3 Business Operations

  PTL is Thailand’s leading producer and distributor of thin PET film
  (Thin Polyethylene Terephthalate Film, also called PET film), with
  most of the company’s production being exported to the foreign
  countries. PTL focuses on 3 key segments - Packaging, Industrial and
  Electrical. PTL’s customers use the company’s products as raw material
  to produce their end-products which are then sold to their consumers.
  Some examples of products made from thin PET film are Coffee/Tea bag,
  snack bag, softener bag, detergent bag, wire/cable wrap and hot
  stamping foil.

3.1 Product Description

  PTL is the producer and distributor of thin PET film which has a wide
  range from 9 microns to 50 microns in thickness. The film is a high
  performance plastic film made from PET resin. The thin PET film
  product produced by the company can be categorized as follows:

  A.) Transparent films which can divided into 5 sub-categories

-   Plain

-   Corona or chemically treated

-   High adhesion and Barrier films

-   Ultra clear films

-   Co-extruded films

  B.) Hazy films

  C.) Metallised films

3.1.1 Characteristic of PET film

PET film characteristic properties are as follow:

-   Optically brilliant, clear appearance

-   Excellent mechanical strength and toughness

-   Good dielectric properties

-   Good flatness and coefficient of friction (COF)

-   Tear-resistant and puncture - resistant characteristics

-   Excellent dimensional stability over a wide range of temperatures

-   Very good resistance to most common solvents, moisture, oil, and
    grease

-   Excellent barrier against a wide range of gases

  PET film can also be modified with varying degrees of shrinkage,
  opacity & colours and different surface textures for it to be used
  over a wide range of applications.

  A wide range of chemical treatments (in addition to corona) can be
  applied to PET film during its manufacture to help it adhere to
  various coatings.

3.1.2 End Use segment

  Thin PET film can be used in the 3 key segments

  -------------- --------------------------------------------------------
  1) Packaging   Clear and Metallized thin PET film can be used as part
                 of the outer layer and middle layer of the flexible
                 packaging such as coffee bag, snack bag, softener bag,
                 and detergent bag.

  2) Industrial  Comprising of Hot stamping foils, flexible
                 air-conditioning ducts, labels /ID cards, lamination
                 products and many more.

  3) Electrical  Wire and cable wrap, membrane switches, flexible printed
                 circuits, capacitors and motor insulation.
  -------------- --------------------------------------------------------

  The segmental break-up of revenue from PET film sale (Plain &
  Metallized films) has been estimated as follows: ­

  -------------- ---------- -------- ---------- -------- ---------- --------
  Segment        2005-06             2006-07             2007-08    

                 Bt. Mn     %        Bt. Mn     %        Bt. Mn     %

  Packaging Use  2,124.96   72.62    1,981.02   75.23    2,554.04   88.62

  Industrial Use 790.18     27.01    640.71     24.33    314.19     10.90

  Electrical Use 10.90      0.37     11.49      0.44     13.68      0.48

  Total Film     2,926.04   100.00   2,633.22   100.00   2,881.91   100.00
  Sales                                                             
  -------------- ---------- -------- ---------- -------- ---------- --------

3.1.3 Products with similar properties

  In certain applications like primarily graphics and magnetic
  recordings, substituting PET film would result in sacrificing
  performance characteristics of the product (e.g., strength, flatness,
  clarity, tear resistance, thermal stability and chemical resistance).
  However, in other applications, for which certain PET film performance
  characteristics may not be needed, PET film competes with a wide
  variety of substitute materials. These applications tend to fall in
  the low end of the product range, where other plastic films (e.g.,
  polyvinyl chloride, polypropylene, and polyethylene films) and paper
  may be considered as lower-priced substitutes. Applications for which
  a variety of substitute products may exist are primarily packaging and
  general-purpose industrial applications.

  BOPP Films (Biaxially Oriented Polypropylene) is one such close
  substitute product type, which is comparable in terms of its broad
  physical and mechanical properties to Polyester films. However, there
  are pros and cons of using PET film or BOPP films and depending upon
  the application requirements, a choice of the substrate would be made.
  As a result of this, both PET films and BOPP films have largely
  demarcated pockets where one is preferred over the other.

