Part 3

13. Financial Position and Operational performance

    1.  Financial statements

  Auditor

+---------------------+------------------+-------+---------------------+
| Year                | Name of auditor  | CPA   | Auditing firm       |
|                     |                  | no.   |                     |
+---------------------+------------------+-------+---------------------+
| 2015/16 ( April 1,  | Mr. Chayapon     | 3972  | EY Office Limited   |
| 2014-Mar 31,2016)   | Supasethnon      |       |                     |
+---------------------+------------------+-------+---------------------+
| 2014/15 ( April 1,  | Mr. Termphong    | 4501  | EY Office Limited   |
| 2014-Mar 31,2015)   | Opanaphan        |       |                     |
+---------------------+------------------+-------+---------------------+
| 2013/14 ( April 1,  | Mr. Termphong    | 4501  | EY Office Limited   |
| 2013-Mar 31,2014)   | Opanaphan        |       |                     |
+---------------------+------------------+-------+---------------------+
| 2012/13 ( April 1,  | Mr. Termphong    | 4501  | Ernst & Young       |
| 2012-Mar 31,2013)   | Opanaphan        |       | Office Limited      |
+---------------------+------------------+-------+---------------------+
| 2011/12             | Mr.Narong        | 3315  | Ernst & Young       |
|                     | Puntawong        |       | Office Limited      |
| (April 1, 2011-Mar  |                  |       |                     |
| 31.2012)            |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 2010/11             | Mr.Narong        | 3315  | Ernst & Young       |
|                     | Puntawong        |       | Office Limited      |
| (April 1, 2010-Mar  |                  |       |                     |
| 31.2011)            |                  |       |                     |
+---------------------+------------------+-------+---------------------+

  Auditor’s report

  For all the past years, including the year ended on March 31^(st)
  2016, the Auditors have given an unqualified opinion that the
  financial statements were fairly presented and prepared in accordance
  with generally accepted accounting principles.

  The financial statements of last 3 years, for both Consolidated and
  Standalone, latest being the year ended on 31^(st) March 2016 have
  been given for the purpose of comparison and for the appreciation of
  the change in revenues and profitability over the years.

­[]

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[]

[]

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14. Management Discussion and Analysis of operational performance and
    financial status

    1.  Operational performance

­

PTL, a subsidiary of PCL, was incorporated on March 26, 2002 to engage
in the production and distribution of PET film (Polyethylene
Terephthalate Film or Polyester Film) mainly for export markets focusing
on packaging, industrial and electrical segments. The Company commenced
operations from its first production line in April, 2003. Since then,
the Company has expanded its operations significantly, both within and
outside Thailand. In Thailand, the Company has invested in Extrusion
Coating lines, Cast Polyproplene line, Silicone Coating line, Thick PET
film line, Blown PP line and few Metallizers. Apart from this the
Company has also set up manufacturing subsidiaries in Turkey (2005) and
in USA (2012), trading companies in Europe and China, Liaison offices in
Malaysia and Korea.

All our operational product lines in Thailand have the following
certifications:

-   ISO 14001:2004 certification on Environment Management system

-   ISO 9001:2008 certification on Quality Management system

-   OHSAS 18001:2007 certification on Occupational Health and Safety
    Management system

-   ISO 22000:2005 certification on Food Safety standards

-   TPM Excellence Award (Category A)

All our product lines in Turkey have the following certifications:

-   ISO 14001:2004 certification on Environment Management system

-   ISO 9001:2008 certification on Quality Management system

-   OHSAS 18001:2007 certification on Occupational Health and Safety
    Management system

-   BRC/IoP – certification on Global Standard For Packaging and
    Packaging Materials (For Plain and Metallized Film lines)

-   ISO 50001:2011 certification on Energy Management system

Polyplex group aims to become one of the world market leaders in plastic
film industry by continuously expanding its market share through regular
expansions in capacity and diversification in its product portfolio. The
Thin PET film line in US and the Thick PET Film line in Thailand, which
started in 2013 have added 31,000 MT and 28,800 MT per annum in the
Company’s combined PET film capacity. By venturing into the manufacture
of related products such as BOPP film (In India) and CPP films (In
Thailand), which are other Packaging substrates, used by Converters, in
addition to PET film, Polyplex aims to become a preferred packaging
substrate provider as against just a PET thin film supplier. Apart from
this, in order to further diversify its product range, the group has
regularly been expanding into other products such as Silicone coated
film (In India – 2007, Thailand - 2012), Extrusion coated films (In
Thailand – first line in 2008 and second line in 2013), Blown PP film
(in Thailand in 2013) and Metallized films. The recycling project in
Thailand has been set up to find sustainable solution for film based
process waste.

Polyplex group has set out clear business strategies:

1) Focus on product development and technical services to penetrate high
growth and high margin markets,

2) Optimal Cost of Production

3) Boosting delivery efficiency through focus on distributed
manufacturing and logistics

4) Diversifying the product portfolio to minimize the risk of cyclical
impact of the PET film industry, to increase stability of Earnings

5) Continuous effort to improve the share of value added and specialty
products in the product portfolio.

