4. Business Operation of the Company

Business Segments

Polyester Value Chain

The chart below summarizes the polyester value chain, outlining the
steps from processing crude oil to polyester polymer based products used
in applications for fast moving consumer goods “FMCG”. The polyester
value chain lies at the heart of our everyday life, found in numerous
consumer items. Our main products are PET (Polyethylene Terephthalate),
Polyester Fiber and Yarn, and PTA (Purified Terephthalic Acid)

[]

Polyester value chain supplies products to daily or consumer staples and
has continuously seen annual growth in demand on a global basis. PET
resin is used mainly for making PET bottles for packaging of beverages,
carbonated soft drinks, water, energy drinks, juices, tea, sauces and
others, and also for packaging of food and medicines. Polyester fibers
and yarns are used mainly for clothing and also has applications in home
furnishings and industrial applications. PET resin and Polyester fibers
and yarns are the lowest cost materials in there product category. The
demand growth is both organic and from substitution of other products.
PTA is the key raw material for both PET resins and Polyester fibers and
yarns therefore its demand grows in line with its application. Polyester
value chain is a bridge between oil and petrochemicals to fast moving
consumer goods “FMCG” as illustrated below:

[]

Source: Company

As driven by the demand consistency of the FMCG market, integrated
margins in the polyester value chain remain relatively stable throughout
the years, resilient to changes in crude oil price movement and global
GDP growth rates. The polyester chain lies at the heart of our everyday
life, found in numerous consumer items. As a result, driven by the
demand consistency of the FMCG market, exhibit little (if any)
volatility, unlike petrochemicals products in the olefins and aromatics
chain.

[]

[]

Source: CMAI-CCI, IMF World Economic Outlook Database, IVL Analysis

(1) Blended (simple average) industry spread across three regions,
Europe, US, Asia; per 1t of PET

(2) Average Brent Crude Oil Price for the year

Business Overview

As of December 31, 2011, IVL has 28 manufacturing facilities in 14
countries located in Asia, Africa, North America and Europe, which can
be seen below:

[]

1. 50:50 JV between IVL and PCH Holding SRL

2. 75:25 JV between IVL and Sinterama

3. Under construction and expected to completed by 2012

PET Business

PET Business Overview

Our PET business is part of our core polyester value chain business.
Beginning with one manufacturing plant, we have grown today to operate
fourteen production facilities across the three major consuming
continents of North America, Europe and Asia. Our PET business comprises
the production and sale of PET resin, a plastic polymer resin primarily
used for beverage containers and food packaging, for packaging of
pharmaceutical and household products and in industrial packaging
applications. We also produce PET packaging in the form of preforms,
bottles and closures through a joint venture with Serm Suk Pcl, the
exclusive Pepsi bottler in Thailand.

We entered the PET business in 1995 through the establishment of
Indorama Polymers, the first PET resin manufacturing facility in
Thailand, with an initial installed capacity of 20,000 tonnes per annum.
Our PET installed capacity has since increased significantly to
3,271,600 tonnes per annum as of December 31, 2011, comprising of four
PET facilities in Asia (Thailand, China and Indonesia), five PET
facilities in Europe (the Netherlands, the United Kingdom, Lithuania,
Poland and Italy) , and four PET facilities in North America (the United
States and Mexico). Our significant PET capacity growth was achieved
primarily through:

-   The acquisition of StarPet, a PET facility in Asheboro, North
    Carolina, U.S.A. from Tiepet Inc.;

-   The acquisition of a PET facility in Rotterdam, the Netherlands and
    a PET facility in Workington, United Kingdom from the Eastman
    Chemical Company;

-   The construction of the Orion Global PET facility in Lithuania,
    Europe’s largest PET resin plant;

-   The construction of AlphaPet PET facility, a PET plant in Decatur,
    Alabama, U.S.A.;

-   The acquisition of a PET facility in Kaiping city, Guangdong, China
    from Guangdong Shinda UHMWPE Co., Ltd.;

-   The acquisition of PET facility’s in Indonesia and Poland from SK
    Chemicals; and

-   The acquisition of PET facility’s in Spartanburg, South Carolina,
    USA and a PET facility in Queretaro, Mexico from Invista S.a’ r.l.

The PET packaging facility Petform, owned by our joint venture, which is
co-located with one of our PET resin plants in Thailand, has the annual
installed capacity to produce 980 million preforms, 420 million bottles
and 1,600 million closures.

As of December 31, 2011, we have completed several acquisitions
announced in 2010, following which we became the largest PET resin
producer in the world with an aggregate installed production capacity of
3,271,600 tonnes per annum (excludes expansions in progress in
Rotterdam, Netherlands, Wlocklawek, Poland and Port Harcourt, Nigeria).

PET Products

We produce a variety of PET resins, including hot-fill, high and low
intrinsic viscosity, quick heat and general grade, to serve a variety of
markets including carbonated soft drinks, bottled water, other
beverages, food and other applications.

Our PET resins are marketed under Ramapet^(®) and Preformance^(TM) PET
brands. Through Petform, our joint venture with Serm Suk Pcl, we offer
packaging solutions to food and beverage producers in the region. We
also manufacture a range of PET preforms, PET bottles and closures.

PET Production Process

PET resin can be produced from polyester polymer melt. The chart below
summarises the polyester polymer melt production process.

[]

Polyester polymer melt is then converted into PET resin either through a
conventional solid state process or through a newer technology
melt-to-resin process. Under the conventional solid state
polycondensation process, the polyester polymer melt is extruded in
strands, which are cooled down quickly by water. After solidification,
the strands are cut into small pellets, dried and further crystallized
by heating in a reactor under specific temperature and pressure
conditions under a nitrogen flow. Under the melt-to-resin process using
new technology reactors, the polycondensation process is completed
during the melt phase, resulting in the formation of pellets without
going through the solidification process. Other than our AlphaPet PET
facility, which uses the melt-to-resin process, all of our other PET
facilities use the conventional solid state poly condensation process.

PET Production Facilities

The following table describes our PET production facilities as of
December 31 , 2011

  --------------------- -- --------------- ------------- ------------ -- ------------------
  Production Facility      Location        Installed                     Production
                                           Capacity⁽¹⁾                   Technology

                                           (tonnes per                   
                                           annum)                        

  AlphaPet PET Facility    Decatur,                      438,000         Uhde Inventa
                           Alabama, U.S.A.                               Fischer MTR

  StarPet PET Facility     Asheboro, North               252,000         Zimmer / Buhler
                           Carolina,                                     
                           U.S.A.                                        

  Orion Global PET         Klaipeda,                     241,000         Inventa / Buhler
  Facility                 Lithuania                                     

  IRP Rotterdam PET        Rotterdam, the                231,000         Inventa / Buhler
  Facility                 Netherlands                                   

  IRP Workington PET       Workington,                   168,000         Zimmer / Bepex
  Facility                 United Kingdom                                

  IRP/AsiaPet PET          Lopburi,                      178,000         Zimmer and Sinco
  Facilities ⁽²⁾           Thailand                                      

  Indorama Polyester       Map Ta Phut,                  91,000          Buhler
  Industries PET Resin     Thailand                                      
  Line                                                                   

  Ottana Polimeri          Ottana, Italy                 161,000         Dow
  S.R.L. ⁽³⁾                                                             

  GIVL PET Facility        Kaiping, China                406,000         Inventa/ Buhler

  Arteva PET Facility      Queretaro,                    478,000         Invista/ Sinco
                           Mexico                                        

  Auriga Facility - PET    Spartanburg,                  387,000         Invista/ Bepex
  Resin Line               South Carolina,                               
                           U.S.A.                                        

  IVL Wloclawek PET        Wloclawek,                    153,000         Inventa/ Buhler
  Facility                 Poland                                        

  IVL Tangerang            Tangerang,                    87,600          Hitachi/ Buhler
  Facility - PET Resin     Indonesia                                     
  Line                                                                   

  Petform PET Packaging    Lopburi,                      ⁻⁽⁴⁾            Husky (preforms
  Facility                 Thailand                                      and closures)
                                                                         Sidel (bottles)

  Total ⁽⁵⁾                                              3,271,600       
  --------------------- -- --------------- ------------- ------------ -- ------------------

(1) Effective January 1, 2011, the capacity of plants have been re-rated
    to reflect the de-bottlenecking projects taken-up by the various
    plants from time-to-time.

(2) Comprises the Indorama Polymers PCL PET facility and the AsiaPet
    Amorphous PET facility, each with a capacity of 178,000 tonnes per
    annum and together forming a single PET resin line. The AsiaPet
    (Thailand) Ltd. Amorphous PET facility produces amorphous PET, all
    of which is used in the Indorama Polymers PCL PET facility to
    produce PET resin.

(3) 50/50 Joint venture investment

(4) Preforms—980 million per annum, bottles—420 million per annum, and
    closures—1,600 million per annum.

(5) Excludes capacity of Petform (Thailand) Ltd.

The following table sets out our actual PET production by facility for
the periods indicated.

+----------------------------------+----------+---+----------+---+----------+
|                                  | Year     |   |          |   |          |
|                                  | Ended    |   |          |   |          |
|                                  | December |   |          |   |          |
|                                  | 31,      |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|                                  | 2009     |   | 2010     |   | 2011     |
+----------------------------------+----------+---+----------+---+----------+
|   PET Resin Production Volumes   |          |   |          |   |          |
|   (in tonnes):                   |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   AlphaPet PET Facility⁽¹⁾       | 31,924   |   | 227,543  |   | 276,722  |
+----------------------------------+----------+---+----------+---+----------+
|   StarPet PET Facility           | 241,319  |   | 232,753  |   | 211,821  |
+----------------------------------+----------+---+----------+---+----------+
|   Orion Global PET Facility      | 230,446  |   | 226,610  |   | 225,628  |
+----------------------------------+----------+---+----------+---+----------+
|   IRP Rotterdam PET Facility⁽²⁾  | 211,699  |   | 205,021  |   | 218,196  |
+----------------------------------+----------+---+----------+---+----------+
|   IRP Workington PET Facility⁽²⁾ | 138,361  |   | 148,932  |   | 152,150  |
+----------------------------------+----------+---+----------+---+----------+
|   Indorama Polymers/AsiaPet PET  | 172,833  |   | 173,947  |   | 128,705  |
|   Facility                       |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   Indorama Polyester Industries  | 20,832   |   | 91,921   |   | 94,595   |
|   Facility –                     |          |   |          |   |          |
|                                  |          |   |          |   |          |
|   PET Resin Line⁽³⁾              |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   GIVL PET Facility⁽⁴⁾           | -        |   | -        |   | 196,718  |
+----------------------------------+----------+---+----------+---+----------+
|   Arteva PET Facility⁽⁵⁾         | -        |   | -        |   | 381,491  |
+----------------------------------+----------+---+----------+---+----------+
|   Auriga Facility - PET Resin    | -        |   | -        |   | 253,997  |
|   Line ⁽⁵⁾                       |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   IVL Wloclawek PET Facility⁽⁶⁾  | -        |   | -        |   | 111,048  |
+----------------------------------+----------+---+----------+---+----------+
|   IVL Tangerang Facility - PET   | -        |   | -        |   | 71,057   |
|   Resin Line ⁽⁶⁾                 |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   Total                          | 1        |   | 1        |   | 2        |
|                                  | ,047,414 |   | ,306,728 |   | ,322,128 |
+----------------------------------+----------+---+----------+---+----------+
|                                  |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   PET Packaging Production       |          |   |          |   |          |
|   Volumes                        |          |   |          |   |          |
|                                  |          |   |          |   |          |
|   (in million units):            |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   Petform Packaging Facility:    |          |   |          |   |          |
+----------------------------------+----------+---+----------+---+----------+
|   Preforms                       | 376      |   | 576      |   | 452      |
+----------------------------------+----------+---+----------+---+----------+
|   Bottles                        | 133      |   | 180      |   | 170      |
+----------------------------------+----------+---+----------+---+----------+
|   Closures                       | 713      |   | 805      |   | 525      |
+----------------------------------+----------+---+----------+---+----------+

(1) Commenced one production line in the fourth quarter of 2009 and
commercial operations for both lines in the second quarter of 2010.

(2) Acquired on March 31, 2008.

(3) Converted one line of the polyester production to produce PET resin
in the fourth quarter of 2009 .

(4) Acquired on January 27,2011.

(5) Acquired on March 1, 20011.

(6) Acquired on March 2, 2011

The following is a brief description of each of our PET facilities.

AlphaPet PET Facility

The AlphaPet PET facility is located in Decatur, Alabama, U.S.A. and has
an installed capacity of 432,000 tonnes per annum. It is adjacent to,
and receives its PTA from, BP’s Decatur PX and PTA facility through a
pipeline connecting the two facilities. We commenced commercial
production of the first line of the AlphaPet PET facility in October
2009 with an installed capacity of 216,000 tonnes per annum, and
subsequently commenced commercial production at the second line with an
installed capacity of 216,000 tonnes per annum in June 2010. The
facility employs new generation Uhde Inventa-Fischer melt-to-resin
technology. Effective January 2011, the capacity has been re-rated to
438,000 tonnes per annum on de-bottlenecking.

AlphaPet has entered into a PTA supply agreement, a ground lease
agreement, a services framework interface agreement and a utilities
framework interface agreement with BP.

Pursuant to the PTA supply agreement, AlphaPet is required to purchase
100% of the AlphaPet PET Facility’s PTA requirements from BP, up to a
specified maximum quantity of PTA per year. The initial term of the
agreement is 15 years, after which it is renewed for successive renewal
terms of five years each unless either party gives at least 36 months’
written notice prior to the end of the initial term or any renewal term.
In addition, the agreement automatically terminates if the ground lease
expires or is terminated.

Pursuant to the ground lease, BP has agreed to lease to AlphaPet
approximately 40 acres of land located within the Decatur site to
construct the improvements necessary to operate the AlphaPet PET
Facility. The lease is for a term of 20 years, extendable at AlphaPet’s
option for two extension terms of 20 years each. BP has agreed, pursuant
to the services agreement, to provide certain services to the AlphaPet
PET Facility, including MEG barge unloading and storage services and
emergency response services. BP has agreed, pursuant to the utilities
agreement, to provide certain utilities to the AlphaPet PET Facility,
including the supply of fire, water, steam, instrument air and filtered
water.

The following table sets forth our achieved key performance indicators
for the AlphaPet PET facility for the periods indicated:

  ----------------------------------- ----------- ------------ -----------
                                      Year Ended               
                                      December                 
                                      31,                      

                                      2009        2010         2011

                                                               

                                                               

  Effective capacity (tonnes)⁽¹⁾      54,000      342,000      438,000

  Production (tonnes)⁽²⁾              31,924      227,543      276,722

  Capacity utilization (%)            59          67           63
  ----------------------------------- ----------- ------------ -----------

⁽¹⁾ The first line of the AlphaPet PET facility commenced commercial
production in October 2009 with an installed capacity of 216,000 tonnes
per annum, and subsequently commenced commercial production at the
second line with an installed capacity of 216,000 tonnes per annum in
June 2010

⁽²⁾ The plant was shutted down for 2 months in the 2^(nd) quarter of
2011 due to Tornado

StarPet PET Facility

The StarPet PET facility is located in Asheboro, North Carolina, U.S.A.
and has an installed capacity of 225,000 tonnes per annum. We acquired
the StarPet PET facility from Tiepet Inc. in 2003. The StarPet PET
facility obtains its PTA from BP and Interquisa Canada L.P.
(“Interquisa”), which is transported from their respective PTA
facilities. Effective January 2011, the capacity has been re-rated to
252,000 tonnes per annum which captures various debottlenecking
projects.

The following table sets forth our achieved key performance indicators
for the StarPet PET facility for the periods indicated:

  ----------------------------------- ----------- ------------ -----------
                                      Year Ended               
                                      December                 
                                      31,                      

                                      2009        2010         2011

                                                               

                                                               

  Effective capacity (tonnes)         225,000     225,000      251,926

  Production (tonnes)                 241,319     232,753      211,821

  Capacity utilization (%)            107         103          84
  ----------------------------------- ----------- ------------ -----------

Starpet has entered into a PTA and MEG long term supply agreement for
the supply and purchase of PTA and MEG for the Starpet PET facility.

Orion Global PET Facility

The Orion Global PET facility is located in the Free Economic Zone of
Klaipeda, Lithuania and has an installed capacity of 198,000 tonnes per
annum. We constructed the facility on a greenfield site and commenced
commercial production in the fourth quarter of 2006. The Orion Global
PET facility obtains its PTA from our IRH Netherlands PTA facility and
third party suppliers, which is transported by sea to the port of
Klaipeda. Effective January 2011, the capacity has been re-rated to
241,000 tonnes per annum which captures various debottlenecking
projects.

The following table sets forth our achieved key performance indicators
for the Orion Global PET facility for the periods indicated:

  ----------------------------------- ----------- ----------- -----------
                                      Year Ended              
                                      December                
                                      31,                     

                                      2009        2010        2011

                                                              

                                                              

  Effective capacity (tonnes)         198,000     198,000     240,950

  Production (tonnes)                 230,446     226,610     225,628

  Capacity utilization (%)            116         114         94
  ----------------------------------- ----------- ----------- -----------

IRP Rotterdam PET Facility

The IRP Rotterdam PET facility is located in Rotterdam, the Netherlands
and has an installed capacity of 200,000 tonnes per annum. We acquired
the IRP Rotterdam PET facility, which was commissioned in 1998, from the
Eastman Chemical Company in March 2008. The IRP Rotterdam PET facility
is located adjacent to the IRH Rotterdam PTA facility, from which it
obtains its PTA through a pipeline connecting the two facilities.
Effective January 2011, the capacity has been re-rated to 231,000 tonnes
per annum which captures various debottlenecking projects.

