11. Financial Status and Performance

Financial Statements

Summary of the consolidated financial statements for the years ended
March 31, 2010, March 31,2009, March 31, 2008 is presented below:

+--------------------------------------+---------+---------+---------+
|                                      |         | (Unit:  |         |
|                                      |         | Baht    |         |
|                                      |         | m       |         |
|                                      |         | illion) |         |
+--------------------------------------+---------+---------+---------+
| Transactions                         | 2010    | 2009    | 2008    |
+--------------------------------------+---------+---------+---------+
| Balance Sheets                       |         |         |         |
+--------------------------------------+---------+---------+---------+
| Cash and cash equivalents            | 2       | 3       | 2       |
|                                      | ,092.74 | ,151.90 | ,598.37 |
+--------------------------------------+---------+---------+---------+
| Trade accounts receivable - net      | 881.70  | 508.89  | 2       |
|                                      |         |         | ,389.94 |
+--------------------------------------+---------+---------+---------+
| Recei                                | 0.43    | 0.38    | 0.57    |
| vables and loans – related companies |         |         |         |
+--------------------------------------+---------+---------+---------+
| Inventories                          | 6       | 5       | 4       |
|                                      | ,461.05 | ,085.86 | ,774.15 |
+--------------------------------------+---------+---------+---------+
| Other current assets                 | 738.64  | 405.00  | 45.05   |
+--------------------------------------+---------+---------+---------+
| Property, plant and equipment – net  | 11      | 11      | 9       |
|                                      | ,407.83 | ,129.26 | ,236.47 |
+--------------------------------------+---------+---------+---------+
| Other assets                         | 4       | 4       | 4       |
|                                      | ,932.45 | ,746.60 | ,378.80 |
+--------------------------------------+---------+---------+---------+
| Total assets                         | 26      | 25      | 23      |
|                                      | ,514.84 | ,027.89 | ,423.35 |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+
| B                                    | 2.28    | 1.92    | 135.38  |
| ank overdrafts and short-term loans  |         |         |         |
+--------------------------------------+---------+---------+---------+
| Trade accounts payable               | 2       | 1       | 610.16  |
|                                      | ,516.56 | ,632.34 |         |
+--------------------------------------+---------+---------+---------+
| Curr                                 | 875.92  | 757.96  | 600.00  |
| ent portion of long-term liabilities |         |         |         |
+--------------------------------------+---------+---------+---------+
| Pa                                   | 227.19  | 24.67   | 21.99   |
| yables and loans – related companies |         |         |         |
+--------------------------------------+---------+---------+---------+
| Other current liabilities            | 897.80  | 649.81  | 887.53  |
+--------------------------------------+---------+---------+---------+
| Long-term loans                      | 5       | 5       | 4       |
|                                      | ,227.69 | ,676.34 | ,358.81 |
+--------------------------------------+---------+---------+---------+
| Other liabilities                    | 583.87  | 135.94  | 98.27   |
+--------------------------------------+---------+---------+---------+
| Total liabilities                    | 10      | 8       | 6       |
|                                      | ,421.31 | ,878.98 | ,712.15 |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+

