia and Korea respectively. Due to higher delivery lead time, the company is required to maintain slightly higher levels of inventory for these coating chemicals. The Company is also exploring the possibility of procuring these raw materials from local sources. Major Raw materials for the Cast Polypropylene Film production: The major raw materials for the Cast Polypropylene film production are Homo Polymer and Co-Polymer. Homopolymer is being procured locally while Co-Polymer is being imported from Singapore. The company continues to look out for alternative sourcing options and would decide on an appropriate raw material procurement strategy for this product line, based on relevant factors such as pricing, quality, delivery lead time etc.

The value chain for the Company没s PET film business is depicted below:

The value chain for CPP film is given below:

The value chain for Thermal Lamination film is given below:

Annual Report 2010-2011

40 Polyplex (Thailand) Public Company Limited

3.6.5.4Impact on the environment There is a negligible impact on environment caused from the polyester film production process since PET in both film and resins are generally recyclable. For its Polyester resin line, it has the required EIA approval and submits regular reports required as per EIA approval to the concerned authorities. Since its commencement of production in March 2003, PTL has not faced any significant problems relating to the environment. Inspection by the Industrial Factory Department has been undertaken on a regular basis, the result of which has come out that the Companyûs manufacturing process poses no environmental impacts. All our product lines in Thailand have the following certifications: ISO 14001:2004 certification on Environment Management system ISO 9001:2008 certification on Quality Management system OHSAS 18001:2007 certification on Occupational Health and Safety Management system ISO 22000:2005 certification on Food Safety standards ● ● ●

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All our product lines in Turkey have the following certifications: ISO 14001:2004 certification on Environment Management system ISO 9001:2009 certification on Quality Management system OHSAS 18001:2007 certification on Occupational Health and Safety Management system BRC/IoP - certification on Global Standard For Packaging and Packaging Materials (For Plain and Metallized Film lines)

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4. Risk Factors Before making a decision to invest in the shares of the Company, investors should prudently consider the information about risk factors described in this section and all information contained herein. Apart from the said risk factors, there are still other unpredictable risks that may adversely impact the Company没s operating results. The key risk factors are: 4.1 Industry Cycle The industry cycle of PET film hinges on the spread between the PET film price and the prices of PTA and MEG which are major raw materials. Whenever the demand supply balance favors the suppliers, the PET film and raw material price spread usually widens, thereby encouraging the manufacturers to increase production by expanding their capacities. On the contrary, if PET film supply is larger than market demand, the film price will drop, hence narrowing the spread between the film and raw material prices. This cyclical nature will inevitably affect every producer没s revenues and profits. To illustrate such cyclical impact, the movement of profit before tax/sales of PTL (Consolidated), is shown in comparison with that of the prices of PET film and raw materials, as below: Comparison of profit before tax as a % to sales, of PTL on a consolidated basis, with prices of PET film and raw materials (Consolidated - Average for PTL-Thailand and PE-Turkey)

Source: Company information Annual Report 2010-2011

42 Polyplex (Thailand) Public Company Limited

The cyclical behavior can be seen in the above data of the last 8 years, which has direct impact on the operating results of PET film producers as well as Polyplex. To mitigate such risk, the Company has sought to undertake the following: With high productivity levels and cost control measures, Polyplex believes it is one of the lowest cost producers of polyester film in the world which will help it deliver better financial results than the other constituents of the industry.

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Diversify its product portfolio by introducing new products like Extrusion Coated Film, Cast Polypropylene Film), the Silicone Coating Line (project implementation underway and expected to start commercial production in Q3 of FY 2011-12), Thick PET Film (project implementation underway and expected to start in H1 of FY 2013-14) to mitigate the risk of over dependency on a single product and single industry.

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Accessing customers operating across the globe in the flexible packaging and industrial segments by presenting alternative sourcing options from its manufacturing locations in India, Turkey and Thailand and its warehousing & distribution set up in US and China, thereby mitigating the risk of over dependency on few customers.

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Diversified manufacturing and distribution base helps to mitigate the risk of volatile markets. For Eg: South East Asian markets are quite volatile in nature, whereas developed markets of US, Europe, Japan etc are less volatile. Polyplex tries to mitigate such risks by having a diversified sales portfolio.

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Increased focus on new product development through R&D or technology acquisitions besides creating a strong technical services team are likely to be additional differentiators between Polyplex and its competition

4.2 Risks relating to uncertainty in prices of the product and raw material The basic raw material for production of PET film is PET resin, which is in turn produced from Purified Terephthalate Acid (PTA) and Mono Ethylene Glycol (MEG). Since the cost of resin is the single largest component of the total production cost of Polyester film, the fluctuation in the resin price may hurt the Companyûs operating margins depending upon the ability of the Company to pass the increase in costs to its customers. As selling prices are usually negotiated on a monthly / quarterly basis, in a balanced demand supply situation, PTL is usually able to adjust the selling prices following any changes in the PET resin cost and other operating costs. The above graph of historic Selling price and Raw material price movement demonstrates the correlation between the raw material cost and the selling prices. In most of the years the movement in the selling prices have been following the trend of the raw material cost except for years where other factors influenced the prices like 2006-07 (down cycle in PET film

industry due to imbalance in supply demand situation) and 2008-09 when the world economies went through a turmoil. During the FY 2010-11, the company witnessed a major demand supply imbalance in the PET film industry (in favor of manufacturers). Some of the main reasons which contributed to this market disruption are as under: Market Developments Over the past few years demand continued to grow despite the Economic Crisis in 2008-09. There had been inadequate matching capacity addition (excluding China) in 2008 and 2009. Strong revival of demand post economic crisis in 2010. ●

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Structural changes : Closure of some old uneconomic lines Diversion of capacity from packaging to industrial segment as well as conversion of thin film lines into intermediate and thick films for new applications. Heightened anxiety with the convertors to develop alternative supply options with a clear preference for onshore/ near shore suppliers. ❍ ❍

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New specialized applications Optical industry /Photovoltaic (PV) industry. Shift of focus by world majors in Thin PET film from commodity film to specialized Thick PET film applications due to higher and relatively more stable margins and limited competition in these applications ❍ ❍

The above factors resulted in a very tight supply situation of BOPET Films in 2010 and all manufacturers in this industry were able to increase selling prices by a very high proportion, without any corresponding increase in raw material costs, thereby improving margins to exceptionally high levels. The exceptionally high margins witnessed in 2010 have attracted new investments in the PET thin film industry, mainly in India and China. This is expected to balance out the gap between demand and supply. Analysis of historical data shows high correlation between PTA/MEG - polyester film prices. The spread between two intermediates would vary depending upon the demand-supply situation of the commodity. Also sudden and sharp movements in raw material prices may affect the correlation for some time. The chart below shows the past trend in the pricing of PET film and PTA and MEG:

Annual Report 2010-2011

44 Polyplex (Thailand) Public Company Limited

Source: Industry information The above industry data of the Far East demonstrates that variations in the raw material prices by and large tend to get passed on to the end-customers. The demand-supply balance of PET films which could vary across regions could impact margins. The spread between the raw material and PET films, especially over the last few years, has moved in a band. PTL没s contracts with some customers provide for a quarterly/periodic review in pricing which enables it to adjust for any raw material cost movement. The Company monitors world and local input price trends carefully and determines its procurement plans accordingly. 4.3 Risk associated with reliance on only a few raw material suppliers The 2 major raw materials for the company, PTA and MEG are well traded commodities, available from a variety of sources in this region. However, the company is meeting its requirement domestically, by procuring each of these raw materials 100% from a single local supplier, thereby enjoying certain distinct advantages of shorter lead time/lower raw material inventory carrying levels etc. The company has entered into long term / yearly contract for the supply of the raw material to ensure its availability. These contracts also have a supply guarantee clause to ensure that the risk of buying 100% from a single source and also a single plant operation is mitigated. And as far as the pricing is concerned, since it is linked to certain standard international benchmark rates there is high degree of transparency. For the Extrusion Coated film production, apart from PET film, the major raw materials are BOPP base film and Coating chemicals such as LDPE and EVA. The company has been meeting its BOPP film requirement by procuring it both locally as well as importing from manufacturers within the ASEAN region. The coating chemicals i.e LDPE and EVA are also both being locally as well as imported from the ASEAN region. The major raw materials for the Cast Polypropylene film production are Homo Polymer and Co-Polymer. Homopolymer is being procured locally while Co-Polymer is being imported from

Singapore. Since the production from this new line has recently started in March 2010, the company would continue to look out for alternative sourcing options and would decide on an appropriate raw material procurement strategy for this product line, based on relevant factors such as pricing, quality, delivery lead time etc. 4.4 Risk from environmental regulatory measures All the production lines of PTL, except for the Polyester resin line, do not require any environmental impact assessment (EIA). For its Polyester Resin line, the Company has the required clearance from the regulatory authorities and utmost care is taken to ensure compliance to the same. For the Silicone Coating line or the Thick Film line under implementation, PTL would not be required to get any EIA approval. 4.5 Risk from competition from existing manufacturers and entry of new players With consistently rising demand and healthy growth potential, the PET film industry attracts new capacity investments from existing large manufacturers (such as Polyplex) who are well-established companies with long experience in this industry, as well as medium to small producers and new entrants with strong capital to accommodate investment in PET film plants and machinery. Compared to these players, PTL has a lower cost of production and focuses on producing thin film which is PET film of high growth potential to serve flexible packaging, industrial and electrical applications. For those who are new entrants, they need to improve and develop their production competence to ensure competitively low cost against the existing players, the process of which will certainly take some time. Besides, they need to build up their customer base which can happen gradually through supply of consistently good quality products. Thus, PTL is confident that it will readily be able to compete against both world leading producers as well as newcomers. While the financials of the company and group would broadly reflect the cyclical trend of the industry, it would be able to demonstrate superior profitability in any market situation due to its competitive edge as reflected in lower costs, good quality, higher productivity, value added product mix and global sales reach. The Company has strategically embarked on various expansion projects in Turkey and Thailand over the last few years and also has two other expansion projects in the pipeline in Thailand and a new PET thin film line investment under implementation in the US, which will further strengthen its competitiveness (Refer Section 3 - Business Overview for details on Projects commenced during the year and Section 5 - Future projects for new projects in the pipeline) The company has been continuously evaluating other growth options in PET film / value added products / related areas like CPP / BOPP/ Silicone Coated Films at all existing locations in Turkey/Thailand US, while also continuously evaluating growth options in other new locations/new product lines. With the start up of the Extrusion Coated Film line, Annual Report 2010-2011

46 Polyplex (Thailand) Public Company Limited

Cast Polypropylene Film line, and the projects under implementation in Thailand i.e Silicone Coating Film and Thick PET film line, the company aims to further broad base its product offering to its customers, and also diversify the risks associated with the cyclical nature of the PET film industry. The company has also been evaluating possibilities for any acquisitions to further expand its manufacturing base and also to improve its cost structure, product offering and market reach / penetration. 4.6 Risk from trade barrier measures Trade barrier measures taken by various countries are broadly of two major types: a) Anti-dumping (AD): An anti-dumping duty can be imposed on imports if the ex-factory prices of such imported products are proved to be lower than the local selling prices of the similar products in the countries of the exporters. For the past years, the countries adopting this measure are the European Union member countries and the US against such countries as India, China, Brazil and South Korea. b)

Anti-subsidy: A countervailing duty (CVD) can be imposed if the government or any government agency provides any benefits or privileges specifically to any company or exporter of such country.

Such tax measures will cause import duty on the goods produced and exported from the targeted countries imposed at such a high rate that such goods will carry higher prices and hence have difficulty to compete with the products of the rivals. For manufacturers having a regional manufacturing base in such locations, such trade defense measures can be an opportunity if anti dumping duties are levied against imports from the Asian low cost producers. The company is undertaking all the safeguards to insulate against the risk arising out of anti-dumping duties and other protective barriers imposed by the importing countries. A geographically well-diversified sales portfolio like ours will help mitigate the adverse fall-out of such an action, if any. In the year 2008, in the US Anti Dumping petition against producers of PET film from Thailand, China, Brazil and Middle East, there was a negative injury ruling by the International Trade Commission (ITC) against Thailand and consequentially, there is no duty against Thailand imports into the US market. This has definitely given an opportunity for the company to increase its share on the US market through its distribution company Polyplex Americas Inc. As an outcome of the Anti-Dumping Investigation by Brazil in the year 2007, against Thailand, an Anti Dumping duty of about 28 cents/Kg on imports from Thailand to Brazil had been imposed. However, the impact of this on the Company is minimal, as the sales to Brazil are almost negligible. In December 2011, the Government of Brazil initiated an anti dumping investigation against UAE, Mexico and Turkey, in respect of PET film imports into Brazil. The Company没s subsidiary 47

in Turkey (Polyplex Europa) submitted responses to the questionnaires, as required by the Brazilian Government and also cooperated in providing the required data during the onsite verification at Turkey in Juneû11. The preliminary determination of the investigation is expected to be known over the next few months. Currently, Polyplex Europaûs exports to Brazil are not a very significant portion of their overall sales volumes and as such, the management does not expect any major impact from any adverse fall out of this investigation. 4.7 Risks from future projects The major risks associated with any new Projects are as below: Market Risk: Since Polyplex has a global reach and an extensive marketing and distribution network, the Company does not foresee any major risk in developing the markets new products. In the case of the Silicone Coating project, the market research data and the market experience already available with the parent company can also be leveraged upon to ramp up the sales once the Project is implemented. ●

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Competition Risk: The Company believes that its cost structure would be globally very competitive and will be one of the major advantages to gain an edge over some of the existing producers/new entrants.

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Project Implementation risk: Implementation of the Project within the Budgeted cost and timeline is another critical aspect for the success of any Project. Based on past experiences, it can be very well said that the experienced Projects team at Polyplex should be able to achieve successful implementation of new projects on time and within Budgeted costs except for un-foreseen circumstances.

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Funding Risk: Long term Debt to the extent of 65-75% of the Project cost is generally borrowed by the Company and the balance is funded out of internal accruals. Based on the good relationship with existing banks, the Company is quite confident of raising the required financing for its new Projects at competitive terms and conditions.

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Currency Risk: For any new project, the currency of borrowing is decided, based on the projected operational cash flows of the project. The currency which has the maximum surplus in the operational cash flows is chosen to be the currency for the loan. This creates a natural hedge for the loan repayments, as and when the repayments start. The company also has internal FX guidelines to cover net exposure of Project costs, in various currencies by booking appropriate forward contracts, so that the risk on the initially estimated overall Project cost, on account of currency fluctuations is minimized.

Apart from all the Project specific risks and their mitigation plans as discussed above, the Company would also like to mention here that the overall Project risk of any new Project is covered by taking appropriate Insurance policies to cover various risks such as Erection and Construction all risks, Marine risks, Loss of Profit coverage due to delay in Project Start-up etc. Annual Report 2010-2011

48 Polyplex (Thailand) Public Company Limited

4.8 Risk from dependence on the parent company Polyplex Corporation Ltd. (PCL), through direct and indirect shareholding, currently controls 51% of the paid up shares in the Company. In the initial 2-3 years of its incorporation, PTLûs core management team consisted of persons who were previously employed by PCL and they played a vital role in successfully establishing PTLûs operations ahead of the schedule and at a lower-than-estimated cost, together with ensuring high productivity levels resulting in the Companyûs ability to produce quality products at a competitive cost. However, after about 4-5 years of running, once operations were fully stabilized, the company successfully implemented a program for reducing the dependence on expatriates by increasing the proportion of local Thai staff in operating/managerial positions and has been managing the production and operations efficiently thereafter. The Companyûs present management team is composed of experienced key personnel in production, marketing, distribution and accounting/finance. It has thus been able to run the business on its own without reliance on the parent company. It is only in the research and development area and the implementation of new projects, where the parent company provides know-how and technical assistance to the Company. PTLûs business operation is independent from PCL in such undertaking as public offering of equity, borrowing of loans, and other investments in the future, for instance. The parent company need not request any approval from any government bodies except for reporting of significant events to two stock exchanges where it is listed, namely Mumbai Stock Exchange and National Stock Exchange. The Company is confident that there will be no conflict of business interest between PCL and PTL on account of the following: It is Polyplexûs policy in business operation that there is an equitable distribution of business between the various manufacturing units aligned to efficient servicing of customers.

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The investment in PTL and its subsidiaries is higher as compared to PCLûs assets, hence the success of PTL being critical for PCL.

4.9 Risk from sponsor group holding about 51% of total shares Currently, PTLûs major shareholder is PCL (As of March 31, 2011 the promoter Mr. Sanjiv Saraf and related parties control 46.93% in PCL), holding 16.50%, and Polyplex (Asia) Pte. Ltd. (çPAPLé) which is wholly owned by PCL, holding 34.50%, thus in aggregate holding 51% of PTL paid-up common shares of Bt. 800 million. Thus, in matters that require a three-fourths majority vote of shareholders, the minority shareholders can successfully oppose corporate actions undertaken or supported by the majority shareholders. However, the parent

company will continue to play a vital role in determining the Companyรปs policy on business administration and operation. However, PTL has set up a three-member Audit Committee to provide for an audit of the operations and the management. Besides, PCL is listed on the Stock Exchanges in India and abides by the Corporate Governance regulations prevailing for listed companies in India. 4.10 Foreign exchange risk Most of PTLรปs products, i.e. about 75-85%, are for exports, which are mostly denominated in US dollars and Euro. As against this, raw material (PTA & MEG) prices are also linked to the US dollar, although their payments are done in Baht and there are Long term loan related interest payments/loan repayments in USD and Euro. The company as at Mar 31st รป11 had Euro loans of about 6.2 million and USD loans of about 36.4 million. There are some expenses which are in Thai Baht, i.e. locally procured raw materials, packing materials, salaries, utilities and other administrative expenses which have to be settled by income from domestic sales and from the surplus income from USD/Euro exports. Thus, broadly speaking, PTL has a net surplus US dollar and Euro position on the trade front, which can be hedged somewhat against repayment of its long-term loans. To the extent possible, the company has been trying to create a natural hedge to mitigate the risk from currency fluctuations. On an ongoing basis, the company also takes forward covers, to cover the net surplus exposure in USD and Euro. Similarly, the Companyรปs subsidiary in Turkey has a net surplus in USD and Euro currencies whereas they have certain payments in the local currency, which is hedged from time to time by taking appropriate forward covers. The funding for new Projects of the company are also planned based on the future inflows from the Project Operations so that a natural hedge can be created to the extent possible 4.11 Interest rate risk As of March 31, 2011, the Companyรปs outstanding long term loans (consolidated basis) were Euro 18.2 million and USD 36.4 million, whereas outstanding short term loans were USD 6.4 Mn. The USD loans amounting to USD 6.1 million have already been swapped to fixed interest rate and the balance loans have floating LIBOR based interest rates. Almost all the Euro loans have floating EURIBOR based rates, except for Euro 0.2 Mn at the subsidiary in Turkey which is swapped to fixed rate. The floating interest rate may put the Company at a risk of rising financial cost if the interest rates move up. The company has been constantly monitoring the interest rates and will take interest rate swaps for converting the liability into fixed rates, if considered beneficial.

