2.3 Business Characteristics of each Undertaking

(1) Business Characteristics

The characteristics of each of the company’s business are classified as
follows:

  Securities Broker

Market share value of the company for the past 3 years compared to the
most updated data as at 31 December, 2001 were shown in the table below:

Table of Market Share Value

  ---------------------------- ---------- ----------- ---------- -----------
  Securities Trading Volume    1998       1999        2000       2001

  SET (Million Baht)           855,169    1,609,787   925,202    1,579,144

  US (Million Baht)            45,812     77,694      31,456     68,322

  US Market share (%)          2.68%      2.41%       1.70%      2.16%
  ---------------------------- ---------- ----------- ---------- -----------

For the past 3 years, the company had not had any sub-broker until May
2000 when one sub-broker joined in.

Securities Broker Business

New Customer Securities Policy

It is the Company’s policy to welcome all kinds of customers, domestics,
institutional and foreigners. At present, however, most of our customers
are domestic customers and we have set up the screening of new customers
policy according to the rules and regulations of the SET while focusing
on minimizing the company‘s risk.

Margin accounts Policy

The Company has the policy not to provide any margin loan for securities
trading to the customers.

Securities Trading Credit Line Policy

The Company has set up the securities trading credit line and appointed
the authorized signers to approve for each level of the Line for the
customers governing each activity such as Short Sell and Net Settlement
/Waive as well as the approval of the Change of order and the Company’s
Error Port. The authorized signers and related authorities were
appointed by the Board of Executive Directors and was shown in table.
Moreover, authorized signers were also appointed to approve for the
temporary credit line as follows:

+----------------------------------+-----------------------------------+
| Credit Line                      | Authorized Signers                |
|                                  |                                   |
| (temporary line per customer)    |                                   |
+----------------------------------+-----------------------------------+
| Not exceeding 6 million Baht     | Assistant to Managing Director    |
+----------------------------------+-----------------------------------+
| Not exceeding 8 million Baht     | Deputy Managing Director          |
+----------------------------------+-----------------------------------+
| Not exceeding 10 million Baht    | Managing Director or Executive    |
|                                  | Directors                         |
+----------------------------------+-----------------------------------+
| Exceeding 10 million Baht        | 3 out of 4 Executive Directors    |
|                                  | and proposed to be re-confirmed   |
|                                  | by the Board of Directors         |
+----------------------------------+-----------------------------------+