+--------------------------------------+---------+---------+---------+
|                                      |         | (Unit:  |         |
|                                      |         | Baht    |         |
|                                      |         | m       |         |
|                                      |         | illion) |         |
+--------------------------------------+---------+---------+---------+
| Transactions                         | 2010    | 2009    | 2008    |
+--------------------------------------+---------+---------+---------+
| Balance Sheets (Cont.)               |         |         |         |
+--------------------------------------+---------+---------+---------+
| Registered share capital             | 11      | 11      | 11      |
|                                      | ,025.58 | ,025.58 | ,025.58 |
+--------------------------------------+---------+---------+---------+
| Paid-up capital                      |         |         |         |
+--------------------------------------+---------+---------+---------+
|  Preferred shares                    | 252.77  | 252.77  | 593.17  |
+--------------------------------------+---------+---------+---------+
|  Ordinary shares                     | 8       | 8       | 7       |
|                                      | ,168.77 | ,168.77 | ,828.37 |
+--------------------------------------+---------+---------+---------+
| Share premium                        | 3       | 3       | 3       |
|                                      | ,258.62 | ,258.62 | ,258.62 |
+--------------------------------------+---------+---------+---------+
| Warrants                             | 130.20  | 130.20  | 130.20  |
+--------------------------------------+---------+---------+---------+
| Convertible debentures               | -       | -       | -       |
+--------------------------------------+---------+---------+---------+
| Unrealized                           | 2.00    | 1.10    | 2.69    |
| gain from investment in subsidiaries |         |         |         |
+--------------------------------------+---------+---------+---------+
| Legal reserve                        | 285.18  | 283.10  | 276.59  |
+--------------------------------------+---------+---------+---------+
| Retained earnings (loss)             | 3       | 4       | 4       |
|                                      | ,988.28 | ,044.75 | ,610.37 |
+--------------------------------------+---------+---------+---------+
| Minority interest                    | 7.71    | 9.60    | 11.18   |
+--------------------------------------+---------+---------+---------+
| Total shareholders’ equity           | 16      | 16      | 16      |
|                                      | ,093.53 | ,148.91 | ,711.21 |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+
| Statements of Income                 |         |         |         |
+--------------------------------------+---------+---------+---------+
| Revenue from sales of goods          | 22      | 29      | 31      |
|                                      | ,421.75 | ,352.78 | ,139.06 |
+--------------------------------------+---------+---------+---------+
| Total revenues                       | 22      | 29      | 31      |
|                                      | ,520.38 | ,443.21 | ,280.12 |
+--------------------------------------+---------+---------+---------+
| Cost of goods sold                   | 21      | 28      | 26      |
|                                      | ,714.74 | ,257.36 | ,601.80 |
+--------------------------------------+---------+---------+---------+
| Gross profit                         | 707.01  | 1       | 4       |
|                                      |         | .095.42 | ,537.26 |
+--------------------------------------+---------+---------+---------+
| Selling and administrative expenses  | 700.60  | 857.82  | 1       |
|                                      |         |         | ,122.77 |
+--------------------------------------+---------+---------+---------+
| Interest expense                     | 148.58  | 221.79  | 268.42  |
+--------------------------------------+---------+---------+---------+
| Income tax                           | 12.75   | 26.89   | 583.59  |
+--------------------------------------+---------+---------+---------+
| Pr                                   | (56.29) | 79.35   | 2       |
| ofit (Loss) before minority interest |         |         | ,703.53 |
+--------------------------------------+---------+---------+---------+
| Net profit (Loss)                    | (54.40) | 80.93   | 2       |
|                                      |         |         | ,701.07 |
+--------------------------------------+---------+---------+---------+
| Earnings (Loss) per share – basic    | (0.01)  | 0.01    | 0.32    |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+