Annual Report 2010-2011

50 Polyplex (Thailand) Public Company Limited

4.12 Risk from overlap of products and markets The product portfolio of PCL, PTL and PE is quite similar. In order to mitigate the risk from overlapping of products and markets, Polyplex has also evolved an equitable policy for distribution of markets for PET film business between its Indian, Thailand and Turkey operations based on the several factors like product range, delivered cost to customer, supply lead times and preferential duty access. Based on the same, PTL would serve North America, South East Asia, Asia Pacific, China, Australia & New Zealand. PCL would serve South Asia, and South America. Turkey will serve, Europe, America, Middle East, Africa and CIS/Russian markets. The Polyplex group also has a policy on future investments in polyester film / related areas between the Company and its parent company. Investments in India/SAARC region would be decided and made by PCL and its other subsidiaries (excluding the Company) while investments In Thailand / ASEAN region as well as other countries would be in all likelihood be made by PTL or the subsidiaries in which the Company has a major stake. The above is subject to availability of Investible cash / ability to borrow debt by the existing / preferred Company as per the policy. 4.13 Credit risks Credit risk of customers is another significant risk for any business. The Company manages the risk by adopting appropriate credit control policies and procedures. All the sales, which are on credit are secured either through a Letter of credit issued by the customer or by taking appropriate credit insurance coverage for both domestic and export sales. The Company also takes extra caution in selection of any new customers and granting of credit. 4.14 Risk from European economic crisis Since the company没s subsidiary in Turkey is mainly dependant on the European market, the recession in Europe has raised concerns regarding the potential impact of this recession on our Turkey operations for this financial year. As of now, the subsidiary has not felt any direct impact in terms of contraction in demand/ orders from its customers, which would impact its operations or the profitability for the current year. In fact, during the FY 2010-11, the subsidiary没s net profit went up by almost more than 5 times compared to the previous financial year due to the favorable market situation. Since most of our products are being used in the packaging of consumer staples (food items, soaps, detergents etc), it may be said that such products are recession resistant and as such, the impact of the recession is not expected to be very significant. However, any weakening of the Euro currency, would impact the the consolidated revenues/ profits of PTL, since the reporting currency of the Turkey subsidiary is in Euro and most of its revenues are also Euro denominated, along with some sales in USD currency as well.

5. Future Projects 5.1 Future Projects 5.1.1. Silicone Coating Line (PTL - Thailand) In May 2009, the Board had approved investment in a Silicone Coating line, which will be another value added product in the Companyûs portfolio of products. The parent company in India has been manufacturing this product since 2007 and has been quite successful in establishing itself in the market. Hence, it was decided to Invest in another Silicone Coating line within the group. This project is being implemented in Thailand by partially using the plot of land located adjacent to the factory in Siam Eastern Industrial Park, where the companyûs Extrusion Coating Project and the Cast Polypropylene Plant have been installed. Project Details The Investment in this project is about USD 23 million The capacity of this line would be dependent on the product mix run on the line and could vary largely from 400 to 600 million sq. mtrs. Target markets would be mainly Europe, US and Asia. The usage of the film would be mainly as Release Liners for Label Liners, Graphic Arts, Medical Liners etc and also be used in Shingle Tape application. ● ●

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Project Rationale This Project would help in further diversification of current PET film business Presently, the use of Paper Liners is more common and it maybe said that Film Liners account for only about 15% share in this application. However, there is a big opportunity for substitution of Paper liner with Film Liners due to certain characteristics of Film Liners which are better than Paper Liners (Eg: Film has higher tear resistant properties as compared with Paper and can prove to be a better Liner in labeling applications which operate in high speed machinery). This would also help us in differentiating ourselves with other Asian film producers, none of whom are present in Siliconizing business We will have the advantage of an integrated facility in comparison with stand alone siliconizing producers in Europe and US due to a more competitive cost structure Capture the shortage of capacity in this segment by leveraging on the experience gained in operating the similar product line in India. ● ●

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Annual Report 2010-2011

52 Polyplex (Thailand) Public Company Limited

Status of the project: The company has tied up Long term Debt financing of $ 16.5 Mn for part financing the project, out of which loans amounting to USD 6.9 million have been drawn until 31st March 2011. Balance project costs would be met out of internal accruals of the company. The deliveries of main machineries have been received and are currently under installation. Test runs are expected to be conducted over the next few months The civil construction and electrical/mechanical works are expected to be completed within Juneû11 The commercial start up of this project is expected in the Q3 of financial year 2011-12 The BOI promotion certificate has been received ●

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5.1.2. Expansion of Thin PET Film line capacity In July 2010, the Thin PET film line expansion project was approved by the Board to be implemented in the Companyûs subsidiary in Turkey. An Investment of USD 70 million was approved in a Polyester Film line alongwith an associated Polyester Chips and Metallized Film line. In its meeting held on 25th May 2011, the Board of Directors has approved relocation of this project to the USA. Project Details: Total Capital investment is estimated to be about USD 75 million This would include a PET Thin Film Line of 8.7 metres width with a capacity of about 31,000 TPA and a High speed Metallised Film line of 2.85 metres width with a capacity of about 8,600 TPA Investment to be made by a new company to be incorporated in the USA, which will be a 100% subsidiary of the Company and/or its 100% held subsidiaries Funding of the Project will be through Long Term Debt borrowing to the extent of 65-75% of the Project cost and balance will be funded out of internal cash flows of the Company and/or its subsidiaries The expansion is scheduled to be completed within 15-18 months from the time of financial closure. ● ●

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Project Rationale: Polyplexûs market share in the American continent has increased significantly post acquisition of the Trading Company in the US, in January 2006. With existing US PET thin film manufacturers shifting their focus from packaging applications to high end industrial and electrical applications and no new capacities coming in the US, there is a scope for Polyplex to further increase its market share in the US. The Company evaluated the option of either servicing the US market from its existing manufacturing 53

location(s) vis a vis setting up of a manufacturing base in the US. The Company felt that an on shore location would be more competitive from a long term point of view as compared to an off-shore supplier due to the following reasons: Proximity to key markets leads to reduced cycle time, faster deliveries and is clearly a source of differentiation in the eyes of the customer. Also this will help the company to reduce its logistics, delivery costs including lower working capital. Both the key raw materials i.e. PTA and MEG are surplus in North America and possibilities of co-location also exist to further improve the economics. Risk of Trade remedial measures like AD/CVD duties can also be significantly reduced / eliminated. An additional location will also significantly diversify the overall business risk. ●

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5.1.3. Thick PET Film line project ( PTL -Thailand) In its meeting held on 14th February 2011, the Board of Directors has approved an Investment in a Thick PET film line in Thailand. In the recent past, there have been several structural changes in the PET film industry. Some of the large PET thin film producers are accelerating exit from the competitive commodity segments in packaging (Thin films) & industrial (traditional Thick and Thin films) to electrical/electronic segments (new Thick film applications) - as a long term competitive repositioning strategy. This has prompted some major players of PET film to shift their focus from commodity Thin PET films to such specialized Thick PET films. While Thin PET film would continue to remain the core business of Polyplex, the company would evaluate opportunities in other related businesses, for sustainable growth in this industry. Project Details The Total Investment in this project (including working capital) would be about USD 75 million The project would include a PET Thick Film Line of 5.9 metres width with a capacity of about 28,800 TPA and a Polyester Batch Process Chips manufacturing facility with capacity of about 28,000 TPA. The product range from the new PET thick film line would be thick film in the range of 23-350 micron thickness. Funding of the Project will be through Long Term Debt borrowing to the extent of 65-75% of the Project cost and balance will be funded out of internal cash flows of the Company. The start up of this project is expected in 18-24 months from financial closure i.e Approx H1 of FY 2013-14 ●

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Annual Report 2010-2011

54 Polyplex (Thailand) Public Company Limited

Project Rationale Polyplex has become a preferred supplier of PET thin film to almost all the large convertors in major markets in the world. By implementing the project for PET Thick film, the company would have certain benefits as given below: Diversification of risk from packaging dominated to industrial segments Thick film offers a relatively higher margin and more stable business, thereby mitigating the risk of volatility in earnings. Would also give an opportunity to the company to meet the in house requirement of Thick PET film for Extrusion Coated film line (existing in Thailand) and the Silicone Coating film line under implementation in Thailand Enhancement of presence in North East Asia (Japan, Korea and Taiwan) which are large markets for traditional thick films Leveraging existing sales and distribution network Extension of inherent cost competitiveness - being a part of large manufacturing facility leading to reduction in 1. Capital cost 2. Operating overheads - manpower, shared services, SG&A etc ● ●

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5.2 Other Capital Expenditure As an ongoing effort to improve productivity, reduce losses, develop products and enhance quality control, PTL undertakes several small/medium capital expenditures on the basis of cost benefit analysis. The total outlay over the next 12-15 months for such projects is estimated at about Bt. 100-150 million which includes some energy conservation schemes, apart from normal insurance spares and miscellaneous equipments for upkeep of the machinery.

6. Legal Dispute -None-

7. Shareholding Structure 7.1 Shareholding Structure 7.1.1 Securities PTL's current registered capital is Bt. 960 million of which, Bt. 800 million is paid up, divided into 800 million ordinary shares each of Bt. 1 par value. 7.1.2 The shareholding structure of PTL as on 31st March 2011 is as follows:

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Name Polyplex Corp. Ltd. (PCL) Polyplex (Asia) Pte. Ltd. (PAPL) General public Existing small shareholders* Total ○

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Ordinary shares 131,999,940 275,999,915 392,000,000 145 800,000,000 ○

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% 16.50 34.50 49.00 0.00 100.00 ○

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* Beneficial interest held by PCL and PAPL PCL's shareholding structure as of March 31, 2011 is shown as below: Name

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Promoter/Sponsor Group Institutional investors Non Institutional Investors (Corporate Bodies, Indian public, HUF) Other shareholders Grand total ○

○

% 46.93 7.71 35.43 9.93 100.00 ○

○

PAPL is 100% held by PCL and together PAPL and PCL hold 51% of PTL. 7.1.3 Dividend payment policy As per the dividend policy stated in the prospectus, dividend is required to be paid out at rate of about 40% of the annual net profit, taking into account economic conditions, growth plans, future deployment opportunities, the Company's financial position and liquidity and subject to the approval by the shareholders. The Board of PTL has recommended a dividend of Baht 1.94 per share for FY 2010-11, out of which Bt 0.59 per share was paid as Interim dividend in November 2010 and the balance of Bt 1.35 per share will be paid out in August 2011, post approval by the Shareholders in the Annual General meeting to be held in July 2011. The following graph shows the comparison of dividend payment for the last 7 years, since the company's public listing in December 2004. The dividend per share is in line Annual Report 2010-2011

56 Polyplex (Thailand) Public Company Limited

with the company's policy of paying dividend at 40% of net profits. In the years when the profit has been lower due to cyclical downtrend in the PET film industry, the dividend per share has also come down.

7.2 MANAGEMENT STRUCTURE Company Secretary

Board of Directors

Audit Committee

Managing Director

Head - Chief Financial Officer

Head Operations

Head Sales & Marketing

Corporate Finance

Head-Production & Engineering

SE Asia

Costing and Accounts

Head - Film & Chips Plant

Domestic market

Head - Cast Polypropylene Film plant

America

Legal & Tax

TPM

Europe

Investor Relations

HR & Industrial Relations

Others

Business Head SARALAM

Manager-SARALAM Plant

Quality Assurance & Technical Services Purchase & Stores

PTL has a board of directors and an audit committee. There is a provision to appoint other need-based committees as may be appointed by the shareholders or the board of directors from time to time. The board members and executive officers are qualified persons with complete qualifications as per Section 68 of the Public Limited Companies Act B.E. 2535 and as per the Notification of the Securities and Exchange Commission (SEC) No. KorJor. 12/2543 Re: Application for Permission and Permission to Sell Newly Issued Shares dated March 22, 2000. Details of the board of directors and other committees are as follows: 7.2.1 Board of Directors As of May 31, 2011, PTL's Board of Directors is composed of eight members as follows: 1. Mr. Manu Leopairote Board chairman and Audit Committee Chairman 2. Dr. Virabongsa Ramangkura Director (and Audit Committee member) 3. Mr. Shiraz Erach Poonevala Director (and Audit Committee member) 4. Mr. Sanjiv Saraf Vice Chairman 5. Mr. Praphad Phodhivorakhun Director 6. Mr. Pranay Kothari Director 7. Mr. Ranjit Singh Director 8. Mr. Rohit Kumar Vashistha Managing Director Mrs.Supritha Pai Kasturi is the secretary to the Board of Directors Authorized signatories Any one of the four authorized signatories, namely Mr. Sanjiv Saraf, Mr. Pranay Kothari, Mr. Ranjit Singh, and Mr. Rohit Kumar Vashistha are empowered to sign with the Company's seal affixed. Power and duties of the board of directors (the Board) The Board of Directors has the powers, duties and responsibilities to faithfully and prudently conduct the operations of the Company in accordance with the Company's objectives and Articles of Association, applicable laws and resolutions of the shareholders' meetings, for the benefit of the Company. A summary of the substantial duties and responsibilities of members of the Board of Directors is set out below: 1. to hold the annual general meeting of shareholders within 4 months from the close of the accounting period; 2.

to call the meeting of the Board of Directors at least once every calendar quarter

to arrange for the preparation and submission of the audited balance sheet and profit and loss statement at the end of each accounting period to the shareholders' meeting for its consideration and approval;

to authorise any one or several directors to perform any action on behalf of the Board of Directors under the supervision of the Board of Directors, or granting the

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58 Polyplex (Thailand) Public Company Limited

power-of-attorney to such designated director(s) to perform any action within the specified time as the Board of Directors may think fit; provided, however, that the Board of Directors has the sole discretion to revoke or modify such designated director or power-of-attorney as the Board of Directors may think fit. For this purpose, the Board of Directors may authorize the Executive Committee, if any, to conduct any activities within the specified scope of work, duties and responsibilities of the Executive Committee. No authorization will entitle the Executive Committee to consider and approve the transaction which may cause a conflict of interest between the Executive Committee or any related person or interested person as the one party and the Company or its subsidiary companies as the other party. However, an exception is granted where the transaction conforms to the approved policies and rules of the Board of Directors; 5.

to determine the goals, prospects, policies, business plans and budgets of the Company, and to ensure that the management work performed by the Executive Committee, if any complies with the set policies. However, the Board of Directors needs to obtain the resolution of the shareholders' meeting before entering into these legal transactions, for instance, increase or reduction of capital, issue of bonds, sale or transfer of all or any substantial parts of the Company's businesses to any third party, purchase or acceptance of transfer of other businesses, amendment to the Memorandum of Association, and so on. The Board of Directors is also responsible for ensuring the Company's compliance with the securities and exchange law and rules of the SET, for instance, rules concerning the entry into connected transactions and concerning purchase or sale of substantial assets, including any law governing the Company's business;

to review the management structure and appoint the Executive Committee, General Manager and any subcommittees, as it deems appropriate;

to ensure that the Company's performance follows the business plans and budgets at all times;

to refrain from conducting any similar or competitive business, participating as partner in an ordinary partnership or partner with unlimited liability in a limited partnership or director in a private company or in any other firm, company or corporation operating the business similar to or in competition with the Company, regardless of whether for his/her own benefit or for others' benefit. However, an exception is granted where the director provides notice to the shareholders' meeting in advance of his/her effective appointment as director of the Company; and

to notify the Company without delay of the event of likelihood that the director may have direct or indirect interests as a result of (i) the Company's entry into any agreement; and (ii) his/her increased or decreased holding of shares or bonds in the Company or its subsidiary companies.

7.2.2 Audit Committee The Company's Audit Committee comprises of: 1. Mr. Manu Leopairote Audit Committee Chairman 2. Dr. Virabongsa Ramangkura Audit Committee member 3. Mr. Shiraz Erach Poonevala Audit Committee member Mrs.Supritha Pai Kasturi is the secretary to the Audit Committee. Power and duties of the Audit Committee 1. to review the sufficiency, credibility and objectivity of the financial reporting of the Company by coordinating with the external auditors and management responsible for preparing the quarterly and yearly financial reports. The Audit Committee may suggest issues or matters to be included for review or audited by the external auditors during its audit of the Company; 2.

to review the adequacy and effectiveness of internal control systems and internal audit functions by coordinating with the external auditors and internal auditors (if any);

to review compliance with the Securities and Exchange Acts, Regulations of the SET, and any other relevant laws;

to consider and advise on the appointment of the external auditor including the audit fee, taking into account the creditability of the external auditor, the adequacy of its resources, the firm's audit engagements, and the experience of its supervisory and professional staff; as well as to have a meeting with the external auditor, once a year without the presence of the Executive directors or any other member of the management team.

to review the connected transactions and ensure proper compliance with all the SET regulations and also to ensure adequate disclosures or conflict-of-interest disclosures;

to take care of any other matters assigned to it by the Board of Directors, such as reviewing the Company's financial and risk management policies, reviewing compliance with the Code of Corporate Conduct of the management, and reviewing with the company's management, all important reports which must be disclosed to the public according to the law (e.g. Management Discussion and Analysis (MD&A), etc.);

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60 Polyplex (Thailand) Public Company Limited

to report the activities of the Audit Committee in the company's annual report, which must be signed by the chairman of the Audit Committee, and to express in such annual report the Audit Committee's opinion on (i) the accuracy and completeness of the procedures for the preparation of the report and information disclosure, (ii) the sufficiency of the internal control system of the Company, (iii) opinion on the suitability of the external auditor and appointment for another term, (iv) the number of Audit committee meetings held in the previous year and the attendance of each member in such meetings, (v) opinion on the connected transactions and any transactions that may lead to conflict of interest (vi) the compliance by the Company with rules and regulations of SET, SEC and other applicable laws, and report on any information that the shareholders and investors should be aware of under the scope of power of the duty that has been assigned by the Board of Director.

to report the performance of the Audit Committee to the Board of Directors at least once every calendar quarter; and

to express its opinion on the performance, appointment, removal and determination of remuneration of the internal auditor.

7.2.3 Management PTL's senior management during 2010-11 consisted of five persons as below: 1. Mr. Rohit Kumar Vashistha Managing Director 2. Mr. Vinod Sureka Chief Financial Officer 3. Mr. Manav Singh Business Head - SARALAM division 4. Mr. Ramanathan Kannan Head - Operations* 5. Mr. Ashish Ghosh Head - Sales & Marketing * For part of the year - Until June;10 Power and duties of Managing Director 1. to monitor and supervise the day-to-day business operations and management of the Company. 2.

to undertake or perform duties in line with the policy, plan and budget approved by the board of directors and/or the Executive Committee (if any) of the Company.

to perform as the authorized person of the Company in administering the business in line with the objective, regulations, policy, rules, stipulations, orders and resolutions of the meeting of the Board and/or resolutions of the meeting of shareholders.

to appoint and manage the performance of the working committees to ensure benefit and efficiency as well as transparency in management, and be authorized 61

to appoint and/or assign any person to specifically perform on his behalf. Such delegation of power and authority shall come under the purview of such certain authorization letter and/or comply with the regulations, stipulations or orders issued by the board of directors and/or the Company. 5.

to determine mission, objectives, framework and policy of the Company including orders and supervision in overall for optimum benefit in administration.

to follow up and assess the Company's operational results on a regular basis to cope with both internal and external risks.

to consider and approve expenditure spending in the normal course of business operations, such as transacting with banks regarding deposit accounts or procurement of raw materials for production

to consider the recruitment and employment of personnel as well as transfer, rotation across functional lines/departments/divisions, or termination of employment of personnel, and determine rate of wages, remuneration, bonus and welfare package relating to personnel.

to issue orders, regulations, announcements and memorandum to ensure the operations come out in line with the policy and for the benefit of the Company as well as to maintain discipline in the organization.

10. to perform any other duties as occasionally assigned by the Board of Directors Power to approve any transactions (i) which may cause a conflict of interest with the Company or its subsidiary; or (ii) in which the interests of the Managing Director or other interested person may be in conflict with the Company or its subsidiary, under the applicable rules and regulations of the SET, do not fall within the scope of the powers and authorities of the Managing Director to act at his/her own discretion or to designate any person to act on his/her behalf. Typically, these transactions need the consideration and approval of the Board of Directors and/or the shareholders' meeting in accordance with the Articles of Association of the Company and subject to applicable laws. 7.2.4 Role of Company Secretary The Company has appointed Mrs. Supritha Pai Kasturi as the Company Secretary. She is a qualified Chartered Accountant from the Institute of Chartered Accountants of India and has the requisite knowledge and experience to perform this function. She also performs the role of the Secretary to the Board of Directors and to the Audit Committee.