+------+--------+--------+----------+--------+--------+-------------+
| T    | Ap     |        |          |        |        |             |
| ABLE | proval |        |          |        |        |             |
| 1    | Autho  |        |          |        |        |             |
|      | rities |        |          |        |        |             |
+------+--------+--------+----------+--------+--------+-------------+
|      | New    | Net    | Short    | Change | Error  |             |
|      | Cash   | Sett   | Sell     | Order  | Port   |             |
|      | A      | lement |          |        |        |             |
|      | ccount | &      |          |        |        |             |
|      | O      | Waive  |          |        |        |             |
|      | pening |        |          |        |        |             |
+------+--------+--------+----------+--------+--------+-------------+
|      |        |        |          |        | Error  | Error with  |
|      |        |        |          |        | with a | a Deficit   |
|      |        |        |          |        | Square | or transfer |
|      |        |        |          |        |        | the         |
|      |        |        |          |        |        | difference  |
|      |        |        |          |        |        | into        |
|      |        |        |          |        |        | Company’s   |
|      |        |        |          |        |        | Port        |
+------+--------+--------+----------+--------+--------+-------------+
| Not  | -      | -      | A        | -      | -      | Amount x    |
| e    |        |        | ssistant |        |        | price <     |
| xcee |        |        | Vice     |        |        | 10.0        |
| ding |        |        | P        |        |        | million     |
|      |        |        | resident |        |        | Baht and/or |
| 0.5  |        |        |          |        |        | a deficit   |
| mil  |        |        |          |        |        | of not over |
| lion |        |        |          |        |        | 50,000 Baht |
| Baht |        |        |          |        |        | Assistant   |
|      |        |        |          |        |        | to Managing |
|      |        |        |          |        |        | Director    |
|      |        |        |          |        |        | and Deputy  |
|      |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director    |
|      |        |        |          |        |        | Amount x    |
|      |        |        |          |        |        | price <     |
|      |        |        |          |        |        | 10.0        |
|      |        |        |          |        |        | million     |
|      |        |        |          |        |        | Baht and/or |
|      |        |        |          |        |        | the deficit |
|      |        |        |          |        |        | over 50,000 |
|      |        |        |          |        |        | Baht Deputy |
|      |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director or |
|      |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director or |
|      |        |        |          |        |        | Executive   |
|      |        |        |          |        |        | Director    |
|      |        |        |          |        |        | and         |
|      |        |        |          |        |        | proposed to |
|      |        |        |          |        |        | be approved |
|      |        |        |          |        |        | by the      |
|      |        |        |          |        |        | Investment  |
|      |        |        |          |        |        | committee   |
+------+--------+--------+----------+--------+--------+-------------+
| Not  | Vice   | Vice   | Vice     | Vice   | Vice   |             |
| e    | Pre    | Pre    | P        | Pre    | Pre    |             |
| xcee | sident | sident | resident | sident | sident |             |
| ding |        |        |          |        |        |             |
|      |        |        |          |        |        |             |
| 1    |        |        |          |        |        |             |
| mil  |        |        |          |        |        |             |
| lion |        |        |          |        |        |             |
| Baht |        |        |          |        |        |             |
+------+--------+--------+----------+--------+--------+-------------+
| Not  | Senior | Senior | Senior   | Senior | Senior |             |
| e    | Vice   | Vice   | Vice     | Vice   | Vice   |             |
| xcee | Pre    | Pre    | P        | Pre    | Pre    |             |
| ding | sident | sident | resident | sident | sident |             |
|      |        |        |          |        |        |             |
| 2    |        |        |          |        |        |             |
| mil  |        |        |          |        |        |             |
| lion |        |        |          |        |        |             |
| Baht |        |        |          |        |        |             |
+------+--------+--------+----------+--------+--------+-------------+
| Not  | Ass    | Ass    | A        | Ass    | Ass    |             |
| e    | istant | istant | ssistant | istant | istant |             |
| xcee | to     | to     | to       | to     | to     |             |
| ding | Ma     | Ma     | Managing | Ma     | Ma     |             |
|      | naging | naging | Director | naging | naging |             |
| 6    | Di     | Di     |          | Di     | Di     |             |
| mil  | rector | rector |          | rector | rector |             |
| lion |        |        |          |        |        |             |
| Baht |        |        |          |        |        |             |
+------+--------+--------+----------+--------+--------+-------------+
| Not  | Deputy | Deputy | Deputy   | Deputy | Deputy | Amount x    |
| e    | Ma     | Ma     | Managing | Ma     | Ma     | price >10.0 |
| xcee | naging | naging | Director | naging | naging | million     |
| ding | Di     | Di     |          | Di     | Di     | Baht and/or |
|      | rector | rector |          | rector | rector | a deficit   |
| 8    |        |        |          |        |        | not over    |
| mil  |        |        |          |        |        | 50,000 Baht |
| lion |        |        |          |        |        | Deputy      |
| Baht |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director or |
|      |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director or |
|      |        |        |          |        |        | Executive   |
|      |        |        |          |        |        | Director    |
|      |        |        |          |        |        | and         |
|      |        |        |          |        |        | proposed to |
|      |        |        |          |        |        | Investment  |
|      |        |        |          |        |        | Committee   |
|      |        |        |          |        |        | for         |
|      |        |        |          |        |        | approval    |
|      |        |        |          |        |        |             |
|      |        |        |          |        |        | Amount x    |
|      |        |        |          |        |        | price >     |
|      |        |        |          |        |        | 10.0        |
|      |        |        |          |        |        | million     |
|      |        |        |          |        |        | Baht and/or |
|      |        |        |          |        |        | a deficit   |
|      |        |        |          |        |        | over 50,000 |
|      |        |        |          |        |        | Baht Deputy |
|      |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director or |
|      |        |        |          |        |        | Managing    |
|      |        |        |          |        |        | Director or |
|      |        |        |          |        |        | Executive   |
|      |        |        |          |        |        | Director    |
|      |        |        |          |        |        | and         |
|      |        |        |          |        |        | proposed to |
|      |        |        |          |        |        | Investment  |
|      |        |        |          |        |        | Committee   |
|      |        |        |          |        |        | for         |
|      |        |        |          |        |        | approval    |
|      |        |        |          |        |        | and         |
|      |        |        |          |        |        | proposed to |
|      |        |        |          |        |        | Board of    |
|      |        |        |          |        |        | Executive   |
|      |        |        |          |        |        | Director    |
|      |        |        |          |        |        | for         |
|      |        |        |          |        |        | ackn        |
|      |        |        |          |        |        | owledgement |
+------+--------+--------+----------+--------+--------+-------------+
| Not  | Ma     | Ma     | Deputy   | Deputy | Ma     |             |
| e    | naging | naging | Managing | Ma     | naging |             |
| xcee | Di     | Di     | Director | naging | Di     |             |
| ding | rector | rector | or       | Di     | rector |             |
|      | or     | or     | Managing | rector | or     |             |
| 10   | Exe    | Exe    | Director | or     | Exe    |             |
| mil  | cutive | cutive | or       | Ma     | cutive |             |
| lion | Di     | Di     | E        | naging | Di     |             |
| Baht | rector | rector | xecutive | Di     | rector |             |
|      |        |        | Director | rector |        |             |
|      |        |        |          | or     |        |             |
|      |        |        |          | Exe    |        |             |
|      |        |        |          | cutive |        |             |
|      |        |        |          | Di     |        |             |
|      |        |        |          | rector |        |             |
+------+--------+--------+----------+--------+--------+-------------+
| 10   | Board  | Board  | Managing | Ma     | Ma     |             |
| mil  | of     | of     | Director | naging | naging |             |
| lion | Exe    | Exe    | or       | Di     | Di     |             |
| Baht | cutive | cutive | E        | rector | rector |             |
| and  | Di     | Di     | xecutive | or     | or     |             |
| over | rector | rector | Director | Exe    | Exe    |             |
|      |        |        |          | cutive | cutive |             |
|      |        |        |          | Di     | Di     |             |
|      |        |        |          | rector | rector |             |
+------+--------+--------+----------+--------+--------+-------------+
| 100  | Board  | Board  | Managing | -      | -      |             |
| mil  | of     | of     | Director |        |        |             |
| lion | Di     | Di     | or       |        |        |             |
| Baht | rector | rector | E        |        |        |             |
| and  |        |        | xecutive |        |        |             |
| over |        |        | Director |        |        |             |
+------+--------+--------+----------+--------+--------+-------------+

