6. Future Projects

In 2006, ethanol plant phase 1 and organic fertilizer plant in Khon Kaen
Province were completed. The machinery has been in operation, and there
has been sales of the products. The power plant started operating in
December 2006. There are 4 new ventures: ethanol plant phase 2 in
Cholburi Province, ethanol plant phase 3 in Kanchanaburi Province,
sugarcane plantation and sugar mill project in Laos, and sugarcane
plantation and sugar mill project in Cambodia. Those 4 projects are from
the corporate policy to generate incomes and value-added services from
sugar and sugar production-related businesses.

The followings are the project details:

Biomass Power Plant Project

This project is under Khon Kaen Power Plant Company Limited (paid-up
capital amounting to Baht 400.0 million), which is a subsidiary of Khon
Kaen Sugar Industry Public Co., Ltd. with 100.00 percent share holding.
The plant has capacity for electricity generating of 30 MW, in which 20
MW of electricity is sold to Electricity Generating Authority of
Thailand Public Company Limited (in accordance with the 21-year
agreement which the Company sells its electricity at an SPP rate
calculating from raw material cost and fuel use rate in electricity
generating). The rest of the electricity generated is sold to factories
in the business group and used in the power plant itself. The main
source of fuel consumed by the power plant is bagasses from sugar
manufacturing process. The plant is located in the vicinity of the sugar
plant of Khon Kaen Sugar Industry. The capital amounts to approximately
THB 880 million. An eight-year personal income tax exemption has been
granted by Thailand Board of Investment (BOI) as investment support. The
plant operation was scheduled to take place in December 2006.

Ethanol Plant Phase 2 in Cholburi Province

The project is undertaken by Khon Kaen Alcohol Co., Ltd. This ethanol
plant is located in Chonburi Province near New Kwang Soon Lee Sugar
Mill, part of one of KSL’s subsidiaries. The ethanol is used in mixing
with gasoline. The production capacity totals 100,000 liters per day.
Production materials include molasses, cassava and cassava related
products, and sugarcane juice. The estimated investment amounts to Baht
500 million. The company is applying for investment support from the
Board of Investment of Thailand (BOI). The plant is to operate and the
sale is to commence in the second quarter of 2008.

Potential difficulty that might prevent the project from being completed
as planned, such as technology problems in construction, is relatively
low. This is due to the fact that the company has experienced in
constructing and operating an ethanol plant. However, the uncertainty
about the related government policies and practice might necessitate the
postponement of the project. As the ethanol plant to be constructed will
be in eastern Thailand near a major port, the company will have the
advantage of producing ethanol for exportation when domestic ethanol
exceeds the domestic demand.

Ethanol Plant Phase 3 in Kanchanaburi Province

The project is undertaken by Khon Kaen Alcohol Co., Ltd. This ethanol
plant is located in Kanchanaburi Province near Tamaka Sugar Factory and
New Krung Thai Sugar Factoryl, parts of KSL’s subsidiaries. The ethanol
is used in mixing with gasoline. The production capacity totals 150,000
liters per day. Production materials include molasses, cassava and
cassava related products, and sugarcane juice. The estimated investment
amounts to Baht 500 million. The company is applying for investment
support from the Board of Investment of Thailand (BOI). The plant is to
operate and the sale is to commence in the second quarter of 2009.

Potential difficulty that might prevent the project from being completed
as planned, such as technology problems in construction, is relatively
low. This is due to the fact that the company has experienced in
constructing and operating an ethanol plant. However, the uncertainty
about the related government policies and practice might necessitate the
postponement of the project.

Sugarcane Plantation and Sugar Mill in Laos

The project is under Savannaket Sugar Co., Ltd., a subsidiary that Khon
Kaen Sugar Industry holds 80% of the shares. The 30-year concession is
for sugarcane farming at the area of 10,000 hectare (62,500 rai) in
Savannaket. In the first two years of operations, the company itself is
to deal with growing sugarcane. Once there is sufficient sugarcane to
operate crushing efficiently, the company will start the construction of
the sugar mill. The sugarcane crushed is expected to start in 2008. The
primary investment amounts to about Baht 1,200 million. It is estimated
that there will be 500,000 tons of sugarcane being pressed in one year.
The sugar to be produced has EBA (Everything but Arms) quota on
exporting in EU at good prices.

Potential difficulties that might prevent the project from being
completed as planned include unexpected complications in farming,
locals’ undefined parcels of lands, and unclearly defined boundary of
the land under the concession.

Sugarcane Plantation and Sugar Mill in Cambodia

The project is under Koh Kong Plantation Co., Ltd. and Koh Kong Sugar
Industry Co., Ltd. The registration to increase the capital is
processing in order to allow Khon Kaen Sugar Industry to hold 50% of the
shares. Both companies are granted 90-year concessions for sugarcane
farming at the area of 20,000 hectare (125,000 rai) in Koh Kong. In the
first three years of operations, the companies are to deal with growing
sugarcane themselves. Once there is sufficient sugarcane to operate
crushing efficiently, the company will start the construction of the
sugar mills. The sugarcane pressing is expected to start in 2009. The
primary investment amounts to about Baht 2,700 million. It is estimated
that there will be 1,000,000 tons of sugarcane being pressed in one
year. The sugar to be produced has EBA (Everything but Arms) quota on
exporting in EU at good prices.

Potential difficulties that might prevent the project from being
completed as planned include unexpected complications in farming and
political uncertainty.