4. Business Description

Type of product and service

Products

(1) Rebars

The products consist of the round bars and deformed bars whose size of
diameter are 6-25 mm. and 10-40 mm., respectively. The round bars are
produced in accordance with Thai Industrial Standards Institute (TISI)
No. 20-2543, grade quality: SR 24 and deformed bars are produced in
accordance with Thai Industrial Standards Institute (TISI) No. 24-2536,
grade quality: SD 30, SD 40 and SD 50. Deformed bars are served for
various purposes for construction industry mostly for reinforcement of
concrete such as road, bridge, footing, building, house and general use
for construction industry, etc.

(2) Low Carbon Wire Rods (“LCWR”)

LCWR is of grade quality: SWRM 6-22, SWRY11 and SWRCH6A-22A. The size of
diameter is 5.5-16 mm. and it is produced in accordance with Thai
Industrial Standards Institute (TISI) No. 348-2540, JIS G3503 (1980) and
JIS G3507 (1991). They are used as raw materials for construction parts
such as binding wire, nails, wire mesh, galvanized wire, barbed wire,
welding wire, cold draw wire, screw and nuts, etc.

(3) High Carbon Wire Rods (“HCWR”)

HCWR is of grade quality: SWRH 27-82BE. The size of diameter is 5.5-16
mm. and it is produced in accordance with Thai Industrial Standards
Institute (TISI) No. 349-2532. They are used as raw materials for
manufacturer of pre-stressed concrete wires and strands (PC wires and PC
strands), compression spring, extension spring, torsion spring, sling
etc.

(4) Small Sections

Small sections have various forms such as angles or channels. They are
produced in accordance with Thai Industrial Standards Institute (TISI)
No. 1227-2537, grade quality: SM400-570 and SS400-540. They are served
for the various uses of construction industry i.e. roof structures,
electricity poles and billboards etc.

Management Standard System

TSTH’s subsidiaries consisting of SISC, SCSC and NTS determine to
reinforce the management to be international standard. SISC and SCSC are
certified with ISO 9001: 2008 and NTS is certified with ISO 9001:2000
(International standard in Quality Management Systems). In addition, the
Company realizes the importance of the environment control and
competence of the laboratory. SCSC is certified with ISO14001:2004
(International standard for the environmental control) and NTS is
certified with ISO/IEC 17025:2005 (General requirements for the
competence of testing and calibration laboratories). The Company also
realizes the importance in the safety control for working environment to
be in sanitary system for the employees. SISC and SCSC are certified by
TIS 18001:2542 & OHSAS18001:2007 (International standard of Occupational
Health and Safety Management Systems).

Privileges through the BOI Program

The Company can enjoy certain privileges from the BOI and its
subsidiaries, NTS and SCSC as of March 31, 2010 as follows:

+------------+-------------+-------------------------------------------+
|            | Production  | Privileges Received                       |
|            | Volume      |                                           |
|            |             |                                           |
|            | (tons per   |                                           |
|            | annum)      |                                           |
+------------+-------------+-------------------------------------------+
| NTS        | 520,000     | -   Tax exemption for 8 years from the    |
|            |             |     commencement of operation (2006 -     |
| Phase II   | 500,000     |     2013)                                 |
|            |             |                                           |
| MBF*       |             | -   Net loss incurred between 1^(st) –    |
|            |             |     8^(th) year can be realized against   |
|            |             |     taxable profits during the next 5     |
|            |             |     years.                                |
|            |             |                                           |
|            |             | -   Tax exemption for 8 years for the net |
|            |             |     profit from the first income          |
|            |             |                                           |
|            |             | -   Net loss incurred between 1^(st) –    |
|            |             |     8^(th) year can be realized against   |
|            |             |     taxable profits during the next 5     |
|            |             |     years.                                |
+------------+-------------+-------------------------------------------+
| SCSC       | 200,000     | -   Tax exemption of 50% from 2006 -      |
|            |             |     2010.                                 |
| Phase II   |             |                                           |
|            |             | -   Net loss incurred between 1998        |
|            |             |     through 2005 be realized against      |
|            |             |     taxable profits between 2006 - 2010.  |
+------------+-------------+-------------------------------------------+

* Mini Blast Furnace Project

Market Situation and Competition

Major marketing policies and products’ characteristic

Strategies, Distribution System and Channel

To maintain and enhance its market share of the Company and its
subsidiaries, the Company has set its marketing strategies, distribution
system, and distribution channels as follows:

Domestic markets

Rebars:

Utilization of the three distribution channels from its three
subsidiaries:

-   Contractors and Developers undertaking vast projects from government
    or private sectors.