Definitions in the Approval Authorities Table.

  ------------------------------- ------- --------------------------------
  Approved Credit Line            Means   The securities trading approved
                                          limits for the newly open cash
                                          accounts or the new trading
                                          limits after the increasing or
                                          decreasing of the previous limit

  Assistant Vice President, Vice  Means   Those positions from the
  President and Senior Vice               Marketing Department
  President                               

  Assistant to Managing Director  Means   That position from the Marketing
                                          Department

  Deputy Managing Director        Means   That position from the Marketing
                                          Department

  Board of Executive Directors    Means   The Executive Board formally
                                          appointed by the company
  ------------------------------- ------- --------------------------------

Settlement Control Policy

The Company has set up a strictly control policy over the customers’
settlement in order to comply with the rules and regulations of SET as
follows:

Payment on securities purchasing should be settled on time. Late payment
or cheques default cases will be followed up by the company’s marketing
officer in order to urge the customers to make payment either by cash or
by depositing into the company’s account and to warn them to be more
careful in the future. Late payment or late submission of share
certificates will subject to a fine. And if the late payment of any
customer happens 3 times in a year, then the account will be closed.

Securities Trading 

The Board of Directors has appointed an Investment Committee to handle
the company’s investment function under the company’s investment. Such
investments may include the investment in both listed securities in the
SET and the MAI or in Bond Dealing Center and the unlisted securities
which consist of both equity and debt instruments and include a long
term as well as short term investments.

Investment Policy

1.  The Investment amount limit is set up so that the company can remain
    its Net Capital Rule of not less than 20%

2.  The Company would invest in those securities from the listed or
    unlisted company in the SET, MAI or in the Thai Bond Dealing Center
    which have good fundamentals, good financial status, fair liquidity
    with growth potential, reasonable price, good management team and
    most of all they should have good governance.