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62 Polyplex (Thailand) Public Company Limited

Responsibilities of Company Secretary: Arrange the Board of Directors' Meetings, Audit Committee Meetings and the Shareholders' Meeting in accordance with the relevant laws and regulations. Prepare the Agenda/ supporting documents for the above meetings and ensure that the same is circulated to the concerned members, at least a week in advance of the meeting date, to allow sufficient time to review the documents. Prepare the Minutes of all the above Meetings and monitor subsequent compliance with the resolutions of those Meetings. Ensure that disclosures of information to regulatory agencies (SET/SEC and other relevant regulatory agencies) are made in accordance with the applicable laws and regulations. Execute any additional duties assigned by the Board of Directors from time to time ●

●

7.2.5 Selection of members of the board of directors, independent directors and the audit committee The Company has no Nomination Committee to select and nominate any persons to be appointed as directors of the Company. In this regard, the Board will undertake the selection process, taking into account the experience, expertise and competency of the prospective persons and the qualifications required as per the criteria prescribed in the Public Limited Companies Act B.E. 2535 and as announced by the SEC and relevant agencies, as also the provisions of Articles of Association of the company. Nomination will be made at the shareholders' meeting and election made under the procedures prescribed in the Company's regulations as below: I)

Selection of members of the Board of Directors a) The Company is required to have a board of directors consisting of at least 5 persons. The board of directors must elect one of their members to be the Chairman and may elect another member to be a Vice-Chairman and any other positions as they see fit. At least one-half of the directors must reside in Thailand. A director need not be a shareholder of the company. b)

A meeting of shareholders must elect the directors in accordance with the following procedures and rules:a. Each shareholder has one vote for each share held; b. Each shareholder may exercise the votes in electing one or more persons to be the directors but the votes are indivisible; and c. The person who obtains the highest votes will be elected as a director in respective order according to the required number of directors, but if two or more persons obtain equal votes, the Chairman must exercise a casting vote. 63

At every general meeting of shareholders, one-third (1/3) of the directors, or if it is not a multiple of three, then number nearest to one-third (1/3) must retire from office.

There must be a drawing by lots to determine the directors retiring on the first and second years following the registration of the company. In each subsequent year, the directors who occupy the position for the longest period must retire. A retiring director is eligible for re-election.

II)

Selection of members of the Audit Committee/Independent Director Audit Committee is composed of at least three independent directors with an office term of 2 years. The Company has a policy to select and nominate Audit Committee / Independent director in compliance with the SEC Notification no. KorJor. 12/2543 regarding application for and approval of offering of newly issued shares, with each of whom to have the following qualifications: a) Hold shares not exceeding 5% of the total shares with voting rights of the Company, an affiliated company, a subsidiary company, an associated company or a juristic person that may have conflict of interest, b)

Not be an employee or a staff member or an advisor who receives a regular salary or a person with controlling power of the Company, an affiliated company, a subsidiary company, an associated company or a juristic person that may have conflict of interest,

Not be a person having blood relation or legal relation in the manner of being any family member or spouse thereof of the executives, the major shareholders, the persons with controlling power or any persons to be nominated to the managerial positions or the persons with controlling power of the Company or a subsidiary company.

Have no business relation with the Company, an affiliated company, a subsidiary company, an associated company or any juristic person that may have conflict of interest in the manner that may hinder the use of individual's independent judgment, and have no other nature that will hinder the individual's provision of independent opinions relating to the Company's operations.

In addition, at least one independent director appointed as an Audit Committee member must have sufficient knowledge and experience in finance and accounting areas so that he/she can review the reliability of the financial statements. Other qualifications must also be taken into account, comprising business Annual Report 2010-2011

64 Polyplex (Thailand) Public Company Limited

experience, expertise in the field related to the business and ethical qualifications, to ensure maximum benefits to the Company. The appointment of Audit Committee members is subject to the same criteria and procedures as those in the appointment of directors of the Board. The vacating Audit Committee member upon completion of his/her office term of 2 years may be re-appointed by the Board of Directors for another term. In the event that there is a vacancy on the grounds other than the completion of office term, the Board shall select and appoint the person who possesses the required qualifications to fill the vacancy to complete the number of the Audit Committee members as prescribed by the Board. The newly appointed Committee member shall be in the office only for the remaining period of the office term of the vacating member. 7.2.6 Remuneration for management a. Monetary remuneration Directors Before the transformation into a public company, PTL had five directors. These directors did not receive any meeting allowance from the Company. Since transformation into a Public Company in 2004, the Company has 8 Directors on the board. Until FY 2007-08, the Directors had renounced their right to receive any remuneration. However, from FY 2008-09, the independent directors are receiving remuneration as approved by the shareholders in the Annual General Meeting of the Company. For the FY 2010-11, the actual remuneration paid to the Independent Directors is Baht 3,000,000 as against the amount approved of Baht 3,000,0000. Details of the same are as under: S.No Name of Director 1 Mr. Manu Leopairote 2 Dr. Virabongsa Ramangkura 3 Mr. Praphad Phodhivorakhun 4 Mr. Shiraz Erach Poonevala

Amount Approved (Baht) Baht100,000 per month Baht 50,000 per month Baht 50,000 per month Baht 50,000 per month

Actual Paid (Baht) Baht 1,200,000 Baht 600,000 Baht 600,000 Baht 600,000

In addition to the above remuneration, meeting sitting fees of Baht 10,000 per meeting attended has been paid to the Audit Committee members, which is as per the amount proposed and approved in the Shareholder meeting in July 2010. For the FY 2011-12, it is proposed to fix a remuneration of Baht 75,000 per month to all the independent directors as mentioned below: 1. Mr. Manu Leopairote 2. Dr. Virabongsa Ramangkura 3. Mr. Praphad Phodhivorakhun 4. Mr. Shiraz Erach Poonevala 65

Mr.Manu Leopairote, in his capacity as the Chairman of the Board of Directors and the Chairman of the Audit Committee would be entitled to an additional remuneration of Baht 25,000 per month, for each role. For the Audit Committee, each member would be entitled to a sitting fee of Baht 10,000 per meeting attended. The above remuneration package, to the Independent directors and Audit committee members, would be proposed to the Shareholder meeting for their consideration and approval. The remuneration details of the senior management, including 1 executive director of PTL is as below : 2006/07 2007/08 2008/09 2009-10 2010-11 (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar)* Number of executives 5 5 6 6 4 Salaries (In ù000û Baht) 7,890 9,085 9,389 9,753 7,611 Bonus and Others (In ù000û Baht) 4,614 9,245 8,199 10,325 10,292 Total 12,504 18,330 17,588 20,078 17,904 Remuneration (In ù000 Baht)

○

** Including remuneration of a senior management person who was in the company for only part of the year. So the number of executives was 5 until part of the year and 4 as on March 31st '11. b. Other remuneration Directors -NoneExecutives -None7.2.7 Personnel As of March 31, 2011, PTL had a total workforce of 411 persons, 378 of whom are personnel at the plant in Rayong Province and 33 at the head office in Bangkok. The Company also has 28 expatriates, 9 of whom are at the head office in Bangkok and the remaining 19 in Rayong.

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66 Polyplex (Thailand) Public Company Limited

Number of employees As of As of As of As of As of Department March March March March March 31,2007 31,2008 31,2009 31,2010 31, 2011 1. Executives 5 5 6 7 4 2. Production 141 140 137 162 161 3. Commercial, IT,Personnel & Admn. 44 50 47 35 37 4. Sales and Marketing 12 16 18 21 25 5. Chips plant 26 25 23 21 22 18 33 37 37 37 6. Metallizer 7. Extrusion Coating 0 19 38 53 46 8. Cast Polypropylene Project 0 0 2 51 56 9. Silicone Coating Project 23 Total 246 288 308 387 411

○

Employee (non-executive) remuneration (Bt. thousand) Remuneration

○

No. of employees Salaries & Wages Overtime pay Bonus Provident fund* Others Total ○

○

2006/2007 2007/2008 2008/09 2009/10 (Apr-Mar) (Apr-Mar) (Apr-Mar) (Apr-Mar) 241 283 302 381 55,309 61,180 71,072 78,272 7,292 6,985 6,655 7,350 10,810 18,473 16,233 15,408 567 595 1,841 2,102 29,794 35,925 42,303 47,183 103,772 123,158 138.104 150,316 ○

○

2010/11 (Apr-Mar) 407 101,857 11,206 27,941 2,489 55,705 199,198 ○

○

* The Company started contributing to the provident fund since September 2004. The contribution of the employee and employer is 4% There has been no labor dispute for the past years. HRD Policy The company realizes the importance of its staff as they are valuable assets and play a major role in the success and growth of the company. Therefore it has a policy to develop the efficiency, knowledge and skills of its staff at all levels by having well organized training programs on a periodic basis. Training programs are designed to improve various aspects of work life like technical competence, team building, enhancement of leadership skills, time management skills etc thereby improving the quality of the working life of the employees. Feedback of employees participating in such trainings is taken in order to help improvement of quality of seminars and trainings to be conducted in future.

8. Good Corporate governance & Internal Control 8.1 Corporate governance 8.1.1 Policy on Corporate governance Polyplex realizes the significance of good corporate governance and makes every effort to implement the Corporate Governance principles laid down by the Stock Exchange of Thailand. The company has firm belief in transparency, accountability and ethical conduct in carrying out its operations. Accordingly, the Company has formulated a policy which emphasizes regular disclosures to the public and the shareholders. In addition, the Company adopts strict internal controls and audits in recognition of their importance. It also has several risk management policies, keeping in mind a good relationship and business ethic towards business partners, shareholders and all concerned parties. In the year 2010, the Company has also been able to improve its Corporate Governance Rating, as per the IOD assessment for Listed Companies in Thailand, from ùGoodû to ùVery Goodû category. 8.1.2 Rights of shareholders The Company recognizes the importance of equal rights of all shareholders and considers all the shareholders as owners of the Company irrespective of the percentage of shares owned. The Company has a policy to report to shareholders regularly on progress of operations, either directly or through the Stock Exchange of Thailand or through information on its website after listing. Shareholders will be given fourteen days advance notice of all shareholder meetings, including the meeting agenda and related information. The shareholders would be encouraged to participate in the general meetings and their views and comments would be noted and followed up. In accordance with the good governance practice relating to equitable treatment of shareholders, the company also invites the shareholders to propose additional agenda for the Annual general meeting of the shareholders and gives sufficient time (about 30 days) to propose the Agenda. The shareholders also have the following rights which are exercised in the Annual Shareholding meetings: Re-appointment of Directors retiring by rotation and approval of the Director remuneration Approval of Auditor appointment and remuneration Approval of dividend payment ●

● ●

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68 Polyplex (Thailand) Public Company Limited

8.1.3 Rights of stakeholders PTL has always provided equal importance to the requirements of all its stakeholders as under: Personnel : PTL considers all its personnel to be valuable assets, critical to the success and growth of the organization. The Company is committed to providing a quality oriented work environment, with special emphasis on safety, along with fair and equitable remuneration. Apart from basic salary, Performance linked Bonus, Provident Fund contribution and Social Security Contribution, the Company also provides certain other benefits to its employees such as Overtime pay, Housing Allowance, Transport Allowance, Telephone allowance, Medical Insurance, Life Insurance coverage etc. Business partners: It has always been the policy of PTL to develop long standing and growing relationships with all its business partners based on mutual benefit and guided by good business ethics. The company values the long standing relationship with its business partners, whether it is the banks that support the trade finance and project financing requirements of the Company, or the strong Distributors/Agent network across various parts of the globe, which help in market development and ensure smooth continuity of the business operations for the company. Competitors : PTL will always abide by the framework of fair competition and would work towards market development and growth to the mutual benefit of the industry. Creditors : To abide by the loan covenants and provide all information about the progress of the Company to its creditors as may be required for smooth business dealings. Customers : PTL is committed to creating customer satisfaction by ensuring consistency in the quality of its products and offering value proposition to its global customer base. Shareholders : PTL strives to conduct its business in a transparent and efficient manner with a view to constantly strive to enhance shareholder value. New project investments will be evaluated prudently to ensure good returns and increase value to the shareholders. Community/ : PTL realizes and cares for the safety of society, environment and Society quality of life of people. It places priority on activities relating to the community and the society and also by compliance of applicable laws and regulations relating to the same. During FY ●

●

2010-11, the company organized Tree plantations in Chantaburi province to support natureûs conservation and also extended support to a Turtle Conservation project. The company also provided donations to the flood victims of South of Thailand and towards the Rehabilitation fund for Japan Tsunami disaster. We organize Blood donation camps and encourage employees to donate blood. 8.1.4 Shareholdersû meetings The Company has a policy to enable shareholders to attend meetings without undue effort. It endeavors to organize the shareholdersû meeting with equitable treatment for all participants and in strict accordance with legal procedures, from meeting invitations, proxy form for those who are unable to attend the meeting, and distribution of meeting documents to inform all concerned of the meeting agendas. The meeting venue and time will be convenient while the meeting session will allow adequate time for shareholders to ask questions on business operations or voice their opinion. 8.1.5 Leadership and vision The Board of Directors is the forum for review of plans, vision, strategies and key policies. Elaborate budgets have been formulated for all functional areas in the Company and a system of Key Result Areas (KRAs) has also been implemented for each department and individual as also at the corporate level to align interests and priorities across the organization. The Board of Directors would play a leading role in regular review of the actual operations vis-à-vis budgets as well as other key performance indicators. 8.1.6 Conflict of interest The policy is based on the principle that any decision to be made by personnel at all levels in business operations must be in the best interest of the Company. It is the duty of all personnel to avoid any transactions and/or dealings which could result in financial losses to the Company and result in personal monetary benefit. The Audit Committee is entrusted to watch over and review the internal controls and audit function to ensure their efficiency and also ensure adequate disclosures to be made as per the SEC/SET guidelines. 8.1.7 Business ethics PTL has a code of conduct for all personnel who emphasize observance of ethical practices, honesty and accountability. Responsibility towards all stakeholders and external agencies is encouraged in order to foster a good corporate culture and social responsibility.

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70 Polyplex (Thailand) Public Company Limited

8.1.8 Check and balance by non-executive directors The Company has altogether eight directors as detailed below: Status

○

Executive Directors Non-Executive Directors Audit Committee

Shareholdersû representative Directors Independent Directors ○

○

1 -

○

3 1 ○

○

3 ○

○

8.1.9 Integration or delegation of title and authority The Chairman of the Board of Directors is an independent director and is also the Chairman of the Audit Committee. Independent directors constitute 50% of the Board of Directors and thus composition of the Board would ensure fair and effective management monitoring. The Managing Director is the CEO in charge of day-to-day operations and has specified powers with certain key decisions requiring approval by the Board of Directors. 8.1.10 Remuneration for directors and executives The remuneration of the Board of Directors and the Audit Committee is proposed to the Shareholder meeting for their consideration and approval. The Managing Directorûs remuneration is fixed by the Board of Directors in discharge of duties as the CEO of the Company. The remuneration of the management is open for review by the shareholders who may set the appropriate policies and guidelines on this matter. 8.1.11 Board meetings The meetings of the Board of Directors are usually convened at least once every quarter to review the operations / quarterly financial results and other matters. There were five Board meetings conducted during the FY 2010-2011.Attendance of directors is as follows: Name Mr. Manu Leopairote Dr. Virabongsa Ramangkura Mr. Shiraz Erach Poonevala Mr. Sanjiv Saraf Mr. Rohit Kumar Vashistha Mr. Praphad Phodhivorakhun Mr. Pranay Kothari Mr. Ranjit Singh

○

Position Board Chairman & Audit Committee Chairman Director & Audit Committee member Director & Audit Committee member Vice-Chairman of the Board Managing Director Director Director Director ○

○

Attendance 5/5 5/5 5/5 2/5 5/5 5/5 0/5 0/5 ○

○

8.1.12 Supporting committees or sub-committees The Board of Directors has recommended and shareholders have approved an Audit Committee consisting of three independent directors. The Audit Committee members have the requisite qualifications under the relevant SET rules & guidelines. The powers 71

and allocation of work have been clearly defined by the shareholders and include review of internal control systems, review of financial reports, connected transaction or transaction involving conflict of interest. The term of the Audit committee is 2 years and may be renewed by the Board of Directors every 2 years. 8.1.13 Internal control and audit system The Board of Directors exercises control through setting of annual budgets and operational objectives, periodical review of which is done from time to time. Meanwhile, the Audit Committee oversees the internal controls and audit in the Company and suggests measures for improvement. 8.1.14 Board of Directorsû report The Board of Directors is responsible for the Companyûs financial statements. As a part of the annual report, the directors have commented on the financial results of the Company. 8.1.15 Relationship with investors The Company places significance on the timely disclosure of accurate information to its shareholders and investors. It has been participating in the SET Opportunity day every year to disseminate information about the Company and its operations to investors and analysts. The company also organized a factory visit for the shareholders, analysts and potential investors in February 2011, through the SET. The Company also organized an Analysts Meet in November 2010. Apart from this, the management also participates in Investor Meets organized by various brokerage houses within the region. As regards investor relations, the Company has a well-developed IR section in the company website. Investor queries can be sent to the IR website (investorrelations@polyplexthailand.com) and will be responded to by the management of PTL. The Investors/ Analysts can also register their e-mail IDûs and receive an IR alert message, when any information is updated on the Companyûs website. Further information regarding the Company may be obtained by contacting at tel. 0-2665-2706-8. Measures to prevent use of internal information for executivesû personal benefit The Company has a policy on supervision of usage of internal company information by its directors and management for their own benefit. The directors and management who come to possess internal company information are not permitted to buy or sell the securities of the Company for a specified period prior to its announcement of operating results.

8.2 Internal Controls At the 2/2011 board of directorsû meeting of PTL held on May 25, 2011 with two out of the three audit committee members attending, the board assessed PTLûs internal control by means of making inquiries with its management. Based on the assessment of PTLûs internal control system in five aspects, namely organization and environment, risk management, control of the executivesû operation, information technology system & information communication Annual Report 2010-2011

72 Polyplex (Thailand) Public Company Limited

and follow-up system, the board viewed that PTL has adequate internal control with regard to the making of transaction with its major shareholders, directors, executives, or persons connected with the above mentioned persons. The board considered that the Companyûs adequate and appropriate internal control and follow-up of the operations would be able to safeguard its assets against any illegitimate use by the executives.

8.3 Connected Transactions 8.3.1 A summary of the connected transactions between PTL and the connected parties during the past three years is as follows Party having Relationship conflict of interest

Description of transaction

Polyplex PCL is the Corporation Companyûs major Ltd. (PCL) shareholder, owning directly and indirectly the 51% of the Companyûs share capital and the two parties have common directors.

PCL made advance payments on behalf of the Company for administrative expenses, which were mainly traveling expenses of employees, accommodations for employeesû family, educational fees for employeesû children, insurance claims of employees, insurance premium payments, project related expenses etc. The Company has given the appropriate accounting treatment to these expenses and/or collected these amounts from the employees and paid them back to PCL. Polyplex PCL is the PTL made payments on Corporation Companyûs major behalf of PCL, which were Ltd. (PCL) shareholder, mainly traveling and other owning directly expenses of PCL and indirectly the employees and their 51% of the families. Companyûs share capital and the two parties have common directors.

○

Net Amount Paid to PCL by PTL (Bt. 000ûs) 2008-09 2009-10 2010-11 The price of the 6,461 3,467 1,221 transaction between PCL and the Company was a normal price in general business practice and was the price as actually paid by PCL in advance for the Company without any extra charge by PCL. Pricing policy

○

The price of the transaction between PCL and the Company was a normal price in general business practice and was the price as actually paid by company in advance for PCL without any extra charge.

○

185

○

185

○

131

* The outstanding amount payable by PTL to PCL as on 31 March 2011 was Baht NIL.