6) Endeavor to attain Customer satisfaction through supply of consistent
quality products

7) Judicious mix of On-shore, Off-shore and Near-shore strategy.

The excessive oversupply situation in the PET thin film industry which
started in 2012, still persists, thereby keeping the selling prices
under pressure. However, the growth in demand along with slowdown in
capacity additions is gradually narrowing the gap between demand and
supply. Although there has been an improvement in the overall
operational performance at Thailand, Turkey and in USA, , due to the
exceptional loss items of Asset Impairment loss and Deferred tax asset
reversal loss at the US subsidiary, there is a reported net loss for the
year on Consolidated basis. Apart from this, the exchange losses, due to
sharp depreciation of THB against Euro and USD, resulting in exchange
losses on restatement of the Euro and USD loans at Thailand and Euro
loans at the US subsidiary have also contributed to the losses reported
for the year.

The highlights of the year’s performance are as follows:

TOTAL REVENUES

Consolidated:

Sales Revenue:

Consolidated Sales revenue of the company has increased from Baht
11,912.73 million to 12,233.25 million, an increase of Baht 320.53
million or 2.69%. Increase in revenues is mainly on account of increase
in sales volumes (Better utilization of new capacities added in USA and
Thailand), partly offset by decrease in selling prices due to drop in
the key input costs.

Table illustrating consolidated sales revenue from Exports and Domestic
sales is as below:

  -------------- ----------- -------- ----------- -------- ----------- --------
                 2013-14              2014-15              2015-16     

  Market         Bt. million %        Bt. million %        Bt. Million %

  Exports        7,406.35    69.20    7,690.47    64.56    7,996.29    65.37

  Domestic sales 3,296.19    30.80    4,222.26    35.44    4,236.96    34.63

  Total          10,702.53   100.00   11,912.73   100.00   12,233.25   100.00
  -------------- ----------- -------- ----------- -------- ----------- --------

Note: Sales made by the distribution company in the Netherlands/ China
has been considered as Exports.

The historic trend of value additions [VA = Selling price – Raw Material
Cost] for PTL and PE are shown below. During the current year, value
additions (For plain Thin PET) have improved at Turkey due to the drop
in key raw material prices, as the European markets are usually less
price sensitive as compared to the Asian markets.

[]

[]

Other Income:

The other income has decreased from Baht 90.70 million in the previous
year to Baht 80.92 million. There is an increase in other income at
Thailand (higher export incentive and misc. sales), partly offset by
decrease in other income at the subsidiaries.

We have an exchange loss this year as against an exchange gain of Baht
480.17 million in the previous year.

The net impact of all the above factors have contributed to an overall
decrease in total consolidated revenue by Baht 169.42 million or 1.36%
to Baht 12,314.18 million.

Standalone:

Sales Revenue:

The Company’s total sales revenue is mainly driven by Exports, with
75-80% of its total sales revenue coming from exports.

Table illustrating the Company’s sales revenue from export and domestic
sales is below:

  -------------- ----------- -------- ----------- -------- ---------- --------
                 2013-14              2014-15              2015-16    

  Market         Bt. million %        Bt. million %        Bt.        %
                                                           Million    

  Exports        3,521.19    77.95    4,248.43    81.83    4,498.67   83.23

  Domestic sales 996.33      22.05    943.49      18.17    906.20     16.77

  Total          4,517.51    100.00   5,191.92    100.00   5,404.87   100.00
  -------------- ----------- -------- ----------- -------- ---------- --------

On a standalone basis, the Company recorded sales of Baht 5,404.87
million, an increase of Baht 212.95 million or 4.10%, due to higher
volumes, mainly from Thick film line, partly offset by lower volumes in
Thermal Lamination and CPP businesses and also the drop in the selling
prices, in line with the lower raw material prices.

Other Income:

The other income has increased from Baht 64 million to Baht 74.01
million due to higher income from miscellaneous sales and higher export
incentive income (increase in export sales).

There is an exchange loss this year of Baht 249.18 million as against an
exchange gain of Baht 230.44 million in the previous year.

The net impact of all the above factors have contributed to an overall
net decrease in total revenues by Baht 7.48 million or 0.14%.

TOTAL EXPENSES

Consolidated

The key elements of the Company’s cost structure are raw materials,
packing, electricity & fuel, depreciation, staff cost, selling &
administrative expenses and finance costs.

The company recorded total consolidated expenses (cost of sales, selling
and administrative expenses, exchange losses and Impairment loss) of
Baht 11,944.78 million being an increase over previous year by Baht
85.67 million or 0.72%.

There is a decrease in cost of sales by Baht 441.58 million due to
reduction in raw material prices, partly offset by higher sale volumes.
Cost of sales includes mainly the raw material costs, packing costs,
utilities, depreciation on building and machinery, staff costs etc.

