10. Related Party Transactions

For the year ended 31 December 2010, the Company has related
transactions with persons who have potential conflict of interest with
the Company i.e., shareholders, related companies having common
shareholders or directors, associated companies, and related joint
venture, which are described in “Notes to Financial Statements”. The
major related transactions are as follows:

Normal Business Transactions

+---+------------+------------+---------+--------+-------------------+
|   |            |            |         |        |  U                |
|   |            |            |         |        | nit: Million Baht |
+===+============+============+=========+========+===================+
| I | IVL/S      | Type of    | Year    | Year   | Necessity and     |
| t | ubsidiary- | T          | Ended   | Ended  | reasonableness    |
| e |            | ransaction |         |        |                   |
| m | Party      |            | 31      | 31     |                   |
|   | having     |            | D       | De     |                   |
|   | Conflict   |            | ecember | cember |                   |
|   | of         |            | 2009    | 2010   |                   |
|   | Interest   |            |         |        |                   |
+---+------------+------------+---------+--------+-------------------+
| 1 | Petform    | Petform    | 702.50  | 869.05 | Petform           |
|   | (Thailand) | (Thailand) |         |        | (Thailand) Ltd.   |
|   | Ltd.  -    | Ltd.  sold |         |        | is a joint        |
|   | Sermsuk    | goods to   |         |        | venture company   |
|   | PCL        | Sermsuk    |         |        | between IRP and   |
|   |            | PCL        |         |        | Sermsuk for       |
|   |            |            |         |        | manufacturing     |
|   |            | -   Sale   |         |        | preforms,         |
|   | Rela       |     of     |         |        | closures and      |
|   | tionship:  |            |         |        | bottles for Pepsi |
|   |            |   Preforms |         |        | bottles & water   |
|   | -          |            |         |        | bottles           |
|   |    Sermsuk | -   Sale   |         |        | application.      |
|   |     PCL is |     of     |         |        |                   |
|   |     a      |            |         |        | Petform           |
|   |     major  |   closures |         |        | (Thailand) Ltd.'s |
|   |     s      |            |         |        | major customer is |
|   | hareholder | -   Sale   |         |        | Sermsuk who buy   |
|   |     of     |     of     |         |        | preforms,         |
|   |     PFL,   |            |         |        | closures and      |
|   |            |    bottles |         |        | bottles from PFL  |
|   |    holding |            |         |        | and use the same  |
|   |     40%    | Total      |         |        | for blowing/      |
|   |            |            |         |        | filling with      |
|   |    shares. |            |         |        | Pepsico products  |
|   |            |            |         |        |                   |
|   | -   Common |            |         |        | Pricing method:   |
|   |            |            |         |        |                   |
|   |  Director: |            |         |        | Pricing between   |
|   |     Mr.    |            |         |        | PFL and Sermsuk   |
|   |            |            |         |        | PCL is decided    |
|   |    William |            |         |        | based on          |
|   |            |            |         |        | negotiations with |
|   |    Ellwood |            |         |        | Sermsuk PCL and   |
|   |            |            |         |        | such prices are   |
|   |   Heinecke |            |         |        | driven by market  |
|   |     is a   |            |         |        | prices.           |
|   |            |            |         |        |                   |
|   |   director |            |         |        | Generally prices  |
|   |     of IVL |            |         |        | are changed when  |
|   |     and    |            |         |        | there is major    |
|   |            |            |         |        | change in market  |
|   |    Sermsuk |            |         |        | conditions.       |
|   |     PCL    |            |         |        |                   |
|   |            |            |         |        | Terms of credit:  |
|   |            |            |         |        |                   |
|   |            |            |         |        | 30 days credit*   |
|   |            |            |         |        |                   |
|   |            |            |         |        |  Going Forward:   |
|   |            |            |         |        | This normal       |
|   |            |            |         |        | business          |
|   |            |            |         |        | transaction will  |
|   |            |            |         |        | continue on the   |
|   |            |            |         |        | underlying        |
|   |            |            |         |        | commercial terms. |
|   |            |            |         |        |                   |
|   |            |            |         |        | * The credit      |
|   |            |            |         |        | period given for  |
|   |            |            |         |        | sale of goods by  |
|   |            |            |         |        | PFL to Sermsuk    |
|   |            |            |         |        | conform to normal |
|   |            |            |         |        | credit days given |
|   |            |            |         |        | to other          |
|   |            |            |         |        | customers in the  |
|   |            |            |         |        | local market      |
+---+------------+------------+---------+--------+-------------------+