8.3.2 Necessity and reasonableness of the connected transaction The connected transaction involved the advance payments made by PCL on behalf of the Company for administrative expenses. The payments were made for such expenses as transportation, accommodations for employees没 family, educational fees for employees没 children, insurance claims of employees, project related expenses etc. The Company has given the appropriate accounting treatment to these expenses and/or collected these amounts from the employees and paid them back to PCL. The reimbursement of advances/expenses was to PCL was at the actual prices incurred without any extra charge by PCL. The connected transaction also involved the advance payments made by the Company on behalf of PCL for administrative expenses, which were later re-imbursed by PCL to the Company. 8.3.3 Measures or procedures for approval of the connected transaction The audit committee of PTL has examined the connected transaction described in the table above and viewed that it is in accordance with the normal business practice. For such transactions in the future, the Company can undertake the transactions and inform the audit committee on a quarterly basis. For any other future connected transactions, the Company will assign the concerned units to gather the relevant information and provide it to the audit committee to be used as a basis for its consideration on those transactions as to whether they are consistent with the normal business practice and the market price. The Company would follow the regulations of the SEC and SET in this regard. The audit committee has to consider and inform the board of directors for the approval. The directors who have a conflict of interest may not partake in the giving of comments on those connected transactions. 8.3.4 Policy for potential connected transactions For any connected transactions that may take place in the future, the Company has a policy to set appropriate conditions on the said transactions based on the reasons and necessity of the Company. The connected transactions performed over the past period were merely advance payments, made for such expenses as transportation, accommodations for employees没 family, educational fees for employees没 children, insurance claims of employees etc. Moreover, there were no extra charges by the parent company regarding such cost and expenses as brand name and R & D, and so on. In performing any future connected transactions, PTL board of directors will comply with the law governing securities and exchange and the regulations, notifications and orders of the Stock Exchange of Thailand, as well as the regulations regarding disclosure of

Annual Report 2010-2011

74 Polyplex (Thailand) Public Company Limited

information about connected transactions and acquisition or disposal of core assets of companies or subsidiary companies according to the accounting standards defined by the Institute of Certified Accountants and Auditors of Thailand. Where the connected transaction involves any person who may have a conflict of interest, the Company will arrange for the audit committee to give opinion on the necessity and appropriateness of that transaction. In case the audit committee has no expertise in any such transaction, the Company will have an independent expert or its external auditor provide opinion on that transaction to be used as a basis of decision-making by the board of directors or the shareholders, as the case may be. The Company will disclose such connected transactions in the notes to the financial statements duly audited by its external auditor.

9. Financial Position and Operational performance 9.1 Financial statements Auditor

○

Year

Name of auditor

CPA no.

2010/11 (April 1, 2010-Mar 31.2011) 2009/10 (April 1, 2009-Mar 31.2010) 2008/09 (Apr 1,2008-Mar 31,2009) 2007/08 (Apr 1,2007- Mar 31,2008) 2006/2007 (Apr 1, 2006 - Mar 31, 2007) 2003-04 to 2005-06 (Apr 1, 2003 - Mar 31, 2006)

Mr.Narong Puntawong

3315

○

Mr.Narong Puntawong ○

○

Mr. Vichien Thamtrakul

○

3183

○

Ernst & Young ○

○

Ernst & Young ○

○

2803 ○

○

Ernst & Young

3315

Mr.Pisit Chiwaruangroch ○

○

3315

Mr.Narong Puntawong ○

○

Ernst & Young

3315

Mr.Narong Puntawong ○

○

Auditing firm

○

KPMG Phoomchai Audit Ltd. ○

○

KPMG Phoomchai Audit Ltd.

Auditorûs report For all the past years, until the year ended on March 31st 2011, the Auditors have given an unqualified opinion that the financial statements were fairly presented and prepared in accordance with generally accepted accounting principles. The Company had set up subsidiaries, namely Polyplex (Singapore) Pte. Ltd. (PSPL) in July 2004, Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE) in September 2004, Polyplex (Americas) Inc. in January 2006 and Polyplex Trading (Shenzhen) Co. Ltd in 2009. The financial statements of last 3 years, for both Consolidated and Standalone, latest being the year ended on 31st March 2011, have been given for the purpose of comparison and for the appreciation of the growth in revenues and profitability over the years.

Annual Report 2010-2011

76 Polyplex (Thailand) Public Company Limited

○

Assets Current Assets Cash and cash equivalents Current investments Accounts receivable Amounts due from related party Inventories Other current assets Total Current Assets Non-Current Assets Investment in subsidiary Land, premises and equipment-net Intangible assets-net Other non current assets Total Non-current Assets Total Assets

○

2,408,782 2,205,535 74,127 4,688,445 6,086,694

○

39.57 36.24 1.22 77.03 100.00

○

2,113,486 2,629,228 82,499 4,825,213 6,033,356

○

35.03 43.58 1.37 79.98 100.00

○

1,936,415 3,115,042 260,825 5,312,282 7,304,139

○

2008/2009 April - March Amount %

○

8.02 13.17 0.68 12.59 1.18 35.65

Consolidated 2009/2010 April - March Amount %

○

1,231,009 164,947 1,896,159 221,816 1,732,304 212,333 5,458,568

○

10.32 1.38 15.89 1.86 14.52 1.78 45.74

2010/2011 April - March Amount %

○

Unit : Baht 000ûs

26.51 42.65 5,598,594 63.04 5,618,255 63.36 5,979,206 50.11 2,232 0.03 1,266 0.01 1,354 0.01 3.57 78,138 0.88 86,422 0.97 493,774 4.14 72.73 5,678,964 63.95 5,705,943 64.35 6,474,333 54.26 100.00 8,880,550 100.00 8,866,744 100.00 11,932,901 100.00

○

Unconsolidated 2009/2010 2010/2011 April -March April - March Amount % Amount %

17,566 0.29 108,797 1.80 42,042 0.58 432,538 4.87 711,418 348,700 5.73 - 164,947 2.26 348,700 3.93 670,613 11.02 644,582 10.68 1,181,339 16.17 1,334,256 15.02 1,167,444 52,241 0.59 60,646 313,719 5.15 411,888 6.83 470,777 6.45 959,569 10.81 1,116,293 47,651 0.78 42,876 0.71 132,752 1.82 74,283 0.84 105,000 1,398,249 22.97 1,208,144 20.02 1,991,857 27.27 3,201,586 36.05 3,160,801

2008/2009 April - March Amount %

Polyplex (Thailand) Public Company Limited Balance Sheet

78 Polyplex (Thailand) Public Company Limited

Annual Report 2010-2011

○

Liabilities & Shareholdersû Equity Current Liabilities Accounts payable Dividend payable Long-term loans-due within one year Short-term loans from financial institutions Other current liabilities Total current liabilities Non-current Liabilities Long-term loans-net of amount due within one year Other non-current liabilities Total Liabilities Shareholders Equity Issued & Paid-up Share Capital Preferred shares Ordinary shares Premium on ordinary shares Translation adjustment Retained earnings (deficits) Total Shareholdersû Equity Minority Interest Total Liabilities and Shareholdersû Equity

○

540,590 320,000 297,753 104,094 ○

○

6.09 3.60 3.35 1.17 ○

○

854,975 454,064 52,266

80,276 1.33 106,458 1.46 133,899 1.51 135,878 832,771 13.80 1,183,990 16.21 1,396,336 15.72 1,497,184 ○

821,531 11.25 256,001 3.50 -

○

800,000 1,370,460 1,722,774 3,893,234 6,086,694

○

13.14 22.52 28.30 63.96 100.00

○

800,000 1,370,460 1,798,721 3,969,181 6,033,356

○

13.26 22.71 29.81 65.79 100.00

○

800,000 1,370,460 2,829,489 4,999,949 7,304,139

○

10.95 18.76 38.74 68.45 100.00

○

800,000 1,370,460 (138,255) 2,543,705 4,575,911 20,316 8,880,550

○

9.01 15.43 (1.56) 28.64 51.53 0.23 100.00

○

1.53 189,958 1.59 16.89 2,062,206 17.28 ○

○

800,000 9.02 800,000 6.70 1,370,460 15.46 1,370,460 11.48 (388,776) (4.38) (316,111) (2.65) 3,211,091 36.21 6,481,976 54.32 4,992,775 56.31 8,336,325 69.86 19,709 0.22 26,380 0.22 8,866,744 100.00 11,932,901 100.00

○

9.64 1,290,564 10.82 5.12 387,200 3.24 0.59 194,484 1.63

0.05 3,258 0.03 43.47 3,570,197 29.92

○

8.46 3.18 0.83

2010/2011 April - March Amount %

1,957 0.02 4,456 2,193,460 36.04 2,064,175 34.21 2,304,191 31.55 4,284,323 48.24 3,854,260

○

510,356 192,139 50,000

2008/2009 April - March Amount %

Consolidated 2009/2010 April - March Amount %

26.53 1,504,733 12.61

○

72,401 1.19 917,523 15.07

5.93 5.26 2.70 -

Unconsolidated 2009/2010 2010/2011 April -March April - March Amount % Amount %

○

Unit : Baht 000ûs

1,275,937 20.96 1,231,404 20.41 1,120,200 15.34 2,886,030 32.50 2,352,620

○

360,865 320,000 164,256 -

2008/2009 April - March Amount %

Polyplex (Thailand) Public Company Limited Balance Sheet

○

Revenues Net sales Other revenues Gain on foreign exchange Total Revenues Costs and Expenses Cost of sales Selling and administrative expenses Loss of foreign exchange Management Benefit expenses Total Expenses Profit (loss) before interest expenses Interest expenses Income Tax Net profit (loss) after income tax Net loss of minority interest Net profit (loss) Earnings (losses) per share (Baht)

○

2,365,438 70.14 2,546,428 304,440 9.03 278,709 19,988 0.59 23,189 2,689,865 79.77 2,848,326 682,366 20.23 487,021 (68,194) (2.02) (39,074) 614,172 18.21 447,947 614,172 18.21 447,947 0.77 0.56

○

76.35 8.36 0.70 85.40 14.60 (1.17) 13.43 13.43 -

○

3,104,616 311,026 21,024 3,436,667 1,678,333 (35,565) 1,642,767 1,642,767 2.05

○

60.70 6.08 0.41 67.19 32.81 (0.70) 32.12 32.12 -

○

Unconsolidated 2009/2010 2010/2011 April -March April - March Amount % Amount %

○

57.44 6.67 0.43 64.54 35.46 (0.82) (0.25) 34.39 (0.09) 34.30 -

○

2010/2011 April - March Amount %

5,058,953 71.63 5,394,355 73.90 6,502,517 686,236 9.72 685,410 9.39 755,461 37,884 0.54 49,084 0.67 48,531 5,783,073 81.88 6,128,849 83.96 7,306,510 1,279,752 18.12 1,170,671 16.04 4,013,659 (219,211) (3.10) (114,655) (1.57) (92,728) (13,863) (0.20) (12,177) (0.17) (27,882) 1,046,679 14.82 1,043,839 14.30 3,893,049 (4,713) (0.07) (4,453) (0.06) (10,164) 1,041,966 14.75 1,039,386 14.24 3,882,885 1.30 1.30 4.85

○

2008/2009 April - March Amount %

Consolidated 2009/2010 April - March Amount %

○

Unit : Baht 000ûs

3,236,611 95.98 3,174,656 95.18 4,980,737 97.38 6,859,738 97.12 7,125,366 97.61 11,183,174 98.79 74,881 2.22 85,376 2.56 58,745 1.15 74,922 1.06 111,323 1.53 106,586 0.94 60,739 1.80 75,315 2.26 75,517 1.48 128,166 1.81 62,832 0.86 30,410 0.27 3,372,230 100.00 3,335,347 100.00 5,115,000 100.00 7,062,825 100.00 7,299,520 100.00 11,320,169 100.00

2008/2009 April - March Amount %

Polyplex (Thailand) Public Company Limited Statement of Income and Retained Earnings

Polyplex (Thailand) Public Company Limited Cash Flow Statement Unit : Baht 000ûs Unconsolidated Consolidated 2008/2009 2009/2010 2010/2011 2008/2009 2009/2010 2010/2011 April-March April-March April-March April-March April-March April-March

○

Cash flow from operating activities Net profit (loss) 614,172 Adjustment to reconcile net profit of net cash provided by operating activities Depreciation and amortization 154,466 Increase (decrease) allowance for (74) doubtful debts Allowance for diminution in value 16,183 of inventories (reversal) Dividend income (2,525) Interest Expense 66,837 Income Tax expense Gain on disposal of property, (534) plant and equipment Unrealized losses (gains) on 21,192 foreign exchange Exchange loss on share deposit 6,026 paid in advance Exchange loss on the redemption of investment in subsidiary Gains on sales of current (2,191) investments Net loss of minority interest Profit (Loss) from operation before 873,552 changes in operating assets and liabilities Decrease (Increase) in operating assets Accounts receivable 284,286 Balance due from/to a related company Inventories (103,925) Other current assets 6,285 Other non-current assets 277 Increase (Decrease) in operating liabilities Accounts payable (147,061) Other current liabilities 34,633 Income tax paid Other non- current liabilities Cash flow provided from (used in) 948,047 operating activities ○

○

Annual Report 2010-2011

80 Polyplex (Thailand) Public Company Limited

○

447,947

1,642,767

1,041,966

1,039,386

3,882,885

162,014 667

190,413 (233)

343,266 (74)

356,731 1,852

357,538 783

1,709

(17,289)

19,558

1,575

(17,289)

(4,489) 37,309 (823)

(9,858) 33,934 (402)

196,994 13,863 1,172

104,658 12,177 (668)

76,002 27,882 (610)

(100,555)

(99,795)

34,128

(101,239)

(97,579)

29,561

37,407

(1,841)

(472)

(2,191)

(1,841)

(472)

571,500

1,776,472

4,713 1,653,394

4,453 1,417,084

10,164 4,239,304

11,938

(528,037)

104,591

152,713

(723,653)

(99,879) 4,717 (978)

(41,599) (89,258) 3,994

(52,241) (212,666) 6,774 188

(8,406) (157,992) (18,665) (890)

(161,170) (598,525) (105,941) 3,997

132,242 597 620,135

156,367 26,492 1,304,431

(261,311) 47,629 (9,516) 87 1,276,929

296,808 (4,683) (24,011) 2,500 1,654,457

281,323 38,614 (14,624) (1,199) 2,958,128

○

Cash flow from Investing activities Decrease (increase) in current investments Dividend from subsidiary Increase in advance payment for purchases of assets Increase in Investment in subsidiary Increase (decrease) in accounts payable for purchases of fixed assets Purchases of property, plant and equipment Increase in intangible assets Proceeds from sales of property, plant and equipment Net cash used in investing activities Cash flow from financing activities Interest Paid Increase (Decrease) in short term loans from financial institutions Dividend Paid Dividend paid to minority shareholders Increase/(decrease) in long-term loans Cash provided from financing activities Currency Translation changes Increase in cash and cash equivalents Cash and cash equivalents at the beginning of period (April 1) Cash and Cash equivalents at the end of period (March 31) ○

○

(346,509)

350,541

(164,475)

(346,509)

350,541

(164,475)

2,525 (57,829)

4,489 (7,528)

9,858 (182,321)

(57,829)

(7,528)

(411,349)

(261,950)

265,735

139,665

(17,300)

22,120

161,359

(97,938)

22,120

161,359

(74,545)

(581,187)

(676,237)

(243,167)

(617,742)

(760,722)

1,019

873

411

4,308

(58) 1,125

(731) 1,718

○

(741,134) ○

○

(778,852)

○

8,450 9,117

○

17,566

○

(583,947) ○

○

(66,755)

○

91,231

○

108,797

○

108,797 ○

○

42,042

○

(151,084) (1,004,365) (1,323,679)

○

17,566 ○

○

(659,447)

○

(251,543) (1,174,201)

(146,756)

(185,009)

○

347,752

○

36,838

○

102,058

○

221,103

○

(612,000) (278)

○

(711,739)

(692,000) (1,418)

○

(320,000) (1,119)

○

(612,000) -

○

(692,000) -

○

(320,000) -

○

55,042

(74,766) 142,218

○

(112,363) (51,828)

○

(204,347) 26,629

○

(34,285) (50,000)

○

(44,004) 50,000

○

(67,740) (18,371)

○

(754,588)

○

(119,668) 278,881

○

(39,051) 345,659

○

86,878 ○

○

432,538

○

432,538 ○

○

711,418

○

59,342 519,590

○

711,418 ○

○

1,231,009

Polyplex (Thailand) Public Company Limited Financial Statement Unconsolidated Consolidated 2008/2009 2009/2010 2010/2011 2008/2009 2009/2010 2010/2011 April-March April-March April-March April-March April-March April-March Liquidity Ratios Current ratio Quick ratio Cash flow current ratio Receivable current ratio Avg. debt collection period Inventory turnover period Avg. selling period Payable current ratio Loan repayment period Cash cycle Profitability Ratios Gross profit margin Operating profit margin Other profit margin Cash to profit margin Net profit margin Return on equity Efficiency Ratios Return on assets Return on fixed assets Asset turnover Financial Policy Ratios Debt to equity ratio Interest coverage ratio Commitment coverage ratio (cash basis ) Pay out ratio

(time) (time) (time) (time) (day) (time) (day) (time) (day) (day)

1.52 1.13 1.18 4.01 89.78 108.69 3.31 5.84 61.63 31.47

1.45 0.90 0.71 4.83 74.57 110.69 3.25 6.41 56.18 21.64

1.68 1.17 1.29 5.46 65.99 88.87 4.05 5.73 62.78 7.25

2.29 1.52 0.94 4.94 72.84 22.61 15.92 7.87 45.72 43.04

2.11 1.25 1.14 5.70 63.20 19.00 18.94 8.18 44.02 38.12

2.65 1.60 1.66 7.30 49.31 15.68 22.96 6.86 52.50 19.77

(%) (%) (%) (%) (%) (%)

26.92% 16.89% 2.22% 124.68% 18.21% 15.72%

19.79% 10.28% 2.56% 108.47% 13.43% 11.39%

37.67% 31.00% 1.15% 74.53% 32.12% 36.63%

26.25% 15.70% 1.06% 84.46% 14.75% 23.44%

24.29% 13.99% 1.53% 116.94% 14.24% 21.72%

41.85% 34.67% 0.94% 69.25% 34.30% 58.26%

(%) (%) (time)

10.43% 34.23% 0.57

7.39% 25.23% 0.55

24.63% 63.83% 0.77

12.13% 24.10% 0.82

11.71% 24.89% 0.82

37.34% 73.13% 1.09

(time) (time) (time)

0.56 12.27 5.01

0.52 16.61 0.83

0.46 52.54 1.50

0.94 7.38 2.57

0.77 13.28 1.81

0.43 47.03 2.44

(%)

39%

40%

39%

40%

Annual Report 2010-2011

82 Polyplex (Thailand) Public Company Limited

9.2 Explanation and analysis of operational performance and financial status 9.2.1 Operational performance PTL, a subsidiary of PCL, was incorporated on March 26, 2002 to engage in the production and distribution of PET film (Polyethylene Terephthalate Film or Polyester Film) mainly for export markets focusing on packaging, industrial and electrical segments. The Company commenced operations from its first production line on April 2, 2003 and the second production line on November 12 of the same year. The Companyûs factory is situated in Siam Eastern Industrial Park, Rayong on a land area of 20 rai 22 sq. wah which was later expanded by another land area of 8 rai 28.9 sq.wah for implementation of the captive PET resin project. Another plot of land with an area of 35 rai, 2 nang and 54.80 square wah was bought opposite to the factory, where The Companyûs Extrusion Coating project and the Cast Polypropylene Project have been set up. The Silicone Coating project is also being set up on the same plot of land During the year, the Company invested in a new plot of land, adjacent to the existing factory in Rayong, with an area of 35 rai, 2 Nang and 66.5 square wah, for facilitating future expansion projects. All our product lines in Thailand have the following certifications: ISO 14001:2004 certification on Environment Management system ISO 9001:2008 certification on Quality Management system OHSAS 18001:2007 certification on Occupational Health and Safety Management system ISO 22000:2005 certification on Food Safety standards ● ● ●

●

Polyplex group aims to become one of the world market leaders in PET thin film by continuously expanding its market share through regular expansions in capacity. By venturing into the manufacture of related products such as BOPP film (In India) and CPP film (In Thailand), which are other Packaging substrates used by Converters, in addition to PET thin film, Polyplex is moving towards establishing itself as a Preferred packaging substrate provider as against just a PET thin film supplier. Apart from this, in order to further diversify its product range, the group has regularly been expanding into new value added products such as Silicone coated film (In India - 2007), Extrusion coated films (In Thailand - 2008), increasing its Metallised film capacities in Turkey and Thailand in May 2008 and the new Silicone Coated Film line, which is under 83

implementation in Thailand. The Company is also venturing into Thick PET film and is currently in the process of setting up this project in Thailand. Polyplex group has set out clear business strategies: 1) Focus on product development and technical services to penetrate high growth and high margin markets, 2) Cost leadership 3) Boosting delivery efficiency through focus on distributed manufacturing and logistics 4) Diversifying the product portfolio to minimize the risk of cyclical impact of the PET film industry, to increase stability of Earnings 5) Customer satisfaction through supply of consistent quality products 6) Judicious mix of On-shore, Off-shore and Near-shore strategy. The polyester film industry witnessed a significant surge in the demand in second half of calendar year 2010. Also there had been a shift by some of the major players of the industry from flexible packaging sector to industrial and other higher value added products. This created a demand-supply imbalance in the packaging sector which resulted in a sharp increase in the selling prices, especially in the second half of the financial year. As the company mainly caters to the flexible packaging segment, it also benefitted from this surge and was able to increase its contributions significantly in the current financial year. The highlights of the yearûs performance are as follows: TOTAL REVENUES Consolidated: Sales Revenue: The consolidated sales revenue has increased to Baht 11,183 million, (Baht 4,058 million or 56.9% growth over previous year). Increase in revenues is mainly on account of significant increase in selling prices of Polyester films, as compared with the previous year, due to the favorable market situation. The new CPP plant in Thailand also contributed to the growth in the top line. Table illustrating consolidated sales revenue from Exports and Domestic sales is as below: Market

○

Exports Domestic sales Total ○

○

2008-09 Bt. million % 4,496.09 65.54 2,363.65 34.46 6,859.74 100.00 ○

○

2009-10 Bt. million % 4,975.55 69.83 2,149.81 30.17 7,125.36 100.00 ○

○

2010-11 Bt. million % 7,660.45 68.50 3,522.72 31.50 11,183.17 100.00

○

Note: Sales made by the distribution company in the US/China has been considered as Exports. Previous year figures have been regrouped accordingly. Annual Report 2010-2011

84 Polyplex (Thailand) Public Company Limited

The value additions [VA = Selling price - Raw Material Cost] during the year for PTL and PE are shown below. The value addition levels witnessed an exceptional surge in FY 2010-11 and contributed to an increase of 274% in the Company没s overall profitability.