3.  The types of investment are divided into 2 types.

    1.  Short term Investment

    2.  Long term Investment

4.  Risk Management

    1.  The risk on investment should be scattered by determining the
        investment according to the period of investment and the types
        of the invested securities groups.

    2.  Set up a cut loss limit.

    3.  Investment decision always supported by research paper.

5.  The monthly report on investment is submitted to the Board of
    Directors monthly for acknowledgement.

As at 30 December 2001 the ratio between the investment in equity and
debt instrument is 77:23 of the total investment of the company.

Investment Advisory Business

The investment advisory service is considered to be another alternative
service offered to the customers by which various kinds of investment
advices are given to the customers both general or specific advices in
order that the customers will be able to understand all aspects of the
investment in particular company. The customers will be supplied with
adequate information for decision making. And they can be assure that
all advices are standardized on customers’ benefit-oriented basis.

The Financial Advisory and Underwriting Business

The Company also provides the underwriting services of various kinds of
financial instruments both debts and equity instruments together with
the investment advisory services.

The Company ‘s subsidiary company is providing the financial advisory
services and the investment banking department will give advices
concerning the shareholder structuring, the fund raising through issuing
of financial instruments such as common stocks, preferred stocks,
debentures and debentures with warrant, etc. and the listing of stocks
in the Stock Exchange of Thailand or in Market Alternative
Investment(MAI).

(2) Marketing and Competition Situation

Table of Securities Business Situation Summary

  --------------------------------- ----------- ----------- ----------- -----------
  Year                              1998        1999        2000        2001

  Securities Trading Volume(Million 855,169     1,609,787   925,202     1,579,758
  Baht)                                                                 

  Average daily Trading             3,504.79    6,570.60    3,739.66    6,413.59
  Volume(Million Baht)                                                  

  Market total Volume(Million Baht) 1,268,200   2,193,067   1,279,220   1,607,330

  SET Index (Point)                 355.81      481.92      269.19      303.85

  Dividend Payment Rate (%)         1.34        0.61        1.78        2.06

  Rate of closing price per EPS     10.04       14.70       5.52        4.92
  (Time)                                                                

  Number of Listed Company          418         392         381         382
  --------------------------------- ----------- ----------- ----------- -----------

Source : The Stock Exchange of Thailand

Competitive Strategies

The Company ‘s competitive strategies for securities broker business are
to provide fast and accurate information services in order to facilitate
the customer’ decision making on investment. The company is fully
equipped with efficient Marketing personnel and Securities Analysts
whose analyses will cover the main industries which are of high interest
to the customers. In addition, we also have a subsidiary company which
specializes in Investment Banking and underwriting business and because
we had taken up so many cases of IPO deals, we were continuously able to
offer the IPO shares to the public as well as to our customers to
subscribe. We also operate 3 branches upcountry namely Rangsit,
Nakornpathom and Nakornsawan in order to serve the customers in
provincial areas.

Marketing and Competition

In 2001, the SET Index had picked up from 269.19 point since the end of
the year 2000 to close at 303.85 point or an increase of 12.88% with the
increase in average daily volume from 3,740 million Baht from the
previous year to 6,413 million Baht. The increase of the SET Index
during the beginning of the year was resulted from the establishment of
the new parliament of Pol.Gen Taksin Chinnawatra, the Thai Rak Thai
Party Leader, after the 6^(th) January,2001’s victory in the Member of
the Assembly voting. However, the recovery of the country’s economic
situation was disturbed by the sabotage in the United States of America
on 11 September 2001 followed by the war in Afkanistan which adversely
resulted in the slow down of the world economics which inevitably had
bad impact on the improvement sign of Thai economics as well. The Index
reached the lowest point of the year at 265.22 points on 7 November
2001. However, towards the year end, the listing of new companies as
well as some of the State Enterprises, PTT PLC. for instance, in the SET
had brought the securities market into live again.