The following table sets forth our achieved key performance indicators
for the IRP Rotterdam PET facility for the periods indicated:

+----------------------------------+----------+----------+-----------+
|                                  | Year     |          |           |
|                                  | Ended    |          |           |
|                                  | December |          |           |
|                                  | 31,      |          |           |
+----------------------------------+----------+----------+-----------+
|                                  | 2009     | 2010     | 2011      |
+----------------------------------+----------+----------+-----------+
|                                  |          |          |           |
+----------------------------------+----------+----------+-----------+
|                                  |          |          |           |
+----------------------------------+----------+----------+-----------+
|   Effective capacity (tonnes)⁽¹⁾ | 200,000  | 200,000  | 231,000   |
+----------------------------------+----------+----------+-----------+
|   Production (tonnes)            | 211,699  | 205,021  | 218,196   |
+----------------------------------+----------+----------+-----------+
|   Capacity utilization (%)       | 106      | 103      | 94        |
+----------------------------------+----------+----------+-----------+

IRP Workington PET Facility

The IRP Workington PET facility is located in Workington, United Kingdom
and has an installed capacity of 155,000 tonnes per annum. We acquired
the IRP Workington PET facility, which was commissioned in 1988, from
the Eastman Chemical Company in March 2008. The IRP Workington PET
facility obtains its PTA from our IRH Rotterdam PTA facility, which is
transported by truck. Effective January 2011, the capacity has been
re-rated to 168,000 tonnes per annum which captures various
debottlenecking projects.

The following table sets forth our achieved key performance indicators
for the IRP Workington PET facility for the periods indicated:

+----------------------------------+----------+----------+-----------+
|                                  | Year     |          |           |
|                                  | Ended    |          |           |
|                                  | December |          |           |
|                                  | 31,      |          |           |
+----------------------------------+----------+----------+-----------+
|                                  | 2009     | 2010     | 2011      |
+----------------------------------+----------+----------+-----------+
|                                  |          |          |           |
+----------------------------------+----------+----------+-----------+
|                                  |          |          |           |
+----------------------------------+----------+----------+-----------+
|   Effective capacity (tonnes)    | 150,000  | 150,000  | 168,000   |
+----------------------------------+----------+----------+-----------+
|   Production (tonnes)            | 138,361  | 148,932  | 152,150   |
+----------------------------------+----------+----------+-----------+
|   Capacity utilization (%)       | 92       | 99       | 91        |
+----------------------------------+----------+----------+-----------+

Indorama Polymers/AsiaPet PET Facilities

The Indorama Polymers/AsiaPet PET facilities comprise the Indorama
Polymers PET facility and the AsiaPet Amorphous PET facility, both of
which are co-located in Lopburi, Thailand and linked to form one PET
resin line with a combined installed capacity of 180,000 tonnes of PET
resin per annum. The Indorama Polymers PET facility commenced commercial
production in 1995 with an initial installed capacity of 21,600 tonnes
per annum, which we subsequently expanded to 90,000 tonnes per annum in
2005 and to 180,000 tonnes per annum in 2007. The AsiaPet Amorphous PET
facility commenced commercial production in 2003 with an initial
installed capacity of 110,000 tonnes per annum, which we subsequently
expanded to 180,000 tonnes per annum in the third quarter of 2008.
Effective January 2011, the capacity has been re-rated to 178,000 tonnes
per annum.

The Indorama Polymers/Asia Pet PET facilities obtain most of their PTA
from our Indorama Petrochem facility and TPT Petrochemicals facility in
Map Ta Phut, which is transported by truck. The Indorama Polymers/Asia
Pet PET facilities are also co-located with the Petform packaging
facility, allowing for partial downstream integration into PET preforms.

The following table sets forth our achieved key performance indicators
for the Indorama Polymers/Asia Pet PET facilities for the periods
indicated:

+----------------------------------+----------+----------+-----------+
|                                  | Year     |          |           |
|                                  | Ended    |          |           |
|                                  | December |          |           |
|                                  | 31,      |          |           |
+----------------------------------+----------+----------+-----------+
|                                  | 2009     | 2010     | 2011      |
+----------------------------------+----------+----------+-----------+
|                                  |          |          |           |
+----------------------------------+----------+----------+-----------+
|   Effective capacity (tonnes)    | 180,000  | 180,000  | 178,000   |
+----------------------------------+----------+----------+-----------+
|   Production (tonnes)            | 172,883  | 173,947  | 128,705   |
+----------------------------------+----------+----------+-----------+
|   Capacity utilization (%)       | 96       | 97       | *72       |
+----------------------------------+----------+----------+-----------+

*Loss of production as the plant was shutdown from impact of floods in
Lopburi, Thailand from September 23, 2011. Expected to restart in April,
2012

Petform Packaging Facility

The Petform packaging facility is co-located with the Indorama
Polymers/AsiaPet PET facilities in Lopburi, Thailand. The Petform
packaging facility is owned by Petform, a joint venture company with
Serm Suk Pcl (the exclusive Pepsi bottler in Thailand), of which we own
60.0% of the shares and Serm Suk owns 40.0%. The Petform packaging
facility commenced commercial production in 1996. The Petform packaging
facility obtains its PET from Indorama Polymers PET facility and shares
utilities with the Indorama Polymers/AsiaPet PET facilities.

In the second quarter of 2010, we have completed the capacity expansion
at the Petform packaging facility by an additional two preforms
machines, one bottle blowing machine and two closure machines with a
total cost of USD 11.5 million. The total installed capacity in 2011 is
to produce 980 million preforms, 420 million bottles and 1,600 million
closures per annum.

Under the joint venture agreement, we are responsible for, amongst other
things, the management of Petform, operating and maintaining Petform’s
equipment and providing a lease for Petform’s preform facility. The
joint venture agreement has an indefinite term but may be terminated by
mutual consent or by a non-defaulting party.

Indorama Polyester Industries - PET Resin Line

In August 2008, we completed the acquisition of 98.46% of the shares of
Tuntex Thailand, subsequently renamed Indorama Polyester Industries. In
year 2009, the major shareholders launched a tender offer to purchase
upto 100% of shares and to delist the shares of Indorama Polyester
Industries Public Company Limited. On completion of the tender offer
shareholding increased to 99.55%. Also, during the year polyester fibers
business was consolidated under the single corporate entity of Indorama
Polyester Industries Public Company Limited through the entite business
transfer of Polyester fibers and yarns Nakhon Pathom facility.

Indorama Polyester Industries owns a polyester facility in the Map Ta
Phut Industrial Estate in Thailand with an installed capacity of 252,000
tonnes per annum. Unoperational at the time of acquisition, the Indorama
Polyester Industries polyester facility restarted production in December
2008. We have converted a portion of the existing polyester capacity
into a PET resin line with an installed capacity of 108,000 tonnes per
annum since the fourth quarter of 2009. Effective January 2011, the
capacity of PET resin line has been re-rated to 91,000 tonnes per annum.

The Indorama Polyester Industries PET resin line is located adjacent to,
and receives its PTA from, the TPT Petrochemicals PTA facility and is
powered by the 55MW coal-fired cogeneration plant owned by, and located
on, the TPT Petrochemicals PTA facility and is powered by the 55MW
coal-fired cogeneration plant owned by, and located on, the TPT
Petrochemicals PTA facility. We commenced commercial production of the
Indorama Polyester Industries PET resin line in the fourth quarter of
2009.

The following table sets forth our achieved key performance indicators
for the Indorama Polyester Industries Map Ta Phut PET facility for the
periods indicated:

+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   | Y |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | a |           |          |           |
|                                  |   | r |           |          |           |
|                                  |   | E |           |          |           |
|                                  |   | n |           |          |           |
|                                  |   | d |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | d |           |          |           |
|                                  |   | D |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | c |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | m |           |          |           |
|                                  |   | b |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | r |           |          |           |
|                                  |   | 3 |           |          |           |
|                                  |   | 1 |           |          |           |
|                                  |   | , |           |          |           |
+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   |   | 2009      | 2010     | 2011      |
+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   |   |           |          |           |
+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   |   |           |          |           |
+----------------------------------+---+---+-----------+----------+-----------+
|   Effective capacity (tonnes)    |   |   | 24,500    | 102,556  | 91,000    |
+----------------------------------+---+---+-----------+----------+-----------+
|   Production (tonnes) ⁽¹⁾        |   |   | 20,832    | 91,921   | 94,595    |
+----------------------------------+---+---+-----------+----------+-----------+
|   Capacity utilization (%)       |   |   | 85        | 90       | 104       |
+----------------------------------+---+---+-----------+----------+-----------+

(1) Since Q4, 2009, we have converted one polyester production line into
a PET resin production line

GIVL PET Facility

Guangdong IVL PET Polymer Co., Ltd. is the first investment of IVL in
China and allows IVL to establish its footprint in one of the largest
and fastest growing markets for PET. The GIVL PET facility is located on
the riverside in Kaiping City, Guangdong Province, China and has an
installed capacity of 406,000 tonnes per annum. We acquired the GIVL PET
facility from Guangdong Shinda UHMWPE Co., Ltd. in January 2011. The
plant deploys technology from Inventa Fischer, a European technology
provider, and IVL has in its portfolio plants from the same technology
supplier in Lithuania and USA. The plant has its own jetty on the river
for efficient logistics. The main focus will be domestic markets in
China and will be used as an export base to Far East and other markets.
Key raw materials PTA & MEG will be sourced from China and imports.
After completion of the ongoing capacity de-bottlenecking which is
expected to complete in the first quarter of 2012, the installed
capacity of the plant will increase to 522,000 tonnes per annum.

Arteva PET Facility

The Arteva PET facility is located in Querétaro, Mexico and has an
installed capacity of 478,000 tonnes per annum. We acquired the Arteva
PET facility from Invista S.a’ r.l. (formerly DuPont Textiles and
Interiors) in March 2011. This acquisition complement the strategy to
increase IVL footprint into new higher growth markets of Central and
Latin America, with strong R&D set up in the plants that enable us to
provide innovative products to the customers.

The PET is used in application for packaging of carbonated soft drink,
water, beer, juice, food and custom containers. Containers made from
INVISTA polymers can be reclaimed, recycled, and/or reused. In April
2007, INVISTA opened a new state-of-the-art PET resin plant, doubling
its production in order to meet the demand of its markets.

Auriga Facility- PET Line

The Auriga facility is located in Spartanburg, South Carolina, USA and
has total installed capacity of 458,000 tonnes per annum, comprising of
PET capacity of 387,000 tonnes per annum and Polyester fibers and yarns
capacity of 71,000 tonnes per annum. We acquired the Auriga facilityfrom
Invista S.a’ r.l.. The South Carolina facility produces PET used in
bottles for carbonated soft drinks, water, beer, juice, and wine; food
and custom-container applications.

IVL Wloclawek PET Facility

The IVL Wloclawek PET facility is located in Wloclawek, Poland and has
an installed capacity of 153,000 tonnes per annum. We acquired the IVL
Wloclawek PET facility from SK Chemicals in March 2011. The plant
deploys technology from Inventa Fischer and Buhler. The facility
produces PET used in application for packaging of beverages like
carbonated soft drink, water and others.

IVL Tangerang Facility- PET Line

The IVL Tangerang facility is located in Tangerang, Indonesia and has
total installed capacity of 161,200 tonnes per annum, comprising of PET
capacity of 87,600 tonnes per annum and Polyester fibers and yarns
capacity of 73,600 tonnes per annum. We acquired the IVL Tangerang
facility from SK Chemicals in March 2011. The plant employs a well
proven technology from Hitachi, Japan and Buhler, Switzerland. The
facility produces PET used in application for packaging of carbonated
soft drinks, water and other beverages.

PET Sales and Marketing

We have PET sales and marketing teams in each of the regions in which we
operate, which are overseen by our sales and marketing head office in
Thailand. We classify our main customers for PET into four main groups:

-   Well-known brand name beverage companies with their own conversion
    plants to produce PET bottles;

-   Well-known brand name beverage companies who sub-contract the
    production of PET bottle to converters using PET resin purchased by
    such beverage companies

-   PET resin traders; and

-   PET converters who use PET resin to manufacture preforms, bottles,
    sheets and other PET packaging to service the needs of end users.

We sell our PET resin primarily through direct sales to end-use
customers. A small proportion of our sales take place through agents and
traders.

We are the world’s largest PET resin producer and the only PET resin
producer with production facilities in Asia, North America and Europe,
which allows us to market our PET resin products globally to customers
for their world-wide PET requirements. Our marketing activities include
regular meetings with our customers to understand their requirements and
maintain good relationships as well as providing customer service.

PET Competition

The global market for PET resin is highly competitive, involving a large
number of producers located throughout the world, some of whom may have
greater financial resources than us. Because PET resin is a commodity
product, competition in the PET resin market is predominantly based on
price and, to a lesser degree, on reliability and consistency of product
quality and specifications and lead times to product delivery. We
believe our vertically intergrated operations provide us with a
competitive advantage because we have security of raw materials sourcing
and some cost control, over our principal raw material, PTA.

The European Union has adopted anti-dumping duties on PET resin imports
from various Asian countries, including Thailand. In addition, the U.S.
has imposed import duties on PET resin imports from various countries,
including Thailand, at a rate between 3.0% and 6.5%. These anti-dumping
duties and import duties, together with the transportation costs in
shipping PET resin from the country of production to these markets, make
it more difficult for imported PET resin to compete with locally
produced PET resin. Therefore, we believe we have a competitive
advantage in having PET resin production facilities in Europe and in the
U.S.

We are the largest PET producer in North America and Europe after
completion of acquisitions in Q1, 2011. Our principal competitors in the
European market are La Seda de Barcelona, Equipolymers and Neo Group.
Our principal competitors in the North American market are DAK Americas
LLC and M&G Group. Our competitors in the Thai market are Thai Shinkong
Industry Corp., Thai PET Resin Co., Ltd. and Bangkok Polyester Public
Company Limited. Although PET technology is available through commercial
licenses, we believe the capital investment required to achieve
profitability through economies of scale may inhibit new entrants to the
market.

Polyester Fiber and Yarn Business

Polyester Business Overview

We commenced our polyester business in Thailand in 1997 when we acquired
Siam Polyester, which we subsequently re-named Indo Poly. With an
initial installed capacity of 40,000 tonnes per annum, we then increased
our polyester installed capacity to 71,000 tonnes per annum in 2005 and
to 100,800 tonnes per annum in 2007. Indo Poly subsequently transferred
its assets to, and its liabilities were assumed by Indorama Polyester
Industries in 2009.

In August 2008, as part of our strategy to expand the scale of our
production and to vertically integrate the manufacturing of PTA,
polyester and PET, we acquired Tuntex Thailand, a manufacturer of
polyester fibers and yarn in Thailand. Unoperational at the time of
acquisition, the facility restarted production in December 2008. Tuntex
Thailand was subsequently renamed Indorama Polyester Industries. The
acquisition increased our total polyester installed capacity from
100,800 tonnes per annum in 2007 to 352,800 tonnes per annum in 2008. We
have converted a portion of Indorama Polyester Industries’ polyester
capacity into PET resin capacity, which began commercial production in
the fourth quarter of 2009, reducing our aggregate polyester installed
capacity to 244,800 tonnes per annum. We are currently the largest
producer of polyester fibers in Thailand by production capacity.

In 2011, we expanded our Polyester footprint internationally by
acquisitions of Invista facility in Spartanburg, USA and SK Chemical
facility in Indonesia. Both acquisitions were completed in March 2011.
We also have joint venture investment (75% held by IVL: 25% held by
Sinterama S.p.A.) which has completed the acquisition of Trevira GmbH,
an integrated Polyester Fiber facility in Germany and Poland on July 1,
2011. These acquisitions will facilitate the entry of IVL into the
branded specialist filament business and provide access to an
outstanding R&D facility with accompanying intellectual property. In
November 2011, we acquired Wellman International plant which has three
production facilities based in the republic of Ireland, Netherlands and
France. The plant in Ireland is capable of converting waste polyester
into 100% recycled fiber to produce fibers that can be used in a variety
of premium applications, such as in the hygiene industry.

Polyester Products and Polyester Production Process

In our polyester fiber and yarn business, we manufacture a broad range
of products serving both the commodity and non-commodity segments of the
polyester fiber market. In order to differentiate ourselves from a pure
commodity player, we have increased our presence in the non-commodity
segment over the years. As a result, we are able to achieve higher
margins, as compared to pure commodity players, and provide our
customers with value added niche products.

We manufacture a broad range of polyester products to serve a variety of
markets, including non-wovens, home textiles, technical textiles,
automotives and apparel. Our polyester products can be classified into
three main categories: polyester chips, polyester fibers and polyester
yarns. They can further be divided into commodity and non-commodity
products based on the production process and end use applications. The
table below summarizes our polyester products:

  ------------- ---------------------- -----------------------------------
                Commodity              Non-Commodity

  Polyester     Textile Grade and Semi Film Masterbatch, Film Grade, Flame
  Chips         Dull Chips             Retardant, Cationic Dyeable,
                                       Antimony Free, Anti Microbial, Full
                                       Dull and Semi Bright Chips.