Tata Steel (Thailand) Public Company Limited

Statements of Cash Flows

For the years ended March 31, 2010, March 31 2009 and March 31, 2008

+---+-----------------------------------------+--------+--------+--------+
|   |                                         | (Unit: |        |        |
|   |                                         | Baht   |        |        |
|   |                                         | mi     |        |        |
|   |                                         | llion) |        |        |
+---+-----------------------------------------+--------+--------+--------+
| C |                                         | 2010   | 2009   | 2008   |
| a |                                         |        |        |        |
| s |                                         |        |        |        |
| h |                                         |        |        |        |
| f |                                         |        |        |        |
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| s |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
| N |                                         | (      | 106.23 | 3,     |
| e |                                         | 43.54) |        | 287.13 |
| t |                                         |        |        |        |
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+---+-----------------------------------------+--------+--------+--------+
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| s |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Unrealized loss (gain) on foreign       | (5.74) | 12.51  | (1.71) |
|   | exchange                                |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Reversal of allowance for doubtful      | 5.91   | (      | 19.64  |
|   | accounts                                |        | 56.16) |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Reversal of allowance for inventory     | (3.18) | 25.96  | (6.63) |
|   | obsolescence                            |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Depreciation and amortization           | 925.07 | 839.18 | 821.85 |
+---+-----------------------------------------+--------+--------+--------+
|   | Goodwill amortization                   | -      | -      | 280.62 |
+---+-----------------------------------------+--------+--------+--------+
|   | Provision for employee retirement       | 1.70   | 35.50  | 8.72   |
|   | benefit                                 |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Loss from writing off fixed assets      | 0.47   | 26.50  | 32.93  |
+---+-----------------------------------------+--------+--------+--------+
|   | Loss from impairment of fixed assets    |        | 0.12   | 48.08  |
+---+-----------------------------------------+--------+--------+--------+
|   | Interest income                         | (      | (      | (      |
|   |                                         | 17.60) | 54.41) | 20.50) |
+---+-----------------------------------------+--------+--------+--------+
|   | Interest expense and financial charges  | 148.58 | 221.79 | 268.42 |
+---+-----------------------------------------+--------+--------+--------+
|   | Loss (Gain) from sale of property and   | (0.13) | (0.48) | (      |
|   | equipment                               |        |        | 37.16) |
+---+-----------------------------------------+--------+--------+--------+
|   | Minority interest in loss of            | -      | -      | -      |
|   | subsidiaries                            |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Income tax expense                      | -      | -      | -      |
+---+-----------------------------------------+--------+--------+--------+
|   | Trade accounts receivable and           | (3     | 1,     | (2     |
|   | receivables from related companies      | 79.03) | 936.18 | 46.74) |
+---+-----------------------------------------+--------+--------+--------+
|   | Inventories-net                         | (1,4   | (3     | (4     |
|   |                                         | 11.25) | 65.93) | 01.30) |
+---+-----------------------------------------+--------+--------+--------+
|   | Other current assets                    | (3     | (3     | 34.02  |
|   |                                         | 33.64) | 60.28) |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Other non-current assets                | 7.97   | (      | 15.78  |
|   |                                         |        | 29.26) |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Trade accounts payable and payables to  | 1,     | 1,     | 11.07  |
|   | related companies                       | 121.18 | 013.57 |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Accrued expenses and other current      | 179.86 | 188.16 | (      |
|   | liabilities                             |        |        | 35.05) |
+---+-----------------------------------------+--------+--------+--------+
|   | Income tax paid                         | (1     | (7     | (1     |
|   |                                         | 99.06) | 41.61) | 60.47) |
+---+-----------------------------------------+--------+--------+--------+
|   | Interest paid                           | (1     | (2     | (2     |
|   |                                         | 48.64) | 21.75) | 69.03) |
+---+-----------------------------------------+--------+--------+--------+
|   | Net cash provided by operating          | (1     | 2,     | 3,     |
|   | activities                              | 51.07) | 575.82 | 649.67 |
+---+-----------------------------------------+--------+--------+--------+
| C |                                         |        |        |        |
| a |                                         |        |        |        |
| s |                                         |        |        |        |
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| s |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Interest received                       | 17.60  | 54.73  | 21.33  |
+---+-----------------------------------------+--------+--------+--------+
|   | ส่วนของผู้ถือหุ้นส่วนน้อย                       |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Purchase of property, plant and         | 0.23   | 0.07   | 2,     |
|   | equipment                               |        |        | 598.37 |
+---+-----------------------------------------+--------+--------+--------+
|   | ค่าความนิยม                               |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | สินทรัพย์รอการขาย                          |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Sale of property and equipment          | (1,0   | (2,7   | (6     |
|   |                                         | 38.08) | 62.57) | 27.00) |
+---+-----------------------------------------+--------+--------+--------+
|   | Net cash provided by (used in)          | (1,0   | (2,7   | (5     |
|   | investing activities                    | 20.25) | 07.11) | 25.13) |
+---+-----------------------------------------+--------+--------+--------+
|   |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
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+---+-----------------------------------------+--------+--------+--------+
|   |                                         | (Unit: |        |        |
|   |                                         | Baht   |        |        |
|   |                                         | mi     |        |        |
|   |                                         | llion) |        |        |
+---+-----------------------------------------+--------+--------+--------+
| C |                                         | 2010   | 2009   | 2008   |
| a |                                         |        |        |        |
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| s |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Interest paid and financial charges     | -      | -      | -      |
+---+-----------------------------------------+--------+--------+--------+
|   | Cash paid for financial lease           | (      | (      | (2.03) |
|   |                                         | 15.02) | 17.17) |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Increase in bank overdrafts and         | 0.36   | (1     | 40.81  |
|   | short-term loans from financial         |        | 33.46) |        |
|   | institutions                            |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Repayment of long-term loans            | (6     | (6     | (6     |
|   |                                         | 25.00) | 00.00) | 00.00) |
+---+-----------------------------------------+--------+--------+--------+
|   | Payment of long-term debt to related    | -      | -      | -      |
|   | company                                 |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Trade accounts payable arising from     | -      | -      | (0.03) |
|   | debt restructuring                      |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | เงินกู้ยืมระยะยาวจากการปรับโครงสร้างหนี้        |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Proceeds from long-term loans           | 751.81 | 2,     | 251.31 |
|   |                                         |        | 075.49 |        |
+---+-----------------------------------------+--------+--------+--------+
|   | Payment of dividend                     | -      | (6     | (2     |
|   |                                         |        | 40.03) | 52.64) |
+---+-----------------------------------------+--------+--------+--------+
|   | Capital increase                        | -      | -      | -      |
+---+-----------------------------------------+--------+--------+--------+
|   | Net cash provided by (used in)          | 112.15 | 684.83 | 562.58 |
|   | financing activities                    |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
| N |                                         | (1,0   | 553.53 | 2,     |
| e |                                         | 59.17) |        | 561.96 |
| t |                                         |        |        |        |
| i |                                         |        |        |        |
| n |                                         |        |        |        |
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| t |                                         |        |        |        |
| s |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
| C |                                         | 3,     | 2,     | 36.41  |
| a |                                         | 151.90 | 598.37 |        |
| s |                                         |        |        |        |
| h |                                         |        |        |        |
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+---+-----------------------------------------+--------+--------+--------+
| C |                                         | 2,     | 3,     | 2,     |
| a |                                         | 092.74 | 151.90 | 598.37 |
| s |                                         |        |        |        |
| h |                                         |        |        |        |
| a |                                         |        |        |        |
| n |                                         |        |        |        |
| d |                                         |        |        |        |
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| r |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+
|   |                                         |        |        |        |
+---+-----------------------------------------+--------+--------+--------+