At Present, there are totally 33 securities companies of which 27
companies are members of the SET(Broker) and the rest 6 companies are
non-members of the SET(sub-broker). Out of these Broker companies, there
are 8 companies who have Internet Trading System provided for the
customers and the companies of the top 5 volumes ranking in SET have an
aggregate market share of 43% of the total market.

The competition in securities business was becoming very intense after
the free negotiation of commission policy was activated. From a fixed
commission rate of 0.50% of the trading volume to the free negotiation
commission for all types of customers had tremendously decelerated the
brokerage fee in securities business while the increase in other types
of fee income like Underwriting fee was also limited. Thus, almost all
securities companies were operating on a net loss.

Securities Business Trend

Since 14 January 2002, SET had changed its regulations to fix the
brokerage fee to be at a minimum of 0.25% of the trading volume for all
types of customers for traditional trading and 0.20% for Internet
Trading which was expected to have better results on the income of all
securities companies.

The better economic situation in the year 2002 together with the
political stability of the country will be the factors supporting the
investment in the stock market. Moreover, the Major Plan concerning the
development of Thai stock market was set to focus on the increasing of
liquidity by increasing more supplies in the stock market. Objectives
were set to increase the number of new listed companies for about 50
companies of which 20 are to be listed in SET and 30 in MAI.
Privatization of many large State Enterprises may also raise the market
capitalization of about 360,000 million Baht i.e. from 1,600 billion to
2,000 billion Baht. And thus it is also expected that this will recover
the income from underwriting business as well. As for the demand aspect,
the new investor groups will be approached by arranging various
marketing activities or providing training courses on investment. Such
new investor groups may include members from the pension fund, the
retirement group and the early retirement group.

However, the plan of allowing commercial Banks to undertake securities
related business and the consideration of upgrading the sub-broker to be
a broker company at a lower cost will certainly lead to higher
competition. Therefore, most of the securities companies are trying to
improve their services, for example, improvement on research paper,
improvement of Internet Trading System which is expected to have higher
potential growth though it was just the beginning, and finally the
improvement and enlargement of the Financial Advisory and Underwriting
business in order to take up more stakes in the market.

Securities Trading Statistics of the SET in the years 2000 and 2001

+---------------------------------------+--------+--------+-----------+
|                                       | 2001   | 2000   | Change(%) |
+---------------------------------------+--------+--------+-----------+
| SET Index at year end                 | 303.85 | 269.19 | 12.88%    |
+---------------------------------------+--------+--------+-----------+
| Highest                               | 342.56 | 498.46 |           |
| point of SET Index in the fiscal year |        |        |           |
+---------------------------------------+--------+--------+-----------+
| Lowest                                | 265.22 | 250.60 |           |
| point of SET Index in the fiscal year |        |        |           |
+---------------------------------------+--------+--------+-----------+
| Daily average trading Volume (Million | 6,     | 3,     | 71.50%    |
| Baht)                                 | 413.59 | 739.66 |           |
+---------------------------------------+--------+--------+-----------+
| Ratio of price per average EPS        | 4.92   | 5.52   | (10.87%)  |
| (times)                               |        |        |           |
+---------------------------------------+--------+--------+-----------+
| Ratio of price per average Book Value | 1.29   | 1.11   | 16.22%    |
| (times)                               |        |        |           |
+---------------------------------------+--------+--------+-----------+
| Average Dividend yield (%)            | 2.06   | 1.78   | 15.73%    |
+---------------------------------------+--------+--------+-----------+
| Total Market Volume (Billion Baht)    | 1,     | 1,     | 25.65%    |
|                                       | 607.31 | 279.22 |           |
+---------------------------------------+--------+--------+-----------+

Source : The Stock Exchange of Thailand

Securities Trading Volume and top 10 Market Share Ranking of Broker in
the years 2000-2001