  Polyester     Spinning Fiber         Hollow Conjugate, Splin Lace,
  Fibers                               Hygiene, Optically Bright, Super
                                       Bright, Wool Blend and Anti
                                       Bacterial Fibers.

  Polyester     Regular Denier and     Micro Deniers, Multi Filament,
  Yarns         Semi Dull Yarns        Black, Coloured, Bright, Full Dull,
                                       Anti Bacterial, Moisture Management
                                       and Carpet Yarns.
  ------------- ---------------------- -----------------------------------

In the non-commodity polyester market segment, it is important to have
flexible facilities and processes that allow for the ability to move to
different product types according to customer and market requirements,
while maintaining a competitive cost structure. There are two polyester
production processes: the batch process and the continuous process. In
the batch process, polymerization yields polyester chips which are
further processed into polyester fiber. In the continuous process,
however, polyester fiber can be extruded directly from polymerization to
direct spinning.

At our polyester facilities we employ both processes, from which we are
able to gain different advantages. The batch process allows us to
manufacture products that can be modified at the polymerization stage,
for example flame retardant and cationic dyeable products. In addition,
the batch process enables us to produce film grade chips with additives
that impart the special features found in polyester films. The
continuous process at one of our facilities has a provision to add the
dulling agent that allows for the simultaneous production of products
with different lustres.

In addition, we have different features built into our plant
configurations, allowing for modifications to be made to our polyester
products. These include the following:

-   One of our polyester staple fiber (PSF) lines has a side stream
    injection, facilitating the production of special products such as
    anti-bacterial and flame retardant fibers. It also permits the
    addition of post-consumer-recycling in the product;

-   Our partially oriented yarn (POY) machines have circular quenching,
    facilitating the production of micro count yarns;

-   We have an extruder-fed fully drawn yarn (FDY) process line to
    produce fully drawn yarn with differentiated polymers from the batch
    process;

-   We have two different polymer reactors in one process line whereby
    two polymers are fed into a single stream to make hollow conjugate
    fibers (HCF);

-   We have a masterbatch injection facility in fiber spinning,
    facilitating the production of special lustre fibers such as
    optically whitened fibers;

-   We have the ability to use different spin finishes to make fibers
    suitable for various end uses such as non-wovens and hygiene fibers;

-   We have the ability to use silicone oils to produce feather touch
    hollow conjugated fibers;

-   Our pilot partially oriented yarn and draw textured yarn (DTY)
    machines enable us to develop new product applications; and

-   More than half of our partially oriented yarn process lines are
    extruder fed, and therefore have the ability to make various niche
    products such as black yarns, coloured yarns, cationic dyeable
    yarns, yarns with 100% post-consumer-recycling and yarns of
    different lustres

    Polyester Production Facilities

The following table describes our polyester production facilities as of
December 31, 2011

+------------------------+---+------------+---+----------+---+------------------+
| Production Facility    |   | Location   |   | I        |   | Production       |
|                        |   |            |   | nstalled |   | Technology       |
|                        |   |            |   | Cap      |   |                  |
|                        |   |            |   | acity⁽¹⁾ |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|                        |   |            |   | (tonnes  |   |                  |
|                        |   |            |   | per      |   |                  |
|                        |   |            |   | annum)   |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   Indorama Polyester   |   | Nakhon     |   | 127,000  |   | Inventa-Fischer  |
|   Industries           |   | Pathom,    |   |          |   |                  |
|   Nakhon Pathom        |   | Thailand   |   |          |   |                  |
|   Facility             |   |            |   |          |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   Indorama Polyester   |   | Map Ta     |   | 196,000  |   | Tuntex           |
|   Industries           |   | Phut,      |   |          |   |                  |
|   Map Ta Phut Facility |   | Thailand   |   |          |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   Auriga Facility –    |   | Sp         |   | 71,000   |   | Invista          |
|   Polyester line       |   | artanburg, |   |          |   |                  |
|                        |   | South      |   |          |   |                  |
|                        |   | Carolina,  |   |          |   |                  |
|                        |   | USA        |   |          |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   IVL Karawang         |   | Karawang,  |   | 36,000   |   | Teijin Seiki     |
|   Polyester Facility   |   | Indonesia  |   |          |   | Murata           |
+------------------------+---+------------+---+----------+---+------------------+
|   IVL Tangerang        |   | Tangerang, |   | 73,600   |   | Hitachi/ Teijin  |
|   Facility – Polyester |   | Indonesia  |   |          |   | Seiki            |
|   line                 |   |            |   |          |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   Trevira – Polyester  |   | Bobingen & |   | 120,000  |   | Hoechst/         |
|   line                 |   | Gubem,     |   |          |   | Barmag/Fleissner |
|                        |   | Germany    |   |          |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   Wellman              |   | Mullagh,   |   | 153,000  |   | Wellman          |
|   International –      |   | Ireland,   |   |          |   |                  |
|                        |   |            |   |          |   |                  |
|   Recycled Polyester   |   | Spijik,    |   |          |   |                  |
|                        |   | N          |   |          |   |                  |
|                        |   | etherlands |   |          |   |                  |
|                        |   | & Verdun,  |   |          |   |                  |
|                        |   | France     |   |          |   |                  |
+------------------------+---+------------+---+----------+---+------------------+
|   Total                |   |            |   | 776,600  |   |                  |
+------------------------+---+------------+---+----------+---+------------------+

(1) Effective January, 2011, the capacity of plants have been re-rated
to reflect the de-bottlenecking projects taken-up by the various plants
from time-to-time.

(2) 75% JV by acquisition of facility on July 1, 2011.

The following is a brief description of each of our facilities.

Indorama Polyester Industries Nakhon Pathom Polyester Facility

The Indorama Polyester Industries Nakhon Pathom polyester facility is
located in Nakhon Pathom, Thailand, and has an aggregate installed
capacity of 100,800 tonnes per annum, comprising a continuous
polymerization plant with an installed capacity of 88,000 tonnes a year
and a batch polymerization plant with an installed capacity of 20,000
tonnes per annum. We acquired Indo Poly in 1997 and in 2009 Indo Poly
transferred the assets and liabilities of its Nakhon Pathom polyester
facility to Indorama Polyester Industries. We use the continuous
polymerization plant to produce polyester filament, such as partially
oriented yarns, fully drawn yarns and draw textured yarns and polyester
staple fiber. The Indorama Polyester Industries Nakhon Pathom polyester
facility obtains its PTA from our Indorama Petrochem PTA facility and
TPT Petrochemicals PTA facility, which is transported by truck.
Effective January 2011, the capacity has been re-rated to 127,000 tonnes
per annum which captures various debottlenecking projects.

The following table sets forth our achieved key performance indicators
for the Indorama Polyester Industries Nakhon Pathom polyester facility
for the periods indicated:

+----------------------------------+---+----------+----------+-----------+
|                                  |   | Year     |          |           |
|                                  |   | Ended    |          |           |
|                                  |   | December |          |           |
|                                  |   | 31,      |          |           |
+----------------------------------+---+----------+----------+-----------+
|                                  | 2 |          | 2010     | *2011     |
|                                  | 0 |          |          |           |
|                                  | 0 |          |          |           |
|                                  | 9 |          |          |           |
+----------------------------------+---+----------+----------+-----------+
|                                  |   |          |          |           |
+----------------------------------+---+----------+----------+-----------+
|                                  |   |          |          |           |
+----------------------------------+---+----------+----------+-----------+
|   Effective capacity (tonnes)    | 1 |          | 100,800  | 127,000   |
|                                  | 0 |          |          |           |
|                                  | 0 |          |          |           |
|                                  | , |          |          |           |
|                                  | 8 |          |          |           |
|                                  | 0 |          |          |           |
|                                  | 0 |          |          |           |
+----------------------------------+---+----------+----------+-----------+
|   Production (tonnes) ⁽¹⁾        | 1 |          | 110,983  | 106,255   |
|                                  | 1 |          |          |           |
|                                  | 6 |          |          |           |
|                                  | , |          |          |           |
|                                  | 4 |          |          |           |
|                                  | 7 |          |          |           |
|                                  | 8 |          |          |           |
+----------------------------------+---+----------+----------+-----------+
|   Capacity utilization (%)       | 1 |          | 110      | 84        |
|                                  | 1 |          |          |           |
|                                  | 6 |          |          |           |
+----------------------------------+---+----------+----------+-----------+

(1) Based on equivalent production.

*In Q4, 2011 lowered production in view of flooding in area around plant
in Nakhon Pathom, Thailand

Indorama Polyester Industries Map Ta Phut Polyester Facility

The Indorama Polyester Industries Map Ta Phut polyester facility is
located in Map Ta Phut, Thailand, and has an aggregate installed
capacity of 252,000 tonnes per annum, comprising two production lines.
We acquired the Indorama Polyester Industries Map Ta Phut polyester
facility in August 2008 as part of our acquisition of 98.46% of the
shares of Tuntex Thailand, which was subsequently renamed Indorama
Polyester Industries. Unoperational at the time of acquisition, the
Indorama Polyester Industries Map Ta Phut polyester facility restarted
production in December 2008. We have converted one production line into
a PET resin production line with an installed capacity of 108,000 tonnes
per annum. The remaining production line has a polyester installed
capacity of 144,000 tonnes per annum. In the third quarter of 2010, we
have completed the de-bottlenecking of capacity of the polyester
production line at the Indorama Polyester Industries Map Ta Phut
polyester facility to produce polyester staple fiber, and install
machinery to produce ultra fine polyester fibers (FDY). Effective
January 2011, the capacity has been re-rated to 196,000 tonnes per
annum.

The Indorama Polyester Industries Map Ta Phut polyester facility is able
to produce polyester filament, such as partially oriented yarns and draw
textured yarns, as well as polyester staple fiber and hollow conjugated
fiber. The Indorama Polyester Industries Map Ta Phut polyester facility
is located adjacent to the TPT Petrochemicals PTA facility and 55MW
cogeneration plant, from which it obtains both PTA and power
requirements, and the MEG plant, from which it obtains its MEG.

+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   | Y |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | a |           |          |           |
|                                  |   | r |           |          |           |
|                                  |   | E |           |          |           |
|                                  |   | n |           |          |           |
|                                  |   | d |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | d |           |          |           |
|                                  |   | D |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | c |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | m |           |          |           |
|                                  |   | b |           |          |           |
|                                  |   | e |           |          |           |
|                                  |   | r |           |          |           |
|                                  |   | 3 |           |          |           |
|                                  |   | 1 |           |          |           |
|                                  |   | , |           |          |           |
+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   |   | 2009      | 2010     | *2011     |
+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   |   |           |          |           |
+----------------------------------+---+---+-----------+----------+-----------+
|                                  |   |   |           |          |           |
+----------------------------------+---+---+-----------+----------+-----------+
|   Effective capacity (tonnes)    |   |   | 227,500   | 162,148  | 196,000   |
+----------------------------------+---+---+-----------+----------+-----------+
|   Production (tonnes) ⁽¹⁾        |   |   | 181,272   | 167,947  | 158,131   |
+----------------------------------+---+---+-----------+----------+-----------+
|   Capacity utilization (%)       |   |   | 80        | 104      | 81        |
+----------------------------------+---+---+-----------+----------+-----------+

(1) Since Q4, 2009, we have converted one polyester production line into
a PET resin production line

*In year 2011, technical breakdown of the main processing equipment in
plant resulting in lower production volume and utilization

Auriga Facility- Polyester Line

The Auriga facility is located in Spartanburg, South Carolina, USA and
has total installed capacity of 458,000 tonnes per annum, comprising of
PET capacity of 387,000 tonnes per annum and Polyester fibers and yarns
capacity of 71,000 tonnes per annum. We acquired the Auriga facilityfrom
Invista S.a’ r.l. in March 2011. The South Carolina facility produces
polyester fibers and yarns for textile applications and technical
applications.

IVL Karawang Polyester Facility

The IVL Karawang Polyester facility is located in Karawang, Indonesia
and has an installed capacity of 36,000 tonnes per annum of Polyester
Filament yarns. We acquired the IVL Karawang Polyester facility from SK
Chemicals in March 2011. The facility produces polyester fibers and
yarns for textile applications.

IVL Tangerang Facility- Polyester line

The IVL Tangerang facility is located in Tangerang, Indonesia and has
total installed capacity of 161,200 tonnes per annum, comprising of PET
capacity of 87,600 tonnes per annum and Polyester fibers and yarns
capacity of 73,600 tonnes per annum. We acquired the IVL Tangerang
facility from SK Chemicals in March 2011. The plant employs a well
proven technology from Hitachi, Japan and Buhler, Switzerland. The
facility produces polyester fibers and yarns for textile applications
and technical applications.

Trevira – Polyester facility

On July 01, 2011, Trevira Holdings GmbH, the joint venture entity (75%
held by IVL : 25% held by Sinterama S.p.A.), has completed the
acquisition Trevira GmbH. of Germany. Trevira GmbH is a fully integrated
Polyester Fiber Company in Europe with a capacity of 120,000 tons per
annum of Staple Fiber and Filament Yarn at its manufacturing locations
in Germany and Poland. Trevira GmbH is the market leader in Europe in
high value applications of polyester, especially in automotive and home
textiles. The company is a widely known and well-recognized brand both
amongst customers and producers of synthetic fabrics. The acquisition of
Trevira GmbH will facilitate the entry of IVL into the branded
specialist filament business and provide access to an outstanding
research and development facility with accompanying intellectual
property. Through both partners' global marketing and sales networks,
customers will be presented with a much deeper portfolio of value-added
products and we will be able to attract new customers seeking to benefit
from the unique and comprehensive branded product range.

Wellman – Recycled Polyester facility

Wellman International has three production facilities in Europe with
total output 153,000 tons : a polyester fiber plant based in Mullagh,
the Republic of Ireland, recycling plants at Spijk in the Netherlands
and Verdun in France. The plant in Ireland is capable of converting
waste polyester into 100% recycled fiber. Post consumer recycled Bottles
are flaked and processed with other waste material to produce fibers
that can be used in a variety of premium applications, such as in the
hygiene industry.

Polyester Sales and Marketin

Our main customers for polyester products are companies producing
textiles for apparel, companies producing home textiles and industrial
companies such as automotive companies and packaging film producers. Our
polyester sales and marketing head office is located in Thailand and is
responsible for sales and marketing activities relating to our customers
worldwide. We sell our polyester products directly to our customers for
domestic sales in Thailand and through sales agents for our export
sales.

Our marketing activities include regular contact with our customers to
understand their requirements and maintain good relationships as well as
providing customer service.

Polyester Competition

Competition in the global polyester industry is characterized by the
presence of large diversified industrial companies, as well as a large
number of relatively small niche players with a capacity of less than
10,000 tonnes per annum. Larger polyester producers usually focus on
high-volume standard fibers for sale in domestic markets where the level
of competition is high and where competition is predominantly based on
price and, to a lesser degree, on consistency of product quality and
specifications and lead times to product delivery. We intend to continue
to vertically integrate our operations, which we believe will provide us
with a competitive advantage because we have security of supply of, and
have a degree of cost control over, our principal raw material, PTA. We
also intend to avoid competing with the larger polyester producers for
commodity polyester products by continuing to focus on increasing the
production of non-commodity products so that they comprise approximately
half of our total polyester output.

Large polyester producers that focus on volume typically lack marketing
channels for the sale of niche products. Therefore, the level of
competition in niche product markets is moderate to low and pricing
pressure is typically lower than for polyester standard fibers or for
PET resin. In niche markets, competition is based more on the ability to
meet product quality and specifications and lead times to product
delivery.

The table below summarizes our competitors for our polyester products.

+------------------+---+-------------+---+---------------------------------+
| Product          |   | Thai        |   | Export Market                   |
|                  |   | Domestic    |   |                                 |
|                  |   | Market      |   |                                 |
+==================+===+=============+===+=================================+
| Film grade chips |   | Huvis-Korea |   | Toray-Korea, SK                 |
|                  |   |             |   | Keris-Indonesia, Mitsubishi     |
|                  |   |             |   | Chemical, Tejin – Japan         |
+------------------+---+-------------+---+---------------------------------+
| Fiber            |   | Kangwal     |   | Reliance, Formosa, Huvis, Far   |
|                  |   | Polyester,  |   | Eastern Textiles, Recron        |
|                  |   | Tejin       |   | Polyester (Reliance), Nan Ya,   |
|                  |   | Polyester,  |   | Alpek                           |
|                  |   |             |   |                                 |
|                  |   | Thai        |   |                                 |
|                  |   | Polyester   |   |                                 |
+------------------+---+-------------+---+---------------------------------+
| Yarn             |   | Kangwal     |   | Recron Polyester, Polyfinis –   |
|                  |   | Polyester,  |   | Indonesia, CFC China,           |
|                  |   | Tejin       |   | Xiangshang- China, Far Eastern  |
|                  |   | Polyester,  |   |                                 |
|                  |   |             |   |                                 |
|                  |   | Thai        |   |                                 |
|                  |   | Polyester   |   |                                 |
+------------------+---+-------------+---+---------------------------------+

There are no anti-dumping or import duties or tariffs in Europe, North
America or Asia on the types of polyester fiber, yarn or other polyester
products that we sell that would have a material impact on our business,
financial condition, results of operations and prospects.