Unit: Million Baht

+---+------------+------------+--------+--------+-------------------+
| I | IVL/S      | Type of    | Year   | Year   | Necessity and     |
| t | ubsidiary- | T          | Ended  | Ended  | reasonableness    |
| e |            | ransaction |        |        |                   |
| m | Party      |            | 31     | 31     |                   |
|   | having     |            | De     | De     |                   |
|   | Conflict   |            | cember | cember |                   |
|   | of         |            | 2009   | 2010   |                   |
|   | Interest   |            |        |        |                   |
+===+============+============+========+========+===================+
| 2 | Indorama   | Indorama   | 926.99 | 3,     | Indorama          |
|   | Petrochem  | Petrochem  |        | 560.45 | Synthetics Ltd.   |
|   | Ltd. and   | Ltd. and   |        |        | is a Polyester    |
|   | TPT        | TPT        |        |        | manufacture and   |
|   | Petr       | Petr       |        |        | distributor,      |
|   | ochemicals | ochemicals |        |        | which use PTA for |
|   | PCL -      | PCL sold   |        |        | raw material.     |
|   | Indorama   | PTA to     |        |        |                   |
|   | Synthetics | Indorama   |        |        | Pricing method:   |
|   | (India)    | Synthetics |        |        |                   |
|   | Ltd.       | (India)    |        |        | Negotiated per    |
|   |            | Ltd.       |        |        | market rate as    |
|   | Rela       |            |        |        | applicable to     |
|   | tionship:  | Total      |        |        | other customers.  |
|   |            |            |        |        |                   |
|   | -   Mr.    |            |        |        | Terms of credit:  |
|   |     O.P.   |            |        |        |                   |
|   |     Lohia  |            |        |        | DA/LC 90 days     |
|   |     major  |            |        |        |                   |
|   |     s      |            |        |        | Going Forward:    |
|   | hareholder |            |        |        | This transaction  |
|   |     of     |            |        |        | will continue on  |
|   |            |            |        |        | the above normal  |
|   |   Indorama |            |        |        | terms and         |
|   |            |            |        |        | conditions.       |
|   | Synthetics |            |        |        |                   |
|   |     India  |            |        |        |                   |
|   |     is     |            |        |        |                   |
|   |     blood  |            |        |        |                   |
|   |            |            |        |        |                   |
|   |    brother |            |        |        |                   |
|   |     of Mr. |            |        |        |                   |
|   |     Aloke  |            |        |        |                   |
|   |     Lohia  |            |        |        |                   |
|   |            |            |        |        |                   |
|   | -   Mr.    |            |        |        |                   |
|   |     Aloke  |            |        |        |                   |
|   |     Lohia  |            |        |        |                   |
|   |            |            |        |        |                   |
|   |   director |            |        |        |                   |
|   |     of     |            |        |        |                   |
|   |            |            |        |        |                   |
|   |   Indorama |            |        |        |                   |
|   |            |            |        |        |                   |
|   |  Petrochem |            |        |        |                   |
|   |     Ltd.   |            |        |        |                   |
|   |     and    |            |        |        |                   |
|   |     TPT    |            |        |        |                   |
|   |     Petr   |            |        |        |                   |
|   | ochemicals |            |        |        |                   |
|   |     PCL    |            |        |        |                   |
+---+------------+------------+--------+--------+-------------------+

Rental/Lease (not exceed 3 years) without any indication of General
Trading Condition