A broad break up of COS is given below:

  ---------------------------------------------- --------- --------- ---------
  Description                                    2013-14   2014-15   2015-16

  Raw materials and consumables used             74.9%     74.6%     74.4%
  (incl.change in inventory)                                         

  Depreciation ( in COS)                         6.1%      6.9%      7.6%

  Salaries, wages and other employee benefits    7.6%      7.9%      8.4%
  (in COS)                                                           

  Utilities (Power/Natural Gas/ Chilled water    8.0%      8.1%      7.8%
  etc)                                                               

  Others                                         3.4%      2.5%      1.7%

                                                 100.0%    100.0%    100.00%
  ---------------------------------------------- --------- --------- ---------

The administrative have been lower by Baht 59.75 million mainly due
lower administrative costs at Thailand (as explained below under
Standalone) and at the subsidiaries, due to cost reduction initiatives.
Also, previous year included legal and other expenses incurred at the
Turkey subsidiary in relation to the disposal of the investment in
Polyplex resins.

The selling expenses have increased by Baht 99.58 million due to higher
selling expenses at Thailand and the subsidiaries (increase in sales
volumes).

There is an exchange loss of Baht 313.24 million this year as against an
exchange gain of Baht 480.17 million in the previous year. The main
reason for the exchange losses is the losses on the restatement of USD
and Euro loans at Thailand due to the sharp depreciation of THB against
both these currencies and also losses on the restatement of the Euro
loans at the US subsidiary due to depreciation of the USD against Euro.

During the year, Polyplex USA LLC, the company’s subsidiary in USA,
provided for an impairment loss of Baht 351.19 million, which has been
shown as “Impairment loss on property, plant and equipment”. The
carrying value of the assets has been determined based on the discounted
free cash flow method, in line with the relevant accounting standard.

As a % to total revenue, total expenses have increased from 95% to 97%
due to increase in total expenses (including the Exchange loss and
Impairment loss) and also due to reduction in total revenues (due to
forex loss this year as compared to forex gain in previous year).

The consolidated finance costs during the year were Baht 226.40 million,
an increase of Baht 3.62 million or 1.62% over previous year, which is
due to higher working capital interest at the US subsidiary and also
higher exchange rate (USD/THB) for conversion of subsidiary income
statement into Baht for the purpose of consolidation.

The Consolidated Corporate Income tax expense in this year is Baht
262.81 million as compared to Baht 6.60 million in the previous year.
The increase is due to the reversal of Deferred Tax Asset (DTA) created
in the US Subsidiary in the past, and also, there is a tax expense
provision at some of the subsidiaries. This tax expense is partly offset
by the tax income from additional DTA created at Thailand on the losses
made during the year.

Standalone

The total expenses for the company standalone is Baht 5,708.42 million
being an increase over previous year by Baht 277.62 million or 5.11%.
The increase is mainly on account of the forex loss and the impairment
loss.

There is a reduction in cost of sales by Baht 203.81 million due to
lower raw material prices, partly offset by higher volumes.

A broad breakup of the COS is given below:

  ---------------------------------------------- --------- --------- ---------
  Description                                    2013-14   2014-15   2015-16

  Raw materials and consumables (incl.change in  75.1%     71.8%     72.0%
  all inventory)                                                     

  Depreciation ( in COS)                         6.4%      7.4%      7.9%

  Salaries, wages and other employee benefits    8.5%      8.7%      8.3%
  (in COS)                                                           

  Utilities (Power/Natural Gas/ Chilled water    8.7%      10.0%     9.6%
  etc)                                                               

  Others                                         1.3%      2.1%      2.3%

                                                 100.0%    100.0%    100.0%
  ---------------------------------------------- --------- --------- ---------

Admin expenses have been lower than previous year by Baht 28.52 million
or 25.36% due to lower professional fees (Previous year had higher
professional fees paid to various market and business development
consultants engaged for ramp up of the new projects) and due to lower
consequential customer claims paid this year as compared to provisions
made in previous year.

The selling expenses have been higher by Baht 14.48 million or 4.36% due
to increase in sales volumes, higher ocean freight (USA/Europe), higher
commission and foreign travelling expenses etc.

Due to the impairment of the manufacturing assets of Polyplex USA LLC,
the Company, in line with the relevant Accounting standard; has set
aside a provision of Baht 246. 28 million, for diminution in the value
of its investment held in Polyplex America Holdings Inc.

There is an exchange loss this year of Baht 249.18 million as against an
exchange gain of Baht 230.44 million in previous year. This is mainly on
account of the forex loan restatements, as explained above.

As a % to total revenue, total expenses have increased from 98.99% to
104.19% due to higher expenses (Impairment loss and exchange loss this
year as compared to exchange gain of previous year) and also due to
lower revenues.