  A Comparison of BOPP Films and BOPET (Polyester) Films

  Polyester film is considered as the premium plastic film in the
  flexible packaging industry. This is also reflected by the difference
  in the volume of the two products.

+-------------------------------------------+------------+-------------+
| Features                                  | BOPP       | BOPET       |
+-------------------------------------------+------------+-------------+
| Water vapour barrier                      | Excellent  | Fair        |
+-------------------------------------------+------------+-------------+
| Gas barrier properties                    | Poor       | Excellent   |
+-------------------------------------------+------------+-------------+
| Break down voltage                        | Poor       | Excellent   |
+-------------------------------------------+------------+-------------+
| Machineability                            | Fair       | Excellent   |
+-------------------------------------------+------------+-------------+
| Printability                              | Fair       | Excellent   |
+-------------------------------------------+------------+-------------+
| Suitability for metallising               | Poor       | Excellent   |
+-------------------------------------------+------------+-------------+
| Density (gm/cc)                           | Low (0.91) | High (1.39) |
+-------------------------------------------+------------+-------------+
| Strength                                  | Fair       | Excellent   |
+-------------------------------------------+------------+-------------+
| Temperature Sensitivity                   | Poor       | Excellent   |
+-------------------------------------------+------------+-------------+

  Polyester film when stretched in both directions gives excellent
  dimensional stability, gas barrier properties, break-down voltage etc.
  BOPP, despite stretching remains a ‘limp film’. Polyester film has
  better handling capabilities for fluctuations in temperatures etc. and
  is therefore also preferred in the less sophisticated markets. In
  tropical countries PET is also preferred due to its moisture and
  oxygen barrier properties. In addition products where aroma retention
  is important require the use of PET; e.g. coffee, tea.

  On the other hand, the low density of BOPP (0.91 Vs. 1.39 for PET)
  makes it a ‘cheaper’ alternative in packaging. However, the advantage
  of density is to some extent offset by the need to typically have a
  thicker film when using BOPP as compared to PET for the same
  application. Further, since PET is not ordinarily heat sealable, BOPP
  is preferred in heat sealable applications.

  All over the world BOPP and PET have established their respective
  segments in the packaging market and overlap is insignificant. Even in
  times of decline in BOPP selling prices about 2-3 years back, there
  was no visible impact on the growth in PET films consumption. This
  establishes the limited substitutability between the two products.

  3. 2 Business Strategy

  Key elements of the strategy are:

  - Attain cost leadership by way of capacity expansion and vertical
  integration,

  Capture growth markets and build good customer relationship

  - To build strong global delivery capabilities with near-shoring and
  efficient onward distribution network. Acquisition of the distribution
  company in the USA in early 2006 has been a strategic move of the
  company in this direction.

  - Further broad base the product portfolio by investing in upgrading
  technical and R&D capabilities. Setting up of an extrusion coated
  project and the decision to set up the CPP line In Thailand were part
  of the strategy to diversify the product portfolio and to add new
  products to its existing product offering to customers.

  - Consolidate market position in key geographic locations before the
  next phase of growth.

  Moving in this direction, the following initiatives have been taken by
  the Company in the past and planned for future:

-   The setting up of 2 successive film lines in Thailand was the first
    step towards achieving cost leadership position along with
    diversification of customer base.

-   With the start up of the additional film line in Turkey in May 2008,
    the subsidiary has an even stronger cost effective production base
    to service its expanding customer base in Europe, Middle East,
    Africa & CIS/Russia.

-   Backward integration into the manufacturing of PET chips has
    strengthened the cost structure of the Company in Thailand and also
    of the subsidiary in Turkey.

-   PTL has started production from the Extrusion Coating plant and has
    also announced a CPP project which will increase its product
    offering to its customers.

-   PTL has also started production from the additional Metallizers in
    Thailand and Turkey in May ‘08 and will be able to increase
    significantly the share of value added products, in its sales
    portfolio, thereby improving its profitability on the whole.

-   The additional Thin PET film line expansion announced in Thailand
    will help PTL in strengthening its position in existing markets and
    also help in tapping the high growth in new markets.

