3. Business Overview

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, 2002 with an initial registered capital
  of Bt. 400,000 to manufacture and distribute PET film (polyethylene
  terephthalate film or polyester film). The registered capital of the
  Company was subsequently increased to Bt. 400 million in April/May,
  2002. In August 2004, the Company was transformed into a Public
  Company 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 20
  years. As on date, PCL has 70% stake in the Company through both
  direct and indirect shareholding and the balance 30% is with the
  general public.

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

+--------------+-------------------------------------------------------+
| March-April  | PTL was promoted by PCL, which is a listed company    |
| 2002         | (on the Bombay Stock Exchange as also National Stock  |
|              | Exchange) in India. PCL took up 100% of the Company’s |
|              | registered capital of Bt. 400,000,000, divided into   |
|              | 8,000,000 ordinary shares at a par value of Bt. 10    |
|              | per share and 32,000,000 preference shares at a par   |
|              | value of Bt. 10 per share. 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.          |
+--------------+-------------------------------------------------------+
| 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.             |
+--------------+-------------------------------------------------------+
| Marc         | The shareholders’ meeting resolved for increase of    |
| h/April-2003 | registered capital by another Bt. 260 million through |
|              | issuance of 20,800,000 preference shares at a par     |
|              | value of Bt. 10 per share and 5,200,000 ordinary      |
|              | shares at a par value of Bt. 10 per share to the      |
|              | existing shareholders                                 |
+--------------+-------------------------------------------------------+
| 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  |
|              |     expanded to 19,500 tons per year).                |
|              |                                                       |
|              | -   PET resin with an approved production capacity of |
|              |     26,250 tons per year                              |
+--------------+-------------------------------------------------------+
| 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.                                    |
+--------------+-------------------------------------------------------+
| December 13, | The Company attained ISO 9001:2000 certification on   |
| 2003         | quality management system.                            |
+--------------+-------------------------------------------------------+
| May 31, 2004 | The Company attained ISO 14001:1996 certification on  |
|              | environmental management system.                      |
+--------------+-------------------------------------------------------+
| May to       | The company received approval from the BOI for a      |
| July-2004    | restatement of the installed capacity of both its     |
|              | film production lines from 15,000 tons to 19500 tons  |
|              | each per year. The company also applied to the BOI    |
|              | for further increase in the production capacity of    |
|              | both the film lines to 24,000 tons per year each      |
|              | given the significant productivity improvements and   |
|              | additional equipment commissioned by the company.     |
+--------------+-------------------------------------------------------+
| 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 with an |
| 2004         | annual production capacity of 7,000 MT per annum.     |
|              |                                                       |
| September 2, | The shareholders’ meeting resolved for decrease of    |
| 2004         | registered capital as under:                          |
|              |                                                       |
|              | -   Redemption of the entire 105.6 million preference |
|              |     shares worth Bt. 528 million, currently held by   |
|              |     PCL, by a capital reduction process.              |
|              |                                                       |
|              | -   Cancellation of the unissued ordinary shares of   |
|              |     Bt. 240 million, comprising of 48 million shares, |
|              |     which were to be subscribed by PAPL.              |
|              |                                                       |
|              | The combined reduction as above would make the total  |
|              | registered capital Bt. 960 million of which Bt. 560   |
|              | million is paid-up.                                   |
|              |                                                       |
|              | The shareholders’ meeting also resolved to reduce the |
|              | par value of the shares from Bt. 5 per share to Bt. 1 |
|              | per share to be registered along with the capital     |
|              | reduction.                                            |
+--------------+-------------------------------------------------------+
| November 15  | - Reduced the 105.6 million preference shares worth   |
| -16, 2004    | Bt. 528 million , currently held by PCL, by a capital |
|              | reduction process. The reduction make the registered  |
|              | capital Bt. 960 of which Bt. 560 is paid-up capital.  |
|              |                                                       |
|              | - Changed the par value to Bt. 1 per share            |
+--------------+-------------------------------------------------------+
| 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 with a production   |
| 2005         | capacity of 45,500 MT per annum.                      |
+--------------+-------------------------------------------------------+
| April 19,    | The company received approval from the BOI for a      |
| 2005 &       | restatement of the installed capacity of both its     |
|              | film production lines from 19,500 tons to 24,000 tons |
| April 22,    | each per year as also for its Chips plant from 26,250 |
| 2005         | tons to 52,500 tons per year                          |
+--------------+-------------------------------------------------------+
| August, 2005 | Start up of Metallizer Line 1 in Thailand with an     |
|              | attainable annual capacity of 4,800 MT per annum.     |
+--------------+-------------------------------------------------------+
| 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 45,500 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            | Start up of Trial run of Extrusion Coating Plant      |
| ovember,2007 |                                                       |
+--------------+-------------------------------------------------------+
| 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 Thin PET |
|              | Film line and the Metallised Film line in Turkey and  |
|              | also the Metallised Film line in Thailand.            |
+--------------+-------------------------------------------------------+
| July,2008    | The OHSAS (Occupational Health and Safety Management  |
|              | Systems) 18001:2007 certification was received for    |
|              | all the product lines                                 |
+--------------+-------------------------------------------------------+
| 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.                        |
+--------------+-------------------------------------------------------+
| F            | Board of Directors of PTL approved an Investment for  |
| ebruary,2009 | setting up a Trading company in China.                |
+--------------+-------------------------------------------------------+
| May,2009     | Board of Directors of PTL approved an Investment in a |
|              | Silicone Coating line. Location to be either Thailand |
|              | or Turkey, and will be finalized in the next 2-3      |
|              | months                                                |
+--------------+-------------------------------------------------------+

3.2 Shareholding structure

  The current shareholding structure of the Polyplex group is:

* Trading Company in China – under formation

Polyplex Corporation Ltd. (PCL)

  PCL, the parent company operating for over 20 years since 1988, is a
  major producer and distributor of PET 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. Its
  issued capital is INR 165.70 million (about Bt. 120 million).