Financial Ratios

+-------------------------------------------+--------+--------+--------+
| Financial Ratios                          | 2010   | 2009   | 2008   |
+-------------------------------------------+--------+--------+--------+
| Liquidity ratio                           |        |        |        |
+-------------------------------------------+--------+--------+--------+
|  Current ratio (times)                    | 2.21   | 2.98   | 4.35   |
+-------------------------------------------+--------+--------+--------+
|  Quick acid ratio (times)                 | 0.65   | 1.19   | 2.21   |
+-------------------------------------------+--------+--------+--------+
| Capacity of assets utilization ratio      |        |        |        |
+-------------------------------------------+--------+--------+--------+
|  Accounts receivable turnover (times)     | 35.12  | 20.25  | 13.75  |
+-------------------------------------------+--------+--------+--------+
|  Accounts receivable collection (days)    | 10     | 18     | 26     |
+-------------------------------------------+--------+--------+--------+
|  Inventory turnover (times)               | 24.52  | 30.59  | 22.55  |
+-------------------------------------------+--------+--------+--------+
|  Fixed asset turnover (times)             | 1.96   | 2.83   | 3.32   |
+-------------------------------------------+--------+--------+--------+
|  Total asset turnover (times)             | 0.87   | 1.21   | 1.41   |
+-------------------------------------------+--------+--------+--------+
| Coverage ratio                            |        |        |        |
+-------------------------------------------+--------+--------+--------+
|  Debt ratio (%)                           | 39     | 35     | 29     |
+-------------------------------------------+--------+--------+--------+
|  Interest Coverage ratio (times)          | 6.81   | 5.22   | 17.09  |
+-------------------------------------------+--------+--------+--------+
|  Debt to Equity ratio (times)             | 0.65   | 0.55   | 0.40   |
+-------------------------------------------+--------+--------+--------+
| Efficiency ratio                          |        |        |        |
+-------------------------------------------+--------+--------+--------+
|  Net profit margin (%)                    | (0.2)  | 0.3    | 9      |
+-------------------------------------------+--------+--------+--------+
|  Return on total assets (%)               | (0.2)  | 0.3    | 12     |
+-------------------------------------------+--------+--------+--------+
|  Return on equity (%)                     | (0.4)  | 0.5    | 17     |
+-------------------------------------------+--------+--------+--------+
|  Gross Profit margin (%)                  | 3      | 4      | 15     |
+-------------------------------------------+--------+--------+--------+
|  Operating profit margin (%)              | 0.5    | 1      | 11     |
+-------------------------------------------+--------+--------+--------+
|                                           |        |        |        |
+-------------------------------------------+--------+--------+--------+