-   The company has also instituted the implementation of the Total
    Productive Maintenance (TPM) philosophy to improve the productivity
    at the plant and this has started bringing about considerable
    improvements in capacity utilizations, over 100% in both Thailand
    and Turkey.

  3.3 Distribution Channel

  The Company distributes its products to both domestic and overseas
  markets, with main focus put on the latter, constituting about 80-85%
  of its total sale revenues. Such export markets are classified by
  region into three groups, namely Asia, North America and Europe.

  The product distribution has been made directly to the end users using
  its own marketing arm as in the USA and indirectly through
  distributors in designated areas, such as those in Europe. Its
  indirect distribution through distributors can help support and even
  boost its sales as these distributors are in close proximity of the
  target markets, hence allowing for closer service provision to the
  customers with rapid delivery, and also better market penetration to
  access small customers.

  Value of export and domestic PET film sales (Plain & Metallized films)
  are as follows:­

  -------------- ---------- -------- ---------- -------- ---------- --------
  Customers      2005/06             2006/07             2007/08    

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

  Exports                                                           

  Asia           740.27     25.30    953.73     36.22    976.86     33.90

  North America  705.25     24.10    579.36     22.00    473.75     16.44

  Europe         915.86     31.30    442.87     16.82    597.80     20.74

  Other          101.26     3.46     195.48     7.42     296.41     10.29

  Total exports  2,462.64   84.16    2,171.44   82.46    2,344.82   81.36

  Domestic sales 463.41     15.84    461.78     17.54    537.10     18.64

  Grand total    2,926.05   100.00   2,633.22   100.00   2,881.91   100.00
  -------------- ---------- -------- ---------- -------- ---------- --------

  Value of sales to end users and distributors are as follows:­

  3. 4 Markets and competitive environment

  3. 4.1 Global Demand

  The worldwide merchant market of PET film in 2007 was 1.71 million
  tons, up from 1.33 million tons in 2003, which represents a CAGR of
  6.63 % with the growth in 2007 over 2006 being in excess of 6%. Of
  this market, about 80% of demand is estimated to be driven by thin
  films. The sector with highest demand for thin PET film is packaging,
  followed by industrial and electrical films respectively. Their
  combined demand accounted for 80% in 2003, rising to 93% in 2007, with
  a cumulative growth of almost 50% during 2003-2008. Electrical segment
  recorded the highest growth of 81.12%, packaging 49.61% and industrial
  35.41%.

  Table to illustrate global consumption of PET film by business sectors
  (unit: ‘000 tons)

  []

Source: Company Data

  Classified by region, demand for PET film in 2003 was the highest in
  Other Asia followed by America, Japan and West Europe. In 2007, other
  Asian countries’ demand for PET film is the largest accounting for 34%
  of world demand, followed by America and Japan with 20% and 18%
  respectively. With the expansion of packaging, industrial and
  electrical businesses (CAGR of 10.56% during 2003-2007 and 8.77% in
  2007 over 2006) and hence growing demand for thin PET film since 2003,
  demand from other Asian countries recorded a healthy CAGR of 14.19%
  during 2003-2007.

  Table to illustrate global consumption of PET film classified by
  regions (unit : thousand tons)

  []

Source: Company Data

  3. 4.2 Global Supply

  The global merchant capacity for PET film in 2007 was almost 2.38
  million tons up from 1.61 million tons in 2003, which represents a
  CAGR of 10.21%. Thin film capacity was 1.76 million tons in 2007
  (about 74% of the total) up from 1.22 million tons in 2003( about 75%
  of the total), which represents a CAGR of 9.59%. Since 1999, there has
  been a shift of production towards Asian markets (excluding Japan and
  Korea) whereas the capacity in all the other markets has remained
  largely unchanged.