  Unit: Million Baht

+---+-------------+-----------+--------+--------+--------------------+
| I | IVL/        | Type of   | Year   | Year   | Necessity and      |
| t | Subsidiary- | Tr        | Ended  | Ended  | reasonableness     |
| e |             | ansaction |        |        |                    |
| m | Party       |           | 31     | 31     |                    |
|   | having      |           | De     | De     |                    |
|   | Conflict of |           | cember | cember |                    |
|   | Interest    |           | 2009   | 2010   |                    |
+---+-------------+-----------+--------+--------+--------------------+
| 1 | Indorama    | Indorama  | 2.70   | 2.12   | This transaction   |
|   | Polyester   | Polyester |        |        | has been done for  |
|   | Industries  | I         |        |        | using as a         |
|   | PCL -       | ndustries |        |        | dormitory of       |
|   | Pacific     | PCL       |        |        | factory staff with |
|   | Resources   | rented    |        |        | total space of     |
|   | Ltd.        | dormitory |        |        | 7,577 Sqm.         |
|   |             | at Rayong |        |        |                    |
|   | Re          | from      |        |        | Pricing method:    |
|   | lationship: | Pacific   |        |        |                    |
|   |             | Resources |        |        | Rent and service   |
|   | -   Mr.     | Ltd. The  |        |        | charge based on    |
|   |     Anuj    | rental    |        |        | Fair Market value  |
|   |     Lohia,  | expense   |        |        | of property with a |
|   |     son of  | is of     |        |        | return of 7% – 8%. |
|   |     Mr.     | Baht      |        |        |                    |
|   |     Aloke   | 225,000   |        |        | Terms of credit:   |
|   |     Lohia,  | per month |        |        | Advance or 5^(th)  |
|   |     is the  | or Baht   |        |        | day of each        |
|   |     major   | 29.70 per |        |        | calendar month.    |
|   |             | Sqm. per  |        |        |                    |
|   | shareholder | month.    |        |        | Going Forward:     |
|   |     of      | (         |        |        |                    |
|   |     Pacific | Rent-Baht |        |        | Pacific Resources  |
|   |             | 75,000    |        |        | Ltd. sold          |
|   |   Resources | per       |        |        | ddormitory to      |
|   |     Ltd.    | month,    |        |        | Indorama Polyester |
|   |             | Service   |        |        | Industries PCL.    |
|   | -   Mr.     | fee-Baht  |        |        | Therefore, this    |
|   |     Aloke   | 150,000   |        |        | agreement expired  |
|   |     Lohia   | per       |        |        | on 12 October      |
|   |     is a    | month)    |        |        | 2010.              |
|   |             |           |        |        |                    |
|   |    director | Total     |        |        |                    |
|   |     of      |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    Indorama |           |        |        |                    |
|   |             |           |        |        |                    |
|   |   Polyester |           |        |        |                    |
|   |             |           |        |        |                    |
|   |  Industries |           |        |        |                    |
|   |     PCL     |           |        |        |                    |
+---+-------------+-----------+--------+--------+--------------------+
| 2 | Indorama    | Indorama  | 3.45   | 5.25   | This transaction   |
|   | Polyester   | Polyester |        |        | has been done for  |
|   | Industries  | I         |        |        | using as a office  |
|   | Limited -   | ndustries |        |        | space, with total  |
|   | Pacific     | rented    |        |        | areas of 1,457.88  |
|   | Resources   | out       |        |        | Sqm.               |
|   | Ltd.        | office    |        |        |                    |
|   |             | space at  |        |        | Pricing method:    |
|   | Re          | 28th      |        |        |                    |
|   | lationship: | floor     |        |        | As per prevailing  |
|   |             | Ocean     |        |        | rent in Ocean      |
|   | -   Mr.     | Tower 2,  |        |        | Tower building, it |
|   |     Anuj    | Bangkok.  |        |        | has been agreed.   |
|   |     Lohia,  | (Unit A,  |        |        |                    |
|   |     son of  | B, C, D). |        |        | Terms of credit:   |
|   |     Mr.     |           |        |        |                    |
|   |     Aloke   | The       |        |        | Advance on or      |
|   |     Lohia,  | rental    |        |        | before 5th day of  |
|   |     is the  | expenses  |        |        | each calendar      |
|   |     major   | is of     |        |        | month.             |
|   |             | Baht      |        |        |                    |
|   | shareholder | 437,364   |        |        | Going Forward:     |
|   |     of      | per month |        |        |                    |
|   |     Pacific | or Baht   |        |        | Such transactions  |
|   |             | 300 per   |        |        | will continue as   |
|   |   Resources | Sqm. per  |        |        | per the agreement  |
|   |     Ltd.    | month     |        |        | and payment terms  |
|   |             |           |        |        | from November 1,   |
|   | -   Mr.     | Total     |        |        | 2007 to October    |
|   |     Aloke   |           |        |        | 31, 2010.          |
|   |     Lohia   |           |        |        |                    |
|   |     is a    |           |        |        | Renewal Condition: |
|   |             |           |        |        |                    |
|   |    director |           |        |        | The agreement will |
|   |     of      |           |        |        | be renewed as per  |
|   |             |           |        |        | the terms of       |
|   |    Indorama |           |        |        | agreement          |
|   |             |           |        |        |                    |
|   |   Polyester |           |        |        |                    |
|   |             |           |        |        |                    |
|   |  Industries |           |        |        |                    |
|   |     PCL     |           |        |        |                    |
+---+-------------+-----------+--------+--------+--------------------+

