As filed with the Securities and Exchange Commission on June 25, 2004
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            ------------------------

                                   Form 20-F

                            ------------------------

     |_|    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

          |X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 2003

                                       OR

        |_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                        Commission File Number 001-14950

                            ------------------------

                          ULTRAPAR PARTICIPACOES S.A.
             (Exact name of Registrant as specified in its charter)

   ULTRAPAR HOLDINGS INC.                      THE FEDERATIVE REPUBLIC OF BRAZIL
(Translation of Registrant's                    (Jurisdiction of incorporation
    name into English)                                  or organization)

                            ------------------------

                 Av. Brigadeiro Luis Antonio, 1343, 9(0) Andar
                        Sao Paulo, SP, Brazil 01317-910
                           Telephone: 55-11-3177-6695

Securities registered or to be registered pursuant to Section 12(b) of the Act.

   Title of each class           Name of each stock exchange on which registered
   -------------------           -----------------------------------------------
Preferred Shares, without                    New York Stock Exchange
       par value*

                            ------------------------

*   Traded only in the form of American Depositary Shares (as evidenced by
        American Depositary Receipts) each representing 1,000 Preferred
         Shares which are registered under the Securities Act of 1933.

 Securities registered or to be registered pursuant to Section 12(g) of the Act:
                                      NONE

        Securities for which there is a reporting obligation pursuant to
                           Section 15(d) of the Act:
                                      NONE

      The number of outstanding shares of each class of stock of Ultrapar
                  Participacoes S.A. as of December 31, 2003.

                   Common Shares            51,264,621,778
                   Preferred Shares         18,426,647,050

    Indicate by check mark whether the registrant (1) has filed all reports
 required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
   1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
                   filing requirements for the past 90 days.

                               Yes |X|   No |_|

    Indicate by check mark which financial statement item the registrant has
                              elected to follow:

                           Item 17 |_|   Item 18 |X|

===============================================================================
<PAGE>


TABLE OF CONTENTS


INTRODUCTION ................................................................  3

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS ............................  3


PART I ......................................................................  5

ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS ...........  5

ITEM 2.     OFFER STATISTICS AND EXPECTED TIME TABLE ........................  5

ITEM 3.     KEY INFORMATION .................................................  5

ITEM 4.     INFORMATION ON THE COMPANY ...................................... 18

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS .................... 59

ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES ...................... 77

ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS ............... 83

ITEM 8.     FINANCIAL INFORMATION ........................................... 85

ITEM 9.     THE OFFER AND LISTING ........................................... 88

ITEM 10.    ADDITIONAL INFORMATION .......................................... 90

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ...... 98

ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES .......... 99



PART II ..................................................................... 99

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ................. 99

ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
              USE OF PROCEEDS ............................................... 99

ITEM 15.    CONTROLS AND PROCEDURES .........................................100

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT ................................100

ITEM 16B.   CODE OF ETHICS ..................................................100

ITEM 16C.   COMPENSATION OF THE PRINCIPAL AUDITING COMPANY ..................100


PART III ....................................................................101

ITEM 17.    FINANCIAL STATEMENTS ............................................101

ITEM 18.    FINANCIAL STATEMENTS ............................................101

ITEM 19.    EXHIBITS ........................................................102


GLOSSARY ....................................................................103




                                       2
<PAGE>


INTRODUCTION



     In this annual report, "Ultrapar", "Company", "Registrant", "we", "us" and
"our" refer to Ultrapar Participacoes S.A. "Ultragaz" refers to Ultragaz
Participacoes Ltda. together with its subsidiaries. "Oxiteno" refers to Oxiteno
S.A. Industria e Comercio, together with its subsidiaries. "Ultra S.A." refers
to Ultra S.A. Participacoes. "Ultracargo" refers to Ultracargo Operacoes
Logisticas e Participacoes Ltda, formerly Ultracargo Participacoes Ltda.

     All references herein to the "real", "reais", or "R$" are to the Brazilian
Real, the official currency of Brazil. All references to "U.S. dollars",
"dollars" or "U.S.$" are to United States dollars.

     Some of the figures included in this annual report may not sum due to
rounding.

     We will provide without charge to each person to whom this report is
delivered, upon written or oral request, a copy of any or all of the documents
incorporated by reference into this annual report (other than exhibits, unless
such exhibits are specifically incorporated by reference in such documents).
Written requests for such copies should be directed to Ultrapar Participacoes
S.A., Av. Brigadeiro Luiz Antonio, 1343, 9(0) Andar, Sao Paulo, SP, Brazil
01317-910, Attention: Director, Investor Relations. Telephone requests may be
directed to 55-11-3177-6482.

     Financial Statements

     The audited consolidated balance sheets included in this annual report as
of December 31, 2003 and 2002 and the related consolidated statements of
income, cash flows, changes in financial position and changes in shareholders'
equity for each of the years ended December 31, 2003, 2002 and 2001, including
the notes thereto, are our consolidated financial statements. The selected
financial information presented below should be read in conjunction with our
consolidated financial statements and the notes thereto.

     Accounting Practices Adopted in Brazil and U.S. GAAP

     Our consolidated financial statements are prepared in accordance with
accounting practices adopted in Brazil, which include accounting principles
emanating from the Brazilian Corporate Law and accounting standards and
supplementary procedures established by the CVM. Such accounting practices
differ in certain material respects from accounting principles generally
accepted in the United States of America, or U.S. GAAP. See note 24 to our
consolidated financial statements for a summary of the differences between the
accounting practices adopted in Brazil and U.S. GAAP, and a reconciliation to
U.S. GAAP of shareholders' equity as of December 31, 2003 and 2002, and net
income for the years ended December 31, 2003, 2002 and 2001. As described
above, current accounting practices in Brazil do not allow price-level
accounting for periods after December 31, 1995. Under U.S. GAAP price-level
adjusted accounting continued until July 1, 1997, when Brazil ceased to be
considered a highly inflationary economy for U.S. GAAP purposes.


INFORMATION REGARDING FORWARD-LOOKING STATEMENTS


     The declarations contained in this annual report in relation to our plans,
forecasts, expectations regarding future events, strategies, and projections,
are forward-looking statements which involve risks and uncertainties and which
are therefore not guarantees of future results. Words such as "believe",
"expect", "plan", "strategy", "prospect", "foresee", estimate", "project",
"anticipate", "can" and similar words are intended to identify forward-looking
statements. We have made forward-looking statements which cover, among other
things, our:

o    strategy for marketing and operational expansion;

o    capital expenditures forecasts; and

o    development of additional sources of revenue.


                                       3
<PAGE>


These forward-looking statements are subject to risks and uncertainties, which
could mean that our actual results and performance could differ significantly
from those anticipated and therefore the reader of this annual report should
not base his or her decisions exclusively on these forecasts. The risks and
uncertainties include, but are not limited to:

o    general economic and business conditions, including the crude oil prices
     and other commodities, refining margins and prevailing foreign exchange
     rates;

o    competition;

o    ability to produce and deliver products on a timely basis;

o    ability to anticipate trends in the liquefied petroleum gas, or LPG
     industry, including changes in capacity and industry price movements;

o    changes in official regulations;

o    receipt of official authorizations and licenses;

o    political, economic and social events in Brazil;

o    approval of Brazilian anti-trust authorities of the Shell Gas acquisition

o    access to sources of financing and our level of debt;

o    other factors contained under Item 3 - "Key Information - Risk Factors".


                                       4
<PAGE>


PART I


ITEM 1.           IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not applicable.



ITEM 2.           OFFER STATISTICS AND EXPECTED TIME TABLE

     Not applicable.



ITEM 3.           KEY INFORMATION


A.   Selected Financial Data

     We have selected the following consolidated financial data from our
audited consolidated annual financial statements, for the periods indicated.
You should read our selected financial data in conjunction with "Item 5.
Operating and Financial Review and Prospects" and our consolidated financial
statements and notes to the consolidated financial statements included in this
annual report.

     The consolidated annual financial statements and notes thereto which
comprise the financial statements for the fiscal years 2001, 2002 and 2003 and
the consolidated balance sheets for December 31, 2003 and 2002 are shown as an
exhibit to this Form 20-F. The consolidated income statement data for the
fiscal years 1999 and 2000 and the consolidated balance sheet data for December
31, 1999, 2000 and 2001 are derived from our audited financial statements which
are not included in this report.

     Our consolidated financial statements are prepared in Brazilian Reais in
accordance with accounting practices adopted in Brazil, which differ in certain
material respects from accounting principles generally accepted in the United
States of America, or U.S. GAAP. See note 24 to our consolidated financial
statements for a summary of the differences between the accounting practices
adopted in Brazil, and U.S. GAAP.


                                       5
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries

<TABLE>
                                                                              Year Ended December 31,
                                              ------------------------------------------------------------------------------------
                                               2003(1)          2003          2002           2001           2000           1999
                                              ---------      ---------      ---------      ---------      ---------      ---------
                                                  (in millions of U.S. dollars or Reais, where indicated, except per share data)
<S>                                             <C>            <C>            <C>            <C>            <C>            <C>
Consolidated Income Statement Data:
Accounting Practices Adopted in                   US$            R$             R$             R$             R$             R$
     Brazil:
Gross sales and services                        1,593.4        4,603.8        3,795.3        2,862.5        2,301.2        1,927.0
Taxes on sales and services, rebates,
discounts and returns                            (208.9)        (603.5)        (800.8)        (577.8)        (423.2)        (332.4)
                                              ---------      ---------      ---------      ---------      ---------      ---------
Net Sales and Services                          1,384.5        4,000.3        2,994.5        2,284.7        1,878.0        1,594.6
Cost of  sales and services                    (1,106.3)      (3,196.4)      (2,247.1)      (1,698.3)      (1,399.6)      (1,106.7)
                                              ---------      ---------      ---------      ---------      ---------      ---------
Gross profit                                      278.2          803.9          747.4          586.4          478.4          487.9
Operating income (expenses)
Selling, general and administrative              (158.8)        (458.9)        (382.3)        (317.7)        (266.2)        (233.6)
Other operating income, net                         2.3            6.6            0.4           10.2            1.3            3.8
                                              ---------      ---------      ---------      ---------      ---------      ---------
Total operating (expenses) income                (156.5)        (452.3)        (381.9)        (307.5)        (264.9)        (229.8)
Operating income before financial
     items                                        121.7          351.6          365.5          278.9          213.5          258.1
Financial (expenses) income                       (19.8)         (57.2)          28.5          (31.1)          43.4          (34.4)
Nonoperating income (expenses), net                 0.3            1.0          (44.1)         (17.0)         (16.5)         (18.3)
                                              ---------      ---------      ---------      ---------      ---------      ---------
Income before income and social
  contribution taxes, equity in
  earnings (losses) of affiliated
  companies and minorities
  interests                                       102.2          295.4          349.9          230.8          240.4          205.4
Income and social contribution
     taxes                                        (15.5)         (44.9)         (71.4)         (27.5)         (47.3)         (40.6)
                                              ---------      ---------      ---------      ---------      ---------      ---------
Income before equity in earnings
(losses) of associated companies and
minority interest                                  86.7          250.5          278.5          203.3          193.1          164.8
                                              ---------      ---------      ---------      ---------      ---------      ---------
Equity in earnings (losses) of
     associated companies                          (0.2)          (0.5)          (1.7)           1.9            9.6           (3.2)
Minority interest                                  (1.3)          (3.6)         (54.5)         (73.0)         (74.2)         (73.7)
                                              ---------      ---------      ---------      ---------      ---------      ---------
Net income                                         85.2          246.4          222.3          132.2          128.5           87.9

Net earnings per thousand shares(2)                 1.2            3.5            3.6            2.5            2.4            1.7
                                              ---------      ---------      ---------      ---------      ---------      ---------

Dividends per thousand common
     shares (3)                                     0.35           1.01           1.00           4.20           0.57           0.48
                                              ---------      ---------      ---------      ---------      ---------      ---------
Dividends per thousand preferred
     shares (3)(4)                                  0.38           1.11           1.09           4.63           0.63           0.53

U.S. GAAP:
Net income                                         99.8          288.3          143.9          123.0          123.8           98.7
Basic and diluted earnings per
thousand common shares(2)                           1.39           4.03           2.28           2.23           2.24           2.24
Basic and diluted earnings per thousand
preferred shares(2)(4)                              1.53           4.43           2.51           2.55           2.57           2.50

Other financial data (Accounting
Practices Adopted in Brazil) (5)
Cash flows from operating
     activities(6)                                107.8          311.4          468.8          339.7          302.7          373.9
Cash flows from investing
     activities(6)                               (135.4)        (391.3)        (427.2)        (206.7)        (170.5)         (96.4)
Cash flows from financing
     activities(6)                                  3.7           10.8          (59.7)        (339.2)        (126.6)         233.3
Depreciation and amortization(7)                   50.8          146.9          121.8          102.4           90.8           78.9
EBITDA(8)                                         172.5          498.5          487.3          372.5          304.3          337.0
Number of common shares (in
     millions) (9)                             51,264.6       51,264.6       51,264.6       37,984.0       37,984.0       37,984.0
Number of preferred shares (in
     millions)(9)                              18,426.6       18,426.6       18,426.6       15,016.0       15,016.0       15,016.0
</TABLE>

     (1)  Amounts in Reais for 2003 converted using the foreign exchange rate
          of US$ 1.00 = R$ 2.8892 which is the commercial rate reported by the
          Central Bank on December 31, 2003. This information is presented
          solely for the convenience of the reader. You should not interpret
          the currency conversions in this annual report as statements that the


                                       6
<PAGE>


          amounts in Reais represent such amounts in US dollars. Additionally,
          you should not interpret such conversions as statements that the
          amounts in Reais have been, could have been or could be converted
          into US dollars at this or any other foreign exchange rates. See
          "Exchange Rates".

     (2)  Net income per thousand shares is based on the weighted average of
          the shares outstanding at December 31. In 1999, although not
          consistent with accounting practices adopted in Brazil, for the
          convenience of the reader, the amounts disclosed give retroactive
          effect to the 15,000:1 stock split which occurred in July 1999. One
          ADS represents 1,000 preferred shares. Common shares and preferred
          shares each represent the same economic interest in Ultrapar.

     (3)  See "Item 8. Financial Information - Consolidated Statements and
          other Financial Information - Dividend and Distribution Policy" for
          information regarding declaration and payment of dividends.

     (4)  Prior to 1999, Ultrapar had no preferred shares outstanding.

     (5)  Cash flow and EBITDA information has been derived from our
          consolidated financial statements prepared in accordance with
          accounting practices adopted in Brazil and Brazilian Securities
          Commission (CVM guidelines).

     (6)  See Note 24 to our consolidated audited financial statements.

     (7)  Depreciation and amortization represents depreciation and
          amortization expenses included in cost of goods and services sold and
          in selling, general and administrative expenses.

     (8)  EBITDA is a measure widely used to approximate operating income. The
          inclusion of information on EBITDA is to provide a measure of
          assessing our ability to generate cash from our operations. EBITDA is
          equal to operating income before financial items plus depreciation
          and amortization expenses. EBITDA is not a measure of financial
          performance under U.S. GAAP or accounting practices adopted in
          Brazil, being supplied exclusively for the convenience of the reader.
          EBITDA should not be considered in isolation, or as an alternative to
          net income as a measure of operating performance or to cash flows
          from operations as a measure of liquidity. The EBITDA presented
          herein relates to the accounting practices adopted in Brazil, which
          is used in the primary financial statements included in this filing.
          Such EBITDA is expressly permitted by the standard-setter that
          establishes the accounting principles generally accepted for use in
          such financial statements and is included in the financial statements
          used in the Company's home country jurisdiction and market.

<TABLE>
                                            Reconciliation of operating income before financial items to EBITDA
                                            -------------------------------------------------------------------
                                                                    Year ended December 31,
                                                                    -----------------------
                                                           (in millions of U.S. dollars or reais)
                                                ----------------------------------------------------------
                                                 2003        2003      2002      2001     2000       1999
                                                ----------------------------------------------------------
                                                  US$         R$        R$        R$       R$         R$
                                                ----------------------------------------------------------
<S>                                               <C>        <C>       <C>       <C>       <C>       <C>
          Operating income before financial
          items                                   121,7      351.6     365.5     278.9     213.5     258.1
          (+) Depreciation and amortization        50.8      146.9     121.8     102.4      90.8      78.9
          (-) Non-cash operating income
          included in "Nonoperating income
          (expenses), net"                                                        (8.8)
          EBITDA                                  172.5      498.5     487.3     372.5     304.3     337.0
                                                =======    =======   =======    ======   =======   =======
</TABLE>


     (9)  Number of shares at end of period. In 2002, our capital was increased
          by 16.7 billion shares in connection with our 2002 corporate
          restructuring.


                                       7
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries

<TABLE>
                                                                              Year Ended December 31,
                                              ------------------------------------------------------------------------------------
                                               2003(1)          2003          2002           2001           2000           1999
                                              ---------      ---------      ---------      ---------      ---------      ---------
                                                  (in millions of U.S. dollars or Reais, where indicated, except per share data)
<S>                                             <C>            <C>            <C>            <C>            <C>            <C>
Consolidated Balance Sheet data:                 US$             R$            R$             R$             R$              R$
Accounting Practices Adopted in
Brazil
Current assets:
Cash and cash equivalents
                                                  196.9          568.8          637.9          656.0          862.2          856.6
Short term investments                             14.2           41.0
Trade accounts receivable                         111.6          322.3          278.0          149.2          139.2          119.0
Inventories                                        47.7          137.7          106.3           94.5           86.5           79.1
Recoverable taxes                                  40.0          115.5          115.1          121.2           82.2           42.8
Other                                              12.1           35.1           49.6           24.3           20.7           15.4
Total current assets                              422.5        1.220.4        1,186.9        1,045.2        1,190.8        1,112.9

Long-term assets:
Related companies                                   1.0            2.8            2.6            1.7            1.5            1.5
Deferred income and social                         21.2           61.4           33.3           27.3           23.0           18.5
contribution taxes
Other                                               6.6           19.0           11.5           13.0           11.3           14.0
Total long-term assets                             28.8           83.2           47.4           42.0           35.8           34.0

Permanent assets:
Investments                                        11.5           33.1           33.0           88.8           87.8           78.2
Property, plant and equipment                     335.2          968.6          779.5          707.9          655.9          665.7
Deferred charges                                   35.5          102.7           81.1           68.1           44.2           31.8
Total permanent assets                            382.2        1,104.4          893.6          864.8          787.9          775.7
-----------------------------------------------------------------------------------------------------------------------------------
Total Assets                                      833.5        2,408.0        2,127.9        1,952.0        2,014.5        1,922.6
-----------------------------------------------------------------------------------------------------------------------------------

Current liabilities:
Suppliers                                          31.3           90.3          104.4           88.4           86.8           73.0
Financing                                         132.1          381.6          219.8          124.5          134.1          190.1
Salaries and related charges                       25.9           74.7           64.4           50.2           44.7           38.2
Dividends                                          14.4           41.7           49.0           33.6           27.1           25.5
Other                                              15.4           44.5           30.6           27.2           28.9           29.5
Total current liabilities                         219.1          632.8          468.2          323.9          321.6          356.3

Long-term liabilities:
Financing                                         106.0          306.3          363.6          290.2          291.8          279.1
Related companies                                   3.1            9.0           10.2           11.0           11.6           12.8
Other taxes and contributions -                    14.2           40.9           28.5           62.4           53.4           21.5
contingency liabilities
Other                                              10.4           30.1           35.3           24.8           27.2           38.9
Total long-term liabilities                       133.7          386.3          437.6          388.4          384.0          352.3
Total liabilities                                 352.8        1,019.1          905.8          712.3          705.6          708.6

Minority interest                                  11.1           32.2           31.0          439.8          411.2          394.4

Shareholders' equity:
Capital                                           229.8          664.0          664.0          433.9          433.9          433.9
Revaluation reserve                                 6.2           17.8           26.0           25.9           29.1           53.5
Profits reserves and retained
earnings                                          233.6          674.9          501.1          340.1          434.7          332.2
Total shareholders' equity                        469.6    1.356.7            1,191.1          799.9          897.7          819.6
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity                                            833.5        2,408.0        2,127.9        1,952.0        2,014.5        1,922.6
-----------------------------------------------------------------------------------------------------------------------------------

U.S. GAAP:
Total Assets
                                                  811.2        2,343.6        2,004.2        1,892.0        1,967.6        1,838.0
Shareholders' equity                              448.2        1,294.8        1,076.5          748.5          854.6          760.1
</TABLE>

     (1) Amounts in Reais for 2003 converted using the foreign exchange rate of
US$ 1.00 = R$ 2.8892 which is the commercial rate reported by the Central Bank
on December 31 2003. This information is presented solely for the convenience
of the reader. You should not interpret the currency conversions in this annual
report as statements that the amounts in Reais represent such values in U.S.
dollars. Additionally, you should not interpret such conversions as statements
that the amounts in Reais have been, could have been or could be converted into
U.S. dollars at this or any other foreign exchange rates. See "Exchange Rates".


                                       8
<PAGE>


  Exchange Rates

     There are two principal foreign exchange markets in Brazil:

     o    the commercial rate exchange market, and

     o    the floating rate exchange market

     Each one of these markets is regulated separately. The commercial market
is dedicated principally to foreign exchange transactions which require prior
approval of the Brazilian monetary authorities, such as the buying and selling
of registered investments by foreign entities, the purchase or sale of shares
or the payment of dividends or interest with respect to shares, among other
transactions. Foreign currencies may only be purchased through financial
institutions domiciled in Brazil authorized to operate in these markets. The
floating rate foreign exchange market is generally used for transactions not
conducted through the commercial foreign exchange market. In both markets,
rates are freely negotiated but may be strongly influenced by Central Bank
intervention. Before February 1, 1999, the foreign exchange rate in each of
these markets was established independently from one another, resulting in
different rates during given periods. On January 25, 1999, the Brazilian
government announced the unification of the exchange positions of the Brazilian
banks in the floating rate exchange market and commercial rate exchange market,
which led to a convergence in the pricing and liquidity of both markets. Since
February 1, 1999 the floating market rate has been the same as the commercial
market rate. However, there is no guarantee that the rates will continue to be
the same in the future.

     Since the introduction of the Real in 1994 through 1998, the Central Bank
maintained a band system exchange rate, under which the exchange rate between
the Real and the U.S. dollar would fluctuate within a pre-established moving
band. In January 1999, due to market pressures, the Central Bank abolished the
band system and allowed the Real/U.S. dollar exchange rate to float freely.
Since then, the exchange rate has been established by the market, and has
fluctuated considerably, reporting a maximum quotation of R$ 3.955 per US$ 1.00
on October 22, 2002. During this period, the Central Bank has intervened
occasionally to control unstable movements in the foreign exchange rate. It is
not possible to predict whether the Central Bank will continue to let the Real
float freely or whether the Real will remain at its present level. Accordingly,
it is not possible to predict what impact the Brazilian government's exchange
rate policies may have on us. The Brazilian government could impose a band
system in the future or the Real could devalue or appreciate substantially. See
- "Risk Factors -- Risks Relating to Brazil."

     The following table sets forth information on prevailing commercial
foreign exchange selling rates for the periods indicated.

                              Exchange rates of nominal Reais per US$ 1.00
Year  Ended               High          Low           Average         Period-End
----  -----               ----          ---           -------         ----------

December 31, 1999         2.165        1.208          1.851(1)          1.789
December 31, 2000         1.985        1.723          1.835(1)          1.955
December 31, 2001         2.801        1.936          2.353(1)          2.320
December 31, 2002         3.955        2.271          2.998(1)          3.533
December 31, 2003         3.662        2.822          3.060(1)          2.889
Month Ended
-----------
December 31, 2003         2.943        2.888          2.916(2)          2.889
January 31, 2004          2.941        2.802          2.872(2)          2.941
February 27, 2004         2.988        2.904          2.946(2)          2.914
March 31, 2004            2.941        2.875          2.908(2)          2.909
April 30, 2004            2.952        2.874          2.913(2)          2.945
May 31, 2004              3.205        2.957          3.081(2)          3.129

(1)  Average of the foreign exchange rates on the last day of each month in the
     period.

(2)  Average of the high and low foreign exchange rates for each month.

Source: Central Bank


                                       9
<PAGE>


B.   Capitalization and Indebtedness

     Not applicable.

C.   Reasons for the Offer and Use of Proceeds

     Not applicable.

D.   Risk Factors

     The holders and potential purchasers of Ultrapar's shares or ADRs should
carefully consider the risks described below.

     Our business, financial condition or results of operations could be
materially affected by any of the risks and uncertainties described below.
Additional risks not presently known to us, or that we currently deem
immaterial, may also impair our financial condition and business operations.

     This annual report also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of a number of
factors, including the risks described below and elsewhere in this report.


Risks Relating to Brazil

     The Brazilian government has exercised, and continues to exercise,
significant influence over the Brazilian economy. Brazilian political and
economic conditions have a direct impact on our business and the market price
of the preferred shares.

     The Brazilian government frequently intervenes in the Brazilian economy
and occasionally makes drastic changes in its economic policy. The government's
actions to control inflation and effect other policies have often involved wage
and price controls, currency devaluations, capital controls, and limits on
imports, among other things. Our business, financial condition and results of
operations may be adversely affected by changes in policy involving tariffs,
exchange controls and other matters, as well as factors such as:

     o    currency fluctuations;

     o    inflation;

     o    social instability;

     o    price instability;

     o    energy shortages;

     o    monetary policy and interest rates;

     o    liquidity of domestic capital and lending markets;

     o    fiscal policy; and

     o    other political, diplomatic, social and economic developments in or
          affecting Brazil.

     Luiz Inacio Lula da Silva, known as President Lula, a member of the
Workers' Party, took office as President of Brazil on January 1, 2003. In the
period prior to, and following President Lula's election, there was significant
uncertainty with respect to the policies that the new government would adopt,
including fears as to the introduction of macroeconomic policies radically
different to those of the out-going government. While President Lula's


                                      10
<PAGE>


government has adopted more conservative economic policies than expected by
some observers, there is no certainty that such policies will be maintained or
that President Lula will continue to adopt policies for stabilizing and
liberalizing the economy. We are unable to foresee what fiscal, monetary,
social security and other policies will be adopted by President Lula's
government and if such policies will result in adverse consequences for the
economy and our business, the results of our operations and our financial
condition.

   Proposed changes in Brazilian labor and labor union law could impact
company-labor relations

     In April 2003, the Lower Chamber of Congress resumed discussions on
changes to Brazilian labor law. Labor relations are highly regulated under the
current system. While this legislation still protects the fundamental rights of
labor, the congressional commission preparing a new draft bill has proposed to
introduce a greater flexibility into the rules that regulate labor relations in
Brazil, enabling employers and employees to freely negotiate certain aspects of
their relationship. A review of Brazilian labor union relations is also under
discussion. It is expected that Congress will vote the labor union reform
before the end of 2004 while the labor law reform will likely be voted in 2005.
At this point, it is still unclear if the proposed changes, should they be
approved by Congress, would be acceptable to employees and their respective
labor unions. Should these changes be implemented, they could have an impact on
our business.

   Inflation, and certain governmental measures to combat inflation, may
contribute significantly to economic uncertainty in Brazil.

     Brazil has historically experienced extremely high rates of inflation.
Since the introduction of the Real in July 1994 under the Real Plan, Brazil's
inflation rate has been substantially lower than in previous periods. The
inflation rate, as measured by the Indice Geral de Precos -- Mercado, the
general market price index in Brazil, or IGP-M, which was 1.8% in 1998,
recorded an increase of 20.1% in 1999 as a result of the devaluation of the
Real beginning in January 1999, decreasing again to 10.0% in 2000 and 10.4% in
2001. In 2002, the inflation rate as measured by the IGP-M once more increased
to reach 25.3%, reflecting the foreign exchange rate devaluation of 52.3%,
largely the result of uncertainties and risks inherent in the Brazilian
presidential succession campaign. In 2003 the Real appreciated 18.2% against
the U.S. dollar and inflationary pressures declined, with the IGP-M recording
8.7% for the year. From January 1, 2004 until May, 2004 inflation rate as
measured by the IGP-M was 5.3%. Future governmental actions, including actions
to adjust the value of the Real in relation to the U.S. dollar, may trigger
increases in inflation. Our cash operating expenses are substantially in Reais
and tend to increase with Brazilian inflation.

   Fluctuations in the value of the Brazilian currency against the value of
the U.S. dollar may result in uncertainty in the Brazilian economy and the
Brazilian securities market, which may adversely affect our financial condition
and results of operations and, consequently, the market value of the preferred
shares and ADSs.

     The Brazilian currency has historically suffered frequent devaluations. In
the past, the Brazilian government has implemented various economic plans and
utilized a number of foreign exchange policies, including sudden devaluations,
periodic mini-devaluations during which the frequency of adjustments has ranged
from daily to monthly, floating exchange rate systems, exchange controls and
dual exchange rate markets. Devaluations over shorter periods have resulted in
significant fluctuations in the exchange rate between the Real and the U.S.
dollar and other currencies.

     In 1999, the Real depreciated 48.0% against the U.S. dollar, as a result
of the exchange rate crisis of that year. In 2000, the Real depreciated 9.0%
against the U.S. dollar, and in 2001 the Real depreciated 18.7% against the
U.S. dollar. Due to uncertainties as to the outcome of the presidential
elections in October 2002 and the economic policy to be adopted by the new
government, the Real depreciated by 52.3% against the U.S. dollar during 2002.
In 2003, with the maintenance of the existing macroeconomic policy by the new
government, the Real appreciated 18.2% against the US dollar There are no
guarantees that the exchange rate between the Real and the U.S. dollar will
stabilize at current levels. Although we have managed our existing U.S. dollar
debt obligations in order to protect against fluctuations in the dollar/Real
exchange rate, we could in the future experience monetary losses relating to
these fluctuations. See "Item 11. Quantitative and Qualitative Disclosures
about Market Risk - Foreign Exchange Risk" for information about our foreign
exchange risk hedging policy. In addition, fluctuations in the value of the


                                      11
<PAGE>

Real relative to the U.S. dollar can affect the market value of the ADSs.
Devaluation may reduce the U.S. dollar value of distributions and dividends on
the ADSs and may also reduce the market value of the preferred shares and the
ADSs.

   Restrictions on the movement of capital out of Brazil may hinder your
ability to receive dividends and the proceeds of any sale of the preferred
shares.

     From time to time the Brazilian government may impose restrictions on
capital outflow that would hinder or prevent the custodian who acts on behalf
of the depositary for the ADSs from converting proceeds from the preferred
shares underlying the ADSs into U.S. dollars and remitting those proceeds
abroad. Brazilian law permits the government to impose these restrictions
whenever there is a serious imbalance in Brazil's balance of payments or
reasons to foresee a serious imbalance.

     The Brazilian government imposed remittance restrictions for approximately
six months in 1989 and early 1990. If enacted, similar restrictions would
hinder or prevent the conversion of dividends, distributions or the proceeds
from any sale of preferred shares from Reais into U.S. dollars and the
remittance of the U.S. dollars abroad. In such a case, the custodian, acting on
behalf of the depositary, will hold the Reais it cannot convert and remit for
the account of the holders of ADSs. The depositary will not invest the Reais
and such amounts will not be liable for interest. Furthermore, any Reais so
held will be subject to devaluation risk.


   Developments in other emerging markets may adversely affect the results of
our operations and the market price of the preferred shares and ADSs.

     As a general rule, international investors consider Brazil to be an
emerging market economy. Consequently, economic conditions and the market for
emerging market countries, especially those located in Latin America, influence
investor's perceptions of Brazil and the evaluation of Brazilian companies'
securities. Since the end of 1997, investors have shown a high degree of
concern in relation to the risk of investing in emerging market economies due
to the economic problems faced by some of these countries, including Asian
countries, Russia and Argentina. Consequently, on occasions, Brazil has faced a
significant outflow of capital and at the same time Brazilian companies have
shouldered the burden of higher financial costs. Brazilian securities or the
Brazilian economy may continue to be negatively affected by events (including
economic crises or currency fluctuations) that occur in other places and such
events may adversely affect our businesses, financial condition, results of the
operations, prospects and the value of our shares or ADSs.


   United States investors may not be able to obtain jurisdiction over or
enforce judgements against us.

     We are a company incorporated under the laws of the Federal Republic of
Brazil. All our board directors, executive officers and experts named in this
annual report are residents of Brazil. All, or a substantial part of the assets
pertaining to these individuals and to Ultrapar are located outside the United
States. As a result, it is possible that investors may not be able to obtain
jurisdiction over these individuals or Ultrapar in the United States, or
enforce judgements handed down by United States courts of law based on
provisions for civil liability under federal law in relation to securities of
the United States or otherwise.


Risks relating to the Preferred Shares and the American depositary shares, or
ADSs


   The ADSs generally do not give you voting rights.

     The ADSs represent our preferred shares. Generally under Brazilian law and
in the case of our by-laws, holders of preferred shares do not have the right
to vote at shareholders' meetings. This means, among other things, that holders
of our ADSs are not entitled to vote on important corporate transactions
including mergers or consolidations with other companies.


                                      12
<PAGE>


   The preferred shares and ADSs do not entitle you to a fixed or minimum
dividend.

     Under accounting practices adopted in Brazil and our by-laws, unless
otherwise proposed by the board of directors and approved by the voting
shareholders in the Ordinary General Meeting, we must pay our shareholders a
mandatory distribution equal to at least 50% of our adjusted net income.
Therefore, whether or not you receive a dividend depends on the amount of the
mandatory distribution, if any, and whether the board of directors and the
voting shareholders exercise their discretion to suspend these payments. See
"Item 8. Financial Information -- Consolidated Statements and Other Financial
Information -- Distribution Policy and Dividends" for a more detailed
discussion on mandatory distributions.


   You might be unable to exercise preemptive rights with respect to the
preferred shares.

     In the event of a rights offering or a capital increase which would
maintain or increase the proportion of capital represented by preferred shares,
preferred shareholders would have preemptive rights to subscribe to newly
issued preferred shares. In the event of a capital increase which would reduce
the proportion of capital represented by preferred shares, preferred
shareholders would have preemptive rights to subscribe for preferred shares in
proportion to their shareholdings and for common shares only to the extent
necessary to prevent dilution of their interest in the company.

     The holders of ADSs may be unable to exercise their preemptive rights in
relation to the preferred shares represented by the ADSs, unless we file a
registration statement pursuant to the United States Securities Act of 1933 or
an exemption from the registration requirements applies. We are not obliged to
file registration statements with respect to the preemptive rights and
therefore do not assure holders that such a registration will be obtained. If
the rights are not registered as required, the depository bank will try to sell
the preemptive rights and you will have the right to the net sale value, if
any. However, the preemptive rights will expire should the depositary not
succeed in selling them.

   If you exchange the ADSs for preferred shares, you risk losing certain
foreign currency remittance and Brazilian tax advantages.

     The ADSs benefit from the depositary's certificate of foreign capital
registration, which permits the depositary to convert dividends and other
distributions with respect to the preferred shares into foreign currency and
remit the proceeds abroad. If you exchange your ADSs for preferred shares, you
will be entitled to rely on the depositary's certificate of foreign capital
registration for five business days from the date of exchange. Thereafter, you
will not be able to remit abroad non-Brazilian currency unless you obtain your
own certificate of foreign capital registration or you qualify under National
Monetary Council Resolution 2,689 dated January 26, 2000, known as Resolution
2,689, which entitles certain investors to buy and sell shares on Brazilian
stock exchanges without obtaining separate certificates of registration. If you
do not qualify under Resolution 2,689, you will generally be subject to less
favorable tax treatment on distributions with respect to the preferred shares.
The depositary's certificate of registration or any certificate of foreign
capital registration obtained by you may be affected by future legislative or
regulatory changes, and additional Brazilian law restrictions applicable to
your investment in the ADSs may be imposed in the future. For a more complete
description of Brazilian tax regulations, see "Item 10. Additional Information
-- Taxation -- Brazil."


   The relative volatility and illiquidity of the Brazilian securities
markets may adversely affect you.

     Investing in securities, such as the preferred shares or ADSs, of issuers
from emerging market countries, including Brazil, involves a higher degree of
risk than investing in securities of issuers from more developed countries. For
the reasons above, investments involving risks relating to Brazil, such as
investments in ADSs, are generally considered speculative in nature and are
subject to certain economic and political risks, including but not limited to:


                                      13
<PAGE>


     o    changes to the regulatory, tax, economic and political environment
          that may affect the ability of investors to receive payments, in
          whole or in part, in respect of their investments; and

     o    restrictions on foreign investment and on repatriation of capital
          invested.

     The Brazilian securities market is substantially smaller, less liquid,
more concentrated and more volatile than major securities markets in the United
States. This may limit your ability to sell the preferred shares underlying
your ADSs at the price and time at which you wish to do so. The Sao Paulo Stock
Exchange, known as Bovespa, the only Brazilian stock exchange, had a market
capitalization of approximately US$ 234.2 billion as of December 30, 2003 and
an average monthly trading volume of approximately US$ 5.7 billion for 2003. In
comparison, the NYSE had a market capitalization of U.S.$ 17.3 trillion as of
December 31, 2003 and an average monthly trading volume of approximately U.S.$
808 billion for 2003.

     There is also a large concentration in the Brazilian securities market.
The ten largest companies in terms of market capitalization represented
approximately 49.83% of the aggregate market capitalization of the Bovespa as
of December 31, 2003. The top ten stocks in terms of trading volume accounted
for approximately 52.4% of all shares traded on the Bovespa in 2003. Ultrapar's
average daily volume at Bovespa in 2003, 2002 and 2001 was R$ 1,586 thousand,
R$ 1,233 thousand, and R$ 787 thousand, respectively.


   Controls and restrictions on the remittance of foreign currency could
negatively affect Ultrapar's capacity to make dividend payments to foreign
investors.

     Brazilian law determines that whenever there is a serious imbalance in the
Brazilian balance of payments, or reasons for believing that there will be a
serious imbalance in the future, the Brazilian government can impose temporary
restrictions on remittances of income on investments by foreign investors in
Brazil. The probability that the Brazilian government might impose such
restrictions can be determined by the level of the country's foreign currency
reserves, the availability of currency in the foreign exchange markets on the
maturity date of a payment, the amount of the Brazilian debt servicing
requirement in relation to the economy as a whole, and the Brazilian policy
towards the International Monetary Fund, among other factors. We are unable to
give assurances that the Central Bank will not modify its policies or that the
Brazilian government will not introduce restrictions or cause delays in
payments by Brazilian entities of dividends relating to securities issued in
the overseas capital markets up to the present.


   Our share price may be affected by shares eligible for future sale.

     Currently, our total capital consists of approximately 18.4 billion
preferred shares and approximately 51.3 billion common shares. The public holds
substantially all of our preferred shares and ADS representing preferred
shares. Ultra S/A, a holding company, holds approximately 34.2 billion of our
common shares, representing 67% of our voting capital. Two other shareholders,
who may freely sell their respective shares, hold a substantial portion of our
remaining common shares. A sale of a large block of common shares could
negatively affect the market value of the preferred shares and ADSs.


   If we were treated as a Passive Foreign Investment Company (PFIC), U.S.
Holders of ADSs would be subject to disadvantageous rules under the U.S. tax
laws.

     If we are characterized as a passive foreign investment company, or PFIC,
in any year, U.S. holders of ADSs could be subject to unfavorable U.S. federal
income tax treatment. Although we do not believe that we were a PFIC in 2003,
there can be no assurance that our business and activities will not lead to
PFIC status for us in the future. PFIC classification is a factual
determination made annually and thus may be subject to change. Please see "Item
10. Additional Information -- Taxation -- United States" for a description of
the passive foreign investment company, or PFIC, rules.


                                      14
<PAGE>


     Risks Relating to Ultrapar


   Government deregulation of LPG prices has caused refinery prices to
fluctuate according to the international markets and may affect our revenues
and operating margin.

     The Brazilian government has historically regulated (i) the refinery price
of LPG, which is the price we pay Petrobras and is thus a component of our cost
of goods sold, and (ii) the retail price of LPG, which is the price we charge
customers and is thus a component of our gross sales revenue. In the 1990's,
the Brazilian government began to deregulate both prices. Since May 2001 the
retail store prices in Brazil are no longer regulated.

     In January 2002, Petrobras refinery prices, which are the LPG prices
charged by Petrobras to the distributors, were deregulated and have thereafter
been freely established by Petrobras, although subject to government
intervention when deemed appropriate, such as occurred between August 2002 and
October 2002. In this new market, the refinery price tends to fluctuate
according to the international markets, while the retail price depends on a
number of factors, including the level of competition, brand recognition and
the relative prices of the energy sources that compete with LPG. If we are not
able to pass on increases in the refinery price to our customers by increasing
the retail prices, our operating margins may be adversely affected.


   Ultragaz, our LPG distribution subsidiary, currently depends upon
Petrobras for its supply of LPG.

     Prior to 1995, Petrobras benefited from a constitutional monopoly in the
production and importation of petroleum products in Brazil. Although the
Brazilian government removed Petrobras' monopoly from the Federal Constitution
in November 1995, Petrobras effectively remains the sole provider of LPG in
Brazil. See "Item 4. Information on the Company -- Business Overview --
Distribution of Liquefied Petroleum Gas -- Industry and Regulatory Overview."
This may change in the future as LPG prices charged by Petrobras in the
domestic market are similar to the prices charged in the international market.
At present, however, any interruption in the supply of LPG from Petrobras
immediately affects Ultragaz's ability to provide LPG to its customers.


   Currently we have no formal contract with Petrobras to supply LPG

     Ultragaz currently purchases all its LPG requirements from Petrobras
although there is no formal LPG supply contract between the parties. The
agreements for ordering and purchasing LPG from Petrobras are generally common
to all LPG distributors - including Ultragaz. There have been no significant
interruptions in the supply of LPG by Petrobras to the distributors with the
exception of 1995 due to a 15-day strike by Petrobras employees. However we
cannot guarantee that there will be no significant interruptions to LPG
supplies in future.


   LPG competes with alternative sources of energy.

     LPG competes with natural gas, wood, diesel, fuel oil and electric energy.
Natural gas is currently less expensive than LPG for industrial consumers who
purchase large volumes, but more expensive for residential consumers, since its
supply requires significant investments in pipelines. In 2003, the overall
Brazilian LPG market decreased by 5.7% in part due to an increase in the use of
natural gas. The development of alternatives sources of energy in the future
may adversely affect the LPG market and consequently, our business, financial
results and results of operations. See "Item 4. Information On the Company --
Business Overview -- Distribution of Liquefied Petroleum Gas -- Competition."


   The acquisition of Shell Gas LPG Brasil ("Shell Gas") is subject to
Brazilian regulations and other anti-trust rules.

     Ultragaz is subject to regulation under Brazilian anti-trust rules. For
this reason, the acquisition of the LPG distribution operations of Shell Gas is
subject to approval by the Brazilian anti-trust authorities. The process is in
the


                                      15
<PAGE>


first of three phases of examination by the Brazilian anti-trust authorities.
We cannot assure that the anti-trust authorities will approve the acquisition
and the impact of such action in Ultrapar, in future.

   Ethylene, the principal raw material used in our petrochemical operations,
comes from limited supply sources.

     Oxiteno, our subsidiary involved in the production and sale of chemical
and petrochemical products, purchases its principal raw material, ethylene,
from two of Brazil's three naphtha crackers, which are the sole sources of
ethylene in Brazil. Braskem S.A. ("Braskem") supplies all of our ethylene
requirements at our plant located at Camacari, and Petroquimica Uniao S.A.
("PQU") supplies all of our ethylene requirements at our plant located at Maua.
Because of its characteristics, ethylene is difficult and expensive to store
and transport, and cannot be easily imported into Brazil. Therefore, like other
second-generation petrochemical companies, Oxiteno is almost totally dependent
on ethylene produced at Braskem and PQU for its supply of ethylene. In 2003,
Brazilian ethylene imports totaled 13,423 tons, representing less than 1% of
Brazil's installed capacity.

     Due to ethylene's chemical characteristics, Oxiteno does not store
significant quantities of ethylene, and reductions in supply from Braskem and
PQU would have an immediate impact on our production and results of operations.
We have a supply contract with Braskem, which expires in 2012, setting forth
the volume of ethylene that Braskem will supply and the amount that Oxiteno
will purchase. Unlike Braskem, PQU usually does not enter into long-term supply
contracts with its customers. If we further expand our production capacity,
there is no assurance that we will be able to obtain additional ethylene from
Braskem and PQU.

     Unlike PQU, which acquires all of its naphtha requirements from Petrobras,
Braskem made investments in its plant and equipment that allowed it to import
approximately 25 to 30% of its naphtha requirements in 2003, thus reducing its
dependence of supplies from Petrobras.

     While Braskem and Companhia Petroquimica do Sul ("Copesul"), the third
naphtha cracker in Brazil imported naphtha during 2003, Petrobras is still the
principal supplier of naphtha to crackers in Brazil, and any interruption in
the supply of naphtha from Petrobras to the crackers could adversely impact
their ability to supply ethylene to Oxiteno.


   The Brazilian petrochemical industry is very closely influenced by the
performance of the international petrochemical industry and its cyclical
behavior.

     The decrease in Brazilian tariff rates on petrochemical products, the
increase in demand for such products in Brazil, and the ongoing integration of
regional and world markets for commodities, among other factors, have
contributed to the increasing integration of the Brazilian petrochemical
industry into the international petrochemical marketplace. The international
petrochemical market is cyclical in nature, with alternating periods of tight
supply, increased prices and high margins, and of over-capacity, declining
prices and low margins. Accordingly, prices of certain of our products in
Brazil are becoming more closely related to price trends in the global market.
As a consequence, events affecting the petrochemical industry worldwide could
have a material adverse effect on our business, financial condition and results
of operations.


  The price of ethylene is subject to fluctuations in international oil prices.

     The price of ethylene, which is the principal component of Oxiteno's cost
of goods sold in the petrochemicals business, is directly linked to the price
of naphtha which, in turn, is largely linked to the price of crude oil.
Consequently, ethylene prices are subject to fluctuations in international oil
prices. A significant increase in the price of crude oil and, consequently,
naphtha and ethylene, could have a material adverse effect on our results of
operations.


                                      16
<PAGE>


   The reduction in import tariffs on petrochemical products can reduce our
competitiveness in relation to imported products.

     Final prices paid by importers of petrochemical products include
transportation costs and tariff rates. Consequently, tariff rates imposed by
the Brazilian government affect the prices we can charge for our products. The
Brazilian government's negotiation of commercial and free trade agreements,
principally with NAFTA and the European Union may result in reductions in
Brazilian import duties on petrochemical products and may reduce the
competitiveness of our products vis-a-vis imported petrochemical products.


   Our insurance coverage may be insufficient to cover losses that we might
incur.

     The operation of any chemical manufacturing plant and the distribution of
petrochemicals, as well as the operations of logistics of oil and chemical
products and LPG distribution involve substantial risks of property
contamination and personal injury and may result in material costs and
liabilities. We maintain insurance policies that cover material damages caused
by leakages of toxic substances and other events that we are able to eliminate
within 72 hours. The occurrence of losses or other liabilities that are not
covered by insurance or that exceed our insurance limits could result in
significant unexpected additional costs.


   We may be adversely affected by the imposition and enforcement of more
stringent environmental laws and regulations.

     We are subject to stringent environmental laws and regulations in Brazil.
Changes in these laws and regulations, or changes in the enforcement policy of
existing laws and regulations, could adversely affect us. In addition, it is
possible that new laws or additional regulations will come into force, or that
the relevant enforcement agencies will seek a more stringent interpretation of
existing laws and regulations that would require us to spend additional funds
on environmental matters in order to continue to keep our plants and operations
in compliance with current legislation.


   The production of petrochemicals and chemicals is inherently hazardous.

     The complex manufacturing operations we perform at our plants involve a
variety of safety and other operating risks, including the handling, production
and transportation of highly inflammable, explosive and toxic materials.
Equipment breakdowns, natural disasters, and delays in obtaining imports or
required replacement parts or equipment can also affect our manufacturing
operations. We cannot completely eliminate the risks inherent in the production
process.


   We are currently controlled by our senior management, which substantially
limits the ability of non-management shareholders to control the direction of
our business.

     Until the end of 2004, our senior management indirectly controls,
approximately 67% of our voting share capital through their control of Ultra
S.A. This level of control enables the management to elect the majority of our
directors and to determine the outcome of substantially all actions requiring
shareholder approval. See "Item 7. Major Shareholders and Related Party
Transactions -- Major Shareholders -- Shareholders' Agreement of Ultra S.A."


   Our status as a holding company may limit our ability to pay dividends on
the preferred shares.

     As a holding company, we have no significant operating assets other than
our ownership of shares of our subsidiaries. Substantially all of our operating
income comes from our subsidiaries. Consequently, our ability to pay you
dividends depends solely upon our receipt of dividends and other cash flows
from our subsidiaries.


                                      17
<PAGE>


ITEM 4.           INFORMATION ON THE COMPANY


A.   History and Development of the Company

     Ultrapar Participacoes S.A. ("Ultrapar") is a sociedade anonima
incorporated under the laws of the Federative Republic of Brazil. It has
operations in LPG distribution, through Ultragaz, chemical production through
Oxiteno and logistics of oil and chemical products through Ultracargo.

     We were incorporated on December 20, 1953, with our origins going back to
1937, when Ernesto Igel founded Companhia Ultragaz S.A and brought LPG to be
used as cooking gas in Brazil using cylinders acquired from Companhia Zeppelin.
The gas stove began to replace the traditional wood stoves and to a lesser
degree, kerosene and coal gas, which dominated the Brazilian kitchens at the
time.

     In 1966, Transultra Armazenamento e Transporte Especializado Ltda
("Transultra") was formed to satisfy the demand for high quality transportation
services and focused in both the transportation and storage of chemicals,
petrochemicals and LPG. In 1978, Terminal Quimica de Aratu - Tequimar
("Tequimar") was founded for the specific purpose of operating the storage
business. Transultra and Tequimar are the operating subsidiaries of Ultracargo.

     We were also pioneers in developing the Brazilian petrochemicals industry
with the creation of Oxiteno in 1970, located in the Maua petrochemical complex
in Sao Paulo. In 1986, Oxiteno established its own research and development
center in order to respond to specific customer needs.

     Today, we have a significant market presence in the business areas in
which we operate. We are the leader in LPG distribution in Brazil through
Ultragaz with a 24.3% market share, according to data prepared by Sindigas, the
Brazilian Association of LPG distributors. We deliver LPG to an estimated 7.5
million households using our own vehicle fleet and also approximately 4,200
independent retailers. We are the only manufacturer of ethylene oxide and its
derivatives in Brazil, with an extensive business in the domestic and
international markets. Our petrochemical operations supply more than 30 market
segments, particularly agricultural chemicals, food, cosmetics, leather,
detergents, packaging for beverages, thread and polyester filaments, brake
fluids, petroleum, paints and varnishes. Through Ultracargo, we are the leading
logistics operator in the chemical and fuel products segments in Brazil. We
offer integrated multimodal transportation, loading and unloading services and
the management of third party fleets. Our high storage capacity together with
the strategic location of our assets, facilitates product movement along an
integrated multimodal logistics system.


Investments in Permanent Assets and Deferred Charges

     We have made substantial investments in our operations in the last five
years. At Ultragaz, we have invested heavily in LPG bulk delivery distribution,
restructuring our distribution logistics. We have also invested in the
construction of filling plants over the past five years, expanding
geographically our operations to give an almost nationwide coverage. At
Oxiteno, we have invested in increasing installed production capacity and in
the modernization of the industrial plants. Ultracargo has been investing in
storage facilities and in its truck fleet in response to strong demand for
logistic infrastructure in Brazil, deregulation of the oil and oil products
industry and the strong growth in the international trade in vegetable oils and
alcohol. In 2003, capital expenditures focused on the construction of the
Santos and Tatui Intermodal Terminals, the Liquid Fuels Terminal in Montes
Claros and fleet expansion. We have invested in information technology at all
our businesses for integrating processes, improving the quality of information,
increasing the response time in decision making and improving our services.


                                      18
<PAGE>


     The following table shows our capital expenditures in permanent assets and
deferred charges in the years indicated below:

                                                  Year Ended December 31,
                                          -------------------------------------
        Company                            2003(1)         2002          2001
        -----------------------------     --------       ---------    ---------
                                            (in millions of reais)
        Ultragaz                             114.4         130.6         148.2
        Oxiteno                               58.1          55.8          42.9
        Ultracargo                            41.5          36.2          11.9
        Others2                                0.3           0.2           0.1
        Total Capex                          214.3         222.8         203.1
                                          --------       -------       -------
        Disposals                             (7.4)         (4.5)         (9.3)
        Total Capex, net of disposals        206.9         218.3         193.7
                                          ========       =======       =======


Equity Investments

     To maintain our growth and consolidate our position in the markets where
we operate, in 2003 we acquired the Brazilian LPG distribution operations of
Royal Dutch/Shell N.V. - Shell Gas, and also the chemical products assets of
Berci Group in Mexico - CANAMEX.

     CANAMEX
     On December 4, 2003 we concluded the acquisition of the chemical business
of the Berci Group (CANAMEX), a Mexican specialty chemicals company. CANAMEX
has 2 plants in Mexico (Guadalajara and Coatzacoalcos), with an installed
production capacity of 52,800 tons/year. The product line is similar to the
products manufactured by Oxiteno, and in the case of some markets,
complementary. At the time of acquisition, CANAMEX was operating at 25% of its
installed capacity. The rationale behind the acquisition was to establish a
greater presence in the Mexican petrochemical market and create a production
and distribution platform for the United States. The acquisition amount was US$
10.25 million, without assuming any residual debt.

     Shell Gas
     On August 8 2003, we acquired the LPG distribution operations of Royal
Dutch/Shell N.V. in Brazil, becoming leader in this segment with a 24.3% market
share, according to data prepared by Sindigas, the Brazilian Association of LPG
distributors. At the time of the acquisition, Shell Gas had an approximately
4.5% market share with six filling plants in the states of Sao Paulo, Minas
Gerais, Bahia, Rio Grande do Sul and Goias. The acquisition price was R$ 170.6
million and included the purchase of 100% of the shares of Shell Gas, without
assuming any residual debt. Approval from the Brazilian anti-trust authority
(CADE) for this acquisition is pending at the time of the writing.

     Corporate Restructuring
     On December 20, 2002, we completed a corporate restructuring process which
we began on October 15, 2002. The effects of the corporate restructuring were:

o    merger of Gipoia Ltda, a company which held a 23% direct stake in
     Companhia Ultragaz S.A. and was owned by Ultra S.A., into Ultrapar,
     increasing Ultrapar's ownership in Ultragaz to 100% from 77% of total
     share capital. Ultrapar issued approximately 7.8 billion common shares in
     connection with this merger.

o    Ultrapar's "incorporation" of shares issued by Oxiteno, increasing
     Ultrapar's ownership in Oxiteno to 100% from 48% of total share capital.
     The holders of approximately 12 million of Oxiteno's shares elected to
     exchange their shares for shares in Ultrapar, triggering the issue of
     approximately 5.4 billion common shares

----------------------------------
1    Net of R$ 7.9 million of exchanged assets
2    Includes expenditures relating to maintenance of our headquarters which is
     performed by our wholly-owned subsidiary Imaven Imoveis e Agropecuaria
     Ltda.