FX Fluctuation gain and Other Income: There has been an exchange gain of Baht 30.4 million as compared with Baht 62.8 million exchange gain in the previous year. The decrease is mainly due to exchange loss in the books of Company没s subsidiary in Turkey on restatement of US Dollar denominated assets. The other income has reduced to Baht 106.6 million from Baht 111.3 million in the previous year, mainly due to reduction in the export incentive income due to reduction of incentive rates in Thailand w.e.f 1st April 2010. 85

Standalone: Sales Revenue: The Companyûs total sales revenue is mainly driven by Exports, with 75-80% of its total sales revenue coming from exports. Table illustrating the Companyûs sales revenue from export and domestic sales is below: Market

○

Exports Domestic sales Total ○

○

2008-09 Bt. million % 2,522.67 78.16 713.94 21.84 3,236.61 100.00 ○

○

2009-10 Bt. million % 2,496.48 78.64 678.17 21.36 3,174.65 100.00 ○

○

2010-11 Bt. million % 3,950.99 79.33 1,029.75 20.67 4,980.74 100.00

○

In the year 2010-11 (April 1- March 31, 2011), The Company achieved total sales revenues of Baht 4,981 million, an increase of Baht 1,806 million or 56.9% over the previous year. The increase is mainly due to increase in selling prices of polyester film due to favorable market situation, as explained above. The current year also included sales of Cast polypropylene film which commenced commercial production in March 2010. The impact of increase in sales volumes of film (Polyester film + Cast Polypropylene + Thermal Laminated film), has been partially offset by lower volumes of Chips sales. FX Fluctuation gain and Other Income: The Company has made an exchange gain of Baht 75 million, almost the same as in the previous year. The other income has been Baht 58.7 million, as against Baht 85.4 million in the previous year. Some of the main items included in other income are miscellaneous sales, Export Incentive, Interest income, Dividend Income, Profit on sale of fixed assets, Insurance claims etc. The decrease in other income this year is mainly due to the reduction in export incentive income, subsequent to the reduction in incentive rates in Thailand w.e.f 1st April 2010.The impact of reduction in incentive rates has been partly offset by significantly higher selling prices in current year. TOTAL EXPENSES Consolidated The key elements of the Companyûs cost structure are raw materials, packing, electricity & fuel, depreciation, staff cost and selling & administrative expenses. Cost of sales (COS) amounted to Baht 6,503 million as compared to Baht 5,394 million of previous year, representing 89% of the total expenses, marginally higher than 88% of the previous year. Cost of sales includes mainly the raw material costs, packing costs, utilities, depreciation on building and machinery, staff costs etc. A broad break up of COS is given below: Annual Report 2010-2011

86 Polyplex (Thailand) Public Company Limited

Description 2010-11 2009-10 2008-09 Raw materials and consumables used (incl.change in inventory) 78.2% 75.6% 74.3% Depreciation ( in COS) 5.1% 6.1% 6.3% Salaries, wages and other employee benefits (in COS) 5.7% 5.4% 6.1% Utilities (Power/Natural Gas/ Chilled water etc) 7.2% 8.7% 10.4% Others 3.8% 4.2% 2.9% 100.0% 100.0% 100.0% ○

○

The selling expenses amounted to Baht 546 million or 7.5% of total expenses as compared with Baht 490 million or 8% in the previous year. It includes shipment costs for the exported products, inland transportation charges, inland insurance on domestic sales, commission on sales, credit insurance charges and other selling expenses. The increase in selling expenses is mainly due to higher sale volumes this year. The commissions on sales have also been higher due to the higher average sales realization. The administrative expenses amounted to Baht 209 million or 2.9% of total expenses as compared with Baht 195 million or 3.2% in the previous year. Management benefit expenses of Baht 48.5 million in the current year is almost the same as previous year. Despite increase in long term loans due to additional loans borrowed for the Cast Polypropylene project in Thailand, the finance charges have reduced from Baht 115 million to Baht 93 million, mainly due to lower interest rates as well as repayments, including some prepayment of loans by the subsidiary in Turkey (about Euro 15 million) for better deployment of surplus funds generated during the year. Standalone Cost of sales (COS) amounted to Baht 3,105 million, representing 90.3% of the total expenses, higher than Baht 2,546 million or 89.4% of the previous year. The main reason for the higher COS is higher production volumes as well as higher average raw material prices during the year. A broad breakup of the COS is given below: Description Raw materials and consumables (incl.change in all inventory) Depreciation ( in COS) Salaries, wages and other employee benefits (in COS) Utilities (Power/Natural Gas/ Chilled water etc) Others

2010-11 2009-10 2008-09 78.3% 78.3% 74.8% 5.8% 6.0% 6.2% 6.8% 5.8% 6.3% 7.9% 8.7% 8.8% 1.2% 1.2% 3.9% 100.0% 100.0% 100.0% ○

○

The selling expenses amounted to Baht 260 million or 7.6 % of total expenses as compared with Baht 217 million or 7.6% in the previous year. The increase in selling expenses is mainly due to higher sales volumes and higher commissions due to higher average sales realization. The administrative expenses amounted to Baht 51 million or 1.5% of total expenses, lower compared with Baht 62 million or 2.2% in the previous year. Management benefit expenses of Baht 21 million in the current year are lower than Baht 23 million of the previous year. Despite higher long term debt borrowings, the finance charges have reduced from Baht 39 million to Baht 35.5 million, due to lower interest rates. Profit margins - Gross Profit, Operating Profit and Net profit ratios Gross profit margin on a consolidated basis has been 41.9% as compared to 24.3% of previous year. On a standalone basis, The Company had a gross profit margin of 37.7% in 2010-11, which is higher than 19.8% in the previous year, mainly due to significantly higher average sales realization, especially in the second half of the financial year. On a consolidated basis, the operating profit margin in the current year has increased from 14% to 34.7%. And on a standalone basis, it has increased from 10.3% to 31%, mainly due reasons of higher average sales realization during the year, as explained above. Net profit margin on a consolidated basis has been 34.3%, significantly higher than 14.2% of the previous year and on a standalone basis it has increased from 13.4% to 32.1%. 9.2.2 Financial status TOTAL ASSETS As at 31st March 2011, The Company没s consolidated total assets were Baht 11,932.9 million, higher by 34.6% as compared to Baht 8,867 million in the previous year. On a Standalone basis, the total assets as at 31st March 2011 were Baht 7,304 million, higher by about 21.1% compared to Baht 6,033 million of previous year. The main components of Total Assets are Current assets, Fixed assets, Investments and other non-current assets. A brief summary of the movement in the various components of total assets is given below: Accounts receivable The Company没s consolidated net accounts receivable as of March 31, 2011 stood at Baht 1,896 million which is higher by Baht 729 million , as compared to Baht 1,167 million as of March 31, 2010 or an increase of 62.4%. The increase in receivables is Annual Report 2010-2011

88 Polyplex (Thailand) Public Company Limited

mainly due to the significant increase in selling prices in current year, particularly in the second half of the financial year, due to the favorable market situation. The Companyûs Standalone Net Accounts Receivables as of 31st March, 2011 were Baht 1,181 million, as against Baht 645 million in the previous year, or an increase of 83.3%. The increase in receivables is mainly due to the significant increase in selling prices as explained above. Inventories On a consolidated basis, the total inventories have gone up from 1,116 million to 1,732 million, an increase of Baht 616 million or 55.2%. On a standalone basis, the increase is from Baht 412 million to Baht 471 million or 14.3%. The increase in inventory levels is mainly due to higher stock of finished goods in Polyplex Americas Inc to cater to growing demand in the American region. There has been an increase in the finished goods and work in process stock at the subsidiary in Turkey. On a standalone basis, the increase is mainly in raw material stock due to higher inventory of polyester chips and also some increase in finished goods inventory. Net Fixed Assets Consolidated Net Fixed Assets (including capital work in progress -CWIP) have increased by Baht 361 million from Baht 5,620 million to Baht 5,981 million, due to the net impact of the following: Increase due to additions to fixed assets - Baht 761 million, mainly on account of the Capital work in progress relating to the Silicone Coating Line, apart from other normal CAPEX, including a new plot of land purchased by the Company, close to the existing factory in Rayong. ●

●

Loss on account of fixed assets disposed/written off during the year - Baht 1 million (Gross book value, net of accumulated depreciation) Decrease on account of Translation adjustment - Baht 42 million (net of translation impact on accumulated depreciation), mainly due to translation of subsidiary Net Fixed Assets, denominated in Euro, USD and RMB, into THB for the purpose of consolidation.

●

Decrease on account of depreciation charged during the year - Baht 357 million The Company (standalone) Net Fixed Assets have increased by Baht 486 million, from Baht 2,629 million to Baht 3,115 million, due to the net impact of the following:

●

Increase due to addition to fixed assets - Baht 676 million mainly on account of following: Addition to Building/Machinery mainly relating to the Silicone Coating project - Baht 571 million (including machinery-in-transit) ❍

❍

●

Normal CAPEX in existing plants ( Machinery/ Office equipments/ Motor Vehicles etc)( Baht 12 million) Purchase on land for future expansions, adjacent to existing factory in Rayong - Baht 93 million

Decrease on account of depreciation charged during the year - Baht 190 million

Investment in subsidiaries During the year, the Company redeemed USD 4.7 million of the Preference Shares of Polyplex (Singapore) Pte Ltd (PSPL Return on assets On a consolidated basis also, the return on assets has increased to 37.3% from 11.7% in previous year, despite increase in average assets, mainly due to increase in profitability during the current year. On a Standalone basis, the Companyûs return on assets has increased to 24.6% from 7.4% in the previous year, despite increase in average assets, mainly due to increase in profitability during the current year. 9.2.3 Liquidity Cash flow For the year 2010-11, the Company and its subsidiaries generated net cash from operating activities amounting to Baht 2,958 million. Out of these, Baht 1,009 million (net of sales of fixed assets) was expended for purchase, including advances for machinery & equipment (mainly for the Silicone Coating project and Thin & Thick PET film line investments) and other fixed assets, Baht 75 million was paid as finance charges on the long term and short term borrowings and, Baht 164 million was invested in current investments, Baht 637 million net outflow was on account of loan movement (long term and short term bank borrowings). There was a outflow of Baht 612 million on account of dividend paid by the Company for 2009-10 and Interim dividend for 2010-11 and Baht 0.3 million of dividend payout by PA to the minority shareholders. The balance thereof along with the translation adjustment of Baht 59 million and the opening balance of Baht 711 million resulted in a net closing balance of Baht 1,231 million. During the year 2010-11, the Company generated net cash from operating activities of Baht 1,304 million, Redemption of Preference Share investment in Polyplex (Singapore) Pte Ltd - Baht 140 million, and dividend from the US subsidiary Baht 10 million. Of these, Baht 696 million was used for purchase of fixed assets & other assets (mainly for the Silicone Coating Project and Thick PET Film line project), Baht 164 million was invested in current investments, Baht 34 million was paid as finance charges on the Long/short term loans, Baht 13 million net outflow was on account of loan Annual Report 2010-2011

90 Polyplex (Thailand) Public Company Limited

movement (long term and short term bank borrowings). There was an outflow of Baht 612 million on account of dividend for 2009-10 and Interim dividend for FY 2010-11. The deficit thereof together with the opening balance of Baht109 million resulted in a net closing balance of Baht42 million. Liquidity ratio In 2010-11, consolidated current ratio was 2.65 and quick ratio was 1.60. The Companyûs (standalone) current ratio and quick ratio were 1.68 and 1.17 respectively. Consolidated average debt collection period during 2010-11was 49 days along with Account payables period of 52 days and average selling period of 23 days, resulting in a cash cycle of 20 days as against a cash cycle of 38 days of previous year. The average debt collection period of The Company (standalone) during 2010-11 was 66 days along with Accounts payable period of 63 days and average selling period of 4 days resulting in cash cycle of 7 days as against a cash cycle of 22 days in previous year. 9.2.4 Sources of funds Sources of funds consist of long term and short term loans from financial institutions and shareholdersû equity. TOTAL LIABILITIES Current Liabilities As at 31st March, 2011, consolidated current liabilities stood at Baht 2,062 million, an increase of Baht 565 million from Baht 1,497 million in the previous year, mainly due to the following: Increase in Trade payables by Baht 281 million, mainly due to higher prices of raw materials and also higher procurement levels due to higher production volumes, including the new CPP line in Thailand. ●

●

Increase in payables for fixed assets by Baht 155 million, mainly due to the Silicone Coating project related machinery/building payables.

●

Increase in other liabilities by Baht 54 million (mainly provision for expenses and increase in Income tax payable at the subsidiary in US)

●

Net increase in short term borrowings - Baht 142 million, at the subsidiary in US due to increase in working capital requirement

●

The above increase is partly offset by decrease in current portion of long term loans by Baht 67 million due to prepayment of loans by the subsidiary in Turkey

As at 31st March, 2011, The Companyûs Standalone current liabilities stood at Baht 1,184 million, an increase of Baht 351 million from Baht 833 million in the previous year, mainly due to increase in payables for Fixed assets (Baht 155 Million), Trade

payables (Baht 156 Million), increase in current portion of loans (Baht 64 Million) and other current liabilities (Baht 26 Million), partly offset by reduction in Short term borrowings by Baht 50 million. Term Debts On a consolidated basis, the term debt (net of current portion) has decreased by Baht 848 million from Baht 2,353 million to Baht 1,505 million. The decrease in consolidated debt is mainly on account of loan repayments, including prepayment of loans during the year by the subsidiary in Turkey (approx. Euro 15 Million) for better deployment of surplus funds, and also on account of exchange gain on USD/Euro loan restatements. This is partially offset by additional borrowings at Thailand for the Silicone Coating project. The Company没s term debt (net of current portion) has decreased from Baht 1,231 million to Baht 1,120 million due to loan repayments as well as exchange gain on the Euro/USD loan restatements, partly offset by new loans borrowed for the Silicone Coating project. Leveraging & interest coverage ratio The net debt equity ratio (debt only - short term and long term, including current portion, after netting off cash & cash equivalents and current investments) of 0.08 on a consolidated basis and 0.23 for The Company standalone are quite comfortable. Debt equity ratio (for total debt, including current + non-current liabilities), is 0.43 on a consolidated basis and 0.46 for The Company standalone, which are also quite comfortable. The consolidated interest coverage ratio was 47 times as against 13.3 in previous year. Increase in the interest coverage ratio is mainly due to increase in EBITDA during the current year, as well as due to lower interest costs. The Company没s standalone interest coverage ratio was 52.5 times as against 16.6 times in previous year. Despite the additional borrowings, there is an increase in Interest coverage ratio, due to increase in EBITDA during the current year as well as lower interest costs because of lower interest rates. Commitments As at 31 March 2011, company had the following commitments and contingent liabilities: (a) The Company had commitments totaling Baht 6.1 million under various service agreements. These agreements terminate between May 2011and January 2013. (b) The Company没s foreign exchange contracts outstanding at 31 March 2011 are summarized below.

Annual Report 2010-2011

92 Polyplex (Thailand) Public Company Limited

Bought Sold Foreign currency amount amount (Million) (Million) US dollar

2.70

37.82

Swiss franc

2.21

Swiss franc Euro

0.49 0.84

3.79

Euro Japanese yen

0.05 -

70.33

Contractual exchange rate Bought Sold (Baht per 1 foreign currency unit) Baht 30.6650 - 33.2380 Baht 30.0600 - 32.6654 per USD 1 per USD 1 Baht 29.5100 - 30.7096 per CHF 1 CHF 1.0113 per USD 1 Baht 39.4520 - 42.9400 Baht 39.9650 - 42.9400 per EUR 1 per EUR 1 USD 1.3089 per EUR 1 Baht 0.3686 - 0.3763 per JPY 1

The Company没s subsidiary in Turkey had the following forward exchange contracts outstanding at 31st March, 2011: Bought Amt Contractual Exchange Rate YTL Buy 1,200,000 1.5942-1.628 per USD (c)

As at 31 March 2011, The Company and its subsidiaries had capital commitments of approximately Baht 1,184 million relating to the construction of building and acquisition of machinery and equipment for the upcoming projects. For the Company Standalone, the capital commitments amounted to Baht 547.3 million.

(d)

As at 31 March 2011, the Company is committed for rentals (under Operating Lease agreements) as follows: Thousand Baht Payable within: 1 years 1,004 2 to 5 years 643

(e) The Company has given short term guarantees worth USD 20.0 million against working capital facilities of its subsidiaries. The Company has also given a guarantee of EUR 6.7 million for the long term loans taken by the Turkey subsidiary. Apart from above, as at 31 March 2011 there were outstanding bank guarantees of approximately Baht 43.8 million and EUR 9.9 million issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of business.

Shareholdersรป equity The Companyรปs shareholdersรป equity on a consolidated basis rose from Baht 4,993 million to Baht 8,336 million, representing a growth rate of 67% during the year, which is after accounting for dividend payment of Baht 612 million by the Company (140 million relating to FY 2009-10 and Baht 472 million of Interim dividend for FY 2010-11). On a standalone basis, the increase in shareholder equity is about 26% or Baht 1,031 million from Baht 3,969 million to Baht 5,000 million mainly due to profits of the year of Baht 1,643 million, which is partially offset by dividend payout of Baht 612 during the year. Return on equity On a consolidated basis, the Return on equity has increased from 21.72% to 58.26%, due to the significant increase in profitability. The ROE of the Company Standalone for 2010-11 has also increased to 36.6% from 11.4% in 2009-10 mainly due to increase in profitability for the year. The Company has a policy to pay dividend at 40% of consolidated net profits. For the year 2010-11, the Companyรปs board has proposed a dividend of Baht 1.94 per share, out of which, Baht 0.59 per share has already been paid in November 2010 as Interim dividend and the balance of Baht 1.35 per share is payable in August 2011, subject to the approval of shareholders in the Annual General meeting in July 2011.