  Table to illustrate global capacity by types of PET film (unit:
  thousand tons)

  ------------- ---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----
  Types of PET  2,003            2,004            2,005            2,006            2,007      
  film                                                                                         

                Capacity   %     Capacity   %     Capacity   %     Capacity   %     Capacity   %

  Thin Film     1,217      75    1,415      77    1,564      78    1,736      77    1,755      74

  Thick Film    395        25    424        23    433        22    531        23    623        26

  Total         1,612      100   1,839      100   1,997      100   2,267      100   2,379      100
  ------------- ---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----

  Source: Industry estimates

  Thin film: < 36 micron (µ) Thick film: > 36 micron

  Classified by region, Other Asia had the highest capacity in producing
  PET film in 2007. Its share compared to total capacity was 50.40%,
  followed by America and Korea with 13.37% and 12.90% respectively.
  During 2003-2007, Other Asia also was the region that had the highest
  growth rate of PET film production capacity with growth rate 131.76%
  due to the expansions by existing producers as also entry of several
  new producers in the region, especially China and India in order to
  meet the increase in PET film demand.

  Table to illustrate shows global capacity of thin & thick film (unit:
  thousand tons)

[]

Source: Company Data

Note to Table :

  --------------- --- -----------------------------------------------------
  America         :   America Continent

  Other Asia      :   Countries in Asia except Japan and Korea

  West Europe     :   Countries in West Europe

  The Rest of the :   Countries in : Europe other than West Europe, Africa,
  World               Australia and New Zealand
  --------------- --- -----------------------------------------------------

3.4.3 Industry condition

  Global competition

  There are currently three distinct classes of PET film manufacturers
  classified by size of production capacity:

(i) World majors with production capacity of over 100,000 tons per year
    (e.g. Dupont-Teijin, Mitsubishi and Toray, Cifu etc). Recently,with
    the start up of the Thin PET film line in Turkey, Polyplex group has
    also attained a capacity level of more than 100,000 tons and become
    one of the world major players.

(ii) Mid-size players with production capacity between 50,000 – 100,000
     tons per year (e.g. Kolon, SKC, Flex and Jindal, etc.) and

(iii) Small / local producers with production capacity of less than
      50,000 tons per year

  Demand for PET film for magnetic media application has been high in
  the past, prompting major producers to focus mainly on this segment.
  Competition in the magnetic media segment is thus confined only to
  these major ones based on their long and well established expertise
  and experience.

  For other PET films including thin film, competition is seen among all
  groups of producers thanks to the consistently rising demand,
  especially for thin film which is used in packaging, industrial and
  electrical segments where healthy growth of demand is recorded. Thus
  small and mid sized producers (including Polyplex group) have expanded
  their capacity to cope with the increasing demand in these segments.
  This has lead to the expectation of higher market share by some small
  and mid sized producers in various countries which have surplus
  production capacity.

  Domestic competition

  Thailand’s PET film market is of small scale. PTL forecasts that
  domestic demand in Thailand is approximately 18,000 tons per year with
  an annual growth rate of about 6-8%. In the past, domestic producers
  have put emphasis on producing BOPP film rather than any other types.
  PTL itself has principally focused on PET film with initial production
  capacity of 15,000 tons per year, rising to 48,000 tons per year at
  present, hence the largest PET film production capacity in the
  country.

  The production capacities of the various plastic film producers in
  Thailand are as follows:

+--------------------+------------------------+--------------+-------+
| Production line    | Thai Film Industrials  | A.J. Plast.  | PTL   |
|                    | Plc.                   | Plc.         |       |
| (tons per year)    |                        |              |       |
+--------------------+------------------------+--------------+-------+
| BOPP film          | 100,000                | 36,500       | -     |
+--------------------+------------------------+--------------+-------+
| PET film           | 3,500                  | 28,500       | 4     |
|                    |                        |              | 8,000 |
+--------------------+------------------------+--------------+-------+
| CPP film           | 3,500                  | -            | -*    |
+--------------------+------------------------+--------------+-------+
| BOPA film          | -                      | 8,000        | -     |
+--------------------+------------------------+--------------+-------+
| Metallized film    | 7,000                  | 9,275        | 7,500 |
+--------------------+------------------------+--------------+-------+
| Extrusion Coating  | -                      | -            | 9,000 |
| film               |                        |              |       |
+--------------------+------------------------+--------------+-------+
| Other coated films | 3,000                  | -            | -     |
+--------------------+------------------------+--------------+-------+
| Total              | 117,000                | 82,275       | 6     |
|                    |                        |              | 4,500 |
+--------------------+------------------------+--------------+-------+

  Source: Annual Report of A.J.Plast Plc and T.F.I Plc

  * CPP film project with a capacity of 10,000 MT per annum is under
  implementation, expected to start operations by Q2 of 2009-10.