                                      19
<PAGE>


     and 3.4 billion preferred shares by Ultrapar. We paid R$ 208.0 million
     representing approximately 13 million shares to Oxiteno's minority
     shareholders who exercised their statutory withdrawal rights.

<TABLE>
     The table below shows the effects of the corporate restructuring in our share capital:

                                        Total capital            Number of shares
                                        (in millions   ------------------------------------
                                           of reais)     Common shares      Preferred shares      Total shares
-------------------------------------    ----------    ----------------   -----------------   -----------------

<S>                                           <C>        <C>                 <C>                 <C>
As of December 31, 2001                       433.9      37,984,012,500      15,015,987,500      53,000,000,000

Shares issued for:
Merger of Gipoia                               38.5       7,850,603,880           -               7,850,603,880

"incorporation" of Oxiteno's shares           191.6       5,430,005,398       3,410,659,550       8,840,664,948

                                         ----------    ----------------   -----------------   -----------------
As of December 31, 2002                       664.0      51,264,621,778      18,426,647,050      69,691,268,828
                                         ==========    ================   =================   =================
</TABLE>

     Oxiteno Nordeste
     In March 2002, Oxiteno made a tender offer for the acquisition of the
shares of its subsidiary Oxiteno Nordeste S.A. Industria e Comercio, known as
Oxiteno Nordeste. The tender offer was completed on April 16, 2002, through the
acquisition of 93,871 shares of Oxiteno Nordeste by Oxiteno, representing
approximately 73.3% of the shares held by minority shareholders. Oxiteno
increased its share ownership from 97% to 98.9% for approximately R$4.4
million.

     Transultra
     On May 23, 2001, we acquired the 35% voting interest of Transultra that we
did not already own, from Petrobras Distribuidora S.A. We made this acquisition
through our wholly owned subsidiary, Ultracargo, in an auction held at Bovespa.
We paid the minimum price at the auction, which was R$21 million. Of that
amount we paid 5% in cash, and the remaining 95% with government securities,
that we acquired at a 62.7% discount for this purpose.

     Share Repurchase Program
     In October, 2001, the board of directors approved a share repurchase
program under which we can acquire our own preferred shares at market price and
hold them in treasury for subsequent sale or cancellation. During 2003 and
2002, we acquired a total of 87.9 million and 20.2 million preferred shares,
respectively. From January 1, 2004 to May 31, 2004, we acquired a total of
183.8 million preferred shares.


                                      20
<PAGE>


     The following table shows our principal equity investments, in our
companies and in new companies, for the indicated periods:

                                              Year Ended December 31,
                                       ------------------------------------
                    Company             2003(3)       2002          2001
                    ---------------    ---------   ----------    ----------
                                                 (in millions of reais)
                    Ultragaz              171.1           -            -
                    Oxiteno                32.5         212.6          0.1
                    Ultracargo              -             -           13.7
                    Others4                 2.1           0.4          -
                                       ---------   ----------    ----------
                    Total                 205.7         213.0         13.8
                                       ---------   ----------    ----------


     Our principal executive office is located at Avenida Brigadeiro Luis
Antonio, 1343, 9(0) andar, 01317-910, Sao Paulo, SP, Brazil. Our telephone
number is 55-11-3177-6482. Our Internet website address is
http://www.ultra.com.br. Our agent for service of process in the United States
is C.T. Corporation System, located at 1633 Broadway, New York, New York 10019.


B.   Business Overview

     We are one of the leading Brazilian corporate groups with net annual sales
of more than R$ 4 billion. We have more than 6,000 employees and operate
throughout practically the entire country. We are the largest LPG distributor
in Brazil, and we estimate to be the seventh largest in the world based on
volumes sold. Oxiteno is the only producer of ethylene oxide and of some of its
derivatives in the Mercosur area. We are also especially active in providing
logistical services for chemical and petrochemical products.

     Through Ultragaz, which sells LPG throughout Brazil except the Amazon
region, we are the market leader in key states such as Bahia and Sao Paulo with
a market share of 45% and 42%, respectively. In 2003, total sales exceeded 1.3
million tons of LPG. Ultragaz was responsible for 65.6% of our consolidated net
revenue in 2003.

     In 2003, Oxiteno, which produces ethylene oxide, solvents and specialty
chemicals, reported total sales of 474 thousand tons of petrochemicals. The
chemical segment accounted for 30.9% of our consolidated net revenue in 2003.

     Ultracargo operates through a fleet of approximately 500 trucks. In the
storage segment, Ultracargo has warehouses at port terminals and rail junctions
used in the handling of chemical products, with a storage capacity of 207,781
m3. The logistics operation was responsible for 3.5% of consolidated net
revenues in 2003.


     Our Strategy and Objectives

     Our principal objective is to create shareholder value. For this purpose,
we seek to consolidate our presence in our chosen markets through growth
opportunities, that allow for sustained expansion in our businesses, excellence
in performance and profitability as well as improved technology in products and
processes, while at the same time maintaining strong cash flows and a solid
financial position.


-----------------------------
3    The difference between principal equity investments (excluding share
     repurchase program) of R$ 203.6 million above, and "Business combinations,
     net of cash acquired", of R$ 134.6 million shown in the 2003 Consolidated
     Statements of Cash Flows is substantially comprised of cash acquired and
     settlement of debt of Shell Gas (included in "Cash Flows from Financing
     Activities - Loans from Affiliated Companies")

4    Share repurchase program, included in the Consolidated Statement of Cash
     Flows under "Cash Flow from Financing Activities - Other"


                                      21
<PAGE>


     Our three businesses share certain values that drive their strategy:

     1) People - To motivate, attract and retain talent;

     2) Clients - To establish and maintain strong relationships with clients
by understanding their current needs, anticipating their future requirements
and providing continuous enhancement of products and services, at competitive
prices;

     3) Costs - To continually reinforce a culture of providing high-quality
products and services while maintaining rigorous cost control.


     Our Competitive Advantages

     We believe Ultragaz's principal competitive advantages include:

o    strong brand name recognition, associated with quality, safety and
     efficiency;

o    market concentration in the principal Brazilian population centers thus
     boosting economies of scale in distribution logistics and resulting in
     cost efficiencies;

o    detailed knowledge of the Brazilian market, in part based on Ultragaz's
     involvement at all levels of LPG distribution to its clients; and

o    a highly efficient distribution network.


     We believe Oxiteno's principal competitive advantages include:

o    its position as the sole producer of ethylene oxide and its derivatives in
     the Mercosur area;

o    its large production capacity in excess of Brazilian demand

o    its operational flexibility which enables it to optimize its sales mix in
     line with market conditions;

o    its plants which employ technologically advanced production processes;

o    its advanced research and development centers for improving production
     processes and product uses; and

o    its highly skilled labor force.


     We believe Ultracargo's principal competitive advantages include:

o    its unique position as the only company in the market equipped to offer
     integrated transportation services and storage for the chemical products
     and fuels segment;

o    the location of its assets, and;

o    the commitment to operational safety.


                                      22
<PAGE>


The following map shows the geographic location of our operations:


                                [GRAPH OMITTED]



     The following table shows social and economic indicators for the principal
states in Brazil in which we operate:

-------------------------------------------------------------------------------
State                     Population         Percentage of     Per Capita GDP
                         (in millions)       Brazilian GDP       (in reais)
-------------------------------------------------------------------------------
Rio Grande do Sul            10.2                7.73              8,341
Parana                        9.6                5.99              6,882
Sao Paulo                    37.0               33.67              9,995
Rio de Janeiro               14.4               12.52              9,571
Minas Gerais                 17.9                9.64              5,925
Espirito Santo                3.1                1.96              6,931
Goias                         5.0                1.97              4,316
Bahia                        13.1                4.38              3,680
Sergipe                       1.8                0.54              3,310
Alagoas                       2.8                0.64              2,485
Pernambuco                    7.9                2.64              3,673
Ceara                         7.4                1.89              2,794

-------------------------------------------------------------------------------
Source: Instituto Brasileiro de Geografia e Estatistica (IBGE) - Censo 2000


                                      23
<PAGE>


     Distribution of Liquefied Petroleum Gas

     Industry and Regulatory Overview

     LPG is a fuel derived from the oil and natural gas refining process. In
Brazil, refineries produced approximately 80% of local demand in 2003 and the
remaining 20% was imported. LPG has the following primary uses in Brazil:

o    Bottled segment: used primarily by residential consumers for cooking;

o    Bulk segment: used primarily for cooking and water heating in shopping
     malls, hotels, residential buildings, restaurants, laundries and
     hospitals.


                                      24
<PAGE>


     The following chart shows the process for LPG distribution:

                                [GRAPH OMITTED]


     In 2003, the bottled segment represented 74% of the LPG distributed in
Brazil, and was primarily used for cooking. The use of LPG for domestic heating
in Brazil is immaterial compared with its use in other developed and emerging
countries, primarily because of Brazil's generally warm climate. Consequently,
consumer seasonality throughout the year is significantly smaller. In addition,
because LPG is not used to a significant extent for domestic heating in Brazil,
overall consumption of LPG per capita is lower in Brazil compared to countries
where domestic heating is a major element of LPG demand, making low
distribution cost a major competitive differential in the market for Brazilian
LPG.


                                      25
<PAGE>


     Prior to 1990, extensive governmental regulation of the LPG industry
essentially limited the use of LPG to domestic cooking. Since 1990, enacted
regulations allow for the use of LPG for certain commercial and industrial uses
and the use of LPG has increased accordingly.

     The primary international suppliers of LPG are major oil companies and
independent producers of both natural gas liquids and oil. However, due to
Petrobras' monopoly over the production and importation of petroleum and
petroleum products until the end of 2001, Petrobras is currently the sole de
facto supplier of LPG in Brazil.

     Currently, the LPG distribution industry in Brazil consists of 15 LPG
distribution companies or groups of companies, and is regulated by the National
Oil Agency, or ANP, which reports to the Ministry of Mines and Energy. The LPG
distribution industry includes purchasing LPG from Petrobras, filling LPG
cylinders and bulk delivery trucks at filling stations, selling LPG to end
users, controlling product quality and providing technical assistance to LPG
consumers. See "The Role of the ANP."

     LPG produced by Petrobras, which represented approximately 80% of total
demand in Brazil in 2003, is transported in pipelines and by trucks from
Petrobras' production and storage facilities to filling stations maintained by
LPG distributors. The balance is imported by Petrobras into Brazil and stored
in large storage facilities maintained by Petrobras. The imported LPG is then
transported from the storage facilities by pipeline and truck to the LPG
distributors' filling stations.

     LPG can be delivered to end users either in cylinders or in bulk. The
cylinders are filled in the LPG distributors' filling stations. Distribution to
the bottled segment is conducted through the use of cylinders via two principal
channels:

     o    home delivery of LPG cylinders; and

     o    the sale of LPG cylinders in retail stores and at filling stations.

     In both cases, the cylinders are either delivered by the LPG distributors
themselves or by independent dealers.

     Bulk delivery is the principal delivery method to large volume consumers,
such as residential buildings, hospitals, small and medium businesses and
industries. In the case of bulk delivery, LPG is pumped directly into tanker
trucks at filling stations, transported to customers and pumped into a bulk
storage tank located at the customer's premises.

     As of December 2003, the four largest LPG distributors in Brazil were:

     o    Ultragaz;

     o    Agip do Brasil S.A., known as AgipLiquigas, a subsidiary of
          AgipPetroli SpA, an Italian conglomerate;

     o    Nacional Gas Butano Ltda., known as Butano, which is controlled by a
          Brazilian family; and

     o    Supergasbras S.A., known as Supergasbras, which is jointly controlled
          by SHV Energy and the founding Brazilian family.

     The Role of the Brazilian Government. The Brazilian government
historically regulated the sale and distribution of LPG in Brazil. The period
from 1960 to 1990 was characterized by heavy governmental regulation, including
price controls, regulation of the areas in which each LPG distributor could
operate, regulation of the services offered by distributors and governmental
quotas for the LPG sold by distributors, thus restricting the growth of larger
LPG distributors. In 1990, the government started a deregulation process with
the purpose of establishing a largely unregulated LPG market. This process
included easing the requirements for the entry into the market of new
distribution companies, reducing certain administrative burdens and removing
restrictions on the areas in which distributors could conduct their business
and on sales quotas. There are currently no restrictions on foreign ownership
of LPG companies.


                                      26
<PAGE>


     Since May 2001, distributors are allowed to freely establish retail
prices, which were previously set by the government. Until the end of 2001, the
LPG refinery price, which is charged by Petrobras to all LPG distributors, was
determined by the government and was the same for all LPG distributors in all
regions of Brazil. Historically, refinery prices have been subsidized by the
government. In January 2002, the government abolished subsidies to refinery
prices, creating a new tax system, the CIDE, which equalized the tax charges on
the local market with the exported product in order to open up the market for
LPG. Consequently, from January 2002, Petrobras started to freely price LPG in
the domestic market and adopted the international price plus surcharges as its
benchmark. However, in August 2002, the ANP intervened in the prices fixed by
Petrobras for the bottled segment, fearing the effects of the increases in
international LPG prices. This policy continued through October 2002, when the
ANP control was lifted and Petrobras was once again able to set its own prices
for LPG. In 2003, Petrobras' average refinery price was approximately US$
313.17 per ton compared with the average international price of US$ 299.10 per
ton.

     The Role of Petrobras. Petrobras, Brazil's national oil and oil products
company, has had a legal monopoly in the exploration, production, refining,
importing and transporting of crude oil and oil products in Brazil and Brazil's
continental waters since its establishment in 1953. This monopoly was confirmed
in Brazil's federal constitution enacted in 1988. As a result, Petrobras was
historically the sole supplier in Brazil of oil and oil-related products,
including naphtha and LPG.

     In November 1995, Petrobras' monopoly was removed from the federal
constitution by a constitutional amendment approved by the Brazilian Congress.
According to this amendment, other state and private companies would be able to
compete with Petrobras in virtually all fields in which Petrobras operated.
This amendment was implemented through Law No. 9,478, dated August 6, 1997,
which effectively allowed Petrobras' monopoly to continue for a maximum period
of three years. Law No. 9,478 prescribed that the termination of Petrobras'
monopoly would be accompanied by the deregulation of prices for oil, gas and
oil products, and created a new regulatory agency, the ANP, to oversee
oil-related activities. However, in practice, Petrobras still remains the sole
LPG supplier in Brazil, even though there are no legal restrictions to the
operation of other suppliers.

     The Role of the ANP. The ANP is responsible for the control, supervision
and implementation of the government's oil and gas policies. The ANP regulates
all aspects of the production, distribution and sale of oil and oil products in
Brazil, product quality standards, and minimum storage capacities required to
be maintained by distributors.

     In order to operate in Brazil, an LPG distributor must be licensed with
the ANP and must comply with certain minimum operating requirements, including:

     o    maintenance of sufficient LPG storage capacity;

     o    maintenance of an adequate quantity of LPG cylinders;

     o    use of cylinders stamped with the distributor's own brand name;

     o    have its own filling plant;

     o    appropriate maintenance of LPG filling units;

     o    distribute LPG exclusively in areas where it can provide technical
          assistance to the consumer either directly or indirectly through an
          authorized dealer;

     o    full compliance with the Unified Suppliers Registration System -
          Sistema Unico de Cadastramento Unificado de Fornecedores - SICAF.

     LPG distributors are required to provide the ANP with monthly reports
showing their previous month's sales and the volume of LPG ordered from
Petrobras for the next four months. The ANP limits the volume of LPG that may
be ordered by each distributor based on the number of cylinders and
infra-structure owned by the distributor. Based on the information provided by
the distributors, Petrobras supplies the volume of LPG ordered, provided its
production and imports of LPG are sufficient to meet the demand.


                                      27
<PAGE>


     LPG distribution to the end consumer may be carried out directly by the
LPG distribution companies or by independent dealers. Each LPG distributor must
provide the ANP with information regarding its contracted independent dealers
on a monthly basis. The construction of LPG filling plants and storage
facilities is subject to the prior approval of the ANP, and filling plants and
storage facilities may only begin operations after ANP inspection.

     In addition to the ANP regulations, LPG distribution companies are subject
to all federal, state and local government regulation and supervision generally
applicable to companies engaged in business in Brazil, including labor laws,
social security laws, public health, consumer protection and environmental
laws, securities laws and antitrust laws.

     The Self-Regulatory Code. In August 1996, most of the Brazilian LPG
distributors, representing more than 90% of the market, cylinder manufacturers,
LPG transportation companies and certain LPG retail stores, under the
supervision of the Brazilian government, entered into a statement of intent
regarding the establishment of a program for "requalifying" LPG cylinders (a
process under which they undergo safety and quality checks) and other safety
procedures, known as the "Self-Regulatory Code" or Codigo de
Auto-Regulamentacao. See "Cylinder Swapping and Requalification Centers."
Before the Self-Regulatory Code came into effect, certain LPG distributors, not
including Ultragaz, would fill cylinders stamped with another distributor's
brand. This practice resulted in a low level of investment in new cylinders,
giving rise to concerns regarding the safety of older cylinders. The
Self-Regulatory Code provides, among other things, that:

     o    each LPG distributor may only fill and sell cylinders that are
          stamped with its own trademark;

     o    each LPG distributor is responsible for the quality and safety
          control of its cylinders; and

     o    each LPG distributor must maintain a sufficient number of cylinders
          to service its sales volume.

     Under the Ministry of Mines and Energy Normative Ruling No. 334 of
November 1, 1996, or Ruling 334, any party that defaults on its obligations
under the Self-Regulatory Code will be subject to the penalties in law, ranging
from payment of a fine and suspension of supply of LPG to such party to
suspension of such party's LPG distribution operations.

     Ruling 334 sets forth the following timetable for the implementation of
the measures adopted under the Self-Regulatory Code:

     o    the construction of at least 15 cylinder swapping centers, starting
          in November 1996 (See "-- Cylinder Swapping Centers - Requalification
          of Cylinders);

     o    the filling of third-party cylinders to have ceased by October 1997;

     o    by November 1, 2006, the requalification of 68.8 million cylinders
          manufactured up to 1991; and

     o    by November 1, 2011, the requalification of 12.8 million cylinders
          manufactured between 1992 and 1996.

     Ultragaz itself is required to requalify 13.8 million cylinders by
November 2006 and an additional 1.3 million cylinders by November 2011. As of
December 31, 2003, Ultragaz had requalified 9.2 million cylinders.

     Environmental, Health and Safety Standards. LPG distributors are subject
to Brazilian federal, state and local laws and regulations relating to the
protection of the environment, public health and safety. Primarily the National
Council of the Environment, or Conselho Nacional do Meio Ambiente - CONAMA,
regulates Ultragaz at the federal level.

     Federal and state environmental laws and regulations require LPG
distributors to obtain operating permits from the state environmental agencies
and from the fire department. In addition, the distributors must satisfy
regulatory authorities that the operation, maintenance and reclaiming of
facilities is in compliance with regulations and not prejudicial to the
environment. Civil, administrative and criminal sanctions, including fines and
the revocation of licenses, may apply to violations of environmental
regulations. Under applicable law, the distributors are strictly


                                      28
<PAGE>


liable for environmental damages. In addition, regulations establish standard
procedures for transporting, delivering and storing LPG and for testing and
requalification of LPG cylinders.

     The distributors are also subject to federal, state and local laws and
regulations that prescribe occupational health and safety standards. In
accordance with such laws and regulations, it is mandatory for distributors to
prepare reports on their occupational health and safety records on an annual
basis to the local office of the Ministry of Labor in each of the states in
which they operate. In addition, they are also subject to all federal, state
and local governmental regulation and supervision generally applicable to
companies doing business in Brazil, including labor laws, social security laws,
and public health and consumer protection laws. See "--Environmental Matters."


     Ultragaz

     We distribute LPG through Ultragaz. Founded in 1937, the company was the
first LPG distributor in Brazil and at present is the leading company by sales
volume in the Brazilian LPG market.

     Ultragaz operates in the bottled and bulk segments, nation-wide, including
the most highly populated states in Brazil, such as Sao Paulo, Rio de Janeiro
and Bahia. The company sells LPG to the bottled segment through its own retail
stores and through independent dealers as well as its own truck fleet, which
operates on a door-to-door basis. The bulk segment is serviced through its own
truck fleet.

     In August 2003, Ultragaz acquired Shell Gas, Royal Dutch/Shell N.V.'s LPG
operations in Brazil for R$ 170.6 million, a price which included the purchase
of the company's total equity without taking on any debt. Shell Gas had about
4.5% market share in Brazilian LPG distribution, selling approximately 287
thousand tons of LPG in 2002. With the acquisition, Ultragaz has become the
Brazilian market leader in LPG. In 2003, Ultragaz sold 1.36 million tons of
LPG, ending the year with a 24.3% share of the Brazilian market and about 41.9%
of the market in Sao Paulo state, which is the largest economy in Brazil,
representing approximately 34% of the Brazilian GDP and has a population of
approximately 37 million. With the acquisition, Ultragaz has also improved its
economies of scale for distribution and reduced its logistics cost. The
acquisition was presented to the Brazilian anti-trust authority (CADE). We are
currently awaiting CADE's final approval of the acquisition.

     History. Ultragaz was founded in 1937 and introduced the use of LPG for
domestic cooking to the Brazilian population. In this period, Brazilians used
wood stoves and, to a lesser extent, alcohol, kerosene and coal gas stoves.
When Ultragaz began operations, it had a fleet of three trucks and 166
customers.

     Ultragaz has four operating subsidiaries:

o    Companhia Ultragaz S.A., or Cia Ultragaz, the company that pioneered our
     LPG operations;

o    Bahiana Distribuidora de Gas Ltda. - Bahiana, which is a wholly-owned
     subsidiary of Ultragaz.

o    Shell Gas, acquired in August 2003 and subsequently, renamed SPGas
     Distribuidora de Gas Ltda.; and

o    Utingas Armazenadora S.A., or Utingas, which was incorporated in 1967 when
     Ultragaz and other LPG distributors joined to construct LPG storage
     facilities based in the states of Sao Paulo and Parana. Ultragaz currently
     controls 56% of the storage operations. See "LPG Storage".


     Markets and Marketing

     When Ultragaz began its operations, it served only the southeast region of
Brazil. Currently, Ultragaz is present in all of Brazil's significant
population centers, with the exception of the Amazon region. Ultragaz provides
this service through 16 filling plants in its principal operating areas.

     The following table shows Ultragaz's LPG sales volumes by region, as well
as certain financial information relating to Ultragaz for the periods
indicated:


                                      29
<PAGE>


                                                Year Ended December 31,
                                   ---------------------------------------------
LPG Sold                                2003            2002            2001
---------------------------------  ------------   ---------------   ------------
                                   (in thousands of tons, except where otherwise
                                                      indicated)


Sao Paulo                                 414             293             307
Rio de Janeiro                            158             130             104
Southern Central Region                   501             483             544
Northeast                                 289             397             390
     Total                              1,362           1,303           1,345
     -----                              -----           -----           -----

Net sales (1)                         2,622.7         1,942.7         1,381.1
Operating income (1)                    113.2           143.2           101.1

(1) In million of reais.

     Distribution in the bottled LPG segment includes direct home delivery and
retail stores, both carried out by the company or its dealership network In
this segment, 13 kg ANP (National Oil Agency) approved cylinders are used. In
Ultragaz's case, the cylinders are painted blue which we believe is an
important element in recognizing the "Ultragaz" brand. The company's operating
margins in the bottled segment vary from region to region and reflect market
share and distribution channel in the region.

     Until recently, Ultragaz's sales strategy for bottled LPG delivery was to
increase market share through geographical expansion as well as protecting and
incrementing market participation in regions where the company already
operated. With the acquisition of Shell Gas, Ultragaz became the Brazilian
market leader in LPG, intensifying its strategy of investing in the brand and
protecting market share. The LPG bottled market in Brazil is a mature one and
Ultragaz believes that growth in demand will be a function of increasing number
of households consuming the product and the level of household income.

     Distribution to the bulk segment is largely carried out through 190 Kg
storage tanks installed on its clients' premises. Since 1994, Ultragaz has been
investing in small/medium size bulk delivery facilities and in bob-tail trucks,
known as UltraSystem, which deliver LPG in bulk to commercial clients.
Ultragaz's clients in the commercial sector include shopping centers, hotels,
residential buildings, restaurants, laundries and hospitals. Ultragaz's trucks
supply client's stationary tanks using a system that is quick, safe and cost
effective.

     Ultragaz's industrial clients are made up mostly of companies in the food,
metallurgical, steel and ceramics industries that have large fixed tanks at
their plants and consume monthly volumes in excess of 5 tons of LPG. These
clients represent a very small portion of Ultragaz's sales volume since, in the
case of large volume consumers, Ultragaz is competing with other more
competitive energy sources such as natural gas.

     Ultragaz supplies its bulk delivery clients on the basis of supply
contracts with terms ranging from two to five years. This type of contract
limits fluctuations in sales given that the installation of the tanks is
carried out by Ultragaz, and any change in supplier would imply the client
reimbursing Ultragaz's investments. The contract also requires that any tank
supplied by Ultragaz may only be filled with LPG delivered by the company. When
the bulk delivery contract expires, it can be renegotiated or the tank removed.
Since the installation of the tank represents a significant investment for
Ultragaz, the company seeks to achieve a return on its investment within the
term of the contract.

     The company's strategy in the bulk segment is to continue its process of
product and service innovation and in increasing the profile of its trade-mark.
Ultragaz also has a team to verify needs of each client in the large bulk
segment and develop practical solutions for using LPG as an energy source.


     The table below shows Ultragaz's sales of LPG to clients in the bottled
and bulk markets:


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<PAGE>

                                               Fiscal year ending December 31
                                           -------------------------------------
Client Category                              2003          2002          2001
---------------------------------------    ---------     ---------     ---------
                                                    (in thousands of tons)
   Bottled LPG Segment via Cylinder:
     Residential Delivery by Ultragaz         114.4          78.4          86.5
     Ultragaz Retail Stores                     5.0           4.7           5.6
     Independent Dealers(1)                   770.6         715.2         733.7
                                           ---------     ---------     ---------
Total bottled segment                         890.0         798.3         825.8
                                           ---------     ---------     ---------
Total bulk segment                            472.0         504.3         519.1
                                           ---------     ---------     ---------
Total Sales                                 1,362.1       1,302.6       1,344.9
                                           =========     =========     =========

(1)  Includes residential deliveries and distribution through retailers'
     stores.

     Distribution Infrastructure

     Ultragaz's distribution strategy includes having its own distribution
infrastructure, since it believes being close to customers is a significant
factor in successful distribution and sales strategies. The services associated
with Ultragaz's home deliveries strongly influence the ranking of the
"Ultragaz" brand name in the bottled market. Ultragaz seeks to expand its home
delivery services by having its delivery personnel provide safety
recommendations to household customers and by scheduling deliveries on the same
week-day in each covered area. In both bottled and bulk segments deliveries are
made by employees wearing Ultragaz uniforms, and driving vehicles with
Ultragaz's logo. Ultragaz, in partnership with consumer goods companies,
distributes samples of soap and shampoo, among other things, captivating its
customers and adding value to its services. On December 31, 2003, of Ultragaz's
4,560 employees, 1,958 worked in the LPG transportation and distribution areas.

     Ultragaz delivers LPG to the bottled segment using a distribution network,
which includes 65 company-owned retail stores, and approximately 4,200
independent dealers. Ultragaz has a fleet of 762 trucks for delivering gas
cylinders to homes and commercial establishments. Ultragaz' retail stores are
distributed as follows:

     o    17 in the southern central region;

     o    21 in Sao Paulo;

     o    17 in Rio de Janeiro; and

     o    10 in the northeastern region.

     Bottled sales capacity derives from the number of cylinders owned by
Ultragaz and the number of cylinders owned by its independent dealers. Ultragaz
estimates that as of December 31, 2003, there were 20 million 13 kg Ultragaz
cylinders in the market.

     Independent Dealers. Ultragaz's independent distribution network ranges
from large dealers, which carry out extensive home delivery, to single retail
stores, which sell small quantities of LPG cylinders. Until the enactment of
Rule 297 of ANP on November 18, 2003, independent dealers needed only to be
registered with ANP for the sale of LPG cylinders. No licenses were required
except for those required by the fire department and the municipal authorities.
Rule 297 established that the independent dealers must be registered with ANP
and comply with a list of pre-requisites contained in such rule, as well as
those required by law for the storage of cylinders up to 90 kg. Also, each
municipality sets forth its own safety regulations applicable to stores that
sell LPG, including a minimum distance from certain locations, such as schools.
As of December 31, 2003, Ultragaz had 2,142 distributors in the southern
central region, 949 distributors in the southeast region, and 1,103
distributors in the northeast region. In 2003, approximately 87% of Ultragaz's
bottled LPG sales were made through independent dealers.

     The agreements entered into between Ultragaz and independent dealers
require the use of the Ultragaz brand and the display of the Ultragaz logo in
the delivery vehicles and in the uniforms worn by delivery personnel.
Proprietary rights in the trademark and logo are retained by Ultragaz, duly
registered with the National Institute of Industrial Property (INPI - Instituto
Nacional de Propriedade Industrial). All contracted dealers are Ultragaz's


                                      31
<PAGE>


exclusive representatives. Under the terms of the respective contracts, each
dealer agrees not to deliver non-Ultragaz LPG cylinders.

     In order to strengthen the relationship with its network of independent
dealers, Ultragaz has created the project SOMAR - Marketing Solutions Applied
to Independent Dealers, recommending changes to their operating procedures,
helping to improve the efficiency of their operations and encouraging the
adoption of best practices. Ultragaz believes that improving the efficiency of
independent dealers is a key factor to improve the profitability of the
distribution chain of LPG.

     Distribution Channels to Bulk Consumers. Large bulk distribution,
classified by Ultragaz as consumption of more than 5 tons per month and
comprised almost exclusively of industrial users, is made by tanker trucks that
deliver the LPG directly to the storage tanks located at the customers'
premises. Small bulk distribution, classified by Ultragaz as consumption of
between 0.5 and 5 tons per month and comprised of commercial users and smaller
industrial users, is made primarily by bob-tail trucks, to enable delivery to
be made to commercial users whose tanks are not readily accessible by
traditional bulk delivery equipment. Ultragaz uses the UltraSystem trade name
in connection with its small bulk distribution through bob-tail trucks.
Ultragaz makes bulk sales directly to customers using its own fleet and
transportation provided by Ultracargo and by third parties.

     Payment Terms. Ultragaz's sales through its retail stores and through home
delivery are made on a cash basis. Ultragaz's sales to independent dealers and
to industrial and commercial users have payment terms of 10 to 30 days.


     Cylinder Swapping Centers

     Pursuant to the Self-Regulatory Code, the LPG distributors have
established sixteen operating swapping centers to facilitate the return of
third-party cylinders to the appropriate distributor. Under the Self-Regulatory
Code, while LPG distributors may pick up any empty LPG cylinders tendered by
customers in exchange for full LPG cylinders, whether or not such empty
cylinders were put in circulation by that distributor, after October 1997, LPG
distributors were not permitted to refill third-party cylinders. Accordingly,
LPG distributors may deliver third-party cylinders to a swapping center where
such cylinders may be exchanged for cylinders placed in circulation by such LPG
distributor. The swapping centers currently charge a fee of R$0.16 per
exchanged LPG cylinder. In areas where only one LPG distributor has a sizable
market share, it is customary to use the facilities of that distributor as an
unofficial swapping center for which there may be an additional cost.

     Prior to the establishment of the swapping centers, Ultragaz incurred
significant costs associated with the return of its cylinders, as it did not
follow the widespread industry practice of filling third-party cylinders.
Ultragaz estimates its costs relating to swapping centers and cylinder returns
were approximately R$6.6 million, R$ 6.2 million, and R$4.8 million in 2003,
2002, and 2001, respectively. As the swapping centers costs are shared amongst
LPG distributors, Ultragaz's costs from the return of cylinders were
significantly reduced when the swapping centers were created, but have since
then increased due to Ultragaz's geographic expansion.

     Requalification of Cylinders. The useful life of a cylinder varies
depending on a number of factors, the most important of which are the extent to
which the cylinder has been exposed to corrosion from the atmosphere and
whether the cylinder has been damaged. The Self-Regulatory Code provides that
all cylinders must be requalified after their first 15 years' use, and every 10
years thereafter. Each cylinder is visually inspected for damage and corrosion
to determine if it can be requalified or if it should be discarded as scrap
metal. In the case of cylinders which pass the quality and safety checks,
several procedures are followed before the cylinders are stamped with the year
of requalification and the next year in which they are due for requalification.

     In 2003, Ultragaz carried out approximately 85% of its requalification
operations in its own plants.

     Supply of LPG

     Currently, Ultragaz purchases LPG exclusively from Petrobras although
there is no formal LPG supply contract between the parties. The agreements for
ordering and purchasing of LPG from Petrobras are generally common to all LPG
distributors - including Ultragaz. There have been no significant interruptions
in the supply of LPG by Petrobras to the distributors with the exception of
1995 due to a 15-day strike by Petrobras employees.


                                      32
<PAGE>


     It is possible that LPG distributors, including Ultragaz, could diversify
their supply sources as a result of the end of Petrobras' monopoly, the
equalization of the tax on domestic and imported LPG and the matching of
Petrobras' prices with prevailing prices in the international market.

     Storage of LPG

     Ultragaz's storage capacity is limited. Based on its 2003 average LPG
sales, Ultragaz can store approximately two and a half days' supply of LPG.
Petrobras maintains approximately three and a half days' supply of LPG at its
refineries and other facilities. Accordingly, any interruption in the
production of LPG can result in shortages, such as the one that occurred during
the Petrobras strike in 1995.

     Ultragaz's total storage capacity of 18.8 thousand tons includes its
storage capacity at its filling plants of 14.6 thousand tons, and its
proportional share of the storage capacity at Utingas of 4.2 thousand tons.

     Ultragaz stores its LPG in large tanks at each of its filling plants
located throughout the regions in which it operates. Primary filling plants
receive LPG directly from Petrobras by pipeline; secondary filling plants are
supplied by truck; and satellite plants primarily hold LPG which is used to
fill bob-tail trucks for small bulk distribution to customers that are not
located near a primary or secondary filling plant in order to optimize the LPG
distribution process. See " -- Property, Plants and Equipment -- Ultragaz."

     Utingas. Utingas is an LPG storage company, owned 56% by Ultragaz and 44%
owned by other LPG distributors. Utingas has a total LPG storage capacity of
7.5 thousand tons. Its storage facilities are located in the city of Santo
Andre, in the state of Sao Paulo, representing 6.4 thousand tons of storage
capacity, and in the city of Araucaria, in the state of Parana in the south of
Brazil, representing 1.1 thousand tons of storage capacity. According to
Utingas' by-laws, each of its shareholders is entitled to use Utingas' total
storage capacity in proportion to such shareholder's equity ownership, and at
an agreed basic price. Currently Ultragaz uses only 2.5 thousand tons of the
4.2 thousand tons of storage capacity that it is entitled to at Utingas
facilities. Any storage capacity which is not used by Utingas' shareholders
pursuant to their basic entitlements, is leased by Utingas at market rates. In
2003, Utingas' net sales, excluding sales to Ultragaz, were R$5.3 million,
representing approximately 0.2% of Ultragaz's net sales on a consolidated
basis.

     Future Storage Requirements. Due to the historical Petrobras monopoly in
the production and importation of LPG, LPG distributors have historically not
made substantial investment in storage capacity. Nevertheless, Ultragaz
believes that a LPG distributor that decides to diversify its supply of LPG
through importation will have to increase its storage capacity because the
importation of LPG would only be economically viable if carried out on a large
scale. Ultragaz's management believes that Ultragaz has several alternatives to
address storage capacity including joint ventures, joint investments with other
LPG distributors and possible contracts with Petrobras for using existing
storage facilities.

     Competition

     Ultragaz's main competitors are:

     o    AgipLiquigas, an Italian oil and gas conglomerate, which has been
          operating in the Brazilian LPG distribution sector for more than 40
          years;

     o    Butano, a domestic Brazilian LPG distributor which has been present
          in the market for more than 45 years;

     o    Supergasbras, which was incorporated in 1946, operates mainly in the
          south, southeast and mid-west regions and is controlled by SHV
          Energy, a major multinational LPG distributor, and Supergasbras'
          original founding family and;

     o    Minasgas S.A., known as Minasgas, which was incorporated in 1955,
          operates mainly in the south, southeast and mid-west regions and is
          controlled by SHV Energy.

     The following table sets forth the market share of Ultragaz and its
competitors:


                                      33
<PAGE>


                                       Year Ending December 31
                                       -----------------------
LPG Distributor               2003               2002               2001
---------------               ----               ----               ----
Ultragaz(*)                   24.3%              19.6%              19.3%
AgipLiquigas                  21.4%              21.2%              20.7%
Butano                        19.0%              19.4%              19.0%
Supergasbras                  12.7%              12.8%              13.2%
Minasgas                      10.9%              10.5%              10.4%
Others                        11.7%              16.5%              17.4%
Total                        100.0%             100.0%             100.0%

             (*) Includes sales volume of Shell Gas in 2003
             Source: Sindigas

     Prior to 1990, the government specified the areas in which LPG
distributors were permitted to operate and each LPG distributor was allocated a
limit in its LPG sales for each Brazilian geographic region in which it
operated. These limits impacted the growth of larger LPG distributors and
limited competition among LPG distributors. These restrictions were removed as
part of the deregulation process, resulting in a substantial increase in
competition among domestic LPG distributors.

     The bottled market for LPG is a mature market with relatively low
consumption growth and thus competition is largely based upon attempts by LPG
distributors to increase market share at the expense of their competitors. LPG
distributors in the bottled market compete primarily on brand awareness and
reliability of delivery and the service provided to customers. Ultragaz
believes that it is competitive in these aspects. Since per capita consumption
is small, low distribution costs is the critical factor in dictating
profitability. Therefore, LPG distributors largely compete on the basis of
efficiencies in distribution and delivery as all LPG distributors currently
purchase all of their LPG requirements from Petrobras, and as Petrobras'
refinery price charged to the distributors is the same to all LPG distributors.
Ultragaz's principal markets, including the cities of Sao Paulo, Salvador and
Curitiba, contain heavy concentrations of residential consumers and therefore
distribution to this market can be carried out with great economies of scale
resulting in lower distribution costs to Ultragaz. Additionally, Ultragaz
enjoys low distribution costs to the bulk segment through UltraSystem.

     Since May 2001, each LPG distributor, without governmental interference,
has freely determined LPG retail store prices. The retail store price will
depend on factors varying from the level of competition among LPG distributors
in a particular region to brand recognition, value added services provided in
connection to distribution and each distributor's logistics efficiency.

     In addition to the competition of other LPG distributors, Ultragaz
competes with companies that offer alternative energy sources to LPG, such as
fuel oil, electricity, wood and natural gas.

     While fuel oil is less expensive than LPG, LPG has performance and
environmental advantages over fuel oil in industrial use. When compared to
other energy sources, LPG is a clean, portable and economic alternative.
Natural gas is currently less expensive than LPG for large volume industrial
consumers, although substantially more expensive than LPG in the bottled
market. In addition, providing natural gas requires significant investments in
distribution infrastructure.


                                      34
<PAGE>


     The following chart provides a comparison between the consumer prices
charged for LPG in Brazil and consumer prices of other energy sources in U.S.
dollars per million of BTU, the British Thermal Unit, as of December 2003:


                                [GRAPH OMITTED]


     (1)  The price of natural gas for industrial purposes is based on a
          monthly consumption of 300 thousand tons.


     From January 2002, the LPG refinery price charged by Petrobras to its
distributors was set at international market levels. This change has meant that
domestic prices are now affected by the fluctuations in prices on the overseas
market as well as foreign exchange rate variation. The Real's deprecation
against the US dollar increased the ex-refinery price of LPG by approximately
123% in 2002, resulting in a 5% decline in consumption in the Brazilian market
in the same year. This increase in LPG prices during 2002 continued to impact
sales volume in 2003, which together with the average loss in disposable
incomes in Brazil, translated into a 5.7% decline. Ultragaz posted a 4.6%
growth in sales volumes during 2003, principally due to the acquisition of the
LPG distribution business of Shell in Brazil in August 2003. Ignoring the
additional volume from the acquisition of Shell Gas, Ultragaz posted an
approximately 4.3% decline in sales volume.


                                      35
<PAGE>

     The following graph shows LPG annual sales volume for the Brazilian market
and Ultragaz for the periods indicated:

                  [GRAPH OMITTED]            [GRAPH OMITTED]

     Tax Exemption Status

     Pursuant to legislation which provides tax relief for industries located
in the northeast region of Brazil, Ultragaz benefits from an income tax
exemption on operating income with respect to the filling plants at Mataripe,
Juazeiro and Suape expiring in 2003, 2004 and 2007, respectively as well as a
reduction of 25% on operating income at the filling plants in Ilheus and
Aracaju, valid through 2008. The company filed a request in December 2003 on
behalf of the Mataripe plant to the Northeast Development Agency - ADENE
(responsible for this tax relief program) seeking a 75% reduction in income tax
until 2012 for this base. On April 30, 2004, ADENE issued its report approving
the reduction of 75% in income tax up to 2012. This report was submitted for
the approval of the Brazilian Federal Revenue Authorities (Receita Federal),
which is expected to announce its decision within 120 days from submission
date. Should this period elapse without any such announcement then the
reduction is considered as approved. Should this request not be approved, the
reduction in income tax at this unit will be 25% through 2008 and 12.5% from
2009 to 2013. Bahiana has requests under analysis with the Federal Revenue
Authorities relating to the Caucaia base, which, once approved, would represent
a reduction of 75% of income tax until 2012 for this base. This reduction was
approved by the Brazilian Internal Revenue Service on April 16, 2004. Tax
exemptions amounted to R$ 3.7 million, R$ 5.4 million, R$ 1.6 million in 2003,
2002 and 2001 respectively. Amounts which are payable as income tax are charged
to income and credited to a reserve account in shareholders' equity. We cannot
guarantee that there will be no amendments to the current tax legislation.

     Environmental Matters

     Ultragaz is subject to the Brazilian federal, state and local laws and
regulations relating to the protection of the environment. Pursuant to specific
regulation, each of Ultragaz's filling plants is required to obtain operating
permits from the state environmental agencies and from the fire department. See
"-- Industry and Regulatory Overview."

     Quality

     Ultragaz was the first Brazilian company to accept responsibility for the
safety of its cylinders and campaign for the self-regulation of the gas
distribution sector. The company is still the only Brazilian LPG distributor
with ISO (International Standards Organization) certification for excellence in
quality management. All its filling plants are ISO 9001 certified and the
plants at Piraja in the state of Bahia, Caucaia in the state of Ceara, Pouso
Alegre in the state of Minas Gerais and Sao Jose dos Campos and Santos, in the
state of Sao Paulo.

     Insurance

     Ultragaz maintains adequate insurance policies covering a number of risks
to which it believes to be exposed, including damages and/or losses caused by
fire, lightning, explosion of any nature, flooding, aircraft crashes and


                                      36
<PAGE>


electrical damage, covering the filling plants and satellite stations, and also
the pipelines owned and/or used by Utingas.

     Our third party insurance covers all the Ultrapar companies and comprises
two policies: one policy covers minor events and has a limit of R$ 1 million
and the other covers possible events of a more serious nature and has a limit
of US$ 150 million. The entire plan covers damages and/or losses that can
eventually be caused to third parties due to accidents related to Ultragaz's
commercial and industrial operations and/or distribution and commercial
products and services.

     Ultragaz's management and its advisors believe that this insurance
coverage is in line with industry standards in Brazil.


     Petrochemicals and Chemicals

     Overview of the Sector and Applicable Regulations

     The petrochemical industry transforms crude oil or natural gas into widely
used consumer and industrial goods. The Brazilian petrochemical industry is
generally divided in three sectors, depending on the stage of transformation of
the petrochemical raw material. The companies that operate in these different
stages are known as first, second and third generation companies.

     First Generation Companies. Brazil's first generation companies, which are
referred to as "crackers", break down or "crack" naphtha (a by-product of the
oil refining process), their principal feedstock, into basic petrochemicals. In
Brazil, the crackers supply their naphtha requirements from Petrobras and
through imports. Currently, Petrobras is the only Brazilian producer of
naphtha. The basic petrochemicals produced by the crackers include olefins,
primarily ethylene, propylene and butadiene and aromatics, such as benzene,
toluene and xylenes. Braskem S.A, Companhia Petroquimica do Sul, known as
Copesul, and Petroquimica Uniao, known as PQU, -- Brazil's three crackers --
sell these basic petrochemicals to second generation companies. The basic
petrochemicals, which are in the form of either gases or liquids, are
transported to the second generation companies through pipelines for further
processing.

     Second Generation Companies. Second generation companies process the basic
petrochemicals produced by the crackers to obtain intermediate petrochemicals,
such as:

     o    polyethylene, ethylene oxide, polystyrene and polyvinyl chloride , or
          PVC, each produced from ethylene;

     o    polypropylene, oxo-alcohols and acrylonitrile, each produced from
          propylene;

     o    caprolactam, produced from benzene;

     o    purified terephtalic acid, or PTA, produced from p-xylene; and

     o    styrene butadiene rubber, or SBR, and polybutadiene, each produced
          from butadiene.

     There are approximately 50 second generation companies operating in
Brazil, including Oxiteno. The intermediate petrochemicals are produced in
solid form (as plastic pellets or powders) and in liquid form and are
transported through roads, railroads or by ship to third generation companies.

     Third Generation Companies. Third generation companies, known as
transformers, purchase the intermediate petrochemicals from the second
generation companies and transform them into final products, including:

     o    polyester - a byproduct of PTA and ethylene glycol (ethylene glycols
          are byproducts of ethylene oxide)

     o    plastics produced from polyethylene, polypropylene and PVC;

     o    acrylic fibers produced from acrylonitrile;


                                      37
<PAGE>

     o    nylon produced from caprolactam; and

     o    elastomers produced from butadiene.

     The third generation companies produce a variety of consumer and
industrial goods, including containers and packaging materials, such as bags,
film and bottles, textiles, detergents and paints as well as automobile parts,
toys and consumer electronic goods. There are over 6,000 third generation
companies operating in Brazil.

     Petrochemical Complexes. The production of first and second generation
petrochemicals in Brazil centers around three complexes: the northeast complex,
the Sao Paulo petrochemical complex, and the southern petrochemical complex.
Each complex has a single first generation producer or cracker, and several
second generation companies.

     The northeast complex, located in the municipality of Camacari in the
state of Bahia, began operations in 1978. It consists of approximately 19
second generation companies, including Oxiteno, situated around Braskem as the
cracker. Braskem currently has an ethylene production capacity of 1.2 million
tons per annum.

     The Sao Paulo complex, at Capuava in the state of Sao Paulo, was created
in 1972 and is the oldest petrochemical complex in Brazil. Its cracker, PQU,
supplies first generation petrochemicals to 25 second generation companies
including Oxiteno. PQU has an ethylene production capacity of 500,000 metric
tons per annum.

     The southern complex, located in the municipality of Triunfo in the state
of Rio Grande do Sul, is based around the raw materials cracker, Copesul, and
includes 7 second generation companies. Copesul has an ethylene production
capacity of 1.135 million metric tons per annum. Oxiteno does not purchase
ethylene from Copesul.

     The following map shows the location of Brazil's petrochemical complexes:

                                [GRAPH OMITTED]


                                      38
<PAGE>


     Structure of the Chemical and Petrochemical Sectors. The current structure
of the petrochemical complexes reflects the plan developed by the Brazilian
government during the 1970s, to establish a domestic petrochemical industry to
serve Brazilian markets. First and second generation companies are located
closely to each other to integrate the common use of facilities and to optimize
raw material supply. Historically, production capacity expansions at these
facilities tend to be coordinated to ensure that demand meets the supply of
petrochemicals. The infrastructure that developed around or near the complexes
further fostered the interdependence of first and second generation companies,
as limited facilities were constructed to facilitate the transportation and
storage of feedstock for importation or exportation.

     The Brazilian government developed the local petrochemical industry by
promoting the formation of joint ventures among the Brazilian government,
foreign petrochemical companies and private Brazilian investors. Petrobras'
majority-owned subsidiary, Petroquisa, participated in each joint venture as
the representative of the Brazilian government; a foreign petrochemical company
provided technology; and a Brazilian private sector company provided
management.

     In 1992, the Brazilian government began a privatization program that
significantly reduced its interests in, and influence over, the petrochemical
industry, particularly with respect to first and second generation companies.
This program was designed to increase private investment in the petrochemical
industry and to spur its consolidation and rationalization. As a result of
privatization auctions, the Brazilian government's voting interests in Copesul,
Braskem (formerly known as Copene), and PQU has been reduced, and the second
generation companies' voting interest in the crackers has increased. In
December 31, 2003 the government held 7.8% of Braskem's voting capital, 17.4%
of PQU's voting capital and 15.6% of Copesul's voting capital.

     In July 2001, the Odebrecht and Mariani groups acquired control of Copene
with the intent of consolidating in one single company, Braskem, Copene's
activities and those of second generation petrochemical companies held by them
(OPP, Trikem, Polialden and Nitrocarbono). As the sole ethylene oxide producer
in Brazil, Oxiteno does not compete with those second generation companies.

     Role of Petrobras. Naphtha is the raw material used in Brazil for the
production of basic petrochemicals such as ethylene and propylene. Petrobras is
still the only producer and the most important naphtha supplier in Brazil, even
though its legal monopoly ended in August 2000. See "-- Distribution of
Liquefied Petroleum Gas -- Industry and Regulatory Overview" for a discussion
of the termination of the Petrobras monopoly. Due to the constraints of
Petrobras' refining capacity, Braskem imports directly 25% to 30% of its
naphtha requirements and Copesul imports 45% to 50%.

     Naphtha prices have been freely negotiated since August 9, 2000. In July
2000, the naphtha price was 9% above the Amsterdam, Rotterdam and Antwerp
Region price, known as the ARA price, which is the international reference
price. Currently, domestic naphtha prices are approximately US$ 4.7/ton (2%)
higher than the ARA price.

     Environmental, Health and Safety Standards. Petrochemical companies are
subject to Brazilian federal, state and local laws and regulations governing
the protection of the environment. At the federal level the main regulators are
the Brazilian Institute of the Environment and Renewable Natural Resources, or
Instituto Brasileiro de Meio Ambiente e Recursos Naturais Renovaveis -- IBAMA,
and CONAMA.

     In accordance with environmental laws and regulations, petrochemical
companies are required to obtain licenses for their manufacturing facilities.
Authorities in the state where a plant is located may regulate its operations
by prescribing specific environmental standards in its operating licenses.
Petrochemical companies must satisfy regulatory authorities that the operation,
maintenance, and reclaiming of facilities comply with regulations and do not
cause damage to the environment.

     Environmental regulations apply particularly to the discharge, handling
and disposal of gaseous, liquid and solid products and by-products from
manufacturing activities. Rules issued by CONAMA and by state authorities also
prescribe preventive measures relating to environmental pollution and waste
treatment requirements. In addition, the transportation, storage and supply of
products are subject to specific standards designed to prevent spills, leakages
and other accidents.


                                      39
<PAGE>

     Historically, environmental regulations have imposed increasingly strict
standards, higher fines, and greater exposure to liability and increased
operating costs and capital expenditures. In addition, civil, administrative
and criminal sanctions, including fines and the revocation of licenses may
apply to violations of environmental regulations. Under applicable law, Oxiteno
is strictly liable for environmental damages.

     Petrochemical companies are also subject to federal, state and local laws
and regulations that establish occupational health and safety standards.
According to such laws and regulations, these companies are also required to
report on their occupational, health and safety records on a yearly basis to
the local office of the Ministry of Labor in each of the states in which it
operates. They are also subject to all federal, state and local government
regulation and supervision generally applicable to companies doing business in
Brazil, including labor laws, social security laws, public health, consumer
protection, securities laws and antitrust laws.

     Oxiteno

     We operate in the chemical segment through the second generation company,
Oxiteno, a wholly owned subsidiary of Ultrapar. Oxiteno is the only Brazilian
producer of ethylene oxide, ethylene glycols, ethanolamines, glycol ethers and
methyl-ether-acetates, and also a major producer of specialty chemicals. With
the exception of a small factory in Venezuela, Oxiteno is the only ethylene
oxide producer in South America. Its products are used in a broad range of
industrial sectors, such as polyester, packaging, paints, varnishes and
cosmetics. In 2003, Oxiteno sold 474 thousand tons of chemical and
petrochemical products.

     Oxiteno's strategic focus is to provide a broad coverage of the ethylene
oxide and derivates market, maintaining a leading position in these markets
that strengthens barriers to entry.

     Products and Markets

     Oxiteno's products can be divided into two principal groups: (i) commodity
chemicals, which are generally higher-volume products, with standard features
and (ii) specialty chemicals, which tend to be lower-volume products sold on
the basis of chemical composition and suitability to meet a particular end-use
requirement. Oxiteno's principal commodity chemicals are ethylene oxide,
several derivatives of ethylene oxide, including ethylene glycol,
ethanolamines, glycol ethers and glycol ether acetates, and MEK. Oxiteno's
principal specialty chemicals include a wide variety of products that are used
as surfactants, softeners, dispersants, emulsifiers and hydraulic fluids.


                                      40
<PAGE>


     The following chart outlines the principal raw materials used by Oxiteno
and their intermediate and final products.

                                [GRAPH OMITTED]


                                      41
<PAGE>


     Supply of ethylene constitutes an entry barrier to new ethylene oxide
producers in the country since the current production capacity of ethylene by
Brazilian crackers is committed to existing second generation companies, and
significant investments are needed for the construction of a new cracker. In
addition, the characteristics of ethylene oxide (highly inflammable at room
temperature and atmospheric pressure), make importing of this product generally
uneconomical. However, ethylene oxide derivatives are regularly imported by the
major international petrochemical companies and by international and domestic
trading companies.


     The following table sets forth Oxiteno's sales volume for each category of
its products for the periods indicated.

