2.  Nature of Business Operations

    1.  Company profile and key changes and developments

  Polyplex (Thailand) Plc. (“PTL” or “the Company”) was incorporated as
  a private company on March 26, 2002 with an initial registered capital
  of Bt. 400,000 to manufacture and distribute PET film (polyethylene
  terephthalate film or polyester film). The registered capital of the
  Company was subsequently increased to Bt. 400 million in April/May,
  2002. The Company is promoted by Polyplex Corporation Limited (PCL)
  based in India and engaged in the same business as the Company for the
  last 18 years. As on date, PCL has 70% stake in the Company through
  both direct and indirect shareholding.

  Past key changes and developments to the Company are as follows:

+-----------+-----------------------------------------------------------+
| Ma        | PTL was promoted by PCL, which is a listed company (on    |
| rch-April | the Bombay Stock Exchange as also National Stock          |
| 2002      | Exchange) in India. PCL took up 100% of the Company’s     |
|           | registered capital of Bt. 400,000,000, divided into       |
|           | 8,000,000 ordinary shares at a par value of Bt. 10 per    |
|           | share and 32,000,000 preference shares at a par value of  |
|           | Bt. 10 per share. PTL also acquired a plot of land with   |
|           | an area of 20 rai 22 square wah at Siam Eastern           |
|           | Industrial Park in Rayong Province in order to construct  |
|           | a factory for manufacture of PET film.                    |
+-----------+-----------------------------------------------------------+
| May 20,   | PTL was granted a promotion certificate by BoI for PET    |
| 2002      | film (production line 1) with an approved production      |
|           | capacity of 15,000 tons per year.                         |
+-----------+-----------------------------------------------------------+
| July-2002 | The Company started construction of the factory in        |
| to        | July-2002 and completed its plant construction and        |
| A         | proceeded with machinery test-run in March, 2003 followed |
| pril-2003 | by commercial production from April 2, 2003 when its      |
|           | first sale invoice was recorded.                          |
+-----------+-----------------------------------------------------------+
| March/A   | The shareholders’ meeting resolved for increase of        |
| pril-2003 | registered capital by another Bt. 260 million through     |
|           | issuance of 20,800,000 preference shares at a par value   |
|           | of Bt. 10 per share and 5,200,000 ordinary shares at a    |
|           | par value of Bt. 10 per share to the existing             |
|           | shareholders                                              |
+-----------+-----------------------------------------------------------+
| June 11,  | The Company was granted a BOI promotion certificate for   |
| 2003      | production of                                             |
|           |                                                           |
|           | -   PET film (production line 2) with an approved         |
|           |     production capacity of 15,000 tons per year (now      |
|           |     expanded to 19,500 tons per year).                    |
|           |                                                           |
|           | -   PET resin with an approved production capacity of     |
|           |     26,250 tons per year                                  |
+-----------+-----------------------------------------------------------+
| September | The Board of Directors resolved for the purchase of       |
| 11, 2003  | another plot of land adjacent to the existing land        |
|           | covering 8 rai 28.9 square wah area to produce PET resin  |
|           | which is the raw material in PET film production.         |
+-----------+-----------------------------------------------------------+
| November  | Commercial production and distribution began for film     |
| 12, 2003  | production line 2.                                        |
+-----------+-----------------------------------------------------------+
| December  | The Company attained ISO 9001:2000 certification on       |
| 13, 2003  | quality management system.                                |
+-----------+-----------------------------------------------------------+
| May 31,   | The Company attained ISO 14001:1996 certification on      |
| 2004      | environmental management system.                          |
+-----------+-----------------------------------------------------------+
| May to    | The company received approval from the BOI for a          |
| July-2004 | restatement of the installed capacity of both its film    |
|           | production lines from 15000 tons to 19500 tons each per   |
|           | year. The company also applied to the BOI for further     |
|           | increase in the production capacity of both the film      |
|           | lines to 24000 tons per year each given the significant   |
|           | productivity improvements and additional equipment        |
|           | commissioned by the company.                              |
+-----------+-----------------------------------------------------------+
| July 30,  | The shareholders’ meeting resolved for transformation of  |
| 2004      | the Company into a public company, write-down of par      |
|           | value from Bt. 10 to Bt. 5 per share and increase of      |
|           | registered capital by Bt. 1,068 million to make up a      |
|           | total of Bt. 1,728 million requiring issue of additional  |
|           | 213.6 million ordinary shares. The allocation of the      |