PTA Business

PTA Business Overview

Our PTA business supports the PET business and the polyester business.
Our PTA business comprises the production and sale of PTA, an organic
acid in the form of fine, white powder used as a raw material in the
production of PET and polyester products. We entered into the PTA
business in an effort to vertically integrate our PET and polyester
businesses with the upstream production of raw materials.

We commenced the PTA business in March 2008 when we acquired a PTA plant
with an installed capacity of 350,000 tonnes per annum in Rotterdam, the
Netherlands from the Eastman Chemical Company. Our PTA production
capacity increased further in 2008 when we acquired Indorama Petrochem,
which owns a PTA plant in Map Ta Phut, Thailand with an installed
capacity of 700,000 tonnes per annum, and TPT Petrochemicals, which owns
a PTA plant in Map Ta Phut, Thailand with an installed capacity of
540,000 tonnes per annum. On July 1, 2010 acquired 50% equity stake in
UAB Ottana Polimeri Europe which owns and operates a PTA plant in
Ottana, Italy with an installed capacity of 192,000 tonnes per annum.

PTA

PTA is the feedstock used in the manufacture of polyester fibers and
yarns, PET resins and polyester film. PTA is produced from PX, which is
an aromatic hydrocarbon and its sole use is in the production of
polyester polymer intermediates, PTA and DMT. PX is derived from the
refining of naphtha obtained from crude oil, and is a traded commodity.

Our PET and polyester fibers and yarns businesses are supported within
the group by our vertical integration in 2008 into PTA, a major raw
material.

The following table illustrates the level of our vertical integration by
showing our primary production and the amounts of such production which
are converted within our group in the production of PET and polyester
products:

+----------------------------------+----------+---+---+--------+----+-----+
|                                  | Year     |   |   |        |    |     |
|                                  | Ended    |   |   |        |    |     |
|                                  | December |   |   |        |    |     |
|                                  | 31,      |   |   |        |    |     |
+----------------------------------+----------+---+---+--------+----+-----+
|                                  | 2009     |   | 2 |        |    | 2   |
|                                  |          |   | 0 |        |    | 011 |
|                                  |          |   | 1 |        |    |     |
|                                  |          |   | 0 |        |    |     |
+----------------------------------+----------+---+---+--------+----+-----+
|   PTA                            |          |   |   |        |    |     |
+----------------------------------+----------+---+---+--------+----+-----+
|   (In thousands of tonnes,       |          |   |   |        |    |     |
|   except percentages)            |          |   |   |        |    |     |
+----------------------------------+----------+---+---+--------+----+-----+
|   Produced                       | 1,584.7  |   |   | 1      |    | 1   |
|                                  |          |   |   | ,594.8 |    | ,62 |
|                                  |          |   |   |        |    | 0.8 |
+----------------------------------+----------+---+---+--------+----+-----+
|   Internally consumed within the | 741.4    |   |   | 751.7  |    | 80  |
|   group⁽¹⁾                       |          |   |   |        |    | 0.7 |
+----------------------------------+----------+---+---+--------+----+-----+
|   Integration ratio (%)⁽²⁾       | 46.8     |   |   | 47.1   |    | 4   |
|                                  |          |   |   |        |    | 9.4 |
+----------------------------------+----------+---+---+--------+----+-----+

(1) Includes inventory of products produced in one period but converted
in a subsequent period.

(2) Volume of production internally consumed within the group to produce
PET and polyester divided by production of PTA.

PTA Production Process

The chart below summarises the PTA production process.

[]

PTA Production Facilities

The following table sets out the key figures for our PTA production
facilities as of June 30, 2011

+--------------------+---+-----------------+---+-----------+---+------------+
| Production         |   | Location        |   | Nameplate |   | Production |
| Facility⁽⁴⁾        |   |                 |   | Ca        |   | Technology |
|                    |   |                 |   | pacity⁽¹⁾ |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+
|                    |   |                 |   | (tonnes   |   |            |
|                    |   |                 |   | per       |   |            |
|                    |   |                 |   | annum)    |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+
|   Indorama         |   |   Rayong,       |   | 771,000   |   | Invista    |
|   Petrochem PTA    |   |   Thailand      |   |           |   |            |
|   Facility         |   |                 |   |           |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+
|   TPT              |   |   Map Ta Phut,  |   | 602,000   |   | Technimont |
|   Petrochemicals   |   |   Thailand      |   |           |   |            |
|   PTA Facility⁽²⁾  |   |                 |   |           |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+
|   IRH Rotterdam    |   |   Rotterdam,    |   | 377,000   |   | Eastman    |
|   PTA Facility     |   |   the           |   |           |   |            |
|                    |   |   Netherlands   |   |           |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+
| Ottana Polimeri    |   | Ottana, Italy   |   | 184,000   |   | Dow        |
| S.R.L. ⁽³⁾         |   |                 |   |           |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+
|   Total            |   |                 |   | 1,934,000 |   |            |
+--------------------+---+-----------------+---+-----------+---+------------+

(1) Effective January, 2011, the capacity of plants have been re-rated
    to reflect the de-bottlenecking projects taken-up by the various
    plants from time-to-time.

(2) We own a 99.96% equity interest in TPT Petrochemicals

(3) Joint ventures investment 50/50 equity interest

(4) Excludes capacity of PT Indorama Petrochemicals in which IVL holds a
    42% equity stake and expected to start operation in Q2, 2012

The following is a brief description of each of our PTA facilities.

Indorama Petrochem PTA Facility

The Indorama Petrochem PTA facility is located in Map Ta Phut, Thailand
and has an installed capacity of 700,000 tonnes per annum. The Indorama
Petrochem PTA facility commenced commercial production in 2006. We
acquired Indorama Petrochem, which owns the PTA facility, in September
2008. The Indorama Petrochem PTA facility obtains its PX from PTT
Aromatics and Refinery, Thai Paraxylene and Exxon, which is transported
by pipeline or barge from their respective PX facilities. Effective
January 2011, the capacity has been re-rated to 771,000 tonnes per annum
which captures various debottlenecking projects.

The following table sets forth our achieved key performance indicators
for the Indorama Petrochem PTA facility for the periods indicated:

+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   | Year      |   |          |   |       |
|                                  |   | Ended     |   |          |   |       |
|                                  |   | December  |   |          |   |       |
|                                  |   | 31,       |   |          |   |       |
+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   | 2009      |   | 2010     |   | 2011  |
+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   |           |   |          |   |       |
+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   |           |   |          |   |       |
+----------------------------------+---+-----------+---+----------+---+-------+
|   Effective capacity (tonnes)    |   | 700,000   |   | 700,000  |   | 77    |
|                                  |   |           |   |          |   | 1,000 |
+----------------------------------+---+-----------+---+----------+---+-------+
|   Actual Production (tonnes)     |   | 714,235   |   | 723,162  |   | 71    |
|                                  |   |           |   |          |   | 3,308 |
+----------------------------------+---+-----------+---+----------+---+-------+
|   Capacity utilization (%)       |   | 102       |   | 103      |   | 93    |
+----------------------------------+---+-----------+---+----------+---+-------+

We operate our Indorama Petrochem PTA facility non-stop throughout the
year, except for periods of scheduled or unscheduled shutdown. The
number of days we shut down our Indorama Petrochem PTA facility in any
year has a substantial effect on our capacity utilization rate in that
year.

TPT Petrochemicals PTA Facility

The TPT Petrochemicals PTA facility is also located in Map Ta Phut,
Thailand and has an installed capacity of 540,000 tonnes per annum. We
acquired a 50.56% interest in TPT Petrochemicals between August and
October 2008, increased our shareholding to 54.60% by purchasing
additional shares from other shareholders in December 2009 and
subsequently increased our shareholding to 99.96% by purchasing
additional shares from other shareholders in October, 2010. Effective
January 2011, the capacity has been re-rated to 602,000 tonnes per annum
which captures various debottlenecking projects.

The TPT Petrochemicals PTA facility obtains its PX from PTT Aromatics
and Refinery, which is transported by pipeline from its PX facility,
which is located adjacent to the TPT Petrochemicals PTA facility. The
TPT Petrochemicals PTA facility also provides our Indorama Polyester
Industries polyester facility at Map Ta Phut, which is co-located with
the TPT Petrochemicals PTA facility, with PTA. The TPT Petrochemicals
PTA facility obtains its electricity from its own 55MW coal-fired
cogeneration plant co-located with the TPT Petrochemicals PTA facility,
which also provides electricity to the Indorama Polyester Industries’
Map Ta Phut polyester facility. We sell the excess electricity we do not
use, as well as the steam produced by the cogeneration plant, to third
parties.

The following table sets forth our achieved key performance indicators
for the TPT Petrochemicals PTA facility for the periods indicated:

+----------------------------------+---+-----------+---+---------+---+---------+
|                                  |   | Year      |   |         |   |         |
|                                  |   | Ended     |   |         |   |         |
|                                  |   | December  |   |         |   |         |
|                                  |   | 31,       |   |         |   |         |
+----------------------------------+---+-----------+---+---------+---+---------+
|                                  |   | 2009      |   | 2010    |   | 2011    |
+----------------------------------+---+-----------+---+---------+---+---------+
|                                  |   |           |   |         |   |         |
+----------------------------------+---+-----------+---+---------+---+---------+
|                                  |   |           |   |         |   |         |
+----------------------------------+---+-----------+---+---------+---+---------+
|   Effective capacity (tonnes)    |   | 540,000   |   | 540,000 |   | 602,000 |
+----------------------------------+---+-----------+---+---------+---+---------+
|   Production (tonnes)            |   | 525,971   |   | 534,547 |   | 544,925 |
+----------------------------------+---+-----------+---+---------+---+---------+
|   Capacity utilization (%)       |   | 97        |   | 99      |   | 91      |
+----------------------------------+---+-----------+---+---------+---+---------+

IRH Rotterdam PTA Facility

The IRH Rotterdam PTA facility is located in Rotterdam, the Netherlands
and has an installed capacity of 350,000 tonnes per annum. We acquired
the facilityfrom the Eastman Chemical Company in 2008. Effective January
2011, the capacity has been re-rated to 377,000 tonnes per annum which
captures various debottlenecking projects.

The facility is located in Europort with access to the port of
Rotterdam. The IRH Rotterdam PTA facility obtains its PX from Exxon,
which is transported by barge from its PX facility. All of the PTA
produced by the IRH Rotterdam PTA facility is used to supply our PET
production facilities in the Netherlands, the United Kingdom and
Lithuania.

The following table sets forth our achieved key performance indicators
for the IRH Rotterdam PTA facility for the periods indicated:

+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   | Year      |   |          |   |       |
|                                  |   | Ended     |   |          |   |       |
|                                  |   | December  |   |          |   |       |
|                                  |   | 31,       |   |          |   |       |
+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   | 2009      |   | 2010     |   | 2011  |
+----------------------------------+---+-----------+---+----------+---+-------+
|                                  |   |           |   |          |   |       |
+----------------------------------+---+-----------+---+----------+---+-------+
|   Effective capacity (tonnes)    |   | 350,000   |   | 350,000  |   | 37    |
|                                  |   |           |   |          |   | 7,000 |
+----------------------------------+---+-----------+---+----------+---+-------+
|   Production (tonnes)            |   | 344,477   |   | 337,068  |   | 36    |
|                                  |   |           |   |          |   | 2,590 |
+----------------------------------+---+-----------+---+----------+---+-------+
|   Capacity utilization (%)       |   | 98        |   | 96       |   | 96    |
+----------------------------------+---+-----------+---+----------+---+-------+

In June, 2010, IVL subsidiary, IVL Belgium N.V., acquired a 50% equity
stake in Ottana Polimeri S.R.L., Italy through a joint venture with PCH
Holdings. The plant was acquired from Equipolymers S.R.L. Ottana
Polimeri owns and operates a 184,000 tons per annum PTA plant on the
island of Sardinia in Italy. The PTA plant is co-located with a PET
plant which consumes majority of PTA produced captively.

In June 2011, IVL subsidiary, Indorama Netherlands B.V., approved to
acquireupto 50% equity stake in PT Polyprima Karyesreska ("PT
Polyprima"), a PTA producer. PT Polyprima is located in Cilegon, West
Java, Indonesia and has an installed capacity of 465,000 tonnes per
annum. The technology used is that of Invista. The restructuring and
approval process is completed by Q4, 2011. After the debt restructuring
with creditors and issue of new capital by PT Polyprima, IVL
shareholding will be reduced to 42% in PT Polyprima. PT Indorama
Synthetics Tbk, (PTIRS) will hold another 42% and the balance by others.
Currently, the plant is not operating and is expected to start
commercial production in Q2, 2012 on completion of required maintenance,
revamping and capacity de-bottlenecking. On de-bottlenecking the
capacity will increase to 500,000 tonnes per annum.

PTA Sales and Marketing

Our main customers for PTA are PET resin and polyester producers. A
significant proportion of our PTA production is used by our downstream
PET and polyester production facilities. We sell the remaining PTA that
we do not use within the group to third party customers. In 2010 and
2011, we sold 47.1% and 49.4%, respectively, of our PTA production
volume to the group and 52.9% and 50.6%, respectively, of our PTA
production volume to third party customers.

We sell our PTA either directly to our customers or through trading
companies. We sell some of our PTA through trading companies principally
because either the trading company provides the end customer with trade
finance or because the trading company is purchasing for its own
account. We bear the cost of the trading companies’ commissions by
reflecting it in the PTA price that we charge the customers. Although we
conduct a portion of our sales through trading companies, we know the
identities of the end customers.

Our PTA sales and marketing head office is located in Thailand and is
responsible for sales and marketing activities relating to our customers
worldwide. Our marketing activities include regular meetings with our
customers to understand their requirements and maintain good
relationships as well as providing customer service.

PTA Competition

As PTA is a commodity product, competition is based mainly on price and,
to a lesser extent, on product quality and lead times to product
delivery.

Manufacturers of PTA can be classified between merchant producers and
integrated PTA producers. Merchant producers manufacture and supply PTA
to third parties, whereas integrated PTA producers manufacture PTA for
their own captive consumption. We are an integrated PTA producer.

In 2011, there were only two producers of PTA in Thailand, namely Siam
Mitsui and ourselves. We believe that Siam Mitsui, which is a merchant
producer, has an installed capacity of approximately 1,500,000 tonnes
per annum. In international export markets we also compete with PTA
merchant producers located in Asia, Europe and the United States,
including BP, CAPCO, Zhejiang Hualian Sunshine, Mitsubishi Chemical
Corporation, Samsung Petrochemical, Sinopec Yizheng Chemical Fibre Co.
Ltd., Mitsui Chemicals, Sam Nam Petrochemical and Dragon Group. We do
not sell the PTA that we produce in Europe to third parties but consume
such PTA within our group.

Although PTA technology is available through commercial license, we
believe the capital investment required to achieve profitability through
economies of scale may inhibit new entrants to the market.

There are no material anti-dumping or import duties or tariffs on PTA in
Europe, North America or Asia. However, in February 2010 China has
imposed anti-dumping duties on PTA products from Thailand and Korea. The
imposition of these duties do not have a material adverse effect on our
PTA business.

We believe there is no economically viable competing or substitute
material to PTA that can be used in the polyester chain. DMT is at a
significant disadvantage as compared to PTA due to the greater costs
incurred when using DMT as a raw material.

Wool Business

Our wool business is a niche business which comprises the development,
production and sale of wool yarns and wool tops. We entered the wool
business in 1994 when we opened our Indorama Holdings wool yarn facility
in Thailand for the production and export of wool yarn. In 1995, we
opened our IRT wool top facility to provide manufactured raw materials
for the Indorama Holdings wool yarn facility. The Indorama Holdings wool
yarn facility was the first worsted wool spinning mill in Thailand and
continues to be the only fully-fledged worsted wool spinning operation
in the country. We produce and sell worsted wool yarn. Worsted wool yarn
is a high quality wool product, used mostly in high-value retail textile
applications such as quality woven apparel and knitwear and, to a lesser
extent, in premium bedding and other interior textile products.

Raw Materials and Suppliers

The two principal raw materials used in the production of the polyester
value chain are PX and MEG. Other additives and utilities that we
require in our business include acetic acid, isopthalic acid, various
catalysts and various gases.

PTA

We have vertically integrated a portion of our PET business and
Polyester fibers and yarns to our PTA business to provide reliable and
cost effective PTA supplies. Our IRP Rotterdam PET facility and our
Indorama Polyester Industries Polyester fibers and yarns line and PET
resin line are co-located with our IRH Rotterdam PTA facility and TPT
Petrochemicals PTA facility, respectively, while our AlphaPet PET
facility is co-located with the PTA production facility of BP with whom
we have a long-term offtake agreements to purchase PTA. Our IRP
Workington PET facility and Orion Global PET facility obtains some of
its PTA from our IRH Rotterdam PTA facility. Our Asia Pet/Indorama
Polymers PET plant in Lopburi, Thailand and Indorama Polyester
Industries, Nakhon Pathom facility, Thailand source PTA from Indorama
Petrochem and TPT Petrochem plants in Thailand.

MEG

We purchase MEG, a downstream derivative of ethylene, from large global
producers through short and medium term contracts at a price linked to
benchmark published prices. In order to obtain the best prices for the
MEG that we purchase, we source for, and negotiate the prices of, these
raw materials through an informal arrangement with the S.P. Lohia Group
(which is controlled by our Chairman and his immediate family) and the
O.P. Lohia Group (which is controlled by the brother of both our
Chairman and our Chief Executive Officer). However, purchase contracts
are entered into by the relevant subsidiary company according to such
subsidiary’s volume and specification requirements. Our group, the S.P.
Lohia Group and the O.P. Lohia Group combined are the largest, and our
group is the second largest, purchasers of MEG worldwide. By being a
global producer of polyester polymers, we are able to procure MEG on a
pan-global basis.

