6. Future Projects

As of October 31, 2005, the Company was working on three projects:
Ethanol Plant Project, Biofertilizer Factory Project, and Power Plant
Factory Project. All the three projects were derived from the corporate
continuous business development policies on making use of sugar
by-products and waste to maximize value-added effects for the Company.

Details of the projects are as follows:

Ethanol Plant Project

This particular project is under Khon Kaen Alcohol Company Limited
(paid-up capital amounting to Baht 160.0 million), which is a subsidiary
of Khon Kaen Sugar Industry Public Co., Ltd. with 99.99 percent share
holding. The factory has capacity for ethanol (99.5 percent alcohol)
production of 150,000 liters per day. The ethanol used in blending with
gasoline is produced from molasses and sugar cane juice. The plant is
located near the factory of Khon Kaen Sugar Industry. The capital
amounts to approximately Baht 350 million. Being supported by Thailand
Board of Investment (BOI), the Company has been granted an eight-year
personal income tax exemption. The plant was expected to operate and
start selling in January 2006. Currently, the Company is applying for
licenses for operating two more ethanol plants. One with expected
production capacity of 150,000 liters per day is to be situated near the
factory of Tamaka Sugar Industry Co., Ltd in Kanchanaburi Provice, while
the other with expected production capacity of 100,000 liters per day is
to be located in the vicinity of New Kwang Soon Lee Sugar Factory Co.,
Ltd. in Chonburi Province.

Ethanol Industry Overview: Manufacturing of ethanol for blending with
gasoline is resulted by aims of reducing the import of oil and MTBE
(Methyl Teriary Butyl Ether, blended with oil to improve combustion),
relieving environmental problems caused by MTBE residues, and creating a
strategy for decreasing Thailand’s dependence on imported energy
resources. The Government mandates 10 percent of ethanol to be mixed
with gasoline to make gasohol as a substitute for ULG 95. Gasohol is
priced Baht 1.50 lower than the premium gasoline. Since the previous
year, promotion by the government factor, private sector, and gasoline
dealers has increased usage rates of gasohol monthly as indicated in
Table 6.1: Gasohol consumption rate in Thailand.

Table 6.1: Gasohol consumption rate in Thailand

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At present, there are 23 licensed ethanol manufacturers with the total
capacity of 4,000,000 million liters. Due to limitations of raw
materials, financial status, and locations of the manufacturers, it is
estimated that only less than half of the businesses are capable of
reaching their full capacity and investing in constructing more ethanol
plants. The estimated capacity is close to volumes of ethanol needed if
gasoline is required to be mixed with 10 percent of ethanol once sale of
ULG 95 and ULG 91 is ceased. Regarding pricing, the government sector is
in the process of determining reference prices for ethanol purchases.
Cost of production using molasses and cassavas as raw materials, and
cost of ethanol import may be used for reference.

Potential Difficulty: As of October 31, 2005, the construction of the
ethanol plant was nearly completed. The plant operation was expected in
December, as raw materials needed would be available after sugarcane
processing of the factory of Khon Kaen Sugar Industry. (The sugar
factory started its sugarcane processing on December 10, 2005.) Then the
commissioning might cause minor difficulty in machinery operation. It is
likely that the machinery can be operated with its capacity in January
2006.

Biofertilizer Factory Project

This project is under Khon Kaen Alcohol Company Limited (paid-up capital
amounting to Baht 160.0 million), which is a subsidiary of Khon Kaen
Sugar Industry Public Co., Ltd. with 99.99 percent share holding. The
factory has capacity for biofertilizer production of approximately
100,000 tons per year. Raw materials include filter cake, a waste from
sugar manufacturing, and wastewater produced by the ethanol plant. The
plant is located 10 kilometers from the factory of Khon Kaen Sugar
Industry. The capital amounts to approximately Baht 80 million. An
eight-year personal income tax exemption has been granted by Thailand
Board of Investment (BOI) as investment support. The plant operation was
expected in January - February 2005, depending on raw material
availability.

Potential Difficulty: As raw materials for biofertilizer manufacturing
are obtained from wastes produced by sugar manufacturing process and the
ethanol plant, a delay of the beginning of sugarcane processing and
machinery operation of the ethanol plant are likely to affect the work
of the project. The processes of mixing and air-drying biofertilizer
which take place in an open space cannot be done in rainy season.

Biomass Power Plant Project

This project is under Khon Kaen Power Plant Company Limited (paid-up
capital amounting to Baht 400.0 million), which is a subsidiary of Khon
Kaen Sugar Industry Public Co., Ltd. with 99.99 percent share holding.
The plant has capacity for electricity generating of 30 MW, in which 20
MW of electricity is sold to Electricity Generating Authority of
Thailand Public Company Limited (in accordance with the 21-year
agreement which the Company sells its electricity at an SPP rate
calculating from raw material cost and fuel use rate in electricity
generating). The rest of the electricity generated is sold to factories
in the business group and used in the power plant itself. The main
source of fuel consumed by the power plant is bagasse from sugar
manufacturing process. The plant is located in the vicinity of the sugar
plant of Khon Kaen Sugar Industry. The capital amounts to approximately
Baht 1,000 million. An eight-year personal income tax exemption has been
granted by Thailand Board of Investment (BOI) as investment support. The
plant operation was scheduled to take place in November 2006.

Potential Difficulty: A possible delay of completion of the contractor’s
construction work might result in a delay of known incomes generating
and a fine issued by the EGAT. However, the construction is currently
performed as scheduled. If the construction is not completed in time and
such delay proves to be the contractor’s responsibility, the agreement
in which the project is registered as a turnkey project will allow the
Company to claim compensation for the delay of work completion.