                                               Year Ended December 31,
                                    -------------------------------------------
Category                                2003            2002            2001
-------------------------------     ------------    -----------    ------------
                                                  (in metric tons)

Commodities
Ethylene Oxide                          12,461          12,293         12,907
Ethylene Glycols                       241,373         224,663        248,570
Etanolamines                            21,004          18,389         18,180
Glycol Ethers                           30,203          25,450         23,637
Acetates                                20,770          15,253         17,674
Metil-Etil-Ketone                       29,945          31,609         24,544
                                    ------------    -----------    ------------
Total                                  355,756         327,657        345,512
                                    ------------    -----------    ------------

Specialty
Blends                                  16,437          13,655         12,110
Ethyoxylated Alcohols                   13,304          11,793         12,866
Ethyoxylated Alkyphenols                28,376          27,652         27,216
Ethyoxylated Fatty Esters                4,703           3,551          3,639
Polyethyleneglycols                      7,279           6,666          5,098
Sulfonates / Sulfates                   24,363          23,912         23,350
Others (1)                              22,967          18,577         15,850
                                    ------------    -----------    ------------
Total                                  117,429         105,806        100,129
                                    ------------    -----------    ------------

CANAMEX(2)                                 966

Total                                  474,151         433,463        445,641
                                    ============    ===========    ============

Exports(3)                             191,139         169,717        188,957
Domestic Market                        283,012         263,746        256,684

(1)  Includes Alcohols, Catalysts, EO/PO, Fatty Esters, Other Ethhoxylates,
     Other Formulae, Polymerics.

(2)  Sales volume in December, 2003

(3)  Includes CANAMEX sales volume


     Commodity Products

     The following are Oxiteno's principal commodity products and their
principal uses and markets.

     Ethylene oxide. Ethylene oxide is a colorless and highly flammable gas at
room temperature and atmospheric pressure. Ethylene oxide is produced in a
continuous production process by gaseous phase catalytic partial oxidation of
ethylene by oxygen at high temperature and pressure. In 2003, Oxiteno used
approximately 96% of its ethylene oxide production in the production of
derivatives and sold the remaining 4% to other petrochemical companies.

     Ethylene glycols. The principal ethylene glycol produced by Oxiteno is
mono-ethylene glycol, known as MEG. Oxiteno also produces di- and tri-ethylene
glycol. Mono-ethylene glycol is a clear, non-flammable, non-volatile liquid at
room temperature and atmospheric pressure. Ethylene glycols are produced in a
continuous process from an ethylene oxide solution. In 2003, approximately 58%
of the ethylene glycol produced by Oxiteno was sold to


                                      42
<PAGE>


chemical companies for the manufacture of polyester fibers and polyethylene
terephthalate known as PET, with the remainder sold for use in the production
of antifreeze, brake fluids, solvent and other chemicals.

     Ethanolamines. Ethanolamines, comprising mono-, di-, and
tri-ethanolamines, are clear, non-flammable, non-volatile liquids at room
temperature and atmospheric pressure. Ethanolamines are produced in a
continuous process whereby ethylene oxide and ammoniacal solutions are fed to a
multiple-stage tubular reactor. Ethanolamines are largely used in the
manufacture of surfactants and in gas purification for removal of acid gases,
such as carbon dioxide and hydrogen sulfide. Mono-ethanolamine is also used in
the manufacture of ethyleneamines and surfactants. The major markets for
di-ethanolamine are for natural gas stabilization and surfactants and
herbicides production. Tri-ethanolamine is widely used in surfactants. A major
end user of surfactants is the detergent market.

     Glycol ethers. Ethylene oxide-based glycol ethers are clear, flammable and
volatile liquids at room temperature and atmospheric pressure. Glycol ethers
are produced by combining ethylene oxide with an anhydrous alcohol, usually
methyl, ethyl or butyl alcohol. In 2003, substantially all of the glycol ethers
produced by Oxiteno were sold for use as solvents for formulations such as
paints, inks and cleaning fluids, with the remainder sold for use in
non-solvent applications, including use as an anti-icing agent in jet fuel, as
fluids for hydraulic systems, and as chemical intermediates for plasticizers
and other compounds.

     Glycol ether acetates. Glycol ether acetates are clear, flammable,
non-volatile liquids at room temperature and atmospheric pressure. Glycol ether
acetates are produced in a continuous process whereby acetic acid and glycol
ether are fed into a reactor operating at mild temperature and pressure.
Ethyl-glycol ether acetate is a versatile solvent for nitrocellulose and
acrylic lacquers, for varnish removers, for wood stains and also as a retarding
agent for thinner preparation. Butyl-glycol ether acetate is a solvent for
polyurethane systems and a coalescent aid in latex paints.

     Methyl-ethyl-ketone. MEK, a clear, volatile, flammable liquid at room
temperature and atmospheric pressure, is Oxiteno's principal commodity chemical
not produced from ethylene oxide. MEK is used as a fast evaporation solvent for
thinners, paints, lacquers and adhesives and also as an active solvent for
several resins such as cellulosics, acrylics, polyesters, polyuretanics, PVC,
neoprene and maleic.

     Specialty Chemicals. The following table sets forth Oxiteno's principal
specialty chemical products and their principal uses and markets.

<TABLE>
Major Markets                  Specialty Chemicals                        Uses
----------------------------   ----------------------------------------   ---------------------------------------
<S>                            <C>                                        <C>
Detergents                     Alkylbenzene sulfonic acids,               Dispersants, solubilizing agents,
                               alkylsulfates, alkyl ether sulfates,       emulsifiers, foam stabilizers,
                               ethoxylated alkylphenols, ethoxylated      adjuvants, moisteners, detergent bases
                               fatty alcohols, polyethyleneglycols,
                               alkanolamides, betaines,
                               sulphosuccinates, block copolymers EO/PO
Agricultural Chemicals         Ethoxylated fatty amines, ethoxylated      Emulsifiers, moisteners, dispersants,
                               alkylphenols, alkyl ether sulfates,        humectants
                               blends, naphthalene sulfonate,
                               ethoxylated vegetable oil, copolymers
                               EO/PO
Cosmetics                      Alkyl sulfates, alkyl ether sulfates,      Emollients, densifiers, emulsifiers,
                               betaines, ethoxylated fatty alcohols,      foam stabilizers, adjuvants, moisteners,
                               polyethyleneglycols, alkanolamides,        detergent
                               ethoxylated sorbitan esters, sorbitan
                               fatty esters
Foods                          Sorbitan fatty esters, ethoxylated         Emulsifiers, stabilizers, dispersants
                               sorbitan esters
Textiles                       Ethoxylated alkylphenols, ethoxylated      Antistatic agents, lubricants,
                               fatty alcohols, ethoxylated vegetable      softeners, emulsifiers, antifoamers,
                               oils, ethoxylated fatty amines             mercerizing additives, humectants, low
                                                                          foam detergents
Leather                        Ethoxylated alkylphenols,                  Depilatory agents, degreasers,
                               polyethyleneglycols, naphthalenes,         dispersants, softeners, synthetic tannins
                               sulfonates
Oil Field Chemicals            Block copolymers EO/PO, condensed          Dispersants, surfactants, emulsion
                               naphthalenes, sulphonates, sorbitan        preventers
                               fatty esters
</TABLE>

                                      43
<PAGE>

     The Brazilian petrochemicals industry seeks to prioritize demand from the
domestic market, where there is greater value added, although sales are also
made to the overseas market. While Oxiteno sells the larger part of its
commodities and specialty chemicals in Brazil, production capacity exceeds
domestic market demand, the company exporting surplus production to more than
48 countries in Asia, Latin America, Europe and North America. The company
maintains production capacity above local demand for strategic reasons. In
2003, 2002 and 2001, 29%, 26% and 28% of Oxiteno's gross revenues were from
exports.

     Domestic Sales. The following table shows Oxiteno's domestic market sales
volumes by market segment for the periods indicated:

                                           Year Ended December 31,
                              -------------------------------------------------
Market sector                     2003             2002                2001
---------------------------   ------------     -------------       ------------
                                             (in metric tons)

Polyester                         72,660             74,149             83,632
Paints and varnishes              15,169             16,594             16,465
Chemical Industries               26,495             23,968             22,994
Detergents                        18,908             19,171             21,365
Hydraulic fluids                  24,024             21,592             15,188
Agricultural chemical             19,491             12,352             11,920
Resins                            16,946             18,168             17,441
Cosmetics                         15,709             16,482             15,285
Leather / Paper                   13,148             11,592              7,725
Textiles                           5,387              5,314              4,822
Food                               3,031              2,714              2,765
Oilfield applications              4,698              4,810              5,117
Distributors                      39,971             27,984             25,533
Others (1)                         7,375              8,856              6,432

                              ------------     -------------       ------------
Total domestic market            283,012            263,746            256,684
                              ============     =============       ============

     (1) Includes catalyzers, civil construction, pharmaceutical and veterinary
         product manufacturers.


     In the Brazilian market, the polyester market constitutes the most
important market for Oxiteno's products. MEG produced by Oxiteno is sold to
chemical companies that manufacture polyester fiber, which is used to make a
variety of fabrics, and is also sold to producers of PET, which is a polymer
used to make packaging, such as soft drink bottles.

     A great portion of Oxiteno's product prices in the Brazilian market are
set by reference to international contract prices in U.S. dollars, as they are
commodity chemicals, but are denominated in Reais. The sales are made on a
negotiated basis rather than pursuant to long-term written contracts. In the
case of specialty chemicals which meet the requirements of a particular demand
and which are not subject to ready substitution by imports, Oxiteno's pricing
is more flexible and takes into account the value-added to its customers by the
particular specialty chemical.

     Oxiteno's sales force in the domestic market consists of 40 persons,
organized by industry sector. In 2003, over 86% of Oxiteno's sales in the
domestic market were made directly by its sales force. The remaining sales,
mainly to smaller regional customers, were made through independent dealers.

     Oxiteno's principal customers in the domestic market include
Mossi-Ghisolfi (former Rhodia Ster), which principally purchases ethylene
glycols, Clariant S.A., which principally purchases ethylene oxide and
ethoxylated products, and Industrias Gessy Lever Ltda (Unilever), which
principally purchases surfactants. In 2003, Oxiteno's ten largest customers in
the domestic market accounted for 42% of domestic market revenues. Oxiteno
believes that by distributing its products to a variety of markets it is able
to protect itself, to a certain extent, from the effects of a decrease in
economic activity in any particular market.


                                      44
<PAGE>

     Export Sales. The following table sets forth Oxiteno's sales by volume in
tons for each geographic market served by Oxiteno in the periods indicated.

<TABLE>
                                                    Year Ended December 31,
                                    ----------------------------------------------------------
Market                                     2003               2002                  2001
----------------------------------  -----------------   -----------------   ------------------
                                            (in metric tons and percentage of the total)
<S>                                  <C>       <C>          <C>       <C>      <C>        <C>
Mercosur (not including Brazil)      53,343    28%          33,124    20%      51,043     27%
Remainder of Latin America            4,531     2%           3,909     2%       3,113      2%
Nafta                                12,463     7%          11,874     7%      30,177     16%
Europe                               21,644    11%          39,984    23%      31,247     16%
Africa                                7,656     4%           6,697     4%       5,321      3%
Far East                             87,296    46%          72,672    43%      67,714     36%
Pacific Region                        2,111     1%           1,317     1%         342      0%
Middle East                           1,130     1%             140     0%           0      0%

CANAMEX                                 966     0%

Total                               191,139   100%         169,717   100%     188,957    100%
                                   ========  =====        ========  =====    ========   =====
</TABLE>

     Oxiteno exports a wide variety of chemical products including glycols,
MEK, ethoxylated alkylphenols, glycol ether acetates, glycol ethers,
ethanolamines, ethoxylated fatty amines and other ethoxylated products. In the
international market, Oxiteno sells both to industrial customers, including
Voridian Argentina S.R.L, Unilever de Argentina S.A. and Cognis S.A., as well
as trading companies and other third-party distributors. Oxiteno's largest
customer in the international market is a major European trading company for
glycol, which accounted for approximately 29% of international revenues in
2003. In the same period, only two other customers individually accounted for
more than 10% of Oxiteno's sales in the international market.

     With the acquisition in December 2003 of CANAMEX, a Mexican specialty
chemicals company, Oxiteno expects to establish a growing presence in the
Mexican market for specialty chemicals and create a distribution platform for
its product sales to the United States. CANAMEX has two production units,
manufacturing principally ethoxylates, which were operating at 25% production
capacity on the acquisition date due to serious financial difficulties being
faced by the company. Currently, about 81% of the company's sales are destined
to the domestic Mexican market, largely for the food and textile segments. The
remaining sales volume is exported, mainly to the United States.

     In 2003, Canamex's December sales' volume of 966 tons was incorporated in
Oxiteno's results.

     In most cases, Oxiteno's sales prices for its commodity chemicals in the
domestic and export markets are based on international contract prices rather
than international spot prices. International contract prices are fixed by
reference to published data regarding the price at which industry participants
have sold the relevant product.

     In general, Oxiteno's operating margins on products sold in the
international market are lower than operating margins for similar products sold
in the domestic market. Nevertheless, Oxiteno deems it important to maintain a
presence in international markets. Oxiteno intends to shift sales to the
domestic market as local demand for its products increases, but will continue
to export and will maintain its presence in the international market.

     Customers. Oxiteno's most important customers for its commodity chemicals
are chemical companies, surface coating producers and polyester producers. In
turn, the customers for specialty chemicals comprise a variety of industrial
and commercial enterprises including brake fluid distributors, agrochemical
producers, manufacturers of food additives and manufacturers of detergents and
cosmetics.

     Competition

     Oxiteno competes largely with imported products. Since 1990, it has had to
operate in an increasingly competitive environment due to imports from
international and transnational petrochemical industries. As imported products
are mostly commodity chemicals, competition is based principally on price.
However, factors such as


                                      45
<PAGE>

product quality, timely delivery, reliability of supply and technical service
and support are also important competitive factors. As a local producer,
Oxiteno believes it has a competitive advantage over imports with regard to
some of these factors.

     Oxiteno's principal competitors are Shell Brasil Ltda., Exxon Mobil
Quimica Ltda., Dow Brasil S.A., Lyondell Quimica do Brasil Ltda., Cognis Brasil
Ltda., Clariant S.A. and BASF S.A.. Importers incur additional costs when
selling their products in the Brazilian market, due to import tariffs and
additional freight charges.

     Oxiteno estimates that its Brazilian market share is approximately 70% on
average. In the case of specialty chemicals, Oxiteno competes primarily with
other Brazilian producers (which would buy ethylene oxide from Oxiteno) and
pricing is a less decisive competitive factor than with true commodity
chemicals, while conformity with specifications, product performance and
reliability of service are comparatively more important. Access to technology
and research and development are important factors with regard to conformity to
specifications and product performance, especially in the development of new
products to meet customers' needs. As Oxiteno's competitors have research and
development resources, Oxiteno's strategy involves ensuring access to
technology through its own research and development activity, licensing and
joint ventures, if appropriate opportunities become available.

     Transportation and Storage

     As of December 31, 2003, Oxiteno had a total storage capacity of 73.1
thousand cubic meters, of which 42.9 thousand cubic meters were located in its
plants and the remaining was leased from third parties. Oxiteno leases storage
capacity from Ultracargo on an arm's length basis and also from unaffiliated
storage companies.

     Raw materials such as ethylene, oxygen, heavy C4 and ammonia are
transported to Oxiteno's plants by pipeline and other raw materials are
transported by truck.

     In 2003, 54% of Oxiteno's products were transported directly to customers
by truck and 7% were transported by truck to a sea terminal for coastal
transportation to other ports in Brazil and further delivery by truck. The
remaining 39%, representing most of Oxiteno's sales in the international
market, were transported by ship.

     Raw Materials

     Oxiteno's principal raw material is ethylene. In 2003, ethylene was
responsible for 52% of Oxiteno's variable costs of production and approximately
45% of its total cost of goods sold. Among Oxiteno's other raw materials, the
principal include ethyl, butyl and lauryl alcohols, oxygen, acetic acid and
rafinate II.

     Ethylene Supply. Ethylene is used for the production of ethylene oxide at
the Camacari plant and the Maua plant. Braskem and PQU supply all of Oxiteno's
ethylene requirements for the Camacari plant and Maua plant, respectively,
thorough pipelines, thus minimizing the costs of delivery of ethylene and
helping to ensure the reliability of supply. "See Item 5 - Operating and
Financial Review and Prospects - Liquidity and Capital Resources - Investments
and Capital Expenditures".

     Oxiteno has a long-term contract with Braskem relating to the volume of
ethylene to be supplied to, and purchased by Oxiteno. This contract will expire
in 2012. Pursuant to its terms, Braskem is required to supply Oxiteno with up
to 197 thousand tons of ethylene per year, and Oxiteno is required to purchase
at least 138 thousand tons per year. The contract does not provide a price for
the ethylene, but provides that the price will be negotiated between the
parties from time to time and will be the same for all buyers of ethylene. The
price is currently established pursuant to a margin sharing mechanism between
Braskem and its customers, including Oxiteno. In the case of PQU, Oxiteno, like
other purchasers from PQU, does not have a long term contract relating to the
volume or price of ethylene supplied.


                                      46
<PAGE>


     The following table sets forth information regarding Oxiteno's usage of
ethylene at its Camacari and Maua plants for the periods indicated.

                                     Year Ended December 31,
                   ------------------------------------------------------------
Plant               2003         2002          2001         2000          1999
----------------   ------       ------        ------       ------        ------
                                      (in thousands of tons)
Camacari            189          165           185          173           183
Maua                 41           38            42           40            41


     Ethylene is difficult and expensive to store and transport, as it must be
kept at a temperature below -200 degrees Fahrenheit or -100 degrees Celsius
during storage and transportation. As a result, ethylene is not imported or
exported in substantial quantities. Accordingly, the naphtha crackers,
including Braskem and PQU, are largely dependent for their sales upon the
second generation petrochemical companies, such as Oxiteno, located in the
respective petrochemical complexes.

     Conversely, since imports of ethylene from other producers are not readily
available, Oxiteno depends entirely on Braskem and PQU for the supply of
ethylene to its Camacari and Maua plants and, therefore for its ability to
operate such plants. Oxiteno does not maintain any significant storage of
ethylene and any unexpected interruptions in supply from the crackers would
have an immediate impact on Oxiteno's production. The last unexpected
interruption in the ethylene supply was in 1993, due to a pipeline fire that
affected the naphtha delivery from Petrobras to Braskem, which caused a
shutdown in the naphtha cracking operations, resulting in a 14-day shutdown in
the Camacari plant's operations.

     First generation petrochemical companies undergo scheduled maintenance
stoppages. Oxiteno anticipates these stoppages by building up inventory and
provisioning costs. Oxiteno also uses these planned stoppages for regular
maintenance work on its own plants and eventual substitution of catalyzers or
for expansion in installed capacity. During the first half of 2002, there was a
planned stoppage at Braskem's pyrolysis I unit for expanding installed ethylene
capacity. Consequently, in the first quarter 2002, Oxiteno's ethylene quota was
reduced by 32%. Problems involving the start-up extended the plant stoppage
beyond schedule, restricting the volume of ethylene supplied in the second
quarter of 2002 to 22% of the second quarter of 2001 volumes. In the second
half of 2002 supplies were normalized. In July 2002, PQU shut down its plant
for a scheduled stoppage, the first time in 6 years. Braskem's last scheduled
downtime was in January 2004 and there were no problems in the re-start

     In 2003, Braskem and PQU had annual ethylene production capacity of 1.2
million tons and 500 thousand tons, respectively. See "Petrochemical Complexes
- Industry and Regulatory Overview."

     Price of Ethylene. The price of ethylene supplied by Braskem to Oxiteno
for the production of goods to be sold in Brazil is determined by a margin
sharing mechanism established in March 1997, and is the same for all of
Braskem's ethylene customers. Prior to March 1997, the price of ethylene was
negotiated between Braskem and its ethylene customers on a monthly basis.

     Under the margin sharing mechanism, the price paid for ethylene depends
upon the weighted average market price charged by the ethylene customers in the
Brazilian market during the previous month for a basket of goods derived from
ethylene. The weight of each product in the basket depends upon the relative
proportion of the total supply of ethylene used in the production of such
product as compared with the other products in the basket. Certain cost
elements are then deducted from the weighted average price. The remaining
"margin" after the deduction of such cost elements from the average weighted
price is shared between Braskem and the ethylene customers based on the
respective investment of Braskem and such customers. The respective investments
are calculated based on U.S. benchmarks rather than the actual investments of
the parties.

     A different margin sharing mechanism is currently in place with respect to
products produced from ethylene for the export market. Under this arrangement,
the price paid for ethylene depends upon the gross margin of each export
transaction of Braskem's customers. Subject to certain limits, the resulting
margin is divided by 45% for Braskem and by 55% to the exporters.


                                      47
<PAGE>


     The following table shows Braskem and PQU listed prices for ethylene per
metric ton for the periods indicated (the average for the indicated periods).

                                  Braskem (formerly Copene)          PQU
                                  ----------------------------  --------------
                                                      (R$/ton)
2003
------------------------------
First Quarter                                    1,944.00            2,009.33
Second Quarter                                   2,036.33            2,060.00
Third Quarter                                    1,555.33            1,703.33
Fourth Quarter                                   1,610.00            1,670.00
Maximum Price                                    2,439.00            2,280.00
Minimum Price                                    1,523.00            1,640.00
Year Average                                     1,786.42            1,860.67
2002
------------------------------
First Quarter                                    1,099.67            1,160.00
Second Quarter                                   1,263.67            1,268.67
Third Quarter                                    1,360.67            1,389.00
Fourth Quarter                                   1,716.33            1,671.33
Maximum Price                                    1,900.00            1,719.00
Minimum Price                                    1,056.00            1,134.00
Year Average                                     1,360.08            1,372.25
2001
------------------------------
First Quarter                                    1,138.33            1,247.67
Second Quarter                                   1,226.33            1,300.33
Third Quarter                                    1,253.00            1,314.67
Fourth Quarter                                   1,207.08            1,273.07
Maximum Price                                    1,360.00            1,397.00
Minimum Price                                    1,089.00            1,179.00
Year Average                                     1,206.19            1,283.93


     As naphtha accounts for approximately 73% of variable costs of ethylene
production, fluctuations in the price of naphtha strongly influence
fluctuations in the price of ethylene. Because the main determinant of the
price of naphtha is the price of crude oil, the price of naphtha, and thus
ethylene, is subject to fluctuations based on changes in the international oil
price. The increases in the price of ethylene could affect Oxiteno's
competitiveness in the petrochemical market. See "Item 3. Key Information --
Risk Factors -- Risks Relating to Ultrapar."

     The current price for naphtha paid by Brazil's naphtha crackers is
negotiated between those crackers and Petrobras and is currently determined
using a formula that leads to a domestic naphtha price that is approximately
US$ 4.0 above the international price (ARA reference). See "--Industry and
Regulatory Overview."

     Other Raw Materials. In 2003, other raw materials, principally oxygen,
lauryl alcohol, ethanol, C4, butyl alcohol, acetic acid, alcohol, nonene,
phenol, primary fatty amine, fusel oil and LAB accounted for approximately 35%
of Oxiteno's variable costs and 30% of its total costs of sales (cost of goods
sold).

     Oxiteno generally obtains these other raw materials from a variety of
sources, except for phenol, which Oxiteno purchases principally from a single
supplier, Rhodia Poliamida Especialidades Ltda.

     Oxiteno uses oxygen in the production of ethylene oxide and purchases
oxygen for the Camacari plant pursuant to a long-term contract with White
Martins and Braskem which will expire in 2010. Oxygen for the Maua plant is
purchased from Oxicap, Oxiteno's joint venture with Air Liquide.


                                      48
<PAGE>


     C4, used for the production of MEK at the Triunfo plant, is purchased from
Copesul, the naphtha cracker in the Southern Complex.

     Utilities. Steam, electric power and natural gas are the main utilities
required for Oxiteno's production. Part of the electricity and steam used by
Oxiteno is generated internally and part is purchased from electricity
companies and third-party suppliers of steam in the regions where Oxiteno's
plants are located. Natural gas is purchased from local companies.

     Tax-Exempt Status

     Pursuant to legislation which provides tax relief for industries located
in the northeast region of Brazil, Oxiteno benefits from an income tax
exemption on operating profits from sales of its products at the Camacari plant
through 2006. Tax exemptions amounted to R$44.0 million, R$ 36.1 million, and
R$ 22.9 million in 2003, 2002, and 2001 respectively. Amounts payable as income
tax are charged to income and credited to a reserve account in shareholders'
equity. After 2006, the income resulting from the Camacari plant operation will
continue to benefit from a partial income tax exemption, resulting in an income
tax rate of 19% until 2008 and 22% until 2013. After 2013, Oxiteno will be
liable for the full tax rate, currently 25%. We cannot guarantee that there
will be no amendments to the current tax legislation.

     Maintenance and Quality Control

     Oxiteno carries out a program of preventive maintenance at each of its
plants and uses statistical analysis to help predict production problems. The
stoppages due to the maintenance program take place at the same time as the
stoppages for the change of the ethylene oxide catalyst. In the case of the
ethylene oxide and ethylene glycol units at the Maua and Camacari plants, which
have continuous production processes, maintenance is preferably scheduled for
periods when the relevant cracker, which supplies ethylene to the plant, is
scheduled to be shut down for maintenance. Each cracker is typically shut down
for maintenance for a period of approximately 20 days every 36 to 48 months.
The same happens to the Triunfo plant, which receives butane from Copesul. In
the case of the other production units at such plants and the Tremembe plants,
maintenance is performed during scheduled breaks in production. Oxiteno uses
its own employees for specialized maintenance and uses third-party contractors
for routine maintenance. In addition, Oxiteno has a team of employees
responsible for quality control that operates continuously. As of December 31,
2003, Oxiteno had 101 employees engaged in maintenance.

     Health, Safety and Environmental Matters

     Oxiteno is subject to the environmental laws and regulations of the states
in which it operates, which specify and detail federal legislation on these
matters. See "-- Industry and Regulatory Overview." Oxiteno continuously
monitors its compliance with federal, state and municipal legislation
applicable to its various places of operation. In accordance with applicable
law, Oxiteno is responsible for losses and damages of an environmental nature.

     The local state environmental authorities license each of Oxiteno's
plants. Licenses granted in certain states are valid for a fixed period of time
and then must be renewed. The licenses for the Tremembe and Maua plants were
issued for an unlimited period of time. The terms of the other licenses vary
according to the applicable legislation and to the periodic inspections
performed by environmental authorities.

     Waste products from Oxiteno's industrial plants are discharged according
to the legal requirements. Effluents are discharged and treated in Oxiteno's
own treatment centers or by petrochemical complexes where the company has
activities. Solid waste products are preferably reprocessed in cement furnaces.
Where the reprocessing is not recommended, these products are incinerated or
deposited in landfills owned by Oxiteno. Oxiteno periodically controls these
discharge areas, not having any significant environmental liability.

     Our health and safety indicators are comparable to the international
standards, and are a priority in Oxiteno's activities and in the action plans
for the upcoming years.

     In March 2002, Oxiteno obtained a SA 8000 certification, which establishes
the parameters for a Quality Management System focused on Social
Responsibility. This certification covers various matters, including health,
safety, labor relations and compliance with the current legislation.


                                      49
<PAGE>


     Additionally, Oxiteno voluntarily complies with other requirements, such
as those related to the responsible care program, issued by ABIQUIM, the
Brazilian Chemical Industries Association, which sets forth international
standards for environmental protection and occupational health as well as
safety measures to be followed by chemical product manufacturers.

     Insurance

     In line with Ultrapar's policy, Oxiteno maintains various insurance
policies which cover a broad range of risks to which it is exposed.

     In addition, Oxiteno maintains insurance policies covering pecuniary
damages. Its insurance policy for "all risks" covers its assets and inventories
against the risks to which they are exposed and also against losses due to
accidents related to these risks.

     Our third party insurance covers each company of the Ultrapar group and
comprises two policies: one policy covers minor events and has a limit of R$
1million; the other policy covers possible events of a more serious nature and
has a limit of US$ 150 million.

     Oxiteno's management and its advisors believe that this insurance coverage
is in line with chemical and petrochemical industries standards in Brazil


     Logistics of Chemicals and Oil Products

     Ultracargo

     Ultracargo is the leader in integrated logistics - road transportation and
storage services - for oil and chemical products in Brazil. Among the solutions
the company offers, are road transportation facilities using its own and third
party fleets, and storage services through warehousing facilities at port
terminals and rail junctions for the handling of chemical and oil products.
Transportation services include integrated multimodal transportation as well as
the receiving and dispatching of customer's goods. Ultracargo also offers ship
loading and unloading services, the operation of pipelines, logistics
programming and installation engineering.

     Ultracargo operates a fleet of approximately 500 tanker trucks and
provides transportation services to the LPG distribution and the chemical
industries. It has a storage capacity of 207,781 m3, accounting for
approximately 70% of all tank capacity for liquids at the Aratu terminal in the
State of Bahia, which serves South America's largest petrochemical complex.
Ultracargo is also present at the ports of Suape and Santos, and provides
support facilities in Camacari and Paulinia. See "--Petrochemicals and
Chemicals--Industry and Regulatory Overview."

     Ultracargo holds 100% of Transultra's voting capital and 80% of Tequimar's
voting capital. The remaining 20% of Tequimar's voting shares is held by
Ultrapar.


                                      50
<PAGE>

     The following table sets forth Ultracargo net revenues by region for the
periods indicated:

                                     Year Ended December 31,
                 ---------------------------------------------------------------
                       2003                 2002                     2001
                 ----------------    ------------------       ------------------
                  Net Sales    %      Net Sales      %          Net Sales     %
                 ---------- -----    -----------  -----       ------------  ----
                            (in thousands of reais except percentages)
  North East       85,185     48%        71,757     54%           60,431     57%
  South East       87,637     49%        57,210     44%           43,305     41%
  South             4,290      3%         2,432      2%            1,592      2%
                 ---------- -----    -----------  -----       ------------  ----
  Total           177,112    100%       131,399    100%          105,328    100%
                 ========== =====    ===========  =====       ============  ====


     Ultracargo seeks to integrate the transportation and storage businesses by
offering complete logistics solutions. Due to this combination, Ultracargo is
the only company in the Brazilian market to offer integrated transport and bulk
liquid and liquefied storage services to the petrochemical segment.

     An example of this integration is the new Paulinia intermodal terminal
built by Ultracargo in the state of Sao Paulo in response to its strategic
decision to manage bulk solids and to position itself as a logistics operator.
The terminal provides storage for solid and liquid products as well as
intermodal transportation. Today, its main activities include the storage of
products originated from Argentina and the Camacari petrochemical complex for
future distribution throughout Brazil.

     Ultracargo's history is one of pioneering logistics' solutions in the
Brazilian market. It was the first company to install autotrack in trucks in
1994, enabling vehicles to be monitored in real time at any point of Mercosur.
The company also implemented a radar operated tank measurement system in 1996,
increasing the safety of product loading and unloading.

     In addition, Ultracargo has introduced Web-based systems allowing
customers to monitor transportation and storage. These services include
services such as e-cargo for producing customized reports and monitoring
operations in real time and estoque.net, for consulting inventory positions -
accessed through any Internet-enabled computer, which permits clients to
effectively participate at all stages of transportation and storage.

     Ultracargo is also implementing the Integrated Transport System (SIT),
which will result in a greater level of automation and control over transport
operations. This system integrates data from all of its plants and branches
through established dedicated lines, permitting the centralization of the data
and the construction of a technological platform with a competitive edge in
relation to the market.


     Transportation

     Ultracargo's principal market for transportation is the chemical industry,
for which transportation is provided by truck between and among port terminals
and first, second and third generation petrochemical companies operating at the
various petrochemical complexes. Ultracargo has been establishing long-term
relationships with key companies in the chemical industry, and provides its
services on a negotiated basis with each individual customer.

     Ultracargo, through a fleet of tanker trucks, offers transportation
services for LPG and chemical products in several major industrial regions in
Brazil, as well as transportation services to Chile and Argentina. In 2003,
Ultracargo operated a fleet of approximately 500 trucks and, in 2002 and 2003,
transported 2,460 and 2,436 thousand tons, respectively.

     In the LPG distribution industry, Ultracargo provides transportation from
Petrobras' facilities to filling stations of the distributors and between the
distributors and their final industrial clients, although in this case, on a
reduced scale.

     In 1997, Ultracargo began operating in the market for bulk transportation
of solid products, an important segment of the transport business in the
domestic market in which products are transported utilizing special silos and


                                      51
<PAGE>

semi-trailers. Ultracargo believes that there are good opportunities for growth
in this market. In 2003, Ultracargo transported approximately 200 thousand tons
of solid products which accounted for approximately 9% of Ultracargo's 2003
revenues.


     Storage

     Ultracargo provides storage facilities to Braskem and most of the
second-generation petrochemical companies in the Northeastern Petrochemical
Complex, including Oxiteno. At the end of 2003, Ultracargo maintained five
storage terminals - in Aratu and Camacari in the state of Bahia, in Paulinia
and Santos in the state of Sao Paulo, and in Suape in the state of Pernambuco.
Ultracargo has been investing in the expansion of storage capacity to meet
demand for logistics infrastructure in Brazil. Currently, the company is
investing in a new inter-modal terminal in Santos, and in early 2004 completed
construction of an inter-modal terminal in Tatui in the state of Sao Paulo and
is to inaugurate another in Montes Claros, in the state of Minas Gerais.

     The conclusion of the Santos Inter-modal Terminal, constructed in
partnership with Crystalsev and Cargill/ Coinbra, is scheduled for the end of
2004. Ultracargo's investment in this terminal is budgeted at approximately R$
60 million and has an occupied area of approximately 64,000 square meters and a
total of 35,000 cubic meters of tankage space for chemical products. Crystalsev
and Cargill/Coinbra are to invest in tankage space for 40,000 square meters of
alcohol and 38,000 cubic meters of vegetable oils, respectively. This project
will be Ultracargo's second port installation to integrate road, rail and
maritime transportation systems, as in the case in Aratu.

     The new Montes Claros terminal will serve fuel distribution companies with
a secondary distribution point. It will integrate road and rail systems and has
a storage capacity of 4,400 cubic meters. The new Tatui terminal has a 2,250
square meter capacity and includes a branch rail link for the simultaneous
unloading of four rail cars at a time.

     We believe that Ultracargo is the second largest company for chemical
product and fuel storage, having approximately 19% of the total domestic
tankage capacity for chemical products.


     Tax Exemption Status

     Pursuant to legislation which offers tax breaks to industries located in
the North East region of Brazil, Ultracargo enjoys exemption from income tax on
the total operating profits from its Aratu terminal as well as operating
profits from acetic acids and butadiene product storage activities at the Suape
Terminal, valid through 2003 and 2005, respectively. With respect to the Aratu
terminal, in December 2003, the company filed a request with the Northeast
Development Agency - ADENE, responsible for managing this fiscal incentives
program, for a 75% reduction in income tax until 2012. On April 30, 2004, ADENE
issued its report approving the reduction of 75% in income tax up to 2012. This
report was submitted for the approval of the Brazilian Federal Revenue
Authorities (Receita Federal), which is expected announce its decision within
120 days from the submission date. Should this period elapse without any such
announcement then the reduction is considered approved. Should this not be
approved, then this unit will be subject to income tax rate reduction of 25%
through 2008 and 12.5% from 2009 through 2013. In 2003, 2002 and 2001, tax
breaks totaled R$ 4.7 million, R$ 2.0 million and R$ 2.5 million, respectively.
Values which are deducted for account of income tax are booked to the debit of
the results account and to the credit of a shareholders' equity reserve
account. We can give no assurance that the current legislation will not be
altered.


     Quality

     In 2003, Ultracargo was reevaluated by SASSMAQ (Safety, Health,
Environment and Quality Evaluation System), a program from ABIQUIM, the
Brazilian Chemical Industries Association, as part of the Responsible Care
Program. We were the first Brazilian company in the sector to go through this
evaluation process. The purpose of the system is to ensure that service
providers in this segment comply with the technical standards required by the
chemical industry, thus reducing the risks in transportation and distribution.
In addition, all the units have adapted their Quality Management System to ISO
9001:2000, in a process based on the continual upgrading and the servicing of
specific customer needs.


                                      52
<PAGE>


     Environmental Matters

     Ultracargo is subject to Brazilian federal and state laws and regulations
relating to the protection of the environment.

     Insurance

     Ultracargo maintains insurance policies covering a number of risks, in
particular those relating to the transportation and storage of chemical and
petrochemical products. Transportation activities are protected by policies
covering damages caused by accidents and stolen cargo.

     Both Ultracargo's properties and Tequimar's pipelines are insured against
fire, lightning, explosion, flooding, aircraft crash, smoke and electrical
damages.

     Ultracargo also maintains insurance policies for civil liabilities. The
storage operations are insured by policies covering damages to products in
storage, including contamination.

     Our third party insurance covers each of the Ultrapar companies and
comprises two policies: one policy covers minor events and has a limit of R$
1million; the other policy covers possible events of a more serious nature and
has a limit of US$ 150 million.

     Ultracargo's management and its advisors believe that the insurance
maintained covers in all material respects the risks to which Ultracargo is
exposed, and that it is consistent with industry practices in Brazil.


                                      53
<PAGE>


C.   Organizational Structure

The following chart shows our current organizational structure, including our
principal intermediate holding companies and operating companies. Percentages
represent approximate ownership of voting share capital and total capital
(voting capital/total capital).

                                [GRAPH OMITTED]


Minority participations in Companhia Ultragaz are mainly held by NGButano (8% of
voting capital).
Minority participations in Utingas are mainly held by Agip do Brasil and
Supergasbras (31% and 7% of voting capital, respectively).


     We conduct LPG distribution through our subsidiary Ultragaz Participacoes
Ltda., of which we own 100% of the total share capital. Ultragaz Participacoes
Ltda. operates through its four primary subsidiaries, Companhia Ultragaz S.A.,
Bahiana, SP Gas and Utingas. The first three companies operate in the filling
and distribution of LPG. Bahiana operates primarily in the northeast region of
Brazil and Companhia Ultragaz together with SP Gas, serves the other Brazilian
regions. Utingas is an LPG storage company, with facilities in the states of
Sao Paulo and Parana.

     We conduct petrochemical and chemical activities through Oxiteno S.A., of
which we own 100% of the total share capital. Oxiteno operates in the
petrochemical and chemical segment directly and through its subsidiary, Oxiteno
Nordeste S.A.. Oxiteno operates two plants located in the state of Sao Paulo,
and Oxiteno Nordeste operates one plant in Camacari, in the state of Bahia, and
a second plant in Triunfo, in the state of Rio Grande do Sul. Canamex was
acquired in December 2003 and has two plants in Mexico,

     Ultracargo conducts chemical products and fuel logistics through its
subsidiaries Transultra and Tequimar, respectively. Transultra provides
transportation services throughout Brazil, as well as in Argentina and Chile.
Tequimar maintains storage facilities at four port terminals located near two
of the main petrochemical complexes in Brazil: Camacari and Sao Paulo.


                                      54
<PAGE>

D.   Property, Plants and Equipment

     Ultragaz

     Plant. Ultragaz's LPG distribution network includes 16 filling plants.
Ultragaz also operates LPG storage bases, known as satellite bases for
supplying our trucks. LPG is carried to the filling plants either via gas
pipelines from Petrobras' installations, or by tanker truck. When LPG
transportation is via gas pipeline the bases are known as primary and when
transportation is via tanker truck, the bases are known as secondary. Ultragaz
maintains storage facilities for LPG cylinders and satellite bulk distribution
plants at strategic locations in order to maintain supplies closer to its
customer bases and thus to reduce transportation costs. Substantially all of
the LPG transported by truck from Petrobras to Ultragaz's secondary plants is
transported by Ultracargo's fleet of tanker trucks on an arm's length basis.
LPG is stored in the filling plants in large LPG storage tanks with a capacity
of 60 tons per tank. In the case of LPG to be delivered in bulk, the LPG is
pumped directly from the storage tanks into the bulk tankers. In the case of
LPG to be delivered in cylinders, the LPG is pumped from the storage tanks into
a number of filling heads, which deliver the LPG cylinders.

     The following table sets forth the total current storage and total filling
capacity and monthly actual filling volumes during 2003 for each of Ultragaz's
primary and secondary filling stations and satellite stations.


<TABLE>
    Location             Base            Type       Total Storage           Filling        Filling average    Spare Capacity
                                                       Capacity            Capacity
                                                        (tons)           (ton / month)       (ton/month)       (% capacity)
---------------------------------------------------------------------------------------------------------------------------

<S>              <C>                  <C>            <C>                 <C>               <C>                <C>
Southeast        Capuava              Primary                    720          13,136                11,656             11%
                 Santos               Primary                    986           3,727                 2,809             25%
                 Sao Jose dos Campos  Primary                    960           5,164                 3,856             25%
                 Rio de Janeiro       Primary                    500           6,650                 5,240             21%
                 Barueri              Secondary                1,500           4,100                 4,220               -
                 Araraquara           Satellite                   60
                 Sao Paulo            Satellite                  600
                 Maua                 Satellite                  480
                 Pouso Alegre         Satellite                   60

Southern-Central Paulinia             Primary                  1,428          11,786                 8,832             25%
Area             Araucaria            Primary                    240           9,677                 6,623             32%
                 Canoas               Secondary                  720           3,752                 2,588             31%
                 Betim                Secondary                  938           4,316                 3,409             21%
                 Ribeirao Preto       Secondary                  180           3,950                 4,350               -
                 Goiania              Secondary                  360           3,512                 1,906             46%
                 Sao Jose do Rio      Satellite                   60
                 Preto
                 Aracatuba            Satellite
                                                                 180
                 Bauru                Satellite
                                                                  60
                 Cascavel             Satellite                  120
                 Londrina             Satellite
                                                                  60
                 Blumenau             Satellite
                                                                  60
                 Chapeco              Satellite
                                                                  60
                 Florianopolis        Satellite                   60
                 Joinville            Satellite                   60
                 Caxias do Sul        Satellite
                                                                  60
                 Joacaba              Satellite
                                                                  60
                 Dois Vizinhos        Satellite                   60
                 Palhoca              Satellite                   32
                 Ponta Grossa         Satellite                   57
                 Sorocaba             Satellite                  115

Northeast        Mataripe             Primary                  1,380          11,563                 9,352             19%
                 Suape                Primary                    500           3,292                 3,402               -
                 Caucaia              Secondary                  420           4,164                 3,675             12%
                 Aracaju              Secondary                  240           4,169                 2,355             44%
                 Ilheus               Secondary                  360           3,861                 2,274             41%
                 Maceio               Satellite                  692
                 Juazeiro             Satellite                   60
                 Joao Pessoa          Satellite                   60
                 Piraja               Satellite                   60

TOTAL                                                         14,608          96.819                76,547             21%
                                                            ---------       --------              ----------         -----
</TABLE>


                                      55
<PAGE>


     In addition, Ultragaz maintains headquarters in the city of Sao Paulo and
regional offices in the areas in which it operates. Ultragaz also maintains 65
retail stores, including outlets at each of its plants.

     Equipment. LPG cylinders are manufactured from steel and are fitted with a
collar at the top of the cylinder and a rim at the base of the cylinder. The
cylinders are fitted with a valve through which the cylinder is filled and
through which the LPG is discharged during use. The 13 kg cylinders, which are
used in the bottled segment, also have a safety plug, which is designed to
discharge LPG if the temperature in the cylinder exceeds a certain limit. 13 kg
cylinders are approximately 46 centimeters high, one meter in circumference and
weigh approximately 26.6 kg when full. Ultragaz's cylinders are painted blue.
The company believes that the distinctive blue color has been important in
developing consumer perception of the Ultragaz brand name.

     Ultragaz has a number of alternative sources of supply for most types of
cylinders and tanks. Each cylinder manufactured for Ultragaz is stamped with
the Ultragaz logo and the month and year of manufacture by the manufacturer. In
2003, the average market price per cylinder for 13kg cylinders, 20kg cylinders
and 45kg cylinders was approximately R$45.42, R$237.00 and R$184.20,
respectively.

     The tanker trucks are used to distribute LPG in both the small bulk and
large bulk markets. In the small bulk market, Ultragaz uses the "UltraSystem"
trade name and delivers LPG using bob-tail trucks, which are fitted with a
longer delivery hose, in order to be able to access tanks of commercial and
smaller industrial users. The bob-tail trucks have a capacity ranging from 6 to
9 tons and can fill tanks with a capacity ranging from 45kg to 125kg. In the
large bulk markets, Ultragaz delivers LPG in larger tanker trucks with an
average capacity of 20 tons, which fill tanks with a capacity ranging from 30
to 60 tons.


     Oxiteno

     Oxiteno has four plants in Brazil: Camacari, in the northeast complex, the
Maua plant in the Sao Paulo complex, the Triunfo plant in the southern complex
and the Tremembe plant in the state of Sao Paulo. On average, Oxiteno spends
approximately R$30 million per year in maintenance of its equipment and
facilities.

     The following table sets forth the ethylene oxide production capacity of
Oxiteno's plants in Brazil:

                     Units                    Current Ethylene Capacity
                     -----                    -------------------------
                                              (in metric tons per year)
                     Camacari                                   260,000
                     Maua                                        52,000
                     Tremembe                                         -
                     Triunfo                                          -
                     Total                                      312,000


     Oxiteno generally produces its commodity petrochemical products through
continuous production processes and produces specialty chemicals through batch
processes.

     Camacari Plant. The Camacari plant, located in the Northeast Complex, was
built by Oxiteno and commenced production in 1978. The Camacari plant produces
ethylene oxide and ethylene oxide derivatives, such as ethylene glycols,
ethanolamines, glycol ethers and ethoxylated derivatives. In addition to the
production units, the Camacari plant has drumming, warehouse, and cogeneration
of electricity and steam and maintenance facilities. As of December 31, 2003,
Oxiteno had 215 employees at the Camacari plant.

     In late 1994, Oxiteno commenced a major modernization project at the
Camacari plant, involving the addition of 105 thousand tons of ethylene oxide
capacity. The new capacity began producing ethylene oxide in July 1997. Since
the scale of production is one of the most important factors in the costs of
production of ethylene oxide and derivatives, the Camacari expansion has
contributed to a significant reduction of its unit costs. Oxiteno believes that
the scale of ethylene oxide production at its Camacari plant is comparable with
some of the world largest ethylene oxide plants. Oxiteno also believes that the
Camacari plant is currently the largest ethylene oxide plant in Latin America.


                                      56
<PAGE>


     The following table sets forth the current production capacity of the
Camacari plant for each of its principal products.

          Units                                        Current Capacity
          ------------------------------------------   -------------------------
                                                       (in metric tons per year)
          Ethylene Oxide                                            260,000
          Ethylene Glycols                                          285,000
          Ethanolamines                                              45,000
          Glycol Ethers                                              25,000
          Ethoxylated derivatives                                   100,000


     In the table above and in the tables immediately following, the capacity
shown for each derivative of ethylene oxide represents the maximum amount of
such product which Oxiteno could produce each year based on the capacity of the
relevant production unit. As Oxiteno's capacity for ethylene oxide derivatives
exceeds its ethylene oxide production capacity, Oxiteno can not produce the
maximum amount of each derivative product in any year and, accordingly, actual
production of ethylene oxide derivatives is less than its capacity.

     However, the excess production capacity of ethylene oxide derivatives
provides a degree of operating flexibility which enables the company to
mitigate the effects of reductions in demand for certain products resulting
from downturns in the petrochemical business cycle. During such downturns,
Oxiteno is able to switch production partially to products, which are less
affected by the cyclical downturn, re-manage its ethylene oxide output between
manufacturing units for derivative products depending on relative demand,
besides the added flexibility such an excess provides in redirecting installed
capacity.

     Maua plant. The Maua plant, located in the Sao Paulo Complex, was the
first plant built by Oxiteno and commenced production in 1974. The Maua plant
has process units for ethylene oxide, ethylene glycols, glycol ethers, glycol
ether acetates, natural alcohols and ethoxylated derivatives. In addition to
the production units, the plant has drumming, storage, warehouse and
maintenance facilities and also houses Oxiteno's principal research and
development laboratory. As of December 31, 2003, Oxiteno had 240 employees at
the Maua plant.

     In 2003, the Maua plant started up a unit dedicated to the production of
sodium isethionate, a surfactant which is one of the principal components used
in the manufacturing of soap. This project was developed in conjunction with
Oxiteno's client. In the light of this project, the client awarded Oxiteno with
the Latin American supplier of the year award.

     The following table sets forth the current production capacity of the Maua
plant for each of its principal products.

          Units                                        Capacity
          ------------------------------------------   -------------------------
                                                       (in metric tons per year)
          Ethylene Oxide                                             52,000
          Ethylene Glycols                                           25,000
          Glycol Ethers                                              35,000
          Acetates                                                   32,000
          C4+C5 Alcohols                                             10,000
          Ethoxylated Derivatives                                    25,000
          Alkylation                                                 17,300
          Esterification                                              3,100
          Emulsification                                              1,300
          Hydraulic fluids                                           30,000


     Tremembe Plant. The Tremembe plant, located at Bairro dos Guedes,
Tremembe, in the state of Sao Paulo, has three principal production units, a
sulfonation/sulfation unit and two multipurpose units. The Tremembe plant
commenced production in 1970 and was subsequently acquired by us in 1985. In
addition to the principal


                                      57
<PAGE>

production units, other facilities at the plant include a quality control
laboratory, a warehouse and a maintenance shop. As of December 31, 2003,
Oxiteno had 108 employees at the Tremembe plant.

     The following table shows the current capacity of the principal units at
the Tremembe plant.

          Units                                        Capacity
          ------------------------------------------   -------------------------
                                                       (in metric tons per year)
          Esterification                                              5,000
          Amidification                                               5,000
          Polymerization                                              2,500
          Specialties                                                 2,000
          Sulfonation/Sulfation                                      30,000
          Betaines                                                   10,000
          Hydraulic fluids                                            3,000
          Naphthalenes Sulfonates                                     3,000


     Triunfo Plant. The Triunfo plant is located in the Southern Complex. The
Triunfo plant was built by Oxiteno and started production in October 1989. It
had been inactive for two years when, in 1995, Oxiteno recommenced production
of MEK at this plant. The Triunfo plant has two process units, one for the
production of secondary butyl alcohol, which is used in the production of MEK,
and one for the production of MEK. In addition to these production units, the
Triunfo plant also has warehouse and maintenance facilities. As of December 31,
2003, Oxiteno had 53 employees at the Triunfo plant.

     The following table shows the current capacity of the principal units at
the Triunfo plant.


          Units                                        Capacity
          ------------------------------------------   -------------------------
                                                       (in metric tons per year)
          Methyl-Ethyl-Ketone (MEK)                                 40,000
          Sec Butyl Alcohol                                         35,000


     With the acquisition of Canamex in December 2003, Oxiteno acquired two
specialty chemical plants in Mexico. The Coatzacolacos plant has a production
capacity of 28,800 tons per year of ethoxylates and has 33 employees. The
Guadalajara plant has a production capacity of 24,000 tons per year of
specialty chemicals and a labor force of 87.

     The following table sets forth Oxiteno's principal overseas production
units, namely those of CANAMEX:


          Units                                        Capacity
          ------------------------------------------   -------------------------
                                                       (in metric tons per year)
          Ethoxylated Derivatives - Coatzacoalcos plant               28,800
          Ethoxylated Derivatives - Guadalajara plant                 12,000
          Esterification - Guadalajara plant                          12,000


     In 2003 CANAMEX operated at 25% of its installed capacity.


     ISO 9001 Quality Systems Certifications. In 1995, the management and the
research and development departments of the Maua and Camacari plants were
awarded the ISO 9001 quality system certification. The Tremembe plant obtained
the ISO 9001 certification in 1996; and the Triunfo plant obtained the ISO 9001
certification in 1997. The ISO 9001 certification acknowledges the adequate
maintenance of a management system


                                      58
<PAGE>


committed to quality improvement in all of Oxiteno's departments. In 2001, each
department at Oxiteno was awarded the ISO 9001 certification in accordance with
the 2000 requirements.

     ISO 14001 Environment Certification. In January 2001, the management and
the research and development departments of the Triunfo plant obtained the ISO
14001 certification. In 2002, Triunfo plant's other areas obtained this
certification. The ISO 14001 certification acknowledges the adequate
maintenance of a management system committed to environmental preservation.

     SA 8000 Certification. Oxiteno was the first chemical and petrochemical
company in Brazil to receive the SA 8000 certification, which establishes
quality management systems requirements related to social responsibility. The
SA 8000 certificate addresses issues such as health, safety, labor relationship
and compliance with applicable legislation.

     QS 9000 Certification. In 1998, Oxiteno obtained the QS 9000 certificate,
which establishes management requirements for the automobile sector, in
connection with its sales of chemical products to this sector. Oxiteno was the
first Brazilian company to receive this certification.


     Ultracargo

     The following table sets forth the principal products stored at, and the
storage capacity of, Ultracargo's plants.


<TABLE>
Plant                    Capacity (in m3) Product Lines
--------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>
Aratu (BA)                   151,450      Glycols, aromatics, acrylates, acrylonitrile, EDC, TDI, normal
                                          paraffins, linear alkyl benzene (LAB), linear alkyl sulphonate-LAS,
                                          methanol, ethers, alcohols, caustic soda, vegetal oil, fuels
Suape (PE)                    34,850      Fuels, VAM, acetic acid, styrene, butadiene
Santos (SP)                   11,000      Vinyl Chloride Monomer
Paulinia Granel (SP)           1,881      PET
Paulinia Quimico (SP)          8,600      Phenol, LAB, LAS
Total                        207,781
-----                        -------
</TABLE>


ITEM 5.           OPERATING AND FINANCIAL REVIEW AND PROSPECTS


A.   Operating Results

     You should read this discussion together with our consolidated financial
statements, including the notes thereto, and other financial information
included elsewhere in this annual report. Our consolidated financial statements
have been prepared in accordance with accounting practices adopted in Brazil
and the accompanying notes contain a description of the principal differences
between such practices and U.S. GAAP, and a reconciliation to U.S. GAAP of net
income and shareholders' equity for the three years ended December 31, 2003.
Our consolidated financial statements for the fiscal years 2003 and 2002 ending
December 31, 2003 and 2002 respectively, were audited by the independent
registered public accounting firm, Deloitte Touche Tohmatsu Auditores
Independentes. Our consolidated financial statements for the fiscal year ended
December 31, 2001 were audited by the independent registered public accounting
firm, PricewaterhouseCoopers.


     Overview

     Our three principal businesses are:

     o    the LPG distribution business, consolidated under Ultragaz;

     o    the chemical and petrochemical business, consolidated under Oxiteno;
          and


                                      59
<PAGE>


     o    chemical products and fuel logistics, consolidated under Ultracargo.


     The following table sets forth the contribution of each of these
businesses to our net sales in the three years ended December 31, 2003.
Intercompany transactions are eliminated upon consolidation at the
parent-company level.