  PCL has the following production capacities:-

  ---------------------- -------- -----------------------------------------
  Product                MT p.a   Remarks

  Polyester Film         20,000   Existing capacity

  Polyester Chips        20,000   Existing capacity

  Metallized Film        4,800    Existing capacity

  Polyester Film         31,000   Under implementation-Expected :H2 2009-10

  Polyester Chips        57,600   Under implementation-Expected :H2 2009-10

  Metallized Film        7,000    Under implementation-Expected :H2 2009-10

  BOPP Film line         35,000   Under implementation-Expected :H2 2009-10

  BOPP Metallized Film   4,500    Under implementation-Expected :H2 2009-10
  ---------------------- -------- -----------------------------------------

  Its direct and indirect shareholding in the Company aggregate to 70%
  of the latter’s paid up capital.

  Polyplex has also evolved an equitable policy for distribution of
  markets between its Indian, Thailand and Turkey 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 North America, South East Asia, Asia Pacific, China,
  Australia & New Zealand. PCL would serve South Asia, and South
  America. Turkey will serve, Europe, Middle East, Africa and
  CIS/Russian markets

For the future investment policy, Polyplex group has clear investment
policy between the Company and its parent company. Investments in India
and South Asia will be implemented by PCL and/or its subsidiaries
(except for the Company) while those in Thailand and ASEAN including
other areas will be carried out by the Company and/or its subsidiaries.
In line with this Investment policy, the Investment to set up a Trading
Company in China is being made from PTL, through its 100% held Singapore
Investment Company PSPL.

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. PAPL was incorporated as an investment
  vehicle of PCL for its overseas investments (including PTL). The
  issued and paid up capital of PAPL as of March 31, 2009 stands at USD
  1.59 million.

Polyplex (Singapore) Pte. Ltd. (PSPL)

  s Thailand and Turkey did not have an effective Double Taxation
  Avoidance Agreement (DTAA), PTL decided to set up its wholly owned
  investment holding company in Singapore to invest in the PET film
  manufacturing factory in Turkey so as to serve the demand in European
  and other proximate markets. During the financial year 2008-09, PTL
  has invested USD 3.5 million in the Preference Shares of PSPL. The
  issued and paid up capital of PSPL as of March 31, 2009 stands at Euro
  44.85 million.

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

  PSPL had incorporated a 100% owned subsidiary company, PE in Turkey
  for operation of Greenfield polyester film plant for export to
  European and other proximate markets. The commercial operations had
  started in December, 2005 with the start up of the first thin PET film
  line. The first Metallizer plant had 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’08.The issued and paid up
  capital of PE as of March 31, 2009 stands at Euro 4.04 million.

  Polyplex (Americas) Inc.

  PTL had acquired 80.24% equity stake in Spectrum Marketing Inc. (since
  renamed as Polyplex (Americas) Inc) with effect from January 1, 2006
  to enhance its distribution network in the North American market. PCL,
  PTL’s parent company also has a 9.88% stake while the balance 9.88% is
  held by a foreign US-based shareholder. During the financial year
  2008-09, PTL invested USD 4 million in PA’s Redeemable Preference
  Shares, in order to finance PA’s working capital requirement. The
  issued and paid up capital of PA as of March 31, 2009 stands at USD
  5.425 million.

3.3 Revenue structure of the Company

  PTL operates only in the thin film segment focusing on the Packaging,
  Industrial and Electrical segments. PTL’s standalone and consolidated
  sales value classified by country group is shown below:

  --------------- ---------- --------- ---------- --------- ---------- -----------
  CONSOLIDATED    2006-07              2007-08              2008-09    

  Customers       Bt.        %         Bt.        %         Bt.        %
                  million              million              million    

  Exports                                                              

  Asia            1,037.78   21.58     1,053.61   16.18     1,409.09   19.95

  North America   462.21     9.61      369.12     5.67      574.82     8.14

  Europe          1,506.22   31.32     1,905.27   29.26     1,845.54   26.13

  Others          451.89     9.40      542.67     8.33      645.32     9.14

  Total exports   3,458.10   71.91     3,870.67   59.44     4,474.76   63.36

  Domestic sales  1,193.18   24.81     1,438.01   22.08     2,182.39   30.90

  Sale of         67.29      1.40      1,090.00   16.74     202.59     2.87
  chips/others¹                                                        

  Other revenues  90.26      1.88      113.33     1.74      203.09     2.88
  ²                                                                    

  Grand total     4,808.83   100.00    6,512.01   100.00    7,062.83   100.00
  --------------- ---------- --------- ---------- --------- ---------- -----------

Notes. .

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 business goal is to increase market share in various regional
  markets - through geographically diversified manufacturing presence,
  increased market penetration in key customers and build a diversified
  portfolio of products like Metallized films, Clear films, Extrusion
  coated films, Silicone Coated film, Chemically Coated films, and other
  grades of packaging films like CPP, BOPP etc.

3.5 Promotion certificate

  PTL has been granted six BOI promotion certificates, the salient
  points 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/Extrusion coated film/CPP 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 shown at
  www.boi.go.th