  In 2002, Thailand’s production capacity of PET film was around 12,000
  tons, rising to 51,000 tons by 2003 year-end and about 80,000 tons
  currently.

  Most of PTL’s production is intended for exports while the other PET
  film producers have been more focused on the domestic markets. Despite
  the disparity between domestic supply and demand, PTL does not foresee
  any specific threat due to its different sales profile.

Conclusion on PET film industry

The PET film industry has expanded successively up to the present with
good future prospects also foreseeable. The main driving factor for the
past five years has been the growth of the packaging, industrial and
electrical segments. Meanwhile, PET film producers have boosted their
capacity utilization and/or their production capacity aggressively to
respond to the increasing growth of demand. During 1999-2003, global
average capacity utilization of PET film accounted for 82-91% of rated
or nameplate capacity, considered a high utilization rate being close to
the full machinery capacity. In practice, some producers can produce
lower than the nameplate capacity due to the long use and hence the poor
condition of machinery while some can produce with capacity utilization
even higher than 100% of the nameplate capacity using new and modern
machinery and based on their long-time expertise and experience.

However, from 2004 onwards, as a result of excess capacity built up, the
average capacity utilization for thin films has declined, reaching a
lowest of 73% last year and resulting in the overall sharp decline in
margins and profitability in the industry. This is the cyclical nature
of the industry and the demand growth has been catching up with the
available supply to bring about improvement in capacity utilization as
can be seen from the improvement in the capacity utilization rates for
2007 to 77% from a 73% in 2006. This continuing growth in demand is
expected to further improve the capacity utilization rates to normal
levels of about 82- 85% in the next 2-3 years.

[]

Despite the rising demand for PET film, it is not easy for new entrants
to compete with the existing players. It is because it is an industry
that needs high levels of know-how, skills and expertise to ensure the
exact product size, standard and specifications required by the
customers. Project management skills are also needed to enhance
efficiency and cost effectiveness that will lead to competitiveness
against other producers. Capacity expansion may be unavoidable to attain
larger size and hence economy of scale.

Polyplex group has accumulated over 20 years experience in the PET film
industry. It has been strengthened with consistent expansion in
production capacity. Its management is highly competent. Delivery of
products is efficient by having geographically distributed production
bases that allow for easy access to the customers. It has clear
classification of markets among the companies in the group. For example,
PTL which is based in Thailand is in charge of catering to markets in
Thailand, East Asian countries, China, Southeast Asian countries and
America, while PE which is based in Turkey, will serve customers in
Europe, Middle East, Africa and Russia/CIS.

The emphasis on the countries with high demand growth potential,
production and cost effectiveness and concentrating on business segments
such as packaging, industrial and electrical segments which have
recorded healthy growth all along has contributed to the Polyplex group
becoming the fifth largest producer of thin PET film (excluding capacity
for magnetic media).

In view of tariff barrier measures taken by importing countries such as
anti-dumping and anti-subsidy duties, the Company’s parent company based
in India has experienced such threat from both the EU and the USA
several times. It has thus been keen on the issue, having information on
the criteria and inspection process adopted by those countries and
knowing how to deal with the problem. As an outcome of the understanding
of the process, that USA has levied zero duties till date under the
anti-dumping measure against the parent company.

As regards Thailand, an Anti Dumping petition was launched by the USA
manufacturers of PET film against PET imports from 4 countries i.e.
China, Brazil, Thailand and UAE. As per the preliminary determination of
the Department of Commerce (DOC) based on their initial findings, zero %
Dumping duties have been levied against Thailand imports into the USA,
whereas the following duty rates have been notified against the other
countries’ imports:

China – 46.82% - 76.72%

Brazil - 28.72% - 44.36%

UAE – 2.45%

This is only the preliminary determination and the final decision may
change based on DOC findings during the course of onsite verification.
The onsite verification for Thailand is scheduled for June’08. The DOC
final determination is expected by July/August’08, followed by the
International Trade Commission (ITC) final determination by
August/September ‘08. The Company has been making its best possible
efforts to co-operate and provide fairly detailed responses to the DOC
enquiry and will continue to do so, in order to protect the same
decision until the final determination.