<TABLE>
                                       Year Ended December 31,
                 ---------------------------------------------------------------------
                       2003                      2002                      2001
                 -----------------         -----------------         -----------------
                 Net Sales     %           Net Sales     %           Net Sales     %
                 ---------   -----         ---------   -----         ---------   -----
                              (in thousands of reais except percentages)
<S>               <C>        <C>            <C>        <C>            <C>        <C>
Ultragaz          2,622.3    65.6%          1,942.1    64.9%          1,380.9    60.5%
Oxiteno           1,237.8    30.9%            956.1    31.9%            832.1    36.4%
Ultracargo          140.2     3.5%             96.3     3.2%             71.7     3.1%
                 ---------   -----         ---------   -----         ---------   -----
Total             4,000.3   100.0%          2,994.5   100.0%          2.284.7   100.0%
                 =========   =====         =========   =====         =========   =====
</TABLE>


     Brazilian Economic Background

     Since most of our operating businesses are located in Brazil, we are
significantly impacted by Brazil's economic and social conditions, including,
but not limited to, gross domestic product, or GDP, growth rates, the domestic
rate of inflation and exchange rate fluctuations.


     Gross Domestic Product

     After the introduction of the Real Plan in 1994, the Brazilian economy
experienced some years of strong economic growth. However, in 1998, economic
growth slowed down, hastened by a sharp devaluation of the Real and a GDP
increase of only 0.8% reported in 1999. On the other hand, in 2000, Brazil's
GDP grew by 4.4% due to a recovery in consumer confidence. In 2001, Brazil's
GDP grew by only 1.5%, largely due to the lack of energy supply, the terrorist
attacks of September 11, and the Argentine crisis. In 2002, Brazil's GDP grew
by 1.5%, as a result of the political instability surrounding the presidential
elections of October 2002, which caused foreign exchange rate devaluation, and
an increase in interest rates, and undermined consumer confidence. In 2003, the
GDP fell 0.2%, largely a reflection of the economic policy of holding the basic
interest rate at high levels throughout the year as a means of controlling
inflation.

     The operations most impacted by Brazilian GDP growth are sales of LPG to
the commercial and industrial customers, Oxiteno's sales to the domestic market
and Ultracargo's logistics operations. In addition, sales of LPG to residential
customers are affected by the level of household income.

     Inflation and Currency Fluctuations

     Our cash operating expenses are substantially in reais and tend to
increase with Brazilian inflation. The inflation rate, as measured by the
Indice Geral de Precos -- Mercado, or IGP-M, was 1.8% in 1998. The inflation
rate increased to 20.1% in 1999 as a result of the devaluation of the Real
beginning in January 1999, and decreased to 10.0% in 2000 and 10.4% in 2001. In
2002, the inflation rate as measured by the IGP-M increased to 25.3%,
reflecting the foreign exchange rate devaluation of 52.3%, largely due to
uncertainties and risks inherent in the Brazilian presidential succession
campaign. In 2003, the Real appreciated 18% against the US dollar, consequently
diminishing inflationary pressures and resulting in an IGP-M of 8.7%. Future
governmental actions, including actions to adjust the value of the Real in
relation to the dollar, may increase inflation.

     The principal foreign exchange risk we face arises from certain U.S.
dollar denominated costs and expenses. Although a substantial part of our debt
is dollar-denominated, it is currently hedged against currency devaluation
through the use of various swap financial instruments. Additionally, a
significant part of our raw materials is also denominated or indexed to the
U.S. dollar. A large part of our sales is denominated in reais, although prices
practiced by the chemical segment are benchmarked to prices prevailing in the
international markets and


                                      60
<PAGE>


denominated in US dollars. Hence we are exposed to foreign exchange rate risks
which could negatively impact our businesses, financial situation and operating
results as well as the capacity to service our debt.

     The table below shows the inflation rate for the periods indicated, as
measured by the IGP-M as well as the depreciation of the real against the U.S.
dollar.


                                                       Year Ended December 31,
                                                      -------------------------
Index                                                  2003      2002     2001
----------------------------------------------------  -------   -------  ------
 General Price Index--IGP-M                             8.7%     25.3%    10.4%
 Devaluation of the real against the U.S. dollar      (18.2)%    52.3%    18.7%


     We manage the foreign exchange risk associated with the scheduled payments
under the terms of our U.S. dollar indebtedness by investing in U.S.
dollar-denominated securities and foreign currency/interest swap contracts,
under which we pay variable interest in Reais based on the interbank
certificate of deposit rate, or CDI, and receive fixed interest in U.S.
currency. As of December 31, 2003 our total debt denominated in foreign
currency was R$448.7 million, including pre-export finance contracts and import
payables. At the same date our total asset position in foreign currency was
R$500.9 million, composed of financial investments indexed to U.S. dollars,
managed against fluctuations of exchange rates and foreign currency
receivables. See "Item 11. Quantitative and Qualitative Disclosures about
Market Risk - Foreign Exchange Risk" and Note 12 and 17 to our consolidated
financial statements.


     Government Policies

     Brazilian economic, fiscal, monetary and social policies and factors have
affected us in the past and will affect us in the future. See "Item 3. Key
Information--Risk Factors--Risks relating to Brazil" for a description of some
of these policies and factors that can affect our results.


     Discussion of Critical Accounting Policies and Estimates

     The presentation of our financial condition and results of operations
requires our management to make judgments regarding the effects of matters that
are inherently uncertain on the carrying value of our assets and liabilities
and may affect the reported amount of them as well as our revenues and
expenses. Actual results may differ from those estimated under different
variables, assumptions or conditions, even though our management believes that
its accounting estimates are reasonable. The following paragraphs review the
critical accounting estimates that management considers most important for
understanding our financial condition, results of operations and cash flows. An
accounting estimate is considered a critical accounting estimate if it meets
the following criteria:

o    The accounting estimate requires management to make assumptions about
     matters that were highly uncertain at the time the accounting estimate was
     made; and

o    Different estimates that management reasonably could have used for the
     accounting estimate in the current period, or changes in the accounting
     estimate that are reasonably likely to occur from period to period, would
     have a material impact on our financial condition, results of operations
     or cash flows.


     We have identified the following seven of our accounting policies that can
be considered critical:

     o    revenue recognition and accounts receivable;

     o    costs and inventory valuation;

     o    impairment of assets;


                                      61
<PAGE>


     o    deferred taxes; and

     o    contingent liabilities

     o    fair value of financial instruments

     o    useful life of property, plant and equipment



     o    Revenue Recognition and Accounts Receivable

     Revenue is recognized when title and risk of loss of the sold goods have
been transferred to the customer and collection of the resulting receivables is
reasonably assured. Revenue from local product sales is recognized at time of
delivery and acceptance by customer. Sales of services are recognized at time
of performance. In the LPG segment, 4.8% of our sales are cash sales. Our
remaining sales in the LPG segment as well as our domestic sales in the
chemicals segment and our sales in the transportation and storage businesses
are credit sales, with a collection period in 2003 of 23 days on average for
Ultragaz, 37 days on average for Oxiteno and 25 days on average for Ultracargo-
see note 24V(b) to our consolidated financial statements for additional
information about our credit policies.

     Revenue from our exports in the chemical segment is recognized when
products are shipped to the customer. As from shipment date, shipped product
risks are transferred to the customer in accordance with International Chamber
of Commerce rules. The average collection period for exports is 46 days after
shipping.

     We maintain allowances for doubtful accounts for estimated losses
resulting from the subsequent inability of our customers to make required
payments. The allowance for doubtful accounts is recorded in an amount we
consider sufficient to cover any probable losses on realization of our accounts
receivable from our customers, as well as other receivables, and is included as
selling expenses; no adjustment is made to net sales revenue. In order to
establish the allowance for doubtful accounts, our management constantly
evaluates the amount and characteristics of our accounts receivable. When
significant delays occur and the likelihood of receiving these payments
decreases, a provision is made. In case receivables in arrears are guaranteed
or there are reasonable grounds to believe they will be paid, no provision is
made. If the financial conditions of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required in future periods. However, because we can not
predict with certainty the future financial stability of our customers, we can
not guarantee that our reserves will continue to be adequate. Actual credit
losses may be greater than the allowance we have established, which could have
a significant impact on our selling expenses. See Note 24V(i) to our
consolidated financial statements for additional information about our
allowance for doubtful accounts.

     o    Costs and inventory valuation

     Inventories are comprised of finished goods, raw materials, cylinders for
resale and materials for consumption. Inventories are stated at the average
cost of acquisition or production, or net realizable value, whichever is lower.
This net realizable value compares the selling price to third parties during
the month in question to the average recorded cost. Should the average recorded
cost be higher than the selling price, there is a provision for losses on the
realization value of inventory, the latter being adjusted to the selling price.
For periods presented in the consolidated financial statements included herein,
inventories of raw materials were recorded at average acquisition cost.

     o    Impairment of assets

     We review the carrying value of property, plant, and equipment for
impairment testing for events and circumstances which indicate that the
carrying value of an asset may not be recoverable from the estimated future
cash flows expected to result from its use and eventual disposition. In cases
where undiscounted expected future cash flows are less than the carrying value,
an impairment loss is recognized equal to an amount by which the carrying value
exceeds the fair value of assets. This has not occurred to date, and there are
no provisions for impairment recorded in our consolidated financial statements.
In particular, in order to estimate the fair value of long-lived assets, we
typically make various assumptions about the future prospects for the business
relating to such


                                      62
<PAGE>


asset, consider market factors specific to that business and estimate future
cash flows to be generated by that business. Assumptions and estimates about
future values and remaining useful lives are complex and often subjective. They
can be affected by a variety of factors, including external factors such as
industry and economic trends, and internal factors such as changes in our
business strategy and our internal forecasts. Changes in assumptions and
estimates that have a significant negative impact on our projected results
could materially impact our reported financial results.


     o    Deferred Taxes

     We recognize deferred tax assets and liabilities based on the differences
between the financial statement carrying amounts and the tax basis of assets
and liabilities. We periodically review the deferred tax assets for
recoverability and establish a valuation allowance, as required, based on
historical taxable income, projected future taxable income, and the expected
timing of the reversals of existing temporary differences. In the event we or
one of our subsidiaries operate at a loss or are unable to generate sufficient
future taxable income, or if there is a material change in the actual effective
tax rates or time period within which the underlying temporary differences
become taxable or deductible, we evaluate the need to establish a valuation
allowance against all or a significant portion of our deferred tax assets,
resulting in an increase in our effective tax rate, thereby decreasing net
income. If we determine that we can realize a deferred tax in excess of our net
recorded amount, we decrease the valuation allowance, thereby increasing net
income. Significant management judgement is required in determining any
valuation allowance. The principal uncertainty relates to the likelihood of
future taxable income from the subsidiary that generated the deferred tax
asset. A change in our projections of profitability could result in the need to
record a valuation allowance against deferred tax assets, resulting in a
negative impact of future results. See Note 20 to our consolidated financial
statements for additional information on taxes.

     o    Contingent liabilities

     We are currently involved in certain legal and administrative proceedings
that arise from our normal course of business as described in Note 18 to our
consolidated financial statements and in "Item 8. Financial Information -
Consolidated Statements and Other Information - Legal Proceedings" of this
annual report. We believe that the extent to which these contingencies are
recognized in our consolidated financial statements is adequate. It is our
policy to record accrued liabilities in regard to contingencies that could have
a material adverse impact on the result of our operations or our financial
condition, to the extent not covered by insurance, and that are likely to occur
in the opinion of the Company's management, based on information available to
the Company including information obtained from its legal advisors. Future
results of operations for any particular quarterly or annual period could be
materially affected by changes in our assumptions, by the effectiveness of our
strategies relating to these proceedings, by future developments in each matter
being discussed or by changes in approach, such as a change in settlement
strategy in dealing with these matters.

     o    Fair value of financial instruments

     We enter into foreign currency swap agreements in order to hedge our
foreign exchange exposure. Under accounting practices adopted in Brazil, these
swap agreements are recorded at their net settlement prices as determined on
each balance sheet date in accordance with their contractual terms. In applying
U.S. GAAP to our swap agreements we adopted SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities". The accounting required under
SFAS 133 is broader than under accounting practices adopted in Brazil,
especially with respect to the overall treatment and definition of a
derivative, when to record a derivative, the classification of derivatives, and
when to designate a derivative as a hedge. Under this method of accounting we
adjusted our foreign currency swaps to their fair values, with changes in fair
values being recognized in earnings. Note 24 to our financial statements
provides additional information regarding the accounting of our swap
agreements.

     In order to estimate fair values, we consider several variables, such as
interest rates, discount rates, foreign exchange rates and future cash flows.
Our most important source of information concerning these variables is the
market projections of future exchange and interest rates provided by the
Brazilian Mercantile & Future Exchange (BMF). We believe BMF to be the most
adequate and reliable source of information available for our calculations.


                                      63
<PAGE>


However, given the volatility inherent in financial markets, estimates
concerning the variables used to calculate fair values are subject to constant
change. As a consequence, our judgment related to, among other issues, the
behavior of these variables, the selection of sources of information and the
timing of calculation, directly affects the fair values of our swaps and the
amount of gains or losses recorded in the income statement under U.S. GAAP.


     o    Useful life of property, plant and equipment

     Our adopted depreciation rates are based on estimated useful lives of the
underlying assets, derived from historical information available to us. We
describe the depreciation rates we apply to our property, plant and equipment
in Note 10 to our financial statements. In the event that we were to reduce the
remaining useful lives of our property, plant and equipment in future periods,
depreciation expense would increase, resulting in a negative impact on future
results.


     Results of Operations

     The following table shows a summary of our results of operations for the
fiscal years 2003, 2002 and 2001, according to the accounting practices adopted
in Brazil:

<TABLE>
                                                                      Year ended December 31,
                                                                      -----------------------
                                                             (in millions of reais, except percentages)
                                             ---------------------------------------------------------------------
                                                   2003          2002          2001        Var 03-02     Var 02-01
                                             ---------------------------------------------------------------------
<S>                                               <C>           <C>           <C>              <C>          <C>
  Net Sales Revenues                              4,000.3       2,994.5       2,284.7          34%          31%
  Cost of Goods Sold                            (3,196.4)     (2,247.1)     (1,698.3)          42%          32%
  Gross Profit                                      803.9         747.4         586.4           8%          27%
  Selling, General and Administrative             (458.9)       (382.3)       (317.7)          20%          20%
  Expenses
  Operating Income Before Financial Items           351.6         365.5         278.9         (4%)          31%
  Net Financial Income, (Expense)                  (57.2)          28.5        (31.1)       (301%)         192%
  Non-operating Income (Expense)                      1.0        (44.1)        (17.0)         102%       (159%)
  Equity in earnings of affiliates                  (0.5)         (1.7)           1.9          71%       (189%)
  Minority Interest                                 (3.6)        (54.5)        (73.0)        (93%)        (25%)
  Net Income                                        246.4         222.3         132.2          11%          68%
  ----------------------------------------------------------------------------------------------------------------
</TABLE>


     Year Ended December 31, 2003 Compared to Year Ended December 31, 2002


     Net Sales. Net sales increased by 34%, to R$ 4,000.3 million in 2003 from
R$ 2,994.5 million in 2002.

     Ultragaz's net sales were R$ 2,622.7 million in 2003, a growth of 35% in
relation to the R$ 1,942.7 million in 2002. The falling disposable incomes in
Brazil, mainly a consequence of the weak economic activity which characterized
the first semester of 2003, allied with the increase of 42% in Petrobras'
refinery LPG prices to distributors, which contributed to the retail prices
increase during 2003, contributed to an overall 5.7% volume decline in the LPG
distribution market. Ultragaz reported a year over year increase of 5% in sales
volume to 1,362.1 thousand tons from 1,302.7 thousand tons, principally due to
the acquisition of Shell Gas in August 2003. Excluding the sales volume from
the Shell Gas, Ultragaz 2003 sales volume decreased 4.3%.

     Oxiteno's net sales increased to R$ 1,237.8 million in 2003, a 29% growth
in relation to R$ 956.1 million in 2002. Oxiteno's sales volume was 474.2
thousand tons, a growth of 9% compared with 433.5 thousand tons in 2002, mainly
a result of (i) the greater penetration in the agrochemical segment; (ii) the
acquisition of new clients, including through import substitution, in several
of Oxiteno's segments; (iii) the increase of exports and (iv) the acquisition
of Canamex. The growth in sales volume, which accounted for approximately 30%
of net sales increase, was accompanied by (i) a price improvement in U.S.
dollars, in the company's principal products on the international market; and
(ii) a better sales mix, thanks to an improvement in the domestic market demand
in the second half of 2003. These three effects accounted for approximately 79%
of net sales increase.


                                      64
<PAGE>


     Ultracargo's net sales increased to R$ 177.1 million in 2003, a growth of
35% over 2002, when net sales were R$ 131.5 million. The improvement in net
sales reflects investments in expanding services, mainly related to new clients
in the transportation segment and to the 20 thousand m3 of additional capacity
at the Aratu terminal in the storage segment. These have resulted in a 26%
increase in total kilometers covered by the truck fleet and a 8% increase in
product volumes held in storage.


     The following table illustrates the change in sales in each of our
segments:


                                       Year ended December 31,
                              (in millions of Reais, except percentages)
                             ---------------------------------------------
                                   2003           2002       Var 03-02
                             --------------------------------------------
Ultragaz                          2,622.7       1,942.7          35%
Oxiteno                           1,237.8         956.1          29%
Ultracargo                          177.1         131.5          35%


     Cost of Goods Sold and Gross Profit. The cost of goods sold increased by
42% to R$ 3,196.4 million in 2003 from R$ 2,247,1 million in 2002.

     Ultragaz's cost of goods sold increased 42% to R$ 2,256.3 million in 2003
from R$ 1,585.1 million in 2002, largely the result of increased sales volume
and the higher year-on-year LPG prices charged by Petrobras to the distributors
(refinery prices).

     Oxiteno's cost of goods sold rose by 40% to R$ 863.6 million in 2003 from
R$ 614.8 million in 2002. This increase was mainly due to the higher sales
volumes as well as increase in ethylene prices, the later directly impacted by
stronger naphtha prices on the international market. In 2003, the increase in
the cost of ethylene (including increases in prices and volumes consumed)
accounted for 49% of Oxiteno's increase in the cost of goods sold. In addition,
Oxiteno increased its sales volume of specialty chemicals, which have a higher
unit cost in spite of better margins, by 11% from 2002 to 2003. Ultracargo's
cost of goods sold increased 38% to R$ 113.9 million in 2003 from R$ 82.8
million in 2002. This increase is a reflection of increased nitrogen costs,
widely used for cleaning storage tanks, and increased product transportation
costs, in turn due to higher third-party freights, in addition to the increased
costs of fuel, tires and spare parts for maintenance.

     Our gross profit increased by 8% to R$ 803.9 million in 2003 from R$ 747.4
million in 2002. Ultragaz's gross profit in 2003 was R$ 366.3 million, 2%
higher than the gross profit of R$ 357.6 million reported in 2002. At Oxiteno,
gross profit was R$ 374.2 million in 2003, a 10% growth compared with R$ 341.3
million reported in 2002. At Ultracargo, gross profit was R$ 63.2 million in
2003, corresponding to an increase of 30% compared with R$ 48.6 million in
2002.

     Selling, General and Administrative Expenses. Our selling, general and
administrative expenses grew 20% to R$458.9 million in 2003 from R$382.3
million in 2002.

     At Ultragaz, selling general and administrative expenses increased by 17%
to R$ 254.1 million in 2003 from R$ 217.8 million in 2002. This increase was
the result of (i) the 24% increase in depreciation and amortization to R$95.1
million in 2003 from R$ 76.7 million in 2002, due to the investments of R$
114.4 million in fixed and deferred assets in 2003; (ii) the acquisition of
Shell Gas and; (iii) the increase in payroll expenses due to collective labor
agreements during the year.

     At Oxiteno, selling, general and administrative expenses were up by 20% to
R$ 171.2 million in 2003 from R$ 142.4 million in 2002, principally the result
of an increase in selling and commercial expenses to R$ 76.9 million in 2003
from R$ 53.6 million in 2002, due to the increase in sales volume and in the
cost of freight.

     Ultracargo's selling, general and administrative expenses rose 25% to R$
39.4 million in 2003 from R$ 31.5 million in 2002. The increase was a function
of higher general and administrative expenses principally as a result of wage
increases following collective labor agreements negotiated in 2003 and higher
headcount, related to increased client base, notably in the transportation
segment.


                                      65
<PAGE>


     Operating income before financial items. Our operating income before
financial items decreased by 4% to R$ 351.6 million in 2003 from R$ 365.5
million in 2002. This was mainly a consequence of the increase of depreciation
and amortization expenses at Ultragaz. Ultragaz's operating income in 2003 was
R$ 113.2 million, R$ 30.0 million lower compared to 2002. At Oxiteno, operating
income was R$ 207.0 million in 2003, R$ 7.1 million higher than in 2002. At
Ultracargo, operating income was R$ 24.7 million in 2003, corresponding to an
increase of 40% compared with 2002.

     The following table illustrates certain consolidated income data as a
percentage of revenue for all periods indicated:


                                                      2003          2002
                                                    -----------------------
Net Sales Revenues                                    100%          100%
Cost of Goods Sold                                     80%           75%
          Gross Profit                                 20%           25%
Selling, General and Administrative Expenses           11%           13%
          Operating Income Before Financial Items       9%           12%


     Net Financial Income (Expense). We recorded a net financial expense of R$
57.2 million in 2003, compared with a net financial income of R$ 28.5 million
in 2002. This change was affected by (i) the reduction in financial
investments, principally due to the disbursement of R$ 170.6 million for the
acquisition of Shell Gas in August 2003, (ii) the reduction in the prevailing
interest rates on financial investments (benchmarked to the CDI -Interbank
Deposit Rate) and (iii) the effect of the appreciation of the Real on our net
foreign exchange exposure, which is mainly comprised of our overseas
investments (in US dollars).

     We ended the year with net debt5 of R$ 78.1 million. We had a net foreign
exchange rate exposure of R$ 52.2 million, comprised of US dollars financial
investments of R$ 21.1 million and R$ 31.1 million currency exposure related to
our investment in Canamex.



                [GRAPH OMITTED]                    [GRAPH OMITTED]


     Non-operating Income (Expense). We posted a net non-operating income of R$
1.0 million in 2003 versus a net non-operating expense of R$ 44.1 million in
2002, the latter due to the provision of R$ 40.5 million for our investment in
Nordeste Quimica S.A., a holding company with stakes in the chemical and
petrochemical industry in Brazil.

     Equity in earnings of affiliates. Our affiliates generated expenses of R$
0.5 million in 2003 compared to a loss of R$ 1.7 million in 2002, as a
consequence of a loss of R$ 1.0 million in the 2002 results of operations of
our affiliate Fabrica Carioca de Catalisadores S.A. - FCC, in which we held a
20% ownership interest and sold in November 2002.


----------------------------
5    Long and short term debt, net of short-term investments and cash and cash
     equivalents


                                     66
<PAGE>

     Minority Interest. The minority interest fell 93% to R$ 3.6 million in
2003 from R$ 54.5 million in 2002, largely as a result of the corporate
restructuring in 2002, pursuant to which Ultragaz and Oxiteno became wholly
owned subsidiaries. In accordance with the merger terms, we included 100% of
Ultragaz's and Oxiteno's results in our operating results as from July 1, 2002,
practically eliminating the impact of minority interest item in our results in
2003.

     Net Income. As a result of the foregoing, our net income grew 11% to R$
246.4 million in 2003 from R$ 222.3 million in 2002.

     EBITDA (1). Our EBITDA increased by 2% to R$ 498.5 million in 2003 from R$
487.3 million in 2002. Ultragaz's EBITDA fell 5% to R$ 208.2 million in 2003
from R$ 219.8 million in 2002. Oxiteno's EBITDA increased by 5% to R$ 243.2
million in 2003 from R$ 232.7 million in 2002. Ultracargo's EBITDA rose 37% to
R$ 40.0 million in 2003 from R$ 29.2 million in 2002.

     (1) EBITDA is a measure widely used to approximate operating income.
Management uses EBITDA as a measure of our ability to generate cash from our
operations. EBITDA is equal to operating income before financial items plus
depreciation and amortization expenses. EBITDA is not a measure of financial
performance under USGAAP or accounting practices adopted in Brazil, and is
included in this report exclusively for the reader's convenience. EBITDA should
not be considered an alternative to net income as a measure of operating
performance nor to operating cash flows as a measure of liquidity. The EBITDA
presented herein relates to the accounting practices adopted in Brazil, which
is used in the primary financial statements included in this filing. Such
EBITDA is expressly permitted by the standard-setter that establishes the
accounting principles generally accepted for use in such financial statements
and is included in the financial statements used in the Company's home country
jurisdiction and market.

     The tables below provide a reconciliation of operating income before
financial items to EBITDA:

                                    Ultrapar
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                            2003        2002
                                                            ----        ----
                             (in millions of Reais)
Operating income before financial items                     351.6       365.5
Depreciation and amortization                               146.9       121.8
EBITDA                                                      498.5       487.3
                                                            =====       =====

                                    Ultragaz
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2003        2002
                                                            -----       -----
                             (in millions of Reais)
Operating income before financial items                     113.2       143.2
Depreciation and amortization                                95.0        76.6
EBITDA                                                      208.2       219.8
                                                            =====       =====


                                      67
<PAGE>


                                    Oxiteno
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2003        2002
                                                            -----       -----
                             (in millions of Reais)
Operating income before financial items                     207.0       199.9
Depreciation and amortization                                36.2        32.8
EBITDA                                                      243.2       232.7
                                                            =====       =====

                                   Ultracargo
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2003        2002
                                                            -----       -----
                             (in millions of Reais)
Operating income before financial items                      24.7        17.6
Depreciation and amortization                                15.3        11.6
EBITDA                                                       40.0        29.2
                                                            =====       =====

     Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

     Net Sales. Our net sales increased by 31%, to R$ 2,994.5 million in 2002
from R$ 2,284.7 million in 2001.

     Ultragaz's net sales increased by 41%, to R$ 1,942.7 million in 2002 from
R$ 1,381.1 million in 2001, reflecting an increase in LPG sales prices during
the year. In January 2002, LPG refinery prices charged by Petrobras to
distributors began to be set by reference to international LPG prices, which
resulted in domestic prices becoming sensitive to the effects of the Real
depreciation against foreign currencies. The depreciation of the Real and the
increases in LPG prices worldwide resulting from the war with Iraq led to an
increase of approximately 123% in LPG refinery prices charged by Petrobras to
distributors and resulted in a 5% decrease in domestic consumption. At
Ultragaz, the resulting increase in sales prices was partially offset by a
reduction in volume sales by 3% to 1.30 million tons in 2002 from 1.34 million
tons in 2001.

     Oxiteno's net sales increased by 15%, to R$ 956.1 million in 2002 from R$
832.1 million in 2001. The depreciation of the Real made Oxiteno's products
more competitive in the international and the domestic markets, which
contributed to the sales increase. During 2002, Oxiteno's sales volume
decreased by 3%, largely due to ethylene supply restrictions from Braskem,
following a long maintenance stoppage during the first half of 2002. In this
scenario, Oxiteno sold a higher margin product mix, increasing its sales in
Brazil.

     Ultracargo's net sales increased by 25%, to R$ 131.5 million in 2002 from
R$ 105.4 million in 2001, mainly reflecting greater sales volumes in the
transportation segment due to expansion of its customer base.

                                          Year ended December 31,
                                 (in millions of Reais, except percentages)
                               -----------------------------------------------
                                      2002            2001       Var 02-01
                               ----------------------------------------------
Ultragaz                                  1,942.7       1,381.1          41%
Oxiteno                                     956.1         832.1          15%
Ultracargo                                  131.5         105.4          25%

     Cost of Goods Sold and Gross Profit. Our cost of goods sold increased by
32%, to R$ 2,247.1 million in 2002 from R$ 1,698.3 million in 2001.

     Ultragaz's cost of goods sold increased by 43%, to R$1,585.1 million in
2002 from R$1,105.2 million in 2001, principally due to increases on the
refinery prices charged by Petrobras to distributors following the deregulation
of


                                      68
<PAGE>


domestic LPG prices in January 2002. Since then, Petrobras has adopted the
international price plus the cost of importing the product as a benchmark.

     Oxiteno's cost of goods sold increased by 9%, to R$614.8 million in 2002
from R$563.8 million in 2001. This increase was largely due to increased
ethylene prices, which are very sensitive to foreign exchange rate devaluation
as well as higher international naphtha prices.

     Ultracargo's cost of goods sold increased by 31%, to R$ 82.8 million in
2002 from R$ 63.0 million in 2001. This increase reflected the higher prices of
nitrogen, the main raw material in the storage segment, and the increase in
diesel fuel.

     Our gross profit increased by 27%, to R$ 747.4 million in 2002 from R$
586.4 million in 2001. Both Ultragaz and Oxiteno contributed to this increase.
At Ultragaz, gross profit increased by 30%, to R$ 357.6 million in 2002 from R$
275.9 million in 2001. At Oxiteno, gross profit increased by 27%, to R$ 341.3
million in 2002 from R$ 268.4 million in 2001.

     Selling, General and Administrative Expenses. Our selling, general and
administrative expenses increased by 20%, to R$ 382.3 million in 2002 from R$
317.7 million in 2001.

     At Ultragaz, depreciation and amortization expenses increased by 24%, to
R$76.7 million in 2002 from R$61.9 million in 2001, due to an increase in fixed
and deferred assets in line with the investments amounting to R$ 130.6 million
in 2002. Selling expenses increased by 16% to R$ 76.6 million in 2002 from
R$66.1 million in 2001, due to sales promotions and marketing campaigns and the
creation of provisions for doubtful accounts in the amount of R$ 8.3 million in
December 2002. General and administrative expenses increased by 31%, to R$ 64.5
million in 2002 from R$ 49.4 million in 2001, due to increases in salaries
following changes in collective labor agreements and consultancy fees arising
from the implementation of integrated systems.

     At Oxiteno, selling, general and administrative expenses increased by 15%,
to R$ 142.4 million in 2002 from R$ 123.7 million in 2001, due to increased
general and administrative due to primarily of higher expenses associated with
our profit sharing program, collective wage agreements and expenses related to
consultancy and legal services provided in connection with the corporate
restructuring which took place in 2002.

     Operating income before financial items. Our operating income before
financial items increased by 31% to R$ 365.5 million in 2002 from R$ 278.9
million in 2001. This was mainly a consequence of (i) the improvement in
Oxiteno's competitiveness in the domestic market due to the depreciation of the
Real; and (ii) the increase in LPG prices, as a result of the 123% increase in
LPG refinery prices charged by Petrobras to distributors during 2002.
Ultragaz's operating income before financial items in 2002 was R$ 143.2
million, R$ 42.1 million higher compared to 2001. At Oxiteno, operating income
before financial items was R$ 199.9 million in 2002, R$ 53.3 million higher
than in 2001. At Ultracargo, operating income before financial items was R$
17.6 million in 2002, R$ 9.8 million lower compared to 2001.

                                                      2002          2001
                                                  ----------------------------
Net Sales Revenues                                         100%          100%
Cost of Goods Sold                                          75%           74%
    Gross Profit                                            25%           26%
Selling, General and Administrative Expenses                13%           14%
    Operating Income Before Financial Items                 12%           12%

     Net Financial Income (Expense). We registered net financial income of R$
28.5 million in 2002 compared with a net financial expense of R$ 31.1 million
in 2001, principally due to our policy of hedging foreign exchange liabilities.
Our consolidated cash position at December 31, 2002 was R$ 637.9 million, of
which R$ 546.3 million were in U.S. dollar-indexed financial investments. Our
total debt at December 31, 2002 was R$ 583.4 million, of which R$ 377.8 million
was denominated in foreign currency. Notwithstanding the disbursement of R$
208.0 million to Oxiteno's dissenting shareholders who decided to sell their
shares during the corporate restructuring, our net cash position at December
31, 2002 was R$ 54.5 million.


                                      69
<PAGE>


     Non-operating Income (Expense). Our net non-operating expenses increased
by 159% to R$ 44.1 million in 2002 from R$ 17.0 million in 2001 due to the
provisioning of R$ 40.5 million for our investment in Nordeste Quimica S.A. -
Norquisa, a company engaged in the chemical and petrochemical businesses. We
held a 8.7% ownership interest in Norquisa, and following the creation of
Braskem, we adjusted the value of this investment to reflect our estimate of
its market value. The R$ 17.0 million of non-operating expense in 2001 referred
mainly to net expense on disposal of investments, property, plant and
equipment.

     Equity in earnings of affiliates. This account registered a loss of R$ 1.7
million in 2002 compared to a gain of R$ 1.9 million in 2001 as a result of a
loss of R$ 1.0 million in the 2002 results of operations of our affiliate
Fabrica Carioca de Catalisadores S.A. - FCC, in which we held a 20% ownership
interest, which we sold in November 2002.

     Minority Interest. Minority interest decreased by 25%, to R$ 54.5 million
in 2002 from R$ 73.0 million in 2001. With the conclusion of the corporate
restructuring in 2002, Oxiteno and Ultragaz become our wholly-owned
subsidiaries. In accordance with the merger terms and conditions, we included
100% of Ultragaz's and Oxiteno's results in our results of operations beginning
July 1, 2002, practically eliminating our minority interest.

     Net Income. Our net income increased by 68%, to R$222.3 million in 2002
from R$132.2 million in 2001.

     The tables below provide a reconciliation of operating income before
financial items to EBITDA:

     EBITDA(1). Our EBITDA increased by 31%, to R$ 487.3 million in 2002 from
R$ 372.5 million in 2001. Ultragaz's EBITDA increased by 35%, to R$219.8
million in 2002 from R$ 163.0 million in 2001. Oxiteno's EBITDA increased by
32%, to R$ 232.7 million in 2002 from R$ 176.8 million in 2001.

     (1) EBITDA is a measure widely used to approximate operating income.
Management uses EBITDA as a measure of our ability to generate cash from our
operations. EBITDA is equal to operating income before financial items plus
depreciation and amortization expenses. EBITDA is not a measure of financial
performance under USGAAP or accounting practices adopted in Brazil, and is
included in this report exclusively for the reader's convenience. EBITDA should
not be considered an alternative to net income as a measure of operating
performance nor to operating cash flows as a measure of liquidity. The EBITDA
presented herein relates to the accounting practices adopted in Brazil, which
is used in the primary financial statements included in this filing. Such
EBITDA is expressly permitted by the standard-setter that establishes the
accounting principles generally accepted for use in such financial statements
and is included in the financial statements used in the Company's home country
jurisdiction and market.

                                    Ultrapar
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2002         2001
                                                             ----         ----
                             (in millions of Reais)
Operating income before financial items                     365.5        278.9
(+) Depreciation and amortization                           121.8        102.4
(-) Non-cash operating income included
    in "Nonoperating income (expenses), net"                  -           (8.8)
EBITDA                                                      487.3        372.5
                                                            =====        =====


                                      70
<PAGE>


                                    Ultragaz
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2002         2001
                                                             ----         ----
                             (in millions of Reais)
Operating income before financial items                     143.2        101.1
Depreciation and amortization                                76.6         61.9
EBITDA                                                      219.8        163.0
                                                            =====        =====


                                    Oxiteno
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2002         2001
                                                             ----         ----
                             (in millions of Reais)
Operating income before financial items                     199.9        146.6
Depreciation and amortization                                32.8         30.2
EBITDA                                                      232.7        176.8
                                                            =====        =====


                                   Ultracargo
      Reconciliation of operating income before financial items to EBITDA
                            Year ended December 31,
                                                             2002        2001
                             (in millions of Reais)
Operating income before financial items                      17.6         27.4
(+) Depreciation and amortization                            11.6          9.5
(-) Non-cash operating income included in "Nonoperating
    income (expenses), net"                                   -           (8.8)
EBITDA                                                       29.2         28.1
                                                            =====        =====

B.       Liquidity and Capital Resources

     Our principal sources of liquidity are cash generated from operations and
loans. We believe that these sources will continue to be sufficient to satisfy
our current funding requirements, which include, but are not limited to,
working capital, capital expenditures, amortization of debt and payment of
dividends.

     From time to time, we examine the opportunities for acquisitions and
investments. We would consider different types of investments, either direct or
through subsidiaries, joint ventures, or affiliated companies. We would finance
such investments using cash generated from our operations, through funding
raised in the capital markets, through capital injections or through a
combination of these methods.

   Sources of Funds

     Our cash flow from operations was R$ 311.4 million, R$ 468.8 million and
R$ 339.7 million in 2003, 2002 and 2001 respectively. Compared to 2002, our
cash flow from operations decreased R$ 157.4 million in 2003, mainly reflecting
the decrease in our financial results due to the increase in net debt and the
effect of the appreciation of the Real, in our US dollar denominated
investment. Our cash flow from operations increased R$ 129.1 million from 2001
to 2002 mainly due to the increase of our operating and financial results.

     Cash flow from financing amounted to R$ 264.7 million, R$97.3 million and
R$54.4 million in 2003, 2002 and 2001 respectively. The increase in cash flow
from financing in 2003, compared to 2002, was mainly due to the increase in
export prepayments financing used to finance acquisitions. We believe we have
sufficient working capital for our present requirements.


                                      71
<PAGE>


   Uses of Funds

     Acquisitions of property, plant and equipment consumed cash of R$ 171.2
million, R$168.8 million and R$145.7 million in 2003, 2002 and 2001,
respectively. Additions to deferred charges, mainly composed of UltraSystem
installations, consumed cash of R$ 51.0 million, R$ 51.3 million and R$ 57.4
million in 2003, 2002 and 2001. Payment of dividends and interest on
shareholders' equity consumed cash flow of R$ 80.1 million, R$60.9 million and
R$244.3 million in 2003, 2002 and 2001, respectively. Repayment of debt
consumed cash flow of R$ 119.5 million, R$98.2 million and R$85.3 million in
2003, 2002 and 2001 respectively.

     The acquisition of ownership interests, including the acquisitions of
Shell Gas and Canamex in 2003 and the acquisition of Oxiteno's minority
interests in 2002, but excluding acquisition of treasury shares, consumed cash
flows of R$ 203.6 million6, R$ 212.6 million and R$ 13.8 million in 2003, 2002
and 2001 respectively. For more information on our investments and capital
expenditures see "Investments".

   Debt

     As of December 31, 2003, our consolidated short and long term debt was as
follows:

<TABLE>
                                                                                 Principal amount outstanding and
                                                                                accrued interest until December 31,
Debt                                                     Interest Payable                      2003
-------------------------------------------------------------------------------------------------------------------
                                                                                      (in millions of Reais)
<S>                                                   <C>                                        <C>
Foreign currency denominated loans:

Syndicated Loan                                             US$ + 4.3%                           173.6
Export prepayment(7)                                    US$ + 4.1% to 6.9%                       205.1
Advances on Foreign Exchange Contracts                  US$ + 1.3% to 5.3%                        24.9
Financing of Inventories and Property Plant &           US$ + 7.3% to 8.0%                        11.4
Equipment
BNDES - National Bank for Economic and Social         UMBNDES + 9.0% to 10.9%                     23.2
Development (8)
Working capital loan (9)                                Mex$ + TIIE + 1.4%                         0.5

Real-denominated loans:

BNDES - National Bank for Economic and Social
Development (10)                                     TJLP or IGPM 1.5% to 6.5%                   159.3
                                                         TJLP 1.8% to 4.0%                        28.9
                                                               TJLP                                5.3
                                                                                                 -----
Total loans:                                                                                     632.2
Unrealized losses on swaps transactions                                                           55.7
  Total                                                                                          687.9
                                                                                                 =====
--------------------
6    The difference between principal equity investments (excluding share
     repurchase program) of R$ 203.6 million above and "Business combinations,
     net of cash acquired", of R$ 134.6 million shown in the 2003 Consolidated
     Statements of Cash Flows is substantially comprised of cash acquired and
     settlement of debt of Shell Gas (included in "Cash Flows From Financing
     Activities - Loans from Affiliated Companies")

7    Net of linked operations

8    UMBNDES is based on the average currency basket of the BNDES. The currency
     basket is a composition of all BNDES foreign currency debts

9    TIIE is the Mexican interbank interest rate

10   TJLP (Long Term Interest Rate) is a nominal rate of interest established
     quarterly. In 2003, TJLP was fixed at 11.5% p.a.

</TABLE>


                                      72
<PAGE>


     Our consolidated debt as of December 31, 2003 had the following maturity
schedule:

                                                Amount
Year  ending December 31,                (in million of reais)
-----------------------------------------------------------------
     2004                                         325.9
     2005                                         160.8
     2006                                          94.7
     2007                                          34.6
     2008                                          15.2
     2009                                           1.0
                                                  -----
                                                  632.2
                                                  =====

     As of December 31, 2003, R$ 34.3 million of our consolidated debt was
secured by property, plant and equipment, R$17.1 million was secured by shares
of affiliated companies and R$17.6 million was secured by guarantees provided by
minority shareholders. As of December 31, 2003, we guaranteed a portion of our
subsidiaries' indebtedness in the amount of R$ 571.4 million.

     In 1997, our indirect subsidiary Companhia Ultragaz issued US$ 60 million
in a 9% US dollar-denominated Eurobond due in 2005 with a put/call option
exercisable in 2002. We and our subsidiary Ultragaz jointly, severally and
unconditionally guaranteed this Eurobond and are thus subject to covenants
which restrict, among other things, our ability to incur indebtedness,
constitute liens, make dividend payments and other distributions and conduct
sale-leaseback transactions, mergers and asset sales. None of these covenants
have restricted our ability to conduct our ordinary course of business as of
the date of this annual report. This Eurobond was purchased in June 2002 by our
indirect subsidiary, LPG International Inc., with funds obtained from a
syndicated loan, with maturity in August 2004. In January 2004, taking
advantage of surplus international liquidity, this syndicated loan was
refinanced through a new Eurobond issue by LPG with the same term and maturity
of the original bond.

       Investments

     The table set forth below shows our investments in acquisitions of
shareholding stakes. For more details on these acquisitions see "Item 4 -
Information on the Company"

                                      Year ending December 31,
                                 --------------------------------
         Company                 2003(11)        2002        2001
         ----------------        ----            ----        ----
                                       (in million of reais)
         Ultragaz                 171.1           -            -
         Oxiteno                   32.5         212.6          0.1
         Ultracargo                 -             -           13.7
         Others(12)                 2.1           0.4          -
                                  -----         -----         ----
         Total                    205.7         213.0         13.8
                                  -----         -----         ----
-------------------------
11   The difference between principal equity investments (excluding share
     repurchase program) of R$ 203.6 million above and "Business combinations,
     net of cash acquired", of R$ 134.6 million shown in the 2003 Consolidated
     Statements of Cash Flows is substantially comprised of cash acquired and
     settlement of debt of Shell Gas (included in "Cash Flows From Financing
     Activities - Loans from Affiliated Companies")

12   Share repurchase program, included in the Consolidated Statement of Cash
     Flows under "Cash Flows From Financing Activities - Other"


                                      73
<PAGE>


       Investments Permanent Assets and Deferred Charges

     The following table sets forth our investments in permanent assets and
deferred charges in 2003, 2002 and 2001 and the projections for 2004.


<TABLE>
                                                                                               Projections for
                                                                                               the years ended
                                                 Year Ended December 31,                         December 31,
                                    ------------------------------------------------           ---------------
                                       2001               2002                2003(13)               2004
                                       ----               ----                ----                   ----
                                                           (in millions of reais)
<S>                                   <C>                 <C>                  <C>                   <C>
Ultragaz                              148.2               130.6                114.4                 86.8
Oxiteno                                42.9                55.8                 58.1                 69.5
Ultracargo                             11.9                36.2                 41.5                 75.1
Others14                                0.1                 0.2                  0.3                  1.6
Total Capex                           203.1               222.8                214.3                233.0
Disposals                              (9.3)               (4.5)                (7.4)               (10.0)
Total Capex, net of disposals         193.7               218.3                206.9                223.0
                                      =====               =====                =====                =====
</TABLE>

     Ultragaz. In 2003, Ultragaz's investments were focused principally on
expanding the small bulk business segment (UltraSystem), replacement of
cylinders and the installation of the integrated ERP system. In 2002 and 2001,
investments included the expansion of its operations to the small bulk segment,
the building of new filling plants, the acquisition of new cylinders and the
installation of the integrated ERP system.

     In 2004, Ultragaz intends to reduce its investments as a reflection of the
consolidation of its recent geographic expansion and the acquisition of Shell
Gas.

     Oxiteno. At Oxiteno, capital expenditures in 2003 were largely for the
development of new products, increase in installed capacity and the
installation of the ERP system. In 2002, capital expenditures were directed to
expand production capacity and quality and environmental control systems, and
to replace old equipment. Oxiteno's capital expenditures in 2001 were mainly
due to an expansion of the production capacity for purified ethylene oxide and
ethanolamines and to modernize its industrial plants

     In 2004, Oxiteno's intention is to invest in upgrading quality and
increasing safety and environmental control aspects.

     Ultracargo. Ultracargo's investments in 2003 continued to be focused on
the opportunities arising from the greater demand for infrastructural logistics
in Brazil, the deregulation of oil and oil derivates and the growth in exports
of vegetable oils and alcohol. In 2003, the company's principal investments
went to the construction of the Santos and Tatui Intermodal Terminals, Montes
Claros Liquid Fuels Terminal and fleet expansion. In 2002, Ultracargo upgraded
and expanded its operating capacity and renewed the lease of the Aratu site
with Cia. Docas do Estado da Bahia - CODEBA for 20 years. This lease is
renewable for another 20 year-period. In 2001, Ultracargo's capital
expenditures were directed to the renewal and expansion of its operating
capacity.

       Ultracargo intends to further intensify this investment strategy in 2004.

------------------------
13   Net of R$ 7.9 million of exchanged assets

14   Includes expenditures related to maintenance of our headquarters which is
     performed by our wholly-owned subsidiary Imaven Imoveis e Agropecuaria
     Ltda.


                                      74
<PAGE>


   U.S. GAAP Reconciliation

     Our net income under the accounting practices adopted in Brazil for the
years ended December 31, 2003, 2002, and 2001 was R$246.4 million, R$222.3
million and R$132.2 million, respectively. Under U.S. GAAP, we have reported
net income of R$ 288.3 million, R$143.9 million and R$123.0 million for the
years ended December 31, 2003, 2002 and 2001, respectively.

     Our shareholders' equity under the accounting practices adopted in Brazil
as of December 31, 2003 and 2002 was R$ 1,356.7 million and R$1,191.1 million,
respectively. Under U.S. GAAP, we have reported shareholders' equity of R$
1,294.8 million and R$1,076.5 million as of December 31, 2003 and 2002,
respectively.

     The reconciliation of our net income and shareholders' equity to U.S. GAAP
includes the effects of the difference in inflation measurement using the
IGP-DI and the UFIR indexes through the end of 1995. Other than inflation
accounting, the principal differences between the accounting practices adopted
in Brazil and U.S. GAAP that affect our net income and shareholders' equity
relate to the treatment of the following items:

     o    capitalized interest;

     o    fixed assets revaluation reversal;

     o    reversal of deferred charges;

     o    restatement of property, plant and equipment to adjust for the
          effects of inflation between January 1, 1996 and December 31, 1997,
          and its respective depreciation, not required by the accounting
          practices adopted in Brazil;

     o    differences in equity accounting;

     o    differences in goodwill accounting;

     o    securities available for sale;

     o    purchase value adjustments relating to business combinations
          (including the 2002 corporate restructuring);

     o    accounting for IPO expenses;

     o    mark-to-market of financial instruments; and

     o    deferred tax effects on the foregoing adjustments.

     The main difference of accounting practices adopted in Brazil that
impacted net income under U.S. GAAP, negatively in 2002 and positively in 2003,
refers to the marking-to-market of financial instruments. See Note 24 to our
consolidated financial statements for a description of the differences above as
they relate to us and a reconciliation to U.S. GAAP of net income and total
shareholders' equity.

C.       Research and Development, Patents and Licenses, etc.

     Ultragaz maintains a program of research and development of new products
and services. For example, it has developed Ultracort, an alternative cutting
fuel, and is developing the use of LPG for a wide variety of segments such as
textiles, ceramics and agribusiness - including grain drying and weed control.
Ultragaz has also developed certain uses for LPG such as gas generators,
vaporizers, indoor space heaters and gas refrigerators. This equipment can be
seen in operation in several Ultragaz showrooms displaying the multiple uses of
LPG in the household.


                                      75
<PAGE>


     Oxiteno carries on a wide range of research and development activities,
principally related to the application of specialty chemicals and improvements
in production processes. Oxiteno's leading research and development and
engineering facility is located at the Maua plant.

     As of December 31, 2003, 109 employees of Oxiteno were engaged in research
and development and engineering activities. Oxiteno's R&D expenditures in 2003,
2002 and 2001 were R$ 13.4 million, R$ 10.9 million and R$ 10.2 million,
respectively. From time to time, Oxiteno purchases and licenses technology,
particularly for the development of specialty chemicals.

D.       Trend Information

     See "- Operating Results" above.

E.       Off Balance Sheet Arrangements


     Our subsidiaries have provided guarantees to financial institutions
related to amounts owed to those institutions by certain of their customers
(vendor financing). The terms of the guarantees are equal to the terms of the
related financing arrangements, ranging between 30 and 210 days. There exists
no recourse provision that would enable us or our subsidiaries to recover any
amount paid to the financial institutions under these guarantees. In the event
that the financial institutions exercise these guarantees, we may recover the
amount paid directly from our customers under the vendor contract. At December
31, 2003, the maximum potential payment under these guarantees totaled R$ 19.8
million, which represented a R$ 12.7 million increase over 2002. This increase
was mainly due to new clients that usually operate with financing arrangements
of 210 days. The use of vendor financing was the best alternative to make
feasible the financing conditions of these clients. If we stop using this
financing instrument, our competitiveness with these clients may be affected.
At December 31, 2003, the Company has not recorded any liability related to
these guarantees in the balance sheet under accounting practices adopted in
Brazil.

F.       Tabular disclosure of Contractual Obligations

     The following table summarizes our known contractual obligations, as of
December 31, 2003:

<TABLE>
                                                                Payment Due by Period
                                                -----------------------------------------------------
                                                               (in millions of Reais)
                                                               Between 1     Between 3    More than 5
Contractual Obligations                Total   Up to 1 year   and 3 years   and 5 years      years
-----------------------------         -------  ------------   -----------   -----------   -----------
<S>                                     <C>           <C>           <C>           <C>           <C>
Long Term Debt                          306.3             -         255.5          49.8           1.0
Purchase Obligations(1)                 980.1         108.9         217.8         217.8         435.6
Operating Leases(2)                      90.4           4.5           9.1           9.1          67.7
Total Contractual Obligations         1,376.8         113.4         482.3         276.7         504.4
-----------------------------         -------         -----         -----         -----         -----
</TABLE>

     (1) The purchase obligation relates to a long-term contract, with Braskem
under which we are committed to purchase at least 138,000 tons of ethylene
annually through 2012. In the event that this commitment is not met, we are
obliged to pay a fine of a maximum of 40% of the annual ethylene volume,
multiplied by the price of the ethylene. This contract does not establish the
price of ethylene and for this reason the amount in Reais is based on the
purchase price as at December 31, 2003.

     (2) Our subsidiary company Terminal Quimico de Aratu S.A. - Industria e
Comercio has contracts with CODEBA - Companhia Docas do Estado da Bahia, and
Complexo Industrial Portuario Governador Eraldo Gueiros, related to the
latter's harbor facilities in Aratu and Suape, respectively. These contracts
establish a minimum movement of products of 1,000,000 tons per year in Aratu
effective through 2022 and 250,000 tons per year in Suape effective through
2027. If the annual movement is less than the minimum contractual movement, the


                                      76
<PAGE>


subsidiary is liable to pay the difference between the effective movement and
the minimum contractual movement based on the port tariff rates on the date
established for payment. As of December 31, 2003, these rates were R$ 3.67 for
Aratu and R$ 3.44 for Suape. The Company has been in compliance with the
minimum movement of products since the inception of the contracts.


ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.   Directors and Senior Management

     Our Management

     The following table sets forth the names and positions of our directors
and executive officers.

<TABLE>
                                                                                Years with
Name                                         Position                          the Company        Age
------------------------------------         -----------------------------     -----------        ---
<S>                                          <C>                                    <C>            <C>
Board of Directors
  Paulo Guilherme Aguiar Cunha               Chairman                               36             64
  Lucio de Castro Andrade Filho              Vice Chairman                          26             59
       Ana Maria Levy Villela Igel           Director                                6             62
  Renato Ochman                              Director                                3             44
  Nildemar Secches                           Director                                2             55
  Paulo Vieira Belotti                       Director                                6             72
  Olavo Egydio Monteiro de Carvalho          Director                                1             62

Executive Officers
  Paulo Guilherme Aguiar Cunha               Chief Executive Officer                36             64
  Lucio de Castro Andrade Filho              Vice-President                         26             59
       Fabio Schvartsman                     Chief Financial Officer,               19             50
                                                  Ultrapar
  Jose Carlos Guimaraes de Almeida           Chief Operating Officer,               43             69
                                                  Ultragaz
  Pedro Wongtschowski                        Chief Operating Officer,               26             58
                                                  Oxiteno
</TABLE>

     Paulo Guilherme Aguiar Cunha. Mr. Cunha is our chief executive officer and
chairman of our board of directors. Mr. Cunha joined Ultrapar in 1967 and was
appointed vice-president in 1973 and chief executive officer in 1981. Mr. Cunha
has also been a member of the National Monetary Council, BNDESPAR, a subsidiary
of BNDES, president of the Brazilian Association of Technical Standards - ABNT,
and President of IBP, the Brazilian Petroleum Institute. Mr. Cunha is the
vice-president of ABIQUIM, the Brazilian Chemical Industry Association, a board
member of the Superior Council of Economy and of the Consultative Council for
Industry of FIESP, the state of Sao Paulo Industry Association and ex-President
of IEDI - Research Institution for the Industrial Development. He is also a
member of the board of directors of Monteiro Aranha. Mr. Cunha is also a member
of the board of IBMEC Business School and of the board of IPT - Technological
Research Institution. Mr. Cunha received a degree in industrial mechanical
engineering from Catholic University in Rio de Janeiro in 1962. Mr. Cunha also
was a Professor of Engineering at the Catholic University and at the Federal
University of Rio de Janeiro from 1963 to 1966.

     Ana Maria Levy Villela Igel. Ms. Villela Igel joined us as a member of the
board of directors in October 1998. She is also a member of the board of
directors of Ultra S.A. and Igel Participacoes, or Igel. She has served as a
secretary in the finance department at the United Nations and as a counselor
for CIEE-Centro de Integracao Empresa Escola, an organization which assists
students in transitioning to the professional environment, and as a counselor
and member of the executive committee of Alumni Association - Bi-National
Cultural Center. She is also involved in several organizations that promote
social welfare activities for children and the elderly throughout Brazil.