9.3 Main factors which may affect the future operational performance and financial position The FY 2010-11 was an exceptional year for the industry. However, market correction has started happening, with new capacity additions coming on board and correcting the demand supply imbalance witnessed last year. As such, the coming year would be a balanced year, with selling prices as well as the margins gradually declining to normal levels, as seen in the historic past (excluding last year). The key challenges for the company in the coming year would be the following: Raw material price volatility and any significant upward movement in prices, which the company might not be able pass on completely to the end customers Successful start up of the Silicone Coating project in Thailand. Successful implementation of the Thick PET film line in Thailand. Impact of FX fluctuations on profits of the company. The company is exposed to 2 types of risks, one on the operational profits as well as the restatement of the assets/ liabilities of the company on a standalone basis and secondly, on the conversion of the subsidiariesรป P&L accounts, which are denominated in USD, Euro and RMB, into THB currency for the purpose of consolidation.

Annual Report 2010-2011

94 Polyplex (Thailand) Public Company Limited

However, The Company is confident of retaining its competitive edge due to various reasons: 1. Benefit from its various projects, the past projects and the ones under implementation as under: a. PTL and PE have both derived significant benefits from the captive PET resin production to serve its raw material demand on costs, quality and security of availability. The main advantages of a captive resin plant are lower cost of production because of efficiencies in raw material sourcing as also a lower conversion cost besides ensuring timely availability of raw material for the film plants. Easy availability of PTA and MEG would reduce the supply risk although cost of the same still remains a matter of concern for any PET film manufacturer as it has a direct impact on the margins of every manufacturer. Captive production of resin would also allow the company to develop new specialty film products. b. Metallizer plants in Thailand and Turkey have helped improve the product mix. With the start up of the second metallizer plants in Turkey and Thailand in May 2008, the company没s capacity to produce value added films and sell additional volumes to its existing as well as new customers has increased significantly. This has helped the Company to increase the share of specialty films in the overall sales portfolio. c. The Extrusion coating plant in Thailand, which commenced operations in April没08, has further helped the company to reduce their exposure to commodity grades of film and increase the proportion of value added films and other specialty grades of film. d. The CPP line which started in Thailand in March 2010 will help the company broad base its product offerings to the converters and move towards becoming a complete packaging solution provider for its customers, rather than just a PET film supplier. e. The Silicone Coating project under implementation will further diversify the product portfolio of the company and add a highly value added product in its portfolio. f. The Thick PET film line, under implementation in Thailand will also help further diversify the product portfolio and mitigate the risk associated with the cyclical nature of the Thin PET film industry, as Thick PET film is a relatively more stable industry within lower competition. 2.

Polyplex has been deriving benefits from the larger size and distributed manufacturing operations across 3 locations whereby it has qualified as a preferred global supplier with many multinational and large customers with global operations.

Polyplex has been able to establish itself as a reliable supplier of consistent quality products

Polyplex had also invested significantly in distribution, through the acquisition of a company in USA (Polyplex (Americas) Inc.(PA) and the investment in Polyplex (Trading) Shenzhen Co Ltd, China. The Investment in PA has lead to a better market penetration

and improved customer service for North American markets and it is evident from the increasing sales volumes of PA. The Company is in the process of implementing a Thin PET film line project in the USA. With its extensive market reach in the North American region, the Company remains confident that this decision, backed by its near shoring strategy will enable it to service its customers in a more efficient manner.

9.4 Remuneration for auditor/s 1.

Audit fee The Company paid audit fee as below: A total of Baht - paid to the auditor/s for the past fiscal year; and A total of Baht 2,175,000.00 paid to the accounting firm the auditor/s work for, or the person or business related to the auditor/s and the accounting firm for the past fiscal year.

Non-audit fee The Company made payment for other services, i.e. examination of compliance with conditions of promotion certificates, and legal and tax advisory services, including BOI and tax audit services, as follows: A total of Baht - paid to the auditor/s for the past fiscal year and Baht - payable in the future for the service not yet fully done for the past fiscal year; and A total of Baht 545,000 paid to the accounting firm the auditor/s work for, or the person or business related to the auditor/s and the accounting firm for the past fiscal year, and Baht 990,000 payable in the future for the service not yet fully done for the past fiscal year.

Annual Report 2010-2011

96 Polyplex (Thailand) Public Company Limited

Report of Independent Auditor To the Shareholders of Polyplex (Thailand) Public Company Limited I have audited the accompanying consolidated balance sheets of Polyplex (Thailand) Public Company Limited and its subsidiaries as at 31 March 2011 and 2010, the related consolidated statements of income, changes in shareholders没 equity and cash flows for the years then ended; and the separate financial statements of Polyplex (Thailand) Public Company Limited for the same periods. These financial statements are the responsibility of the Company没s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. The consolidated financial statements as at 31 March 2011 and 2010 and for the years then ended include the financial statements of certain subsidiaries which were audited by other auditors, whose reports have been furnished to me. My opinion on the consolidated financial statements, insofar as they relate to the amounts included for these subsidiaries, is based solely on the reports of those other auditors. These consolidated financial statements reflect total assets of those subsidiaries as at 31 March 2011 and 2010 of approximately Baht 1,156.1 million and Baht 654.6 million, respectively, total revenues for the years ended 31 March 2011 and 2010 of approximately Baht 2,541.1 million and Baht 1,339.9 million, respectively, and net income for the years ended 31 March 2011 and 2010 of approximately Baht 67.1 million and Baht 32.5 million, respectively. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.I believe that my audits and the reports of the other auditors referred to in the previous paragraph providea reasonable basis for my opinion. In my opinion, based on my audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Polyplex (Thailand) Public Company Limited and its subsidiaries and of Polyplex (Thailand) Public Company Limited as at 31 March 2011 and 2010, the results of their operations and cash flows for the years then ended in accordance with generally accepted accounting principles.

Narong Puntawong Certified Public Accountant (Thailand) No. 3315 Ernst & Young Office Limited Bangkok: 13 May 2011 97

Balance sheets Polyplex (Thailand) Public Company Limited and its subsidiaries As at 31 March 2011 and 2010

(Unit: Baht)

Note Assets Current assets Cash and cash equivalents Current investments Trade accounts receivable Unrelated parties - net Related parties Trade accounts receivable - net Amounts due from related party Inventories - net Other current assets Advance payments for goods Input tax refundable Export incentive receivables Others Total current assets Non-current assets Investments in subsidiaries Property, plant and equipment - net Intangible assets - net Other non-current assets Goodwill Advance payment for purchases of assets Others Total non-current assets Total assets

Consolidated financial statements 2011 2010

Separate financial statements 2011 2010

1,231,008,609 164,946,931

711,418,120 -

42,041,807 164,946,931

108,797,109 -

8 6, 8

1,896,159,409 1,896,159,409 221,816,318 1,732,304,430

1,167,444,375 1,167,444,375 60,646,262 1,116,293,084

802,536,053 378,803,344 1,181,339,397 470,776,718

491,054,364 153,527,362 644,581,726 411,888,405

105,704,434 24,098,204 11,198,766 71,331,382 5,458,568,483

15,773,704 14,151,862 16,326,108 58,747,910 3,160,801,425

75,172,272 24,098,204 11,198,766 22,282,935 1,991,857,030

788,237 14,151,862 16,326,108 11,610,279 1,208,143,726

5,979,205,759 1,353,643

5,618,255,146 1,266,100

1,936,414,851 3,115,042,451 -

2,113,486,334 2,629,227,648 -

3,874,351 480,027,593 9,871,557 6,474,332,903 11,932,901,386

3,874,351 68,678,316 13,868,899 5,705,942,812 8,866,744,237

250,998,855 9,826,112 5,312,282,269 7,304,139,299

68,678,315 13,820,340 4,825,212,637 6,033,356,363

6 9

10 11 12

The accompanying notes are an integral part of the financial statements.

Annual Report 2010-2011 98 Polyplex (Thailand) Public Company Limited

Balance sheets (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries As at 31 March 2011 and 2010

(Unit: Baht)

Note Liabilities and shareholders没 equity Current liabilities Short-term loans from financial institutions 13 Trade accounts payable Current portion of long-term loans from financial institutions 14 Other current liabilities Accounts payable for purchases of fixed assets Corporate income tax payable Others Total current liabilities Non-current liabilities Long-term loans from financial institutions - net of current portion 14 Other non-current liabilities Total non-current liabilities Total liabilities

Consolidated financial statements 2011 2010

Separate financial statements 2011 2010

194,483,944 1,088,573,615

52,266,128 807,961,367

619,540,457

50,000,000 463,342,128

387,200,147

454,064,187

256,001,425

192,138,605

201,990,244 25,767,349 164,190,477 2,062,205,776

47,014,110 11,578,325 124,300,166 1,497,184,283

201,990,244 106,458,108 1,183,990,234

47,014,110 80,276,345 832,771,188

1,504,733,243 3,257,658 1,507,990,901 3,570,196,677

2,352,619,686 4,456,461 2,357,076,147 3,854,260,430

1,120,200,422 1,120,200,422 2,304,190,656

1,231,403,765 1,231,403,765 2,064,174,953

The accompanying notes are an integral part of the financial statements.

Balance sheets (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries As at 31 March 2011 and 2010

(Unit: Baht)

Note Shareholders没 equity Share capital Registered 960,000,000 ordinary shares of Baht 1 each Issued and fully paid up 800,000,000 ordinary shares of Baht 1 each Share premium Translation adjustment Retained earnings Appropriated - statutory reserve Unappropriated Equity attributable to the Company没s shareholders Minority interest - equity attributable to minority shareholders of subsidiaries Total shareholders没 equity Total liabilities and shareholders没 equity

Consolidated financial statements 2011 2010

960,000,000

800,000,000 1,370,460,000 (316,111,008)

800,000,000 1,370,460,000 (388,776,230)

800,000,000 1,370,460,000 -

96,000,000 6,385,976,165

96,000,000 3,115,091,280

96,000,000 2,733,488,643

96,000,000 1,702,721,410

8,336,325,157

4,992,775,050

4,999,948,643

3,969,181,410

26,379,552 8,362,704,709 11,932,901,386

19,708,757 5,012,483,807 8,866,744,237

4,999,948,643 7,304,139,299

3,969,181,410 6,033,356,363

The accompanying notes are an integral part of the financial statements.

Annual Report 2010-2011 100 Polyplex (Thailand) Public Company Limited

Separate financial statements 2011 2010

Income statements Polyplex (Thailand) Public Company Limited and its subsidiaries For the years ended 31 March 2011 and 2010

(Unit: Baht)

Note Revenues Sales Other income Exchange gain Interest income Others Total revenues Expenses Cost of sales Selling expenses Administrative expenses Management benefit expenses Total expenses Income before finance cost and corporate income tax Finance cost Income before corporate income tax Corporate income tax Net income for the year

Net income attributable to: Equity holders of the parent Minority interests of the subsidiaries

Consolidated financial statements 2011 2010

Separate financial statements 2011 2010

11,183,173,844

7,125,365,610

4,980,737,003

3,174,656,004

30,409,607 14,943,825 91,642,001 11,320,169,277

62,831,535 11,216,392 100,106,772 7,299,520,309

75,517,202 453,903 58,291,545 5,114,999,653

75,315,001 271,736 85,103,828 3,335,346,569

6,502,517,451 546,066,964 209,394,337 48,531,483 7,306,510,235

5,394,354,846 490,347,969 195,062,090 49,084,022 6,128,848,927

3,104,616,406 260,250,217 50,775,955 21,024,445 3,436,667,023

2,546,427,700 217,198,477 61,510,708 23,188,665 2,848,325,550

4,013,659,042 (92,727,935) 3,920,931,107 (27,882,009) 3,893,049,098

1,170,671,382 (114,655,012) 1,056,016,370 (12,177,063) 1,043,839,307

1,678,332,630 (35,565,397) 1,642,767,233 1,642,767,233

487,021,019 (39,073,770) 447,947,249 447,947,249

3,882,884,885 10,164,213 3,893,049,098

1,039,385,809 4,453,498 1,043,839,307

1,642,767,233

447,947,249

4.85

1.30

2.05

0.56

Basic earnings per share 19 Net income attributable to equity holders of the parent

The accompanying notes are an integral part of the financial statements.

101

Annual Report 2010-2011 102 Polyplex (Thailand) Public Company Limited 800,000,000 800,000,000

Balance as at 31 March 2010 Translation adjustment Net income for the year Dividends (Note 20) Dividend paid by subsidiary Balance as at 31 March 2011

The accompanying notes are an integral part of the financial statements.

800,000,000 800,000,000

Balance as at 31 March 2009 Translation adjustment Net income for the year Dividends (Note 20) Dividend paid by subsidiary Balance as at 31 March 2010

Issued and fully paid-up share capital

Polyplex (Thailand) Public Company Limited and its subsidiaries For the years ended 31 March 2011 and 2010

1,370,460,000 1,370,460,000

Share premium

(388,776,230) 72,665,222 (316,111,008)

(138,254,531) (250,521,699) (388,776,230)

Translation adjustment

96,000,000 96,000,000

3,115,091,280 3,882,884,885 (612,000,000) 6,385,976,165

2,447,705,471 1,039,385,809 (372,000,000) 3,115,091,280

4,992,775,050 72,665,222 3,882,884,885 (612,000,000) 8,336,325,157

4,575,910,940 (250,521,699) 1,039,385,809 (372,000,000) 4,992,775,050

19,708,757 (3,215,326) 10,164,213 (278,092) 26,379,552

20,315,516 (3,642,242) 4,453,498 (1,418,015) 19,708,757

Minority interestTotal equity equity attributable Appropriated attributable to minority statutory to the parent没s shareholders reserve Unappropriated shareholders of subsidiaries

Retained earnings

Consolidated financial statements Equity attributable to the parent没s shareholders

Statements of changes in shareholders没 equity

5,012,483,807 69,449,896 3,893,049,098 (612,000,000) (278,092) 8,362,704,709

4,596,226,456 (254,163,941) 1,043,839,307 (372,000,000) (1,418,015) 5,012,483,807

Total

(Unit: Baht)

103

800,000,000 800,000,000

Balance as at 31 March 2010 Net income for the year Dividends (Note 20) Balance as at 31 March 2011

The accompanying notes are an integral part of the financial statements.

800,000,000 800,000,000

Issued and fully paid-up share capital

Balance as at 31 March 2009 Net income for the year Dividends (Note 20) Balance as at 31 March 2010

Polyplex (Thailand) Public Company Limited and its subsidiaries For the years ended 31 March 2011 and 2010

Statements of changes in shareholders没 equity (continued)

1,370,460,000 1,370,460,000

Share premium

96,000,000 96,000,000

1,702,721,410 1,642,767,233 (612,000,000) 2,733,488,643

1,626,774,161 447,947,249 (372,000,000) 1,702,721,410

Retained earnings Appropriated statutory reserve Unappropriated

Separate financial statements

3,969,181,410 1,642,767,233 (612,000,000) 4,999,948,643

3,893,234,161 447,947,249 (372,000,000) 3,969,181,410

Total

(Unit: Baht)

Cash flow statements Polyplex (Thailand) Public Company Limited and its subsidiaries For the years ended 31 March 2011 and 2010

(Unit: Baht) Consolidated financial statements 2011 2010 Cash flows from operating activities Net income before tax Adjustments to reconcile net income before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation Doubtful debts (doubtful debts recovery) Allowance for diminution in value of inventories (reversal) Unrealised gain on exchange rate Exchange loss on the redemption of investment in subsidiary Gains on sales of current investments Gain on sales of property, plant and equipment Dividend income Interest expenses Income from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable Amounts due from related party Inventories Export incentive receivables Other current assets Other non-current assets Operating liabilities increase (decrease) Trade accounts payable Other current liabilities Other non-current liabilities Cash from operating activities Cash paid for corporate income tax Net cash from operating activities

3,920,931,107

1,056,016,370

1,642,767,233

447,947,249

357,538,292 782,822 (17,289,445) (97,579,224)

356,731,313 1,852,015 1,574,526 (101,239,143)

190,412,784 (232,677) (17,289,445) (99,794,864)

162,013,643 667,458 1,709,422 (100,555,003)

(471,844) (609,888) 76,002,321

(1,840,604) (668,000) 104,657,602

37,406,615 (471,844) (401,758) (9,858,356) 33,933,956

29,561,015 (1,840,604) (823,224) (4,488,754) 37,308,577

4,239,304,141

1,417,084,079

1,776,471,644

571,499,779

(723,652,740) (161,170,056) (598,524,624) 5,127,342 (111,068,578) 3,997,342

152,712,912 (8,405,694) (157,991,976) (1,726,720) (16,937,933) (890,416)

(528,037,054) (41,598,868) 5,127,342 (94,385,636) 3,994,228

11,937,668 (99,879,304) (1,726,720) 6,443,441 (978,278)

281,323,022 38,614,107 (1,198,803) 2,972,751,153 (14,623,514) 2,958,127,639

296,808,185 (4,683,491) 2,499,722 1,678,468,668 (24,011,458) 1,654,457,210

156,367,007 26,492,324 1,304,430,987 1,304,430,987

132,241,998 596,897 620,135,481 620,135,481

The accompanying notes are an integral part of the financial statements.

Annual Report 2010-2011 104 Polyplex (Thailand) Public Company Limited

Separate financial statements 2011 2010

Cash flow statements (continued) Polyplex (Thailand) Public Company Limited and its subsidiaries For the years ended 31 March 2011 and 2010

(Unit: Baht) Consolidated financial statements 2011 2010 Cash flows from investing activities Decrease (increase) in current investments (164,475,087) Decrease in investments in subsidiaries Dividend received from subsidiary Increase in advance payment for purchases of assets (411,349,277) Increase in accounts payable for purchases of fixed assets 161,359,029 Proceeds from sales of property, plant and equipment 1,718,289 Purchases of property, plant and equipment (760,722,249) Increase in intangible assets (731,215) Net cash from (used in) investing activities (1,174,200,510) Cash flows from financing activities Increase (decrease) in short-term loans from financial institutions Increase (decrease) in long-term loans from financial institutions Cash paid for interest expenses Dividend payment Dividend paid to minority shareholders Net cash used in financing activities Increase (decrease) in translation adjustment Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Separate financial statements 2011 2010

350,540,604 (7,528,062) 22,119,923 1,124,659 (617,741,918) (58,429) (251,543,223)

(164,475,087) 139,664,868 9,858,356 (182,320,540) 161,359,029 411,037 (676,236,866) (711,739,203)

350,540,604 265,734,840 4,488,754 (7,528,061) 22,119,923 873,117 (581,187,108) 55,042,069

(51,827,836)

(50,000,000)

50,000,000

(778,852,400) (146,755,861) (74,766,192) (112,363,486) (612,000,000) (692,000,000) (278,092) (1,418,015) (1,323,678,868) (1,004,365,198) 59,342,228 (119,668,192) 519,590,489 278,880,597 711,418,120 432,537,523 1,231,008,609 711,418,120

36,837,506 (34,284,592) (612,000,000) (659,447,086) (66,755,302) 108,797,109 42,041,807

102,057,541 (44,004,399) (692,000,000) (583,946,858) 91,230,692 17,566,417 108,797,109

142,217,816

The accompanying notes are an integral part of the financial statements.

105

Notes to consolidated financial statements Polyplex (Thailand) Public Company Limited and its subsidiaries For the years ended 31 March 2011 and 2010

General information Polyplex (Thailand) Public Company Limited (çThe Companyé) is a public company incorporated anddomiciled in Thailand. Its parent company is Polyplex Corporation Limited, which was incorporated in India. The Company is principally engaged in the manufacture and distribution of polyester films, metallized films, extrusion coated films, cast polypropylene films and PET resins. The registered addresses of the Companyûs head office and factories are as follows: Head office: 75/26 Ocean Tower II, 18th Floor, Soi Sukhumvit 19, Sukhumvit Road, Kwaeng North Klongtoey, Khet Wattana, Bangkok. Factory 1: Siam Eastern Industrial Park, 60/24 Moo 3, Tambol Mabyangporn, Amphur Pluakdaeng, Rayong. Factory 2: Siam Eastern Industrial Park, 60/91 Moo 3, Tambol Mabyangporn, Amphur Pluakdaeng, Rayong.

Basis of preparation 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Professions Act B.E. 2547 and their presentation has been made incompliance with the stipulations of the Notification of the Department of Business Development dated 30 January 2009, issued under the Accounting Act B.E. 2543. The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies. 2.2 Basis of consolidation a) The consolidated financial statements include the financial statements of the Company (çthe Companyé) and the following subsidiary companies (çthe subsidiariesé):

Annual Report 2010-2011 106 Polyplex (Thailand) Public Company Limited

Companyûs name

Polyplex (Americas) Inc.