|           | increase in capital was as under:                         |
|           |                                                           |
|           | -   133.6 million Shares offered to Polyplex (Asia) Pte.  |
|           |     Ltd. (PAPL), a juristic person registered in          |
|           |     Singapore, being a 100% subsidiary of PCL, India.     |
|           |                                                           |
|           | -   Up to 80 million shares at part value of Bt. 5 per    |
|           |     share, making a total of up to Bt. 400 million as     |
|           |     public offering.                                      |
|           |                                                           |
|           | The meeting also resolved for establishment of a holding  |
|           | company named Polyplex (Singapore) Pte. Ltd.(PSPL),       |
|           | registered in Singapore as a holding company to           |
|           | facilitate investment and business expansion in Turkey.   |
+-----------+-----------------------------------------------------------+
| August    | Registration was completed to transform the Company into  |
| 11, 2004  | a public company.                                         |
+-----------+-----------------------------------------------------------+
| September | The shareholders’ meeting resolved for decrease of        |
| 2, 2004   | registered capital as under:                              |
|           |                                                           |
|           | -   Redemption of the entire 105.6 million preference     |
|           |     shares worth Bt. 528 million, currently held by PCL,  |
|           |     by a capital reduction process.                       |
|           |                                                           |
|           | -   Cancellation of the unissued ordinary shares of Bt.   |
|           |     240 million, comprising of 48 million shares, which   |
|           |     were to be subscribed by PAPL.                        |
|           |                                                           |
|           | The combined reduction as above would make the total      |
|           | registered capital Bt. 960 million of which Bt. 560       |
|           | million is paid-up.                                       |
|           |                                                           |
|           | The shareholders’ meeting also resolved to reduce the par |
|           | value of the shares from Bt. 5 per share to Bt. 1 per     |
|           | share to be registered along with the capital reduction.  |
+-----------+-----------------------------------------------------------+
| November  | - Reduced the 105.6 million preference shares worth Bt.   |
| 15 -16,   | 528 million , currently held by PCL, by a capital         |
| 2004      | reduction process. The reduction make the registered      |
|           | capital Bt. 960 of which Bt. 560 is paid-up capital.      |
|           |                                                           |
|           | - Changed the par value to Bt. 1 per share                |
+-----------+-----------------------------------------------------------+
| December  | IPO of 240,000,000 shares at the price of Baht 6.90 per   |
| 8, 2004   | share                                                     |
+-----------+-----------------------------------------------------------+
| February  | PTL was granted a promotion certificate by BOI for        |
| 22, 2005  | Metalliser film with an approved production capacity of   |
|           | 7,500 tons per year.                                      |
+-----------+-----------------------------------------------------------+
| February  | Startup of Continuous Chips Plant                         |
| 22, 2005  |                                                           |
+-----------+-----------------------------------------------------------+
| April 19, | The company received approval from the BOI for a          |
| 2005 &    | restatement of the installed capacity of both its film    |
|           | production lines from 19,500 tons to 24,000 tons each per |
| April 22, | year as also for its Chips plant from 26,250 tons to      |
| 2005      | 52,500 tons per year                                      |
+-----------+-----------------------------------------------------------+
| August,   | Start up of Metallizer plant in Thailand                  |
| 2005      |                                                           |
+-----------+-----------------------------------------------------------+
| December, | Start up of Thin Pet film line in Turkey implemented by   |
| 2005      | subsidiary company                                        |
+-----------+-----------------------------------------------------------+
| March,    | Metallizer start up in Turkey                             |
| 2006      |                                                           |
+-----------+-----------------------------------------------------------+

1.  Shareholding structure

  The current shareholding structure of the Polyplex group is:

9.88%

9.88%

Polyplex Corporation Ltd. (PCL)

  PCL, the parent company operating for over 18 years since 1988, is a
  major producer and distributor of PET film in India selling in both
  the domestic and overseas markets. It has been listed for several
  years on Bombay Stock Exchange and other Exchanges in India. Its
  issued capital is INR 152.21 million (about Bt. 136 million). PCL has
  the following production capacities:-

Product Tons per annum

Polyester Film 20,000

Polyester Chips 20,000

Metallized Film 4,800

  Its direct and indirect shareholding of the Company aggregate to 70%
  of the latter’s paid up capital.