     Renato Ochman. Mr. Ochman joined us in April 2001 as a member of the board
of directors. Mr. Ochman is a partner in the law firm Ochman Advogados
Associados S/C and General Secretary of the Chamber of Commerce


                                      77
<PAGE>


and Industry of Brazil-Israel. Mr. Ochman is a member of the Youth's Committee
of the United Nations - Brazil and is also a member of the audit committee of
the Association for Assistance to Handicapped Infants. Previously, Mr. Ochman
taught commercial law at the Fundacao Getulio Vargas and acted as legal counsel
for the Brazilian Association of Supermarkets. Mr. Ochman has obtained a law
degree from the Catholic University of Rio Grande do Sul and a commercial law
masters degree and post-graduate degree from the Catholic University of Sao
Paulo.

     Nildemar Secches. Mr. Secches joined us in April 2002 as a member of the
board of directors. Mr. Secches is the chief executive officer of Empresas
Perdigao since 1995, chief executive officer of ABEF -- Brazilian Association
of Chicken Producers and Exporters and vice-president of ABIPECS -- Brazilian
Association of Pork Producers and Exporters Industries. Mr. Secches is also a
member of the board of WEG S.A. From 1972 to 1990, Mr. Secches worked for Banco
Nacional de Desenvolvimento Economico e Social - BNDES, serving as an executive
officer from 1987 to 1990. From 1990 to 1994, Mr. Secches served as chief
executive officer of Grupo Iochpe-Maxion. Mr. Secches received a degree in
mechanical engineering from the University of Sao Paulo, a master's degree in
finance from Pontificia Universidade Catolica of Rio de Janeiro and a doctoral
degree in economics from the University of Campinas (state of Sao Paulo).

     Paulo Vieira Belotti. Mr. Belotti joined us in October 1998 as a member of
our board of directors. Mr. Belotti has also served as chief executive officer
of several companies including Petrobras Distribuidora S.A., Petrobras
Mineracao S.A., Petrobras Quimica S.A., Petrobras Comercio Internacional S.A.,
Petrobras Fertilizantes S.A. and Norcell S.A. He has also served as a member of
the board of directors of Nordon Industria Metalurgica S.A. Mr. Belotti
received a degree in civil engineering from the National School of Engineering
at the University of Brazil, a bachelor's degree in mathematics from the
University of Guanabara and a degree in nuclear engineering from Oak Ridge
School of Technology in Tennessee.

     Olavo Egydio Monteiro de Carvalho. Mr. Monteiro de Carvalho joined our
company in December 2002 as a member of the board of directors. He is chairman
of the board of directors of Monteiro Aranha S.A. and a member on the board of
Klabin S.A.. He is also a member of the Brazil-United States Business Council,
member of the Brazil-Japan Conceptual Group and member of the board of Ad-Rio -
Agencia de Desenvolvimento Economico do Estado do Rio de Janeiro (the Rio de
Janeiro State Development Agency). He holds a mechanical engineering degree
from Technische Hochschule in Munich.

     Lucio de Castro Andrade Filho. Mr. Andrade Filho is the vice chairman of
our board of directors and vice president executive officer. He joined Ultrapar
in 1977. Mr. Andrade Filho has held a number of positions with Ultrapar's
subsidiaries in both the LPG as well as logistics, engineering and chemicals
segments. Mr. Andrade Filho is also the chief executive officer of GLP --
Qualidade Compartilhada, an LPG industry association and a member of the board
of directors of the Brazilian Petroleum Institute (Instituto Brasileiro de
Petroleo - IBP). Mr. Andrade Filho received degrees in civil engineering and in
administration from Mackenzie University in Sao Paulo in 1968 and 1972,
respectively.

     Jose Carlos Guimaraes de Almeida. Mr. Almeida joined Ultrapar in 1960 and
has served as an executive officer since 1985 and as a member of the board of
directors of Ultragaz since 1982. Mr. Almeida is the chief operating officer of
Ultrapar's LPG distribution business. Mr. Almeida was the Chief Executive
Officer of Ultralar Aparelhos e Servicos S.A., general superintendent and
member of the consultative council of Ultracred Credito, Financiamento e
Investimentos S.A., treasury officer of Unidade Interamericana de Publicidade,
and director general of Vedebrasil II Participacoes S.A., the holding company
in Brazil of Vendex International. Since 2003, Mr. Almeida has been a member of
the Board of Sindigas - the National Union of Liquefied Petroleum Gas
Distribution Companies. Mr. Almeida received a degree in civil engineering in
1962 from Pontificia Universidade Catolica of Rio de Janeiro and a master's
degree in economic engineering.

     Fabio Schvartsman. Mr. Schvartsman joined Ultrapar in 1985 and has held a
number of positions, including planning officer, planning and control officer
and financial superintendent officer. Mr. Schvartsman has served as our
executive officer since 1990. Prior to joining us, Mr. Schvartsman worked in
the finance area at Duratex S.A. Mr. Schvartsman is our chief financial officer
and our investor relations officer. Mr. Schvartsman received a degree in
production engineering from Escola Politecnica da Universidade de Sao Paulo and
a master's degree in business administration from the Business School of Sao
Paulo/Getulio Vargas Foundation in 1979.


                                      78
<PAGE>


     Pedro Wongtschowski. Mr. Wongtschowski has served as executive officer
since 1985. Mr. Wongtschowski was employed at our chemical fertilizer company
from 1970 until 1972 and rejoined Ultrapar in 1977. Mr. Wongtschowski is also
the Chairman of the Board of the Brazilian Association for Chemical
Engineering, Vice-President of the board of directors of ABIQUIM, Brazilian
Chemical Industries Association, and Vice-President of Latin American
Petrochemical and Chemical Associations - APLA. Mr. Wongtschowski is the chief
operating officer of our chemical and petrochemical businesses. Mr.
Wongtschowski received a degree in chemical engineering, master's degree in
chemical engineering and a doctoral degree in chemical engineering from the
Escola Politecnica da Universidade de Sao Paulo. Mr. Wongtschowski is the
author of the book "Industria Quimica - Riscos e Oportunidades" (Chemical
Industry - Risks and Opportunities), published in 2002 (2nd edition).

B.       Compensation

     For the year ended December 31, 2003, the aggregate compensation of our
directors and executive officers was approximately R$ 10.8 millions. A portion
of such amount is represented by variable compensation, dependent on business
performance as measured by metrics such as Economic Value Added - EVA and
EBITDA. Except for the expenses related to Ultraprev - Associacao de
Previdencia Complementar, known as Ultraprev, which manages our pension plan,
we have not set aside or accrued any additional amounts for pension, retirement
or similar benefits for our directors and executive officers. See "-
Employees."

     On April 27, 2001, the General Shareholders' Meeting approved a plan for
granting stock options ("The Stock Option Plan") to members of management and
employees in executive positions in the Company and its subsidiaries. On
November 26, 2003, the Extraordinary General Shareholders' Meeting approved
certain amendments to the original plan of 2001 (the "Deferred Stock Plan"). In
the Deferred Stock Plan, certain members of management can enjoy the rights on
preferred shares held as treasury stock, the ownership of the shares being
retained by Ultrapar. The Deferred Stock Plan provides for the transfer of the
ownership of the shares to those eligible members after ten years from their
initial concession, conditional on an uninterrupted labor relationship between
the Deferred Stock Plan participant and the Company during the period. The
Board of Directors shall determine the volume of shares to which each eligible
participant shall have rights. The total number and type of shares to be used
for the purposes of the Deferred Stock Plan shall always be subject to the
availability in treasury of such shares. It is incumbent on Ultrapar's
Executive Board to select which members of management that shall be eligible
for the plan and propose the number of shares in each case for approval by the
Board of Directors. As of December 31, 2003, the amount granted to the
Company's executives, including tax charges, totaled R$ 5.0 million. This
amount will be amortized over a ten year period, the amortization for 2003
amounting to R$ 42 thousand and being registered as an operational expense for
the 2003 fiscal year.

C.       Board Practices

     We are managed by our board of directors (i.e., Conselho de Administracao)
and by our executive officers (i.e., Diretoria).

     Board of Directors. Prior to December 20, 2002, our board of directors was
limited to six members. Pursuant to our amended by-laws, our board of directors
must consist of a minimum of four and a maximum of seven members. Our board of
directors generally meets quarterly or whenever called by its chairman or by
any two directors. During 2003, seven board meetings were held. Each meeting of
the board of directors requires a quorum of a minimum of three members,
including the chairman or the vice-chairman. The board of directors is
responsible for our general policies, for electing our executive officers and
supervising their management, and for deliberating on capital increases up to
the authorized capital, distributions of dividends and interest on
shareholders' equity, investments in other companies, our dissolution or
incorporation and the appointment of independent auditors. Pursuant to
Brazilian law, each member of the board of directors must hold at least one of
our common or preferred shares and be elected by the holders of our common
shares at the Assembleia Geral, or the General Shareholders' Meeting.

     Members of the board of directors are elected by the common shareholders
for a period of one year and may be reelected. According to Law 10,303/2001,
dated October 31, 2001, minority shareholders that together hold common shares
representing at least 15% of the voting capital, are entitled to appoint one
board member. Minority


                                      79
<PAGE>


holders of our voting shares and preferred shareholders that do not represent
the minimum percentage required for the right to elect a member of the board of
directors in the manner described above may jointly elect a single member to
the board. In this case such shareholders should jointly represent a minimum of
10% of the corporate capital. Until the general shareholders' meeting of 2005,
preferred shareholders have the right to elect a board member from a short list
of three names drawn up by the controlling shareholder. As from the general
shareholders' meeting of 2006, the election of this member will be
unrestricted. In 2002, in order to give minority shareholders a more important
role in our corporate governance, we granted them the right to elect a member
to our board of directors. Mr. Nildemar Secches was elected to the board in
April 2002, as the representative of the minority shareholders. Mr. Secches was
reelected in 2003 and in the General Shareholders' Meeting held on April 26,
2004.

     Minority holders of voting shares and preferred shareholders must prove
uninterrupted title to a shareholding interest in our shares for a period of at
least three months immediately prior to the holding of the General
Shareholders' Meeting in order to exercise their rights related to election of
directors.

     Law 10,303/2001 granted members of the board of directors elected by
minority holders of voting shares and/or preferred shareholder, veto powers
over the appointment and dismissal of our independent auditors, provided such
veto is reasonably justified.

     Executive Officers. Our executive officers include our chief executive
officer and a minimum of three and a maximum of six other members. Each of our
current executive officers has been appointed by the board of directors for a
one-year term, which began on April 26, 2004 and may remain in office until the
appointment of his substitute. Sitting members can be reelected for additional
one-year terms.

     Fiscal Council. Under the Brazilian corporate law and our by-laws, we are
not required to, and currently do not, maintain a permanent fiscal council. We
would, however, be required to establish a fiscal council upon the request of
shareholders who hold 2% of the common shares or 1% of the preferred shares,
pursuant CVM Instruction 324 of January 19, 2000 that altered the percentages
referred to in Article 161, Paragraph 2 of Law 6,404/76, based on its
prerogative established in Article 291 of Law 6,404/76. The primary
responsibility of the fiscal council, which, if established, would act
independently from our management and external auditors, would be to review our
consolidated financial statements and report on them to our shareholders.

     The U.S. SEC has adopted a new rule that prohibits the New York Stock
Exchange ("NYSE") from listing, or continuing to list, any security of any
issuer, unless the issuer has an audit committee or an equivalent body (see
following paragraph) which, among other things:

     o    is comprised solely of directors who are considered independent,

     o    is responsible for the appointment, compensation, retention and
          oversight of the issuer's outside auditor, who must report directly
          to the audit committee,

     o    has procedures for the receipt, retention and treatment of complaints
          regarding accounting, internal accounting controls and auditing
          matters,

     o    has the authority to engage independent counsel and other advisors,
          and

     o    is provided appropriate funding, as it determines, to compensate the
          auditors and otherwise carry out its functions.

     A non-U.S. issuer, such as Ultrapar, has until July 31, 2005 to adopt an
audit committee. Alternatively, the SEC has stated that non-US issuers will be
exempt from these requirements if, prior to July 31, 2005, they establish,
according to their local law or regulations, another body that acts as an audit
committee, if that body:

     o    is independent of the Board of Directors and is not elected by
          management;

     o    if that body is not permitted by law to perform the functions set
          forth in the last four bullets of the preceding sentence,


                                      80
<PAGE>


     o    to the extent that shareholders vote on or approve such matters and
          the issuer provides a recommendation or nomination regarding such
          matters, that body is responsible for making the recommendation or
          nomination and

     o    if the board of directors is not permitted by law or stock exchange
          rules to delegate such responsibilities, the body is given
          non-binding advisory powers and such other responsibilities regarding
          such matters as are permitted by law.

     Corporate Governance. We are incorporated under the laws of Brazil and we
are subject to Brazilian laws related to corporate governance. Under Brazilian
law, there are no regulatory requirements with respect to corporate governance
such as (i) the independence of our board of directors, (ii) meetings of
non-management directors, (iii) the establishment and composition of certain
board committees or (iv) the adoption and disclosure of corporate governance
guidelines or codes of business conduct and ethics. As a non-US issuer we are
exempt from adopting certain NYSE corporate governance requirements and other
requirements will only apply to us in the future. However, we aim to ensure
that best practices, recommendations and standards of corporate governance are
employed in our functioning and operations. We have adopted corporate
governance guidelines, such as the requirement that the Board of Directors be
mainly comprised of independent members and the issuance of a code of ethics
for senior officers that we believe are in compliance with U.S. corporate
governance standards.

     We are currently working to comply with all Sarbanes-Oxley and NYSE
requirements within the stated time frame.

D.       Employees

     As of December 31, 2003, we had 6,465 employees.

     The following table sets forth our number of employees per line of
business at the dates indicated.

                          Number of employees
     ----------------------------------------------------------
                         (as of December 31,)
                         2003          2002          2001
                         ----          ----          ----
     Ultragaz            4,560         4,156         4,022
     Oxiteno             1,078           912           902
     Ultracargo            815           743           627
     Outros(1)              12            11            41
                         -----         -----         -----
     Ultrapar            6,465         5,822         5,592
                         =====         =====         =====
(1) Includes  headquarters  maintenance personnel hired by our
wholly-owned subsidiary, Imaven Imoveis e Agropecuaria Ltda.


     Ultragaz's employees are covered by a collective agreement with the union
representing the employees in the LPG industry. According to Brazilian
legislation, Oxiteno's employees are represented by labor unions, and are
currently covered by five collective agreements, which are renewed annually.

     All Ultracargo's employees are covered by a collective agreement, which
incorporates clauses of a social, financial, labor union and labor relations
nature signed by the companies, labor unions and employees.

     In February 2001, our board of directors approved the adoption of a
defined contribution pension plan to be sponsored by Ultrapar and each of its
subsidiaries. Participating employees have been contributing to this plan,
managed by Ultraprev - Associacao de Previdencia Complementar, known as
Ultraprev, since August 2001. Under the terms of the plan, every year each
participating employee chooses his or her basic contribution to the plan. Each
sponsoring company provides a matching contribution in an amount equivalent to
each basic contribution, up to a limit of 11% of the employee's reference
salary, according to the rules of the plan. As participating employees retire,


                                      81
<PAGE>


they may choose to receive either (i) a monthly sum ranging between 0.5% and
1.0% of their respective contribution in Ultraprev or (ii) a fixed monthly
amount which will exhaust their respective contribution over a period of 5 to
25 years. The sponsoring company does not guarantee the amounts or the duration
of the benefits received by each employee that retires. The total number of
participating employees as of December 31, 2003 was 5,160. To date, there are
no retired employees under the plan.

     In general, we consider our employee relations to be good.

E.       Share Ownership

     The table below sets forth the number of our total shares (common and
preferred shares) beneficially owned by each of our directors and executive
officers as of December 31, 2003.

<TABLE>
                                                        % of       Number(1) of     % of                         % of
                                      Number(1) of     common       preferred     preferred    Number(1) of     total
Name                                 common shares     shares         shares        shares     total shares     shares
-----------------------------------  -------------     ------      ------------   ---------    ------------     ------
<S>                                     <C>               <C>         <C>              <C>        <C>             <C>
Board of Directors
       Paulo Guilherme Aguiar                              9.93%        3,864.7        0.02%
      Cunha                            5,093,016.4                                               5,096,881.1      7.31%
       Lucio de Castro Andrade                             2.72%              -            -
      Filho                            1,392,039.2                                               1,392,039.2      2.00%
        Ana Maria Levy Villela
      Igel                             9,039,648.5        17.63%      111,978.3        0.61%     9,151,626.8     13.13%
  Olavo Egydio Monteiro de Carvalho      406,585.7         0.79%      118,356.0        0.64%       524,941.6      0.75%
  Renato Ochman                               15.0            -               -            -            15.0         -
  Nildemar Secches                            15.0            -               -            -            15.0         -
  Paulo Vieira Belotti                        15.0            -               -            -            15.0         -

Executive Officers
       Fabio Schvartsman                 592,246.4         1.16%              -            -       592,246.4      0.85%
  Jose Carlos Guimaraes de Almeida       696,012.1         1.36%              -            -       696,012.1      1.00%
  Pedro Wongtschowski                    592,246.4         1.16%        2,281.2        0.01%       594,527.6      0.85%
</TABLE>
1 Number in thousand shares


     Our board members and executive officers beneficially own our shares
primarily through their participation in holding companies that control us. See
"Item 7. Major Shareholders and Related Party Transactions -- Major
Shareholders." All of our common shares carry the same voting rights. Our
preferred shares are non-voting, except in limited circumstances. Each ADS
represents 1,000 preferred shares.


                                      82
<PAGE>


ITEM 7.           MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.       Major Shareholders

     The following table sets forth certain information regarding the ownership
of our common shares as of December 31, 2003:

                                                        December 31, 2003
                                                        -----------------
                                                         Common
Shareholders                                             Shares               %
--------------------------------------------         ------------        ------
                                                  (in thousands)
     Ultra S.A. Participacoes                       34,193,119            66.7
     Parth Investments Company                                            18.2
                                                     9,311,730
     Ultra-- DI Participacoes S.A.                                         1.0
                                                       490,095
     MASA Participacoes Petroquimicas Ltda.          5,212,637            10.2
     Others                                          2,057,041             3.9
                                                    ----------           -----
      Total                                         51,264,622           100.0
                                                    ==========           =====

     Due to the corporate restructuring in 2002, we issued 13.3 billion common
shares in December 2002. MASA Participacoes Petroquimicas Ltda. held
approximately 7.1 million of Oxiteno's common shares and exchanged them for
approximately 5.2 billion of our common shares.

     For more information on the corporate restructuring, please see "Item 4.
Information on the Company - History and Development of the Company".

     Until September 1998, we were controlled by Pery Igel, the son of Ernesto
Igel, founder of Ultragaz and our group. In 1984, Pery Igel put in place a
succession plan for the transfer of our control from him to our executive
officers. This succession plan allowed for a smooth transition of control
following Mr. Igel's death in September 1998. Daisy Igel, Pery Igel's sister,
controls Parth Investments Company and Ultra -- DI Participacoes S.A., which
hold 19.2% of our common shares.

     On March 22, 2000, our controlling shareholders entered into a
shareholders' agreement designed to ensure the equal treatment of all
non-controlling shareholders in the event of any change in control. Pursuant to
the agreement, any transfer of our control, either directly or indirectly, may
only be executed in conjunction with a public tender offer by the acquiring
entity to purchase the shares of all minority shareholders in the same
proportion and under the same price and payment terms as those offered to the
controlling shareholders. The agreement provides that there will be no discount
or price differentiation between the shares in the public tender offer and
those being sold by the controlling shareholders. The offer must be made on
both the Sao Paulo Stock Exchange and the New York Stock Exchange.

     On December 31, 2003 approximately 4.8 billion preferred shares were held
by international investors in the
form of American Depository Shares (ADS).

   Ownership and Capital Structure of Ultra S.A.

     Ultra S.A. owns approximately 67% of Ultrapar's voting shares. The voting
stock of Ultra S.A. is currently owned as follows:

     o    approximately 49.5% by Igel Participacoes S.A., known as Igel;

     o    49.5% by Avare Participacoes S.A., known as Avare;


                                      83
<PAGE>


     o    0.2% by Ana Maria Levy Villela Igel; and

     o    0.8% by Paulo Guilherme Aguiar Cunha, our chief executive officer and
          chairman of our board of directors.

     Igel is a holding company which holds the interests of certain members of
the family of Pery Igel. Avare is a holding company, which is 69% owned and
controlled by certain members of our senior management. The remaining shares in
Avare are owned by the family of Helio Beltrao and by Pery Igel's heirs. Helio
Beltrao is a former executive officer of Ultrapar. Pery Igel transferred a 69%
ownership interest in Avare to our management under the condition that each
member of our management team would remain in his or her functions until
December 31, 2004.

     In addition to his participation in Avare as one of the management
shareholders, Mr. Cunha holds 0.8% of the voting stock in Ultra S.A., which
were transferred to him by Mr. Pery Igel pursuant to an arrangement under
Brazilian law similar in certain respects to a trust. Under this arrangement,
Mr. Cunha was given temporary ownership of these shares until December 16,
2004, provided that he remains a member of our management team until such date
and complies with certain other conditions. Upon Mr. Igel's death, these
shares' voting rights were transferred to Mr. Cunha. Ownership of these shares
passes to Mr. Igel's children on December 16, 2004 unless any of the children
predeceases Mr. Cunha, in which event a proportionate amount of such shares
become the absolute property of Mr. Cunha. If Mr. Cunha passes away before the
transfer of the shares, such shares will be property of Mr. Igel's children.

     Shareholders' Agreement of Ultra S.A.

     On May 22, 1997, Ultra S.A.'s shareholders entered into the "2004
Shareholders' Agreement", which sets forth that (i) the holding companies Igel
and Avare will be extinguished on December 16, 2004, and each of their
respective shareholders will directly receive, as capital reimbursement for the
liquidation of both companies, shares of Ultra S.A. and (ii) after December 16,
2004, all the shareholders of Ultra S.A. shall give each other the right of
first refusal in the acquisition of Ultra S.A. shares and the corresponding
subscription rights relating thereto, except with respect to the transfer of
shares to a shareholder's spouse or direct descendant or ascendant.

     The term of the 2004 Shareholders' Agreement is five years from the date
on which the current shareholders of Avare and Igel directly receive shares of
Ultra S.A., which is expected to take place on December 16, 2004, as described
above.

B.       Related Party Transactions

     None of the members of our board of directors or executives or their close
family members have any direct participation in any material transaction
involving the Company or relevant to our businesses.

     We and our subsidiaries and affiliated companies enter into intercompany
loans on a regular basis. In certain cases, group companies maintain offsetting
credits and debits on matching terms. In the case of intercompany loans
involving Utingas, loans are made on an arm's length basis. In the case of
intercompany loans among Ultrapar and some of its subsidiaries and affiliates,
loans may be extended on financial terms so as to maximize consolidated profits
at the Ultrapar level. See Note 19 to our consolidated financial statements for
a detailed breakdown of intercompany loans as of December 31, 2003.

     Transultra provides transportation services to Ultragaz and Oxiteno on
arm's length terms. Similarly, Tequimar leases storage capacity for chemicals
and petrochemicals to Oxiteno on arm's length terms. In 2003, payments from
Ultragaz and Oxiteno to Transultra in connection with these services totaled
R$25.3 million and R$5.7 million, respectively. In 2003, payments from Oxiteno
to Tequimar in connection with the leased storage capacity totaled R$6.4
million.

     Utingas' by-laws provides for each of its shareholders to use a proportion
of Utingas' total storage capacity equal to such shareholders' proportionate
ownership of Utingas. Accordingly, Ultragaz is entitled to use 4.2


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<PAGE>


thousand tons of LPG storage capacity at Utingas' facilities, reflecting
Ultragaz's 56% ownership in Utingas. Ultragaz currently uses approximately 2.5
thousand tons of such capacity. The amount of payments made by Ultragaz to
Utingas in 2003 with respect to the use of storage capacity at Utingas'
facilities totaled R$2.2 million.

     Ultragaz purchases LPG requirements from Petrobras on an arm's length
basis. Payments from Ultragaz to Petrobras totaled R$ 1.818 million in 2003.

     Oxiteno purchases all of its ethylene requirements from Braskem and PQU on
an arm's length basis. Payments from Oxiteno to PQU totaled R$ 93.8 million in
2003. Payments from Oxiteno to Braskem totaled R$ 412.4 million in 2003.

     Our subsidiaries lease office space from Imaven Imoveis e Agropecuaria
Ltda, or Imaven, our wholly-owned subsidiary, on an arm's length basis in the
building in Sao Paulo in which our head offices are located. The sole activity
of Imaven is the ownership of the mentioned building. The total amount of rent
payments under these leases is R$ 6.7 million in 2003.

     We are guarantors of a portion of our subsidiaries' indebtedness in the
amount of R$ 571.4 million as of December 31, 2003.

C.       Interests of Expert and Counsel

     Not applicable.


ITEM 8.  FINANCIAL INFORMATION

A.       Consolidated Statements and Other Financial Information

     For our consolidated financial statements and notes thereto see Item 18,
"Financial Statements".

   Dividend and Distribution Policy

     Under the Brazilian corporate law, shareholders are generally entitled to
receive an annual mandatory distribution set forth in each company's by-laws,
which may not be lower than 25% of the Distributable Amount, (as defined
below). If a company's by-laws are silent, the percentage is deemed to be 50%
of the Distributable Amount. Our by-laws provide for a mandatory distribution
equal to 50% of the "Distributable Amount". In addition, until May 18, 2004,
under our by-laws, the amount we distributed in respect of each preferred share
was equal to 110% of the amount we distributed in respect of each of our common
shares. On May 18, 2004, we held an Extraordinary General Meeting which
approved amendments of our Bylaws. The amendments were (i) the registration in
our Bylaws of tag along rights for all Company shareholders, at 100% of the
offer price; and (ii) to make the dividend right of preferred shareholders
equal to those of common shareholders by abolishing the right of preferred
shareholders to receive dividends at least 10% (ten per cent) higher than those
received by common shareholders. "Distributable amount" means a company's net
income as determined in accordance with the accounting practices adopted in
Brazil, as reduced by (i) accumulated losses for prior years, and (ii) amounts
allocated to the legal reserve and other reserves established in accordance
with accounting practices adopted in Brazil, and as increased by the reversal
of any reserve established in a prior year. A company is permitted to allocate
to reserves all income from equity gains in subsidiaries that are not
distributed to the company in the form of cash dividends. When such gains are
distributed to the company in the form of cash dividends, the company is
required to reverse the reserve. See "Item 3. Key Information -- Risk Factors
-- Risks Relating to the Preferred Shares and ADSs." In addition to the
mandatory distribution, the board of directors may recommend to the
shareholders the payment of interim distributions from other funds that are
legally available for such purposes. Any payment of an interim dividend may be
set off against the amount of the mandatory dividend distribution for that
fiscal year.

     In addition to dividends, Brazilian companies may distribute interest
attributed to shareholders' equity, which payments may be treated by a company
as an expense for income tax purposes. Payments of interest attributed to


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shareholders' equity may be made at the discretion of our Board of Directors,
subject to the approval of the holders of our common shares. Payments of
interest attributed to shareholders' equity, net of withholding tax, may be
used to satisfy a company's mandatory distribution obligation. This interest is
calculated in accordance with the daily pro rata variation of the Brazilian
government's long-term interest rate, (TJLP), as determined by the Brazilian
Central Bank from time to time, and cannot exceed the greater of:

     o    50% of net income (after the deduction of social contribution on net
          income and before the deduction of the income tax provision and
          interest on equity attributable to shareholders) related to the
          period in respect of which the payment is made; or

     o    50% of the sum of retained earnings and revenue reserves.

     Under Brazilian corporate law, a company may suspend the mandatory
distribution either in the form of dividends or payments of interest on
shareholders' equity if its board of directors determines prior to the general
shareholders' meeting that payment of the mandatory distribution for the
preceding fiscal year would be inadvisable in light of the company's financial
condition. The holders of common shares must ratify such determination at the
general shareholders' meeting, which must be reported to the CVM within five
days of the relevant general shareholders' meeting. Under Brazilian law,
mandatory distributions that are suspended and not offset against losses in
future years must be paid as soon as the financial condition of the company
permits.

     In 2003, we distributed dividends amounting to R$ 72 million, representing
29% of net income for the period.

The following graph shows the trend in dividend distribution since 1998:


                                [GRAPH OMITTED]


     We can not provide any assurances similar amounts will be distributed in
future fiscal years.

     Legal Proceedings

     Ultragaz is a defendant in approximately 800 legal suits arising from its
normal business activities, including approximately 400 labor claims. Although
the amount of any liability that could arise with respect to these actions
cannot be accurately determined, Ultragaz believes that such actions, if
decided adversely to Ultragaz, would not, individually or in the aggregate,
have a material adverse effect on the financial condition of Ultragaz.

     In particular, Ultragaz is the defendant in 20 bodily harm suits in which
the plaintiffs are claiming damages for the loss of economic benefit and for
pain and suffering arising from fires or gas explosions caused by LPG cylinders
or accidents caused by Ultragaz trucks. With the exception of 2 cases involving
death due to the explosion of a cylinder and bodily harm due to an accident
with an Ultragaz vehicle, claims for which total R$ 2.4 million,


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according to Ultragaz's estimate, the amount claimed in any individual suit
ranges from R$20,000 to R$200,000. Such amounts are generally covered by
Ultragaz's third-party insurance policies, subject to the terms of such
policies. Civil suits are generally followed by criminal investigation
procedures, which can result in criminal liability for Ultragaz employees if
such employees have been criminally negligent. For those suits involving death
or permanent disabilities, the value of the claim is established by the courts
and is based on the average salary and age of the victim. In addition, Ultragaz
is involved in approximately thirty labor claims brought by former employees
claiming damages and, in some cases, reinstatement of employment, in respect of
injuries incurred in delivering LPG cylinders.

     Ultragaz is a defendant in legal suits relating to damages caused by an
explosion in 1996 in a shopping mall in the city of Osasco. The largest single
claim involving Ultragaz is an insurance subrogation claim for approximately R$
9 million brought against Ultragaz, the builder of the shopping mall, the
management of the shopping mall and the engineer responsible for the building's
project. In addition, individual suits were filed by victims of the explosion
claiming damages from Ultragaz for the loss of economic benefit and for pain
and suffering. Subsequently, a public prosecutor commenced a further civil
suit, in which Ultragaz was not named as a defendant, for the benefit of all
victims using a procedural mechanism similar to a class action suit. Ultragaz
believes that it has produced evidence that defective gas pipes in the shopping
mall caused the accident and that Ultragaz's on-site LPG storage facilities did
not contribute to the explosion. Ultragaz believes that the class action suit
brought by the public prosecutor deters individual suits directed at the
company. In June 2002, the management of the shopping mall filed a suit against
Ultragaz for the reimbursement of medical and legal fees as well as expenses
relating to the reconstruction of the mall. No ruling has yet been given on
this suit. Ultragaz believes that its accident insurance is more than enough to
cover the amount being claimed.

     Oxiteno is the defendant in approximately 136 judicial proceedings arising
in the normal course of its business. In common with other Brazilian companies,
Oxiteno is currently disputing the constitutional validity of some taxes. In
addition, Oxiteno is disputing the amounts it is required to pay in connection
with certain sales taxes. The aggregate amount of outstanding tax claims
against Oxiteno is approximately R$4.0 million.

     The Petrochemical Industry Labor Union, which represents the employees of
our indirect subsidiary Oxiteno Nordeste S.A., filed class action suits against
Oxiteno Nordeste in 1991 demanding compliance with the adjustments established
in collective labor agreements or other specific indexes, in lieu of the salary
policies effectively practiced. Based on information from its legal advisors,
who analyzed the final ruling of the Federal Supreme Court, known as STF, on
the class action suit in which the labor union is a plaintiff, as well as the
status of the specific suit against Oxiteno Nordeste, our management does not
believe that it is necessary to record a provision as of December 31, 2003.

     Ultragaz, Oxiteno and several of our other subsidiaries filed individual
suits against the Brazilian tax authorities contesting the increase in certain
taxes introduced by Law 9,718 of November 28, 1998, which increased the COFINS
tax rate by 1% and introduced taxes on financial and other income of 3.00%
(COFINS) and 0.65% (PIS). Furthermore, Law 9,718 introduced a mechanism under
which Ultragaz's contributions of PIS and COFINS on sales would be withheld by
Petrobras, thereby effectively increasing overall taxation for Ultragaz. Our
subsidiaries were granted preliminary injunctions which allowed them to
continue to pay these contributions according to regulations applicable prior
to Law 9,718. At the same time, we had made provisions to contemplate these tax
increases. In November 2002, based on our legal advisors' opinion, we opted to
pay these provisioned amounts, except for the provision of the 3.65% tax on
gross financial and other income. Amounts which were not paid to tax
authorities remain provisioned in the financial statements, and totaled R$ 30.5
million on December 31, 2003, of which R$ 14.8 million relate to Ultragaz and
R$4.8 million relate to Oxiteno. In the event we lose these lawsuits, we would
have to pay these provisioned amounts to the tax authorities, but this would
not affect our statement of operations.


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     The table summarizes our provisions related to legal proceedings as of
December 31, 2003:


                                                    2003
                                           (in millions of reais)
Social contribution taxes on net income                       2.9
Labor claims                                                  0.9
PIS and Cofins on other gains                                30.5
Other(*)                                                      6.6
Total                                                        40.9
-----                                                        ----
(*) comprised of SPGas's tax and labor provisions

     Antitrust matters

     CADE is currently reviewing our acquisition of the LPG distribution
operations of Royal Dutch/Shell N.V. - Shell Gas in Brazil. We submitted the
so-called concentration act to the antitrust authorities, "Secretaria de
Direito Economico do Ministerio da Justica" (SDE) and "Secretaria de
Acompanhamento Economico do Ministerio da Fazenda" (SAE), in August 2003. In
September 2003, SAE requested further information regarding the Brazilian LPG
market and the operations of both Ultragaz and Shell Gas. In November 2003, an
association of LPG resellers, ANERGAS, incorporated after the acquisition of
Shell Gas, filed a petition with the SDE, requesting the SDE to order Ultragaz
and Shell Gas to refrain from going forward with the transaction alleging the
protection of the market conditions for the Shell Gas franchisees. The SDE
denied ANERGAS request and sent its opinion to CADE in January 2004. In March
2004, Brazilian oil and gas regulatory body, "Agencia Nacional do Petroleo"
(ANP), issued a recommendation to SDE approving the transaction without
restrictions. Presently we are awaiting for CADE's final approval.

B.       Significant Changes

     None.

ITEM 9.  THE OFFER AND LISTING

A.       Offer and Listing Details

     On October 6, 1999, we concluded an initial public offering of our
preferred shares, which commenced trading on the Bovespa and on the New York
Stock Exchange, in the form of ADSs. Our preferred shares were issued at
R$26.45 per thousand shares, corresponding to US$13.50 per ADS, with each ADS
representing 1,000 preferred shares.


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     The following table sets forth trading information for our ADSs, as
reported by the New York Stock Exchange, and for our preferred shares, as
reported by Bovespa, for the periods indicated.


                           Price per ADS in U.S.      Price per 1,000 Preferred
                                  dollars                   Shares in Reais
                           ---------------------      -------------------------
Year  ended                  High           Low           High           Low
-------------------------  --------      ---------      --------      ---------
December 31, 1999           13.56          8.50          25.50         18.51
December 31, 2000           13.56          8.00          25.00         15.00
December 31, 2001           10.75          4.95          21.65         14.00
December 31, 2002            9.55          5.00          26.40         18.10
December 31, 2003           12.97          6.41          37.70         21.95
Quarter ended
-------------------------  --------      ---------      --------      ---------
March 31, 2002               9.32          7.65          22.00         18.10
June 30, 2002                9.55          6.80          23.50         19.50
September 30, 2002           7.75          5.25          22.55         19.00
December 31, 2002            7.20          5.00          26.40         20.30
March 31, 2003               7.45          6.41          26.40         21.95
June 30, 2003                9.22          6.94          26.80         22.50
September 30, 2003          10.60          8.69          30.99         25.35
December 31, 2003           12.97         10.25          37.70         30.00
March 31, 2004              13.45         11.25          38.01         33.03
Month ended
-------------------------  --------      ---------      --------      ---------
December 31, 2003           12.97         10.75          37.70         31.69
January 31, 2004            13.45         11.25          38.01         33.50
February 28, 2004           12.98         11.45          37.50         34.00
March 31, 2004              12.44         11.27          36.99         33.03
April 30, 2004              11.95         10.60          34.65         31.00
May 31, 2004                10.70          8.70          32.00         27.10

B.       Plan of Distribution

     Not applicable.

C.       Markets

     Our preferred shares are listed on the Sao Paulo Stock Exchange under the
ticker symbol "UGPA4" and the ADSs are listed on the New York Stock Exchange
under the symbol "UGP."

D.       Selling Shareholders

     Not applicable.

E.       Dilution

     Not applicable.


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ITEM 10.  ADDITIONAL INFORMATION


A.       Share Capital

     Not applicable.

B.       Memorandum and By-laws

     We are registered with the commercial registry of the state of Sao Paulo
under the registration number 35,300,109,724. Pursuant to chapter I, article 3
of our by-laws, our main corporate purpose is the investment of our capital in
the trade, industry and agriculture and in companies providing services, upon
the subscription for or acquisition of shares or quotas in companies.

     More detailed information with respect to our shares, shareholder rights,
and limitations on share ownership, is incorporated herein by reference to our
Registration Statement on Form F-1, Registration Number 33-10818, declared
effective by the Securities and Exchange Commission on October 6, 1999.

C.       Material Contracts

     In 1997, our indirect subsidiary Companhia Ultragaz issued US$ 60 million
in a 9% US dollar-denominated Eurobond due in 2005 with a put/call option
exercisable in 2002. We and our subsidiary Ultragaz jointly, severally and
unconditionally guaranteed this Eurobond and are thus subject to covenants
which restrict, among other things, our ability to incur indebtedness,
constitute liens, make dividend payments and other distributions and conduct
sale-leaseback transactions, mergers and asset sales. None of these covenants
have restricted our ability to conduct our ordinary course of business as of
the date of this annual report. This Eurobond was purchased in June 2002 by our
indirect subsidiary, LPG International Inc., with funds obtained from a
syndicated loan, with maturity in August 2004. In January 2004, taking
advantage of surplus international liquidity, this syndicated loan was
refinanced through a new Eurobond issue by LPG with the same maturity of the
original bond.

     On March 22, 2000, our controlling shareholders entered into a
shareholders' agreement designed to ensure the equal treatment of all
non-controlling shareholders in the event of any change in control. On May 18,
2004, the Extraordinary General Shareholders Meeting and the Special Meeting of
Preferred Shareholders approved an amendment of our Bylaws to register Tag
Along Rights for all Company shareholders, at 100% of the offer price. The
registration of the Tag Along Rights in our Bylaws is intended to improve on
the rights already conceded through the Shareholders Agreement. For information
regarding the Shareholders Agreement, see "Item 7 - Major Shareholders and
Related Party Transactions, Major Shareholders".

     Other material contracts are described in other sections of this report.
For information regarding the acquisition of Shell Gas, see "Item 4 -
Information on the Company, Equity Investments". For information regarding our
contract with Braskem relating to the supply of ethylene, see "Item 4 -
Information on the Company, Oxiteno, Raw Materials" and Item 5 - Contractual
Financial Obligations".

D.       Exchange Controls

     There are no restrictions on ownership of our preferred shares by
individual or legal entities domiciled outside Brazil. However, the right to
convert dividend payments and proceeds from the sale of our shares into foreign
currency and to remit such amounts abroad is subject to restrictions under
foreign investment legislation which generally require, among other things,
that the relevant investment be registered with the Central Bank and the CVM.

     Foreign investors may register their investment under Law 4,131 of
September 3, 1962 or Resolution 2,689. Registration under Resolution 2,689
affords favorable tax treatment to foreign investors who are not residents in


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a tax haven jurisdiction (i.e. countries that do not impose income tax or where
the maximum income tax rate is lower than 20%), as defined by Brazilian tax
laws.

     Under Resolution 2,689, foreign investors may invest in almost all
financial assets and engage in almost all transactions available in the
Brazilian financial and capital markets, provided that certain requirements are
fulfilled. In accordance with Resolution 2,689, the definition of foreign
investor includes individuals, legal entities, mutual funds and other
collective investment entities, domiciled or headquartered abroad.

     Under Resolution 2,689, a foreign investor must:

     o    appoint at least one representative in Brazil, with powers to perform
          actions relating to its investment,

     o    appoint an authorized custodian in Brazil for its investment,

     o    register as a foreign investor with the CVM, and

     o    register its foreign investment with the Central Bank.

     Additionally, the investor operating under the provisions of Resolution
2,689 must be registered with the Brazilian internal revenue service ("Receita
Federal") pursuant to the latter's Regulatory Instruction 200. This
registration process is undertaken by the investor's legal representative in
Brazil.

     Securities and other financial assets held by foreign investors pursuant
to Resolution 2,689 must be registered or maintained in deposit accounts or
under the custody of an entity duly licensed by the Central Bank or the CVM. In
addition, securities trading is restricted to transactions carried out in the
stock exchanges or through organized over-the-counter markets licensed by the
CVM, except for transfers resulting from a corporate reorganization, or
occurring upon the death of an investor by operation of law or will.

     Resolution 1,927 of the National Monetary Council provides for the
issuance of depositary receipts in foreign markets in respect of shares of
Brazilian issuers. Accordingly, the proceeds from the sale of ADSs by holders
of American depositary receipts outside Brazil are free of Brazilian foreign
investment controls and holders of ADSs who are not resident in a tax haven
jurisdiction will be entitled to favorable tax treatment.

     The right to convert dividend payments and proceeds from the sale of our
shares into foreign currency and to remit such amounts outside Brazil is
subject to restrictions under foreign investment legislation which generally
requires, among other things, that the relevant investment be registered with
the Central Bank. Restrictions on the remittance of foreign capital abroad
could hinder or prevent the custodian for the preferred shares represented by
ADSs, or holders who have exchanged ADSs for preferred shares, from converting
dividends, distributions or the proceeds from any sale of preferred shares, as
the case may be, into U.S. dollars and remitting such U.S. dollars abroad.
Delays in, or refusal to, granting the required government approval for
conversions of Brazilian currency payments and remittances abroad could
adversely affect holders of ADSs.

     We have obtained a certificate of registration in the name of Bank of New
York, the depositary. Pursuant to this certificate, the custodian and the
depositary are able to convert dividends and other distributions with respect
to the preferred shares represented by ADSs into foreign currency and to remit
the proceeds outside Brazil. If a holder exchanges ADSs for preferred shares,
such holder may continue to rely on the depositary's certificate of capital
registration for only five business days after such exchange. After that, such
holder must seek to register its investment directly with the Central Bank.
Thereafter, unless the holder has registered its investment with the Central
Bank, such holder may not convert into foreign currency and remit outside
Brazil the proceeds from the disposition of, or distributions with respect to,
such preferred shares. Such holder generally will be subject to less favorable
Brazilian tax treatment than a holder of ADSs.

     There are two principal foreign exchange markets in Brazil:

     o    the commercial rate exchange market, and

     o    the floating rate exchange market.


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<PAGE>


     Most trade and financial foreign-exchange transactions, including
transactions relating to the purchase or sale of shares or the payment of
dividends or interest with respect to shares, are carried out on the commercial
market. Only financial institutions authorized to buy and sell currency in the
commercial market may effect purchases of foreign currencies in that market. In
both markets, rates are freely negotiated, but may be strongly influenced by
Central Bank intervention. See "Item 3. Key Information--Selected Financial
Data--Exchange Rates."

     Under Brazilian law, whenever there is a serious imbalance in Brazil's
balance of payments or reasons to foresee a serious imbalance, the Brazilian
government may impose temporary restriction on the remittance of foreign
currency abroad and on the conversion of Brazilian currency into foreign
currencies. Such restrictions may hinder or prevent the custodian or holders
who have exchanged ADSs for underlying preferred shares from converting
distributions or the proceeds from any sale of such shares, as the case may be,
into U.S. dollars and remitting such U.S. dollars abroad.

E.       Taxation

     Brazil

     The following discussion summarizes the tax consequences in Brazil as
these apply to the acquisition, ownership and sale of preferred shares or ADSs
by a holder that is not domiciled in Brazil for purposes of Brazilian taxation
and, in the case of a holder of preferred shares, which has registered its
investment in preferred shares with the Central Bank as a U.S. dollar
investment. This explanation is based on Brazilian law as currently in effect.
Any change in the law may modify the consequences described below. The
following discussion summarizes the material tax consequences applicable under
current Brazilian legislation to non-Brazilian holders of preferred shares or
ADSs; it does not specifically address all of the Brazilian tax considerations
applicable to any particular non-Brazilian holder, and each non-Brazilian
holder should consult his or her own tax adviser concerning the Brazilian tax
consequences of an investment in preferred shares or ADSs. It is important to
note that the tax consequences described below do not take into account tax
treaties entered into by Brazil and/or reciprocal agreements signed between
Brazil and any other country.

     Taxation on Dividends

     In principle, dividends on shares and other dividends paid by Brazilian
corporations in kind to the foreign domiciled beneficiary in respect of the
preferred shares, are not subject to withholding income tax in Brazil.
Dividends relating to profits generated prior to January 1, 1996 are subject to
withholding income tax at varying rates, depending on the year the profits were
generated (15% in 1994 and 1995).

     Payments on shareholders' equity

     Law 9,249, dated December 26, 1995 permits Brazilian companies to make
distributions to shareholders of interest attributed to shareholders' equity.
This interest is calculated in accordance with the daily pro rata variation of
the Brazilian government's long-term interest rate, (TJLP), as determined by
the Brazilian Central Bank from time to time, and cannot exceed the greater of:

     o    50% of net income (after the deduction of social contribution on net
          income and before the deduction of the income tax provision and
          interest on equity attributable to shareholders) related to the
          period in respect of which the payment is made; or

     o    50% of the sum of retained earnings and revenue reserves.

     Any payment of interest to shareholders (including holders of ADSs in
respect of preferred shares), is subject to withholding income tax at the rate
of 15% or 25% in the case of a shareholder domiciled in a country, which under
the Brazilian legislation, is considered a tax haven (a country which does not
tax income or taxes it at a maximum of less than 20%). Additionally, these
payments may be qualified, at their net value, as an integral part of any
minimum mandatory dividend.


                                      92
<PAGE>


     If payments of interest attributed to shareholders' equity are qualified
as part of a mandatory dividend, the corporation is required to distribute an
additional amount to ensure that the net amount received by shareholders, after
payment of the applicable withholding income tax, is at least equal to the
mandatory dividend.

     Distributions of interest attributed to shareholders' equity to
non-Brazilian investors in respect of preferred shares, including the preferred
shares underlying the ADSs, may be converted into U.S. dollars and remitted
from Brazil, subject to the prevailing exchange controls.

     Taxation of Gains and Income

     According to Brazilian law, capital gains and income are treated
differently for income tax purposes. Income is defined as remuneration derived
from any investment, not originating from the transfer of ownership of such an
investment in any form. For tax purposes, capital gains are defined as the
positive difference between the acquisition cost of the investment and the
respective price derived from the transfer of the ownership in any form (such
as a sale, liquidating distribution, redemption etc.).

     The capital gains obtained as a result of a transaction executed via the
Brazilian Stock Exchange is the difference between the value in Reais realized
through the sale or swap in securities and the acquisition cost in Reais,
without any monetary restatement for inflation. The acquisition cost registered
as an investment with the Central Bank of Brazil is calculated using the value
registered in foreign currency at the Central Bank, converted to Reais at the
commercial US dollar rate on the date of sale or swap in securities.

     As at October 31, 2003, the capital gains realized outside Brazil by a
non-resident as a result of the sale of preferred shares or ADSs to another
non-resident were not subject to Brazilian income tax. However, pursuant to
Article 26 of Law 10,833, published on December 29, 2003, the sale of property
located in Brazil involving non-resident investors could be subject to
Brazilian income tax as from February 1 2004. Our understanding is that ADSs do
not qualify as property located in Brazil. Insofar as the regulatory norm
referred to in Article 26 is recent and generic and has not been tested through
the administrative or judicial courts, we are unable to evaluate what the final
ruling on the matter will be.

     For the purpose of Brazilian taxation, there are two types of non-resident
holders of ADSs or preferred shares:

     a)   market investors, including those investors holding ADSs, not
          resident in tax havens, which represent those non-resident investors
          who register with the CVM or the Central Bank of Brazil, pursuant to
          Resolution 2,689 of the National Monetary Council (market investors);
          and

     b)   ordinary non-resident investors, which include any and all
          non-residents in Brazil which invest in the country through any other
          means and investors that reside in tax havens, irrespective of their
          registration or otherwise in accordance with Resolution 2,689.

     The investors described in (a) above are subject to a more favorable tax
treatment in Brazil, described below. The deposit of ADSs for preferred shares
could be subject to an income tax rate of 15%, or 25% for investors domiciled
in tax havens, when the amount originally registered as an investment in
foreign currency with the Central Bank is less than the average price of the
preferred shares. The average price of the preferred shares is calculated
according to (i) data from the Brazilian stock exchange in which the greater
number of such shares were traded on the day of the deposit; or (ii) if no
preferred share was sold on that day, the average price on the Brazilian stock
exchange in which the greatest number of preferred shares were traded, in the
last 15 business days.

     On the receipt of the preferred shares, the non-resident investor is
obliged to register the share value in foreign currency with the Central Bank
of Brazil. The conversion of preferred shares in ADSs is not subject to
Brazilian income tax. The capital gains resulting from the sale of preferred
shares on the Brazilian stock exchanges by non-resident investors not domiciled
in tax havens, and registered in accordance with Resolution 2,689, are exempt
from income tax. In the case of capital gains resulting from the sale of
preferred shares on the Brazilian stock exchanges, (i) by non-resident
investors not registered in accordance with Resolution 2,689, or (ii) by
non-resident investors,


                                      93
<PAGE>


domiciled in tax havens (irrespective of being registered or otherwise pursuant
to Resolution 2689), the rate of income tax will be 20%.

     Capital gains obtained from the sale of preferred shares not conducted
through the Brazilian stock exchanges by non-resident investors, are subject to
income tax of 15%, or 25% in the case of non-resident investors domiciled in
tax havens.

     Non-resident investors which are not resident in tax havens, must comply
with the following conditions of Resolution 2,689, to obtain the more favorable
tax treatment:

     o    Appoint a representative in Brazil with powers to take actions
          relating to their investment;

     o    Appoint a custodian in Brazil for their investments;

     o    Be registered as a foreign investor with the CVM; and

     o    Register their investment with the Central Bank of Brazil.

       Under  Resolution  2,689,  assets held by foreign  investors must be
maintained  under the custody of, or in deposit accounts with, financial
institutions duly authorized by the Central Bank of Brazil and the CVM.
Additionally, securities trading is restricted to transactions carried out on
Brazilian stock exchanges by certain qualified non-Brazilian investors.

     The proceeds from the redemption of the ADSs, or the distribution on the
occasion of the liquidation of the same ADSs, under the same conditions, is
exempt from Brazilian income tax.

     With reference to proceeds of a redemption of, or a liquidating
distribution with respect to, preferred shares having as the paying source a
Brazilian resident, the positive difference between the amount effectively
received by the shareholder and the amount of foreign currency registered with
the Central Bank of Brazil translated into Reais at the commercial rate on the
date of the redemption or liquidating distribution, will be treated as a
capital gain derived from sale or switch of shares not carried out on a
Brazilian stock exchange, being subject to income tax at the rate of 15% or 25%
in the case of investors domiciled in tax havens.

     Taxation of Foreign Exchange Transactions. A financial transaction tax
("IOF") is imposed on the conversion of Reais into foreign currency and on the
conversion of foreign currency into Reais. Although the current applicable rate
for almost all foreign currency exchange transactions is zero, the Ministry of
Finance can increase the rate at its sole discretion at any time, by merely
issuing a Ministerial Administrative Rule. In this case, the Brazilian
legislation allows for such an increase to be made up to a maximum ceiling of
25%. However, any increase in the prevailing rate will only apply to future
transactions.

     Taxation of Bonds and Securities' Transactions. Transactions involving
bonds and securities, even if the transaction is conducted over the Brazilian
stock exchange, may be subject to the Tax on Financial Transactions - IOF. The
rate of IOF with respect to transactions involving preferred shares and ADSs is
currently zero, although it can increased up to a ceiling of 1.5% per day on
the income from the securities, but only with respect to future transactions
involving preferred shares and ADSs.

     Other Brazilian Taxes. There are no Brazilian inheritance, gift or
succession taxes applicable to the ownership, transfer or sale of preferred
shares or ADSs, except for gift and inheritance taxes imposed by some Brazilian
states on gifts by individuals or entities not domiciled or resident in Brazil
to individuals or entities domiciled or residing in such states. There are no
Brazilian stamp, issue, registration, or similar taxes or duties payable by
holders of preferred shares or ADSs.

     Transactions carried out by the depositary or by holders of preferred
shares, which involve the transfer of Brazilian currency from an account
maintained with any Brazilian financial institution are subject to the CPMF tax
at the rate of 0.38%. Under Amendment 42 to the Brazilian constitution, dated
December 19 2003, the 0.38%


                                      94
<PAGE>


CPMF tax rate will be applicable until December 31, 2007. The CPMF is withheld
from the transferred amounts and collected by the financial institution that
carries out the financial transaction. Financial transfers to and from Brazil
relating operations for acquiring preferred shares on the stock exchange by
non-resident investors are not subject to the CPMF tax

     Registered Capital. The amount of an investment in preferred shares held
by a non-Brazilian holder that qualifies under Resolution 2,689 and obtains
registration with the CVM, or by the depositary representing such holder, is
eligible for registration with the Central Bank (the amount so registered is
referred to as "Registered Capital"); such registration allows the repatriation
of foreign currency, converted at the commercial market rate, acquired with the
proceeds of distributions on, and amounts realized with respect to the sale of
such preferred shares. The Registered Capital for each preferred share
purchased in Brazil and deposited with the depositary will be equal to its
purchase price in U.S. dollars. The Registered Capital for a preferred share
that is withdrawn upon surrender of an ADS will be the U.S. dollar equivalent
of (i) the average price of a preferred share on the Brazilian stock exchange
on which the greatest number of such shares was sold on the day of withdrawal,
or (ii) if no preferred shares were sold on that day, the average price on the
Brazilian stock exchange on which the greatest number of preferred shares were
sold in the fifteen trading sessions immediately preceding such withdrawal. The
U.S. dollar value of the preferred shares is determined on the basis of the
average commercial market rates quoted by the Central Bank on the day of
withdrawal or, if the average price of preferred shares is determined under
clause (ii) of the preceding sentence, the average of such average quoted rates
on the fifteen dates used to determine the average price of the preferred
shares.