The finance costs on a standalone basis during the year were Baht 129.22
million, an increase of Baht 2.85 million or 2.25% over previous year.
The key reason for this increase is higher interest on working capital
borrowings and related party borrowings, partly offset by lower term
debt interest due to lower rates (Euribor) and repayments made during
the year.

There is a corporate tax income of Baht 26.80 million as compared to the
tax expense of Baht 32.43 million in the previous year. The tax income
in this year is on account of additional DTA of Baht 38.1 million
created on the losses made during the year. This is partly offset by a
tax expense provision of Baht 11.7 million due in relation to a past
year, on account of a revision in the methodology of offset of BOI and
Non-BOI losses, to be in line with the standard treatment adopted by the
Revenue Department. The earlier treatment adopted by the Company was in
line with the Company’s interpretation of the relevant regulation in the
Board of Investment Act.

Profit margins – Gross Profit, Operating Profit and Net profit ratios

The gross margin and operating margin have improved compared to previous
year due to the overall improvement in operational performance and lower
losses from the newer projects due to ramp up of capacity utilization.
But the net margin has dropped due to the exceptional losses and also
the forex losses this year, as compared to forex gains last year.

1.  Financial status

Due to the sharp depreciation of THB against Euro and USD in this year
compared to previous year, the translation of the Company’s subsidiaries
whose reporting currency is Euro and USD, has been at a significantly
higher exchange rate, thereby resulting in translation gains (Euro/THB
at 39.89955 and USD/THB at 35.23915 at 31, March 2016 as compared to
35.2178 and 32.5551 at 31, March 2015).

TOTAL ASSETS

As on 31^(st) March 2016, The Company’s consolidated total assets were
Baht 15,631 million, lower by 3.42% as compared to Baht 16,166 million
in the previous year.

On a Standalone basis, the total assets as on 31^(st) March 2016 were
Baht 8,054 million, lower by about 5.08% as compared to Baht 8,463
million of previous year.

The main components of Total Assets are Current assets, Fixed assets,
Investments and other non-current assets. A brief summary of the
movement in the various components of total assets is given below:

Current assets

-   Trade and other receivables have increased, mainly due to additional
    volumes partly offset by lower average sales realization. The
    increase in consolidated is also due to the currency translation
    impact explained above.

-   Inventories on a consolidated basis have reduced, despite the impact
    of higher exchange rate for translation, mainly due to lower
    inventory levels at Thailand and Turkey, partly offset by higher
    inventory at USA. The inventory carrying costs have been lower due
    to reduction in input costs.

-   Increase in Cash and cash equivalent on consolidated basis is due to
    higher cash at Turkey subsidiary due to cash profits generated
    during the year, partly offset by inter-company loans given to
    Thailand entity and lower cash balance at the US subsidiary.

-   Reduction in current investments is due to withdrawal of investments
    at the subsidiary in Thailand – Ecoblue Limited, for operational
    purposes.

-   Other changes in current assets - Reduction in VAT refund receivable
    at Thailand compared to previous year end.

Non-current assets:

-   The restricted bank deposit represents bank deposits pledged with
    the bank, as per terms of the term loan facility of the US
    subsidiary. The increase is on account of higher exchange rate for
    translation.

-   Property Plant & Equipment (net block) have decreased by Bt 436.98
    million, mainly due to the depreciation charged during the period,
    partly offset by normal capex additions. There is a decrease in
    Standalone also by Baht 358.96 million, due to the depreciation
    charged during the period partly offset by normal capex additions.

-   There is a decrease in the Deferred Tax asset on consolidated basis
    due to reversal of DTA created at the US subsidiary, partly offset
    by higher DTA at Thailand on the losses made during the current
    year.

-   Reduction in intangible assets is due to impairment of goodwill

Return on assets

On a consolidated basis, the return on assets is a negative return of
0.78% as compared to a return of 2.17% % during previous year. On a
standalone basis, there is a negative return on assets of 4.02% mainly
due to the net losses reported during the year.

1.  Liquidity

Cash flow

Consolidated

-   For the year 2015-16, the Company and its subsidiaries generated
    cash of Baht 1,547.3 million in operating activities as per details
    below:

    -   Cash generated from operating activities (before changes in
        operating assets and liabilities) was Baht 1,757.9 million.

    -   The impact of changes in working capital ( Outflow of Baht 210.5
        million) is as under:

        -   Increase in Accounts Receivable by Baht 156.4 million due to
            higher sales revenues due to higher volumes, partly offset
            by lower average selling prices.

        -   Decrease in Accounts Payable by Baht 219.3 million mainly
            due to lower raw material prices

        -   Payment of long term employee benefits – Baht 5.9 million

        -   Cash paid for income tax – Baht 33.3 million

        -   Decrease in Inventories by Baht 40.4 million.

        -   Decrease in other current/ non-current assets by Baht 89.4
            million ( Reduction in VAT refund receivable / others
            advances to vendors)

        -   Increase in other current liabilities by Baht 74.6 million

-   Net cash used in investing activities is Baht 117.8 million as per
    details below:

    -   Net additions to fixed assets – Baht 103.5 million.