Relating to Assets/Services Transaction

  Unit: Million Baht

+---+-------------+-----------+--------+--------+--------------------+
| I | IVL/        | Type of   | Year   | Year   | Necessity and      |
| t | Subsidiary- | Tr        | Ended  | Ended  | reasonableness     |
| e |             | ansaction |        |        |                    |
| m | Party       |           | 31     | 31     |                    |
|   | having      |           | De     | De     |                    |
|   | Conflict of |           | cember | cember |                    |
|   | Interest    |           | 2009   | 2010   |                    |
+---+-------------+-----------+--------+--------+--------------------+
| 1 | Royalty Fee | Royalty   | -      | 2.21   | Rationale of       |
|   | (use of the | Fee ( Use |        |        | Transaction:       |
| . | name        | of the    | -      | 0.045  |                    |
|   | “Indorama”) | name      |        |        | Fee paid for use   |
|   |             | "I        | -      | 5.01   | of the name        |
|   | Pay to      | ndorama") |        |        | "Indorama" which   |
|   | Lohia       | as per    | -      | 10.39  | is owned by Lohia  |
|   | Global      | the       |        |        | Global Holdings    |
|   | Holdings    | Royalty   | -      | 7.29   | Limited, as per    |
|   | Limited     | Agreement |        |        | the License        |
|   |             |           | -      | 3.02   | Agreement between  |
|   | 1           | Total     |        |        | Indorama Ventures  |
|   | )  Indorama |           | -      | 4.69   | PCL and Lohia      |
|   |             |           |        |        | Global Holdings,   |
|   |    Polymers |           | -      | 3.07   | assigned to        |
|   |     PCL.    |           |        |        | subsidiaries.      |
|   |             |           | -      | 4.50   |                    |
|   | 2           |           |        |        | Pricing method:    |
|   | )  Indorama |           | -      | 4.75   |                    |
|   |     Holding |           |        |        | Royalty fee to be  |
|   |     LTD.    |           | -      | 44.97  | charged at 0.50    |
|   |             |           |        |        | per MT of net      |
|   | 3           |           |        |        | production as      |
|   | )  Indorama |           |        |        | stipulated in the  |
|   |             |           |        |        | Royalty payment    |
|   |  Polyesters |           |        |        | agreement          |
|   |             |           |        |        |                    |
|   |  Industries |           |        |        | Terms of credit:   |
|   |     PCL     |           |        |        |                    |
|   |             |           |        |        | 7 Days after IVL"  |
|   | 4           |           |        |        | s financial        |
|   | )  Indorama |           |        |        | statement was      |
|   |             |           |        |        | reviewed and       |
|   |   Petrochem |           |        |        | approved by the    |
|   |     LTD.    |           |        |        | auditor            |
|   |             |           |        |        |                    |
|   | 5)  UAB     |           |        |        | Going Forward:     |
|   |     Orion   |           |        |        |                    |
|   |     Global  |           |        |        | Starting from      |
|   |     Pet     |           |        |        | March 2010         |
|   |             |           |        |        |                    |
|   | 6           |           |        |        |                    |
|   | )  AlphaPet |           |        |        |                    |
|   |     Inc.    |           |        |        |                    |
|   |             |           |        |        |                    |
|   | 7)  StarPet |           |        |        |                    |
|   |     Inc.    |           |        |        |                    |
|   |             |           |        |        |                    |
|   | 8)  TPT     |           |        |        |                    |
|   |     Pet     |           |        |        |                    |
|   | rochemicals |           |        |        |                    |
|   |     PCL     |           |        |        |                    |
|   |             |           |        |        |                    |
|   | 9)  UAB     |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    Indorama |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    Holdings |           |        |        |                    |
|   |     Europe  |           |        |        |                    |
|   |             |           |        |        |                    |
|   | 10) UAB     |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    Indorama |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    Polymers |           |        |        |                    |
|   |     Europe  |           |        |        |                    |
+---+-------------+-----------+--------+--------+--------------------+