Paraxylene

We are amongst the world’s largest buyers of PX. We purchase our PX
under long term contracts with PTT Aromatics and Refinery Public Company
Limited, PTT Public Company Limited, Thai Paraxylene Company Limited and
Exxon Chemical Thailand Limited, typically through long-term contracts.
Our Thai PTA plants are able to take delivery of PX either from Thai or
international suppliers via their own Map Ta Phut pipeline which runs
directly from the Thai Tank Terminal (our raw material storage services)
to their tank yard. In Rotterdam, Netherlands, Europe our PTA facility
has its own jetty and Paraxylene is piped into through barges.

Others

Other consummables that we use include acetic acid, IPA, various
catalysts, nitrogen and hydrogen. We purchase these consummables from
various suppliers typically under short-term contracts of one year.

Environmental, Regulatory and Health and Safety Matters

Environmental Matters

Our production facilities generate primarily liquid waste and gaseous
emissions, and small amounts of solid sludge waste and polymer chunks.
Our operations and activities require several permits and approvals, all
of which have either been obtained or are in the process of being
obtained.

We have wastewater treatment units designed specifically for use in our
plants that treat wastewater in several stages to comply with applicable
regulations before the wastewater is discharged in open waterways
leading to the sea. For air emissions, we use filters and a variety of
wet scrubbers, including sodium hydroxide spray scrubbers, rotary
scrubbers, venturi scrubbers and catalytic destruction units to reduce
fine particle and volatile organic compound emissions to within
regulatory standards. Our solid waste consist mainly of sludge and
polymer chunks, which is disposed of through licensed third party
handlers audited on a frequent basis.

Our existing waste management systems allow us to comply in all respects
with existing environmental laws and regulations in Thailand, the United
States, the United Kingdom, the Netherlands and Lithuania.

Indorama Holdings, Indorama Polymers, Orion Global, Indorama Polyester
Industries at Nakhon Pathom, Indorama Petrochem and TPT Petrochemicals
have each been awarded with ISO 14001 Certification for their
environmental management system.

The Rotterdam facilities follow the Dutch chemical association
Responsible Care Program.

The business operations of the Company and its subsidiaries in each of
the jurisdictions in which it operates have been, in 2009,2010, and 2011
and are in compliance with applicable environmental laws in all material
respects. Neither the Company nor any of its subsidiaries in Thailand,
United State, United Kingdom, Netherlands, or Lithuania is subject to
any allegations or involved in any disputes with governmental
authorities in relation to environmental laws except lawsuit regarding
the improvement of project to increase production efficiency and improve
the air pollution treatment system of Indorama Petrochem PTA Facility,
which was filed a lawsuit in the Thai Central Administrative Court. The
said lawsuit was cleared in year 2010 and the court released Indorama
Petrochem from the lawsuit.

Environmental Regulation

We are required to comply with, and are subject to liability under,
environmental laws and regulations in Thailand, the United States, the
United Kingdom, the Netherlands and Lithuania. Environmental laws and
regulations relating to air emissions and water discharges from
production facilities affect all aspects of our business.

The details and applicability of environmental laws or regulation varies
among our business segments and the geographic locations of our
production facilities. These include regulation relating to waste
disposal, emission levels, waste discharges, wastewater treatment and
noise levels resulting from our operations. We carry out periodic
analysis and third party inspections of each plant. Compliance with
relevant laws and regulation is the responsibility of the respective
managers of the operating companies, who are directly responsible to our
senior management.

Thailand

The 2007 Thai Constitution also contains specific definitions and
provisions relating to the government’s responsibility and citizen’s
rights in the management and development of natural resources and the
environment. It also prohibits projects which may seriously affect the
community with respect to the quality of the environment, natural
resources and health, unless, prior to the operation thereof, their
impacts on the quality of the environment and on public health have been
studied and assessed and a public hearing process has been conducted for
consulting the public as well as interested persons and the opinions of
an independent organization, consisting of representatives, have been
obtained. On December 29, 2009, the Ministry of Natural Resources and
Environment of Thailand issued a notification regarding the criteria,
procedures, code of practice and guidelines for preparation of
environmental impact assessment reports (the “EIA Report”) for projects
or activities which may cause a serious impact on the community with
regard to the quality of environment, natural resources and public
health. The notification provides guidelines for the preparation of the
EIA Report, which includes an assessment of public health as well as a
holding of a public hearing and a hearing of opinions from independent
environmental organizations. However, it is unclear which independent
organizations will provide such opinions on such projects. The
government is in the process of considering promulgating laws with
regards to independent organizations and amending the regulation issued
under the Constitution with respect to the types of projects that may
cause a serious impact on the community.

The primary bodies of the Government of Thailand, which supervise our
operations, are the Office of Natural Resources and Environmental Policy
and Planning (“ONEP”) and the Pollution Control Department, both under
the control of the Ministry of Natural Resources and Environment. We are
required by Thai environmental laws to obtain an approval from ONEP and
to conduct environmental impact assessments of potential facilities
(including any expansion of current facilities) prior to construction or
installation. In addition, we are required to assess the likely effect
our activities have on the surrounding environment, ensure that we
operate our facilities with minimal impact on the environment and the
local population, maintain the emissions of our facilities within
certain limits and submit monthly and quarterly reports to the
Industrial Estate Authority of Thailand and ONEP relating to the above.

United States of America

In the United States, we are subject to extensive federal, state, local
laws, regulations, rules and ordinances relating to pollution,
protection of the environment and the generation, storage, handling,
transportation, treatment, disposal and remediation of hazardous
substances and waste materials. U.S. environmental regulations relevant
to us include the Clean Air Act, Clean Water Act, Resource Conservation
and Recovery Act and Federal Comprehensive Environmental Response,
Compensation and Liability Act. The primary body of the U.S. government
that supervises our operations is the U.S. Environmental Protection
Agency.

United Kingdom

The United Kingdom environmental regulations relevant to us include the
Pollution Prevention and Control Act 1999 and the regulations
promulgated thereunder. We are required to obtain an integrated
environmental permit issued by the United Kingdom Environment Agency
under the Pollution Prevention and Control (England and Wales)
Regulations 2000 for our IRP Workington PET facility. We obtained our
integrated environmental permit on December 19, 2006. The integrated
environmental permit is issued under a regulatory system that employs an
integrated approach to control the environmental impacts of certain
industrial activities through a single permitting process, and
implements the EU Integrated Pollution Prevention and Control Directive
in the United Kingdom.

Our permit includes conditions related to management, operations,
emissions and reporting/recordkeeping and specifically sets emission
limit values for certain regulated sources. The permit also included six
improvement programmed requirements that we were required to implement,
including the requirement to carry out an assessment of the techniques
available to reduce NO_(x) emissions. Five of the six requirements have
been met and a submission on the NO_(x) emissions is currently being
considered by the UK Environment Agency.

The Netherlands

In the Netherlands, we are subject to the Environmental Management Act
(Wet milieubeheer) and are required to obtain an Environmental Permit
that regulates aspects such as air and noise emission, discharge of
wastewater, solid waste disposal, use and storage of hazardous
substances, process safety, odor nuisance and the prevention of soil and
groundwater pollution. The original permit was issued on July 15, 1996,
together with a wastewater permit and subsequent permits were issued to
cover expansion at the IRP Rotterdam PET facility and the IRH Rotterdam
PTA facility.

Following the promulgation of the EU Integrated Pollution Prevention and
Control Directive, the DCMR Environmental Protection Agency (the
regional environmental agency) confirmed that a revised Integrated
Pollution Prevention and Control permit was required for the Rotterdam
facilities covering both the PET and PTA facilities, which we received
in 2008. We are required, as part of the permit conditions, to submit
annual environmental reports for formal approval by competent
authorities.

We expect air emissions legislation to be tightened in the future on
NO_(x), small particles and volatile organic compounds, which may result
in further capital expenditures being required to upgrade the catalytic
destruction of volatile organic compounds, replacement of burners to
reduce NO_(x) and scrubbers to reduce fine particles.

Lithuania

Under the Lithuanian Republic environmental regulations, we cannot begin
any processing activities without obtaining the Integrated Pollution
Prevention and Control permit, the main law which was implemented
regarding the EU Integrated Pollution Prevention and Control Directive.
We received the Integrated Pollution Prevention and Control permit on
March 29, 2007, which was updated on September 18, 2007, for producing
600 tonnes per day. In March 2009, the Environmental Protection
Department of the Klaipeda region approved an increase to our plant
capacity from 600 tonnes per day to 700 tonnes per day. The Integrated
Pollution Prevention and Control permit was renewed on April 1, 2009 and
is valid until December 31, 2011. We are required, as part of the permit
conditions, to submit quarterly and annual environmental reports to the
Environmental Protection Department of the Klaipeda region.

Health and Safety

We place significant emphasis on the health and safety of our employees,
and are required to comply with a range of health and safety laws and
regulations. We review our health and safety standards on an ongoing
basis and our operations are subject to government authority inspections
throughout the year. We have a safety, health and environment manual for
our employees. Our employees undergo periodic health check-ups as well
as health and safety training due to legal obligations. Specific health
and safety standards and practices vary according to operation and
geographic location.

Operational Hazards and Insurance

Our operations are subject to numerous operating risks, including fire,
earth movement, flood, machinery breakdown, public liability, product
liability, employer’s liability and cargo damage. These risks and
hazards could result in damage or destruction to production facilities,
personal injury, environmental damage and business interruption.

In order to protect ourselves against such risks, we maintain business
all-risk insurance against property damage, machinery breakdown,
business interruption, public liability, employer’s liability, cargo
insurance, finished goods, raw material and indirect material stock. Our
coverage is on a replacement basis. Under the terms of some of our debt
agreements, we are required to name the lenders as a beneficiary or loss
payee of some of our insurance policies.

We maintain insurance against many of the risks we face in an amount
that our Directors consider to be adequate. However, some of our
operations are not insured, including cash handling and group travel
because such insurance is either not available or not deemed necessary.

Competitive Strengths

[]

We believe that our key competitive strengths are

Industry Focus and Leading Market Positions

We are a leading global producer in the polyester value chain within the
broader petrochemical stream. In 2010 and in 2011, 98.3 % and 99.0% of
our total revenue from sale of goods, respectively, were derived from
the production and sale of PET resin, polyester fiber and yarn and PTA.
We have maintained a keen focus and commitment to the industry in which
we participate. Since 2003, we have significantly sharpened our focus in
the polyester value chain through various expansions and acquisitions,
the disposal of a non-core chemical business, and by expanding our
business portfolio and geographical presence. As a result, we have
become a leading vertically integrated global manufacturer of polyester
polymers.

We believe that we are one of the few petrochemical companies that focus
on the polyester value chain, compared with other important players who
are organized in large divisions that, in turn, consist of many
different businesses. We believe that the key advantages of being a
focused player are:

-   Better understanding of the key success factors for individual
    businesses;

-   More efficient allocation of capital and human talent;

-   Ability to make quick management and commercial decisions; and

-   Reduction in overheads needed to manage a diverse set of operations
    and addition of more value due to the similarity of the businesses.

    Global Sales and Manufacturing Footprint

We are a global company with 28 manufacturing facilities located in 14
countries, namely Thailand, the United States, Lithuania, the
Netherlands, the United Kingdom, Mexico, Italy, Germany, France, Poland,
the Republic of Ireland, the republic of China, Indonesia and Nigeria,
across 4 continents, namely Asia, North America, Europe, and Africa,
supplying products to customers worldwide. We are the only PET resin
producer with operations in Asia, North America and Europe, the three
major PET resin regions. Our polyester business is located in Asia and
has a globally diversified customer base. Our PTA is manufactured in
Thailand and Europe to provide the support to our downstream operations
as well as to market to external customers worldwide.

We believe that our global presence enables us to:

-   Capture volume growth;

-   Widen our customer base;

-   Increase our cost competitiveness by being closer to our customers
    and suppliers;

-   Lower our logistical costs;

-   Benefit from averting existing trade barriers; and

-   Reduce the exposure to cyclicality and dependence on any single
    market.

Integrated Business Model

Our polyester value chain business is vertically integrated into PTA,
PET resin and polyester fiber and yarn. A significant proportion of our
PTA requirements ( 47.1% in 2010 and 49.4% in 2011) for our downstream
PET and polyester production facilities is sourced internally.

We believe that the key benefits from integration include:

-   Security of PTA supply for our PET and polyester operations during
    periods of market fluctuations, specifically in periods of high PTA
    demand;

-   Captive consumption for our PTA operations, resulting in the ability
    to maintain higher capacity utilization as compared to merchant PTA
    suppliers, even in periods of reduced PTA demand;

-   Cost savings through PTA and PET and polyester site co-locations due
    to reduction of logistics costs and the sharing of common services;
    and

-   Cost savings through integration due to reduction of fixed costs
    associated with raw materials procurement, sales and marketing and
    administrative functions.

We believe that integration enhances our operating efficiency,
competitiveness and responsiveness to customers and market developments,
as well as allowing stability in volumes and profits.

Strong Cost Position

We have maintained an emphasis on costs and efficiency and believe that
we hold a strong cost position in the businesses and regions in which we
operate. We believe this is achieved through the following:

Leading economies of scale and flexible operations: We believe we have
some of the largest capacity, and most efficient, production facilities
in the PET resin and PTA industries. We operate the largest single-line
PET resin plant in Europe at our Orion Global PET facility in Lithuania,
which has a capacity of 241,000 tonnes per annum. We also operate the
largest single-line PTA plant in Thailand at our Indorama Petrochem PTA
facility, which has acapacity of 771,000 tonnes per annum. We have
recently constructed a new PET resin plant in North America at our
AlphaPet PET facility in Alabama, U.S.A., with a capacity of 438,000
tonnes per annum. The AlphaPet PET facility is one of the largest in
this region and employs the latest generation PET technology. These
large-scale, modern and efficient facilities enable us to achieve a
competitive cost position in the industries where economies of scale are
critical. In the polyester business, where we focus on the production of
niche products, we have invested in fit-for-purpose, flexible assets
which are ideally suited for the production of niche and value added
products.

Best-in-class manufacturing efficiency: This is achieved through running
our facilities at high capacity utilization rates with optimal levels of
manpower, low overhead costs, as well as energy and utilities cost
savings. We have enhanced our cost competitiveness by building efficient
utility plants using coal or gas as feedstock at most of our facilities
and, where possible, we sell excess electricty and steam to third
parties to reduce our own cost of electricity and steam. We benchmark
all of our facilities against each other in order to optimize
performance.

Raw material cost efficiency: We are able to achieve advantageous raw
material costs due to our large purchasing volumes, proximity to raw
material feedstock and long-term relationships with key suppliers. We
benefit from significant buying leverage for PX, PTA and MEG. We are
amongst the world’s largest buyers of PX and MEG. Our PX requirements
are largely concentrated in Thailand, where we benefit from increased
bargaining power. By being a global producer of polyester polymers, we
have an advantage over regional producers of being able to manage MEG
procurement on a pan-global basis. We are one of the largest merchant
PTA buyers in the U.S. market, which provides enhanced buying leverage.
Our plants are well positioned, mainly through co-location or close
proximity, for advantaged raw material logistics and infrastructure
support.

Low capital cost: We have been able to achieve a low capital cost
structure by constructing large-scale plants and acquiring assets at a
discount to their replacement cost. Our Orion Global and AlphaPet PET
production facilities benefit from a low capital cost per tonne because
of their large scale. We have acquired our Thai PTA and polyester assets
as distressed assets at a discount to their replacement cost. We believe
our acquired European PET and PTA assets were purchased at an attractive
price.

Experienced Management Team with a Proven Track Record of Successfully
Growing and Managing the Business

Our management team is composed of highly experienced managers with
longstanding leadership experience, as well as significant industry
knowledge.