    -   Baht 2.5 million increase in the restricted bank deposit.(Amount
        set aside for servicing the loan repayment and interest payment,
        as part of the Loan covenants of the US subsidiary’s term loan
        for the PET film line project)

    -   Increase in Intangible assets – Bt 0.2 million

    -   Decrease in Advance and Accounts payable for fixed assets by
        Baht 14.1 million

    -   Baht 2.5 million was withdrawn from current investments

-   The net cash outflow from financing activities of Baht 1,682.8
    million:

    -   Repayment of Short term loan for WC financing – Baht 84 million

    -   Repayment of Long term loans from banks - Baht 1,248.7 million

    -   Dividend paid during the year – Baht 80 million

    -   Cash paid for interest on term loans and short term loans – Baht
        270.1 million

The deficit thereof, offset with translation adjustment gain of Baht
365.4 million, and opening balance of Baht 964.4million has resulted in
a net closing balance of Baht 1,076.4 million.

Standalone

-   During the year 2015-16, the Company, on a standalone basis,
    generated net cash from operating activities of Baht 735.3 million
    as per details below:

    -   Cash generated from operating activities (before changes in
        operating assets and liabilities) was Baht 680.5 million.

    -   The impact of changes in working capital (Inflow of Baht 54.8
        million) is as under:

        -   Decrease in Accounts Receivable by Baht 22.1 million due to
            lower selling prices.

        -   Decrease in Inventories by Baht 45.2 million to lower levels
            of inventory as well as lower carrying costs

        -   Decrease in other current/ non-current assets by Baht 21.7
            million ( Reduction in VAT refund receivable / others
            advances to vendors)

        -   Payment of long term employee benefits – Baht 4.8 million

        -   Decrease in Accounts Payable by Baht 15 million due to lower
            raw material prices

        -   Decrease in other current liabilities by Baht 14.4 million

-   Net cash used in investing activities is Baht 308.9 million as per
    details below:

    -   Equity Investment in Polyplex America Holdings Inc– Baht 247.9
        million (Equivalent to USD 7 million), to support their term
        loan prepayment of instalments falling due in FY 2016-17

    -   Net additions to fixed assets– Baht 40.8 million (Normal
        maintenance CAPEX).

    -   Decrease in Advance and Accounts payable for fixed assets by
        Baht 21.8 million

    -   Proceeds from sale of investment in subsidiary – Ecoblue Limited
        – Bt 1.6 million

-   The net cash outflow from financing activities of Baht 441.5
    million, given below, has been used partly to finance the above
    outflow on account of investing activities:

    -   Repayment of Short term loan for WC financing – Baht 44 million

    -   Repayment (including some prepayment) of Long term loans to
        banks – Baht 760 million

    -   Cash paid for interest on term loans and short term loans – Baht
        129.44 million

    -   Dividend paid during the year – Baht 80 million

    -   Drawdown of Loan from subsidiary (Polyplex Europa, Turkey) –
        Baht 572 million to prepay bank term loans falling due in FY
        2016-17

The deficit thereof, together with the opening balance of Baht 40.8
million resulted in a net closing balance of Baht 25.7 million.

Liquidity ratio

In 2015-16, consolidated current ratio was 1.20 and quick ratio was
0.73. The Company’s (standalone) current ratio was 0.47 and quick ratio
was 0.28. Consolidated average debt collection period during 2015-16 was
54 days along with Account payables period of 41 days and average
selling period of 8 days, resulting in a cash cycle of 21 days as
against a cash cycle of 28 days of previous year. The average debt
collection period of the Company (standalone) during 2015-16 was 71 days
along with Accounts payable period of 44 days and average selling period
of 3 days resulting in cash cycle of 30 days as against a cash cycle of
28 days in previous year.

1.  Sources of funds

Sources of funds consist of long term and short term loans from
financial institutions and shareholders’ equity.

TOTAL LIABILITIES

As on 31^(st) March, 2016, consolidated Total liabilities stood at Baht
7,428 million, a decrease of Baht 1,106 million as compared to previous
year. The major movements in Liabilities are as under:

Current Liabilities:

-   Reduction in short term borrowings despite the higher exchange rate
    for translation, is mainly due to lower O/S borrowings at Thailand,
    at the US subsidiary and Trading company at Turkey.

-   The decline in the current portion of term loans is due to
    prepayment of most of the term loans at Thailand and at the US
    subsidiary, which were falling due for repayment in FY 2016-17. The
    prepayments at Thailand were partly funded out of inter-co loan from
    the Turkey subsidiary - Polyplex Europa and the prepayment at the US
    subsidiary were funded partly out of additional Equity investment of
    USD 7 million by Polyplex Thailand in the US subsidiary in March
    2016.

