4 Business Operations by each product line

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

4.1 Product Description

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

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

-   Plain

-   Corona or chemically treated

-   High adhesion films

-   Ultra clear films

-   Co-extruded films

  B.) Metallised films

-   Semi Metallized film (low Optical density)

-   High barrier films

C.) Specialty Films

-   Twist films

-   Anti static films

-   Heat Sealable films

-   Matt films

-   Thick films

D.  Extrusion Coated Film

    -   Gloss PET Thermal Film

    -   MATT PET Thermal Film

    -   BOPP Thermal Film

    -   Metallized Thermal Film

4.1.1 Characteristic of PET film

PET film characteristic properties are as follows:

-   Optically brilliant, clear appearance

-   Excellent mechanical strength and toughness

-   Good dielectric properties

-   Good flatness and coefficient of friction (COF)

-   Tear-resistant and puncture - resistant characteristics

-   Excellent dimensional stability over a wide range of temperatures

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

-   Excellent barrier against a wide range of gases

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

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

4.1.2 End Use segment

  Thin PET film can be used in the 3 key segments

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

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

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

  The segmental break-up of revenue (PTL Standalone and Consolidated)
  from Film sales (Plain & Metallized PET films and Extrusion Coated/
  Silicone Coated Films) are as follows:

  ­­

  -------------------- ---------- -------- ---------- -------- ---------- --------
  STANDALONE SALES     2006-07             2007-08             2008-09    

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

  Packaging Use        1,981.02   75.23    2,554.04   88.62    2,546.14   85.68

  Industrial Use       640.71     24.33    314.19     10.91    276.03     9.29

  Electrical Use       11.49      0.44     13.68      0.47     2.24       0.08

  Thermal lamination   -          -        -          -        147.11     4.95

  Total Film Sales     2,633.22   100.00   2,881.91   100.00   2,971.52   100.00
  -------------------- ---------- -------- ---------- -------- ---------- --------

­

  ----------------- ---------- -------- ---------- -------- ---------- --------
  CONSOLIDATED      2006-07             2007-08             2008-09    
  SALES                                                                

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

  Packaging Use     3,206.12   68.93    4,112.56   77.47    5,090.00   76.46

  Industrial Use    1,245.28   26.77    1,054.36   19.86    1,005.05   15.10

  Electrical Use    199.88     4.30     62.61      1.18     213.10     3.20

  Thermal           -          0.00     79.16      1.49     125.48     1.88
  lamination                                                           

  Release Liners    -          0.00     -          0.00     223.52     3.36

  Total Film Sales  4,651.28   100.00   5,308.68   100.00   6,657.15   100.00
  ----------------- ---------- -------- ---------- -------- ---------- --------

4.1.3 Products with similar properties

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

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

A Comparison of BOPP Films and BOPET (Polyester) Films

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

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

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

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

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

  4.2 Business Strategy

  Key elements of the strategy are:

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

  - Capture high growth markets and build good customer relationship.

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

  - Setting up of the Trading Company in China is another strategic
  decision to establish the Company’s presence in one of the fastest
  growing economies of the world.

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

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

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

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

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

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

-   PTL has started production from the Extrusion Coating plant in April
    2008 and from the additional Metallizers in Thailand and Turkey in
    May ‘08 and will be able to increase significantly the share of
    value added products, in its sales portfolio thereby improving its
    profitability on the whole.

-   The Company has also announced a CPP project/ Silicone Coating line
    which will help the Company to increase its presence in new product
    segments.

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

  4.3 Distribution Channel

  The Company distributes its products to both domestic and overseas
  markets, with main focus put on the latter, constituting about 65-75%
  of its total consolidated sales revenues and 80-85% of PTL standalone
  sales revenues. Such export

  markets are classified by region into four groups, namely Asia, North
  America,

  Europe and Others.