+--------+------+------------+----------+------+-----------+---------+
|        | 2001 |            |          | 2000 |           |         |
+--------+------+------------+----------+------+-----------+---------+
|        | Ran  | Trading    | Market   | Ran  | Trading   | Market  |
|        | king | Volume     |          | king | Volume    |         |
|        |      |            | Share    |      |           | Share   |
|        |      | (Million   |          |      | (Million  |         |
|        |      | Baht)      | (%)      |      | Baht)     | (%)     |
+--------+------+------------+----------+------+-----------+---------+
| YUANTA | 1    | 335,583    | 10.63    | 3    | 128,665   | 6.96    |
+--------+------+------------+----------+------+-----------+---------+
| AST    | 2    | 281,817    | 8.93     | 1    | 162,452   | 8.79    |
+--------+------+------------+----------+------+-----------+---------+
| ZMICO  | 3    | 251,907    | 7.98     | 11   | 69,091    | 3.74    |
+--------+------+------------+----------+------+-----------+---------+
| KIMENG | 4    | 247,342    | 7.84     | 4    | 126,629   | 6.85    |
+--------+------+------------+----------+------+-----------+---------+
| JPM    | 5    | 239,898    | 7.60     | 2    | 148,208   | 8.02    |
+--------+------+------------+----------+------+-----------+---------+
| KGI    | 6    | 161,281    | 5.11     | 6    | 115,418   | 6.25    |
+--------+------+------------+----------+------+-----------+---------+
| ASL    | 7    | 150,042    | 4.75     | 9    | 79,071    | 4.28    |
+--------+------+------------+----------+------+-----------+---------+
| CNS    | 8    | 146,511    | 4.64     | 8    | 80140     | 4.34    |
+--------+------+------------+----------+------+-----------+---------+
| KKS    | 9    | 120,686    | 3.82     | 7    | 85,539    | 4.63    |
+--------+------+------------+----------+------+-----------+---------+
| NATSEC | 10   | 119,957    | 3.80     | 15   | 62,813    | 3.40    |
+--------+------+------------+----------+------+-----------+---------+
| US     | 17   | 68,238     | 2.16     | 23   | 31,457    | 1.70    |
+--------+------+------------+----------+------+-----------+---------+

Source : The Stock Exchange of Thailand

Market Share of Financial Advisory and Underwriting Business in the year
2001

Underwriting Business

In the year 2001, the company had engaged in the underwriting deals
either as leader or co-underwriter of the IPO securities of 6 companies
out of the total 9 companies for the aggregate value of 464 Million Baht
namely Home Product Center PCL., The Team Precision PCL., The
Internet(Thailand)PCL., PTT PCL., Aeon Thanasinsap PCL. And Nava Leasing
PCL. In addition, we had also underwrite the Debenture of Banpu PCL. and
4 cases of tender offer namely K.R. Precision PCL., Royal Orchid Hotel
(Thailand)PCL., Thai Metal Drum Manufacturing PCL. and Carnaud
Metalbox(Thailand) PCL.

The competitive situation of the Financial Advisory Business

The competitive situation of the Financial Advisory and Underwriting
Businesses tend to be more extensive in the future as most of the medium
to small size securities companies are heading toward these fields of
businesses because they can compensate the income with the income from
securities business. However, both the Financial Advisory and
Underwriting businesses are flexible in relation to the securities
market as well. Even so, we still believe that with our high caliber and
expertise in Financial Advisory business, we are able to compete with
others.

The company’s target groups are those listed companies and any other
companies who wish to raise fund though capital market and money market.

(3) Procurement of Products or Services

Sources of Capital

For the past 2 years the company had not engaged in any outside source
of capital. Most capital came from the shareholders’ equity and was
utilized on investment of debt instrument, and underwriting of common
stocks and debt instrument and the rest was used as working capital. The
loan from other financial institution, if any, would be a short term
one. The sources of capital policy is to choose the source which is more
suitable in relation to the business activities and its objectives and
which will not affect the ratio between total liabilities and
shareholders’ equity as well as the NCR ratio.

Margin loan Policy

Due to the adverse securities market condition which often resulted in
default problems, the company does not provide any margin loan for
securities trading to all customers.

The Maintenance of Net Capital Rule

The Company will maintain its Net Capital Rule (NCR) to be up to the
Securities & Exchange Commission ‘s standard on a daily basis. The types
of assets and the capital of the company will be evaluated everyday in
order to control the company’s NCR to be in line with the standard rate
and timely.

As for the company’s NCR management policy, the company has arranged for
various sources of capital such as to open up credit lines with some
financial institutions or the sources of capital from shareholders’
equity through increasing of company’s capital by rights issue or Public
offering through the SET at the right timing and through the most
suitable financial instruments.