-   Stockists with considerable volume consumptions before reaching end-
    consumer hands.

-   SCGN Distribution which has its own inclusively well-built marketing
    management system, logistics, and distribution channels maintained
    solely for SCG construction business. Also, with the SCG Retail Co.,
    Ltd. focusing on marketing operations with an approximately of 500
    small retailers.

The company has positioned itself very well in the rebar market by
strengthening its distribution network in Thailand by implementing a
program called RVM (Retail Value Management) which helps to improve the
capability of the distribution network and also create brand awareness
for the companies rebar with end customer.

In FY10, the company emphasized in the market place the attributes of
good quality standard rebar for which the company’s brand “Bor Lor Sor”
is already the market leader

High Carbon Wire Rods: HCWR

Given the fact that the Company is the only major player with the Billet
production for the manufacturing of HCWR, therefore, the Company can
undoubtedly maintain its policy of selling an exceptional high quality
HCWR to its existing clients. Furthermore, the Company has aimed to
broaden its customer base, extend quality assurance offers, provide
technical services to its clients, offer an on-time delivery, as well as
seek to present clients with a variety of products to fit the needs of
different type of end consumers. The company also exported these high
quality wire rods to markets in Vietnam, Indonesia and S. Korea.

Low Carbon Wire Rods: LCWR

The company maintained its leadership position in LCWR by having close
to 45% market share. Also, being able to produce hard grades like M15,
M12 and soft quality grades like M6 and M8 gives the company the
advantage of suppliers the full range of product to customers in the
domestic market.

Small Sections

The existing distribution channel for this type of product is through
the Stockists which in turns re-distributes to the construction
contractors, fabricators and government agencies.

With increased competition faced within this product category, the
company relentlessly aims to enhance its quality corresponding to the
increasing demands from fabricators and government agencies and provide
enhanced services levels.

International Market

The company strategically focuses on neighbouring countries of Laos,
Myanmar and Cambodia to export its rebar products through a well
established distribution network. It focuses on ASEAN markets of
Vietnam, Indonesia and Philippines to export value added wire rods like
MCWR and Y11. The company aims to export 10-15% of its production on a
sustained basis to these markets.

Customer characteristics and target customers of long steel product
industry

The company follows the following segmentation for its products

1. Rebar: a. Individual house builder/small contractor: This segment is
catered through the SCG network and basically is the retail buyers who
are very brand and quality conscious.

b. Medium/Large contractor: This segment of market is price conscious
and wants good service delivery since they’re concerned about the cost
of their project. The company caters to this segment through the TSTH
stockist network.

c. Direct project: The company also deals with some big contractors
directly. These customers also are concerned about quality and price
along with prompt delivery service.

2. Wire Rods: a. LCWR: These are the commodity wire rods which the
company supplies to end users for making products like GI wire, nails,
fences, mesh etc.

b. SPWR: These are special wire rods like HCWR, MCWR, Y11 and CHQ which
again the company supplies to wire drawers who make products like PC
wire, PC strand, electrode fasteners etc.

Proportion of production distribution

The distribution channel of the Company is heavily reliant on domestic
market, accounting for 87% and 13% for export market. The distribution
channel can be detailed below:

  ------------------------------ -------------- ---------- ---------- ---------
  Distribution Channels          % to                                 
                                 distribution                         

                                 Year 2009      Year 2008  Year 2007  Year 2006

  Direct Sales                   30             28         27         41

  SCG Network                    23             22         23         27

  TSTH Dealers                   47             50         50         32

  Total                          100            100        100        100
  ------------------------------ -------------- ---------- ---------- ---------

Industry Outlook and Competition

Competition within the industry

The industry of steel producer in Thailand can be categorized by types
of products i.e. Long Product and Flat Product. The long product is
deemed to be more fragmented in which the Company which is holding
Company invests in its subsidiaries including NTS, SISC and SCSC are
grouped as the long product producer.

The long product producers comprise of medium and small enterprises,
most of which are regarded as family-run business. The plants whose
production capacity is more than 200,000 tons per annum are consisted of
approximately 13 numbers, thereby generating excess supply to outstrip
the local demand. The excess supply is also due to pressure of many
smaller units in the market.