Last year in March-2007, the appropriate authority in the Government of
Brazil had initiated an anti dumping investigation against Thailand
besides India, against imports of PET films into Brazil. The company as
also its parent company in India had fully cooperated with the same and
submitted their detailed questionnaire responses. As an outcome of the
preliminary determination of this investigation, an Anti Dumping duty of
about 28 cents/Kg on imports from Thailand to Brazil and about 14
cents/Kg of Anti Dumping and Countervailing Duty on imports from India
to Brazil has been notified. PTL’s export sale to Brazil is
insignificant as compared to the total sales volumes. (2007-08 was about
165 MT only. As such, the adverse fall out of the investigation by the
Government of Brazil has had a minimal impact on our sales.

The company is undertaking all the safeguards to insulate against the
risk arising out of anti-dumping duties and other protective barriers
imposed by the importing countries.

Outlook for the PET film industry:

-   Except for a few producers who may consider expanding their
    capacities, there is unlikely to be any significant increase in
    production capacity from developing countries in Asia or from
    Europe, the USA or Japan/Korea in the next 1-2 years.

-   New entrants from China have been increasingly dominating the market
    for PET film but their production is expected to mainly fulfill
    domestic demand which is growing rapidly. Moreover, with their
    limited skills, expertise and experience, their production cost and
    productivity levels fail to be competitive globally. They will need
    more time to develop the technical expertise to be on a par with the
    existing global players.

-   The cyclical nature of the industry would continue but the severity
    of the ups and downs as witnessed in 1995 would be moderated.

-   Dominance of the existing 3-4 large producers with market share of
    about 25-35% is likely to continue though with a reducing share.
    However, decline in their traditional market segments and slower
    growth in their home markets has constrained their ability to
    improve their PET film operations. Lowering production cost through
    acquisitions and joint ventures with low-cost Asian countries,
    rationalization of capacity and continued emphasis on technology
    intensive niche products could be an important strategic response.

-   The transitioning of the industry to Asia would pose higher
    competitive pressure in the years to come.

-   Demand for the products is likely to grow between 5-8% in the
    packaging, industrial and electrical segments.

-   Mid size and new producers would increasingly look to diversify
    their product range from commodity grades to specialty grade films
    to improve margins.

-   Besides Polyplex group, some other low cost producers are attempting
    to duplicate the distributed manufacturing model as evidenced from
    the recent set up of PET film line in Dubai by an Indian producer.

-   Increasingly, the larger producers are trying to tie up strategic
    partnerships or acquisitions in order to ensure growth, presence in
    diversified markets or products or even as a measure to acquire
    technology for newer and sophisticated product range.

3. 5 Manufacturing of product

3.5.1 Production

PTL’s plant is located at No. 60/24 Moo 3, Siam Eastern Industrial Park,
Rayong Province, on an area of 28 rai 50.9 square wah. In order to have
better control over raw material quality and availability as also costs,
PTL has also set up a captive Pet Resin facility. The first phase of the
backward integration project involving setting up of a batch
polycondensation plant of 20 tons/day capacity commenced operations in
September-2004 and the second phase, being the Continuous process plant
started operations in February, 2005. In August, 2005, PTL commenced
production from its Metallizer plant in the same location. In November
2007, PTL commenced production from the Extrusion Coating line, which is
a new product in the wide range on products manufactured by the Polyplex
group. The commercial production from this line has begun in April 2008.
This factory is set up opposite to the existing factory, in a new plot
of land having an area of 35 rai, 2 nang, 54.80 square wah. The new
expansion projects in the pipeline are proposed to be set up in the same
plot of land.