Our management team has a proven track record of successfully
implementing capital-intensive projects to increase our production
capacities, including:

-   Completing the construction of the Orion Global PET facility in
    Lithuania with an installed capacity of 198,000 tonnes per annum in
    2006;

-   Increasing the installed capacity of the StarPet PET facility in USA
    from 50,000 tonnes per annum in 2003 to 116,000 tonnes per annum in
    2005, and to 225,000 tonnes per annum in 2007;

-   Increasing the installed capacity of the Indorama Polymers PET
    facility in Thailand from its initial 21,600 tonnes per annum to
    90,000 tonnes per annum in 2005, and to 180,000 tonnes per annum in
    2007;

-   Increasing the installed capacity of the AsiaPet amorphous PET
    facility in Thailand from 110,000 tonnes per annum to 180,000 tonnes
    per annum in 2008;

-   Increasing the installed capacity of the Indorama Polyester
    Industries polyester facility in Nakhon Pathom, Thailand from 40,000
    tonnes per annum to 100,000 tonnes per annum through 2007;

-   Conversion of a polyester fibers and yarns line to PET line of
    108,000 tonnes per annum in Indorama Polyester Industries facility
    in Map-ta-Phut, Thailand;

-   Completing the construction of the AlphaPET facility in Alabama with
    an installed capacity of 432,000 tonnes per annum in 2009;

as well as selecting attractive acquisition opportunities and
successfully improving the operations and profitability of acquired
businesses, including:

-   The acquisition of the StarPet PET facility In USA in 2003;

-   The acquisition of Eastman Chemical Company’s European operating
    assets, comprising a PET facility in the United Kingdom, a PET
    facility in the Netherlands and a PTA facility in the Netherlands,
    in March 2008;

-   The acquisition of 54.5% of the shares in Indo Poly in 1997 and an
    additional 44.4% of the shares in 2008, and the acquisition of
    98.46% of the shares in Tuntex Thailand in September and December
    2008, subsequently re-named Indorama Polyester Industries;

-   The acquisition of 100.0% of the shares in Indorama Petrochem in
    September 2008;

-   The acquisition of 50.56% of the shares in TPT Petrochemicals
    between August and October 2008, and an additional 4.04% in 2009.
    During 2010, we acquired an additional 45.36% of the shares,
    increasing total shares held in TPT Petrochemicals to 99.96% at the
    end of 2010;

-   The acquisition of 50% equity stake through a joint venture in UAB
    Ottana Polimeri Europe to acquire an integrated PTA/PET plant in
    Ottana, Italy;

-   The acquisition of the Guangdong PET facility in China in January
    2011;

-   The acquisition of the PET resins and Polyester staple facilities
    located in Spartanburg, South Carolina, USA and Queretaro, Mexico.
    from Invista S.a.r.l. in March 2011; and

-   The acquisition of the Polyester Filament yarns and PET resins
    facility in Indonesia and PET resins facility in Poland from SK
    Chemicals in March 2011;

-   The acquisition of 75% equity stake through a joint venture in
    Trevira GmbH a speciality polyester fibers and filament producer in
    Germany and Poland.

-   The acquisition of 50% equity stake in PT Polyprima Karyesreska, a
    PTA producer, in Indonesia.

-   The acquisition in the recycle and fiber manufacturing businesses of
    Wellman International in in the republic of Ireland, the Netherlands
    and France in November 2011

Our Strategy

Our objective is to be the market leader in the polyester value chain in
terms of scale and integration, profitability and return on investment,
supported by a focus on delivering superior customer satisfaction and on
corporate responsibility, thereby enhancing shareholders’ value. Our
ongoing and future strategy has therefore been designed to help us
continue achieving our objectives as follows:

-   Sustaining and increasing our market positions, through selective
    focused growth and investment;

-   Enhancing our integration;

-   Diversifying our product and customer mix;

-   Adding innovative products for new applications and specialty
    products to expand margins and increase our product offerings to
    cutomers

-   Developing research and development recycling capabilities and
    increasing use of recycled materials;

-   Continuing focus on cost competitiveness; and

-   Maximizing stakeholder value by focusing on financial discipline and
    prudence.

Focused Growth and Investment

Our growth and investment strategy is to build and enhance our existing
market leadership position in each of the regions that we operate, as
well as expand our geographical presence through organic growth and
value-enhancing acquisitions in the petrochemical industry, with a
specific focus on the polyester value chain and industry.

We have an established track record of implementing this strategy
through greenfield investments, brownfield expansions as well as
selecting attractive acquisition opportunities, while at the same time
effectively integrating the acquired businesses within our organization.
We intend to continue increasing our exposure to markets which we
believe provide us with potential opportunities, with a keen emphasis on
the BRIC (Brazil, Russia, India, , and China) regions as well as the
Middle East. We intend to explore opportunities, including in Europe, to
invest in or acquire large scale, latest generation assets, including
PET production facilities with a capacity of approximately 150,000
tonnes per annum, that will contribute to a sustainable and competitive
position on the cost curve, acquire value enhancing assets and continue
to expand and debottleneck our capacities at existing production
facilities. At the same time, we are looking at growth opportunities
through acquisitions and expansions to expand our product portfolio with
innovative products and specialty products to increase our product
offerings and expand margins. The acquisitions of business from Invista,
SK Chemicals and Trevira were in this direction.

Enhancing our Integration Model

We expect vertical integration, either through asset ownership, co-sites
with owned assets or virtual integration through co-sites with key raw
material suppliers, to enhance our operational and logistical
efficiency, cost competitiveness and raw material security. Integration
through owned assets also enhances our ability to insulate ourselves
from sector cyclicality and improve the quality and predictability of
earnings. Moving forward, our strategy will focus on growing our PTA
capacities in line with our downstream polyester capacities, especially
in markets that we identify to be important.

During 2008, we entered the PTA segment of the polyester chain through
the acquisition of three PTA production facilities, which provide raw
material support for our downstream PET and polyester facilities. We
intend to gradually consume an increasing quantity of PTA internally
through our PET and polyester facilities, reducing quantities available
for merchant sales.

Diversifying Our Product and Customer Mix

Diversifying our customer mix, both geographically and through end-use
applications (for some business segments), is an important aspect for
our continued success in the polyester value chain. We plan to continue
to enhance our marketing efforts to geographically diversify our
customer base for our PET and PTA product lines. For our PET and
polyester business segments, in addition to continued expansion of
geographic reach, we also look to diversify our customers based on the
end-use application mix. We believe this strategy will help insulate us
from dependence on individual customers and/or an individual application
base, providing us with protection against potential customer distress
or industrial downturns in individual application sectors.

In the polyester business, in addition to maintaining cost and price
competitiveness, we seek to differentiate ourselves through value added
products. This necessitates that we maintain a wide product range to be
a “one-stop shop” for a customer’s requirements and maintain flexibility
in our manufacturing processes to satisfy customer requirements on short
notice.

Developing Research and Development Capabilities and Increasing Use of
Recycled Materials

As a leading polyester value chain player, we intend to focus on the
development of our research and development capabilities, either through
our own facilities or through the establishment of key relationships
with other industry players.

We believe research and development will provide us with opportunities
to better serve our polyester polymer customers by developing products
tailored to serve their requirements and by developing methodologies and
process efficiencies to allow our customers to improve their efficiency.
We believe that increases in our ability to use recycled materials in,
and integration of the use of such recycled materials within, our
standard processes will allow us to cater to changing customer
objectives and proactively address environmental issues. IVL has
announced to invest in recycling projects for both PET and Polyester
fibers and yarns in Thailand and in USA.

Continuing Focus on Cost Competitiveness

Maintaining a low cost philosophy by continued focus on production cost
efficiency, scale and technology efficiency, raw material efficiency and
investment efficiency will help us maintain our industry cost position
in the future. In volume driven commodity businesses, such as our PET,
PTA and some commodity polyester fiber businesses, cost competitiveness
is a key driver which differentiates industry leaders from others.

Financial Discipline and Prudence

We are committed to maintaining a continued emphasis on financial
discipline and prudent investment decisions. We evaluate each potential
investment on the basis of stand-alone profitability and efficiency, in
addition to its potential synergistic contribution within the overall
organization. We strive to maintain an efficient capital structure as we
grow to provide us sufficient flexibility in our operations and
sufficient liquidity in our cash flow position.

We intend to continue to finance projects on a stand-alone basis and to
maintain debt levels at a level where cash flows from individual
operations are sufficient to cover our debt service requirements even
during industrial downturns.

Market and Industry Overview

The information included in this section, including all data (actual,
estimates and forecasts) relating to, amongst others, demand, production
and consumption volumes and import and export volumes, has been provided
by SBA-CCI, a leading consultancy in global raw materials and macro
polyester markets, except as otherwise stated. We do not make any
representation as to the accuracy of this information. These sources,
including the data provided by SBA-CCI, are based on economic and other
assumptions that may prove to be incorrect and the information has not
been independently verified by us. Prospective investors should
recognize that certain industry data included in this section is
estimated in the absence of official company confirmation, or reliable
country source information and should not place undue reliance on such
data. Data included in this section with respect to a year denoted with
the letter “E” means the data is estimated based on preliminary actual
data and “F” means the data is forecasted, respectively, by SBA-CCI
based on its available sources or by the source cited below. Forecasts,
estimates, predictions and other forward-looking statements contained in
this section and throughout the document are inherently uncertain
because of changes in factors underlying their assumptions, or events or
combinations of events that cannot be reasonably foreseen. Actual
results and future events could differ materially from such projections.
Prospective investors should not place undue reliance on such
statements, or on the ability of SBA-CCI or any third party to
accurately predict future industry trends or performance.

Polyester Value Chain Overview

Introduction

The polyester value chain consists of polyester polymer and purified
terephthalic acid (“PTA”), the polyester polymer intermediate. The key
raw materials to the polyester value chain are paraxylene (“PX”) and
monoethylene glycol (“MEG”). In 2010E, the global polyester polymer
industry had an estimated demand of 57.1 million tonnes and the global
PTA industry had an estimated demand of 43.8 million tonnes.

Polyester polymers are classified into three primary segments: polyester
fiber, polyethylene terephthalate (“PET”) resin, and film and
specialties. In 2010E, polyester fiber represented 64.4% of the total
demand, followed by PET resin and film and specialties with a 30.4% and
5.2% market share, respectively.

Polyester fibers are classified as either polyester staple fiber or
polyester filament yarns and are primarily used in the apparel, home
textiles, medical textiles, geotextiles, and industrial applications.

PET resin, used primarily in the manufacture of preforms, which are then
converted (blow molded) into bottles, is used in the packaging of
beverages, food, cosmetics, pharmaceuticals and other applications. The
primary markets for film and specialty polyesters are packaging, media,
photography, electronic and other industrial applications.

Given the position of PTA and polyester polymers in the chemicals
industry, these products act as an intermediate step between the basic
petrochemicals and fast moving consumer goods that drive the demand for
polyester fiber, PET resin and film and specialties.

The chart below summarizes the polyester value chain, outlining the
steps from processing crude oil and natural gas to polyester polymer
based consumer products.

[]

  Note: Numbers in parenthesis represent raw material consumption
  ratios:

  1 tonne of PTA requires .66 tonnes of PX;

  1 tonne of Polyester polymer requires .86 tonnes of PTA and .34 tonnes
  of MEG

Source: SBA-CCI

Industry Fundamentals

The key fundamentals that underpin the polyester value chain include:

-   Consistent consumer driven demand. Polyester products have
    compelling attributes such as versatility, convenience,
    affordability, high performance, comfort, and eco-friendliness that
    make polyester increasingly indispensible for use in a broad range
    of everyday applications. Polyester is the material of choice for
    both packaging and fiber applications, with a strong substitution
    effect for competing materials.

As reflected in the chart below, total polyester demand has been growing
consistently and is expected to continue to grow at steady rates. From
2000 to 2010E, global demand for polyester polymer grew at a compound
annual growth rate (“CAGR”) of 6.8%. From 2010E to 2014F, total
polyester demand is expected to expand at a CAGR of 9.1% to 80.8 million
tonnes in 2014F driven by burgeoning demand from the fast growing
emerging markets, especially China and India, the increased substitution
of competing materials such as cotton, aluminum and glass as well as the
increased use of polyester in other end use products.

The following chart illustrates the historical and projected global
demand for polyester polymer for the periods indicated.

[]

Source: SBA-CCI

-   Relatively stable profitability. Polyester industry profitability
    has proven to be not impacted by primary economic indicators such as
    GDP or oil prices. Over a long term period, the polyester industry
    spreads, the difference between the product selling price and the
    cost of raw materials used in the production, have remained rather
    consistent across economic cycles. This is because (i) polyester is
    primarily used in end use products, which are staples and thus
    insulated from the fluctuations in personal income and the general
    state of the economy (ii) polyester demand is not sensitive to price
    changes. Raw materials ultimately only account up to 5% and 4% of
    the total price of the piece of a garment and a bottle of a soft
    drinks beverage paid by the consumer, respectively. Therefore even
    substantial changes in prices can be safely absorbed into the value
    chain without having any real impact on the final consumer.

The following chart illustrates global integrated PTA and PET spreads in
relationship to global GDP and changes in crude oil price for the
periods indicated.

[]

Note: Blended industry spread across three regions, Europe, US, Asia;
per 1tonne of PET

Source: SBA-CCI , IMF World Economic Outlook Database

-   Market Regionalization. The PTA and the PET businesses are regional
    businesses. Inter-regional trade, whereby product is produced in one
    continent but exported for use in another, is limited as logistics
    and duties serve as import barriers. The cost of production,
    excluding raw materials, is comparable across the regions. Labor
    cost is not a material criterion in the production of PTA and PET
    resin, therefore Asia does not have an advantage. The European Union
    and the United States, the key important PET consuming regions, have
    adopted customs tariffs and, in the case of the European Union,
    anti-dumping duties from various Asian and the Middle Eastern
    countries in order to protect their domestic market. It is important
    to be domestically present in these regions. In terms of market
    consolidation, the North American and the European Union PTA and PET
    resin markets are fairly consolidated, whereas the Asian market is
    relatively fragmented with a large number of producers and
    significant opportunity for consolidation and/or rationalization.

Benefits of Integrating the Polyester Value Chain

The price of PET resin and polyester fiber is predominantly dominated by
market dynamics and, to a lesser extent, by the PET resin and polyester
fiber producer. Therefore, in order to be profitable, producers must
effectively manage their production costs. The integration of PTA
production provides raw material security as well as significant
opportunity for cost reduction. The benefits from integration include
the following:

-   Secured supply of PTA to downstream operations. A key benefit of the
    integration of the PTA and PET resin or polyester fiber operations
    is security of PTA sourcing during periods of market fluctuations,
    specifically in periods of PTA tightness and/or shortage.

-   Captive consumption for PTA operations. This results in the ability
    to maintain higher capacity utilization as compared to merchant PTA
    suppliers, even in periods of reduced PTA demand.

-   Cost savings through site co-locations. The close proximity of the
    PTA and PET resin and polyester fiber plants significantly reduces
    (or, in the case of co-located plants, eliminates) the cost of
    shipping PTA from its production site to the PET resin and polyester
    fiber producer site and saves on fixed costs due to the sharing of
    common services.

-   Cost savings through integration. Integration saves on fixed costs
    associated with raw materials procurement, sales and marketing and
    administrative functions.

Accordingly, integration can result in enhanced operating efficiency,
competitiveness and responsiveness to customers and market developments,
as well as stability in volumes and profits.

PET Resin Industry Overview

Introduction

PET resin is produced from polyester polymer which is a mixture of PTA
and MEG. PET is a plastic resin utilized in a vast array of applications
and is one of the most widely used packaging materials worldwide. From
2000 to 2010E, global PET resin demand grew at a CAGR of 8.9%, from 7.4
million tonnes in 2000 to 17.3 million tonnes in 2010E. This growth has
been driven by increasing consumer spending, population growth,
substitution of PET resin as a primary packaging material and the
increased use of PET resin in other end use products.

PET resin is the packaging material of choice for many food and non-food
products due to its glass-like transparency, ability to retain
carbonation and freshness, chemical inertness, recyclability and a
toughness-to-weight ratio which allows for the manufacture of
lightweight, large-capacity, safe break-resistant containers. PET resin
is used in widespread packaging applications that can be categorized
into the following end use products:

  • Beverage and food:  such as carbonated soft drinks, water, milk, ice
  tea and coffee, health and sport drinks, alcoholic drinks, beer,
  juices, jams and sauces and edible oil;

  • Home care:  such as shampoo, detergents, cosmetics, and cleaning
  solvents;

  • Health care:  such as blister packing for medical supplies and
  pharmaceuticals; and

  • Other industrial uses:  such as signage, transportation and
  construction, roof furniture and sanitary ware.

According to the European Association of Plastics Manufacturers, PET
resin is a recyclable and energy efficient packaging material. PET resin
can be recovered, and the material reused, by simple washing processes
to regenerate clean washed polymer flakes or by chemical treatment to
break down the PET resin into raw materials or intermediates which are
converted into new PET resins. Recycled PET resin can be used to make
many new products, including polyester fiber for carpet, apparel,
luggage, upholstery, fiberfill for sleeping bags and winter coats,
industrial strapping, sheet and film, automotive parts, such as luggage
racks, headliners, fuse boxes, bumpers, grilles and door panels.

According to various studies, the use of PET resin significantly reduces
energy demand and greenhouse emissions as compared to alternative
materials such as aluminum and glass.

[]

Source: Franklin Associates

Global PET Resin Market

The following table summarizes the global PET resin market structure for
2010E.

  ------------- ------------ ------------ ------------ ------------ --------
                                                       Production   Demand

                Production   Demand       Net Trade    Share        Share

                (Million     (Million     (Million     (%)          (%)
                tonnes)      tonnes)      tonnes)                   

  North America 4.1          3.9          0.2          23.8%        22.6%

  South America 0.7          1.5          (0.8)        3.9%         8.7%

  European      2.3          3.4          (1.1)        13.3%        19.6%
  Union                                                             

  Central       0.3          1.0          (0.7)        2.0%         6.0%
  Europe                                                            

  Middle East & 1.6          1.9          (0.3)        9.3%         11.0%
  Africa                                                            

  Asia          8.2          5.6          2.6          47.7%        32.1%

  World         17.3         17.3         (0.1)        100%         100%
  ------------- ------------ ------------ ------------ ------------ --------

Source: SBA-CCI

As reflected in the table above, Asia is currently the largest consuming
region for PET resin and has the largest production share. Surplus
supply in Asia and North America are exported to other parts of the
world. Other regions are net importers of PET resin.