     A non-Brazilian holder of preferred shares may experience delays in
affecting registration with the Central Bank, which may delay remittances
abroad. Such a delay may adversely affect the amount in U.S. dollars received
by the non-Brazilian holder.

United States

     The following is a discussion of the material U.S. federal income tax
consequences of the acquisition, ownership and disposition of preferred shares
or ADSs, but it does not purport to be a comprehensive description of all of
the tax considerations that may be relevant to acquire preferred shares or
ADSs, and does not address state, local or other tax laws. The discussion
applies only to holders that hold preferred shares or ADSs as capital assets
for tax purposes, and does not address special classes of holders, such as
dealers and traders in securities or foreign currencies, financial
institutions, insurance companies, tax exempt entities, persons owning,
directly, indirectly or constructively, 10% or more of our voting shares,
persons holding preferred shares or ADSs as part of a hedging or conversion
transaction or straddle, persons entering into a "constructive sale" with
respect to preferred shares or ADSs, persons whose functional currency for U.S.
federal income tax purposes is not the U.S. dollar, persons liable for
alternative minimum tax, partnerships or other entities classified as
partnerships for U.S. federal income tax purposes, or persons who have ceased
to be United States citizens or to be taxed as resident aliens.

     You are advised to consult your own tax advisors concerning the overall
tax consequences to you, including the consequences under foreign, state and
local laws, of the acquisition, ownership and disposition of preferred shares
or ADSs.

     This discussion is based on the tax laws of the United States, including
the Internal Revenue Code of 1986, as amended, administrative pronouncements,
judicial decisions and final, temporary and proposed Treasury Regulations, all
as currently in effect and changes to any of which may affect the tax
consequences described herein, possibly with retroactive effect. In addition,
this discussion is based in part on representations of the depositary and
assumes that each obligation provided for in or otherwise contemplated by the
Deposit Agreement and any other related document will be performed in
accordance with their terms.

     This discussion applies to you only if you are a "U.S. Holder." For
purposes of this discussion, a "U.S. Holder" is a beneficial owner of preferred
shares or ADSs that is for U.S. federal income tax purposes (i) a citizen or
resident of the United States of America, (ii) a corporation, or other entity
taxable as a corporation, organized under the laws of the United States of
America or any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.


                                      95
<PAGE>


     In general, U.S. Holders of ADSs will be treated for U.S. federal income
tax purposes as owners of the preferred shares underlying the ADSs.
Accordingly, except as noted, the U.S. federal income tax consequences
discussed below apply equally to U.S. Holders of ADSs and preferred shares, and
references to preferred shares should also be treated as references to ADSs.
Exchanges of preferred shares for ADSs and ADSs for preferred shares will not
be subject to U.S. federal income tax.

     The U.S. Treasury has expressed concerns that parties to whom ADSs are
pre-released may be taking actions that are inconsistent with the claiming of
foreign tax credits for U.S. Holders of ADSs. Such actions would also be
inconsistent with claiming the 15% rate applicable to non-corporate holders.
Accordingly, the analysis of the creditability of Brazilian taxes and the
availability of the 15% rate received by certain non-corporate holders
described below could be affected by actions that may be taken by the parties
to whom ADSs are pre-released.

     Taxation of Dividends. Distributions paid with respect to preferred shares
will be includable in the income of a U.S. Holder as ordinary dividend income
to the extent paid out of current or accumulated earnings and profits of
Ultrapar, as determined for U.S. federal income tax purposes. Under recently
enacted legislation, dividends received by non-corporate U.S. Holders on
preferred shares or ADSs may be subject to U.S. federal income tax at lower
rates (generally 15%) than other types of ordinary income if certain conditions
are met. U.S. Holders should consult their own tax advisors regarding the
implications of this new legislation in their particular circumstances. For
purposes of these rules, the amount of any distribution of property other than
cash will be the fair market value of such property on the date of
distribution. In addition, the taxable amount of any distribution will include
the amount of Brazilian tax withheld on the amount distributed, and the amount
of a distribution paid in reais will be measured by reference to the exchange
rate for converting reais into U.S. dollars in effect on the date the
distribution is received by the custodian, in the case of ADSs, or the U.S.
Holder, in the case of preferred shares directly held by a U.S. Holder.
Dividends paid by us generally will constitute foreign source "passive" income
for U.S. foreign tax credit purposes and will not be eligible for the dividends
received deduction. Subject to certain limitations, Brazilian withholding tax,
if any, paid in connection with any distribution with respect to preferred
shares may be claimed as a credit against the U.S. federal income tax liability
of a U.S. Holder if such U.S. Holder elects for that year to credit all foreign
income taxes; otherwise, such Brazilian withholding tax may be taken as a
deduction. U.S. Holders should consult their own tax advisors concerning the
availability and utilization of the foreign tax credit.

     Taxation of Capital Gains. Subject to the discussion below under the
heading "Passive Foreign Investment Companies", gain or loss realized by a U.S.
Holder upon the sale, exchange or other disposition of a preferred share will
be subject to United States federal income tax as U.S. source capital gain or
loss in an amount equal to the difference between the amount realized on the
disposition of the preferred share and the U.S. Holder's tax basis in the
preferred share. The gain or loss will be long term capital gain or loss if the
U.S. Holder's holding period in the preferred share exceeds one year. U.S.
Holders should consult their tax advisors regarding the United States federal
tax treatment of capital gains, which may be taxed at lower rates than ordinary
income for individuals, and losses, the deductibility of which is subject to
limitations.

     Passive Foreign Investment Companies. Special U.S. tax rules apply to U.S.
Holders that own shares in a passive foreign investment company, known as a
PFIC. In general, we will be classified as a PFIC in a particular taxable year
if either:

     o    75% or more of our gross income consists of passive income, such as
          dividends, interest, rents and royalties; or

     o    50% or more of our assets, by value, determined on the basis of a
          quarterly average, consists of assets that produce, or are held for
          the production of, passive income.

     Based on a review of our income and assets, we believe that we were not a
PFIC for U.S. federal income tax purposes in 2003. However, since PFIC status
depends upon the composition of a company's income and assets and the market
value of its assets (including, among others, less than 25 percent equity
investments) from time to time, there can be no assurance that we will not be
considered a PFIC for any taxable year.

     If we are treated as a PFIC in any taxable year during which a U.S. Holder
owns preferred shares, gain recognized by such U.S. Holder on the sale or other
disposition of the preferred shares will be allocated ratably over


                                      96
<PAGE>


the U.S. Holder's holding period for the preferred shares. The amounts
allocated to the taxable year of the sale or other exchange and to any year
before we become a PFIC will be taxable as ordinary income. The amount
allocated to each other taxable year will be subject to tax at the highest rate
in effect for that year for individuals or corporations, as appropriate, and an
interest charge will be imposed on the amount allocated to such taxable year.
Further, any distribution in respect of the preferred shares in excess of 125
percent of the average of the annual distributions on preferred shares received
by the U.S. Holder during the preceding three years or the U.S. Holder's
holding period, whichever is shorter, will be subject to taxation as described
above. Certain elections may be available (including a mark-to-market election)
to U.S. persons that may mitigate the adverse consequences resulting from PFIC
status.

     United States Backup Withholding and Information Reporting

     Payment of dividends and other proceeds in connection with the preferred
shares made within the United States or through certain U.S.-related financial
intermediaries generally are subject to information reporting and to backup
withholding, unless the U.S. Holder (i) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact, or
(ii) provides a taxpayer identification number on a properly completed Form W-9
or a substitute form and certifies that no loss of exemption from back-up
withholding has occurred. The amount of any backup withholding will be
creditable against the U.S. Holder's federal income tax liability and may
entitle the U.S. Holder to a refund, provided that the required information is
furnished to the Internal Revenue Service.

F.       Dividends and Paying Agents

     Not applicable.

G.       Statement by Experts

     Not applicable.

H.       Documents on Display

     Statements contained in this annual report as to the contents of any
contract or other document referred to are not necessarily complete, and each
of these statements is qualified in all respects by reference to the full text
of such contract or other document filed as an exhibit hereto. A copy of the
complete annual report including the exhibits and schedules filed herewith may
be inspected without charge at the public reference facilities maintained by
the SEC at Room 1024,450, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the SEC's regional offices located at 233 Broadway, New York, N.Y., 10279
and North Western Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 - 2511. Copies of such materials may be obtained by mail from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such reports and other information may also be
inspected at the offices of the New York Stock Exchange, 11 Wall Street, New
York, New York 10005, on which ADS are listed. In addition the SEC maintains a
website that contains information filed electronically with the SEC, which can
be accessed over the Internet at http://www.sec.gov.

     We are subject to the information and periodic reporting requirements of
the Securities Exchange Act of 1934 as amended, and, in accordance therewith,
file periodic reports and other information with the SEC. However, as a foreign
private issuer, we are exempt from the rules under the Exchange Act relating to
the furnishing and content of proxy statements and relating to short-swing
profits reporting and liability.

     We furnish to The Bank of New York, as depositary, copies of all reports
we are required to file with the SEC under the Exchange Act, including our
annual reports in English, containing a brief description of our operations and
our audited annual consolidated financial statements which are prepared in
accordance with accounting practices adopted in Brazil and include a
reconciliation to U.S. GAAP. In addition, we are required under the Deposit
Agreement to furnish the depositary with copies of English translations to the
extent required under the rules of the SEC of all notices of meetings of
holders of preferred shares and other reports and communications that are
generally made available to holders of preferred shares. Under certain
circumstances, the depositary will arrange for the mailing, at our expense, of
these notices, other reports and communications to all ADS holders.


                                      97
<PAGE>


I.       Subsidiary Information

     Not applicable.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to various market risks, primarily related to variable
interest rates and foreign exchange rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange rates and interest rates. We do not enter into derivative
financial instruments for speculative purposes. Our market risks are mitigated
by our high level of financial investments.

     See Notes 3(l), 17 and 24(v)(e) and (j) to our consolidated financial
statements for a discussion of the accounting policies for derivative
instruments and information with respect to those financial instruments.

     Interest Rate Risk

     Substantially all of our debt obligations in reais are subject to variable
rates of interest based on either the TJLP or the IGP-M inflation index. Our
foreign currency borrowings, however, are substantially subject to fixed rates
of interest. As of December 31, 2003, we did not have any derivative contracts
outstanding which could limit exposure to variations in the TJLP or the IGP-M,
primarily because such instruments are not available in the Brazilian market at
reasonable prices. Nevertheless, our exposure to interest rate risk is
partially limited by our Brazilian currency variable interest investments,
which generally earn the overnight interest rates paid on interbank
certificates of deposit. In addition to the exposure with respect to existing
borrowings, we would be exposed to interest rate volatility with respect to any
future debt issuance.

     The table below provides information about our debt obligations in foreign
currency and in Reais that are subject to variable rates of interest. The table
summarizes information on instruments and transactions that are sensitive to
foreign currency exchange rates and interest rates:


<TABLE>
                                                                             Principal by year of maturity
                                                                    (in millions of Reais as of December 31, 2003):
                                                                ---------------------------------------------------------
                       Average
                       Interest                  Outstanding
Debt                     Rate      Fair Value      Debt R$      2004      2005     2006      2007      2008    Thereafter
--------------------   --------    ----------    -----------    ----      ----     ----      ----      ----    ----------
<S>                       <C>          <C>          <C>       <C>       <C>       <C>        <C>       <C>          <C>
U.S. dollar               5.1%         425.3        415.0     249.5     101.0     45.3       9.6       9.6
borrowings
Borrowings indexed       10.2%          23.7         23.2       7.7       6.3      5.8       3.2       0.2
to the UMBNDES
Borrowings indexed        1.4%           0.5          0.5       0.5         -        -         -         -           -
to the TIE
Borrowings indexed        2.9%         176.4        176.4      64.5      49.6     39.8      18.0       3.5          1.0
to the TJLP
Borrowings indexed        6.5%          17.1         17.1       3.7       3.9      3.8       3.8       1.9
to the IGP-M
                         ----          -----        -----     -----     -----     ----      ----      ----          ---
Subtotal                               643.0        632.2     325.9     160.8     94.7      34.6      15.2          1.0
                         ====          =====        =====     =====     =====     ====      ====      ====          ===
Unrealized losses on                    34.4         55.7      55.7
swaps transactions
Total                                  677.4        687.9     381.6     160.8     94.7      34.6      15.2          1.0
                         ====          =====        =====     =====     =====     ====      ====      ====          ===
</TABLE>


Foreign Exchange Risk

     A substantial portion of our debt obligations is denominated in U.S.
dollars. In addition, a significant portion of our raw materials, are
denominated in, or indexed to U.S. dollar. Most of our revenues are denominated
in reais, although sales prices of products of the chemicals segment are linked
to international market prices established in


                                      98
<PAGE>


U.S. dollars. As a result, we are exposed to currency exchange risks that may
adversely affect our business, financial condition and results of operations,
as well as our ability to meet our debt service obligations.

     We manage the foreign exchange risks associated with the scheduled
payments related to our debt obligations by investing in U.S.
dollar-denominated assets and in foreign currency/interest swap contracts,
under which we pay variable interest in reais based on the interbank
certificate of deposit rate, or CDI, and receive fixed interest in U.S.
currency.

     The table below summarizes our U.S. dollar net swap position at December
31, 2003:


<TABLE>
Swap                                                                         Maturity
--------------------------------------------      ------------------------------------------------------------
                                                        2004                 2005             2006 thereafter
                                                  ----------------     ---------------       -----------------
<S>                                               <C>                  <C>                   <C>
Floating rate of swaps (in million of reais)(*)         47.4                 238.9                  48.3
  Average receiving rate                             US$ + 15.0%          US$ + 7.1%             US$ + 6.2%
  Average payment rate (**)                       100.0% CDI - 3.3%    100.0% CDI - 0.6%     100.0% CDI - 1.6%

    *     Notional  amount  converted  according to the  commercial  selling rate  reported by Banco Central do Brasil
          (Ptax) at December 31, 2003
    **    CDI - Interbank CD
</TABLE>


     The table below summarizes our Mexican Peso swap position at December 31,
2003:


<TABLE>
Swap                                                                         Maturity
--------------------------------------------      ------------------------------------------------------------
                                                        2004                 2005             2006 thereafter
                                                  ----------------     ---------------       -----------------
<S>                                               <C>                  <C>                   <C>
Floating rate of swaps (in million of reais)(*)            -                   -                    31.1
  Average receiving rate                                   -                   -                     US$%
  Average payment rate (**)                                -                   -                 Mex$ + 5.8%
</TABLE>

     *    Notional amount converted according to the commercial selling rate
          reported by Banco Central do Brasil (Ptax) at December 31, 2003

     **   Mex$: Mexican peso



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
         USE OF PROCEEDS

     The Extraordinary General Shareholders' Meeting and the Special Meeting of
Preferred Shareholders held on May 18, 2004, approved amendments of Ultrapar's
Bylaws, pursuant to articles 135 and 136 of Law 6,404/76. The amendments (i)
registered in the Ultrapar's Bylaws Tag Along Rights for all Company
shareholders, at 100% of the offer price; and (ii) gave common and preferred
shareholders the right to equal dividends. The purpose of these amendments is
to further align the interests of common and preferred shareholders. The
registration of the Tag Along Rights in the Company's Bylaws is intended to
improve on the rights already conceded on March 22, 2000 through Ultra S.A.'s
Shareholders Agreement.


                                      99
<PAGE>


ITEM 15. CONTROLS AND PROCEDURES

     On December 31, 2003, under management's supervision and with its
participation, including our chief executive officer and chief financial
officer, we performed an evaluation of our disclosure controls and procedures
for the period relating to the information contained in this 20F report. Based
on this evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are effective at the
reasonable assurance level for the purpose of collecting, analyzing and
disclosing the information that we are required to disclose in the reports we
file under the Securities Exchange Act of 1934, within the time periods
specified in the SEC's rules and forms. Our management necessarily applied its
judgement in assessing the costs and benefits of such controls and procedures.

     There have been no significant changes in our internal controls over
financial reporting or other factors during the annual period covered by this
Form 20-F that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

ITEM 16.  [Reserved]

ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

     Under Brazilian Corporate Law, we are not required to, and currently do
not maintain, a permanent audit committee. Consequently, we do not currently
have a financial expert performing audit functions. We are currently working to
ensure our compliance with all provisions of the Sarbanes-Oxley Act of 2002 in
the appropriate manner and within the established time frame, including
requirements relating to the appointment of a financial expert.

ITEM 16B.  CODE OF ETHICS

     We have adopted a code of ethics which covers (i) the Board of Directors;
(ii) the Executive Board (including the chief executive officer and the chief
financial officer); (iii) the Fiscal Committee of Ultrapar, when installed;
(iv) the Board of Directors and Executive Board of its subsidiaries; and (v)
remaining bodies with technical or advisory functions that are directly
subordinated to the Board of Directors, to the Executive Board or to the Fiscal
Committee of Ultrapar. The objective of this code is (i) to reduce the
subjectivity of personal interpretations of ethical principles; (ii) to be a
formal and institutional benchmark for the professional conduct of the
employees, including the ethical handling of actual or apparent conflicts of
interests, becoming a standard for the internal and external relationship of
the Company with its stakeholders, namely: shareholders, clients, employees,
partners, suppliers, service providers, labor unions, competitors, society,
government and the communities in which it operates; and (iii) to ensure that
the daily concerns with efficiency, competitiveness and profitability do not
override ethical behavior.

     Our code of ethics complies with the provisions of the Sarbanes-Oxley Act
of 2002. A copy of our code of ethics is filed as an attachment to this
document.

ITEM 16C. COMPENSATION OF THE PRINCIPAL AUDITING COMPANY

     The relationship with our independent auditors in respect to the
contracting of services unrelated to the external audit is based on principles
that preserve the independence of the auditor. We currently do not have an
audit committee. Our board of directors approves our financial statements, the
performance by our auditors of audit and permissible non-audit services, and
associated fees, fulfilling the function of an audit committee. For the fiscal
years ending December 31, 2003 and 2002, Deloitte Touche Tohmatsu Auditores
Independentes ("Deloitte") acted as our independent registered public
accounting firm.


                                      100
<PAGE>


     The following table describes the total amount billed to us by Deloitte
for services performed in 2002 and 2003 and the respective remuneration for
these services.


                                                  2003             2002
                                                --------         --------
                                                 (in thousands of Reais)
Audit Fees................................        728.5            546.6
Audit Related Fees........................            -             26.2
Tax Fees..................................          7.0                -
All Other Fees............................         14.0                -
Total for Consolidated Audit..............        749.5            572.8
                                                  -----            -----

     "Audit Fees" are the aggregate fees billed by Deloitte Touche Tohmatsu for
the audit of our consolidated and annual financial statements, reviews of
interim financial statements and attestation services that are provided in
connection with statutory and regulatory filings or engagements. "Audit-Related
Fees" are fees charged by Deloitte Touche Tohmatsu for assurance and related
services that are reasonably related to the performance of the audit or review
of our financial statements and represent due diligence services related to
potential and non-completed acquisitions. "Tax Fees" are fees for professional
services rendered by Deloitte Touche Tohmatsu for tax advice services. Fees
disclosed under the category "All Other Fees" represent services rendered in
connection to transfer pricing training.

PART III

ITEM 17. FINANCIAL STATEMENTS

     We have responded to Item 18 in lieu of responding to this Item.

ITEM 18. FINANCIAL STATEMENTS

     We file the following consolidated financial statements, together with the
reports of independent registered public accounting firms, as part of this
annual report:

Index to consolidated financial statements .................................F-1

Report of independent registered public accounting firm dated January 30,
2004, (except for Note 24 as to which the date is March 19, 2004; for Note
23.b as to which the dates are April 16, 2004 and April 30, 2004 and for
Note 23.c as to which the date is May 18, 2004) for the fiscal years ended
December 31, 2003 and 2002 issued by Deloitte Touche Tohmatsu Auditores
Independentes ..............................................................F-3

Report of independent registered public accounting firm dated January 31,
2002 for the fiscal year ended December 31, 2001 issued by
PricewaterhouseCoopers Auditores Independentes .............................F-4

Consolidated Balance Sheet at December 31, 2003 and 2002 ...................F-6

Consolidated statement of income for the years ended December 31, 2003,
2002 and 2001 ..............................................................F-7

Consolidated statements of changes in stockholders' equity for the years
ended December 31, 2003, 2002 and 2001 .....................................F-8

Consolidated statements of changes in financial position for the years
ended December 31, 2003, 2002 and 2001 .....................................F-9

Notes to the consolidated financial statements for the years ended
December 31, 2003, 2002 and 2001............................................F-10


                                      101
<PAGE>


ITEM 19. EXHIBITS

   We file the following documents as part of this Annual Report Form 20F:

    1.1  Ultrapar bylaws, revised on May 22, 2004

    2.1  Shareholders' Agreement relating to Tag Along Rights.*

    2.2  The instrument defining the rights of holders of the long-term debt
         securities of Ultrapar and its subsidiaries, specifically the Eurobond
         issued in January of 2004, is omitted pursuant to Section 2(b)(i) of
         the Instructions as to Exhibits of Form 20-F. Ultrapar hereby agrees
         to furnish copies of these instruments to the Securities and Exchange
         Commission upon request.

    4.1  Contract for the supply of ethylene between Braskem and Oxiteno**

    4.2  Shares Sale and Purchase Agreement related to the sale and purchase of
         the entire share capital of Shell Gas (LPG) Brasil S.A.

    8.1  List of Ultrapar's subsidiaries

    11.1 Code of ethics

    12.1 Section 302 Certification by the Chief Executive Officer

    12.2 Section 302 Certification by the Chief Financial Officer

    13.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002

    15.1 Documentation with respect to our corporate restructuring of 2002 ***

--------------------
      *    Incorporated by reference to the Annual Report Form 20-F for the
           fiscal year ended December 31 1999 (file 001-14950) filed with the
           SEC on May 16 2000.

      **   Incorporated by reference to Item 10.7 of the Exhibits filed with
           the Company's Registration Statement on Form F-1, (file 333-10818).

     ***   Incorporated by reference in Forms 6-K, filed with SEC on October
           15, 2002, November 1, 2002 and December 6, 2002 (file 001-14950).


                                      102
<PAGE>


<TABLE>
                                               GLOSSARY


<S>                                     <C>
Acetates                                Chemical substances derived from acetic acid, which are used as solvents in the
                                        production of paints and coatings.

Acetic Acid                             One of the largest produced organic acids and is used in the production of acetates.

Acrylates                               Derivatives from acrylic acid, that are used in the plastic industry.

Acrylonitrile                           Derivative compounds from propylene having a nitrile group.

Alcohol                                 Flammable liquid obtained by fermentation of sugary substances, or by synthetics
                                        operations.

Alcohol Sulfates                        Fatty alcohol-derived sulfates, with surfactant characteristics, mainly used in the
                                        production of detergents.

Alkanolamides                           Substances produced by reaction of fatty acids with alcanolamines, mainly used as
                                        emulsifiers in cosmetic preparation.

Alkyl                                   Benzene Substance with an aromatic ring and an aliphatic chain.

Aromatics                               A major group of organic chemical compounds with a ring shaped carbon chain.
                                        Aromatics are derived chiefly from petroleum and coal tar, and used to make a broad
                                        range of downstream chemical products.

Butadiene                               By-product of the cracking process; used primarily as a feedstock for synthetic
                                        rubber, elastomers and fibers.

Butyl Alcohol                           An alcohol used primarily in the production of solvents and plasticizers.

Commodity Chemicals                     A term applied to chemical substances, which are sold on a generic basis and, unlike
                                        specialty chemicals, are not generally manufactured to meet specific end-use performance
                                        characteristics.

Condensed Naphthalene                   Polymer mainly used as a super-fluidizer and curing agent for cement preparation.

Crackers                                First generation companies that thermally breakdown or "crack" ethane, naphtha and
                                        gas oil into basic petrochemicals, such as ethylene and propylene.

Dispersants                             Class of chemicals whose main property is to maintain the stability of a mixture by
                                        preventing particles from settling out of the mixture.

EDC                                     Ethylene Dichloride, raw material of VCM.

Elastomer                               Broad category of "rubber" polymers which may be natural or synthetic, such as
                                        natural rubber, nitrile rubber and styrene-butadiene rubbers.

Emulsifiers                             A class of chemical generally used to promote the dispersion of materials throughout
                                        a solution or mixture.
</TABLE>


                                      103
<PAGE>


<TABLE>
<S>                                     <C>
Ethanolamines                           Ethanolamines, comprising mono-, di-, and tri-ethanolamines, are clear,
                                        non-flammable, liquids at atmospheric pressure and room temperature conditions, and
                                        are produced from ethylene oxide and ammonium.

Ethers                                  Organic compound with one oxygen atom interpoled between two carbon atoms.

Ethoxylated Alcohol                     Produced by reaction of ethylene oxide with alcohols. Ethoxylated alcohols are used mainly
                                        as surfactants.

Ethoxylated Alkylphenols                Ethoxylated alkylphenols range from clear liquids to colored solids and is produced
                                        by the reaction of ethylene oxide with alkylphenol.

Ethoxylated Fatty Alcohols              Substances produced by reaction of ethylene oxide with fatty alcohols and are used
                                        mainly as a raw material for detergent production.

Ethoxylated Fatty Amines                Substances produced by reaction of ethylene oxide with fatty amines and are used
                                        mainly as emulsifiers for agrochemicals.

Ethoxylated Fatty Esters/               Substances produced by reaction of ethylene oxide with hydroxylated fatty esters and are
                                        used mainly as emulsifiers in the cosmetic industry.

Ethoxylated Vegetable Oil

 Ethoxylated Sorbitan Esters            Substances produced by reaction of ethylene oxide with sorbitan esters and are mainly
                                        used as food emulsifiers, especially for bakery products.

Ethyl Alcohol                           A flammable liquid known as ethanol. It is used as automotive fuel, alone or
                                        in mixture with gasoline, as solvent in personal care products, such as aftershave
                                        lotion and mouthwashes.

Ethylene                                A chemical substance, mainly derived from thermal cracking of ethane, gas oil and
                                        naphtha, and used to make polyethylene and many organic chemical intermediates, such
                                        as ethylene oxide, vinyl chloride, styrene and acetaldehyde.

Ethylene Glycols                        Includes mono-, di-, tri- and other ethylene glycols. Mono-ethylene glycol or MEG is
                                        a clear, non-flammable, non-volatile liquid at room temperature and atmospheric
                                        pressure. Ethylene glycols are produced from ethylene oxide.

Ethylene Oxide                          Ethylene oxide is a colorless and highly flammable gas at room temperature and
                                        atmospheric pressure and is produced by catalytic partial oxidation of ethylene by
                                        oxygen, at high temperature and pressure.

First Generation Company                A petrochemical cracker.

Fuels                                   Any substance that involves energy in a chemical reaction.

Glycol Ether Acetate                    Flammable liquids at room temperature and atmospheric pressure produced by reaction
                                        with acetic acid and glycol ether.

Glycols                                 Alcohols containing two hydroxyl groups.

Glycol Ethers                           Substances produced by reaction of ethylene oxide and an alcohol, or methyl, ethyl
                                        and butyl alcohol.

Hydraulic Fluids                        Mixture of high molecular weight glycols and glycol ethers used as cooling medium and
                                        mechanical action transmitters in automotive braking systems.
</TABLE>


                                      104
<PAGE>


<TABLE>
<S>                                     <C>
Lauryl Alcohol                          Substance of twelve-carbon fatty alcohol raw material for ethoxylated fatty alcohol,
                                        alcohol sulfate and ethoxylated alcohol sulfate production, which are intermediates
                                        for detergent production.

Linear Alkyl Benzene (LAB)              Straight chain alkyl benzene used as surfactant intermediate.

Linear Alkyl Sulphonate (LAS)           Straight chain alkyl benzene sulfate used as surfactant intermediate.

Lubricants                              Broad class of chemicals which are generally used to provide a film between the
                                        moving parts of machines and engines.

Methyl Ethyl Ketone (MEK)               A clear, volatile, flammables liquid at room temperature and atmospheric pressure and
                                        is mainly used as a solvent.

Metric Ton                              Equal to 1,000 kilograms (2,204.62 pounds).

Naphtha                                 A by-product of crude oil refining which is used by crackers as feedstock.

Nitrile                                 Organic compound containing CN group.

Normal Paraffins                        Class of aliphatic hydrocarbons with a single carbon chain.

Olefin                                  Hydrocarbons with double bonds with the general chemical formula CnH2n. Olefins,
                                        along with aromatics, are produced mainly in crackers and are regarded as the
                                        "building blocks" of the petrochemical industry.

Paraxylene                              Organic compound with two methyl radicals in p-position.

PET                                     Polyethylene terephthalate, a polymer produced by polycondensation of ethylene glycol
                                        with either Dimethyl Terephthalate, or therephtalic acid. Used to produce fibers,
                                        resins and packaging such as carbonated soft drink bottles (PET bottle grade).

Phosphate Esters                        Phosphoric acid derived esters, used primarily as "detergent builders" in powder
                                        detergent production.

Polyethylene                            Intermediate petrochemical produced by second generation companies from ethylene;
                                        used in many plastic applications.

Polyethylene Glycols                    Ethylene oxide derived polymers used in many applications, including as fillers,
                                        lubricants and viscosity builders.

Polystyrene                             Intermediate petrochemical produced by second generation companies from styrene.

Polyvinyl Chloride                      Intermediate petrochemical produced by companies from basic petrochemicals.

Propylene                               A chemical substance, mainly derived as a co- product with ethylene through the
                                        cracking process of gas oil or naphtha, often used to make polypropylene, which is a
                                        common plastic.

Rafinate II                             A by-product of naphtha cracking mainly composed of butane and used in the
                                        production of MEK.
</TABLE>


                                      105
<PAGE>


<TABLE>
<S>                                     <C>
Sec-Butanol                             A secondary four-carbon atom alcohol obtained by the hydration of butanes, contained
                                        in raffinate II. Sec-butanol is the raw material for methyl-ethyl-ketone production.

Second Generation Company               A producer of intermediate chemical products based largely on raw materials purchased
                                        from upstream, first generation companies, also known as crackers.

Softeners                               A class of surfactant products mainly used as co-agents in the textile industry and
                                        domestic laundries.

Solvents                                Chemical compounds, usually in liquid form, capable of dissolving another substance;
                                        often used as a medium in which other chemical reactions may take place.

Sorbitan Esters                         Substances produced by the reaction of sorbitan with fatty acids used as a raw
                                        material for ethoxylated sorbitan esters.

Soybean Oil                             Oil from soy beans

Styrene                                 Aromatic compound with ethylene group. Monomer of polystyrene.

Specialty Chemicals                     Chemicals which are usually produced in smaller quantities than commodity chemicals
                                        and which performances are more relevant than the specification.

Stabilizers                             Chemicals which are used to prevent chemical degradation of a product or chemical
                                        compound.

Sulfonates/Sulfates                     Class of sulfur trioxide modified surfactants, used as a raw material for detergent
                                        production.

Surfactants                             Generally defines a group of chemicals which, when dissolved in a solvent, modify the
                                        liquid properties at a liquid/liquid or liquid/solid interface, including increased
                                        solubilization, foaming, frothing, emulsification, dispersing or wetting; a major
                                        end-use market for surfactants is the detergent market.

TDI                                     Toluene diisocyanate used as raw material of polyurethane.

Third Generation Company                A producer that transforms intermediate products into end products such as films,
                                        piping and containers.

Tons                                    Metric tons.

VAM                                     Vinyl acetate monomer. Monomer of PVA - polyvinyl acetate.

VCM                                     Vinyl chloride monomer.
</TABLE>


                                     106
<PAGE>


SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all requirements for filing on
Form 20-F and has duly caused this annual report to be signed on its behalf by
the undersigned, thereunto duly authorized.


                                     ULTRAPAR PARTICIPACOES S.A.


                                     By:     /s/ Fabio Schvartsman
                                             ----------------------------------
                                             Name:     Fabio Schvartsman
                                             Title:    Chief Financial Officer

Date: June 25, 2004




<PAGE>




                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of independent registered public accounting firm
dated January 30, 2004, (except for Note 24 as to which the
date is March 19, 2004; for Note 23.b as to which the dates
are April 16, 2004 and April 30, 2004 and for Note 23.c as
to which the date is May 18, 2004) for the fiscal years
ended December 31, 2003 and 2002 issued by Deloitte Touche
Tohmatsu Auditores Independentes............................................F-3

Report of independent registered public accounting firm dated January 31, 2002
for the fiscal year ended December 31, 2001 issued by PricewaterhouseCoopers
Auditores Independentes.....................................................F-4

Consolidated Balance Sheet at December 31, 2003 and 2002....................F-6

Consolidated statement of income for the years ended December 31,
2003, 2002 and 2001......................................................... F-7

Consolidated statements of changes in stockholders' equity
for the years ended December 31, 2003, 2002 and 2001........................F-8

Consolidated statements of changes in financial position for
the years ended December
31, 2003, 2002 and 2001.....................................................F-9

Notes to the consolidated financial statements for the years
ended December 31, 2003, 2002 and 2001......................................F-10







<PAGE>



              Ultrapar Participacoes S.A. and Subsidiaries

              Financial Statements for the Years Ended
              December 31, 2003, 2002 and 2001 and
              Report of Independent Registered Public
              Accounting Firm




              Deloitte Touche Tohmatsu Auditores Independentes


<PAGE>





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------

To the Board of Directors and Stockholders of
Ultrapar Participacoes S.A.
Sao Paulo - SP - Brazil
-----------------------

1.   We have audited the accompanying consolidated balance sheets of Ultrapar
     Participacoes S.A. and subsidiaries (Ultrapar) as of December 31, 2003 and
     2002, and the related consolidated statements of income, changes in
     stockholders' equity, and changes in financial position for each of the two
     years in the period ended December 31, 2003, all expressed in Brazilian
     reais. These financial statements are the responsibility of Ultrapar's
     management. Our responsibility is to express an opinion on these financial
     statements based on our audit. The consolidated statements of income,
     changes in stockholders' equity, and changes in financial position of
     Ultrapar for the year ended December 31, 2001 were audited by other
     auditors whose report, dated January 31, 2002, expressed an unqualified
     opinion on those statements.

2.   We conducted our audits in accordance with auditing standards of the
     Public Company Accounting Oversight Board (United States). Those
     standards require that we plan and perform the audits 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. We believe
     that our audits provide a reasonable basis for our opinions.

3.   In our opinion, such consolidated financial statements present fairly, in
     all material respects, the financial position of Ultrapar as of December
     31, 2003 and 2002, and the results of its operations, changes in its
     stockholders' equity and its financial position for each of the two years
     in the period ended December 31, 2003 in conformity with accounting
     practices adopted in Brazil.

4.   Accounting practices adopted in Brazil vary in certain significant respects
     from accounting principles generally accepted in the United States of
     America (U.S. GAAP). The application of the latter would have affected the
     determination of net income for each of the two years in the period ended
     December 31, 2003 and the determination of stockholders' equity at December
     31, 2003 and 2002 to the extent summarized in Note 24.

January 30, 2004, except for Note 24 as to which the date is March 19, 2004, for
Note 23.b) as to which the dates are April 16, 2004 and April 30, 2004 and for
Note 23.c) as to which the date is May 18, 2004.


/s/ Deloitte Touche Tohmatsu


<PAGE>


Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Ultrapar Participacoes S.A.


1.   We have audited the accompanying consolidated statements of income, of
     changes in stockholders' equity and of changes in financial position of
     Ultrapar Participacoes S.A. (a Brazilian corporation) and subsidiaries for
     the year ended December 31, 2001, expressed in Brazilian reais, in
     conformity with accounting practices adopted in Brazil. These financial
     statements are the responsibility of the Company's management. Our
     responsibility is to express an opinion on these financial statements based
     on our audit.

2.   We conducted our audit in accordance with auditing standards generally
     accepted in Brazil and standards of the Public Company Accounting Oversight
     Board (United States). Those standards require that we 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, assessing the accounting principles used and significant
     estimates made by management, as well as evaluating the overall financial
     statement presentation. We believe that our audit provides a reasonable
     basis for our opinion.

3.   In our opinion, the consolidated financial statements referred to above
     present fairly, in all material respects, the results of operations, the
     changes in stockholders' equity and the changes in financial position of
     Ultrapar Participacoes S.A. and subsidiaries for the year ended December
     31, 2001 in conformity with accounting practices adopted in Brazil.


<PAGE>


Ultrapar Participacoes S.A.


4.   Accounting practices adopted in Brazil vary in certain significant respects
     from accounting principles generally accepted in the United States of
     America (US GAAP). Information relating to the nature and effect of such
     differences is presented in Note 24 of the notes to the consolidated
     financial statements.


Sao Paulo, Brazil
January 31, 2002


/s/ Pricewaterhouse Coopers

PricewaterhouseCoopers
Auditores Independentes





<PAGE>


ULTRAPAR PARTICIPACOES S.A. AND SUBSIDIARIES
--------------------------------------------

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2003 AND 2002
(In millions of
Brazilian reais - R$)
--------------------------------------------------------------------------------

ASSETS                                                         2003       2002
------                                                        -------   -------
CURRENT ASSETS
Cash and cash equivalents                                       568,8     637,9
Short-term investments                                           41,0        --
Trade accounts receivable                                       322,3     278,0
Inventories                                                     137,7     106,3
Recoverable taxes                                               115,5     115,1
Other                                                            32,3      46,4
Prepaid expenses                                                  2,8       3,2
                                                              -------   -------
                                                              1.220,4   1.186,9
                                                              -------   -------

NONCURRENT ASSETS
Related companies                                                 2,8       2,6
Deferred income and social contribution taxes                    61,4      33,3
Escrow deposits                                                   9,9       7,0
Other                                                             9,1       4,5
                                                              -------   -------
                                                                 83,2       47,4
                                                              -------   -------

PERMANENT ASSETS
Investments:
   Affiliated companies                                           5,7       7,1
   Other                                                         27,4      25,9
Property, plant and equipment, net                              968,6     779,5
Deferred charges, net                                           102,7      81,1
                                                              -------   -------
                                                              1.104,4     893,6
                                                              -------   -------

TOTAL                                                         2.408,0   2.127,9
                                                              =======   =======


LIABILITIES                                                    2003      2002
-----------                                                   -------   -------

CURRENT LIABILITIES
Financing                                                       381,6     219,8
Suppliers                                                        90,3     104,4
Payroll and related charges                                      74,7      64,4
Taxes                                                            12,7       9,9
Dividends payable                                                41,7      49,0
Income and social contribution taxes                              6,6       1,9
Other                                                            25,2      18,8
                                                              -------   -------
                                                                632,8     468,2
                                                              -------   -------

LONG-TERM LIABILITIES
Financing                                                       306,3     363,6
Related companies                                                 9,0      10,2
Deferred income and social contribution taxes                    28,7      34,8
Other taxes and contributions - contingent
  liability                                                      40,9      28,5
Other                                                             1,4       0,5
                                                              -------   -------
                                                                386,3     437,6
                                                              -------   -------

MINORITY INTEREST                                                32,2      31,0
                                                              -------   -------

STOCKHOLDERS' EQUITY
Capital                                                         664,0     664,0
Revaluation reserve                                              17,8      26,0
Profit reserves                                                 677,4     501,5
Treasury shares                                                 (2,5)     (0,4)
                                                              -------   -------
                                                              1.356,7   1.191,1
                                                              -------   -------

TOTAL                                                         2.408,0   2.127,9
                                                              =======   =======


The accompanying notes are an integral part of these financial statements.
-------------------------------------------------------------------------------

                                                                             F-6
<PAGE>


ULTRAPAR PARTICIPACOES S.A. AND SUBSIDIARIES
--------------------------------------------

<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 (In
millions of Brazilian reais - R$, except for per share data)
------------------------------------------------------------------------------------------------

                                                                    2003       2002       2001
                                                                  --------   --------   --------

<S>                                                                <C>        <C>        <C>
GROSS SALES AND SERVICES                                           4.603,8    3.795,3    2.862,5
Taxes on sales and services, rebates, discounts and returns         (603,5)    (800,8)    (577,8)
                                                                  --------   --------   --------
NET SALES AND SERVICES                                             4.000,3    2.994,5    2.284,7
Cost of sales and services                                        (3.196,4)  (2.247,1)  (1.698,3)
                                                                  --------   --------   --------

GROSS PROFIT                                                         803,9      747,4      586,4
                                                                  --------   --------   --------

OPERATING (EXPENSES) INCOME
Selling                                                             (163,7)    (130,2)    (120,0)
General and administrative                                          (188,6)    (165,6)    (127,8)
Management compensation                                               (5,2)      (4,7)      (3,7)
Depreciation and amortization                                       (101,4)     (81,8)     (66,2)
Other operating income, net                                             6,6       0,4       10,2
                                                                   --------   --------   --------
                                                                     (452,3)   (381,9)    (307,5)
                                                                   --------   --------   --------

OPERATING INCOME BEFORE FINANCIAL ITEMS                               351,6     365,5      278,9
Financial income (expenses), net                                     (57,2)      28,5      (31,1)
Nonoperating income (expenses), net                                     1,0     (44,1)     (17,0)
                                                                   --------   --------   --------
                                                                      (56,2)    (15,6)     (48,1)
                                                                   --------   --------   --------

INCOME BEFORE INCOME AND SOCIAL
   CONTRIBUTION TAXES, EQUITY IN EARNINGS
   (LOSSES) OF AFFILIATED COMPANIES AND MINORITY INTEREST             295,4     349,9      230,8

INCOME AND SOCIAL CONTRIBUTION TAXES
Current                                                             (113,0)    (110,1)     (58,4)
Deferred                                                               15,7      (4,8)       3,9
Benefit of tax holidays                                                52,4      43,5       27,0
                                                                   --------   --------   --------
                                                                      (44,9)    (71,4)     (27,5)
                                                                   --------   --------   --------

INCOME BEFORE EQUITY IN EARNINGS (LOSSES) OF
   AFFILIATED COMPANIES AND MINORITY INTEREST                         250,5     278,5      203,3
   Equity in earnings (losses) of associated companies                (0,5)      (1,7)       1,9
   Minority interest                                                  (3,6)     (54,5)     (73,0)
                                                                   --------   --------   --------

NET INCOME                                                            246,4     222,3      132,2
                                                                   ========   ========   ========
NET EARNINGS PER THOUSAND SHARES
   (BASED ON ANNUAL WEIGHTED AVERAGE OF SHARES OUTSTANDING) - R$       3,54       3,62       2,49
                                                                   ========   ========   ========


The accompanying notes are an integral part of these financial statements.
-------------------------------------------------------------------------------------------------

                                                                                               F-7
</TABLE>


<PAGE>


ULTRAPAR PARTICIPACOES S.A. AND SUBSIDIARIES
--------------------------------------------

<TABLE>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(In millions of Brazilian reais - R$)
-----------------------------------------------------------------------------------------------------------------------------------


                                                      Revaluation               Profit
                                                        reserve                reserves
                                                     of subsidiary      --------------------------
                                          Capital    and affiliated            Retention   Unrealized   Retained   Treasury
                                Capital   reserve       companies     Legal   of profits     profits    earnings    shares    Total
                                -------   -------    --------------   -----   ----------   ----------   --------   --------   -----

<S>                               <C>          <C>             <C>     <C>           <C>        <C>        <C>          <C>   <C>
BALANCES AT DECEMBER 31, 2000     433,9        --              29,1    10,8           --        304,0      119,9         --   897,7

Realization of
  revaluation reserve                --        --              (3,4)     --           --           --        3,3         --    (0,1)

Income and social contribution
  taxes on realization of
  revaluation reserve of
  subsidiaries                       --        --               0,2      --           --           --       (0,5)        --    (0,3)

Realization
  of profit reserves                 --        --                --      --           --       (304,0)     304,0         --      --

Supplementary dividends
  (R$0.32 and R$0.65
  per thousand common and
  preferred shares,
  respectively)                      --        --                --      --           --           --      (17,6)        --   (17,6)

Net income                           --        --                --      --           --           --      132,2         --   132,2

Appropriation
  of net income:

   Legal reserve                     --        --                --     6,6           --           --       (6,6)        --      --

   Dividends for the year
     (R$3.32 and R$3.65
     per thousand common
     and perferred shares,
     respectively)                   --        --                --      --           --           --     (181,0)        --  (181,0)

   Interest on capital
     (R$0.57 and R$0.63
     per thousand common
     and preferred shares,
     respectively)                   --        --                --      --           --           --      (31,0)        --   (31,0)

   Retention of profit
     reserves                        --        --                --      --        322,7           --     (322,7)        --      --
                                -------   -------    --------------   -----   ----------   ----------   --------   --------   -----

BALANCES AT DECEMBER 31, 2001     433,9        --              25,9    17,4        322,7           --         --         --   799,9

Capital increase due
  to merger                       230,1        --                --      --           --           --         --         --   230,1

Acquisition of treasury
  shares                             --        --                --      --           --           --         --       (0,3)   (0,3)

Revaluation due to
  merger                             --        --               5,1      --           --           --         --         --     5,1

Realization of revaluation
  reserve                            --        --              (5,1)     --           --           --        4,4         --    (0,7)

Income and social contribution
  taxes on realization of
  revaluation reserve of
  subsidiaries                       --        --               0,1      --           --           --       (0,4)        --    (0,3)

Net income                           --        --                --      --           --           --      222,3         --   222,3

Appropriation of net income:
  Legal reserve                      --        --                --    11,1           --           --      (11,1)        --      --

  Interim dividends
    (R$0.37 and R$0.40 per
    thousand common and
    preferred shares,
    respectively)                    --        --                --      --           --           --      (20,0)        --   (20,0)

  Proposed dividends
    payable (R$0.63 and
    R$0.69 per thousand
    common and preferred
    shares, respectively)            --        --                --      --           --           --      (45,0)        --   (45,0)

   Reserve for unrealized
     profits                         --        --                --      --           --         40,6      (40,6)        --      --

   Retention of profit
     reserves
                                     --        --                --      --        109,6           --     (109,6)        --      --
                                -------   -------    --------------   -----   ----------   ----------   --------   --------   -----

BALANCES AT DECEMBER 31, 2002     664,0        --              26,0    28,5        432,3         40,6         --       (0,3)1.191,1

Acquisition of treasury
  shares                             --        --                --      --           --           --         --       (2,2)   (2,2)

Sale of treasury
  shares                             --       1,1                --      --           --           --         --        2,5     3,6

Realization of revaluation
  reserve                            --        --              (8,2)     --           --           --        1,7         --    (6,5)

Income and social contribution
  taxes on realization of
  revaluation reserve of
  subsidiaries                       --        --                --      --           --           --       (0,1)        --    (0,1)

Realization of profit
  reserves                           --        --                --      --           --        (40,6)      40,6         --      --

Net income                           --        --                --      --           --           --      246,4         --   246,4

Appropriation of net income:

   Legal reserve                     --        --                --    12,3           --           --      (12,3)        --      --

   Interim dividends (R$0.46
     and R$0.51 per thousand
     common and preferred
     shares, respectively)           --        --                --      --           --           --      (33,0)        --   (33,0)

   Proposed dividends payable
     (R$0.55 and R$0.60 per
     thousand common and
     preferred shares,
     respectively)                   --        --                --      --           --           --      (39,0)        --   (39,0)

   Reserve for unrealized
     profits                         --        --                --      --           --         85,6      (85,6)        --      --

   Retention of profit
     reserves                        --        --                --      --        118,7           --     (118,7)        --      --
                                -------   -------    --------------   -----   ----------   ----------   --------   --------   -----

BALANCES AT DECEMBER 31, 2003
(PARENT COMPANY)                  664,0       1,1              17,8    40,8        551,0         85,6         --         -- 1.360,3

Sale of treasury shares (see
  Note 13.g))                        --      (1,1)               --      --           --           --         --       (2,5)   (3,6)
                                -------   -------    --------------   -----   ----------   ----------   --------   --------   -----

BALANCES AT DECEMBER 31, 2003
(CONSOLIDATED)                    664,0        --              17,8    40,8        551,0         85,6         --       (2,5)1.356,7
                                =======   =======    ==============   =====   ==========   ==========   ========   ======== =======
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                 F-8
</TABLE>


<PAGE>


ULTRAPAR PARTICIPACOES S.A. AND SUBSIDIARIES
--------------------------------------------

<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS
ENDED DECEMBER 31, 2003, 2002 AND 2001
(In millions of Brazilian reais - R$)
-------------------------------------------------------------------------------

                                                               2003      2002      2001
                                                             -------   -------   -------
<S>                                                            <C>       <C>       <C>
SOURCES OF FUNDS
Operations:
   Net income                                                  246,4     222,3     132,2
   Items not affecting working capital:
     Equity in earnings (losses) of affiliated companies         0,5       1,7      (1,9)
     Depreciation and amortization                             145,4     121,8     102,4
     Long-term interest and monetary variations                (30,3)     98,3      34,4
     Deferred income and social contribution taxes             (15,7)      4,8      (3,9)
     Minority interest                                           3,6      54,5      73,0
     Net book value of permanent assets written off             22,2      29,9      31,2
     Other long-term taxes                                       3,9       8,6      10,6
     Gain on change in ownership percentage                       --      (3,6)       --
     Amortization of negative goodwill on investments            2,8      (0,4)     (8,7)
     Allowance (realization of provision) for losses
        on permanent assets                                     (0,4)     40,6      (5,3)
                                                             -------   -------   -------
                                                               378,4     578,5     364,0
                                                             -------   -------   -------
Third parties:
   Increase in long-term liabilities                             2,8        --        --
   Decrease in noncurrent assets                                  --       0,6       0,5
   Dividends and interest on capital (gross)                      --       0,4       1,3
   Working capital from merger                                    --       0,1        --
   Long-term financing                                         258,6      68,7      52,9
                                                             -------   -------   -------
                                                               261,4      69,8      54,7
                                                             -------   -------   -------
Total sources                                                  639,8     648,3     418,7
                                                             -------   -------   -------

USES OF FUNDS
Permanent assets:
   Investments                                                   1,7        --        --
   Property, plant and equipment                               299,5     171,5     145,7
   Deferred charges                                             87,2      51,3      57,4
                                                             -------   -------   -------
                                                               388,4     222,8     203,1
                                                             -------   -------   -------

Dividends and interest on capital                               72,9      76,3     250,8

Transfer from long-term to current liabilities                 280,4      86,0      86,7
Decrease in long-term liabilities                                 --      51,2      11,5
Increase in noncurrent assets                                   26,0        --        --
Acquisition of treasury shares                                   2,2       0,3        --
Acquisition of shares from minority stockholders                  --     212,5        --
Taxes on realization of revaluation reserve                      0,2       0,8       0,7
Decrease in minority interest                                    0,8       1,0      13,8
                                                             -------   -------   -------
                                                               309,6     351,8     112,7
                                                             -------   -------   -------
Total uses                                                     770,9     650,9     566,6
                                                             -------   -------   -------

DECREASE IN WORKING CAPITAL                                   (131,1)     (2,6)   (147,9)
                                                             =======   =======   =======

REPRESENTED BY
Current assets:
   At end of year                                            1.220,4   1.186,9   1.045,2
   At beginning of year                                      1.186,9   1.045,2   1.190,8
                                                             -------   -------   -------
                                                                33,5     141,7    (145,6)
                                                             -------   -------   -------
Current liabilities:
-----------------------------------------------------------------------------------------
                                                                                      F-9
</TABLE>


<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


                  ULTRAPAR PARTICIPACOES S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Amounts in millions of Brazilian reais - R$, unless otherwise stated)
--------------------------------------------------------------------------------

1.   OPERATIONS

     Ultrapar Participacoes S.A. (the "Company" or "Ultrapar") is a holding
     company organized under the laws of the Federative Republic of Brazil
     which, through its ownership of various operating subsidiaries, is engaged
     in the distribution of Liquefied Petroleum Gas (LPG) in Brazil (Ultragaz),
     the production and sales of chemicals (Oxiteno), and logistic services of
     chemical products and fuel (Ultracargo).

2.   PRESENTATION OF THE FINANCIAL STATEMENTS AND
     SIGNIFICANT ACCOUNTING POLICIES

     These financial statements were prepared in accordance with accounting
     practices adopted in Brazil, which include the indexation of permanent
     assets and stockholders' equity through December 31, 1995.

     These financial statements have been translated into English from the
     original financial statements issued in Portuguese. In addition, certain
     terminology changes have been made and the notes to the financial
     statements have been expanded to conform them more closely to reporting
     practices prevailing in the United States of America.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accounting practices adopted in Brazil to record transactions and
     prepare the financial statements comply with those prescribed by Brazilian
     corporate law and specific standards established by the Brazilian
     Securities Commission (CVM), which differ in certain respects from
     accounting principles generally accepted in the United States of America
     (U.S. GAAP). See Note 24 for further discussions of the differences and the
     reconciliations of stockholders' equity and net income under both sets of
     principles.

     The following is a summary of significant accounting policies followed in
     the preparation of the financial statements:


                                                                            F-10
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     a)   Consolidation principles

          The consolidated financial statements include the accounts of the
          Company and all of the subsidiaries in which the Company directly or
          indirectly controls more than 50% of the voting share capital, as
          listed below. Intercompany investments, asset and liability balances,
          income and expenses, as well as the effects arising from significant
          intercompany transactions, have been eliminated. Minority interest in
          subsidiary companies is presented separately in the financial
          statements.

<TABLE>
                                                                              Ownership -%
                                                                              ------------
                                                                        2003                 2002
                                                                  ------------------   -----------------
                                                                  Direct    Indirect   Direct   Indirect
                                                                  ------    --------   ------   --------
                        <S>                                        <C>         <C>      <C>         <C>
          Ultragaz Participacoes Ltda.                             100          -       100          -
            Companhia Ultragaz S.A.                                  -         86         -         86
              SPGas Distribuidora de Gas S.A.                        -         86         -          -
            Bahiana Distribuidora de Gas Ltda.                       -        100         -        100
            Utingas Armazenadora S.A.                                -         56         -         56
            LPG International Inc.                                   -        100         -        100
          Ultracargo - Operacoes Logisticas e Participacoes Ltda.  100          -       100          -
            Melamina Ultra S.A. Industria Quimica                    -         93         -         93
            Transultra - Armazenamento e Transporte
              Especializado Ltda.                                    -        100         -        100
            Terminal Quimico de Aratu S.A. - Tequimar                -         99         -         99
          Oxiteno S.A. - Industria e Comercio                      100          -       100          -
            Oxiteno Nordeste S.A. - Industria e Comercio             -         99         -         99
            Barrington S.L.                                          -        100         -          -
              Canamex Quimicos S.A. de C.V.                          -        100         -          -
            Oxiteno International Co.                                -        100         -        100
              Oxiteno Overseas Co.                                   -        100         -        100
          Imaven Imoveis e Agropecuaria Ltda.                      100          -       100          -
</TABLE>


          In 2002, the Company undertook a corporate reorganization, disclosed
          in a relevant fact published on October 15, 2002 and approved at the
          Extraordinary Stockholders' Meeting of October 30, 2002. This
          reorganization was primarily aimed at: (i) streamlining the corporate
          structure of subsidiaries and affiliated companies, (ii) cost
          rationalization, and (iii) concentration of capital market liquidity
          in one company.