Competitors

The Company’s competitors can be divided into two types including the
producers with and without Electrical arc furnace (EAF). Those who own
EAF procure the scrap both domestically and internationally as its
production raw material to produce semi-finished product comprising
billets and produce finished products i.e. rebars, wire rods, small
sections and special bars, in which the Company possesses in the
category. Those who don’t possess EAF are required to procure or import
all semi-finished products including billets from other steel producers
to manufacture finished products.

In terms of overall production capacity of the long steel industry, it
is reckoned that the supply has far outstripped local demand, mainly due
to the fact that the number of rebar producers is much more than wire
rod producers, thus making competition in rebar industry higher than
that in wire rod industry.

With respect to the wire rod products, Thailand has been dependent on
imported wire rods from foreign countries, most of which are regarded as
high quality wire rods. Nonetheless, in the aftermath of economic crisis
in the year 1997, there have been financial difficulties incurred with
lots of steel entrepreneurs, many of which decided to exit their
business, thus making less competitors in the market. Thus, the Company
and its subsidiaries have gained an opportunity to enlarge its target
customers. These factors resulted in the Company to gain more market
share.

For the overall imported wire rods, most imported products are
high-grade wire rods whose country of origin are from China, Japan,
South Korea and Taiwan.

Table 1 : Long product producer in steel industry and its production
capacity (as at March 31, 2010)

  (Tons per annum)

  ---------------------------- ------------ ------------ ------------ -----------
  Company                      Production                             Melting
                               Capacity of                            Capacity
                               Long                                   
                               Products                               

                               EAF Rolling  Non-EAF      Total        
                               Capacity     Rolling                   
                                            Capacity                  

  Tata Steel (Thailand) (TSTH) 1,700,000    -            1,700,000    1,500,000

  Bangsaphan Barmill (BSBM)    -            700,000      700,000      -

  Bangkok Steel Industry (BSI) 750,000      -            750,000      300,000

  Bangkok Iron and Steel Works 500,000      -            500,000      240,000
  (BISW)                                                              

  Tycoon (TYCN)                -            300,000      300,000      -

  Burapa Steel (BRP) / MILLCON              370,000      370,000      -
  (MCST)                                                              

  Namheng Steel (NHS) / Zubb   800,000      -            800,000      300,000
  Group                                                               

  BNS Steel Group (BNS)        240,000      -            240,000      250,000

  Union Metal Limited (UMC)    200,000      -            200,000      420,000

  Siam Steel Syndicate (SSS)   200,000      -            200,000      110,000

  Triumph Steel (Triumph) /    120,000      -            120,000      370,000
  Paisarn Steel                                                       

  Thai Steel Bar (GS)          120,000      -            120,000      120,000

  Thai-India Steel (TICO)      72,000       -            72,000       78,000

  Parthongkij Commercial (PTK) -            240,000      240,000      -

  Thai Steel Profile (TSC)     -            240,000      240,000      -

  Siam Yamato Steel (SYS)      1,100,000    -            1,100,000    1,400,000

  Nova Steel                   -            240,000      240,000      -

  Prapadaeng Shape Steel       -            300,000      300,000      -

  BP Wire Rods (SSI)           -            280,000      280,000      -

  Others                       -            5,882,000    5,882,000    882,000

  Total Capacity               5,802,000    8,552,000    14,354,000   5,970,000
  ---------------------------- ------------ ------------ ------------ -----------

Source: Iron and Steel Institute of Thailand (ISIT)

Table 2: Local long product consumption during the year 2003 - 2009

  ---------------------- ---------------------------- -------------------
  Year                   Long Products (Tons)         Growth (%)

  2009                   4,155,000                    -23%

  2008                   5,417,000                    5%

  2007                   5,150,000                    4%

  2006                   4,963,000                    -11%

  2005                   5,586,000                    -2%

  2004                   5,674,000                    21%

  2003                   4,672,000                    6%
  ---------------------- ---------------------------- -------------------

Source: South East Asia Iron and Steel Institute / Iron and Steel
Institute of Thailand

Long Steel Product Industry overview for the year 2009-2010

The Gross Domestic Product (GDP) and long product industry contracted by
2.8% and 23% respectively. The negative factor was uncertain political
environment and slow recovery of private expenditure in both consumption
and investment. However, major contributing factors to create demand for
Company’s products were ongoing private and public construction project,
new project investment under the “Strong Thailand 2012” program and
consistent demand from industry sector related to steel product like
Automotive, Appliance and Electronics, Packaging and Machinery. The
progress of main mega project like Red Line and Purple line also created
steel demand in long term.