  Polyplex has also evolved an equitable policy for distribution of
  markets between its Indian and Thai operations based on the several
  factors like product range, delivered cost to customer and supply lead
  times, trade barriers and preferential duty access. Based on the same,
  PTL would be servicing North American, EU, South East Asia, Far-East,
  Australia/NZ, China and Pakistan. PCL would take care of South Asia,
  Middle-East, Africa and CIS/Russia. After start up of the Turkey
  project, Europe, Africa, Middle East and CIS/Russia markets is being
  serviced by the new plant.

For the future investment policy, Polyplex group has clear investment
policy between the Company and its parent company. Investments in India
and South Asia will be implemented by PCL and/or its subsidiaries
(except for the Company) while those in Thailand and ASEAN including
other areas will be carried out by the Company and/or its subsidiaries.

Polyplex (Asia) Pte. Ltd. (PAPL)

  PAPL was established as a 100% subsidiary of PCL in July, 2004 and is
  now a major shareholder of PTL. Currently, it has a issued and paid up
  capital of USD 6.87 million. PAPL was incorporated as an investment
  vehicle of PCL for its overseas investments (including PTL).

Polyplex (Singapore) Pte. Ltd. (PSPL)

  TL had set up a wholly owned investment holding company in Singapore
  to invest in the PET film manufacturing factory in Turkey so as to
  serve the demand in European and other proximate markets. The current
  issued and paid up capital of PSPL stands at USD 27.32 million.

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

  PSPL has incorporated a 100% owned subsidiary company, PE in Turkey
  for operation of Greenfield polyester film plant for export to
  European and other proximate markets. The commercial operations have
  begun since December, 2005 with the start up of the thin pet film
  line. The Metallizer plant has since started production in March,
  2006. The Pet resin plant, which is under construction is expected to
  commence production from December, 2006.

  Polyplex (Americas) Inc.

  PTL has acquired 80.24% equity stake in Spectrum Marketing Inc. (since
  renamed as Polyplex (Americas) Inc) with effect from January 1, 2006
  to enhance its distribution network in the North American market. PCL,
  PTL’s parent company also has a 9.88% stake while the balance 9.88% is
  held by a foreign US-based shareholder.

2.  Income structure of the Company

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

  -------------- ---------- -------- ---------- -------- ---------- --------
  Customers      2003/04¹            2004/05             2005/06    

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

  Exports                                                           

  Asia           716.63     41.72    1,090.16   32.50    740.27     21.70

  North America  372.54     21.69    820.50     24.46    705.24     20.67

  Europe         351.53     20.46    863.14     25.73    915.86     26.84

  Others         48.35      2.81     126.71     3.78     101.26     2.97

  Total exports  1,489.05   86.68    2,900.51   86.47    2,462.63   72.18

  Domestic sales 156.42     9.11     362.45     10.80    463.41     13.58

  Sale of chips² -          -        -          -        357.30     10.47

  Other revenues 72.38      4.21     91.52      2.73     128.68     3.77
  ³                                                                 

  Grand total    1,717.85   100.00   3,354.48   100.00   3,412.02   100.00
  -------------- ---------- -------- ---------- -------- ---------- --------

Notes. 1) Commercial operation commencement since April 2003.

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

3) Comprising foreign exchange gain (loss), interest receivables, etc.

  From the above table, it will be observed that about 85% of the
  Company’s sales revenue comes from export sales.

2.4 Business Goal

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

5.  Promotion certificate

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

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

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

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

  By virtue of the provisions of the Board of Investment Promotion Act
  B.E. 2520, the Company has been granted certain standard promotional
  privileges on the manufacturing and distributing the polyester
  film/resin as per the following sections: 25, 26, 27, 28, 31, 34,
  35(1), 35(2), 35(3), 36(1), 36(2) and 37 respectively. The Company
  must comply with certain conditions and restrictions provided for in
  the promotion certificate. Details of the privileges of each of the
  above sections are shown at www.boi.go.th