3.  Nature of Business Operations

3.1 Company profile and key changes and developments

  Polyplex (Thailand) Plc. (“PTL” or “the Company”) was incorporated as
  a private company on March 26, 2002to manufacture and distribute PET
  film (polyethylene terephthalate film or polyester film). In August
  2004, the Company was transformed into a Public Company, with a
  registered capital of Baht 960 million and the IPO was subsequently
  made in December 2004. The Company is promoted by Polyplex Corporation
  Limited (PCL) based in India and engaged in the same business as the
  Company for more than 25 years. As on date, PCL has 51% stake in the
  Company through both direct and indirect shareholding and the balance
  49% is with the general public.

  Past key changes and developments in the Company are as follows:

+--------------+-------------------------------------------------------+
| March-April  | PTL was incorporated by PCL, which is a listed        |
| 2002         | company (on the Bombay Stock Exchange as also         |
|              | National Stock Exchange) in India. PTL also acquired  |
|              | a plot of land with an area of 20 rai 22 square wah   |
|              | at Siam Eastern Industrial Park in Rayong Province in |
|              | order to construct a factory for manufacture of PET   |
|              | film.                                                 |
+--------------+-------------------------------------------------------+
| May 20, 2002 | PTL was granted a promotion certificate by BOI for    |
|              | PET film (production line 1) with an approved         |
|              | production capacity of 15,000 tons per year ( now     |
|              | increased to 24,000 MT pa).                           |
+--------------+-------------------------------------------------------+
| July-2002 to | The Company started construction of the factory in    |
| April-2003   | July-2002 and completed its plant construction and    |
|              | proceeded with machinery test-run in March, 2003      |
|              | followed by commercial production from April 2, 2003  |
|              | when its first sale invoice was recorded.             |
+--------------+-------------------------------------------------------+
| June 11,     | The Company was granted a BOI promotion certificate   |
| 2003         | for production of                                     |
|              |                                                       |
|              | -   PET film (production line 2) with an approved     |
|              |     production capacity of 15,000 tons per year (now  |
|              |     increased to 24,000 tons per year).               |
|              |                                                       |
|              | -   PET resin with an approved production capacity of |
|              |     26,250 tons per year ( now increased to 52,500 MT |
|              |     pa)                                               |
+--------------+-------------------------------------------------------+
| September    | The Board of Directors resolved for the purchase of   |
| 11, 2003     | another plot of land adjacent to the existing land    |
|              | covering 8 rai 28.9 square wah area to produce PET    |
|              | resin which is the raw material in PET film           |
|              | production.                                           |
+--------------+-------------------------------------------------------+
| November 12, | Commercial production and distribution began for film |
| 2003         | production line 2.                                    |
+--------------+-------------------------------------------------------+
| July 30,     | The shareholders’ meeting resolved for transformation |
| 2004         | of the Company into a public company, write-down of   |
|              | par value from Bt. 10 to Bt. 5 per share and increase |
|              | of registered capital by Bt. 1,068 million to make up |
|              | a total of Bt. 1,728 million requiring issue of       |
|              | additional 213.6 million ordinary shares. The         |
|              | allocation of the increase in capital was as under:   |
|              |                                                       |
|              | -   133.6 million Shares offered to Polyplex (Asia)   |
|              |     Pte. Ltd. (PAPL), a juristic person registered in |
|              |     Singapore, being a 100% subsidiary of PCL, India. |
|              |                                                       |
|              | -   Up to 80 million shares at part value of Bt. 5    |
|              |     per share, making a total of up to Bt. 400        |
|              |     million as public offering.                       |
|              |                                                       |
|              | The meeting also resolved for establishment of a      |
|              | holding company named Polyplex (Singapore) Pte.       |
|              | Ltd.(PSPL), registered in Singapore as a holding      |
|              | company to facilitate investment and business         |
|              | expansion in Turkey.                                  |
+--------------+-------------------------------------------------------+
| August 11,   | Registration was completed to transform the Company   |
| 2004         | into a public company.                                |
+--------------+-------------------------------------------------------+
| September,   | Start up on PET resin batch plant in Thailand.        |
| 2004         |                                                       |
+--------------+-------------------------------------------------------+
| December 8,  | IPO of 240,000,000 shares at the price of Baht 6.90   |
| 2004         | per share.                                            |
+--------------+-------------------------------------------------------+
| February 22, | PTL was granted a promotion certificate by BOI for    |
| 2005         | Metalliser film with an approved production capacity  |
|              | of 7,500 tons per year.                               |
+--------------+-------------------------------------------------------+
| February 22, | Startup of Continuous Chips Plant inThailand.         |
| 2005         |                                                       |
+--------------+-------------------------------------------------------+
| August, 2005 | Start up of Metallizer Line 1 in Thailand.            |
+--------------+-------------------------------------------------------+
| December,    | Start up of Thin Pet film line 1 in Turkey            |