Management Discussion & Analysis

Financial Performance

Revenues

April 2009 - March 2010

Revenue from sales of the Company and its subsidiaries was Baht
22,421.75 million, 51% and 34% of which were generated domestically
through of the rebars and wire rods, respectively. The other 11% was
generated through international sales.

Other income of the Company and its subsidiaries amounted to Baht 98.64
million, representing 0.44 % of total revenues. It comprised mainly of
gain on exchange rate of Baht 39.96 million, interest income of Baht
17.60 million, gain from store sales of Baht 2.40 million, delay penalty
income of Baht 2.02 million, previous year income of Baht 21.42 million
and other income of Baht 15.18 million.

April 2008 - March 2009

Revenue from sales of the Company and its subsidiaries was Baht
29,352.78 million, 55% and 26% of which were generated domestically
through of the rebars and wire rods, respectively. The other 12% was
generated through international sales.

Other income of the Company and its subsidiaries amounted to Baht 90.43
million, representing 0.31% of total revenues. It comprised mainly of
interest income of Baht 54.41 million, gain from store sales of Baht
6.09 million, delay penalty income of Baht 4.99 million and other income
of Baht 29.47 million.

Analysis on changes in revenue structure

As for the company net sale for the year ended (April 2009-March 2010)
was Baht 22,422 million from sales volume of 1,198,000 ton (Year/April
2008-March 2009: Baht 29,353 million from sales volume of 1,112,000), it
is a decrease of 24% and increase of 8%, respectively. The average
selling price of this year was decrease by 7,700 Baht per ton or 29%.
The main reason was selling price decrease from previous year.

Net sales for period April 2008 – March 2009 was Baht 29,353.78 million,
decreased from Baht 31,139.06 million earned for period April 2007 –
March 2008. This was attributable to the overall sales volume which
decreased by 6%.The main reason is on account of falling demand in
global steel market which continuously effected from the global economy
crisis. The sales volume was decreased by 321,000 tons from domestic
economic slowdown. While the average selling price of this year was Baht
26,400 per ton or increase by Baht 4,700 per ton. The main reason was
the continuously increasing of scrap and billet prices as well as steel
bar market price.

Cost of goods sold and Gross profit margin

April 2009 - March 2010

Cost of goods sold of the Company and its subsidiaries was Baht
21,714.74 million, equivalent to 97% of total revenue from sales. Gross
profit margin accounted for 3% of total revenue from sales.

April 2008 - March 2009

Cost of goods sold of the Company and its subsidiaries was Baht
28,275.36 million, equivalent to 96% of total revenue from sales. Gross
profit margin accounted for 4% of total revenue from sales.

Analysis on changes in Cost of goods sold and Gross profit margin

For the period of April 2009 - March 2010, gross profit of the Company
and its subsidiaries represented a margin of 3% as a result of the
average selling price of this year was Baht 18,700 per ton or decrease
by Baht 7,700 per ton from last year. While the average cost of goods
sold was decreased by Baht 5,100 per ton. Therefore, gross profit margin
decrease of 1 % from last year.