On competition side, imports from Malaysia, Japan, Taiwan and S. Korea
specially in high end wire rods continued and also the domestic steel
industry faced pricing pressure due to import of finished goods from
China. Moreover, the tax reduction scheme under FTA for industrial steel
products like LCWR, PC Wire, PC Strand Galvanized Wire etc. also
impacted wire rods prices.

In terms of sale price in 2009-2010, the price gradually increased in
the first half, dropping a little bit during the third quarter and then
slowly increasing in the last quarter. The annual average selling price
of all products was Baht 18,400 per ton. Compared with Baht 26,200 per
ton in 2008-2009, represented a decrease of Baht 7,800 per ton or a 30%
decrease. Total billet import in 2009 was 1,181,200 ton compared to
938,200 ton in 2008.

Industry trend for the year 2010-2011

The forecasted GDP growth for 2010 is in the range of 3 to 5%. Growth
for long steel product Industry is forecasted at 10% and the upward
trend of other related steel industry is anticipated. The positive
trends are mainly from stronger economic and the continued expansionary
fiscal and monetary policies from late 2009 particularly from public
sector capital expenditures under the “Stronger Thailand 2012” program.
Moreover, there will be various Mega Projects invested in 2010 like
maintenance highway and rural road, mass transit projects, bus terminal
renovation and Airport renovation. The government has also decided to
expand the period of spending policy for residential market such as
reducing interest rate, special business tax, mortgage and transferring
house fees. Construction demand is also expected to be fueled by new
condominium projects, home office and hotels mainly in tourist cities of
Thailand.

On the supply side, prices of raw material like iron ore, coke and scrap
are expected to be firm globally and this will impact cost of steel
producers in Thailand. Moreover, with import tax becoming 0% from 1^(st)
January 2010 more imports are expected from Malaysia, Singapore and
Indonesia for finished product into Thailand.

Product/service procurement

Manner of product procurement

Production capacity and plant location

Plant and location

N.T.S. Steel Group Plc.

No. 351, Moo 6, 331 Highway, Hemaraj Chonburi Industrial Estate, Tambon
Bowin, Amphoe Sri Racha, Chonburi Province

Siam Iron and Steel (2001) Co., Ltd.

No. 49 Moo 11, Tambon Bang Khamode, Amphoe Ban Mor, Saraburi Province

Siam Steel Construction Co., Ltd.

Plot No. I-23, Map Ta Phut Industrial Estate, Amphoe Muang, Rayong
Province

Production capacity and policy

Detail below indicating the production capacity and policy by each
subsidiary:

+--------------------------------+--------+--------+--------+--------+
|                                | NTS    | SISC   | SCSC   |        |
|                                |        |        |        |  Total |
+--------------------------------+--------+--------+--------+--------+
| Capacity (tons per annum)      |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| - Rebars                       | 4      | -      | 5      | 9      |
|                                | 00,000 |        | 00,000 | 00,000 |
+--------------------------------+--------+--------+--------+--------+
| - Wire rods                    | 4      | 2      | -      | 6      |
|                                | 00,000 | 30,000 |        | 30,000 |
+--------------------------------+--------+--------+--------+--------+
| - Small Sections               | -      | 1      | -      | 1      |
|                                |        | 70,000 |        | 70,000 |
+--------------------------------+--------+--------+--------+--------+
| Total capacity                 | 8      | 4      | 5      | 1,7    |
|                                | 00,000 | 00,000 | 00,000 | 00,000 |
+--------------------------------+--------+--------+--------+--------+

Source: Tata Steel (Thailand) Plc.

With the total Finished goods production of 1,206,034 Tons, the
production capacity utilization for the period ending on March 31, 2010
stood at 70.94%.

Source of raw materials

Aligned with the Tata Steel Group procurement strategic policies - The
Company has set the raw material procurement strategies and policy for
its subsidiaries to generate highest value and efficiency in terms of
pricing, quality, supply lead times and on time delivery. The Company
has a strategy to de-risk and improve its procurement supply chain by
engaging with multiple suppliers (locally and globally) and building a
strong long term partnership. The details of major raw material sources
categorized by type of raw material are given below:

-   Scrap: The strategic policy is to maximize local procurement from
    key partners. The scrap purchased from local key partners and other
    local suppliers accounted for 65%-70% of total quantity procured.
    The balance quantity 30-35% was imported through strategic global
    and local partners to ensure consistency of quality and on time
    delivery.

