2.  Nature of Business Operations

2.1 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. The Company is promoted by Polyplex Corporation Limited (PCL)
  based in India and engaged in the same business as the Company for the
  last 19 years. As on date, PCL has 70% stake in the Company through
  both direct and indirect shareholding.

  Past key changes and developments to 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.            |
+---------------+------------------------------------------------------+
| Mar           | The shareholders’ meeting resolved for increase of   |
| ch/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, 2003 | The Company was granted a BOI promotion certificate  |
|               | 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 11, | The Board of Directors resolved for the purchase of  |
| 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     |
| 2003          | film 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 15000 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 24000 tons per year each      |
|               | given the significant productivity improvements and  |
|               | additional equipment commissioned by the company.    |
+---------------+------------------------------------------------------+
| July 30, 2004 | The shareholders’ meeting resolved for               |
|               | transformation 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 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                    |
| 2005          |                                                      |
+---------------+------------------------------------------------------+
| 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     |
| April 22,     | tons each per year as also for its Chips plant from  |
| 2005          | 26,250 tons to 52,500 tons per year                  |
+---------------+------------------------------------------------------+
| August, 2005  | Start up of Metallizer plant in Thailand             |
+---------------+------------------------------------------------------+
| December,     | Start up of Thin Pet film line in Turkey implemented |
| 2005          | by subsidiary company                                |
+---------------+------------------------------------------------------+
| March, 2006   | Metallizer start up in Turkey                        |
+---------------+------------------------------------------------------+
| December,     | Start up of Pet resin plant in Turkey                |
|               |                                                      |
| 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.                                    |
+---------------+------------------------------------------------------+

2.  Shareholding structure

  The current shareholding structure of the Polyplex group is:

9.88%

9.88%

Polyplex Corporation Ltd. (PCL)

  PCL, the parent company operating for over 19 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 152.21 million (about Bt. 125 million). PCL has
  the following production capacities:-

  -----------------------------------------------------------------------
  Product Tons per annum

  Polyester Film 20,000

  Polyester Chips 20,000

  Metallized Film 4,800
  -----------------------------------------------------------------------

  Its direct and indirect shareholding of 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, Thai and Turkey operations based on the
  several factors like product range, delivered cost to customer and
  supply lead times, trade barriers and preferential duty access. Based
  on the same, PTL would serve North America, South Asia, Asia Pacific.
  PCL would serve South Asia Middle-East, Africa and South America.
  Turkey will serve, Europe, Middle East and CIS/Russia 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.

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. Currently, it has an issued and paid
  up capital of USD 6.87 million. PAPL was incorporated as an investment
  vehicle of PCL for its overseas investments (including PTL).

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. The issued and paid up capital of PSPL as
  of March 31, 2007 stands at USD 40.256 million.

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

  PSPL has 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 have
  begun since December, 2005 with the start up of the thin pet film
  line. The Metallizer plant has since started production in March,
  2006. The Pet resin plant has commenced commercial production from
  December, 2006. The project is underway for an additional thin film
  line which is expected to commence production by Q-2 of 2008. The
  company also has plans to set up an additional metallizer which is
  expected to commence production in Q-1 of 2008.

  Polyplex (Americas) Inc.

  PTL has 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.

  2.3 Revenue structure of the Company

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

­

  ------------- ------------ -------- ---------- -------- ---------- --------
  Customers     2004/05               2005/06             2006/07    

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

  Exports                                                            

  Asia          1,090.16     32.50    740.27     21.70    953.73     26.91

  North America 820.5        24.46    705.25     20.67    579.36     16.35

  Europe        863.14       25.73    915.86     26.84    442.87     12.50

  Others        126.71       37.80    101.26     2.97     195.48     5.52

  Total exports 2,900.51     86.47    2,462.64   72.18    2,171.44   61.27

  Domestic      362.45       10.80    463.41     13.58    461.78     13.03
  sales                                                              

  Sale of       -            -        357.30     10.47    691.07     19.50
  chips¹                                                             

  Other         91.52        27.30    128.68     3.77     65.51      1.85
  revenues ²                                                         

  Share of                                                154.01     4.35
  profit from                                                        
  subsidiary                                                         

  Grand total   3,354.48     100.00   3,412.03   100.00   3,543.80   100.00
  ------------- ------------ -------- ---------- -------- ---------- --------

Notes. .

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

2) Includes Export Incentive, interest received, etc.

  2.4 Business Goal

  The vision at Polyplex is to establish global leadership in the PET
  film business through building trusted partnerships with Investors,
  Customers and Employees. The business goal is to increase market share
  in various regional markets - through geographically diversified
  manufacturing presence, increase market penetration in key customers
  and build a portfolio of products like Metallized films, clear films,
  extrusion coated films etc.

2.5 Promotion certificate

  PTL has been granted four BOI promotion certificates, the salient
  points of which are as below:

  ------------- -------------- --------------- -------------- -----------------
  Privileges    Certificate    Certificate no. Certificate    Certificate
                no.            1287/(2)/2546   no.            no.1261(2)/2550
                1321(2)/2545                   1159(2)/2548   

  Type of       PET film       PET film and    Metallized     Extrusion Coated
  business                     PET Resin       Films          Films

  Date granted  May 20, 2002   June 11, 2003   February       March 14, 2007
                                               22,2005        
  ------------- -------------- --------------- -------------- -----------------

  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 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