For the period of April 2008 - March 2009, gross profit of the Company
and its subsidiaries represented a margin of 4% as a result of the
average selling price of this year was Baht 26,400 per ton or increase
by Baht 4,700 per ton from last year. While the average cost of goods
sold was increased by Baht 6,400 per ton. Therefore, gross profit margin
decrease of 11 % from last year.

Net profit (Loss)

April 2009 - March 2010

Net loss of the Company and its subsidiaries was Baht 54.40 million,
attributable to revenue from sales totaling Baht 22,421.75 million, gain
on exchange rate of Baht 39.96 million, interest income of Baht 17.60
million, gain from store sales of Baht 2.40 million, delay penalty
income of Baht 2.02 million, previous year income of Baht 21.47 million
and other income of Baht 29.47 million.

April 2008 - March 2009

Net profit of the Company and its subsidiaries was Baht 80.93 million,
attributable to revenue from sales totaling Baht 29,352.78 million,
interest income of Baht 54.41 million, gain from store sales of Baht
6.09 million, delay penalty income of Baht 4.99 million and other income
of Baht 29.47 million.

Analysis on changes in the net profit

For the Period April 2009 - March 2010, net loss of the Company and
subsidiaries was Baht 54.40 million. When compared to net profit of Baht
81.93 million in the previous year, it was decreased by Baht 136.33
million. The difference is mainly due to cost of goods sold decreased by
Baht 5,100 per ton or 22%. Conversely, selling price decreased by Baht
7,700 per ton or 29% that led to gross profit decreased 9%

For the Period April 2008 - March 2009, net profit of the Company and
subsidiaries was Baht 80.93 million, a decrease of Baht 2,620.14 million
compared to Baht 2,701.07 million for April 2007 - March 2008 due to the
fact that sales volume decreased by 321,000 tons from previous year and
average cost of goods sold was increased by Baht 6,400 per ton. The main
reason is on account of falling demand in steel market which
continuously effected from the global economy crisis.

Financial status

Assets

Composition of assets

As at March 31, 2010, the Company and its subsidiaries had total assets
of Baht 26,514.84 million. It was composed of current assets, property,
plant and equipment (net) and other asset of Baht 10,174.56 million,
Baht 11,407.83 million and Baht 4,932.44 million, respectively. Other
assets included goodwill of Baht 4,116.34 million, deferred tax assets
of Baht 521.50 million, Computer soft ware of Baht 209.10 million,
deferred expenses and prepaid expenses of Baht 85.50 million, and
others.

Asset Quality

As at March 31, 2010, the Company and its subsidiaries had trade
accounts receivable net of allowance for doubtful accounts in the amount
of Baht 881.61 million, 94.09% of which was from unrelated parties and
5.91% were from related parties. With respect to the quality of the
Company’s trade accounts receivable, it was regarded as “good”
indicating that 95% of aging of trade accounts receivables was less than
three months, which implied the average of the Company’s credit term
offered to customers.

The Company and its subsidiaries have set a policy for provision for
doubtful accounts based on an estimate of receivables expectedly
uncollectible using historical collection experience and review of
current status of existing receivables. As at March 31, 2010, the
Company and its subsidiaries set aside a provision for doubtful accounts
amounting to Baht 697.02 million, equivalent to 54.66% of total trade
accounts receivable, all of which was against NTS’ trade accounts
receivable accumulated prior to the merger.

The Company and its subsidiaries, since year 1999, have made a provision
for loss on revaluation in compliance with Accounting Standard No. 32
“Re: Property, Plant, and Equipment” and provision for impairment loss
for building and machineries in accordance with Accounting Standard No.
36 “Re: Impairment”. As at March 31, 2010, such provisions were recorded
at Baht 806.32 million and Baht 98.31 million, respectively. All of the
aforementioned provisions were from NTS before its merger, with the
purpose to reflect the fair market value of its assets based upon the
recoverable amount. Accounting policy of the Company and its
subsidiaries in respect of impairment of Property, Plant, and Equipment
as well as intangible assets specifies that the review will be conducted
upon an occurrence of incidents or changes in situation which may
indicate higher book value of assets than their recoverable amount.