-   The reduction in unrelated term loans is due to repayments
    (including prepayments) of loans at Thailand and USA. Increase in
    Related party loan at Thailand is due to additional borrowings from
    the Turkey subsidiary to prepay the bank term loans falling due for
    repayment in FY 2016-17.

-   Decrease in trade payables and other payables are mainly on account
    of lower trade payables for raw material suppliers, due to lower raw
    material prices.

-   Other current liabilities on a consolidated basis are higher due to
    higher expense provisions at the Turkey and US subsidiary and also
    due to higher exchange rate for translation. This is partly offset
    by lower other current liabilities at Thailand.

Major changes in Shareholder Equity:

-   The retained earnings on consolidated basis have reduced by Baht
    203.70 million and on Standalone basis have reduced by Baht 411.95
    million due to the losses made during the year and the dividend
    appropriation of Baht 80 million.

-   The significant increase in other components of equity is mainly due
    to exchange translation gain arising on account of translation of
    the balance sheet of the subsidiaries due to sharp depreciation of
    THB against USD and Euro, as compared to exchange rate prevailing at
    previous year end.

-   The increase in Non-controlling interests of subsidiaries is due to
    profits generated during the year and also the increase on account
    of dilution of 6% interest in the subsidiary.

Return on equity

The Return on Equity on Consolidated basis is negative 1.56% and is
negative of 11.18% on Standalone basis as compared to 4.83% on
consolidated basis and 3.20% on Standalone basis in previous year.

The Company has a policy to pay dividend at 40% of consolidated net
profits, taking into account economic conditions, growth plans, future
deployment opportunities, the Company’s financial position and liquidity
and subject to the approval by the shareholders. For the year 2015-16,
due to the net losses reported by the Company and also keeping in mind
the necessity to conserve cash for any growth and investment
opportunities arising in future, the Board of Directors has proposed no
dividend and recommended for approval of shareholders in the Annual
General meeting in July 2016.

Leveraging & interest coverage ratio

The net debt equity ratio (debt only - short term and long term,
including current portion, after netting off cash & cash equivalents and
current investments) is 0.59 on a consolidated basis and 1.64 on a
standalone basis. The increase on Standalone basis is due to higher
borrowings from subsidiary (Polyplex Europa, Turkey) to support the term
loan prepayments to banks and also on account of the reduced retained
earnings due to losses generated during the year. The decrease on
consolidated basis is due to prepayment of bank term loans in Thailand
and USA.

Debt equity ratio (for total debt, including current + non-current
liabilities), is 0.91 on a consolidated basis and 1.92 on a standalone
basis.

The consolidated and standalone Interest coverage ratio are 7.76 and
5.27 as against 5.26 and 2.22 in the previous year, due to the
improvement in operating profits during the year.

Commitments

As at 31 March 2016, company had the following commitments and
contingent liabilities:

(a) The Company’s foreign exchange contracts outstanding at 31 Marchare
    summarized below.

  ­

+------------+----------+----------+-----------------+-----------------+
| 2016       |          |          |                 |                 |
+------------+----------+----------+-----------------+-----------------+
|            | Bought   | Sold     | Contractual     |                 |
|            |          |          | exchange rate   |                 |
+------------+----------+----------+-----------------+-----------------+
| Foreig     | amount   | amount   | Bought          | Sold            |
| n currency |          |          |                 |                 |
+------------+----------+----------+-----------------+-----------------+
|            | (        | (        | (Baht per 1     |                 |
|            | Million) | Million) | foreign         |                 |
|            |          |          | currency unit)  |                 |
+------------+----------+----------+-----------------+-----------------+
| US dollar  | 1.37     | 31.39    | 35.2300 -       | 35.2000 -       |
|            |          |          | 36.4989         | 36.3900         |
+------------+----------+----------+-----------------+-----------------+
|   Euro     | 0.36     | 1.26     | 39.3700 -       | 38.1500 -       |
|            |          |          | 41.3900         | 40.1600         |
+------------+----------+----------+-----------------+-----------------+
|   Japanese | -        | 19.42    | -               | 0.3143 - 0.3145 |
|   yen      |          |          |                 |                 |
+------------+----------+----------+-----------------+-----------------+
| 2015       |          |          |                 |                 |
+------------+----------+----------+-----------------+-----------------+
|            | Bought   | Sold     | Contractual     |                 |
|            |          |          | exchange rate   |                 |
+------------+----------+----------+-----------------+-----------------+
| Foreig     | amount   | amount   | Bought          | Sold            |
| n currency |          |          |                 |                 |
+------------+----------+----------+-----------------+-----------------+
|            | (        | (        | (Baht per 1     |                 |
|            | Million) | Million) | foreign         |                 |
|            |          |          | currency unit)  |                 |
+------------+----------+----------+-----------------+-----------------+
| US dollar  | 3.84     | 30.05    | 32.4646 -       | 32.5776 -       |
|            |          |          | 33.2164         | 33.1400         |
+------------+----------+----------+-----------------+-----------------+
|   Euro     | 0.48     | 1.11     | 36.5600 -       | 34.7600 -       |
|            |          |          | 41.3000         | 41.0300         |
+------------+----------+----------+-----------------+-----------------+
|   Japanese | -        | 55.65    | -               | 0.2711 - 0.2720 |
|   yen      |          |          |                 |                 |
+------------+----------+----------+-----------------+-----------------+