-   Graphite Electrode, Ferro Alloys and Refractories: mostly imported
    with direct procurement from a number of well known importers.

-   Natural gas and fuel: 100% local procurement from well established
    suppliers.

Production Process and Production Technology

Production diagram indicating the production process of rebars, wire
rods and other types of steels of the Company.

+-------------------------------+--------------------------------------+
| 1.  Prepare the scrap for     |                                      |
|     melting taken the size    |                                      |
|     and quality into          |                                      |
|     consideration to suit     |                                      |
|     Electrical arc furnace    |                                      |
+-------------------------------+--------------------------------------+
|                               |                                      |
+-------------------------------+--------------------------------------+
| 2.  Melting the scrap and     |                                      |
|     change it in form of      |                                      |
|     liquid metal at           |                                      |
|                               |                                      |
|   the temperature 1,650°C     |                                      |
+-------------------------------+--------------------------------------+
|                               |                                      |
+-------------------------------+--------------------------------------+
| 3. Mix other additives        |                                      |
| including Manganese and       |                                      |
| Carbon etc.                   |                                      |
+-------------------------------+--------------------------------------+
|                               |                                      |
+-------------------------------+--------------------------------------+
| 4. Casting process to make    |                                      |
| billets                       |                                      |
|                               |                                      |
| (Partial billets will be      |                                      |
| stored up and some will be    |                                      |
| brought to rolling process    |                                      |
| for energy saving purpose.)   |                                      |
+-------------------------------+--------------------------------------+
|                               |                                      |
+-------------------------------+--------------------------------------+
|                               | Stock storage                        |
+-------------------------------+--------------------------------------+
|                               |                                      |
+-------------------------------+--------------------------------------+
| 5.  Bring billets reheating   |                                      |
|     in the temperature of     |                                      |
|     1,200°C and rolling with  |                                      |
|     rolling machine to        |                                      |
|     produce rebars, wire rods |                                      |
|     and                       |                                      |
|                               |                                      |
| other steel products in size  |                                      |
| required                      |                                      |
+-------------------------------+--------------------------------------+
|                               |                                      |
+-------------------------------+--------------------------------------+
| 6.Cooling process for Packing |                                      |
+-------------------------------+--------------------------------------+

Production process by Electric Arc Furnace (EAF) method

1.  Scrap Process

Prepare the scrap for melting, taking into consideration the size and
quality to suit the Electrical arc furnace.

2.  Process of Electric Steel Making

Prepare the electrode into electrical arc furnace and apply the high
voltage of electricity for melting the scrap and change it in the form
of liquid metal at temperature of 1,650°C for approximately 45-60
minutes for each melting time.

3.  Process of Metallurgy

-   Prepare liquid metal arising from step 2 process and release it in
    the ladle furnace by way of Eccentric Bottom Tapping to make liquid
    metal pure.

-   Process of (2) and (3) will be controlled by computerized system.

-   Mix with other additives to yield the required liquid metal.

4.  Continuous Casting Process

Bring hot metal arising from step 3 process and have it passed through
the continuous casting process to make billets of 130 to 150 mm. by
controlling cool water system to produce the required billets. Partial
billets will be stored up and some will be brought to rolling process
for energy saving purpose.

5.  Rolling Process

Bring Billets for reheating in the temperature of 1,200°C and have them
passed through the rolling process by rolling machines to get the
reduction in shape and size. There are three forms of production line
namely:

Method 1: Rolling to be in straight of round bars and deformed bars

Method 2: Rolling to be wire rods

Method 3: Rolling to be small sections and rebars

6.  Packing Process

-   Rebars and Small sections

Bring rebars and small sections and have them laid down for cooling
purposes to ease the cutting to the required length for packing and
dispatch.

-   Wire rods

Bring wire rods to bind, weigh and paste it with sticker for storing and
dispatched purposes.

Environmental Impacts

The Company has policies laid down and given to its subsidiaries to
maintain all machineries/equipments in proper and efficient conditions
to preserve environment. Any defective machineries and equipments found,
the Company will immediately amend and repair such defects.
Additionally, the Company hires an environment consulting Company to
take charge in testing the quality of air and water frequently to comply
with specified Laws and Regulations.

The result of the environment testing (air and water) of NTS, SISC and
SCSC is in compliance with all of the Laws and Regulations as specified
by Authorities.

Presently, the Company has no legal dispute or lawsuits relating to
environment problems.

Work related to project or high value of purchases and sales pending the
delivery

- Not Available -