In addition, as at March 31, 2010, the Company had set a provision for
obsolescence and slow moving items in the amount of Baht 67.37 million,
which belonged to NTS prior to the merger amounting to Baht 41.47
million, and was from SISC as well as SCSC in the amount of Baht 25.90
million. This resulted from the upgrade of long shut down machinery,
before the merger, that caused some spare parts impractical to use. The
provision was in conjunction with Thai Accounting Standard No. 36 “Re:
Impairment”. The Company and its subsidiaries will review such
impairment on an annual basis.

Liquidity

As at March 31, 2010, the Company and its subsidiaries had a net
decrease in cash and cash equivalents of Baht 1,059.17 million from
previous year. The change was due to an decrease in net cash from
operating activities amounting to Baht 151.07 million, which was
explained by the amount of operating profit before changes in operating
assets and liabilities of Baht 1,011.53 million, and an increase in
changes in operating assets and liabilities of Baht 1,162.60 million
largely due to the addition in inventory and trade accounts payable as
well as a decrease in trade accounts receivable. With respect to
investing activities, a net cash flow of Baht 1,020.24 million was
largely for additional investment in fixed assets while net cash of Baht
112.15 million was received for financing activities in respect of
long–term loan draw down of Baht 751.81million and long-term loan
repayment of Bath 625.00 million.

As at March 31, 2009, the Company and its subsidiaries had a net
increase in cash and cash equivalents of Baht 553.53 million. The change
was due to an increase in net cash from operating activities amounting
to Baht 2,575.82 million, which was explained by the amount of operating
profit before changes in operating assets and liabilities of Baht
1,156.75 million, and a decrease in changes in operating assets and
liabilities of Baht 2,382.43 million largely due to reduction in trade
accounts receivable, increase in trade accounts payable, tax paid and
interest paid of Bath 963.36 million. With respect to investing
activities, a net cash flow of Baht 2,707.11 million was largely for
additional investment in fixed assets while net cash of Baht 684.82
million was received for financing activities in respect of long–term
loan draw down of Baht 2,075.56million long-term loan repayment of Baht
600.00 million and payment dividend of Baht 640.04 million.

The Company’s current ratio was good, as evidenced by its 2.98 times and
2.21 times during the year ending March 2009 and 2010, respectively.
This was resulting of cash flow from operating. The liquidity trend
decreased due to an increase in account payable from Mini Blast Furnace
material purchasing.

Sources of Capital Fund

Appropriateness of capital structure

As at March 31, 2010, the Company and its subsidiaries’ debt to equity
ratio of 0.65 times while 0.55 times in 2009.

With regard to sufficiency of capital fund for business operation and
future expansion, the Company has set a plan to maintain sufficient cash
flow for such purposes.

Shareholders’ equity

As at March 31, 2010, the Company and its subsidiaries had shareholders’
equity of Baht 16,093.53 million consisting of the paid-up capital from
ordinary shares and preferred shares totaling Baht 11,680.16 million,
accounting for 73% of its shareholders’ equity. The retained earnings
was Baht 4,273.46 million and the legal reserve increased to Baht 283.10
million.

Liabilities

As at March 31, 2010, the Company and its subsidiaries had liabilities
amounting to Baht 10,421.31 million consisting of current liabilities of
Baht 4,609.76 million and Baht 5,811.55 million for non-current
liabilities, representing 44% and 56% of total liabilities,
respectively. Non-current liabilities included long-term loan from
financial institutions of Baht 5,227.69 million, payable as a result of
debt restructuring of Baht 186.90 million, long-term loan from related
parties of Baht 270.60 million and other liabilities of Baht 126.36
million.

The Company and its subsidiaries has cancelled the existing credit loan
for working capital and entered into the credit facility agreements with
the new financial institution consist of six domestic institutions and
another two foreign institutions. The credit limit total of Baht 2,430
million and Baht 670 million, respectively. The interest rate of credit
facility were classified as following: overdrafts line of credit compute
with Minimum Overdraft Rate (MOR) interest rate for overdraft, interest
rate for Promissory Notes (P/N) was compute at Monthly Mean Rate (MMR)
the same as those of the remaining working capital lines which included
Trusts Receipt (T/R).