PET Resin Demand Dynamics

Key Demand Drivers

Demand for PET resin is predominantly driven by the following factors:

  • the growth in demand for end use products, in which PET resin is
  used as the primary packaging material, such as water and carbonated
  drinks. This growth is predominantly influenced by population growth,
  disposable income and consumer trends;

  • the continued substitution of existing packaging materials such as
  aluminum, glass, tetra pack and other polymers by PET resin due to PET
  resin’s ability to retain carbonation and freshness, chemical
  inertness, recyclability and cost. The end use products where PET
  resin is currently not the primary packaging material include milk,
  other dairy beverages, cosmetics, pharmaceutical and other non-food
  products; and

  • the development and enhancement of PET resin packaging, which
  provides a high oxygen barrier, prevents oxygen seepage and increases
  product shelf-life. The end use products which are susceptible to
  spoilage by oxygen leakage include beer and fruit juices.

Demand for PET resin is characterized by the following attributes:

  • PET resin is primarily used in the packaging of end use products,
  some of which are staples and thus more insulated from the
  fluctuations in personal income and the general state of the economy.

  • There is currently no commercially attractive or practical
  alternative to PET resin in the spectrum of packaging. While there
  could be other polymers which may be substituted for PET resin in
  packaging materials, these other polymers (i) are expensive to
  manufacture, (ii) require raw materials necessary for polymerization
  which are limited and therefore expensive, (iii) are unsafe for food
  products, (iv) are difficult to mass produce or (v) have limited
  production capacity.

Global Demand Growth Outlook

The following chart illustrates the historical and forecasted demand
growth for the global PET resin industry for the periods indicated.

[]

Source: SBA-CCI

As reflected in the chart above, Global PET resin demand has
significantly expanded over the past years and is expected to continue
to grow at steady rates during the periods indicated. From 2010E to
2014F, global PET resin demand is expected to continue at a CAGR of 9.0%
per annum.

Regional Demand Growth Outlook

Demand for PET resin is expected to post positive growth across all
regions from 2010E to 2014F. Asia is expected to continue to drive the
demand for PET resin, with the market expanding at a CAGR of 9.0% during
the forecast period.

North America and the European Union, each an important consuming
region, will also see growth, which although lower in terms of growth
rates, it will still be sizeable in terms of absolute demand increment.

The following table sets forth the regional demand outlook for the
periods indicated.

  ---------- ------ ------------- -------- ------------ -------- ---------------
                    Demand        Market   Demand       Market   CAGR

                    2010E         Share    2014F        Share    2010E-2014F

                    (Million      (%)      (Million     (%)      (%)
                    tonnes)                tonnes)               

  North             3.9           22.6%    4.5          18.4%    3.5%
  America                                                        

  South             1.5           8.7%     2.1          8.4%     8.1%
  America                                                        

  European          3.4           19.6%    3.9          15.8%    3.3%
  Union                                                          

  Central           1.0           6.0%     1.5          6.1%     9.5%
  Europe                                                         

  Middle            1.9           11.0%    2.9          12.0%    11.5%
  East &                                                         
  Africa                                                         

  Asia              5.6           32.1%    9.6          39.3%    14.7%

  World             17.3          100%     24.5         100%     9.0%
  ---------- ------ ------------- -------- ------------ -------- ---------------

Source: SBA-CCI

In 2010E, the estimated world average per capita consumption of PET
resin was 2.5 kg. The developed regions of North America and the
European Union have a per capita consumption of 8.6 kg and 6.7 kg,
respectively. In comparison, the developing regions of Central Europe,
South America, Asia and the Middle East & Africa, have lower per capita
consumption of 3.6 kg, 3.3 kg, 1.5 kg and 1.4 kg, respectively.
Therefore, given the large gap of per capita consumption between the
developed and the developing regions, there is scope for growth in the
latter, most notably in Asia.

The following chart illustrates PET resin per capita consumption by
region for 2010E.

[]Source: SBA-CCI

Substitution of Competing Materials

Over the past decade, PET resin has been increasingly replacing other
packaging materials such as glass, aluminum, and other plastics. The
share of PET resin in the total beverage packaging market has increased
from 22.7% to 33.4% from 2000 to 2010E. In the same period, the share of
main competing materials in the total consumption has decreased, from
32.5% to 25.4% for glass, from 30.7% to 24.2% for aluminum.

The following chart illustrates the position of PET packaging against
other materials from 2000 to 2010E.

[]Source: Euromonitor, SBA CCI Analysis

Competitive Environment

As PET resin is a commodity product, competition is predominantly based
on price and, to a lesser extent, on other factors including product
quality, continuity of supply and customer service.

In an environment characterized by a high level of price competition,
the leading producers are likely to have the following competitive
advantages:

  • economies of scale;

  • integration into raw materials;

  • low cost manufacturing;

  • domestic presence;

  • efficient logistics;

  • ability to manage raw material procurement on a pan-regional
  basis; and

  • ability to supply and service customers on a global basis.

Generally, efficient producers with a stronger customer base, superior
market reach and greater market penetration are able to achieve higher
capacity utilization than producers without these characteristics.

Global Market

The global PET resin industry is relatively consolidated with the top
ten producers representing 59.4% of the global effective capacity.

The following table sets forth the global ranking of the leading market
participants in terms of effective production capacity for 2010E.

  --------- --------------------- --------------------- ------------ -----------
  Ranking   Company               Geographical Presence Effective    Share (%)
                                                        Capacity     

                                                        ('000 MT)     

  1         IVL                   North                 3,030        14.7%
                                  America/Europe/Asia                

  2         M&G Group             North America/South   1,760        8.6%
                                  America/Europe                     

  3         Alpek S.A. de C.V.    North America/South   1,545        7.5%
                                  America                            

  4         Jiangsu Sanfanxiang   China                 1,500        7.3%
            Group                                                    

  5         Far Eastern Group.    Asia                  1,010        4.9%

  6         Formosa Group         North America/Asia    800          3.9%

  7         Lotte Group           Europe/Asia           669          3.3% 

  8         Sinopec Group         China                 660          3.2%

  9         La Seda de Barcelona  Europe                654          3.2%
            SA                                                       

  10        JBF Industries Ltd.   Middle East/Asia      585          2.8%

            Top 10 Producers                            12,213       59.4%

            Others                                      8,352        40.6%

            Total                                       20,565       100%
  --------- --------------------- --------------------- ------------ -----------

Note: Ranking based on December, 2010E effective production capacity

Source: SBA-CCI

As reflected in the table above, out of the top ten producers, IVL is
the only producer with the domestic presence in key PET resin regions,
North America, European Union and Asia.

North America

The North American PET resin market is relatively consolidated with the
top three producers representing 80.3% of the regional capacity. As of
2010E, it is estimated that IVL is the largest producer with 1,537,000
tonnes of capacity, followed by Alpek S.A. de C.V. with 1,360,000
tonnes, M&G Group with 970,000 tonnes. Others are Formosa Group, and
Wellman, Inc.

European Union

The European Union PET resin market is also consolidated with the top
four producers representing 66.8% of the regional capacity. For 2010E,
it is estimated that IVL will be the largest producer with 843,000
tonnes of capacity, followed closely by La Seda de Barcelona with
524,000 tonnes, Neo Group with 360,000 tonnes and Equipolymers with
340,000 tonnes. Other important producers include Novapet, M&G Group,
CEPSA, Lotte Group, and Plastipak.

Asia

The Asia PET resin market is relatively fragmented with the top five
producers representing 42.6% of the regional capacity. For 2010E, it is
estimated that Jiangsu Sanfangxiang Group will be the largest producer
with 1,500,000 tonnes of capacity, followed by Far Eastern Group with
1,010,000 tonnes, Sinopec Group with 660,000 tonnes, IVL with 650,000
tonnes and Lotte Group with 519,000 tonnes. Other important producers
include Reliance Industries Ltd, and Formosa Group. Due to a large
number of small capacity PET resin producers in Asia, there is a
significant opportunity for consolidation and/or rationalization.

Polyester Fiber Industry Overview

Introduction

Polyester fiber is the most versatile as well as the most widely used
fiber in the world. The global polyester fiber industry in 2010E had an
estimated demand of 38.8 million tonnes, representing 51.8 % of the
total fiber demand. From 2000 to 2010E, global polyester fiber demand
grew at a CAGR of 6.8%. The growth has been driven by increasing
consumer spending, population growth, substitution of competing fibers,
primarily cotton, in traditional applications, as well as the
development and enhancement of end use products.

Polyester fibers are used in widespread applications that can be
categorized into the following three main end use products:

  • Apparel:  woven and knit apparel and apparel accessories, including
  linings, interlinings, sewing thread, fiberfill and footwear;

  • Home textiles:  sheets, pillow cases, bedspreads, comforters,
  blankets, mattress covers and other bedding, towels, curtains and
  draperies and table linen; and

  • Other industrial products:  industrial hose and belting, luggage,
  back packs and sport bags, medical and sanitary applications, nonwoven
  and narrow fabrics not used in apparel or home textiles, rope and
  cordage, tents and tarps, textile bags; as well as fabrics used in
  furniture, autos, mattresses, umbrellas and filters.

The polyester fiber industry is typically viewed as comprising of two
main product segments: polyester staple fibers and polyester filament
yarns. Polyester staple fibers are bundles of strands cut into short
lengths, which are primarily used in apparel and home textiles and are
often blended with cotton or other natural and synthetic fibers. Another
form of polyester staple fibers, fiberfill, is used as stuffing for toys
and pillows and as insulation and padding for bedding and furniture.
Polyester filament yarns are continuous strands of fiber, which are used
in apparel, home textiles, and industrial end use markets. In 2010E,
63.3% of total global polyester fiber was used in the production of
polyester filament yarns and the remaining 36.7% was used in the
production of polyester staple fibers.

Polyester fiber is classified as either a commodity or non-commodity
polyester fiber, based on the end use application. Commodity polyester
fibers are sold in bulk with little differentiation between suppliers
and generally at lower margins than non-commodity polyester fibers.
Non-commodity polyester fibers are produced in smaller tonnage, are
generally custom made, have a higher unit value, have generally less
price sensitive customers and have a stringent performance criteria. The
production of commodity polyester fibers tends to be dominated by large
producers with economies of scale, whereas the production of
non-commodity fibers tends to be dominated by producers with
fit-for-purpose assets and cost efficient and flexible operations.

Competitive advantage in the commodity polyester fiber segment of the
business is gained through market share, economies of scale, raw
material cost and logistics cost advantages. In the non-commodity
polyester fiber segment, the competitive advantage is achieved through
product differentiation, customized service, industry experience and
operational excellence, such as, reliability, cost and flexibility. See
"Competitive Environment”.

Polyester fiber is produced from a mixture of PTA and MEG to produce
polyester polymer. There are two polyester polymer production processes
which may be used to produce polyester fibers: the batch process and the
continuous process. In the batch process, polymerization yields
polyester chips which are further processed into polyester fiber. In the
continuous process, however, polyester fiber can be extruded directly
from polymerization to direct spinning. For the production of commodity
polyester fiber, the continuous process is favored because it is more
economical for it creates less waste and has a lower energy and labor
costs than batch process technology. For the production of non-commodity
polyester fiber, batch processing is preferred because the producer has
more flexibility to produce different types of polyester fibers with
minimal losses of intermediate products.

Polyester fiber is more environmentally friendly than cotton. According
to various studies, the use of polyester fiber significantly reduces
water consumption and greenhouse emissions as compared to cotton.

[]

Source: Tampere University of Technology, Finland

Global Polyester Fiber Market

The table below summarizes the global polyester fiber market structure
for 2010E.

  ------------ ------------ ----------- ---------- ------------ ----------------
                                                   Production   Consumer Demand

               Production   Consumer    Net Trade  Share        Share
                            Demand                              

               (Million     (Million    (Million   (%)          (%)
               tonnes)      tonnes)     tonnes)                 

  North        1.2          4.8         (3.6)      3.2%         13.1%
  America                                                       

  South        0.3          2.0         (1.7)      0.8%         5.3%
  America                                                       

  European     0.6          4.8         (4.1)      1.7%         12.9%
  Union                                                         

  Central      0.2          1.9         (1.7)      0.4%         5.0%
  Europe                                                        

  Middle       0.5          2.1         (1.5)      1.4%         5.6%
  East &                                                        
  Africa                                                        

  Asia         34.5         21.4        13.1       92.5%        58.1%

  World        37.3         36.8        0.5        100%         100%
  ------------ ------------ ----------- ---------- ------------ ----------------

Source: SBA-CCI

As reflected in the table above, the global polyester fiber industry is
dominated by Asia, in particular China. Asia is the sole exporter with
the European Union and North America being the largest importers. In
addition to Asia, North America and the European Union are the largest
consumer regions.

Polyester Fiber Demand Dynamics

Key Demand Drivers

Demand in the polyester fiber industry is defined as consumer demand
which is actual consumer demand for the end use product where polyester
fiber is the primary fiber.

Demand for polyester fiber is primarily driven by the following factors:

  • the growth in demand for conventional end use products, such as
  apparels, upholstery, home furnishings, floor coverings in which
  polyester fiber is used as the primary material, which is further
  influenced by population growth, disposable income and consumer
  trends;

  • the substitution of existing fibers such as cotton, nylon, acrylic,
  cellulosics by polyester fiber due to its versatility and favorable
  cost-performance characteristics; and

  • the development and enhancement of applications in which polyester
  adds value such as those in the nonwovens industry, including wipes,
  geotextiles, medical, hygiene, paper reinforcement, filters, fillings;
  automotive industry, including airbags, seatbelts, tires; specialty
  apparel applications such as flame-resistant and other protective
  clothing and sports apparels.

Demand for polyester fiber is characterized by the following attributes:

-   Polyester fiber is primarily used as a raw material in the end use
    products, most of which are staples and thus more insulated from the
    fluctuations in personal income and the general state of the
    economy.

-   Polyester fiber has an increasing advantage over cotton and other
    man-made fibers including nylon and acrylics. Given the
    predictability of polyester production, the relatively low price and
    its wider applications, polyester is expected to continue to replace
    cotton. The substitution of nylon as well as acrylic fibers with
    polyester fibers has gathered significant momentum over the last two
    decades. As a result significant investment in polyester fiber
    production capacity and the lack of correspondingly sizeable
    investments in acrylic and nylon fibers have changed the economies
    of scale in the synthetic fiber industry. Therefore it is unlikely
    that such dynamics will be reversed.The following chart illustrates
    the historical and forecasted consumer demand growth for polyester
    fiber for the periods indicated.

[]

Source: SBA-CCI

As reflected in the chart above, global polyester fiber consumer demand
has consistently grown and it is expected to continue to grow at steady
rates during this period. The higher than historical growth rate is
primarily attributed to robust demand from fast growing emerging
markets, especially China and India, as well as an increased
substitution of cotton.

Regional Consumer Demand Growth Outlook

Demand for polyester fiber is expected to grow across all regions from
2010E to 2014F. During this period, Asia, notably China, is expected to
continue to drive the demand for polyester fiber.

The following table illustrates regional consumer demand growth outlook
for polyester fiber for the periods indicated.

  ---------- ------- --------------- -------- --------------- -------- -------------
                     Consumer Demand Market   Consumer Demand Market   CAGR

                     2010E           Share    2014F           Share    2010E-2014F

                     (Million        (%)      (Million        (%)      (%)
                     tonnes)                  tonnes)                  

  North              4.8             13.1%    5.3             10.2%    2.4%
  America                                                              

  South              2.0             5.3%     2.6             5.0%     6.8%
  America                                                              

  European           4.8             12.9%    5.6             10.7%    4.2%
  Union                                                                

  Central            1.9             5.0%     2.7             5.2%     9.2%
  Europe                                                               

  Middle             2.1             5.6%     2.9             5.6%     8.4%
  East &                                                               
  Africa                                                               

  Asia               21.4            58.1%    33.0            63.3%    11.4%

  World              36.8            100.0%   52.1            100.0%   9.1%
  ---------- ------- --------------- -------- --------------- -------- -------------

Source: SBA-CCI

In 2010E, the current estimated world average per capita consumption of
polyester fiber is 5.4 kg. The developed regions of North America and
the European Union have a per capita consumption of 10.6 kg and 9.4 kg,
respectively. In comparison, the developing regions of Central Europe,
Asia, South America, and the Middle East & Africa, have lower per capita
consumption of 6.4 kg, 5.7kg, 4.3 kg, and 1.5 kg, respectively.
Therefore, given the large gap of per capita consumption between the
developed and the developing regions, there is ample scope for growth in
the latter, most notably in Asia.

The following chart illustrates Polyester fiber per capita consumption
by region for 2010E.

[]

Substitution of Competing Fibers

Over the past decade, polyester fiber has been increasingly replacing
other fibers such as cotton, nylon, acrylic, and other fibers. The share
of polyester fiber in the total fiber market has increased from 38.7% to
51.8% from 2000 to 2010E. In the same period, the share of all other
competing fibers in the total fiber consumption has decreased, from
39.7% to 34.2% for cotton, from 21.6% to 13.9% for other fibers,
including nylon, acrylics, rayon and other natural and synthetic fibers.

The following chart illustrates the position of polyester fiber against
other fibers from 2000 to 2010E.

[]Source: SBA-CCI

The following table summarizes global fiber market production forecast
for the periods indicated.