3.5.2 Production capacity

  The Company currently has two PET film production lines, two
  Metallised film lines, one Continuous Processing PET resin
  manufacturing plant, one Batch processing PET resin plant and one
  Extrusion Coating line. A project for setting up a CPP film line with
  a CPP metallized film line is underway and is expected to start
  operations by Q2 2009-10. Recently, the board has also approved in
  principle, a proposal to invest in an additional Thin PET Film line in
  Thailand. The new line proposed will be the largest available line
  with a capacity of 31,000 MT per annum. Capacity of Polyplex group,
  present and projected as on 31^(st) March 2008, is as follows:

  ----------------------------- ------------------- ---------------------
                                Capacity (tons per  
                                year)               

                                31^(st) March, 2008 Projected as at
                                                    31^(st) March 2009

  a) PET film                                       

  India                         20,000              51,000

  Thailand*                     48,000              48,000

  Turkey                        24,000              48,000

  Total capacity                92,000              147,000

  b) PET resin                                      

  India                         20,000              65,500

  Thailand*                     52,500              52,500

  Turkey                        45,500-             45,500-

  Total capacity                118,000             163,500

  c) Metallized film                                

  India                         4,800               11,300

  Thailand*                     7,500               16,200

  Turkey                        5,000               10,500

  Total capacity                17,300              38,000

  d) Extrusion Coating film                         

  India                                             -

  Thailand*                     9,000               9,000

  Turkey                                            -

  Total capacity                9,000               9,000
  ----------------------------- ------------------- ---------------------

  *Capacities for Thailand are as approved by BOI based on theoretical
  output and the actual attainable output could be lower.

  During 2003/04, its production output of PET film accounted for 23,360
  tons, representing a capacity utilization of 96.46% (as per then
  stated pro rata capacity of 24,000 tons per year). Its output reached
  38,199 tons in 2004/05, 36,877 tons in 2005/06 and 36,847 tons in
  2006/07, which represents 97.95%,94.56% and 94.48% capacity
  utilization (on the effective capacity of 39000 tons per year)
  respectively. For the year 2007-08, production was 39,989 MT
  representing a capacity utilization of 102.54%.

(Tons)

3.5.3Major raw materials

  PET resin

  PET Resin (polyethylene terephthalate resin) is the major raw material
  in the production process for PET films. In beginning, the company had
  procured most of its PET resin requirements from two unrelated
  suppliers belonging to one group with whom the Polyplex group enjoys a
  long-standing good relationship. The requirement of procuring PET
  resin from outside suppliers have gone down since 2004/05 after the
  company commenced production of its captive Pet resin in two phases.

  The table below shows volume of PET resin consumed in 2004/05, 2005/06
  2006/07 and 2007/08:

  ------------- --------- -------- --------- -------- --------- -------- --------- --------
                2004/05            2005/06            2006/07            2007/08   

                Tons      %        Tons      %        Tons      %        Tons      %

  Local         31,428    80.27    1,365     3.62                                  

  Imports       3,971     10.14    -         -        989       2.63     -         -

  Own           3,754     9.59     36,353    96.38    36,618    97.37    41,051    100.00
  Production                                                                       

  Total         39,153    100.00   37,718    100.00   37,607    100.00   41,051    100.00
  ------------- --------- -------- --------- -------- --------- -------- --------- --------

  Purified Terephthalic acid (PTA) and mono ethylene glycol (MEG):

  The major raw materials for PET resin production are purified
  terephthalic acid (PTA) and mono ethylene glycol (MEG). To ensure
  uninterrupted procurement of raw materials the Company has currently
  tied up with one local supplier each for PTA and MEG. The company has
  entered into 1-2 year purchase agreement as per which 100% of the
  company’s requirements would be supplied as per the specified price
  formula throughout the contractual period(s).

3.5.4 Impact on the environment

  There is a negligible impact on environment caused from the production
  process since PET in both film and resins are generally recyclable.

  Since its commencement of production in March 2003, PTL has not faced
  any significant problems relating to the environment. Inspection by
  the Industrial Factory Department has been undertaken on a regular
  basis, the result of which has come out that the Company’s
  manufacturing process poses no environmental impacts. PTL has renewed
  its ISO 14001:2004 certification on environment management system and
  ISO 9001: 2000 certification on quality management system on March 9,
  2007 for its film plants and the same has been extended for the resin
  and Metallizer plants also. The company has also obtained the EIA
  approval for its resin plant. The OHSAS 18001:2007 (Occupational
  Health and Safety management system) certification is in process, the
  pre-qualification audit has been successfully completed and the
  certification is expected soon.