          The corporate reorganization was based on the balance sheets as of
          June 30, 2002. As a consequence, the Company has full participation in
          the results of Ultragaz Participacoes Ltda. and Oxiteno S.A. -
          Industria e Comercio as from July 1, 2002.

          On August 8, 2003, the Company acquired, through its subsidiary
          Companhia Ultragaz S.A., the LPG distribution operation of Shell
          Petroleum N.V. in Brazil (SPGas Distribuidora de Gas S.A.). The
          disbursement for this acquisition was R$ 170.6, for the purchase of
          100% of this company's shares and the extinguishment of its debts. The
          2003 financial statements include the account balances and
          transactions of the company since its acquisition in August 2003. This
          acquisition generated goodwill of R$ 24.4, which was based on the
          expected future profitability of the company, and is being amortized
          over a period of five years, starting August 2003.


                                                                            F-11
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          On December 4, 2003, the Company acquired, through its subsidiary
          Barrington S.L, the chemical business of the Berci Group in Mexico
          (CANAMEX - Canamex Quimicos S.A. de C.V.). The cost of this
          acquisition was US$ 10.3 million, free of debt. The 2003 financial
          statements include the account balances and transactions of the
          company since its acquisition in December 2003.

          On December 31, 2003, the Company merged the subsidiaries Ultratecno
          Participacoes Ltda. into Ultragaz Participacoes Ltda., Ultracargo
          Participacoes Ltda. into Oleoquimica do Nordeste Ltda., and the latter
          into Ultracargo - Operacoes Logisticas e Participacoes Ltda. (new name
          of Ultraquimica Participacoes Ltda.), in order to reduce costs.

     b)   Cash and cash equivalents

          Cash and cash equivalents comprise liquid temporary cash investments
          (with original maturity dates of three months or less and readily
          convertible to cash).

     c)   Short-term investments

          Short-term investments are stated at the lower of cost, plus accrued
          income earned, or market value.

     d)   Trade accounts receivable

          Trade accounts receivable are stated at estimated net realizable
          values. The allowance for doubtful accounts is based on estimated
          losses and is considered by management to be sufficient to cover
          probable losses on the realization of accounts receivable.

     e)   Inventories

          Inventories are stated at the average cost of acquisition or
          production, or net realizable value, whichever is lower.

     f)   Investments in affiliated companies

          Investments in businesses not controlled by the Company, but over
          which it has significant influence, are accounted for using the equity
          method (see Note 9).

     g)   Other investments

          Other investments are recorded at cost less provision for losses, if
          expected to be other than temporary.

     h)   Property, plant and equipment

          Property, plant and equipment are stated at historical cost,
          monetarily restated through December 31, 1995, and revaluation
          adjustments based on appraisal reports issued by independent
          appraisers, less accumulated depreciation. Revaluation increments are
          credited to the revaluation reserve component of stockholders' equity
          and subsequently transferred to retained earnings as the related
          assets are depreciated or disposed of.


                                                                            F-12
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Depreciation is calculated on the straight-line basis at the annual
          rates described in Note 10, based on the estimated useful lives of the
          assets.

     i)   Deferred charges


          Deferred charges consist mainly of costs incurred in the
          implementation of projects to install equipment at customers'
          facilities, projects to modernize systems, and goodwill arising from
          acquisition of subsidiaries, as mentioned in Note 11.

     j)   Income taxes

          Income and social contribution taxes (a federally mandated tax based
          on income) are accrued on taxable results at the applicable tax rates.

          The accrual for income tax includes the effects of tax holidays, where
          applicable. Deferred income and social contribution taxes on temporary
          differences are recognized in accordance with CVM Resolution No.
          273/98.

     k)   Compensated absences

          The liability for future compensation for employee vacations is fully
          accrued as earned.

     l)   Assets and liabilities denominated in foreign currency or subject to
          indexation

          Assets and liabilities denominated in foreign currencies are
          translated into reais at the exchange rate reported by the Brazilian
          Central Bank (BACEN) at each balance sheet date. Exchange gains and
          losses are recognized in income.

          Assets and liabilities denominated in reais and contractually or
          legally subject to indexation are restated to the balance sheet date
          by applying the corresponding index, with related gains and losses
          recognized in income.

     m)   Revenues and expenses

          Revenues from sales are recognized when products are delivered to the
          customer or services performed, and the transfer of risks, rights and
          obligations associated with the ownership of products takes place.
          Expenses are recognized on the accrual basis. Advertising expenses,
          which are expensed as incurred, amounted to R$ 6.7, R$ 8.8 and R$ 6.6
          for the years ended December 31, 2003, 2002 and 2001, respectively.
          Shipping and handling costs, classified as selling expenses and
          expensed as incurred, amounted to R$ 66.5, R$ 45.0 and R$ 37.4 for the
          years ended December 31, 2003, 2002 and 2001, respectively.

     n)   Cost of sales and services

          Costs of sales and services rendered include the cost of LPG, chemical
          products, distribution, transportation and filling costs.


                                                                            F-13
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     o)   Earnings per share

          Earnings per share are calculated based on the annual weighted average
          shares outstanding during each of the years where such earnings are
          reported.

     p)   Use of estimates

          The preparation of financial statements in accordance with accounting
          practices adopted in Brazil requires management to make estimates and
          assumptions that affect the reported amounts of assets and liabilities
          at the date of the financial statements and the reported amounts of
          revenues and expenses for the years presented. Although these
          estimates are based on management's best available knowledge of
          current and expected future events, actual results could be different
          from those estimates.

     q)   Reclassifications

          Certain balances have been reclassified for better comparison of the
          financial statements.


4.   CASH AND CASH EQUIVALENTS

     Cash equivalents consist of investments, contracted with banks of good
     standing, and include fixed income securities, funds linked to interbank
     deposit (CDI) rates and currency hedge, which are stated at cost plus
     accrued income (on a "pro rata temporis" basis).

                                                         2003      2002
                                                         ----      ----

     Fixed income securities and funds                  489.5     417.9
     Foreign investments (a)                             32.6     127.0
     Net income from swaps operations (b)                   -      39.5
     Cash                                                46.7      53.5
                                                        -----     -----
                                                        568.8     637.9
                                                        =====     =====

     (a)  Investments made by the indirect subsidiary Oxiteno Overseas Co. in
          money market funds and debt securities.

     (b)  Accumulated gain on swaps positions (see Note 17).


5.   SHORT-TERM INVESTMENTS

     Our short-term investments relate to the amount invested by the indirect
     subsidiary Oxiteno Overseas Co. in debt securities of U.S. and Brazilian
     corporations.


                                                                            F-14
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


6.   ACCOUNTS RECEIVABLE

                                                         2003      2002
                                                         ----      ----

     Local customers                                    299.8     251.2
     Foreign customers                                   71.3      81.4
     (-) Advances on foreign exchange contracts         (31.5)    (43.4)
     (-) Allowance for doubtful accounts                (17.3)    (11.2)
                                                        -----     -----
                                                        322.3     278.0
                                                        =====     =====


7.   INVENTORIES

                                                         2003      2002
                                                         ----      ----

     Finished products                                   78.4      67.6
     Liquefied Petroleum Gas (LPG)                       22.7       7.9
     Raw materials                                       25.4      20,1
     Supplies and cylinders for resale                   11.2      10.7
                                                        -----     -----
                                                        137.7     106.3
                                                        =====     =====


8.   RECOVERABLE TAXES

     Represented, substantially, by credit balances of State Value-Added Tax
     (State VAT - ICMS), Federal Excise Tax (IPI), and prepaid income and social
     contribution taxes, which can be offset against future taxes payable.

                                                        2003      2002
                                                        ----      ----

     Income and social contribution taxes               64.2      68.3
     State Value-Added Tax (State VAT - ICMS)           40.7      42.6
     Federal Excise Tax (IPI)                            2.8       1.9
     Other                                               7.8       2.3
                                                       -----     -----
                                                       115.5     115.1
                                                       =====     =====


9.   INVESTMENTS IN AFFILIATED COMPANIES

     A summary of financial information for the Company's equity investments is
     as follows:

                                                         2003
                                             -------------------------------
                                                                 Quimica da
                                                Oxicap             Bahia
                                             Industria de       Industria e
                                             Gases Ltda.       Comercio S.A.
                                             -----------       -------------

     Number of shares or quotas held                125           3,174,501
     Adjusted net equity - R$                       3.8                10.1
     Net income for the year - R$                   1.4                   -
     Ownership - %                                25.00               45.56


                                                                            F-15
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


<TABLE>
                                                                   2003
                                             -------------------------------------------------
                                                               Quimica da
                                                Oxicap            Bahia
                                             Industria de      Industria e
                                             Gases Ltda.      Comercio S.A.    Other     Total
                                             ------------     -------------    -----     -----
           <S>                                    <C>                <C>       <C>        <C>
     Changes in investments:
       Balance at the beginning of the year        0.6                4.6      1.9       7.1
          Equity pick-up                           0.3                  -        -       0.3
          Write-off                                  -                  -     (1.7)     (1.7)
       Balance at the end of the year              0.9                4.6      0.2       5.7


                                                                  2002
                                             -------------------------------------------------
                                                                                  Quimica da
                                                Oxicap          Nordeste             Bahia
                                             Industria de    Quimica S.A. -       Industria e
                                              Gases Ltda.       Norquisa         Comercio S.A.
                                             ------------    -------------       -------------
     Number of shares or quotas held                125        60,426,077          3,174,500
     Adjusted net equity - R$                       2.5                 -               10.1
     Loss for the year - R$                        (0.3)                -                  -
     Ownership - %                                25.00              8.73              45.56
</TABLE>

<TABLE>
                                                                       2002
                                   ---------------------------------------------------------------------------------
                                    Oxicap       Fabrica                        Quimica da
                                   Industria   Carioca de       Nordeste           Bahia         Imaven II
                                   de Gases   Catalizadores   Quimica S.A. -    Industria e    Agropecuaria
                                   Ltda.        S.A. - FCC      Norquisa        Comercio S.A.       S.A.       Total
                                   ---------  -------------   --------------    -------------  -------------   -----
               <S>                     <C>           <C>            <C>             <C>             <C>          <C>
     Changes in investments:
       Balance at the beginning
         of the year                   0.7          15.4           42.3               4.6              -       63.0
           Write-off of
             revaluation reserve         -          (2.7)             -                 -              -      (2.7)
           Dividends received            -          (0.4)             -                 -              -      (0.4)
           Equity pick-up             (0.1)         (1.0)             -                 -              -      (1.1)
           Cost of investments
             sold                        -         (11.3)             -                 -              -     (11.3)
           Business combination          -             -              -                 -            0.2       0.2
           Allowance for loss            -             -          (40.6)                -              -     (40.6)
                                      -----        ------         ------             ----           ----     ------
       Balance at the end of the
         year                          0.6             -            1.7               4.6            0.2       7.1
                                      =====        ======         ======             ====           ====     ======


                                                                                 2001
                                                      -------------------------------------------------------------
                                                                        Fabrica                        Quimica da
                                                         Oxicap        Carioca de       Nordeste          Bahia
                                                      Industria de   Catalisadores    Quimica S.A. -   Industria e
                                                       Gases Ltda.     S.A. - FCC      Norquisa       Comercio S.A.
                                                      ------------   -------------    --------------  -------------

     Number of shares or quotas held                        125      125,536,199     60,426,077         3,174,500
     Adjusted net equity - R$                               2.8             77.0          486.8              10.1
     Net income (loss) for the year - R$                   (0.3)            10.9           (4.6)                -
     Ownership - %                                        25.00            20.00           8.73             45.56
</TABLE>


                                                                            F-16
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


<TABLE>
                                                                              2001
                                                ---------------------------------------------------------------------
                                                                 Fabrica                      Quimica da
                                                   Oxicap      Carioca de       Nordeste         Bahia
                                                Industria de  Catalisadores  Quimica S.A. -   Industria e
                                                Gases Ltda.    S.A. - FCC       Norquisa     Comercio S.A.   Total
                                                ------------  -------------  --------------  -------------   -----
           <S>                                        <C>           <C>          <C>               <C>        <C>
     Changes in investments:
        Balance at the beginning of the year           0.7          12.1            43.7             4.6    61.1
         Write-off of revaluation reserve                -             -            (0.3)              -    (0.3)
         Dividends received                              -          (0.9)           (0.4)              -    (1.3)
         Equity pick-up                                  -           4.2            (0.7)              -     3.5
                                                       ---          ----            -----            ---    -----
       Balance at the end of the year                  0.7          15.4            42.3             4.6    63.0
</TABLE>


     In the financial statements, the investments of the subsidiary Oxiteno S.A.
     - Industria e Comercio in the affiliated companies Oxicap Industria de
     Gases Ltda. and Quimica da Bahia Industria e Comercio S.A. are carried
     under the equity method based on their financial statements as of November
     30, 2003.


10.  PROPERTY, PLANT AND EQUIPMENT, NET


<TABLE>
                                                              2003                              2002
                                                --------------------------------  --------------------------------
                                     Annual        Cost,                             Cost,
                                  depreciation   including   Accumulated           including   Accumulated
                                    rates - %   revaluation depreciation    Net   revaluation  depreciation   Net
                                  ------------  ----------- ------------   -----  -----------  ------------  -----
      <S>                              <C>          <C>          <C>        <C>        <C>         <C>         <C>
     Land                               -           46.9            -       46.9        47.2           -      47.2
     Buildings                       4 to 5        356.8       (123.1)     233.7       321.1      (109.9)    211.2
     Machinery and equipment         5 to 10       610.0       (286.2)     323.8       571.8      (287.0)    284.8
     Gas tanks and cylinders           10          380.3       (192.3)     188.0       197.7       (91.0)    106.7
     Vehicles                       20 to 30       127.4        (86.1)      41.3       107.5       (72.4)     35.1
     Furniture and fixtures            10           15.5         (5.4)      10.1        11.9        (4.2)      7.7
     Construction in progress           -           46.3            -       46.3        39.9           -      39.9
     Other                          10 to 30       117.6        (39.1)      78.5        72.7       (25.8)     46.9
                                                 1,700.8       (732.2)     968.6     1,369.8      (590.3)    779.5
</TABLE>


     Property, plant and equipment include net capitalized interest cost of R$
     6.0 and R$ 6.6 as of December 31, 2003 and 2002, respectively.

     Construction in progress refers mainly to construction of TLS - Terminal
     Liquido de Santos and Terminal Intermodal de Montes Claros, both
     investments of the subsidiary Terminal Quimico de Aratu S.A. - Tequimar,
     and renovations of the industrial complexes of other subsidiaries.

     Other is comprised of computer equipment in the amount of R$ 19.6 (2002 -
     R$ 13.2), software in the amount of R$ 29.9 (2002 - R$ 5.2) and commercial
     property rights, mainly those described below.

     o    On July 11, 2002, the indirect subsidiary Terminal Quimico de Aratu
          S.A. - Tequimar won the auction and signed a contract for use of the
          site on which it operates the Aratu Terminal for another 20 years,
          renewable for the same period. The amount paid by Tequimar was R$ 12.0
          and is being amortized over 40 years, equivalent to annual
          amortization of R$ 0.3.


                                                                            F-17
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     o    Further, the subsidiary Terminal Quimico de Aratu S.A. - Tequimar has
          a lease contract of the area adjacent to the Santos harbor for a
          period of 20 years, which allows it to build, operate and exploit the
          terminal, intended for the reception, storage, movement and
          distribution of liquid bulk. The price paid by Tequimar was R$ 3.8 and
          will be amortized over a period of 40 years, as from the beginning of
          its operations, expected to be in November 2004.


11.  DEFERRED CHARGES, NET

     Represented substantially by costs incurred in the implementation of
     systems modernization projects - R$ 3.2 (2002 - R$ 19.9), amortizable over
     five to ten years, and for the installation of Ultrasystem equipment at
     customers' locations - R$ 56.8 (2002 - R$ 58.0), to be amortized over the
     periods of the LPG supply contracts with these customers. Deferred charges
     also includes the goodwill from the acquisition of SPGas Distribuidora de
     Gas S.A., as described in Note 3.


                                                                            F-18
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


12.  FINANCING

     a)   Composition

<TABLE>
                                                                         Annual
                                                          Index/        interest
                   Description            2003   2002    Currency       rate - %       Maturity and amortization
                   -----------            ----   ----    --------       --------       -------------------------
                    <S>                   <C>    <C>       <C>             <C>             <C>
          Foreign currency:

            International Finance
              Corporation - IFC              -   17.7       US$           9.38

            Working capital loan           0.5      -       Mex$           1.4           28 days

            Syndicated loan (*)          173.6  212.5       US$           4.25           Semiannually to 2004

            Financing for inventories
             and property additions       11.4    3.8       US$           From 7.3 to    Semiannually and annually to
                                                                           8.0            2004

            Advances on foreign exchange
              contracts                   24.9   73.9       US$           From 1.3 to    Maximum of 58 days
                                                                           5.31
            National Bank for Economic
              and Social Development
              (BNDES)                     23.2   28.9     UMBNDES         From 9.01 to   Monthly to 2008
                                                           (**)            10.91

            National Bank for Economic
              and Social Development
              (BNDES) - Exim                 -   17.8       US$           5.25

            Export prepayments           205.1   23.2       US$           From 4.1 to    Monthly, semiannually and
                                         -----   ----                      6.85           annually to 2008
          Subtotal                       438.7  377.8

          Unrealized losses on swaps
            transactions                  55.7      -
                                         -----  -----
          Subtotal                       494.4  377.8

          Local currency:

            National Bank for Economic
              and Social Development
              (BNDES)                    159.3  182.0       TJLP or       From 1.5 to    Monthly and semiannually to
                                                             IGP-M         6.5            2008

            FINAME                        28.9   23.6       TJLP          From 1.8 to    Monthly to 2008
                                                                           4.0

            Onlending operations           5.3      -       TJLP          (2.0)          Monthly to 2009
                                         -----  -----
          Subtotal
                                         193.5  205.6
                                         -----  -----
          Total financing                687.9  583.4
                                         -----  -----
          Current liabilities           (381.6)(219.8)
                                         -----  -----
          Long-term liabilities          306.3  363.6
                                         =====  =====
</TABLE>


     (*)  On December 11, 2003, the subsidiary LPG International Inc.
          renegotiated the interest of 7.15% per year to 4.25% per year.

     (**) UMBNDES = BNDES monetary unit. This is a "basket" of currencies
          representing the composition of BNDES' foreign currency debt.
          Approximately 76% of this "basket" is linked to the U.S. dollar.

          TJLP - long-term interest rate.

          IGP-M - general market price index.

          FINAME - government agency for machinery and equipment financing.

     b)   Annual maturities of long-term financing

                                                           2003
                                                           ----

          2005                                            160.8
          2006                                             94.7
          2007                                             34.6
          2008                                             15.2
          2009                                              1.0
                                                          -----
                                                          306.3
                                                          =====


                                                                            F-19
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     c)   Eurobonds

          In June 1997, the subsidiary Companhia Ultragaz S.A. issued eurobonds
          in the total amount of US$ 60 million, maturing in 2005, with put/call
          options in 2002, and guaranteed by Ultrapar Participacoes S.A. and
          Ultragaz Participacoes Ltda. In June 2002, the subsidiary LPG
          International Inc. exercised the call option for these securities
          using funds from a syndicated loan in the same amount, maturing in
          August 2004 and prepaid in January 2004 as stated in Note 23.

     d)   Collateral

          Certain financing is collateralized by liens on property, plant and
          equipment, stockholdings, and promissory notes and guarantees provided
          by the Company and its subsidiaries, as shown below:

                                                             2003       2002
                                                             ----       ----

          Amount of borrowings secured by:
             Property, plant and equipment                   34.3       26.8
             Shares of affiliated  companies                 17.1       18.2
             Minority stockholders' guarantees               17.6       42.2
                                                             ----       ----
                                                             69.0       87.2
                                                             ====       ====

          Other loans are guaranteed either by the Company, or by the future
          flow of export.

          The Company is responsible for sureties and guarantees offered on
          behalf of its subsidiaries, amounting to R$ 571.4.

          The Company's subsidiaries have issued guarantees to financial
          institutions related to amounts owed to those institutions by certain
          of their customers (vendor financing). There are no recourse
          provisions or collateral that would enable the Company or its
          subsidiaries to recover any amounts paid to the financial institutions
          under these agreements. In the event of payment of such guarantees to
          those financial institutions, the subsidiaries may recover the amount
          of such payment directly from their customers through trade
          collection. Maximum future payments related to these guarantees amount
          to R$ 19.8 (2002 - R$ 7.1), with terms ranging from 30 to 210 days. As
          of December 31, 2003, the Company has not recorded any liability
          related to these guarantees.


13.  STOCKHOLDERS' EQUITY

     a)   Capital

          The Company is a public corporation with shares traded on the Sao
          Paulo and New York Stock Exchanges - NYSE. Subscribed and paid-up
          capital is represented by 69,691,268,828 shares without par value,
          consisting of 51,264,621,778 common and 18,426,647,050 preferred
          shares.

          On December 31, 2003, 4,823,058,000 preferred shares were outstanding
          in the U.S. market, in the form of American Depositary Receipts -
          ADRs.


                                                                            F-20
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Preferred shares are nonconvertible into common shares and nonvoting,
          entitle their holders to dividends at least 10% higher than those
          attributable to common shares, and have priority in capital
          redemption, without premium, in the event of liquidation of the
          Company. See Note 23.c).

     b)   Treasury shares

          The Company was authorized to acquire its own shares at market price,
          without capital reduction, to be held in treasury and subsequent
          disposal, in accordance with the provisions set forth by the Brazilian
          Securities Commission (CVM) Instructions No. 10 of February 14, 1980
          and No. 268 of November 13, 1997.

          In 2003, 87,900 thousand preferred shares were acquired at the average
          cost of R$ 24.73 (whole Brazilian reais), with a minimum cost of R$
          22.50 (whole Brazilian reais) and a maximum cost of R$ 31.30 (whole
          Brazilian reais) per thousand shares.

          As of December 31, 2003, the consolidated financial statements
          recorded 108,100 thousand preferred shares in treasury, which were
          acquired at the average cost of R$ 23.79 (whole Brazilian reais) per
          thousand shares.

          The market price of these shares in treasury on December 31, 2003 on
          the Sao Paulo Stock Exchange (BOVESPA) totaled R$ 37.29 (whole
          Brazilian reais) per thousand shares.

     c)   Capital reserve

          The capital reserve in the amount of R$ 1.1 reflects the gain on
          disposal of shares issued by the Company and held in treasury by some
          of the Company's subsidiaries, at the price of R$ 34.87 (whole
          Brazilian reais) per thousand shares. Executives of these subsidiaries
          have been given the usufruct of such shares, as described in Note 21.

     d)   Revaluation reserve

          This reserve reflects the revaluation write-up of assets of
          subsidiaries and affiliated companies and is realized based on
          depreciation, write-off or sale of these revalued assets, including
          the related tax effects.

          In some cases, taxes on the revaluation reserve of certain
          subsidiaries and affiliated companies are recognized only on
          realization of this reserve since the revaluation occurred prior to
          the publication of CVM Resolution No. 183/95. Deferred tax charges on
          these reserves total R$ 7.6 (2002 - R$ 8.5).

     e)   Profit reserves

          Legal reserve
          -------------

          Under Brazilian corporate law, the Company is required to appropriate
          5% of annual earnings to a legal reserve, until the balance reaches
          20% of capital stock. This reserve may be used to increase capital or
          absorb losses, but may not be distributed as dividends.


                                                                            F-21
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Reserve for retention of profits
          --------------------------------

          This reserve is supported by the investment program, in conformity
          with article 196 of Brazilian corporate law, and includes both a
          portion of net income and realization of revaluation reserve.

          Reserve for unrealized profits
          ------------------------------

          This reserve is established in conformity with article 197 of
          Brazilian corporate law, based on the equity in subsidiaries and
          affiliated companies. The realization of reserve normally occurs on
          receipt of dividends, sale and write-off of investments.

     f)   Dividends and appropriation of net income

          According to the Company's bylaws, the stockholders are entitled to a
          minimum annual dividend of 50% of adjusted net income, calculated
          under the terms of accounting practices adopted in Brazil.

          Proposed dividends as stated in the Company's financial statements,
          subject to approval at the Stockholders' Annual Meeting, are as
          follows:

                                                                         2003
                                                                         ----

          Net income                                                     246.4
          Legal reserve                                                  (12.3)
          Retention of profits - article 196                            (117.1)
          Realization of unrealized profit reserve                        40.6
                                                                         -----
          Compulsory dividends                                           157.6

          Reserve for unrealized profits                                 (85.6)
            Interim dividends  (R$ 0.46 and
              R$ 0.51 per thousand common and
              preferred shares, respectively)                            (33.0)
            Proposed dividends (R$ 0.55
              and R$ 0.60 per thousand common and
              preferred shares, respectively)                            (39.0)
                                                                         -----
                                                                             -
                                                                         =====

          Management proposes to retain the balance of net income in the
          "Reserve for retention of profits" account, in order to support the
          business expansion project established in its investment plan.

     g)   Reconciliation of stockholders' equity - parent company and
          consolidated

          Stockholders' equity - parent  company                    1,360.3
          Treasury shares held by subsidiaries -
             net of realization                                        (2.5)
          Capital reserve arising from sale of
             treasury shares to subsidiaries -
             net of realization                                        (1.1)
                                                                    -------
          Stockholders' equity - consolidated                       1,356.7
                                                                    =======


                                                                            F-22

                                       1
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


14.  NONOPERATING INCOME (EXPENSES), NET

     Refers principally to the result on sales of permanent assets, especially
     cylinders for the year ended December 31, 2003. For the year ended December
     31, 2002, refers principally to the recognition of provision for loss, in
     the amount R$ 40.6, of the investment of Oxiteno Nordeste S.A. - Industria
     e Comercio in Nordeste Quimica S.A. - Norquisa. For the year ended December
     31, 2001, refers to loss on disposal of investments and property, plant and
     equipment in the amount of R$ 12.4, write-off of deferred charges related
     to unsuccessful bid for Copene Petroquimica do Nordeste S.A. in the amount
     of R$ 8.0 and reversal for losses on investments, projects and fixed assets
     in the amount of R$ 3.4.


15.  RECONCILIATION OF EBITDA

     As recommended by the CVM in its annual orientation document for the
     preparation of financial statements, the Company is presenting its method
     for calculating EBITDA (Earnings Before Interest, Taxes, Depreciation and
     Amortization), as shown in the table below:

<TABLE>
                                                       2003                                2002          2001
                                 ----------------------------------------------------  ------------  ------------
                                 Ultragaz   Oxiteno  Ultracargo  Other   Consolidated  Consolidated  Consolidated
                                 --------   -------  ----------  -----   ------------  ------------  ------------
          <S>                       <C>       <C>        <C>     <C>          <C>           <C>            <C>
     Operating income               113.2    207.0      24.7      6.7        351.6         365.5         278.9
     (+) Depreciation and
       amortization                  95.0     36.2      15.3      0.4        146.9         121.8         102.4
     Other                              -        -         -        -            -             -          (8.8)
                                    -----    -----      ----      ---        -----         -----         -----
     EBITDA                         208.2    243.2      40.0      7.1        498.5         487.3         372.5
                                    =====    =====      ====      ===        =====         =====         =====
</TABLE>

16.  SEGMENT INFORMATION

     The Company has three reportable segments: gas, chemical and logistics. The
     gas segment distributes LPG to retail, commercial and industrial consumers
     mainly in the South, Southeast and Northeast areas of Brazil. The chemical
     segment produces primarily ethylene oxide, ethylene glycols, ethanolamines
     and glycol ethers. The logistics segment operates storage and
     transportation, mainly in the Southeast and Northeast areas of the country.
     Reportable segments are strategic business units that offer different
     products and services. Each of the reportable segments has a senior officer
     responsible for managing the segment. Intersegment sales are transacted at
     prices that approximate those that the selling entity is able to obtain on
     external sales. The principal financial information about each of the
     Company's reportable segments is as follows:

<TABLE>
                                                           2003                                 2002          2001
                                     ----------------------------------------------------   ------------  ------------
                                     Ultragaz   Oxiteno   Ultracargo  Other  Consolidated   Consolidated  Consolidated
                                     --------   -------   ----------  -----  ------------   ------------  ------------
         <S>                             <C>      <C>         <C>      <C>       <C>             <C>             <C>
     Net sales                        2,622.3   1,237.8       140.2      -       4,000.3        2,994.5       2,284.7
     Operating income before
       financial items                  113.2     207.0        24.7    6.7         351.6          365.5         278.9
     EBITDA                             208.2     243.2        40.0    7.1         498.5          487.3         372.5
     Total assets                     1,010.9   1,075.2       269.4   52.5       2,408.0        2,127.9       1,952.0
</TABLE>

     Disclosures of segments in accordance with U.S. GAAP are made in Note
     24.V.k.).


                                                                            F-23
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


17.  RISKS AND FINANCIAL INSTRUMENTS

     The main risk factors that the Company and its subsidiaries are exposed to
     reflect strategic- -operating and economic-financial aspects.
     Strategic-operating risks (such as demand behavior, competition,
     technological innovation and significant structural changes in industry,
     among others) are addressed by the Company's management model. Economic-
     -financial risks mainly reflect customer default and macroeconomic
     variables such as exchange and interest rates, as well as the
     characteristics of the financial instruments used by the Company. These
     risks are managed through control policies, specific strategies and the
     determination of limits, as follows:

     o    Customer default - These risks are managed by specific policies for
          accepting customers and credit analysis and are mitigated by
          diversification of sales. Oxiteno S.A. - Industria e Comercio and
          Oxiteno Nordeste S.A. - Industria e Comercio held R$ 3.5 (2002 - R$
          6.8) and Ultragaz Participacoes Ltda. held R$ 17.4 (2002 - R$ 8.2) of
          allowances for potential losses on receivables as of December 31,
          2003. The increase in the accrual of Ultragaz Participacoes Ltda. is
          substantially composed of accruals already existing in Shell's LPG
          business, acquired on August 8, 2003.

     o    Interest rates - The Company and its subsidiaries adopt conservative
          policies to obtain and invest funds and to minimize the cost of
          capital. The temporary cash investments of the Company and its
          subsidiaries are substantially comprised of transactions linked to the
          interbank deposit (CDI) rates, as described in Note 4. A portion of
          the financial assets is destined for foreign currency hedges, as
          mentioned below. Funds obtained originate from BNDES financing and
          from abroad, as mentioned in Note 12.

     o    Exchange rate - The Company's subsidiaries use foreign currency swap
          (mainly U.S. dollar to CDI) instruments available in the financial
          market to cover assets and liabilities in foreign currency, with the
          objective of reducing the effects of exchange rate variation in their
          results. Such swaps have amounts, periods and indexes equivalent to
          the assets and liabilities in foreign currency, to which they are
          linked. The following summary shows the assets and liabilities in
          foreign currency, translated into Brazilian reais at December 31,
          2003:

                                                             Book     Book
                                                            value    value
                                                            -----    -----
                                                             2003     2002
                                                             ----     ----

        Assets:
          Investment in foreign currency and swaps          395.3    381.0
          Foreign cash and cash equivalents                  77.6    127.3
          Receivables from foreign customers,
            net of advances
            on export contracts                              28.0     38.0
                                                            -----    -----
        Total                                               500.9    546.3
                                                            -----    -----

        Liabilities:
          Foreign currency financing                        438.7    377.8
          Import transactions payable                        10.0     12.5
                                                            -----    -----
        Total                                               448.7    390.3
                                                            -----    -----
        Net asset position                                   52.2    156.0
                                                            =====    =====


                                                                            F-24


<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     Given the characteristics of the financial instruments described above,
     management believes that the net market values approximate the net book
     values of these financial instruments. The exchange rate variation related
     to cash and banks, temporary cash investments and investments of foreign
     subsidiaries was recorded as financial expenses in the statement of income
     for the year ended December 31, 2003, in the amount of R$ 24.3 (2002 -
     financial income of R$ 44.1 and 2001 - financial income of R$ 12.8). Other
     financial instruments recorded in the financial statements as of December
     31, 2003 and 2002 were determined in conformity with the accounting
     criteria and practices described in the respective notes.

18.  CONTINGENCIES AND COMMITMENTS

     a)   Civil, tax and labor lawsuits

          The Petrochemical Industry Labor Union, of which the employees of
          Oxiteno Nordeste S.A. - Industria e Comercio are members, filed a
          class action suit against the subsidiary in 1991, demanding compliance
          with the adjustments established in collective labor agreements, in
          lieu of the salary policies effectively followed. At the same time,
          the employers' association proposed a collective labor dispute for the
          interpretation and clarification of the fourth clause of the
          agreement. Based on the opinion of its legal counsel, who analyzed the
          decision of the Federal Supreme Court (STF) in the collective dispute
          as well as the status of the individual lawsuit of the subsidiary,
          management believes that a reserve for a potential loss is not
          necessary as of December 31, 2003.

          The subsidiary Companhia Ultragaz S.A. is a defendant in lawsuits
          relating to damages caused by an explosion in 1996 in a shopping mall
          in the city of Osasco, State of Sao Paulo. Such lawsuits involve: (i)
          individual suits filed by victims of the explosion claiming damages
          from Ultragaz for the loss of economic benefit and for pain and
          suffering, (ii) reimbursement of expenses of management of the
          shopping mall and its insurance company, and (iii) class action suit
          seeking indemnification for material damages and pain and suffering
          for all the victims injured and deceased. The subsidiary believes that
          it has presented evidence that defective gas pipes in the shopping
          mall caused the accident and that Ultragaz's on-site LPG storage
          facilities did not contribute to the explosion. It has obtained a
          favorable judgment in all lawsuits which have been judged to date.
          Further, Ultragaz also believes that its insurance coverage is
          sufficient to cover the aggregate amount of all claims filed.

          The Company and its subsidiaries obtained injunctions to pay PIS and
          COFINS (taxes on revenues) without changes introduced by Law No.
          9,718/98 in its original version. The questioning refers to the levy
          of these taxes on gains other than revenues. The unpaid amounts were
          recorded in the financial statements of the Company and its
          subsidiaries, totaling R$ 30.5 (2002 - R$ 24.1).

          The main fiscal discussions of the Company and subsidiaries refer to
          the taxation of PIS and COFINS (as detailed in the preceding
          paragraph) and the taxation of income earned abroad (as stated in Note
          20.a)). The potential losses on these discussions are accrued in
          long-term liabilities as other taxes and deferred income and social
          contribution taxes, respectively.


                                                                            F-25
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          The Company and its subsidiaries have other ongoing administrative and
          judicial proceedings; the Company's legal counsel considers the risks
          of these proceedings to be low or remote and, therefore, no accrual
          for potential losses has been recorded.

          Although there is no assurance that the Company will prevail in all
          cases, management does not believe that the ultimate resolution of
          tax, civil and labor contingencies not provided for will have a
          material effect on the Company's financial position or results of
          operations.

          Escrow deposits and provisions are summarized below:

<TABLE>
                                                              2003                      2002
                                                      ---------------------     ---------------------
                                                       Escrow     Provision      Escrow     Provision
                                                      deposits       made       deposits       made
                                                      --------    ---------     --------    ---------
             <S>                                         <C>         <C>           <C>        <C>
          Social contribution taxes on net income          -         2.9            -           2.9
          Labor claims                                   7.5         0.9          4.5           1.5
          PIS and COFINS on other gains                    -        30.5          0.1          24.1
          Other                                          2.4         6.6          2.4             -
                                                         ---         ---          ---          ----
                                                         9.9        40.9          7.0          28.5
                                                         ===        ====          ===          ====
</TABLE>

     b)   Take or pay commitments

          The subsidiary Terminal Quimico de Aratu S.A. - Tequimar has contracts
          with CODEBA - Companhia Docas do Estado da Bahia and Complexo
          Industrial Portuario Governador Eraldo Gueiros, in connection with its
          harbor facilities in Aratu and Suape, respectively. Such contracts
          establish minimum cargo movement of 1,000,000 tons per year for Aratu,
          effective through 2022, and 250,000 tons per year for Suape, effective
          through 2027. If annual movement is less than the minimum required,
          the subsidiary is required to pay the difference between the actual
          movement and the minimum contractual movement using the harbor rates
          in effect at the date established for payment. As of December 31,
          2003, such rates were R$ 3.67 and R$ 3.44 per ton for Aratu and Suape,
          respectively. The Company has been in compliance with the minimum
          cargo movement since the inception of the contracts.

          Oxiteno Nordeste S.A. - Industria e Comercio has a supply contract
          with Braskem S.A., effective through 2012, which establishes a minimum
          annual ethylene consumption level. The minimum purchase commitment and
          the actual demand for the years ended December 31, 2003 and 2002,
          expressed in tons of ethylene, are summarized below. If the minimum
          purchase commitment is not met, the subsidiary is liable for a fine of
          40% of the current ethylene price for the quantity not purchased.

                                               Minimum
                                               purchase
                                              commitment       Actual demand
                                              ----------       -------------
                                                              2003        2002
                                                              ----        ----

          In tons                                137,900     188,850     164,534
                                                 =======     =======     =======


                                                                            F-26
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     c)   Insurance coverage for subsidiaries

          The subsidiaries maintain insurance policies in amounts considered
          sufficient to cover potential losses from damage to assets, as well as
          for civil responsibility for involuntary, material and/or physical
          damages caused to third parties arising from their industrial and
          commercial operations, considering the nature of their activities and
          the advice of their insurance consultants.

19.  RELATED COMPANIES

<TABLE>
                                                                               2003
                                                            ---------------------------------------------
                                                                  Loans                Trade accounts
                                                            --------------------   ----------------------
                                                            Assets   Liabilities   Receivable     Payable
                                                            ------   -----------   ----------     -------
         <S>                                                  <C>        <C>           <C>         <C>
     Serma Associacao dos Usuarios de Equipamentos de
       Processamentos de Dados e Servicos Correlatos         1.2          0.6              -        0.8
     Petroquimica Uniao S.A.                                   -            -              -        3.5
     Oxicap Industria de Gases Ltda.                         0.2            -              -        0.6
     Quimica da Bahia Industria e Comercio S.A.                -          7.2              -          -
     Petroleo Brasileiro S.A. - Petrobras                      -            -              -        1.3
     Braskem S.A.                                              -            -              -        4.1
     Cia. Termeletrica do Planalto Paulista - TPP            1.3            -              -          -
     Plenogas - Distribuidora de Gas S.A.                      -          0.9              -          -
     Other                                                   0.1          0.3              -        0.4
     Total at December 31, 2003                              2.8          9.0              -       10.7
     Total at December 31, 2002                              2.6         10.2            0.5       31.9

                                                                                   2003
                                                                   --------------------------------
                                                                      Transactions        Financial
                                                                      ------------          income
                                                                   Sales    Purchases     (expenses)
                                                                   -----    ---------     ----------

     Petroquimica Uniao S.A.                                            -          93.7            -
     Oxicap Industria de Gases Ltda.                                    -           6.5            -
     Agip do Brasil S.A.                                              2.6             -            -
     Quimica da Bahia Industria e Comercio S.A.                         -             -         (0.8)
     Petroleo Brasileiro S.A. - Petrobras                               -       1,818.7            -
     Copagaz Distribuidora de Gas S.A.                                0.3             -            -
     Braskem S.A.                                                    53.3         403.4            -
     Supergasbras Distribuidora de Gas S.A.                           1.0             -            -
     Cia. Termeletrica do Planalto Paulista - TPP                       -             -          0.2
     Other                                                            0.6           1.5            -
             ----                                                    ----       -------         ----
     Total - 2003                                                    57.8       2,323.8         (0.6)
             ====                                                    ====       =======         ====

     Total - 2002                                                    46.9       1,678.7         (0.4)
             ====                                                    ====       =======         ====

     Total - 2001                                                    18.3       1,236.2         (0.5)
             ====                                                    ====       =======         ====
</TABLE>

     The loan balances with Quimica da Bahia Industria e Comercio S.A. and Cia.
     Termeletrica do Planalto Paulista - TPP are indexed based on the Brazilian
     long-term interest rate (TJLP). The other loans do not have financial
     charges. Transactions refer principally to purchases of raw material, other
     materials and storage services, carried out at usual market prices and
     conditions.


                                                                            F-27
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


20.  INCOME TAXES

     a)   Deferred income and social contribution taxes

          The Company and its subsidiaries recognize tax assets and liabilities
          which do not expire, arising from tax loss carryforwards, temporary
          add-backs, revaluation of property, plant and equipment, and others.
          The tax credits are substantiated by continued operating
          profitability. Management expects to realize these tax credits over a
          maximum period of three years. Deferred income and social contribution
          taxes are presented in the following principal categories:

<TABLE>
                                                                          2003    2002
                                                                          ----    ----
                  <S>                                                      <C>     <C>
          Noncurrent assets:
            Deferred income and social contribution taxes on:
              Accruals tax deductible only when expenses are incurred     48.6     27.6
              Income and social contribution tax loss carryforwards       12.8      5.7
                                                                          ----     ----
                                                                          61.4     33.3
                                                                          ====     ====
          Long-term liabilities:
            Deferred income and social contribution taxes on:
              Revaluation of property, plant and equipment                 2.1      2.1
              Income earned abroad                                        26.6     32.7
                                                                          ----     ----
                                                                          28.7     34.8
                                                                          ====     ====
</TABLE>


                                                                            F-28
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     b)   Income tax reconciliation

          Income and social contribution taxes are reconciled to statutory tax
          rates as follows:

<TABLE>
                                                                                  2003       2002       2001
                                                                                  ----       ----       ----
                <S>                                                                <C>        <C>        <C>
          Income before taxes, equity in subsidiaries associates and
            minority interest                                                     295.4      349.9     230.8
          Official tax rates - %                                                   34.0       34.0      34.0
                                                                                  -----      -----     -----

          Income and social contribution taxes at official rate                  (100.4)    (119.0)    (78.5)

          Adjustments to the effective tax rate:
            Nondeductible expenses/nontaxable revenues                              2.3       (1.2)      6.2
            Adjustments to estimated income                                         1.1        3.1       3.4
            Realization of inflationary profit                                        -          -       2.0
            Interest on capital paid                                                  -        0.2      10.5
            Other                                                                  (0.6)       1.3       1.6
                                                                                  -----     ------     -----
          Income and social contribution taxes before tax credits                 (97.6)    (115.6)    (54.8)


          Tax credits:
            Workers' meal program (PAT)                                             0.3        0.7       0.3
            Benefits of tax holidays                                               52.4       43.5      27.0
                                                                                  -----     ------     -----
          Income and social contribution taxes per statement of income            (44.9)     (71.4)    (27.5)
                                                                                  =====      =====     =====

          Current                                                                (113.0)    (110.1)    (58.4)
          Deferred                                                                 15.7       (4.8)      3.9
          Benefits of tax holidays                                                 52.4       43.5      27.0
</TABLE>

     c)   Tax loss carryforwards

          Tax loss carryforwards may be used to offset up to 30% of taxable
          income for future periods and do not expire.


                                                                            F-29
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     d)   Tax exemption

          The following indirect subsidiaries have partial or total exemption
          from income tax in connection with a government program for the
          development of the Northeast Region of Brazil, as follows:

<TABLE>
                                                                                           Exemption   Expiration
                           Subsidiary                                 Bases                   - %          date
                           ----------                                 -----                ---------   ----------
                 <S>                                          <C>                              <C>         <C>
         Oxiteno Nordeste S.A. - Industria e Comercio     Camacari plant                        100       2006

         Bahiana Distribuidora de Gas Ltda.               Mataripe base (*)                     100       2003
                                                          Juazeiro base                         100       2004
                                                          Suape base                            100       2007
                                                          Ilheus base                            25       2008
                                                          Aracaju base                           25       2008

         Terminal Quimico de Aratu S.A. - Tequimar        Aratu Terminal (*)                    100       2003
                                                          Suape Terminal (acetic acid
                                                          and butadiene byproducts)             100       2005
</TABLE>


          (*)  In December 2003, requests were filed with Agencia de
               Desenvolvimento do Nordeste (ADENE), the agency in charge of
               managing this incentive program, seeking a 75% reduction in
               income tax until 2013 for these bases. Such requests are still
               pending approval by ADENE. In the case they are not approved, the
               income tax reduction of these bases will be 25% until 2008 and
               12.5% from 2009 to 2013. See Note 23.b).

          Tax benefits from income tax reduction for activities eligible for tax
          incentives were recorded in a specific capital reserve account in
          stockholders' equity by the subsidiaries benefited from tax
          incentives. In the consolidated statements of income, these benefits
          are reported as "Benefit of tax holidays".

          The subsidiary Bahiana Distribuidora de Gas Ltda. has requests under
          analysis by the Federal Revenue Authorities relating to Caucaia base,
          which, once approved, would represent a reduction of 75% of income tax
          until 2012 for this base. See Note 23.b).

21.  STOCK PLAN

     At the Extraordinary Stockholders' Meeting held on November 26, 2003, a
     benefit plan was approved for management of the Company and its
     subsidiaries, which provides for: (i) the initial grant of usufruct of
     shares issued by the Company and held in treasury by the subsidiaries in
     which the beneficiaries are employed, and (ii) the transfer of the
     beneficial ownership of the shares after ten years from the initial
     concession provided that the professional relationship between the
     beneficiary and the Company and subsidiaries is not interrupted. The total
     value granted to executives in December 2003, including taxes, was R$ 5.0.
     This value is being amortized over a period of ten years.


                                                                            F-30
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


22.  EMPLOYEE BENEFITS AND PRIVATE PENSION PLAN (CONSOLIDATED)

     The Company and its subsidiaries offer benefits to their employees, such as
     life insurance, health care and a pension plan. In addition, they offer
     loans for the acquisition of vehicles and personal computers to employees
     of certain subsidiary companies. These benefits are recorded on the accrual
     basis and terminate at the end of the employment relationship.

     In August 2001, the Company and its subsidiaries began to offer their
     employees a defined contribution pension plan. Adoption of this plan,
     managed by Ultraprev - Associacao de Previdencia Complementar, was approved
     at the Board of Directors' Meeting on February 15, 2001. Under the terms of
     the plan, the basic contribution of each participating employee is defined
     annually by the participant between 0 and 11% of his/her salary. The
     sponsoring companies provide a matching contribution in an identical amount
     as the basic contribution. As participants retire, they may opt to receive
     monthly: (i) a percentage varying between 0.5% and 1.0% of the fund
     accumulated in their name at Ultraprev, or (ii) a fixed monthly amount
     which will extinguish the fund accumulated in the participant's name during
     a period of between 5 and 25 years. As such, neither the Company nor its
     subsidiaries assume responsibility for guaranteeing the levels of amounts
     or periods of receipt for the participants that retire under this plan. In
     2003, the Company and its subsidiaries contributed R$ 3.4 (R$ 2.9 in 2002
     and R$ 1.2 in 2001) to Ultraprev, which was charged to income for the year.
     The total number of employee participants as of December 31, 2003 was
     5,115, with no participants retired to date.

     Additionally, Ultraprev has 2 active participants and 34 former employees
     receiving defined benefits according to the policies of a previous plan.
     Considering that the fair market value for the plan's assets significantly
     exceeds the present actuarial value of the accumulated benefit obligations,
     the sponsoring entities have not been contributing to the plan for these 36
     participants. On the other hand, the sponsoring entities do not believe
     that it would be possible to recover any amounts from the plan, based on
     legislation applicable to closed private pension entities. As a result, no
     asset or liability relating to these participants has been recorded in the
     financial statements of the sponsoring companies.

23.  SUBSEQUENT EVENTS

     a)   In January 2004, the subsidiary LPG International Inc. issued
          eurobonds in the amount of US$ 60 million, maturing in June 2005 and
          having an interest rate of 3.5% per year. Funds from issuance were
          used to repay loans, as stated in Note 12.

     b)   On April 30, 2004, ADENE issued reports approving the income tax
          reduction until 2012 for the Mataripe and Aratu bases of subsidiaries
          Bahiana Distribuidora de Gas Ltda. and Terminal Quimico de Aratu S.A.
          - Tequimar, as mentioned in Note 20.d). These reports were submitted
          for approval to the Federal Revenue Service that will issue its
          opinion in a maximum of 120 days. If such opinion is not issued after
          this period, the reductions are considered as approved.

          The reduction of 75% of income tax until 2012 for the Caucaia unit of
          subsidiary Bahiana Distribuidora de Gas Ltda. was approved by the
          Federal Revenue Service on April 16, 2004 for having elapsed the
          period of 120 days.


                                                                            F-31
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     c)   Preferred shares are nonconvertible into common shares and nonvoting,
          and have priority in capital redemption, without premium, in the event
          of liquidation of the Company. Until May 18, 2004 preferred shares
          entitled their holders to dividends at least 10% higher than those
          attributable to common shares. The Special Meeting of the Preferred
          Shareholders and the Extraordinary General Shareholders' Meeting of
          Ultrapar, held on May 18, 2004, approved the amendment of article 12
          of the Company's bylaws, to make the dividend right of preferred
          shareholders equal to those of common shareholders by abolishing the
          right of preferred shareholders to receive dividends at least 10%
          higher than those received by common shareholders.

24.  SUMMARY AND RECONCILIATION OF THE DIFFERENCES BETWEEN ACCOUNTING PRACTICES
     ADOPTED IN BRAZIL AND ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
     UNITED STATES OF AMERICA (U.S. GAAP)


     I - Description of GAAP differences

     The consolidated financial statements of the Company are prepared in
     accordance with accounting practices adopted in Brazil, which comply with
     those prescribed by Brazilian corporate law and specific standards
     established by the Brazilian Securities Commission (CVM). Note 3 to the
     consolidated financial statements summarizes the accounting policies
     adopted by the Company. Accounting policies, which differ significantly
     from U.S. GAAP, are summarized below.

     a)   Inflation accounting

          As discussed in Note 2, the consolidated financial statements account
          for the effects of inflation, through December 31, 1995. Under U.S.
          GAAP, Brazil was considered to be a highly inflationary economy until
          July 1, 1997, and the recognition of the effect of inflation was
          required until December 31, 1997.

          In determining amounts under U.S. GAAP, the effects of inflation for
          the years ended December 31, 1996 and 1997 were determined using the
          "Indice Geral de Precos -Disponibilidade Interna - IGP-DI" index,
          which is widely-accepted and respected index published monthly by the
          Fundacao Getulio Vargas.

          Through December 31, 1995, the Company used indexes established by the
          government to restate balances and transactions for purposes of its
          corporate law financial statements. Such indexes do not necessarily
          represent changes in general price levels, as would be required under
          U.S. GAAP.


                                                                            F-22
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Because the Company's management believes that the "Indice Geral de
          Precos - Disponibilidade Interna - IGP-DI" is an appropriate and
          consistent measure of the general price inflation in Brazil and,
          because of its availability, for U.S. GAAP purposes, the Company
          adopted the IGP-DI for restatement of its financial statements through
          December 31, 1995, replacing the government mandated index. This
          procedure is consistent with the recommendation by the Brazilian Task
          Force (organized under the AICPA International Practices Task Force to
          review the issue of the appropriate index to be used for preparing
          price-level adjusted financial statements of Brazilian companies
          filing with the SEC) of using the IGP-M or IGP-DI for such purposes.
          Thus, all nonmonetary assets and liabilities were restated using the
          IGP-DI since the inception of the Company, through December 31, 1997.

     b)   Reversal of fixed asset revaluations and related deferred tax
          liabilities

          For U.S. GAAP reconciliation purposes, the revaluation of fixed assets
          and the related deferred tax effects recorded in the financial
          statements prepared in accordance with accounting practices adopted in
          Brazil have been eliminated in order to present fixed assets at
          historical cost less accumulated depreciation. Accordingly, the
          depreciation on such revaluation charged to income has also been
          eliminated for U.S. GAAP reconciliation purposes.

     c)   Deferred charges

          Accounting practices adopted in Brazil permit the deferral of research
          and development costs and of preoperating expenses incurred in the
          construction or expansion of a new facility until the facility begins
          commercial operations. Deferred charges are amortized over a period of
          five to ten years.

          For U.S. GAAP reconciliation purposes, such amounts do not meet the
          conditions established for deferral and, accordingly, have been
          charged to income and the related amortization under accounting
          practices adopted in Brazil has been reversed.

     d)   Investments in affiliated companies

          As from 1996, Brazilian corporate law allows certain less than 20% -
          owned affiliated companies in which an investor owns more than 10% of
          voting stock to be accounted for on the equity method. In addition,
          certain more than 20% and less than 50% - owned affiliated companies
          deemed not significant in relation to their parent company are
          accounted at cost.

          For U.S. GAAP reconciliation purposes, less than 20% - owned
          affiliated companies have been accounted for on the basis of cost and
          more than 20% and less than 50% - owned affiliated companies have been
          accounted for on the equity method for all years presented.

     e)   Capitalization of interest in relation to construction in progress

          Under accounting practices adopted in Brazil, prior to January 1, 1996
          the Company was not required to capitalize the interest cost of
          borrowed funds as part of the cost of the related asset. Under U.S.
          GAAP, capitalization of borrowed funds during construction of major
          facilities is recognized as part of the cost of the related assets.


                                                                            F-33
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Under U.S. GAAP, interest on construction-period borrowings
          denominated in foreign currencies is capitalized using contractual
          interest rates, exclusive of foreign exchange or monetary correction
          gains or losses. Interest on construction-period borrowings
          denominated in Brazilian reais is capitalized.

     f)   Income taxes

          Under accounting practices adopted in Brazil and U.S. GAAP, the
          liability method of accounting for income taxes is followed.

          Under accounting practices adopted in Brazil, the Company recognizes
          deferred income taxes based on the combined income tax of 34%. Such
          combined income tax rate includes 25% of income tax and 9% of social
          contribution tax. This 9% social contribution rate was based on a
          provisional measure whereas the rate established by enacted law was 8%
          until December 30, 2002, when such provisional measure was converted
          into law (Law No. 10,637 of December 30, 2002).

          Under U.S. GAAP, the provisional measures discussed are not considered
          to be enacted law. Therefore, for 2001 the combined deferred tax
          effect calculated on temporary differences would be 33% rather than
          34%.

     g)   Acquisitions and business combinations

          Under accounting practices adopted in Brazil, assets and liabilities
          of acquired entities are reflected at book values. Goodwill is
          amortized on straight-line basis over the periods estimated to be
          benefited.