  Unit: Million Baht

+---+-------------+-----------+--------+--------+--------------------+
| I | IVL/        | Type of   | Year   | Year   | Necessity and      |
| t | Subsidiary- | Tr        | Ended  | Ended  | reasonableness     |
| e |             | ansaction |        |        |                    |
| m | Party       |           | 31     | 31     |                    |
|   | having      |           | De     | De     |                    |
|   | Conflict of |           | cember | cember |                    |
|   | Interest    |           | 2009   | 2010   |                    |
+---+-------------+-----------+--------+--------+--------------------+
| 2 | Indorama    | Indorama  | -      | 32.00  | Since September,   |
|   | Polyester   | Polyester |        |        | 2008, IPI was      |
|   | Industries  | I         |        |        | using the said     |
|   | Limited -   | ndustries |        |        | property and       |
|   | Pacific     | PCL       |        |        | paying monthly     |
|   | Resources   | purchased |        |        | rent & maintenance |
|   | Ltd.        | dormitory |        |        | of THB 225,000 to  |
|   |             | at Rayong |        |        | Pacific Resources  |
|   | Re          | from      |        |        | LTD. The           |
|   | lationship: | Pacific   |        |        | management of IPI  |
|   |             | Resources |        |        | was of the fair    |
|   | -   Mr.     | Ltd.      |        |        | opinion that it    |
|   |     Anuj    |           |        |        | would be to buy    |
|   |     Lohia,  | Total     |        |        | back the property  |
|   |     son of  |           |        |        | at the book value  |
|   |     Mr.     |           |        |        | of Pacific         |
|   |     Aloke   |           |        |        | Resources LTD. to  |
|   |     Lohia,  |           |        |        | ensure permanent   |
|   |     is the  |           |        |        | accommodation for  |
|   |     major   |           |        |        | IPI workers and    |
|   |             |           |        |        | avoidance of the   |
|   | shareholder |           |        |        | payment of monthly |
|   |     of      |           |        |        | rent.              |
|   |     Pacific |           |        |        |                    |
|   |             |           |        |        |                    |
|   |   Resources |           |        |        |                    |
|   |     Ltd.    |           |        |        |                    |
|   |             |           |        |        |                    |
|   | -   Mr.     |           |        |        |                    |
|   |     Aloke   |           |        |        |                    |
|   |     Lohia   |           |        |        |                    |
|   |     is a    |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    director |           |        |        |                    |
|   |     of      |           |        |        |                    |
|   |             |           |        |        |                    |
|   |    Indorama |           |        |        |                    |
|   |             |           |        |        |                    |
|   |   Polyester |           |        |        |                    |
|   |             |           |        |        |                    |
|   |  Industries |           |        |        |                    |
|   |     PCL     |           |        |        |                    |
+---+-------------+-----------+--------+--------+--------------------+