On November 29, 2006, the Company entered into two long-term credit
facilities agreements with two commercial banks. The facilities included
long-term loan agreement for refinance of existing long-term loan of the
Company and its subsidiaries which was due in seven years from the date
of the first drawdown totaling Baht 5,000 million. The interest rate was
at the average MLR -1.25% per annum. The other facility amounting to
Baht 3,100 million was working capital facilities, with Minimum
Overdraft Rate (MOR) interest rate for overdraft, whereas interest rate
for Promissory Notes was MMR the same as those of the remaining working
capital lines which included Trusts Receipt (T/R).

In addition, under the said two long-term credit facilities agreements,
the Company must maintain its financial ratios in accordance with the
covenants in that Interest Coverage Ratio were no less than 1.0 time and
1.2 times and Debt to Equity Ratio was no higher than 1.5 times and 2
times, respectively for each agreement.

As at March 31, 2010 the Interest Coverage Ratio was 1.38 times and Debt
to Equity Ratio was 0.65 times.

The collateral under long-term credit facilities with two commercial
banks were NTS’s land, building, construction, machinery, excluding its
Mini Blast Furnace Project’s assets, and assignment of insurance of its
three subsidiaries, in proportion to the credit line from each
commercial bank.

On November 9, 2007, the Company entered into two long-term credit
facilities agreements with two commercial banks. The facilities included
long-term loan agreement for investment in the Mini Blast Furnace
project, which was due in 7 years from the date of the first drawdown
totaling Baht 3,500 million. The interest rate was at the average MLR
-2.0% per annum. In addition, under the said two long-term credit
facilities agreements, the Company must maintain its financial ratios in
accordance with the covenants in that Interest Coverage Ratio were no
less than 1.2 times and Debt to Equity Ratio was no higher than 1.5
times, respectively for each agreement, for the year ended March 31,
2010 and 2009, the Company has withdrawn loans totaling baht 3,079
million and Baht 2,327 million, respectively.

The collateral under long-term credit facilities with two commercial
banks were NTS’s land, building, construction, machinery and assignment
of insurance of its Mini Blast Furnace Project, in proportion to the
credit line from each commercial bank.

On November 2010, the Company made the supplement to the loan agreement
in order to extend the first repayment for one more year, starting from
November 2010 to August 2015

Major factors potentially affecting its operation and financial status
in the future

Contingent Liabilities potentially affecting its operation and financial
status in the future

As of March 31, 2010, the Company had contingent liabilities as follows:

1.  Its subsidiaries had Letter of Credit (L/C) amounting to Baht 904
    million opened but were not under the liabilities’ condition.

2.  Its subsidiaries had obligations under the purchase and installation
    agreement of machineries totaling of Baht 329 million.

3.  The Company and its subsidiaries had obligations under lease
    agreements (including service fees) amounting to Baht 147 million,
    which can be classified by term as follows: within one year of Baht
    38 million, over one year up to five years of Baht 71 million, and
    over five years of Baht 38 million.

Other factors potentially affecting Company’s operation and financial
status in the future

Other factors that may affect Company’s operation and financial status
in the future are shown as the risk in item “Risk Factors”, page 18 and
item “Notes to Financial Statements”, No. 56 Re: Financial Instruments.

Auditor remuneration

Audit Fee

For the period April 2009 - March 2010, the Company and its subsidiaries
paid audit fees to

-   Company’s auditor of Baht 3,800,000.

-   The audit firm affiliated with the auditor, individuals or business
    entities related to the auditor and its affiliated audit firm

- None -

Non-audit Fee

For the period of April 2009 - March 2010, the Company and its
subsidiaries paid fee of Baht 685,240.84 to its auditor, the audit firm
affiliated with the auditor, individuals or business entities related to
the auditor and its affiliated audit firm. In addition, there were no
other fees to be paid in the future due to incomplete transactions
incurred in current period.