          Under U.S. GAAP, business combinations are accounted for by the
          purchase method utilizing fair values. Goodwill is not amortized and
          should be tested for impairment. An impairment test of goodwill is
          performed annually or more frequently if events or changes in
          circumstances indicate that the goodwill might be impaired. Such
          impairment test is performed utilizing a two-step method. The first
          step compares the fair value of a reporting unit with its carrying
          amount, including goodwill. If the carrying amount of a reporting unit
          exceeds its fair value, the second step is performed to measure the
          amount of impairment loss, if any. The second step compares the
          implied fair value of reporting unit goodwill with the carrying amount
          of that goodwill.

          For U.S. GAAP reconciliation purposes, fair values have been assigned
          to acquired assets and liabilities in business combinations in
          accordance with U.S. practices applicable to each specific
          transaction.

          Under Brazilian corporate law, purchases by subsidiaries of treasury
          stock from minority stockholders are initially recorded at cost. Upon
          cancellation of these shares, the difference between cost and the
          related book value of the subsidiary's stockholders' equity is
          recorded by the parent company and in the consolidated financial
          statements as a capital gain or loss. Direct purchases by the parent
          company of the subsidiaries' stock from minority stockholders are
          recorded at cost, with the difference between cost and the related
          book value of the subsidiaries' stockholders' equity recorded as a
          capital gain or loss by the parent company and in the consolidated
          financial statements.


                                                                            F-34
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Under U.S. GAAP, purchases of treasury stock by subsidiaries from
          minority stockholders and direct purchases by the parent company of
          the subsidiaries' stock from minority stockholders are recorded as
          step acquisitions under the purchase method, with assignment of the
          purchase price to the underlying assets and liabilities based on their
          fair values and recording of goodwill to the extent that the purchase
          price exceeds the proportionate amount of the net fair value of the
          assets and liabilities. No gain or loss is recognized upon either
          purchase or cancellation of the shares.

          Corporate reorganization - 2002
          -------------------------------

          As mentioned in Note 3, in 2002, the Company effected a corporate
          reorganization of its major subsidiaries. The reorganization involved
          the exchange of minority interest in its subsidiary Oxiteno S.A. -
          Industria e Comercio for shares of the Company. Pursuant to Brazilian
          securities law, this subsidiary offered withdrawal rights to its
          minority stockholders. These withdrawal rights required the Company's
          subsidiary to buy back and cancel shares from minority stockholders
          who exercised their rights.

          Under accounting practices adopted in Brazil, the exchange of shares
          issued by the Company for minority interest in Oxiteno S.A. -
          Industria e Comercio was recorded based on the book value of the net
          assets of Oxiteno S.A. - Industria e Comercio, and the purchase price
          was considered to be the book value of the shares issued.

          Under U.S. GAAP, the Company has accounted for the reorganization of
          its subsidiary Oxiteno S.A. - Industria e Comercio as an acquisition
          of minority interest. The fair value of the consideration given
          (purchase price), including the cash paid on the exercise of the
          withdrawal rights of R$ 208.0, was R$ 428.9. The purchase price of
          this acquisition was R$ 32.9 lower than the fair value of net assets
          acquired. This difference was allocated as a reduction of property,
          plant and equipment acquired. As a result of the reorganization, the
          Company increased its interest in Oxiteno S.A. - Industria e Comercio
          to 100% and for U.S. GAAP purposes had full participation in the
          results of Oxiteno S.A. - Industria e Comercio beginning December 1,
          2002 (see date of reorganization/acquisition below).

          Date of reorganization/acquisition - 2002
          -----------------------------------------

          As mentioned in Note 3, under accounting practices adopted in Brazil,
          the corporate reorganization was based on the balance sheets as of
          June 30, 2002 and, as a consequence, the Company has full
          participation in the results of its subsidiaries as from July 1, 2002.

          Under U.S. GAAP, the date of acquisition ordinarily is the date assets
          are received and other assets are given, liabilities are assumed or
          incurred, or equity interests are issued, which was considered to be
          October 31 and November 30, 2002 for the merger of Gipoia
          Participacoes Ltda. (an entity under common control of the controlling
          stockholder of the Company) and for the acquisition of minority
          interest in Oxiteno S.A. - Industria e Comercio, respectively. As a
          result, minority interest from July 1, 2002 to the acquisition dates
          under U.S. GAAP were excluded from the U.S. GAAP income of the Company
          in the amount of R$ 55.4.


                                                                            F-35
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Acquisition of SPGas Distribuidora de Gas S.A. ("SPGas") - 2003
          ---------------------------------------------------------------

          As mentioned in Note 3, on August 8, 2003, the Company acquired 100%
          of the outstanding common shares of SPGas. The results of SPGas
          operations have been included in the consolidated financial statements
          since that date. SPGas is a distributor of LPG in Brazil. As a result
          of this acquisition, the Company is expected to be the leading
          distributor of LPG in Brazil.

          The cost of acquisition included the purchase price amounting to R$
          107.9 net of the debt settled and other direct costs amounting to R$
          1.1.

          Under U.S. GAAP, the Company has recorded such acquisition based on
          the fair value of the assets acquired and liabilities assumed and
          determined goodwill in accordance with the purchase method of
          accounting prescribed by Statement of Financial Accounting Standards
          ("SFAS") 141, "Business Combinations", which is completed and resulted
          in the identification of goodwill as shown below.

          The following table summarizes the estimated fair values of the assets
          acquired and liabilities assumed at the date of acquisition:

                                                                          R$
                                                                          --

          Current assets                                                 27.6
          Property, plant and equipment                                  98.6
          Other assets                                                   26.6
                                                                        -----
          Total assets acquired                                         152.8
                                                                        -----

          Current liabilities, including
           short-term debt of R$ 62.7                                    73.3
          Long-term liabilities                                          10.4
                                                                        -----
          Liabilities assumed                                            83.7
                                                                        -----
          Net assets                                                     69.1
                                                                        =====

          Interest acquired                                              100%

          Net assets acquired                                            69.1
          Total cost of acquisition                                     109.0
                                                                        -----

          Goodwill recorded under U.S. GAAP                              39.9

          Goodwill recorded under accounting
           practices adopted in Brazil                                  (24.4)

          Other direct costs recorded as deferred
           charges for accounting practices adopted
           in Brazil                                                     (1.1)

          Goodwill difference between U.S. GAAP
           and accounting practices adopted in
           Brazil (see the stockholders' equity
           reconciliation)                                               14.4

          The purchase price allocation did not result in the identification of
          any intangible assets related to this acquisition.

          The full amount of goodwill related to this business combination was
          assigned to the gas segment. This goodwill is not deductible for tax
          purposes.


                                                                            F-36
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          The following summary presents the Company's unaudited pro forma
          consolidated results of operations for the years ended December 31,
          2003 and 2002, in accordance with accounting practices adopted in
          Brazil, as if the SPGas acquisition had been completed at the
          beginning of each period. The pro forma information is only presented
          for comparative purposes and does not purport to be indicative of what
          would have occurred had the acquisition actually been made at such
          date, nor is it necessarily indicative of future operating results:

<TABLE>
          Amounts under Accounting practices adopted in Brazil       2003        2002
          ----------------------------------------------------       ----        ----
               <S>                                                  <C>          <C>
          Net sales and services                                  4,283.0     3,369.0
          Operating income before financial items                   324.8       357.8
          Net income                                                224.6       218.0
          Net earnings per thousand shares - whole R$                3.23        3.55
</TABLE>

          Acquisition of Canamex Quimicos S.A. de C.V. ("Canamex") - 2003
          ---------------------------------------------------------------

          As mentioned in Note 3, on December 4, 2003, the Company acquired 100%
          of the outstanding common shares of Canamex. The results of Canamex's
          operations have been included in the consolidated financial statements
          since that date. Canamex is engaged in the production and sales of
          chemicals in Mexico. As a result of the acquisition, the Company is
          expected to expand its activities outside of Brazil.

          The cost of acquisition was R$ 32.3, composed of purchase price
          amounting to R$ 30.5 and other direct costs amounting to R$ 1.8. The
          net assets acquired amounted to R$ 29.7, composed of net assets of R$
          39.7 and liabilities assumed of R$ 10.0.

          The Company has recorded such acquisition based on the fair value of
          assets acquired and liabilities assumed and determined goodwill in
          accordance with the purchase method of accounting prescribed by SFAS
          141, which is completed and resulted in the identification of goodwill
          amounting to R$ 2.6. This goodwill is not deductible for tax purposes.

     h)   Earnings per share

          Under accounting practices adopted in Brazil, it is permitted to
          determine earnings per share based upon the weighted average number of
          shares outstanding during each year that earnings are reported.

          Under U.S. GAAP, earnings per share are determined based upon the
          weighted average number of shares outstanding during the period,
          giving retroactive effect to stock splits. Entities whose capital
          structures include nonconvertible securities that may participate in
          dividends with common stock according to a predetermined formula
          should use the two-class method of computing earnings per share as
          described in SFAS 128, "Earnings per Share". The calculation of
          earnings per share under U.S. GAAP is shown in Note 24.V.a).


                                                                            F-37
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     i)   Available-for-sale securities

          Equity securities
          -----------------

          Under accounting practices adopted in Brazil, available-for-sale
          equity securities are generally carried at cost, less provisions
          charged to the statement of operations if a loss in value is
          considered to be other than temporary.

          For U.S. GAAP reconciliation purposes, available-for-sale equity
          securities have been recorded at estimated market value, and the
          resulting adjustments, in the amount of R$ 1.5 (income), R$ 2.4 (loss)
          and R$ 2.7 (loss) as of December 31, 2003, 2002 and 2001,
          respectively, net of deferred tax effects and minority interest, when
          applicable, have been recognized as a separate component of
          stockholders' equity until realization. During the years presented, no
          securities classified under U.S. GAAP as available-for-sale were
          disposed of.

          Debt securities
          ---------------

          Under accounting practices adopted in Brazil, available-for-sale debt
          securities are generally carried at cost, plus interest income earned
          less provisions, when applicable, charged to the statement of
          operations to reduce its carrying value to market value.

          For U.S. GAAP reconciliation purposes, available-for-sale debt
          securities have been recorded at estimated market value, and the
          resulting adjustment, in the amount of R$ 0.4 (loss) as of December
          31, 2003, has been recognized as a separate component of stockholders'
          equity, net of deferred tax effects, until realization. During the
          year presented, no debt securities classified under U.S. GAAP as
          available-for-sale were disposed of.

     j)   Accounting for derivative financial instruments

          In the Company's financial statements prepared in accordance with
          accounting practices adopted in Brazil derivative financial
          instruments are recorded at net settlement price as determined on each
          balance sheet date.

          Under U.S. GAAP, effective January 1, 2001, all derivative financial
          instruments must be reported at fair value on each balance sheet date
          and classified as derivative asset or liability. Also under U.S. GAAP,
          the requirements for a derivative instrument to qualify for hedge
          accounting and deferral of gains and losses are more restrictive than
          under Brazilian corporate law.

     k)   Accounting for stock plan

          As mentioned in Note 21, the Company has approved a stock plan on
          November 26, 2003. Based on the provisions of this plan, on December
          17, 2003 the Company granted 104,000 thousand restricted shares to two
          executives. The grant-date fair value of these shares is R$ 34.87
          (whole Brazilian reais) per thousand shares. These executives have the
          right to receive dividends on these shares provided that the
          professional relationship between them and the Company and its
          subsidiaries is not interrupted. These shares will cliff vest after
          ten years of the initial award.


                                                                            F-38
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Under Brazilian GAAP, the Company records compensation costs from its
          stock plan similarly to the requirements of APB Opinion No. 25,
          "Accounting for Stock Issued to Employees", using the intrinsic value
          of the award. Compensation cost is charged to earnings on a
          straight-line basis.

          No adjustments are included in the U.S. GAAP reconciliation related to
          the Company's stock plan since the Company applies APB Opinion No. 25
          to account for the plan for U.S. GAAP purposes. The Company has not
          disclosed the pro forma information required under SFAS 123,
          "Accounting for Stock-based Compensation", as amended by SFAS 148,
          "Accounting for Stock-based Compensation - Transition and Disclosure",
          since the results of using the fair value method to record
          compensation expense would be the same as under the intrinsic value
          method.

          For U.S. GAAP purposes, dividends declared under these unvested
          restricted shares are accounted initially as a charge to retained
          earnings. If the restricted shares do not vest all previously declared
          dividends associated with the restricted shares are reversed from
          retained earnings and charged to compensation expense. As of December
          31, 2003, accumulated dividends declared under these unvested
          restricted are "de minimis".

     l)   Fair value of guarantees under FIN 45

          Under accounting practices adopted in Brazil, the Company is not
          required to record any liability related to guarantees given to third
          parties unless contingent obligations to make future payments under
          the guarantees are probable.

          Under accounting practices adopted in Brazil, as of December 31, 2003,
          the Company has not recorded any liability related to these
          guarantees, as disclosed in Note 12.

          Under U.S. GAAP, for the year ended December 31, 2003, the Company
          recognizes, at the inception of a guarantee (issued or modified after
          December 31, 2002), a liability for the fair value of the obligation
          undertaken in issuing guarantees in accordance with FIN 45,
          "Guarantor's Accounting and Disclosure Requirements for Guarantees,
          Including Indirect Guarantees of Indebtedness of Others". In the event
          that, at inception of the guarantee, the Company is required to
          recognize a liability under SFAS 5, "Accounting for Contingencies",
          the liability initially recognized would be the greater of: (a) the
          amount of fair value of the value of the obligation undertaken in
          issuing guarantee, or (b) the contingent liability amount required to
          be recognized at inception of the guarantee by applying SFAS 5. As of
          December 31, 2002, the Company adopted the disclosure requirements of
          FIN 45.

          Under U.S. GAAP, the Company recorded a liability of R$ 0.5 (R$ 0.3 -
          net of income tax effects) related to these guarantees issued after
          December 31, 2002 based on their fair value.


                                                                            F-39
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     m)   Classification of export notes

          The Company has discounted with financial institutions certain notes
          under export financing arrangements with recourse. If the original
          debtors fail to pay their obligations when due, the Company would be
          required to repay such amounts. Under accounting practices adopted in
          Brazil, such transactions are classified as a reduction of accounts
          receivable (see Note 6). Under U.S. GAAP, these transactions are
          recorded gross as accounts receivable and bank loans. As a
          consequence, current assets and liabilities under U.S. GAAP would be
          increased by R$ 31.5 and R$ 43.4 at December 31, 2003 and 2002,
          respectively. This GAAP difference has no net income or equity effect.

     n)   Financial statement note disclosures

          Under accounting practices adopted in Brazil, in general, certain
          information is required to be disclosed in the notes to the financial
          statements. The additional disclosures required by U.S. GAAP, which
          are relevant to the accompanying financial statements, are included
          herein.

     o)   New accounting pronouncements

          SFAS 149, "Amendment of Statement No. 133 on Derivative Instruments
          -------------------------------------------------------------------
          and Hedging Activities"
          -----------------------

          In April 2003, the Financial Accounting Standards Board ("FASB")
          issued SFAS 149, "Amendment of Statement No. 133 on Derivative
          Instruments and Hedging Activities", which amends and clarifies
          accounting for derivative instruments, including certain derivative
          instruments embedded in other contracts, and hedging activities under
          SFAS 133, "Accounting for Derivative Instruments and Hedging
          Activities". SFAS 149 clarifies the circumstances under which a
          contract with an initial net investment meets the characteristic of a
          derivative as discussed in SFAS 133. In addition, SFAS 149 clarifies
          when a derivative contains a financing component that warrants special
          reporting in the statement of cash flows. SFAS 149 amends certain
          other existing pronouncements, resulting in more consistent reporting
          of contracts that are derivatives in their entirety or that contain
          embedded derivatives that warrant separate accounting. SFAS 149 is
          effective for contracts entered into or modified after June 30, 2003
          and for relationships designated after June 30, 2003 and is to be
          applied prospectively. The adoption of SFAS 149 did not have any
          impact on the Company's financial statements.

          SFAS 150, "Accounting for Certain Financial Instruments with
          ------------------------------------------------------------
          Characteristics of both Liabilities and Equity"
          -----------------------------------------------

          In May 2003, FASB issued SFAS 150, "Accounting for Certain Financial
          Instruments with Characteristics of both Liabilities and Equity". SFAS
          150 modifies the accounting for certain financial instruments that,
          under previous guidance, issuers could account for as equity. The
          statement requires that those instruments be classified as liabilities
          in statements of financial position. SFAS 150 affects an issuer's
          accounting for three types of freestanding financial instruments,
          namely:

          o    Mandatory redeemable shares, which the issuing company is
               obligated to buy back in exchange for cash or other assets.


                                                                            F-40
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          o    Instruments, other than outstanding shares, that do or may
               require the issuer to buy back some of its shares in exchange for
               cash or other assets. These instruments include put options and
               forward purchase contracts.

          o    Obligations that can be settled with shares, the monetary value
               of which is fixed, tied solely or predominantly to a variable
               such as a market index, or varies inversely with the value of the
               issuers' shares.

          SFAS 150 does not apply to features embedded in financial instruments
          that are not derivatives in their entirety. In addition to its
          requirements for the classification and measurement of financial
          instruments within its scope, SFAS 150 also requires disclosures about
          alternative ways of settling those instruments and the capital
          structure of entities, all of whose shares are mandatorily redeemable.
          SFAS 150 is effective for financial instruments entered into or
          modified after May 31, 2003 and, otherwise, is effective at the
          beginning of the first interim period beginning after June 15, 2003.
          It is to be implemented by reporting the cumulative effect of a change
          in an accounting principle for financial instruments created before
          the issuance date of the statement and still existing at the beginning
          of the interim period of adoption. Restatement is not permitted. The
          adoption of SFAS 150 did not have any impact on the Company's
          financial statements.

          FIN 45, "Guarantor's Accounting and Disclosure Requirements for
          ---------------------------------------------------------------
          Guarantees, Including Indirect Guarantees of Indebtedness of Others"
          --------------------------------------------------------------------

          In November 2002, FASB issued Interpretation No. 45 ("FIN 45"),
          "Guarantor's Accounting and Disclosure Requirements for Guarantees,
          Including Indirect Guarantees of Indebtedness of Others". FIN 45
          requires certain disclosures to be made by a guarantor in its interim
          and annual financial statements about its obligations under certain
          guarantees that it has issued. It also requires a guarantor to
          recognize, at the inception of a guarantee, a liability for the fair
          value of the obligation undertaken in issuing the guarantee. The
          disclosure requirements of FIN 45 are effective for interim and annual
          periods ending after December 15, 2002. The initial recognition and
          initial measurement requirements of FIN 45 are effective prospectively
          for guarantees issued or modified after December 31, 2002. The
          adoption of FIN 45 did not have a material impact on the Company's
          financial statements, as discussed in Note 24.I.l.

          FIN 46, "Consolidation of Variable Interest Entities"
          -----------------------------------------------------

          In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
          Consolidation of Variable Interest Entities", an Interpretation of APB
          No. 51. FIN 46 requires certain variable interest entities to be
          consolidated by the primary beneficiary of the entity' if the equity
          investors in the entity did not have the characteristics of a
          controlling financial interest or did not have sufficient equity at
          risk for the entity to finance its activities without additional
          subordinated financial support from other parties. FIN 46 was
          effective for all new variable interest entities created or acquired
          after January 31, 2003. However, during October 2003, FASB deferred
          the effective date of FIN 46 until the end of the first interim or
          annual period ending after December 15, 2003. This deferral did not
          affect the implementation date for many foreign private issuers, which
          continued to be the beginning of the first annual period ending after
          December 15, 2003.


                                                                            F-41
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          In December 2003, FIN 46 was substantially revised and a new
          interpretation FIN 46 (revised) was issued. FASB partially delayed FIN
          46's effective date (for most public companies) until no later than
          the end of the first reporting period ending after March 15, 2004. The
          delay notwithstanding, public companies must apply either FIN 46 or
          FIN 46R to special-purpose entities (SPEs) no later than the end of
          the first reporting period ending after December 15, 2003. FIN 46R did
          not have any impact on the Company's operations in 2003, and it is
          expected that it will not have any impact on the Company's operations
          in 2004.


                                                                            F-42
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


    II  - Reconciliation of the differences between U.S. GAAP and accounting
          practices adopted in Brazil in net income

<TABLE>
                                                                                Note 24.I.    2003     2002     2001
                                                                                ----------    ----     ----     ----
           <S>                                                                     <C>        <C>       <C>      <C>
     Net income as reported under accounting practices adopted in Brazil                     246.4    222.3    132.2

     Reversal of revaluation adjustments:                                           b)
       Depreciation of property, plant and equipment                                           4.8      5.6      5.1
       Deferred tax effects                                                                   (0.1)    (0.6)    (0.4)
       Minority interests                                                                     (1.2)    (1.9)    (0.9)
                                                                                              ----     ----     ----
                                                                                               3.5      3.1      3.8
                                                                                              ----     ----     ----
     Inflation accounting:                                                          a)
       Property, plant and equipment - incremental depreciation                               (5.1)    (4.6)    (3.3)
       Inventories and other nonmonetary assets                                               (0.4)    (0.5)     0.3
                                                                                              ----     ----     ----
                                                                                              (5.5)    (5.1)    (3.0)
       Deferred tax effects                                                                    1.9      1.7      1.0
       Minority interests                                                                      0.2        -      0.6
                                                                                              ----     ----     ----
                                                                                              (3.4)    (3.4)    (1.4)
                                                                                              ----     ----     ----
     Different criteria for:
       Equity method of accounting                                                  d)         1.9     31.8     (7.3)
       Cancellation of subsidiaries' treasury stock                                 g)         0.8      0.9      0.9
       Deferred charges expensed:                                                   c)
         Cost                                                                                (38.3)   (43.1)   (21.2)
         Accumulated amortization                                                             39.0     35.2      7.1
       Depreciation of interest costs capitalized during construction               e)        (1.0)    (1.0)    (1.0)
                                                                                              ----     ----     ----
       Reversal of goodwill amortization                                            g)         3.1        -        -
       Fair value adjustments relating to accounting for derivative instruments
         and hedging activities                                                     j)        67.9    (50.7)     4.1

       Other individually insignificant adjustments                               i), 1)      (0.8)    (1.2)    (1.0)
                                                                                              72.6    (28.1)   (18.4)
       Deferred tax effects                                                         f)       (25.9)     9.4      5.2
       Minority interests                                                                     (5.9)     8.0      2.6
                                                                                              ----     ----     ----
                                                                                              40.8    (10.7)   (10.6)
                                                                                              ----     ----     ----

       Fair value adjustments relating to business combinations                     g)        (1.5)    (1.6)    (1.5)
       Deferred tax effects                                                                    0.5      0.5      0.5
                                                                                              ----     ----     ----
                                                                                              (1.0)    (1.1)    (1.0)
                                                                                              ----     ----     ----
       Fair value adjustments relating to acquisition of minority interest in
         Oxiteno S.A. - Industria e Comercio                                        g)         3.0    (13.8)       -
       Deferred tax effects                                                                   (0.4)     2.9        -
                                                                                              ----     ----     ----
                                                                                               2.6    (10.9)       -
                                                                                              ----     ----     ----
       Fair value adjustments relating to the acquisition of SPGas Distribuidora
         de Gas S.A.                                                                g)        (0.1)       -        -

       Fair value adjustments relating to the acquisition of Canamex Quimicos
         S.A. de C.V.                                                               g)        (0.7)       -        -
       Deferred tax effects                                                                    0.2        -        -
                                                                                              ----     ----     ----
                                                                                              (0.5)       -        -
       Effect on minority interest arising from difference in acquisition dates     g)           -    (55.4)       -
                                                                                              ----     ----     ----
     Net income under U.S. GAAP                                                              288.3    143.9    123.0
                                                                                             =====    =====    =====

     Basic earnings per thousand shares under U.S. GAAP
       (in accordance with SFAS 128) - R$:                                          h)
         Basic earnings per thousand common shares                                            4.03     2.28     2.23
         Basic earnings per thousand preferred shares                                         4.43     2.51     2.55
</TABLE>

     Dilutive earning (losses) per thousand shares have not been disclosed,
     since the Company has no dilutive shares. The calculation of earnings per
     thousand shares is summarized in Note 24.V.a).


                                                                            F-43
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


   III  - Reconciliation of the differences between U.S. GAAP and accounting
          practices adopted in Brazil in stockholders' equity

<TABLE>
                                                                                        Note 24.I.    2003       2002
                                                                                        ----------    ----       ----
                 <S>                                                                        <C>       <C>         <C>
     Stockholders' equity as reported under accounting practices adopted in Brazil                  1,356.7    1,191.1
     Reversal of revaluation adjustments:                                                  b)
       Property, plant and equipment                                                                  (36.3)     (47.6)
       Deferred tax effects                                                                             2.1        2.1
       Minority interests                                                                               2.7        3.9
                                                                                                      -----      -----
                                                                                                      (31.5)     (41.6)
                                                                                                      -----      -----
     Inflation accounting:                                                                 a)
       Property, plant and equipment                                                                   32.1       37.2
       Other nonmonetary assets                                                                         3.6        4.0
                                                                                                      -----      -----
                                                                                                       35.7       41.2
     Deferred tax effects                                                                             (12.1)     (14.0)
     Minority interests                                                                                (1.0)      (1.2)
                                                                                                      -----      -----
                                                                                                       22.6       26.0
                                                                                                      -----      -----
     Different criteria for:
       Equity method of accounting                                                         d)          (4.7)      (6.6)
       Cancellation of subsidiaries' treasury stock                                        g)          (4.7)      (5.5)
       Deferred charges:                                                                   c)
         Cost                                                                                        (195.6)    (152.6)
         Accumulated amortization                                                                     126.8       86.4
       Capitalization of interest costs during construction:                               e)
         Cost                                                                                          12.8       12.8
         Accumulated amortization                                                                     (10.7)      (9.7)
       Reversal of goodwill recorded at SPGas before acquisition                           g)          (7.1)         -
       Reversal of goodwill amortization of SPGas acquisition under BR GAAP                g)           1.6          -
       Fair value adjustments relating to accounting for derivative instruments            j)          21.3      (46.6)

       Other individually insignificant adjustments                                      i), l)        (0.2)       0.5
                                                                                                      -----      -----
                                                                                                      (60.5)    (121.3)
       Deferred tax effects                                                                            22.6       44.3
       Minority interests                                                                               5.1        9.9
                                                                                                      -----      -----
                                                                                                      (32.8)     (67.1)
                                                                                                      -----      -----
       Fair value adjustments relating to business combinations:                           g)           6.2        7.7
         Deferred tax effect                                                                           (2.1)      (2.6)
                                                                                                      -----      -----
                                                                                                        4.1        5.1
                                                                                                      -----      -----
       Fair value adjustments relating to acquisition of minority interest in
         Oxiteno S.A. - Industria e Comercio                                               g)         (36.4)     (39.4)
       Deferred tax effects                                                                             7.5        7.9
                                                                                                      -----      -----
                                                                                                      (28.9)     (31.5)
                                                                                                      -----      -----
       Adjustments relating to the acquisition of  SPGas Distribuidora de Gas S.A.:        g)
         Fair value adjustments                                                                       (10.0)         -
         Deferred tax effects                                                                           3.4          -
         Goodwill difference between U.S. GAAP and accounting practices
          adopted in Brazil                                                                            14.4          -
         Minority interest                                                                             (1.1)         -
                                                                                                      -----      -----
                                                                                                        6.7          -
       Adjustments relating to the acquisition of Canamex Quimicos S.A. de C.V.:           g)
         Fair value adjustments                                                                        (1.8)         -
         Deferred tax effects                                                                           0.6          -
         Goodwill difference between U.S. GAAP and Accounting practices
          adopted in Brazil                                                                             0.7          -
                                                                                                      -----      -----
                                                                                                       (0.5)         -
       Available-for-sale securities (temporary unrealized losses)                         i)          (2.5)      (8.2)
       Deferred tax effects                                                                             0.9        2.7
                                                                                                      -----      -----
                                                                                                       (1.6)      (5.5)
                                                                                                      -----      -----
     Stockholders' equity under U.S. GAAP                                                           1,294.8    1,076.5
                                                                                                    =======    =======
</TABLE>


                                                                            F-44
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     IV - Statement of changes in stockholders' equity in accordance with
          U.S. GAAP

<TABLE>
                                                                       2003        2002       2001
                                                                     --------    --------   --------
<S>                                                                  <C>         <C>        <C>
     Stockholders' equity under U.S. GAAP as of
       beginning of the year                                          1,076.5       748.5      854.6

       Additional paid-in capital                                         0.7         0.7        0.7
       Net income                                                       288.3       143.9      123.0
       Dividends and interest on own capital                            (72.0)      (65.0)    (229.6)
     Acquisition of treasury shares:                                     (2.2)       (0.3)         -
       Unrealized losses (gains) on available-for-sale
         equity securities, net of tax                                    3.9         0.3       (0.2)
       Unrealized losses on available-for-sale
         debt securities, net of tax                                     (0.4)          -          -
       Issuance of common and preferred shares                              -       248.4          -
                                                                     --------    --------   --------

     Stockholders' equity under U.S. GAAP as
       of the end of the year                                         1,294.8     1,076.5      748.5
                                                                     ========    ========   ========

     Comprehensive income (under SFAS 130):
       Net income                                                       288.3       143.9      123.0
       Unrealized losses (gains) on available-for-sale
         equity securities, net of tax                                    3.9         0.3       (0.2)
       Unrealized losses on available-for-sale                                          -
         debt securities, net of tax                                     (0.4)                     -
                                                                     --------    --------   --------
     Total comprehensive income                                         291.8       144.2      122.8
                                                                     ========    ========   ========

     Accumulated other comprehensive income (loss)
       as of the end of the year                                          1.1        (2.4)      (2.7)
                                                                     ========    ========   ========
</TABLE>

     V - Additional disclosures required by U.S. GAAP

     a)   Earnings per share

          The following table provides a reconciliation of the numerators and
          denominators used in computing earnings per share and the allocation
          of distributed and undistributed income between common and preferred
          stockholders under the two-class method of computing earnings per
          share as required by SFAS 128.


                                                                            F-45
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


<TABLE>
                                                                                      2003
                                                                   ----------------------------------------
                                                                       Common      Preferred          Total
                                                                   ----------     ----------     ----------

<S>                                                                      <C>            <C>            <C>
         Distributed income                                              51.7           20.3           72.0
         Undistributed income                                           154.9           61.4          216.3
         Net income                                                     206.6           81.7          288.3
                                                                   ----------     ----------     ----------
         Weighted average shares outstanding
           (in thousands)                                          51,264,622     18,426,647     69,691,269
                                                                   ----------     ----------     ----------

         Earnings per thousand shares - whole R$                         4.03           4.43
                                                                   ==========     ==========


                                                                                      2002
                                                                   ----------     ----------     ----------
                                                                       Common      Preferred          Total
                                                                   ----------     ----------     ----------

         Distributed income                                              46.2           18.8           65.0
         Undistributed income                                            55.7           23.2           78.9
         Net income                                                     101.9           42.0          143.9
                                                                   ----------     ----------     ----------
         Weighted average shares outstanding
           (in thousands)                                          44,624,317     16,721,317     61,345,634
                                                                   ----------     ----------     ----------

         Earnings per thousand shares - whole R$                         2.28           2.51
                                                                   ==========     ==========


                                                                                      2001
                                                                   ----------------------------------------
                                                                       Common      Preferred          Total
                                                                   ----------     ----------     ----------

         Distributed income                                              60.6           26.4           87.0
         Distributed reserves                                            87.1           37.9          125.0
         Supplementary dividends from net income for
           the year ended December 31, 2000                              12.2            5.4           17.6
         Total distributions                                            159.9           69.7          229.6
         Distributions from retained earnings                           (75.2)         (31.4)        (106.6)
         Net income                                                      84.7           38.3          123.0
                                                                   ----------     ----------     ----------
         Weighted average shares outstanding (in
           thousands)                                              37,984,013     15,015,987     53,000,000
                                                                   ----------     ----------     ----------

         Earnings per thousand shares - whole R$                         2.23           2.55
                                                                   ==========     ==========
</TABLE>

     b)   Concentrations of credit risk

          Financial instruments which potentially subject the Company to credit
          risk are cash and cash equivalents, short-term investments and trade
          receivables. Based on the factors described below, the Company
          considers the risk of counterparty default to be minimal.


                                                                            F-46
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          The Company manages its credit risk with respect to cash equivalents
          by investing only in liquid instruments with highly-rated financial
          institutions. In addition, investments are diversified in several
          institutions, and credit limits are established for each individual
          institution.

          Credit risk from accounts receivable is managed following specific
          criteria for each of the segments in which the Company operates, as
          follows:

          Chemical segment (Oxiteno)
          --------------------------

          Oxiteno's customers for its commodity chemicals are principally
          chemical companies, surface coating producers and polyester resin
          producers, and customers for its specialty chemicals comprise a
          variety of industrial and commercial enterprises. No single customer
          or group accounts for more than 10% of total revenue. Management
          believes that by distributing its products to a variety of markets it
          is able to protect itself, to a certain extent, from the effects of
          negative trends in any particular market. Oxiteno acts as a member of
          a Credit Committee of the Brazilian chemical manufacturers which meets
          monthly to review the financial position of clients showing past-due
          accounts.

          Historically, the Company has not experienced significant losses on
          trade receivables.

          Gas segment (Ultragaz)
          ----------------------

          Ultragaz sells its products to the retail, commercial and industrial
          markets.

          Sales to the retail market are carried out directly by Ultragaz using
          cash terms, from which no significant credit risk exists, or through
          outside distributors. Credit risk in sales to outside distributors is
          reduced due to the large customer base, the ongoing control procedures
          that monitor the creditworthiness of distributors, and by short-term
          payment (23 days on average) that permit continuous monitoring of
          distributors' compliance.

          Sales to the commercial and industrial markets are made to customers,
          which have signed a credit agreement with the Company and have
          provided personal guarantees or collateral. Periodic monitoring of
          these accounts is performed by specific staff with the support of
          financial information systems.

          No single customer or group accounts for more than 10% of total
          revenue.

          Historically, the Company has not experienced significant losses on
          trade receivables.

          Logistic segment (Ultracargo)
          -----------------------------

          The main customers of Ultracargo are chemical companies. The
          average-term payment is 25 days.

          Historically, the Company has not experienced significant losses on
          trade receivables.


                                                                            F-47
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Company is dependent on few major suppliers
          -------------------------------------------

          The Company is dependent on third-party manufacturers for all of its
          supply of ethylene and LPG. In 2003, 2002 and 2001, products purchased
          from the Company's three largest suppliers accounted for approximately
          72%, 74% and 72% of cost of sales and services, respectively. The
          Company is dependent on the ability of its suppliers to provide
          products on a timely basis and on favorable pricing terms. The loss of
          certain principal suppliers or a significant reduction in product
          availability from principal suppliers could have a material adverse
          effect on the Company. The Company believes that its relationship with
          its suppliers is satisfactory.

     c)   Impairment of long-lived assets

          The Company reviews the carrying value of property, plant, and
          equipment for impairment whenever events and circumstances indicate
          that the carrying value of an asset may not be recoverable from the
          estimated future cash flows expected to result from its use and
          eventual disposition. In cases where undiscounted expected future cash
          flows are less than the carrying value, an impairment loss is
          recognized equal to an amount by which the carrying value exceeds the
          fair value of assets. The factors considered by management in
          performing this assessment include current operating results, trends,
          and prospects, as well as the effects of obsolescence, demand,
          competition, and other economic factors.

          No impairment has been recorded in the consolidated financial
          statements as of December 31, 2003.

     d)   Impairment of goodwill

          Under U.S. GAAP financial statements, goodwill consists of the excess
          of the cost paid for the acquisitions of SPGas and Canamex over the
          net of the fair value assigned to assets acquired and liabilities
          assumed of these companies.

          The Company has recorded the following amounts of goodwill under the
          U.S. GAAP financial statements:

                        Description                                      2003
          ----------------------------------------                       ----

          Gas segment (Ultragaz):
            Goodwill on the acquisition of  SPGas                        39.9

          Chemical segment (Oxiteno):
            Goodwill on the acquisition of Canamex                        2.6

          As mentioned in Note 24.g), goodwill is not amortized and should be
          tested for impairment. The first impairment test will be made in 2004,
          considering that the acquisitions were concluded in the second
          semester of 2003.


                                                                            F-48
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     e)   Intangible assets subject to amortization

          The Company's intangible assets subject to amortization are mainly
          composed of software and commercial property rights. These intangible
          assets are classified as other property, plant and equipment (see Note
          10).

<TABLE>
                                                                 2003
                                             ------------------------------------------
                                                         Commercial
                                                          property
                                             Software      rights       Other     Total
                                             --------    ----------     -----     -----
<S>                                              <C>           <C>       <C>       <C>
         Gross                                   40.6          12.0      17.8      70.4
         Accumulated amortization               (10.7)         (0.4)    (10.0)    (21.1)
                                             --------    ----------     -----     -----
         Net                                     29.9          11.6       7.8      49.3
                                             ========    ==========     =====     =====


                                                               2002
                                             ------------------------------------------
                                                         Commercial
                                                          property
                                             Software      rights       Other     Total
                                             --------    ----------     -----     -----

         Gross                                    8.8          12.0      19.8      40.6
         Accumulated amortization                (3.5)         (0.1)    (10.2)    (13.8)
                                             --------    ----------     -----     -----
         Net                                      5.3          11.9       9.6      26.8
                                             ========    ==========     =====     =====
</TABLE>

          Aggregate amortization expense for the above intangible assets
          amounted to R$ 21.1, R$ 13.8 and R$ 8.7 for the years ended December
          31, 2003, 2002 and 2001, respectively.

          The estimated aggregate amortization expense for the next five years
          is as follows:

         2004                                                            11.2
         2005                                                            10.7
         2006                                                            10.4
         2007                                                             6.6
         2008                                                             0.3
         Thereafter                                                      10.1
         Total                                                           49.3

     f)   Fair value of financial instruments

          The fair value of foreign cash and cash equivalents, receivables from
          foreign customers, net of advances on export contracts and import
          transactions payable approximates to their book value as disclosed in
          Note 17. Fair values of investment in foreign currency and swaps are
          R$ 416.6 and R$ 334.4 at December 31, 2003 and 2002, respectively, and
          fair values of foreign currency financings are R$ 449.5 and 357.9 at
          December 31, 2003 and 2002, respectively.


                                                                            F-49
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     g)   Environmental issues

          The Company and its subsidiaries are subject to federal, state and
          local laws and regulations relating to the environment. These laws
          generally provide for control of air and effluent emissions and
          require responsible parties to undertake remediation of hazardous
          waste disposal sites. Civil penalties may be imposed for
          noncompliance. The Company provides for remediation costs and
          penalties when a loss is probable and the amount is reasonably
          determinable. It is not presently possible to estimate the amount of
          all remediation costs that might be incurred or penalties that may be
          imposed; however, management does not presently expect that such costs
          and penalties, to the extent not previously provided for, will have a
          material effect on the Company's consolidated financial position or
          results of operations.

     h)   Financial income and expenses, net

<TABLE>
                                                               2003      2002      2001
                                                              -----     -----     -----
<S>                                                           <C>       <C>       <C>
         Interest on cash and cash equivalents                105.7     102.7     121.3
         Interest from customers                                5.4       3.9       4.0
         Interest on loans                                    (56.9)    (49.3)    (49.2)
         Bank charges                                          (6.7)     (7.5)     (5.5)
         Monetary variation, net                              (67.9)      8.7     (70.0)
         Other                                                 (1.7)      2.9      (2.7)
         CPMF, PIS, COFINS and IOF taxes on financial
            transactions                                      (35.1)    (32.9)    (29.0)
                                                              -----     -----     -----
         Total                                                (57.2)     28.5     (31.1)
                                                              =====     =====     =====
</TABLE>

     i)   Supplementary information - valuation and qualifying accounts for
          accounts receivable (see Note 6)

                                                                   Allowance for
                                                                      doubtful
                                                                      accounts
                                                                   -------------
         Balance as of December 31, 2000                                 3.8
         Additions - costs and expenses                                  7.8
         Deductions - trade accounts receivable                         (2.3)
                                                                       -----
         Balance as of December 31, 2001                                 9.4
         Additions - costs and expenses                                  9.1
         Deductions - trade accounts receivable                         (7.3)
                                                                       -----
         Balance as of December 31, 2002                                11.2
         Additions - costs and expenses (*)                             31.1
         Deductions - trade accounts receivable                        (25.0)
                                                                       -----
         Balance as of December 31, 2003                                17.3
                                                                       =====

          (*)  Include transfer of valuation allowances for doubtful accounts
               previously recorded at SPGas Distribuidora de Gas S.A. in the
               amount of R$ 11.2.


                                                                            F-50
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     j)   Statement of cash flows

          Accounting practices adopted in Brazil do not require the presentation
          of a statement of cash flows as required by U.S. GAAP. Changes in
          working capital are presented in the statement of changes in financial
          position. U.S. GAAP requires the presentation of a statement of cash
          flows describing the Company's cash flows from operating, financing
          and investing activities. Statements of cash flows derived from the
          information based on accounting practices adopted in Brazil
          information are as follows (the reconciling items to U.S. GAAP under
          item II relate exclusively to operating activities).

<TABLE>
                                                                                           2003      2002     2001
                                                                                         ------    ------   ------
<S>                                                                                       <C>       <C>      <C>
         CASH FLOWS FROM OPERATING ACTIVITIES
         Net income                                                                       246.4     222.3    132.2
         Adjustments to reconcile net income
            to cash provided by operating activities:
              Depreciation and amortization                                               146.9     121.8    102.4
              Amortization of negative goodwill                                               -         -     (8.7)
              Gain on sale of property, plant and equipment                                 7.6      25.4     21.9
              Foreign exchange and indexation losses on liabilities                       (54.5)    118.5     74.1
              Allowance (realization of provision) for losses on permanent assets          (0.4)     40.6     (5.3)
              Equity in earnings (losses) of affiliated companies                           0.5       1.7     (1.9)
              Proposed dividends and interest on capital (gross)                              -       0.4      1.3
              Deferred income and social contribution taxes                               (15.7)      4.8     (3.9)
              Other long-term taxes                                                         3.9       8.6     10.6
              Loss (gain) on change in ownership percentage                                   -      (3.6)       -
              Minority interest                                                             3.6      54.5     73.0
              Other                                                                           -      (0.4)     0.1
            Decrease (increase) in operating assets:
              Short-term investments                                                       (0.5)        -        -
              Trade accounts receivable                                                    (9.0)   (122.4)   (10.0)
              Recoverable taxes                                                             6.3       6.1    (39.0)
              Other receivables                                                             5.7     (31.9)    (2.3)
              Inventories                                                                 (20.0)    (11.8)    (8.0)
              Prepaid expenses                                                              0.6       0.2     (1.3)
            Increase (decrease) in operating liabilities:
              Suppliers                                                                   (24.9)     16.0      1.6
              Accrued interest                                                             (1.0)      0.4     (0.8)
              Salaries and related charges                                                  8.5      14.2      5.5
              Taxes                                                                         2.2       4.1     (2.8)
              Income and social contribution taxes                                          4.7      (0.1)    (2.6)
              Other                                                                         0.5      (0.6)     3.6
                                                                                         ------    ------   ------
            Net cash provided by operating activities                                     311.4     468.8    339.7
                                                                                         ------    ------   ------

         CASH FLOWS FROM INVESTING ACTIVITIES
         Additions to short-term investments                                              (40.5)        -        -
         Additions to investments                                                          (1.7)        -        -
         Business combinations, net of cash acquired                                     (134.6)        -        -
         Additions to property, plant and equipment                                      (171.2)   (168.8)  (145.7)
         Additions to deferred charges                                                    (51.0)    (51.3)   (57.4)
         Acquisition of minority interests                                                 (0.5)   (212.6)   (13.8)
         Proceeds from sales of property, plant and equipment                              15.2       4.5      9.3
         Other                                                                             (7.0)      1.0      0.9
                                                                                         ------    ------   ------
         Net cash used in investing activities                                           (391.3)   (427.2)  (206.7)
                                                                                         ------    ------   ------
</TABLE>


                                                                            F-51
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries

<TABLE>
                                                                                           2003      2002     2001
                                                                                         ------    ------   ------
<S>                                                                                        <C>       <C>     <C>
         CASH FLOWS FROM FINANCING ACTIVITIES
         Short-term debt, net                                                              19.6      55.8    (51.5)
         Long-term loans:
            Issuances                                                                     264.7      97.3     54.4
            Repayments                                                                   (119.5)    (98.2)   (85.3)
         Loans from affiliated companies:
            Issuances                                                                      20.7      14.5      3.9
            Repayments                                                                    (86.7)    (16.8)    (5.2)
         Dividends paid                                                                   (80.1)    (60.9)  (244.3)
         Other                                                                             (7.9)    (51.4)   (11.2)
                                                                                         ------    ------   ------
         Net cash provided by (used in) financing activities                               10.8     (59.7)  (339.2)
                                                                                         ------    ------   ------

         Net decrease in cash and cash equivalents                                        (69.1)    (18.1)  (206.2)
         Cash and cash equivalents at the beginning of the year                           637.9     656.0    862.2
                                                                                         ------    ------   ------
         Cash and cash equivalents at the end of the year                                 568.8     637.9    656.0
                                                                                         ======    ======   ======

         SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
         Cash paid during the year for:
            Interest, net of amounts capitalized                                           51.3      46.6     38.3
            Taxes on income                                                                25.0      52.3     20.6
         Noncash investing and financing activities:
            Direct supplier financing of acquisition of property, plant and equipment         -       2.7        -
            Capital contribution with investments in subsidiaries - Gipoia
              Participacoes Ltda.                                                             -      38.5        -
            Acquisition of minority interest with issuance of shares - Oxiteno S.A. -
              Industria e Comercio                                                            -     191.6        -
            Acquisition of businesses:
              Fair value of assets acquired                                               232.1         -        -
              Fair value of liabilities assumed                                           (93.7)        -        -
                                                                                         ------    ------   ------
              Purchase price                                                              138.4         -        -
              Cash acquired                                                                (3.8)        -        -
                                                                                         ------    ------   ------
              Purchase price, net of cash acquired                                        134.6         -        -
                                                                                         ======    ======   ======
</TABLE>

                                                                            F-52
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


     k)   Segment information

          Financial information about each of the Company's reportable segments
          based on records in accordance with accounting practices adopted in
          Brazil is as follows:

<TABLE>
                                                                                           2003      2002        2001
                                                                                        -------   -------     -------
<S>                                                                                     <C>       <C>         <C>
         Net revenue from sales to unassociated companies:
           Gas                                                                          2,622.3   1,942.1     1,380.9
           Chemical                                                                     1,237.8     956.1       832.1
           Logistics                                                                      140.2      96.3        71.7
           Other                                                                              -         -           -
                                                                                        -------   -------     -------
                                                                                        4,000.3   2,994.5     2,284.7

         Intersegment:
           Gas                                                                              0.4       0.6         0.2
           Chemical                                                                           -         -           -
           Logistics                                                                       36.9      35.2        33.7
           Other                                                                            6.4       6.4         6.4
                                                                                        -------   -------     -------
           Eliminations                                                                    43.7      42.2        40.3

         Net revenues:
           Gas                                                                          2,622.7   1,942.7     1,381.1
           Chemical                                                                     1,237.8     956.1       832.1
           Logistics                                                                      177.1     131.5       105.4
           Other                                                                            6.4       6.4         6.4
           Eliminations                                                                   (43.7)    (42.2)      (40.3)
                                                                                        -------   -------     -------
                                                                                        4,000.3   2,994.5     2,284.7
                                                                                        -------   -------     -------
         Operating profit before financial income (expenses):
           Gas                                                                            113.2     143.2       101.1
           Chemical                                                                       207.0     199.9       146.6
           Logistics                                                                       24.7      17.6        27.4
           Other                                                                            6.7       4.8         3.8
                                                                                        -------   -------     -------
                                                                                          351.6     365.5       278.9
                                                                                        -------   -------     -------

           Financial income (expenses), net                                               (57.2)     28.5       (31.1)
           Nonoperating income (expenses), net                                              1.0     (44.1)      (17.0)
           Equity in losses of affiliated companies                                        (0.5)     (1.7)        1.9
                                                                                        -------   -------     -------
                                                                                          (56.7)    (17.3)      (46.2)
                                                                                        -------   -------     -------
         Income before taxes and minority interests                                       294.9     348.2       232.7
                                                                                        -------   -------     -------
</TABLE>


                                                                            F-53
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries

<TABLE>
                                                                                           2003      2002        2001
                                                                                        -------   -------     -------
<S>                                                                                        <C>       <C>         <C>
         Additions to property, plant and equipment according to:
           Accounting practices adopted in Brazil:
             Gas                                                                           78.8      86.1        97.9
             Chemical                                                                      51.9      49.9        36.1
             Logistics                                                                     40.2      35.4        11.7
             Other                                                                          0.3       0.1           -
                                                                                        -------   -------     -------
                                                                                          171.2     171.5       145.7
                                                                                        -------   -------     -------
           U.S. GAAP:
             Gas                                                                           78.8      86.1        97.9
             Chemical                                                                      51.9      49.9        36.1
             Logistics                                                                     40.2      35.4        11.7
             Other                                                                          0.3       0.1           -
                                                                                        -------   -------     -------
                                                                                          171.2     171.5       145.7
                                                                                        -------   -------     -------

         Depreciation and amortization charges according to:
           Accounting practices adopted in Brazil:
             Gas                                                                           95.0      76.6        61.9
             Chemical                                                                      36.2      32.8        30.2
             Logistics                                                                     15.3      11.6         9.5
             Other                                                                          0.4       0.8         0.8
                                                                                        -------   -------     -------
                                                                                          146.9     121.8       102.4
                                                                                        -------   -------     -------
           U.S. GAAP:
              Gas                                                                          47.9      42.4        36.1
              Chemical                                                                     34.0      30.6        28.6
              Logistics                                                                    16.5      12.3        10.1
              Other                                                                         0.1       0.1         0.1
                                                                                        -------   -------     -------
                                                                                           98.5      85.4        74.9
                                                                                        -------   -------     -------

         Identifiable assets - accounting practices adopted in
           BR GAAP:
             Gas                                                                        1,010.9     828.0
             Chemical                                                                   1,075.2   1,021.1
             Logistics                                                                    269.4     129.0
             Other                                                                         52.5     149.8
                                                                                        -------   -------
                                                                                        2,408.0   2,127.9
                                                                                        -------   -------

         Identifiable assets - accounting practices adopted in
           U.S. GAAP:
             Gas                                                                          965.4     735.0
             Chemical                                                                   1,093.8   1,031.6
             Logistics                                                                    273.0     133.0
             Other                                                                         11.4     104.6
                                                                                        -------   -------
                                                                                        2,343.6   2,004.2
                                                                                        =======   =======
</TABLE>


                                                                            F-54
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Additional information about business segments can be found in Note
          16.

<TABLE>
                                                                                                     2003        2002
                                                                                                     ----        ----
<S>                                                                                                   <C>         <C>
         Investments in equity investees - accounting practices adopted in Brazil:
           Chemical                                                                                   5.5         6.9
           Other                                                                                      0.2         0.2
                                                                                                     ----        ----
         Total consolidated                                                                           5.7         7.1
                                                                                                     ----        ----
</TABLE>

          See Note 9 for details of investment in equity investees.

     l)   Geographical area information

          All long-lived assets are located in Brazil, except for long-lived
          assets located in Mexico, in the amount of R$ 18.9, as of December 31,
          2003.

          The Company generates revenues from operations in Brazil and, as from
          December, 2003, from Mexico, as well as from exports of products to
          clients located in foreign countries as shown below:

<TABLE>
                                                                                           2003      2002        2001
                                                                                        -------   -------     -------
<S>                                                                                     <C>       <C>         <C>
         Gross sales:
           Brazil                                                                       4,182.0   3,505.8     2,595.7
           Latin America, other than Brazil                                               162.5      98.2       107.8
           Far East                                                                       168.2      97.5        84.0
           Europe                                                                          42.3      55.8        31.4
           North America                                                                   21.3      19.3        33.3
           Other                                                                           27.5      18.7        10.3
           ------                                                                       -------   -------     -------
         Total                                                                          4,603.8   3,795.3     2,862.5
                                                                                        =======   =======     =======
</TABLE>

     m)   Research and development expenses

          Total research and development expenses amounted to R$ 13.4, R$ 10.9
          and R$ 10.2 for the years ended December 31, 2003, 2002 and 2001,
          respectively.

     n)   Employee severance fund and termination payments

          The Company is required to contribute 8% of each employee's gross pay
          to an account maintained in the employee's name in the Government
          Severance Indemnity Fund (FGTS). No other contributions to the FGTS
          are required. Additionally, effective September 2001, the Company is
          required to pay an additional tax equal to 0.5% of gross pay.
          Contributions are expensed as incurred.


                                                                            F-55
<PAGE>


Ultrapar Participacoes S.A. and Subsidiaries


          Under Brazilian law, the Company is also required to pay termination
          benefits to employees who have been dismissed. The amount of the
          benefit is calculated as 40% of the accumulated contributions made by
          the Company to the FGTS during the employee's period of service.
          Additionally, effective September 2001, the Company is required to pay
          a social tax of 10% of these accumulated contributions. The Company
          does not accrue for these termination costs before a decision to
          terminate has been made, since the benefits are neither probable nor
          reasonably estimable. Actual termination costs paid on dismissal
          totaled R$ 3.4, R$ 3.0 and R$ 3.8 for the years ended December 31,
          2003, 2002 and 2001, respectively.


--------------------------------------------------------------------------------
                                                                            F-56


<PAGE>

                        EXHIBIT INDEX


1.1     Ultrapar bylaws, revised on May 22, 2004

2.1     Shareholders' Agreement relating to Tag Along Rights.*

2.2     The instrument defining the rights of holders of the long-term debt
        securities of Ultrapar and its subsidiaries, specifically the Eurobond
        issued in January of 2004 is omitted pursuant to Section 2(b)(i) of the
        Instructions as to Exhibits of Form 20-F. Ultrapar hereby agrees to
        furnish copies of these instruments to the Securities and Exchange
        Commission upon request.

4.1     Contract for the supply of ethylene between Braskem and Oxiteno**

4.2     Shares Sale and Purchase Agreement related to the sale and purchase of
        the entire share capital of Shell Gas (LPG) Brasil S.A.

8.1     List of Ultrapar's subsidiaries

11.1    Code of ethics

12.1    Section 302 Certification by the Chief Executive Officer

12.2    Section 302 Certification by the Chief Financial Officer

13.1    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1    Documentation with respect to our corporate restructuring of 2002 ***

--------------------------
*       Incorporated by reference to the Annual Report Form 20-F for the fiscal
        year ended December 31 1999 (file 001-14950) filed with the SEC on May
        16 2000.

**      Incorporated by reference to Item 10.7 of the Exhibits filed with the
        Company's Registration Statement on Form F-1, (file 333- 10818).

***     Incorporated by reference in Forms 6-K, filed with SEC on October 15,
        2002, November 1, 2002 and December 6, 2002 (file 001- 14950).