| 2005         | implemented by subsidiary company with a production   |
|              | capacity of 24,000 MT per annum.                      |
+--------------+-------------------------------------------------------+
| March, 2006  | Metallizer start up in Turkey with a production       |
|              | capacity of 4,800 MT pa.                              |
+--------------+-------------------------------------------------------+
| December,    | Start up of Pet resin plant in Turkey with a          |
|              | production capacity of 57,600 MT per annum            |
| 2006         |                                                       |
+--------------+-------------------------------------------------------+
| March,2007   | PTL was granted a promotion certificate by BOI for    |
|              | Extrusion Coating film project with an approved       |
|              | production capacity of 18,000 MT per annum for two    |
|              | production lines.                                     |
+--------------+-------------------------------------------------------+
| October,2007 | Board of Directors of PTL approved a Project for      |
|              | related product diversification in CPP Film           |
|              | manufacture in Thailand.                              |
+--------------+-------------------------------------------------------+
| N            | Total Productive Maintenance (TPM) policy adopted and |
| ovember,2007 | rolled out by PTL to enhance productivity.            |
+--------------+-------------------------------------------------------+
| January,2008 | PTL was granted a promotion certificate by BOI for    |
|              | Metallised Film Expansion Project with an approved    |
|              | production capacity of 8,700 MT per annum.            |
+--------------+-------------------------------------------------------+
| April,2008   | Commencement of commercial production of the          |
|              | Extrusion Coating line.                               |
+--------------+-------------------------------------------------------+
| May,2008     | Commencement of commercial production of the 2^(nd)   |
|              | Thin PET Film line and the 2^(nd) Metallised Film     |
|              | line in Turkey and also the 2^(nd) Metallised Film    |
|              | line in Thailand.                                     |
+--------------+-------------------------------------------------------+
| F            | PTL was granted a promotion certificate by BOI for    |
| ebruary,2009 | Cast Polypropylene (CPP) film project with an         |
|              | approved production capacity of 15,600 MT for CPP     |
|              | plain and CPP Metallized film.                        |
+--------------+-------------------------------------------------------+
| May,2009     | Board of Directors of PTL approved an Investment in a |
|              | Silicone Coating line in Thailand. 9                  |
+--------------+-------------------------------------------------------+
| September,   | The Trading company in China - Polyplex Trading       |
| 2009         | (Shenzhen) Co. Ltd was set up and capital injected    |
|              | through Polyplex (Singapore) Pte Ltd                  |
+--------------+-------------------------------------------------------+
| March, 2010  | Commencement of commercial production of the Cast     |
|              | Polypropylene line                                    |
+--------------+-------------------------------------------------------+
| July,2010    | PTL was granted a promotion certificate by BOI for    |
|              | the Silicone Coating film project with an approved    |
|              | capacity of 725 million sqm.                          |
+--------------+-------------------------------------------------------+
| February,    | Board of Directors of PTL approved an Investment in a |
| 2011         | Thick PET film line in Thailand.                      |
+--------------+-------------------------------------------------------+
| May, 2011    | Board of Directors of PTL approved the investment in  |
|              | a new Thin PET film line in USA, under its 100%       |
|              | subsidiary Polyplex USA LLC (PUL).                    |
+--------------+-------------------------------------------------------+
| July. 2011   | Board of Directors of PTL approved an Investment in a |
|              | Blown PP film line in Thailand.                       |
+--------------+-------------------------------------------------------+
| November,    | Board of Directors of PTL approved an Investment in   |
| 2011         | the Second Extrusion Coating line in Thailand.        |
+--------------+-------------------------------------------------------+
| March’2012   | The Silicone Coating plant started the commercial     |
|              | operations.                                           |
+--------------+-------------------------------------------------------+
| August ‘2012 | Board of Directors approved an Investment in a new    |
|              | subsidiary ( EcoBlue Limited) in Thailand, for        |
|              | implementing the project for recycling plastic waste. |
+--------------+-------------------------------------------------------+
| October’2012 | Board of Directors of PTL approved the proposal for   |
|              | 67% acquisition by Polyplex Europa Polyester Film     |
|              | Sanayi Ve Ticaret A.S.(“PE”), Turkey, of the shares   |
|              | of Polyplex Resins Sanayi Ve Ticaret A.S (PR), from   |
|              | Polyplex (Asia) Pte Ltd (PAPL). A project for         |
|              | investment in a PET Bottle grade resin line is        |
|              | underway at PR.                                       |
+--------------+-------------------------------------------------------+
| October’2012 | Board of Directors of PTL approved an Investment in   |
|              | an Offline Coater at PE, Turkey.                      |
+--------------+-------------------------------------------------------+
| January’2013 | Board of Directors approved the acquisition of the    |
|              | balance 19.76% from the minority shareholders of      |
|              | Polyplex (Americas) Inc.(PA), USA. Subsequently, PA   |
|              | has been merged with the manufacturing subsidiary     |
|              | PUL.                                                  |
+--------------+-------------------------------------------------------+
| F            | Board of Directors approved an Investment in setting  |
| ebruary’2013 | up a Trading and distribution company in Netherlands. |
+--------------+-------------------------------------------------------+