Relationship with Related Parties

Related parties are those parties linked to the Group and the Company as
shareholders or by common shareholders or directors. The relationships
within the Group are as follows:

  -------------------- --------------- --------------------------------------
  Name of entities     Country of      Nature of relationships
                       Incorporation   

  Serm Suk PCL         Thailand        Major Shareholder of Petform
                                       (Thailand) Ltd., holding 40%, one
                                       common director

  Indorama Synthetics  India           Mr. O.P. Lohia, major shareholder of
  India Ltd.                           Indorama Synthetics India Ltd. is a
                                       blood brother of Mr. Aloke Lohia

  Pacific Resources    Thailand        Mr. Anuj Lohia, son of Mr. Aloke Lohia
  Ltd.                                 is the major shareholder of Pacific
                                       Resources Ltd.

  Lohia Global Holding Hong Kong       Lohia Global Holdings Limited is owned
  Limited                              by Mr. M.L Lohia father of Mr. S.P.
                                       Lohia and Mr. Aloke Lohia Directors of
                                       Indorama Ventures PCL and its
                                       subsidiaries
  -------------------- --------------- --------------------------------------

The Audit Committee Opinion on the Related Party Transaction

The above related party transactions have been considered and opined by
the Company’s Audit Committee that the foresaid related party
transactions are reasonable and necessary to the Company’s operation.
Entering into those transactions, the Company has considered for the
best interest of the Company as the priority and no additional benefit
has been transferred between the Company and the persons who have the
conflict of interest.

Policy and Procedure to Approve Related Party Transactions

In the event that the Company carries out its business with the related
party who may have a conflict of interest with the Company, the Audit
Committee expresses its opinion regarding the necessity of such
transactions. The Audit Committee ensures that terms and conditions of
these transactions are consistent with market practice and price charged
for these transactions are evaluated and compared with market prices. In
the event that market price is not available, the Audit Committee
ensures that these prices are reasonable and the transactions are
carried out in the best interest of the Company and its shareholders. If
the Audit Committee is unable to evaluate related party transactions due
to lack of expertise in certain areas, the Company arranges an
independent expert to evaluate and give opinion on such transactions.
The Board of Directors or Audit Committee or the Company shareholders,
as the case may be, uses this opinion from the independent expert as a
supplement to form their own conclusion. Those directors who may have
conflict of interests with the Company are prohibited from voting on
issues regarding related parties transactions.

All Related Party transactions are reported by the External Auditors in
their Quarterly and Audited Financial Statements and in Form 56-1 and
Annual Report as per the SEC/SET guidelines.

Policy on the Entering into New Related Party Transaction

For any new related transaction, Indorama Ventures PCL ensures that such
transactions are carried out in compliance with the SEC Act, rules,
notifications and regulations of the Capital Market Supervisory Board,
the SEC and the SET. In addition, the Company also complies with the
Thai GAAP on disclosure rules related to related party transactions and
other requirements as specified by the Institute of Certified
Accountants of Thailand and the policy of Indorama Ventures PCL

In addition, when Indorama Ventures PCL proposes to conduct their
business with a related party, Indorama Ventures PCL seeks Audit
Committee’s opinion on the reasonableness of such transactions. In the
event that the Audit Committee is unable to evaluate related party
transactions due to lack of expertise in certain areas, the Committee
may arrange an independent expert, such as independent appraiser, to
evaluate and give opinion on the transactions. The opinion of the Audit
Committee or the independent expert is be used by the Company’s Board of
Directors or shareholders for making a decision to ensure that these
related party transactions are carried out without any conflict of
interest and for the best interest of all shareholders of Indorama
Ventures PCL

However, the Company and its subsidiaries may have related party
transactions with their directors, executives or potential connected
persons. The Board of Directors meeting has approved in principle that
the management is empowered to approve such transactions under the
reasonable, transparent and uncorrupted conditions, provided that such
transaction is categorized as a transaction with the same commercial
terms as those an ordinary person would agree with any unrelated
counterparty under similar circumstances, on the basis of commercial
negotiation (general trading conditions) and without any dependent
interest resulting from the status of director, executive or related
person as the case maybe.