As at 31 March, a subsidiary had forward foreign exchange contracts as
follows:

+--------------------+---------------+---------------------------------+
| 2016               |               |                                 |
+--------------------+---------------+---------------------------------+
| Bought amount      | Sold amount   | Contractual exchange rate       |
+--------------------+---------------+---------------------------------+
| YTL 3.0 million    |   -           |   YTL 3.2936 - 3.3850 per EUR 1 |
+--------------------+---------------+---------------------------------+
| USD 3.0 million    |   -           |   USD 1.0905 - 1.1187 per EUR 1 |
+--------------------+---------------+---------------------------------+
| 2015               |               |                                 |
+--------------------+---------------+---------------------------------+
| Bought amount      | Sold amount   | Contractual exchange rate       |
+--------------------+---------------+---------------------------------+
| YTL 2.0 million    |   -           |   YTL 2.8390 - 2.8535 per EUR 1 |
+--------------------+---------------+---------------------------------+
| USD 2.5 million    |   -           |   USD 1.1297 - 1.1432 per EUR 1 |
+--------------------+---------------+---------------------------------+

(b) As at 31 March 2015, the Company and its subsidiaries had capital
    commitments of approximately Baht 0.6 million , relating to the
    construction of building and acquisition of machinery and equipment

(c) As at 31 March 2016, the Company had commitments totaling Baht 15.1
    million under various service agreements (2015: Baht 91.7 million).
    These agreements expire between April 2016 and September 2019.

(d) The Company has entered into several lease agreements in respect of
    the lease of office building space and equipment.

  Future minimum rentals payable under these leases are as follows:

+------------------------------------+----------------+----------------+
|                                    | (Unit: Million |                |
|                                    | Baht)          |                |
+------------------------------------+----------------+----------------+
|                                    |   As at 31     |                |
|                                    |   March        |                |
+------------------------------------+----------------+----------------+
|                                    | 2016           | 2015           |
+------------------------------------+----------------+----------------+
| Payable:                           |                |                |
+------------------------------------+----------------+----------------+
|   In up to 1 year                  | 2.0            | 4.7            |
+------------------------------------+----------------+----------------+
|   In over 1 and up to 5 years      | 0.3            | 4.0            |
+------------------------------------+----------------+----------------+

(e) As at 31 March 2016, the Company has provided short-term guarantee
    worth USD 30.0 million (2015: USD 30.0 million) for working capital
    facilities obtained by a subsidiary, Polyplex USA LLC.

(f) As at 31 March 2016, the Company has provided guarantee of USD 84.0
    million (2015: USD 84.0 million) for the long-term loans obtained by
    its subsidiary (Polyplex USA LLC). As at 31 March 2016, the
    outstanding balance of this subsidiary’s loan was USD 52.2 million
    (2015: USD 66.1 million).

(g) As at 31 March 2016, Polyplex Europa Polyester Film Sanayi Ve
    Ticaret Anonim Sirketi has provide guarantee of EUR 5.7 million for
    credit facilities obtained by Polyplex Paketleme Cozumleri Sanayi Ve
    Tickaret Anonim Sirketi (2015: EUR 5.7 million).

(h) As at 31 March 2016, the Company has provided corporate guarantee of
    USD 1.8 million for the raw material suppliers of Polyplex USA LLC
    (2015: USD 1.3 million).

(i) As at 31 March 2016, there were outstanding bank guarantees as
    follows:

  ------------------ ---------- -------------- ---------- ------------ -----------
  (Unit: Million)                                                      

                                Consolidated              Separate     
                                financial                 financial    
                                statements                statements   

  Letters of         Currency   2016           2015       2016         2015
  guarantee for                                                        

  Purchase payment   Baht       -              83.0       -            83.0

  Electricity usage  Baht       0.6            0.6        0.6          0.6

  VAT refund         Baht       106.9          106.9      106.9        106.9

  Others             Baht       0.1            0.1        0.1          0.1

  Total              Baht       107.6          190.6      107.6        190.6

  Purchase payment   Euro       -              7.5                     

  Others             Euro       7.2            1.9                     

  Total              Euro       7.2            9.4                     

  Purchase payment   USD        1.8                                    

  Total              USD        1.8                                    
  ------------------ ---------- -------------- ---------- ------------ -----------

1.  Main factors which may affect the future operational performance and
    financial position

  The last 3-4 years have been very challenging year for the Polyester
  Film industry due to the excessive oversupply caused by the
  significant supply additions that happened, following the up cycle in
  2010/ 2011. For Polyplex, the additional challenge has been the ramp
  up of the new projects which started in 2013 in Thailand and USA.