  ------------- -------------- -------- -------------- -------- -------------
                               Market                  Market   CAGR

                2010E          Share    2014F          Share    2010E-2014F

                (Million       (%)      (Million       (%)      (%)
                tonnes)                 tonnes)                 

  Polyester     37.3           51.8%    52.1           59%      8.7%
  Fiber                                                         

  Cotton        24.6           34.2%    26.0           29%      1.4%

  Nylon         3.3            4.6%     3.5            4%       1.0%

  Acrylic       2.0            2.8%     2.0            2%       0.3%

  Others        4.7            6.5%     4.8            5%       0.4%

  Total         72.0           100%     88.4           100%     5.3%
  ------------- -------------- -------- -------------- -------- -------------

Source: SBA-CCI

As reflected in the table above, polyester fiber is expected to solidify
its position against all other fibers. The share of polyester fiber in
the total fiber market is expected to increase from 51.8% to 59.0% from
2010E to 2014F. In the same period, the share of all other competing
fibers is expected to decrease or remain constant.

Polyester vs. Cotton

In the past decade, polyester fiber has gained market share against
cotton. In 2003, polyester fiber surpassed cotton as the most widely
used fiber in the world. The competition between the two fibers is
driven by a number of factors including:

  • product economics: polyester fiber is less expensive than
  cotton; and

  • product versatility: polyester fiber can be used in a wide range of
  end use products ranging from apparel to industrial products.

  • production predictability: unlike cotton, man-made polyester fiber
  production is not impacted by the elements;

Cotton is a natural fiber and its availability is dependent on a number
of factors including: (i) cotton prices relative to other cash crops,
(ii) the amount of land available for planting, (iii) availability of
water and (iv) weather conditions.

The chart below illustrates historical prices for cotton and polyester
staple fiber on an equivalent basis for the periods indicated.

[]

1. Asia PSF price 2. Average cotton spot price x1.17 (17% is an
adjustment for waste in the production process)

Source: SBA-CCI

As it can be seen from the chart above, polyester has been consistently
a better alternative to cotton in terms of product economics.
Historically, the long-term average price delta between polyester and
cotton has been US$0.45 per kilogram. In 2010E, the price delta has
increased to US$1.3 per kilogram as a result of unprecedented cotton
shortage, therefore accelerating cotton substitution.

Going forward, polyester is expected to continue to increase market
share against cotton because cotton is constrained by supply.

The chart below illustrates historical and forecasted output for cotton
and polyester fiber production for the periods indicated.

[]

Source: SBA-CCI

Polyester Fiber vs. Synthetic Fiber

Polyester fibers are more economical to produce than other man-made
fibers including nylon and acrylic primarily due to scale. In addition,
the substitution of nylon as well as acrylic fibers with polyester
fibers has gathered significant momentum over the last two decades. As a
result significant investment in polyester fiber production capacity and
the lack of correspondingly sizeable investments in acrylic and nylon
fibers have changed the economies of scale in the synthetic fiber
industry. Therefore it is unlikely that such dynamics will be reversed.

Competitive Environment

In the polyester fiber industry, companies compete on a variety of
factors such as price, product quality, performance or specifications,
continuity of supply, customer service and breadth of product line. The
competition among existing players is varied and is predominantly
dependent on which sector the producer is focused on: commodity
polyester fiber or non-commodity polyester fiber. For a commodity
polyester fiber producer, the main pricing drivers are the raw material
cost and supply/demand balances, wherein prices are public and based on
cost-related formulas. For a non-commodity polyester fiber producer,
however, price is a reflection of the value added to the customer and
that value is decoupled from the raw material cost cycle. Given the
standardized product, the switching costs for the customers of a
commodity polyester fiber producer are low in relation to those for a
non-commodity polyester fiber producer. Commodity polyester producers
have a defined chemical entity and few parameters, whereas the
production process for non-commodity polyester fiber products has to be
adapted over time. Technical and customized service by a non-commodity
polyester fiber producer is critical and products are sold through
long-term customer specific commitments. For the commodity polyester
fiber producer, on the other hand, products are sold through standard
terms and technical service is irrelevant. There are low barriers to
entry for the commodity polyester fiber sector as the technology and
know-how is easily accessible. The non-commodity polyester fiber sector,
however, requires long-term experience and advanced technology with
patent protection in some cases. The commodity polyester fiber producer
sector has many players and competition is primarily driven by price,
aiming for higher market share and capacity utilization. In contrast,
the non-commodity polyester fiber sector has fewer players and
competition is primarily driven by product quality and customer service.
Overall, there is a high level of competition for the commodity
polyester fiber products and moderate to low level of competition for
the non-commodity polyester fiber products.

Global Market

The global polyester fiber industry is fairly fragmented with the top
twenty producers representing 52.7% of the global effective capacity.
Most of these producers are based in China and they sell to domestic
textile companies, who in turn sell final goods within China and
internationally. The differentiated players are not generally competing
against these players.

PTA Industry Overview

Introduction

In 2010E, the global PTA industry had an estimated production of
43.9 million tonnes. From 2006 to 2010E, global PTA production grew at a
CAGR of 6.7%, from 33.8 million tonnes in 2006 to 43.9 in 2010E, driven
by strong polyester polymer production and ongoing substitution of
dimethyl terephtalate (“DMT”) as the polyester polymer intermediate of
choice. PTA has no other application other than being a key component in
the polyester polymer production process. In 2010E, 60.9% of PTA went
into production of polyester fiber, 31.6% into PET resin and 7.5% into
film and specialties.

Global PTA Market Overview

In 2010E, the global PTA industry was dominated by Asia, in particular
China, due to the substantial market size of the regional polyester
fiber and PET resin industries. Asia is both the largest producer and
consumer of PTA. North America, the European Union and Asia are net
exporters. South America, and the Middle East & Africa are net
importers. Central Europe is balanced in terms of supply and demand.

The table below summarizes the global PTA market structure for 2010E.

  --------------- ------------ ----------- ---------- ------------ ----------
                                                      Production   Demand

                  Production   Demand      Net Trade  Share        Share

                  (Million     (Million    (Million   (%)          (%)
                  tonnes)      tonnes)     tonnes)                 

  North America   5.0          4.1         0.9        11.3%        9.3%

  South America   0.0          0.7         (0.7)      0.0%         1.5%

  European Union  2.6          2.4         0.2        5.9%         5.5%

  Central Europe  0.2          0.3         (0.0)      0.5%         0.6%

  Middle East &   1.0          1.9         (0.9)      2.3%         4.3%
  Africa                                                           

  Asia            35.1         34.5        0.6        80.0%        78.7%

  World           43.9         43.8        0.1        100%         100%
  --------------- ------------ ----------- ---------- ------------ ----------

Source: SBA-CCI

PTA Demand Dynamics

Key Demand Drivers

Demand for PTA is primarily driven by the following factors:

  • The growth in demand of end use markets, such as polyester fiber,
  PET resin and film and specialties; and

  • The continued substitution of DMT and the lack of other viable
  alternatives in the production of polyester polymer.

Global PTA Demand Growth Outlook

The following chart illustrates the historical and forecasted global PTA
consumption by end use for the periods indicated.

[]

Note: Numbers in parentheses represent CAGRs from 2000-2010E/2010E-2014F

Source: SBA-CCI

As reflected in the chart above, global PTA demand has been growing
consistently and is expected to continue to grow at steady rates. The
continued growth of global PTA demand is primarily driven by increased
production and demand for polyester fiber and PET resin.

Regional Demand Growth Outlook

The following table illustrates regional demand growth outlook for PTA
for the periods indicated.

  ---------- -------- -------------- -------- -------------- -------- -------------
                      Demand         Market   Demand         Market   CAGR

                      2010E          Share    2014F          Share    2010E-2014F

                      (Million       (%)      (Million       (%)      (%)
                      tonnes)                 tonnes)                 

  North               4.1            9.3%     4.7            7.4%     3.5%
  America                                                             

  South               0.7            1.5%     1.2            1.9%     16.2%
  America                                                             

  European            2.4            5.5%     3.1            4.9%     6.5%
  Union                                                               

  Central             0.3            0.6%     0.7            1.1%     26.4%
  Europe                                                              

  Middle              1.9            4.3%     3.2            5.1%     14.2%
  East &                                                              
  Africa                                                              

  Asia                34.5           78.7%    50.1           79.5%    9.8%

  World               43.8           100%     62.9           100%     9.5%
  ---------- -------- -------------- -------- -------------- -------- -------------

Source: SBA-CCI

The increase in global PTA demand is expected to be driven primarily in
Asia, namely China, expanding at a CAGR 9.8%, in 2010E to 2014F, led by
the growth in the polyester fiber industry and to a smaller extent, the
PET resin industry. The projected growth rate from 2010E to 2014F in
other regions is predominantly a result of the increase in regional PET
production.

Competitive Environment

Key success factors

As PTA is a commodity product, competition is based mainly on price and,
to a lesser extent, on product quality and lead times to product
delivery.

In an environment characterized by a high level of price competition,
the leading producers have the following competitive advantages:

  • security of raw material supply; 

  • low cost manufacturing;

  • economies of scale;

  • downstream integration;

  • efficient logistics; and

  • customer proximity and market focus.

Global PTA Industry

The global PTA industry is relatively consolidated with the top fifteen
producers representing 80.1% of the global effective production
capacity. The following table sets forth the global ranking of the
leading market participants in terms of effective production capacity
for 2010E.

  --------- -------------------- ---------------------------- -------------- -------
                                 Geographical                 Effective       
                                                              Production     

  Ranking   Company              Presence                     Capacity 2010E Share

                                                              ('000 MT)       (%)

  1         BP Chemical          Worldwide                    7,214          14.8%

  2         Sinopec Group        China                        3,490          7.2%

  3         Mitsubishi Group     Asia                         3,480          7.1%

  4         Formosa Group        China/Taiwan                 3,000          6.2%

  5         Alpek S.A. de C.V.   Mexico/USA                   2,850          5.8%

  6         Zhejiang Yisheng     China                        2,850          5.8%
            Petrochemical Co.,                                               
            Ltd.                                                             

  7         Mitsui Chemicals     Asia                         2,130          4.4%

  8         Reliance Industries  India                        2,050          4.2%
            Limited                                                          

  9         Lotte Group          UK/Korea/Pakistan            2,008          4.1%

  10        Zhejiang Yuan Dong   China                        2,000          4.1%
            Petrochemical                                                    

  11        Samsung              Korea                        1,900          3.9%
            Petrochemical                                                    

  12        IVL                  Italy/Netherlands/Thailand   1,782          3.7%

  13        Far Eastern Group    Taiwan/China                 1,650          3.4%

  14        Dragon Group         China                        1,550          3.2%

  15        Taekwang Group       Korea                        1,120          2.3%

            Others                                            9,680          19.9%

            Total                                             48,754         100%
  --------- -------------------- ---------------------------- -------------- -------

Note: Ranking based on December, 2010E effective production capacity

Source: SBA-CCI

Manufacturers of PTA can be classified between merchant producers and
integrated PTA producers. Merchant producers manufacture and supply PTA
to third parties, whereas integrated PTA producers manufacture PTA for
their own captive consumption. The major global merchant PTA producers
are BP Chemical, Mitsubishi Group, Samsung Petrochemical, Zhejiang
Yisheng Petrochemical Co., Ltd., and Mitsui Chemicals. The major global
integrated PTA producers are Sinopec Group, Reliance Industries Limited,
Formosa Group, Far Eastern Group and IVL.

North America

The North American PTA market is largely consolidated with 3 players. As
of 2010E, it is estimated that Alpek is the largest producer with
2,850,000 tonnes of capacity, followed by BP Chemical with 2,385,000
tonnes, and Cepsa with 500,000 tonnes. BP Chemicals and Cepsa are
merchant producers, whereas Alpek is produces PTA primarily for internal
consumption.

European Union

The European Union PET resin market is also consolidated with 4 players.
For 2010E, it is estimated that BP Chemical will be the largest producer
with 1,415,000 tonnes of capacity, followed by Cepsa with 600,000
tonnes, Lotte with 400,000 tonnes, and IVL with 542,000 tonnes. The
merchant European Union PTA producers are BP Chemical and Cepsa. Lotte
produces PTA for internal consumption as well as for sale to external
market. IVL is fully downstream integrated.

Asia

The Asia PTA market is relatively consolidated with the top 5 producers
representing 42.4% of the regional capacity. For 2010E, it is estimated
that Sinopec Group will be the largest producer with 3,490,000 tonnes of
capacity, followed by Mitsubishi Group with 3,480,000 tonnes, BP
Chemical 3,414,000 tonnes, Formosa Group with 3,000,000 tonnes and
Zhejiang Yisheng Petrochemicals Co., Ltd. with 2,850,000 tonnes. Other
important producers include Mitsui Chemicals, Reliance Industries
Limited, Zhejiang Yuan Dong Petrochemicals, Samsung Petrochemicals, Sam
Nam Petrochemical, Far Eastern Group, Lotte Group, Dragon Group, and
IVL. The major merchant regional PTA producers are BP Chemical,
Mitsubishi Group, and Mitsui Chemicals. The major regional integrated
PTA producers are Sinopec Group, Reliance Industries Limited, Formosa
Group, Far Eastern Group and IVL.

Raw Materials Industry Overview

PX Industry

PX is a petrochemical intermediate whose main use is for the production
of PTA.  In 2010E, the global PX industry had an estimated demand of
29.8 million tonnes.  Asia is by far the largest producer, consumer and
net importer of PX, whilst the Middle East and Africa is the largest
exporting region.  North America and the European Union are relatively
balanced.

The table below summarizes the global PX market structure for 2010E:

  ------------- ---------- ------------ ----------- ----------- ---------- --------
                                                                Capacity   Demand

                Capacity   Production   Demand      Net Trade   Share      Share

                (Million   (Million     (Million    (Million    (%)        (%)
                tonnes)    tonnes)      tonnes)     tonnes)                

  North America 4.1        3.6          3.7         (0.1)       11.3%      12.4%

  South America 0.2        0.2          0.0         0.2         0.6%       0.0%

  European      2.2        1.9          1.9         (0.1)       6.1%       6.5%
  Union                                                                    

  Central       0.5        0.4          0.3         0.1         1.5%       1.0%
  Europe                                                                   

  Middle East & 3.6        2.6          0.8         1.7         9.9%       2.8%
  Africa                                                                   

  Asia          25.4       21.4         23.0        (1.6)       70.7%      77.4%

  World         36.0       30.0         29.8        0.2         100%       100%
  ------------- ---------- ------------ ----------- ----------- ---------- --------

Source: SBA-CCI

The global PX industry is relatively consolidated with the top ten
producers representing 55.6% of the global effective production
capacity. The following table sets forth the global ranking of the
leading PX producers in terms of effective production capacity for
2010E.

  --------- ---------------------- -------------- ------------------ --------
                                   Geographical   Effective           
                                                  Production         

  Ranking   Company                Presence       Capacity 2010E     Share

                                                  ('000 MT)           (%)

  1         ExxonMobil             Worldwide      3,490              9.7%

  2         Sinopec Group          China          3,325              9.2%

  3         JX Nippon Oil          Japan          2,480              6.9%

  4         BP Chemical            Worldwide      2,419              6.7%

  5         Reliance Industries    India          1,868              5.2%
            Limited                                                  

  6         Formosa Group          Taiwan         1,720              4.8%

  7         PTT Group              Thailand       1,347              3.7%

  8         GS Caltex              Korea          1,300              3.6%

  9         NPC                    Iran           1,205              3.3%

  10        PetroChina             China          850                2.4%

            Top 10 producers                      20,004             55.6%

            Others                                15,967             44.4%

            Total                                 35,971             100.0%
  --------- ---------------------- -------------- ------------------ --------

Note: Ranking based on December, 2010E effective production capacity

Source: SBA-CCI

MEG Industry

MEG is produced from ethylene, via the intermediate ethylene oxide. The
primary use of MEG is in the manufacture of polyester fiber, PET resin
and film. In addition, MEG is also important in the production of
antifreeze, coolants, and solvents. In 2010E, the global MEG industry
had an estimated demand of 20.6 million tonnes. Asia has the largest
global capacity share, followed by the Middle East and Africa and North
America. Asia is the largest consumer of MEG as well as a significant
net importer along with the European Union. The Middle East & Africa are
the largest net exporter followed by North America.

The table below summarizes the global MEG market structure for 2010E:

[TABLE]

Source: SBA-CCI

The global MEG industry is relatively consolidated with the top ten
producers representing 70.6% of the global effective production
capacity. The following table sets forth the global ranking of the
leading MEG producers in terms of effective production capacity for
2010E.

  --------- ---------------------- --------------- ------------- ------------
                                   Geographical    Effective      
                                                   Production    

  Ranking   Company                Presence        Capacity      Share
                                                   2010E         

                                                   ('000 MT)      (%)

  1         SABIC                  Saudi Arabia    4,220         15.9%

  2         MEGlobal               Worldwide       3,245         12.2%

  3         Sinopec Group          China           2,610         9.8%

  4         Formosa Group          USA/Taiwan      1,980         7.5%

  5         Shell                  Worldwide       1,753         6.6%

  6         Mitsubishi Group       Worldwide       1,558         5.9%

  7         Lotte Group            South Korea     1,085         4.1%

  8         NPC                    Iran            1,010         3.8%

  9         Reliance Industries    India           750           2.8%
            Limited                                              

  10        Ineos                  Europe          520           2.0%

            Top 10 producers                       18,730        70.6%

            Others                                 7,790         29.4%

            Total                                  26,520        100.0%
  --------- ---------------------- --------------- ------------- ------------

Note: Ranking based on December, 2010E effective production capacity

Source: SBA-CCI