Nature of business

Distribution of plastic film Investment holding company Manufacture and distribution of polyester film and chips

Polyplex (Singapore) Pte. Ltd. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (100% owned by Polyplex (Singapore) Pte. Ltd.) Polyplex Trading Distribution of (Shenzhen) Co., Ltd. plastic film (100% owned by Polyplex (Singapore) Pte. Ltd.)

c) d)

e) f)

Assets as a percentage to the consolidated Country of Percentage of total assets as at incorporation shareholding 31 March 2011 2010 2011 2010 Percent Percent Percent Percent United States 80.24 80.24 9.42 7.20 of America Singapore 100.00 100.00 0.13 0.04 Turkey

Revenues as a percentage to the consolidated total revenues for the year ended 31 March 2011 2010 Percent Percent 22.07 18.19 0.04

0.17

100.00

48.47

50.10

39.48

42.76

The Peopleûs 100.00 Republic of China

100.00

0.14

0.15

0.34

Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Company. The assets and liabilities in the financial statements of overseas subsidiary companies are translated to Baht using the exchange rate prevailing on the balance sheet date, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of çTranslation adjustmenté in shareholdersû equity. Significant balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements. Minority interests represent the portion of net income or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet.

2.3 The separate financial statements, which present investments in subsidiaries under the cost method, have been prepared solely for the benefit of the public.

Adoption of new accounting standards During the current year, the Federation of Accounting Professions issued a number of revised and new accounting standards (TAS, TFRS, TFRIC, SIC) as listed below. 107

Accounting standards that are effective for fiscal years beginning on or after 1 January 2011 (except Framework for the Preparation and Presentation of Financial Statements, which is immediately effective): Framework for the Preparation and Presentation of Financial Statements (revised 2009) TAS 1 (revised 2009) Presentation of Financial Statements TAS 2 (revised 2009) Inventories TAS 7 (revised 2009) Statement of Cash Flows TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (revised 2009) Events after the Reporting Period TAS 11 (revised 2009) Construction Contracts TAS 16 (revised 2009) Property, Plant and Equipment TAS 17 (revised 2009) Leases TAS 18 (revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (revised 2009) Borrowing Costs TAS 24 (revised 2009) Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (revised 2009) Consolidated and Separate Financial Statements TAS 28 (revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (revised 2009) Interests in Joint Ventures TAS 33 (revised 2009) Earnings per Share TAS 34 (revised 2009) Interim Financial Reporting TAS 36 (revised 2009) Impairment of Assets TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2009) Intangible Assets TAS 40 (revised 2009) Investment Property TFRS 2 Share-Based Payment TFRS 3 (revised 2009) Business Combinations TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRIC 15 Agreements for the Construction of Real Estate SIC 31 Revenue - Barter Transactions Involving Advertising Services

Accounting standards that are effective for fiscal years beginning on or after 1 January 2013: TAS 12 Income Taxes TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance

Annual Report 2010-2011 108 Polyplex (Thailand) Public Company Limited

TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates SIC 10 Government Assistance - No Specific Relation to Operating Activities SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets SIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders The Company没s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied, except for the following accounting standards which management is evaluating the impact on the financial statements in the year when these standards are adopted. TAS 19 Employee Benefits This accounting standard requires employee benefits to be recognised as expense in the period in which the service is performed by the employee. In particular, an entity has to evaluate and make a provision forpost-employment benefits using actuarial techniques. Currently, the Company accounts for such employee benefits when they are incurred. TAS 12 Income Taxes This accounting standard requires an entity to identify temporary differences, which are differences between the carrying amount of an asset or liability in the accounting records and its tax base, and to recognise deferred tax assets and liabilities under the stipulated guidelines.

Significant accounting policies 4.1 Revenue recognition Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances. Interest income Interest income is recognised on an accrual basis based on the effective interest rate. Dividends Dividends are recognised when the right to receive the dividends is established. 4.2 Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 109

4.3 Trade accounts receivable Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debt aging. 4.4 Inventories Finished goods and work in process are valued at the lower of cost (average method) and net realisable value. Cost includes all production costs and attributable factory overheads. Raw materials, spare parts and factory supplies are valued at the lower of cost (average method) and net realisable value and are charged to production costs whenever consumed. 4.5 Investments Investments in subsidiaries are accounted for in the separate financial statements using the cost method. The weighted average method is used for computation of the cost of investments. In the event the Company reclassifies investments from one type to another, such investments will be readjusted to their fair value as at the reclassification date. The differences between the carrying amount of the investments and their fair value on the date of reclassification are recorded as gains or losses in the income statement or recorded as surplus (deficit) from changes in the value of investments in shareholders没 equity, depending on the type of investment that is reclassified.

4.6 Property, plant and equipment/Depreciation Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation of buildings and building improvements, machinery and equipment is calculated by reference to their costs on the straight-line basis. Depreciation of other equipment is calculated on the sum of the year digits basis. The estimated useful lives of plant and equipment are as follows: Buildings and building improvements - 20, 50 years Machinery and equipment - 4 - 20 years Furniture, fixtures and office equipment - 3 - 10 years Motor vehicles - 5 - 7 years Depreciation is included in determining income. No depreciation is provided on land, machinery in transit, and assets under installation and construction. Annual Report 2010-2011 110 Polyplex (Thailand) Public Company Limited

4.7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 4.8 Intangible assets Intangible assets acquired through business combination are initially recognised at their fair value on the date of business acquisition while intangible assets acquired in other cases are recognised at cost. Following the initial recognition, the intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to the income statement. A summary of the intangible assets with finite useful lives is as follows: Useful lives Computer software 3 - 5 years

4.9 Goodwill Goodwill is initially measured at cost, which equals to the excess of cost of business combination over the fair value of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination, the excess is immediately recognised as gain in the income statement. Goodwill is carried at cost less any accumulated impairment losses. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company没s cash generating units (or group of cash-generating units) that are expected to benefit from the synergies of the combination. The Company estimates the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

111

4.10 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company and its subsidiaries, whether directly or indirectly, or which are under common control with the Company and its subsidiaries. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company and its subsidiaries that gives them significant influence over the Company and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of the operations of the Company and its subsidiaries.

4.11 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the balance sheet date. Gains and losses on exchange are included in determining income.

4.12 Impairment of assets At each reporting date, the Company and its subsidiaries perform impairment reviews in respect of the property, plant and equipment and other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. The Company and its subsidiaries also carry out annual impairment reviews in respect of goodwill. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset没s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations arecorroborated by a valuation model that, based on information available, reflects the amount thatthe Company and its subsidiaries could obtain from the disposal of the asset in an arm没s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. An impairment loss is recognised in the income statement.

4.13 Employee benefits Salaries, wages, bonuses, contributions to the social security fund and provident fund, and other employee benefits are recognised as expenses when incurred. Annual Report 2010-2011 112 Polyplex (Thailand) Public Company Limited

4.14 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 4.15 Income tax Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.

Use of accounting estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

Related party transactions During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties. (Unit: Million Baht) Consolidated Separate financial statements financial statements 2011 2010 2011 2010 Transactions with subsidiaries (eliminated from the consolidated financial statements) Sales of goods

795.3

Dividend income Purchases of raw materials

9.9 20.0

1,052.2

197.2

1.2

7.2

1.2

Transactions with related companies Purchases of raw materials Other expenses

Transfer pricing policy

467.3 With reference to market prices 4.5 As declared - With reference to market prices - With reference to market prices 3.5 With reference to market prices

113

As at 31 March 2011 and 2010, the balances of the accounts between the Company and those related companies are as follows: (Unit: Baht) Consolidated financial statements 2011 2010 Trade accounts receivable - related parties Subsidiaries Polyplex (Americas) Inc. Polyplex Trading (Shenzhen) Co., Ltd. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi Total trade accounts receivable - related parties Amounts due from related party Parent company Polyplex Corporation Ltd. Total amounts due from related party

Separate financial statements 2011 2010

373,741,206 4,611,757

152,399,665 1,127,697

450,381 378,803,344

153,527,362

221,816,318 221,816,318

60,646,262 60,646,262

Directors and management没s remuneration In 2011 the Company and its subsidiaries had salaries, bonuses, meeting allowances and gratuities of their directors and management recognised as expenses totaling Baht 48.5 million (The Company only: Baht 21.0 million) (2010: Baht 49.1 million, The Company only: Baht 23.2 million). Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 23.4 to the financial statements.

Cash and cash equivalents (Unit: Baht)

Cash Bank deposits Total

Consolidated financial statements 2011 2010 2,191,193 1,520,152 1,228,817,416 709,897,968 1,231,008,609 711,418,120

Separate financial statements 2011 2010 1,066,700 628,049 40,975,107 108,169,060 42,041,807 108,797,109

As at 31 March 2011, bank deposits in saving accounts and fixed deposits carried interests between 0.05 and 3.90 percent per annum (2010: between 0.05 and 3.00 percent per annum).

Annual Report 2010-2011 114 Polyplex (Thailand) Public Company Limited

Trade accounts receivable The balances of trade accounts receivable as at 31 March 2011 and 2010, aged on the basis of due dates, are summarised below. (Unit: Baht) Consolidated financial statements 2011 2010 Unrelated parties Not yet due Past due Up to 3 months 3 - 6 months Over 6 months Total Less: Allowance for doubtful debts Net Related parties Not yet due Total Trade accounts receivable - net

Separate financial statements 2011 2010

1,843,558,451

1,070,017,130

778,672,433

461,027,646

50,486,427 1,354,090 4,140,736 1,899,539,704 (3,380,295) 1,896,159,409

96,496,547 930,698 2,556,425 1,170,000,800 (2,556,425) 1,167,444,375

21,856,496 1,246,683 1,947,079 803,722,691 (1,186,638) 802,536,053

30,025,549 1,169 1,419,315 492,473,679 (1,419,315) 491,054,364

1,896,159,409

1,167,444,375

378,803,344 378,803,344 1,181,339,397

153,527,362 153,527,362 644,581,726

Inventories (Unit: Baht)

Finished goods Work in process Raw materials Spare parts and factory supplies Materials in transit Total

Consolidated financial statements Allowance for diminution in Cost value of inventories Inventories - net 2011 2010 2011 2010 2011 2010 568,546,262 272,370,705 (3,480,840) (8,040,766) 565,065,422 264,329,939 251,056,821 144,995,680 - (12,926,796) 251,056,821 132,068,884 411,063,359 391,273,828 - 411,063,359 391,273,828 153,712,573 134,951,545 351,406,255 193,668,888 1,735,785,270 1,137,260,646

- 153,712,573 134,951,545 - 351,406,255 193,668,888 (3,480,840) (20,967,562) 1,732,304,430 1,116,293,084 (Unit: Baht)

Finished goods Work in process Raw materials Spare parts and factory supplies Materials in transit Total

Separate financial statements Allowance for diminution in Cost value of inventories Inventories - net 2011 2010 2011 2010 2011 2010 46,165,994 29,271,211 (602,658) (4,965,307) 45,563,336 24,305,904 98,957,181 108,041,425 - (12,926,796) 98,957,181 95,114,629 244,159,023 211,168,909 - 244,159,023 211,168,909 73,171,260 71,333,061 8,925,918 9,965,902 471,379,376 429,780,508

- 73,171,260 71,333,061 - 8,925,918 9,965,902 (602,658) (17,892,103) 470,776,718 411,888,405

115

As at 31 March 2010, the allowance of the Company of Baht 17.9 million included allowance of Baht 16.0 million which was due to the commercial start up of the Cast Polypropylene line in March 2010.

10. Investments in subsidiaries These represent investments in ordinary shares and preference shares in the following subsidiarycompanies: (Unit: Baht)

Company没s name

Ordinary shares Polyplex (Singapore) Pte. Ltd. Polyplex (Americas) Inc. Preference shares Polyplex (Singapore) Pte. Ltd. Polyplex (Americas) Inc.

Paid-up capital 2011 2010

EUR 0.8 million USD 1.3 million

EUR 34.5 million USD 4.2 million

EUR 0.8 million USD 1.3 million

EUR 38.1 million USD 4.2 million

Total investments in subsidiaries

Separate financial statements Shareholding percentage Cost 2011 2010 2011 2010 Percent Percent

Dividend received for the year ended 31 March 2011 2010

100.00

41,440,000

80.24

41,660,675

1,995,261

3,853,667

83,100,675

1,995,261

3,853,667

100.00 1,713,458,176 1,890,529,659

7,863,095 7,863,095 9,858,356

635,087 635,087 4,488,754

100.00 96.15

96.15

139,856,000 139,856,000 1,853,314,176 2,030,385,659 1,936,414,851 2,113,486,334

During the year, the Company received Baht 139.7 million from the redemption of EUR 3.6 million of the preference shares of Polyplex (Singapore) Pte. Ltd. As a result, as at 31 March 2011, the Company had investments in 161,600 preference shares of this company (2010: 178,300 shares). These preference shares are non-cumulative and non-participative preference shares. The Company is entitled to receive dividend at a rate not to exceed 7% per annum, in the year in which dividend is declared. On 24 October 2008, the meeting of the Board of Directors of the Company approved an investment of up to USD 7 million to purchase 1.4 million non-cumulative and non-voting preference shares of Polyplex (Americas) Inc. Up to 31 March 2011, a total of USD 4 million, or equivalent to approximately Baht 139.9 million, has been paid for 800,000 preference shares of this company.

Annual Report 2010-2011 116 Polyplex (Thailand) Public Company Limited

117

Land 17,191,792 637,446,361 (88,213,215) 921,953 89,398 567,436,289 17,191,792 567,436,289

34,319,250 2,554,997 (3,572,895) 557,688 (296,156) 33,562,884 21,816,818 5,534,661 (2,958,438) (167,492) 24,225,549 12,502,432 9,337,335

Consolidated financial statements Furniture, Buildings and fixtures and Assets under building Machinery office installation and improvements and equipment equipment Motor vehicles construction

Cost 31 March 2010 181,918,443 1,018,668,130 5,698,519,177 81,208,219 Purchases 93,445,575 774,703 5,130,932 4,170,150 Disposals (1,118,997) (10,137,774) Transfer in/(Transfer out) 47,130,627 5,109,627 33,182,729 2,232,544 Capitalised interest Translation adjustment 962,060 (7,423,318) (34,812,205) (547,626) 31 March 2011 323,456,705 1,017,129,142 5,700,901,636 76,925,513 Accumulated depreciation 31 March 2010 102,599,181 1,238,394,014 50,759,852 Depreciation for the year 33,067,653 309,731,287 8,573,034 Disposals (699,373) (10,063,454) Translation adjustment (26,404) 49,019 (126,370) 31 March 2011 135,640,430 1,547,474,947 49,143,062 Net book value 31 March 2010 181,918,443 916,068,949 4,460,125,163 30,448,367 31 March 2011 323,456,705 881,488,712 4,153,426,689 27,782,451 Depreciation for the year 2010 (Baht 319.6 million included in manufacturing cost, and the balance in selling and administrative expenses) 2011 (Baht 331.8 million included in manufacturing cost, and the balance in selling and administrative expenses)

11. Property, plant and equipment

16,277,578

16,277,578 16,277,578

Machinery in transit

355,800,826 356,906,635

5,618,255,146 5,979,205,759

1,413,569,865 356,906,635 (13,721,265) (271,247) 1,756,483,988

7,031,825,011 759,800,296 (14,829,666) 921,953 (42,027,847) 7,735,689,747

Total

(Unit: Baht)

Annual Report 2010-2011 118 Polyplex (Thailand) Public Company Limited

Cost 31 March 2010 103,181,652 436,107,857 2,875,843,071 38,948,240 Purchases 93,445,575 774,703 5,130,932 3,800,630 Disposals (9,188,650) Transfer in/(Transfer out) 4,700,000 2,391,020 24,500 Capitalised interest 31 March 2011 196,627,227 441,582,560 2,883,365,023 33,584,720 Accumulated depreciation 31 March 2010 64,430,053 755,227,160 31,329,607 Depreciation for the year 22,023,483 160,048,338 4,100,998 Disposals (9,179,371) 31 March 2011 86,453,536 915,275,498 26,251,234 Net book value 31 March 2010 103,181,652 371,677,804 2,120,615,911 7,618,633 31 March 2011 196,627,227 355,129,024 1,968,089,525 7,333,486 Depreciation for the year 2010 (Baht 153.7 million included in manufacturing cost, and the balance in selling and administrative expenses) 2011 (Baht 182.1 million included in manufacturing cost, and the balance in selling and administrative expenses)

Land

Buildings and building Machinery improvements and equipment 17,071,933 554,170,695 (7,115,520) 921,953 565,049,061 17,071,933 565,049,061

18,599,396 1,714,800 (2,155,929) 18,158,267 9,537,681 4,239,965 (2,155,929) 11,621,717 9,061,715 6,536,550

Separate financial statements Furniture, fixtures and Assets under office installation and equipment Motor vehicles construction

16,277,578

16,277,578 16,277,578

Machinery in transit

162,013,643 190,412,784

2,629,227,648 3,115,042,451

860,524,501 190,412,784 (11,335,300) 1,039,601,985

3,489,752,149 675,314,913 (11,344,579) 921,953 4,154,644,436

Total

(Unit: Baht)

As at 31 March 2011, certain equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation) of those assets amounted to approximately Baht 33.6 million (2010: Baht 28.5 million) (The Company only: Baht 14.3 million, 2010: Baht 21.0 million). The Company and its subsidiaries have pledged their assets amounting to approximately Baht 2,933.3 million (2010: Baht 3,645.6 million) as collateral against credit facilities received from financial institutions (The Company only: Baht 2,087.1 million, 2010: Baht 1,680.5 million).

12. Intangible assets Details of intangible assets (computer software) are as follows: Baht Cost As at 31 March 2010 Purchases Translation adjustment As at 31 March 2011 Accumulated amortisation As at 31 March 2010 Amortisation expenses for the year Translation adjustment As at 31 March 2011 Net book value As at 31 March 2010 As at 31 March 2011 Amortisation expenses for the year 2010 2011

4,377,974 731,215 (25,388) 5,083,801 3,111,874 631,657 (13,373) 3,730,158 1,266,100 1,353,643 930,487 631,657

13. Short-term loans from financial institutions As at 31 March 2011, short-term loans from financial institutions of a subsidiary company carry interest at Libor + 1.50% per annum (2010: Libor + 2.50% per annum). The subsidiary没s shortterm loans from financial institutions are guaranteed by the Company.

119

14. Long-term loans from financial institutions (Unit: Baht) Loans Floating rate loans (Euribor + 0.6% to 3.125%) Floating rate loans (Libor + 1.5% to 2.0%) Fixed rate loans (3.83% to 5.54%) Total Less: Current portion Net

Repayment schedule

Consolidated financial statements 2011 2010

Separate financial statements 2011 2010

Repayable as from April 2006 to December 2017 Repayable as from October 2009 to September 2016 Repayable as from April 2006 to July 2016

774,374,084 1,669,811,238

269,134,871

373,102,200

922,875,871

915,129,007

915,129,008

194,683,435 221,743,627 184,191,105 135,311,163 1,891,933,390 2,806,683,873 1,376,201,847 1,423,542,370 (387,200,147) (454,064,187) (256,001,425) (192,138,605) 1,504,733,243 2,352,619,686 1,120,200,422 1,231,403,765

The Company没s loan facilities are secured by the mortgage of land, premises and machinery of the Company. The subsidiary没s loan facilities are secured by the mortgage of its land and premises and the pledge of its machinery, and are guaranteed by the Company as described in Note 23.4 to the financial statements. The loan agreements contain covenants that, among other things, require the Company and its subsidiaries to maintain a certain debt to equity ratio and debt service coverage ratio, and require a subsidiary to maintain a particular current ratio. During the current fiscal year, the Company was granted long-term loan facilities by two banks, amounting to USD 16.5 million. These loans were granted for investment in the Silicone Coating project and were secured by the mortgage of the lands, premises and machinery of the Company. As at 31 March 2011, the Company has already drawn down a total of USD 6.9 million from these facilities, or equivalent to Baht 210.0 million. During the current fiscal year, a subsidiary repaid loans amounting to EUR 14.6 million in advance. The Company entered into two interest rate swap agreements with a bank, under which the Company agreed to swap a floating interest rate of LIBOR for a fixed interest rate of 2.61 percent per annum on principal of USD 4.16 million and to swap a floating interest rate of LIBOR for a fixed interest rate of 3.54 percent per annum on principal of USD 2.29 million. The swap agreements will mature on 31 July 2016.

15. Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting Annual Report 2010-2011 120 Polyplex (Thailand) Public Company Limited

accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.

16. Expenses by nature Significant expenses by nature are as follows: (Unit: Baht) Consolidated financial statements 2011 2010 Salaries and wages and other employee benefits 513,304,039 416,894,766 Depreciation and amortisation 357,538,292 356,731,313 Loss on diminutions in value of inventories (Reversal) (17,289,445) 1,574,526 Raw materials and consumables used 4,545,330,391 4,003,535,540 Changes in inventories of finished goods and work in process (402,236,698) 49,719,022

Separate financial statements 2011 2010 217,102,054 170,394,935 190,412,784 162,013,643 (17,289,445) 1,709,422 2,453,210,489 2,025,784,772 (7,810,539)

(54,216,189)

17. Corporate income tax No corporate income tax was payable for the years since the Company has been granted promotional privileges under the Investment Promotion Act B.E. 2520 by the Board of Investment. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi, being a manufacturing company which operates in a Free Trade Zone, is eligible to benefit from corporate tax exemptions, until the end of the financial year of full membership of Turkey to the European Union. However, this exemption is limited to the earnings related to the sale of manufactured goods.

18. Promotional privileges The Company has received promotional privileges from the Board of Investment for the manufacture of polyester films, metallized films, extrusion coated films, cast polypropylene films and PET resins. As a promoted company, the Company must comply with certain conditions and restrictions provided for in the promotional certificates. The Company没s sales for the years ended 31 March 2011 and 2010 divided according to promoted and non-promoted operations are set out below. (Unit: Baht) Promoted operations 2011 2010

Sales Domestic sales Export sales Total sales

1,029,784,828 674,224,365 3,948,639,016 2,493,823,877 4,978,423,844 3,168,048,242

Separate financial statements Non-promoted operations 2011 2010

917,550 1,395,609 2,313,159

Total 2011

2010

6,607,762 1,030,702,378 680,832,127 - 3,950,034,625 2,493,823,877 6,607,762 4,980,737,003 3,174,656,004

121

19. Basic earnings per share Basic earnings per share are calculated by dividing net income for the year by the weighted average number of ordinary shares in issue during the year. 20. Dividends (Unit: Baht) Dividends Final dividends for 2009 Interim dividends for 2010

Approved by Annual General Meeting of the shareholders on 28 July 2009 Board of Directors没 meeting on 28 January 2010

Total dividends for fiscal year 2010 Final dividends for 2010 Interim dividends for 2011

Annual General Meeting of the shareholders on 22 July 2010 Board of Directors没 meeting on 28 October 2010

Total dividends for fiscal year 2011

Total dividends 96,000,000

Dividend per share 0.120

276,000,000

0.345

372,000,000

0.465

140,000,000

0.175

472,000,000

0.590

612,000,000

0.765

21. Segment information The Company and its subsidiaries没 operations involve principally a single industry segment, the manufacture and distribution of polyester films, metallized films, extrusion coated films, cast polypropylene films and PET resins, and are carried on in two geographic areas in Thailand and overseas countries, as operated by subsidiaries. The financial information of the Company and its subsidiaries by geographical segment, for the years ended 31 March 2011 and 2010 are as follows: (Unit: Million Baht) Elimination of inter-segment Thailand Overseas countries revenues 2011 2010 2011 2010 2011 2010 Sales to external customers Inter-segment sales Total sales Segment income Unallocated income and expenses: Finance cost Corporate income tax Minority interest Net income As at 31 March 2011 and 2010 Property, plant and equipment Unallocated assets Total assets

Consolidation 2011 2010

4,185.4 2,707.4 6,997.8 4,418.0 - 11,183.2 7,125.4 795.3 467.3 1,176.3 588.1 (1,971.6) (1,055.4) 4,980.7 3,174.7 8,174.1 5,006.1 (1,971.6) (1,055.4) 11,183.2 7,125.4 1,678.3 487.0 2,531.0 609.9 (195.6) 73.8 4,013.7 1,170.7 (92.7) (114.7) (27.9) (12.2) (10.2) (4.4) 3,882.9 1,039.4 3,115.0 2,629.2 2,864.2 2,989.0

Annual Report 2010-2011 122 Polyplex (Thailand) Public Company Limited

5,979.2 5,618.2 5,953.7 3,248.5 11,932.9 8,866.7

Transfer prices between segments are as set out in Note 6 to the financial statements.

22. Provident fund The Company and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company contributed to the fund monthly at the rate of 4 percent (2010: 4 percent) of basic salary. The fund, which is managed by a licensed fund manager, will be paid to employees in accordance with the fund rules. During the year ended 31 March 2011, the Company contributed Baht 2,727,617 (2010: Baht 2,443,317) to the fund. 23. Commitments and contingent liabilities 23.1 Capital commitments As at 31 March 2011, the Company and its subsidiaries had capital commitments of approximately Baht 1,184.00 million (2010: Baht 328.06 million), relating to the construction of building and acquisition of machinery and equipment (The Company only: Baht 547.29 million, 2010: Baht 328.06 million). 23.2 Operating lease commitments The Company has entered into several lease agreements in respect of the lease of office building space and equipment. Future minimum rentals payable under these leases as at 31 March 2011 are as follows: Thousand Baht Payable within: 1 years 1,004 1 to 5 years 643

23.3 Service agreements As at 31 March 2011, the Company had commitments totaling Baht 6.1 million under various service agreements (2010: Baht 17.6 million). These agreements expire between May 2011 and January 2013. 23.4 Guarantees The Company has given short-term guarantees worth USD 20.0 million (2010: USD 8.0 million) against working capital facilities obtained by its subsidiary (Polyplex (Americas) Inc.). In addition, the Company has given a guarantee of EUR 6.7 million (2010: EUR 8.9 million) for the long-term loans obtained by its subsidiary (Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi).

123

As at 31 March 2011, there were outstanding bank guarantees of approximately Baht 43.8 million and EUR 9.9 million (2010: Baht 0.8 million and EUR 7.8 million) issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of businesses (The Company only: Baht 43.8 million, 2010: Baht 0.8 million).

24. Financial instruments 24.1 Financial risk management The Company and its subsidiariesû financial instruments, as defined under Thai Accounting Standard No. 107 çFinancial Instruments: Disclosure and Presentationsé, principally comprise cash and cash equivalents, trade accounts receivable, investments, trade accounts payable, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable and other receivables. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and considering credit insurance contracts from time to time, and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables and other receivables as stated in the balance sheet. Interest rate risk The Company and its subsidiariesû exposure to interest rate risk relates primarily to its cash at banks, bank overdrafts, and short-term and long-term borrowings. However, since most of the Companyand its subsidiariesû financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. In addition, the Company considers interest rate swap agreements from time to time so as to reduce exposure to the interest rate risk. Significant financial assets and liabilities as at 31 March 2011 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interestrates further classified based on the maturity date, or the repricing date if this occurs before the maturity date. Annual Report 2010-2011 124 Polyplex (Thailand) Public Company Limited

Consolidated financial statements Fixed interest rates Floating NonWithin 1-5 Over 5 interest interest 1 year years years rate bearing Total (Million Baht) Financial Assets Cash and cash equivalents Current investments Trade accounts receivable Amounts due from related party

944.3 71.9 1,016.2

Financial liabilities Short-term loans from financial institutions Trade accounts payable Accounts payable for purchases of fixed assets Long-term loans

47.5 47.5

138.4 138.4

8.8 8.8

67.2 67.2

219.5 1,231.0 0.05 - 3.90 93.0 164.9 2.30 - 2.32 1,896.2 1,896.2 221.8 221.8 2,430.5 3,513.9

194.5 1,697.2 1,891.7

194.5 Libor + 1.50 1,088.6 1,088.6 202.0 202.0 - 1,891.9 See Note 14 1,290.6 3,377.0

Separate financial statements Fixed interest rates Floating NonWithin 1-5 Over 5 interest interest 1 year years years rate bearing (Million Baht) Financial Assets Cash and cash equivalents Current investments Trade accounts receivable

71.9 71.9

Financial liabilities Trade accounts payable Accounts payable for purchases of fixed assets Long-term loans 37.0 37.0

138.4 138.4

8.8 8.8

Interest rate (% p.a.)

Total

Interest rate (% p.a.)

39.9 39.9

2.1 42.0 0.10 - 0.75 93.0 164.9 2.30 - 2.32 1,181.3 1,181.3 1,276.4 1,388.2

1,192.0 1,192.0

619.5 619.5 202.0 202.0 - 1,376.2 See Note 14 821.5 2,197.7

As at 31 March 2011, the Company had interest rate swap agreements with a bank to swap floating interest rate to fixed interest rate, as described in Note 14 to the financial statements.

Foreign currency risk The Company and its subsidiaries没 exposure to foreign currency risk arise mainly from trading transactions that are denominated in foreign currencies. The Company and its subsidiaries seekto reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.

125

The Company没s balances of financial assets and liabilities denominated in foreign currencies asat 31 March 2011 are summarised below. Financial assets (Million) 22.39 3.92 73.93 -

Foreign currency

US dollar Euro Japanese yen Swiss franc

Financial liabilities (Million) 39.55 6.69 0.06 2.36

Average exchange rate as at 31 March 2011 (Baht per 1 foreign currency unit) 30.2967 42.8572 0.3658 33.0163

The Company没s foreign exchange contracts outstanding at 31 March 2011 are summarised below. Foreign currency

Bought amount (Million)

US dollar

2.70

Swiss franc Swiss franc Euro

2.21 0.49 0.84

Euro Japanese yen

0.05 -

Sold amount (Million)

Contractual exchange rate Bought Sold (Baht per 1 foreign currency unit)

37.82

Baht 30.6650 Baht 30.0600 33.2380 per USD 1 32.6654 per USD 1 - Baht 29.5100 - 30.7096 per CHF 1 CHF 1.0113 per USD 1 3.79 Baht 39.4520 Baht 39.9650 42.9400 per EUR 1 42.9400 per EUR 1 USD 1.3089 per EUR 1 70.33 Baht 0.3686 - 0.3763 per JPY 1

As at 31 March 2011, a subsidiary had forward foreign exchange contracts as follows: Bought amount Contractual exchange rate YTL 1.20 million YTL 1.5942 - 1.6280 per USD 1

24.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries没 financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm没s length transaction. The fair value is determined byreference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

Annual Report 2010-2011 126 Polyplex (Thailand) Public Company Limited

25. Capital management The primary objective of the Company没s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern. According to the balance sheet as at 31 March 2011, the Group没s debt-to-equity ratio was 0.43:1 (2010: 0.77:1) and the Company没s debt-to-equity ratio was 0.46:1 (2010: 0.52:1).

26. Approval of financial statements These financial statements were authorised for issue by the Company没s authorised directors on 13 May 2011.

127

Annual Report 2010-2011 128 Polyplex (Thailand) Public Company Limited

Board Chairman & Audit Committee Chairman

Director & Vice Chairman

2 Mr.Sanjiv Saraf

Position

1 Mr.Manu Leopairote

Name-Surname Education/Training

53 Bachelorรปs degree Agricultural Engineering, Indian Institute of Technology, Kharagpur

68 Bachelorรปs degree Economics (Hons.), Thammasat University Masterรปs degree M.Sc. (Econ.) , University of Kentucky, USA Ph.D in Business Administration (Honorary), Thammasat University Directors Certification Program (DCP) Class 30/2003, IOD

Age (Years)

Relation % of among Shareholding family within Company Position

Company / Type of Business

2004-Present Board Chairman & Chairman Polyplex (Thailand) Plc. of the Audit Committee 2002-2006 Chairman Small and Medium Enterprise Development Bank of Thailand 1999-2004 Permanent Secretary Ministry of Industry 1999-2004 Chairman PTT Public Co.,Ltd 1999-2006 Chairman Thai Oil Plc. 2001-2006 Chairman PTT Exploration and Production Plc 2002-2003 Chairman Asian Productivity Council, Japan 2005-2009 Chairman Neighboring Countries Economic Development Agency 1994-2008 Chairman TECHNONET ASIA, Singapore 2006-Present Director Polyplex (Americas) Inc. 2004-Juneรป08 Director Polyplex (Asia) Pte. Ltd. 2004-Marchรป08 Director Polyplex (Singapore) Pte. Ltd. 2004-Present Director & Chairman Polyplex Europa Polyester Film Sanayi Ve Ticaret Anoim Sirketi, Turkey 2002-Present Vice Chairman Polyplex (Thailand) Plc. 2002-Present Chairman Polyplex Corporation Ltd.

Period

Working Experiences in the 5 preceding years

Information of Director and Management of the Company as on 31.5.2011

129

Director

4 Mr.Ranjit Singh

Position

3 Mr.Pranay Kothari

Name-Surname Education/Training

54 Bachelor没s degree Mechanical Engineering, Birla Institute of Technology & Science, Pilani, India Master没s degree MBA, India of Institute of Management, Ahmedabad

52 Fellow Chartered Accountant Institute of Chartered Accountants of India Associate Company Secretary The Institute of Company Secretaries of India

Age (Years)

Relation % of among Shareholding family within Company

Director Executive Director Executive Director Director Director

2002-Present 2001-Present July 2007-Present 2004-March没08 2004-Present 2002-Present Director

Director Director Director Director

Position

2006-Present 2004-March没08 2004-Present 2004-Present

Period

Polyplex (Americas) Inc. Polyplex (Asia) Pte. Ltd. Polyplex (Singapore) Pte. Ltd. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anoim Sirketi, Turkey Polyplex (Thailand) Plc. Polyplex Corporation Ltd. Polyplex Corporation Ltd. Polyplex (Asia) Pte. Ltd. Polyplex Europa Polyester Film Sanayi Ve Ticaret Anoim Sirketi, Turkey Polyplex (Thailand) Plc.

Company / Type of Business

Working Experiences in the 5 preceding years

Information of Director and Management of the Company as on 31.5.2011

Annual Report 2010-2011 130 Polyplex (Thailand) Public Company Limited

5 Dr.Virabongsa Ramangkura

Name-Surname

Director & Audit Committee member

Position Education/Training

68 Bachelor没s degree First Class Honors, B.A. (Political Science), Chulalongkorn University Master没s Degree Economics, University of Pennsylvania, U.S.A. Ph.D. (Econonmics), University of Pennsylvania, U.S.A., Doctor of Law (Honorary), Webster University, USA

Age (Years) -

Relation % of among Shareholding family within Company Position

Director Director Advisory on the Board Advisory on the Group Foundation and Honorary Member 2004-Present Advisory Chairman

2005-Present 2006- April 2011 1999-Present 2008-Present 2001-Present

2004-Present Director & Audit Committee member 1994-Present Chairman 1995-Present Chairman of the Executive Board 2004-Present Chairman 2005-Present Chairman 2006-Present Chairman Present Chairman Present Director Present Director Present Director

Period

Areeya Property Public Co., Ltd.

Thai-Lao Association for Friendship Finansa Co., Ltd. South East Asia Energy Co., Ltd. Bang-Mod Hospital Co., Ltd. Advance Paper Co., Ltd. Advance Agro Holding Co., Ltd. Thailand Development Research Institute Foundation Bangkok Airways Co., Ltd. IRPC Public Co. ,Ltd. Bangkok Bank Public Co., Ltd. King Power International Co., Ltd. BOAO Forum for Asia

Bangkok Expressway Public Co., Ltd. Advance Agro Public Co., Ltd.

Polyplex (Thailand) Plc.

Company / Type of Business

Working Experiences in the 5 preceding years

Information of Director and Management of the Company as on 31.5.2011

131

6 Mr.Praphad Phodhivorakhun

Name-Surname

Director

Position Education/Training

65 Bachelor没s degree Political Science, Ramkhamhaeng University Post Graduate Degree, National Defense College of Thailand Master Degree Business Administration (MBA), Public Administration (MPA) Ramkhamhaeng University Honourary Doctorate Degree in Business Administration Rajabhat University of Lampang

Age (Years) -

Relation % of among Shareholding family within Company Position

Company / Type of Business

2004-Present Director Polyplex (Thailand) Plc. Present Chairman of Board of Directors Kang Yong Electric Pcl. Present Chairman of Board of Directors Mitsubishi Electric Kang Yong Wattana Co., Ltd. Present Chairman of Board of Directors Siam City Leasing and Factoring Pcl. Present Chairman of Board of Directors Yokohama Rubbers (Thailand) Co., Ltd. Present Chairman of Board of Directors Kang Yong没 Group of Companies Present President K. Y. Intertrade Co., Ltd. Present Director Nitto Seiko (Thailand) Co., Ltd. Present Director Kulthorn Kirby Pcl. Present Director Thai Refrigeration Components Co., Ltd. Present Chairman Rajamangala University of Technology Rattanakosin. Present Member of the International Ritsumeikan Asia Pacific University, Advisory Committee Japan Present Commissioner Business Competition Commission, Ministry of Commerce

Period

Working Experiences in the 5 preceding years

Information of Director and Management of the Company as on 31.5.2011

Annual Report 2010-2011 132 Polyplex (Thailand) Public Company Limited

Director & Audit Committee Member

Managing Director

Chief Financial Officer

8 Mr.Rohit Kumar Vashistha

9 Mr.Vinod Sureka

Position

7 Mr.Shiraz Erach Poonevala

Name-Surname Education/Training

47 Bachelors of Commerce Sydenham College of Commerce, India Master of Commerce Sydenham College of Commerce, India Associated Chartered Accountant Institute of Chartered Accountants of India 40 Bachelorรปs degree in Metallargy, IT -BHU, India Masterรปs degree International business, Indian Institute of Foreign Trade, India Directors Certification Program (DCP) Class 123/2009, IOD 36 Bachelor of Commerce, Calcutta University, INDIA, Chartered Accountant, The Institute of Chartered Accountants of India (ICAI)

Age (Years)

Relation % of among Shareholding family within Company Position

Managing Director Director & Profit Center Head Head - Sales & Marketing Head (International Trade)

August 2008- Chief Financial Officer Present December 2001- Finance Manager July 2008

Mayรป10 - Present Mayรป08 -Aprilรป10 2003- 2008 1996-2002

2004-Present Director & Audit Comittee member March 2008- Director - Investment Present 2005-March 2008 Senior Vice President 2002-2005 Director

Period

Indorama Iplik San. Ve. Tic. A.S., Turkey

Polyplex (Thailand) Plc

Polyplex (Thailand) Plc. Polyplex (Thailand) Plc. Polyplex (Thailand) Plc. Tata Steel

Seamico Securities Plc. Paragon Partners Co.,Ltd.

G.P. Group of Companies Limited

Polyplex (Thailand) Pcl.

Company / Type of Business

Working Experiences in the 5 preceding years

Information of Director and Management of the Company as on 31.5.2011

133

Business Head SARALAM

Head - Sales & Marketing

11 Mr. Ashish Ghosh

Position

10 Mr.Manav Singh

Name-Surname Education/Training

36 BTech (Mech Engg.) Jamia Millia Islamia College MBA International Business (Indian Institute of Foreign Trade) 45 Bachelor没s / Master没s Degree in Science - Jiwaji University, Gwalior - INDIA, Master没s degree in Business Administration - BIT Ranchi, INDIA

Age (Years)

Relation % of among Shareholding family within Company Position

Company / Type of Business

November 2009- Head - Sales & Marketing Present December 1995- AVP - Marketing November 2009

SRF Limited -Manufacture of Polyester Film, Nylon Tyre Chord fabric, Engineering plastics

Polyplex (Thailand) Plc

July 2008-Present Business Head - SARALAM Polyplex (Thailand) Plc April 2005- Marketing Manager Polyplex (Thailand) Plc April 2008

Period

Working Experiences in the 5 preceding years

Information of Director and Management of the Company as on 31.5.2011