9. Internal Control System

The Board of Directors remain committed to effectiveness of the internal
control and audit systems of the Company. Enterprise Risk Management
Approach is adopted as a tool for managing risks and internal controls.
To strengthen the commitment, the Audit Committee has been established
to supervise the financial reporting process of the Company and its
subsidiaries in accordance with Generally Accepted and Accounting
Principles and prevailing regulations, including requirements of the
Stock Exchange of Thailand. Its responsibilities also involve reviewing
the company performance in compliance with the Good Corporate Governance
Principles, evaluating the risk management, maintaining suitable,
effective, and well-recognized internal control and audit systems,
selecting and nominating external auditors, and any other tasks as
designated by the Board of Directors. Besides, the Audit Committee is
entrusted to modify the control measures in response to changing
circumstances, environment, and business risks.

The Company is aware of the importance of a solid and structured
Corporate Governance. Therefore, Internal Audit Department (“IAD”) has
been established to fulfill an important assurance and consulting
function. IAD is an independent function providing Management and the
Audit Committee assurance on the adequacy and effectiveness of the
Organization’s internal controls and assisting in the continuous
improvement of the system of internal controls.

The annual audit plan and five-year audit have been developed by using a
risk oriented methodology and approved by the Audit Committee. The audit
plan encompasses the assessment of effective controls within the
operation, financial reporting, and compliance with the Company’s
policies and procedures, and prevailing laws and regulations.
Significant aspects comprehended in the internal audits entailed
improvements in efficiency and controls in the areas of procurement and
payables process, sales, marketing and distribution, human resource
management, inventory management, accounts and finance and SAP post
implementation, etc.The execution of audits is implemented in accordance
with the IA plan. Audit findings and Management action plans are
summarized and reported on a quarterly basis directly to the Audit
Committee, who will further deliberate the report and express opinions
to the Board of Directors.

On May 4, 2012, a meeting of the Board of Directors of the Company,
which was attended by members of the Audit Committee, the Board of
Directors, after considering of the recommendation of the Audit
Committee, has come up with the opinion for the internal control system
in the year 2011-2012 of the Company in each area as the followings:

Organization and Environment

The Company has an organizational structure and environment that promote
operational efficiency and an adequate control system. In addition,
there is a clear delineation of responsibilities for each department.
This organizational format has also been shown to be suitable to the
business plan, including the recruitment of quality personnel and the
continual development program to respond to changes in business
operations. The Company has established its operating guidelines for
each section so as to ensure efficiency, internal control and ensuring a
similar operating standard for all departments. The Company established
clear business goals for 2011-2012 and long term, incorporating
different factors such as economic condition, market condition and
competition strategies.

Risk Management

The company and its subsidiaries follow a framework for Risk Management
that identifies and proactively addresses risks at the enterprise level
and assists in prevention of erosion in shareholder value. In light of
the prevailing economic scenario, the focus areas of the Risk management
include the following :

-   Safety initiatives to ensure ‘Safe Operating procedures’ with
    emphasis on Human Safety of employees and contractors.

-   Observing highest standards of corporate governance in strict
    compliance with TCOC for all its stakeholders. ‘Whistle Blower
    Policy’, Ethics Controller to address ‘silent’ grievances, and
    appropriate mechanisms to check fraud & malfeasance are in place.

-   An empowered Internal Audit team, with quarterly reporting to the
    Audiit Committee of the Board on the internal controls and systems.

-   Cash flow forecasting on a continuous basis to ensure cash adequacy
    for business continuity.

Accordingly, the Board is of the opinion that the risk management
practices are at acceptable levels.

Operational Control of Management

The Company has established policies and procedures that are appropriate
to the efficient operations of the business. These include the
determination of clear scope, responsibility and authority for each
level of management, and monitoring of the operation of the Company and
its subsidiaries on a regular basis. Appropriate internal controls are
also evident in transactions concerning major shareholders, directors
and management team or related parties.

Information Technology and Communication System

Information that are complete, accurate, relevant and important are
submitted to the Board of Directors to facilitate their decision making
process. Minutes of all Board meetings are thoroughly taken. Important
and accounting documents are kept according to legal requirements and a
storage system is available for such use. The Company also maintains a
system of communication channels that are updated, on-time and easy to
understand.

Monitoring System

Management meeting is held on a monthly basis to monitor the operating
performance of the Company and comparison to the plan. It will be
quarterly proposed to the Board of Directors meeting along with the
Audit Committee meeting. Causes are analyzed and corrections and
improvements made on a continuous basis.

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