  The key challenges for the company in the coming year would be the
  following:

-   Raw material price volatility and any significant upward movement in
    prices, which the company may not be able to fully pass on to the
    end customers in the current weak market scenario. Volatility in raw
    material prices is not good, as it dampens the overall business
    sentiment.

-   Although the utilization rates of the Thin PET film line in USA and
    Thick PET Film line in Thailand have shown a significant improvement
    over previous year, the challenge remains to continue to increase it
    further, to optimum levels.

-   Volatility of THB against USD and Euro as well as the movement of
    Euro against the USD impacts the profits of the company. The company
    is exposed to 2 types of exchange fluctuation risks, one on the
    operational profits, including the restatement of the foreign
    currency denominated assets/ liabilities of the company on a
    standalone basis and secondly, on the conversion of the
    subsidiaries’ financial statements, which are denominated in USD,
    Euro and RMB, into THB currency for the purpose of consolidation.
    While the Company hedges most of its operational foreign currency
    exposures, the fluctuations on account of restatement of long term
    loans cannot be completely hedged. As on 31^(st) March, 2016, the
    total foreign currency denominated loans at Thailand are Euro 43
    million (including related party loans) and USD 32 million and at
    USA is Euro 31 million (related party loan).

  In the long run, the Company still remains confident of retaining its
  competitive edge due to various reasons:

1.  Benefit from its various projects and expansions in the recent past:

a.  PTL and its manufacturing subsidiaries have derived significant
    benefits from the captive PET resin production to serve its raw
    material demand on costs, quality and security of availability. The
    main advantages of a captive resin plant are lower cost of
    production because of efficiencies in raw material sourcing as also
    a lower conversion cost besides ensuring timely availability of raw
    material for the film plants. Easy availability of PTA and MEG would
    reduce the supply risk although cost of the same still

  remains a matter of concern for any PET film manufacturer as it has a
  direct impact on the margins of every manufacturer. Captive production
  of resin also allows the company to develop new specialty film
  products.

  b. Metallizer plants in Thailand, Turkey and USA have helped improve
  the product mix by increasing the share of specialty film in the
  overall sales portfolio. In Thailand PET as well CPP and Blown PP
  films are being Metallized whereas in Turkey and in US, the
  Metallizers are used to metalize PET films.

  c. The 2 Extrusion coating lines in Thailand have further helped the
  company to reduce their exposure to commodity grades of film and
  increase the proportion of value added films and other specialty
  grades of film.

  d. The CPP line which started in Thailand in 2010 has helped the
  company broad base its product offerings to the converters and move
  towards becoming a complete packaging solution provider for its
  customers, rather than just a PET film supplier.

  e. The Silicone Coating project which started in 2012 and the Blown PP
  line which started in 2013 in Thailand, will further diversify the
  product portfolio of the company and add a highly value added product
  in its portfolio.

  f. The Thick PET film line, implemented in Thailand in 2013 will also
  help further diversify the product portfolio and mitigate the risk
  associated with the cyclical nature of the Thin PET film industry, as
  Thick PET film is a relatively more stable industry.

2.  Polyplex has been deriving benefits from the larger size and
    distributed manufacturing operations across 4 existing locations
    whereby it has qualified as a preferred global supplier with many
    multinational and large customers with global operations.

3.  Polyplex has been able to establish itself as a reliable supplier of
    consistent quality products

4.  Polyplex had also invested significantly in distribution, through
    the acquisition of a company in USA (Polyplex (Americas) Inc. (PA),
    [which has now been merged with Polyplex USA LLC (PUL), the
    manufacturing entity in USA], the investment in Polyplex (Trading)
    Shenzhen Co Ltd, China, setting up of the trading company in
    Netherlands in 2013 and by establishing warehouses across Europe for
    better distribution. It has also set up Liaison offices in Malaysia
    and in Korea.

    1.  Remuneration for auditor/s

1.  Audit fee

  The Company paid audit fee as below:

  - A total of Baht - paid to the auditor/s for the past fiscal year;
  and

-   A total of Baht 2,280,000.00 paid to the accounting firm the
    auditor/s work for, or the person or business related to the
    auditor/s and the accounting firm for the past fiscal year.

2.  Non-audit fee

  The Company made payment for other services, i.e. examination of
  compliance with conditions of promotion certificates, and legal and
  tax advisory services, including BOI and tax audit services, as
  follows:

-   A total of Baht - paid to the auditor/s for the past fiscal year and
    Baht - payable in the future for the service not yet fully done for
    the past fiscal year; and

-   A total of Baht 160,000 paid to the accounting firm the auditor/s
    work for, or the person or business related to the auditor/s and the
    accounting firm for the past fiscal year, and Baht 570,000 payable
    in the future for the service not yet fully done for the past fiscal
    year.