3.2 Shareholding structure

  The current shareholding structure of the Polyplex group is:

[]

Polyplex Corporation Ltd. (PCL)

  PCL, the parent company operating for over 25 years since 1988, is one
  of the major producers and distributor of plastic film in India
  selling in both the domestic and overseas markets. It has been listed
  for several years on Bombay Stock Exchange and other Exchanges in
  India. It’s paid up capital is INR 325.6 million (about Bt. 175
  million).

  PCL has the following production capacities as at 31^(st) March 2013:-

  Its direct and indirect shareholding in the Company aggregate to 51%
  of the latter’s paid up capital.

  Polyplex has also evolved an equitable policy for distribution of
  markets, for common businesses, between its Indian, Thailand, Turkey
  and US operations based on the several factors like product range,
  delivered cost to customer, supply lead times and preferential duty
  access. Based on the same, PTL would serve South East Asia, Asia
  Pacific, China, Australia & New Zealand. PCL would serve South Asia.
  Turkey will serve, Europe, Middle East, Africa and CIS/Russian markets
  and US would serve North America, and South America.

  The Polyplex group also has a policy on future investments in
  polyester film / related areas between the Company and its parent
  company. Investments in India/SAARC region would be decided and made
  by PCL and its other subsidiaries (excluding the Company) while
  investments In Thailand / ASEAN region as well as other countries
  would be in all likelihood be made by PTL or the subsidiaries in which
  the Company has a major stake. The above is subject to availability of
  Investible cash / ability to borrow debt by the existing / preferred
  Company as per the policy.

Polyplex (Asia) Pte. Ltd. (PAPL)

  PAPL was established as a 100% subsidiary of PCL in July, 2004 and is
  now a major shareholder of PTL holding 34.5% as on 31^(st) March 2013.
  The issued and paid up capital of PAPL as of March 31, 2013 stands at
  USD 1.13 million.

Polyplex (Singapore) Pte. Ltd. (PSPL)

  SPL was established as a 100% subsidiary of PTL in July 2004, as a
  wholly owned investment company. Subsequently, PSPL invested in
  Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Şirketi (PE),
  through Share capital injection as well as by extending subordinated
  loans, to set up a manufacturing factory in Turkey so as to serve the
  demand in European and other proximate markets.

  In September 2009, PSPL set up a trading company in China, Polyplex
  Trading (Shenzhen) Co Ltd (PTSL) by investing $ 400,000 as share
  capital.

  The issued and paid up capital of PSPL (including Preference Share
  Capital) as of March 31, 2013 stands at Euro 9.14 million.

Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Şirketi (PE)

  PSPL had incorporated a 100% owned subsidiary company, PE in Turkey
  for setting up a Greenfield polyester film plant to cater to the
  European and other proximate markets. The commercial operations
  started in December, 2005 with the start up of the first thin PET film
  line. The first Metallizer plant started production in March, 2006.
  The PET resin plant commenced commercial production from December,
  2006. The second thin PET film line and Metallized Film line commenced
  commercial production in May 2008.The issued and paid up capital of
  PE, including Additional Contribution from PSPL, as of March 31, 2013
  stands at Euro 8.83 million.

  Polyplex (Americas) Inc.

  PTL acquired 80.24% equity stake in Spectrum Marketing Inc. (renamed
  as Polyplex (Americas) Inc) (PA) with effect from January 1, 2006 to
  enhance its distribution network in the North American market. PCL,
  PTL’s parent company also had a 9.88% stake while the balance 9.88%
  was held by a foreign US-based shareholder. In January 2013, PTL
  acquired the minority stake from the shareholders to make PA its 100%
  subsidiary. Post this acquisition, PA was merged with Polyplex USA LLC
  w.e.f 31^(st) January, 2013.

  Polyplex Trading (Shenzhen) Co. Ltd (PTSL)

  In the financial year 2009-10, PTL invested in the setting up of a
  wholly owned Trading Company in Shenzhen, China, through its 100% held
  Investment Company in Singapore, PSPL. The decision to invest in the
  setting up of the Trading Company in China was a strategic initiative
  to establish the Company’s presence in China, which is one of the
  largest and the fastest growing market in this industry. The issued
  and paid up capital of PTSL as at 31^(st) March 2013 is USD 0.4
  million.

  Polyplex Americas Holding Inc (PAH).

  In FY 2011-12, PTL invested in setting up a 100% investment holding
  company in USA. PAH has further invested in Polyplex (USA) LLC, a
  manufacturing facility, under whicha PET Thin Film line project has
  just been commissioned in April 2013 and a project for manufacture of
  PET Resin line is still underway. The issued and paid up capital of
  PAH (including the Additional Paid-In Capital) as on 31^(st)
  March’2013 is USD 29.62 million.

  Polyplex USA LLC (PUL)

  Polyplex USA LLC was established in FY 2011-12 as a 100% subsidiary of
  PAH. The thin PET film line along with the PET Resins plant project is
  being set up under this company in Decatur, Alabama. This project is
  the first manufacturing base of Polyplex in USA. The members’
  contribution which represents the paid up capital as on 31^(st)
  March’13 is USD 29.5 million.

  Polyplex Resins Sanayi Ve Ticaret A.S (PR)

  Polyplex Resins Sanayi Ve Ticaret A.S (PR) was incorporated in Turkey,
  in December 2011, as a 100% subsidiary of PAPL. In October 2012, PE
  acquired 67% stake in PR from PAPL. The PET Bottle Grade Resin line,
  the first line in the Polyplex group, is under implementation at PR.
  The Paid up Capital of PR as at 31st March, 2013 is Turkish Lira 20.2
  million.

3.3 Revenue structure of the Company

  PTL’s standalone and consolidated sales value classified by regions is
  shown below:

Note:

1) Sale of chips includes both domestic and export sales.

2) Includes Exchange gain, miscellaneous sales, Export Incentive,
interest received, etc.

  []

3.4 Business Goal

  The vision of Polyplex is to continuously grow, create value and
  establish global leadership in the plastic film business through
  building trusted partnerships with Investors, Customers and Employees.
  Keeping this vision in mind, Polyplex has been moving towards
  establishing itself as a Preferred packaging substrate provider as
  against just a PET thin film supplier, by undertaking expansions for
  manufacturing BOPP film and CPP film, which are other Packaging
  substrates used by Converters, in addition to PET thin film. The Thick
  PET film line in Thailand which will start commercial production in
  2013 is Polyplex’s first step into the Thick Film segment which would
  help in diversifying its product and customer portfolio. The second
  Extrusion coating line and the Blown PP line projects in Thailand
  would help in diversifying its product portfolio further.

  The business goal is to increase market share in various regional
  markets - through geographically diversified manufacturing presence,
  increased market penetration in key markets and build a diversified
  portfolio of products like Metallized films, Clear films, Thermal
  Lamination films, Silicone Coated film, Chemically Coated films, and
  other grades of packaging films like CPP, BOPP etc. The new Thin PET
  film line which has recently started in USA in Q1 2013-14, will help
  the company to increase its market share in American continent by
  moving closer to the customers and becoming a preferred on-shore
  supplier as against an off-shore or near-shore supplier in the past.

3.5 Promotion certificate

  PTL has been granted nine BOI promotion certificates, details of which
  are as below: ­

  By virtue of the provisions of the Board of Investment Promotion Act
  B.E. 2520, the Company has been granted certain standard promotional
  privileges on the manufacturing and distributing the polyester
  film/resin/Thermal Lamination film/CPP film/ Silicone Coated/Blown PP
  film as per the following sections: 25, 26, 27, 28, 31, 34, 35(1),
  35(2), 35(3), 36(1), 36(2) and 37 respectively. The Company must
  comply with certain conditions and restrictions provided for in the
  promotion certificate. Details of the privileges of each of the above
  sections are available at www.boi.go.th