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

  Value of export and domestic Film sales (Plain & Metallized PET films,
  Extrusion Coated Film and Silicone Coated films) are as follows:

­

­

  --------------------- ---------- -------- ---------- -------- ---------- --------
  CONSOLIDATED SALES    2006-07             2007-08             2008-09    

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

  Exports                                                                  

  Asia                  1,037.78   22.31    1,053.61   19.85    1,409.09   21.17

  North America         462.21     9.94     369.12     6.95     574.82     8.63

  Europe                1,506.22   32.38    1,905.27   35.89    1,845.54   27.72

  Other                 451.89     9.72     542.67     10.22    645.32     9.69

  Total exports         3,458.10   74.35    3,870.67   72.91    4,474.76   67.22

  Domestic sales        1,193.18   25.65    1,438.01   27.09    2,182.39   32.78

  Grand total           4,651.28   100.00   5,308.68   100.00   6,657.15   100.00
  --------------------- ---------- -------- ---------- -------- ---------- --------

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

  --------------- ----------- ------- ---------- -------- ---------- --------
  STANDALONE      2006-07             2007-08             2008-09    
  SALES                                                              

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

  End Users       1,790.58    68.00   1,633.74   56.69    1,384.94   46.61

  Distributors    842.64      32.00   1,248.17   43.31    1,586.57   53.39

  Total           2,633.22    100.0   2,881.91   100.00   2,971.52   100.00
  --------------- ----------- ------- ---------- -------- ---------- --------

  ---------------- ---------- -------- ---------- -------- ---------- --------
  CONSOLIDATED     2006-07             2007-08             2008-09    
  SALES                                                               

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

  End Users        3,291.41   70.76    3,353.74   63.17    3,984.70   59.86

  Distributors     1,359.87   29.24    1,954.94   36.83    2,672.46   40.14

  Total            4,651.28   100.00   5,308.68   100.00   6,657.15   100.00
  ---------------- ---------- -------- ---------- -------- ---------- --------

  4.4 Markets and competitive environment

  4.4.1 Global Demand and supply

  The growth in packaging has over the years shifted the production and
  usage patterns of PET films. The Company’s relevant segments of
  Packaging, Industrial and Electrical constitute 93% of the total
  demand and the traditional high-end technology segments like magnetic
  media and imaging segments are reduced to only 7% of the total
  consumption due to technology transformation. Polyplex produces only
  thin films, which represents three-forth of the total PET film
  capacity.

  Better packaging not only improves the shelf life of the products but
  is also essential for improving product appeal in a highly competitive
  consumer goods industry. Flexible packaging also plays a key role in
  source reduction on the principle of ‘use less waste in the first
  place’ which has ensured higher-than-GDP growth in the flexible
  packaging industry across the globe. PET film, being a higher-end
  substrate within packaging, has grown more rapidly than other
  substrates, growing at an average of about 7% per annum. Demand in
  packaging is quite resilient as it relates to consumption of food
  products and consumer staples which are to a large extent
  non-discretionary in nature. This has moderated the impact of the
  global economic recessionary environment on the industry. On the other
  hand, some of the other segments like industrial and electrical have
  been impacted more and have witnessed a contraction in demand in 2008.

  An increase in the purchasing power in the developing countries has
  brought with it a large rise in the per capita consumption of
  packaging material. As a result of this, Asia (excluding Japan &
  Korea), is the largest market for PET films with almost one-third of
  the PET films produced in 2008 being consumed in this region. At the
  same time, per capita consumption of packaging material in developing
  countries is still very low as compared to the mature markets. The key
  drivers of demand growth in these regions are the increase in the
  share of organized sector, increasing consumerism, changing
  demographics and the resulting need for better packaging.

  [][]

  Source: Company/ Industry estimates

  A similar trend is also evident on the supply-side with most of the
  new capacities being added in low-cost developing countries. Most of
  the new capacity is also focused on the packaging segment, with an
  emphasis on high productivity and low operating costs. This has
  adversely impacted the traditionally large producers of PET film
  operating with high cost structures, who have now been forced to
  concentrate in the emerging niche technologies in PET films like films
  for LCDs, solar panels and specific high-end applications within
  packaging. While trade defense measures like anti-dumping and
  countervailing duties are on the rise in an increasingly competitive
  market environment, they are unable to address the inherent problems
  of unproductive assets operating in the developed countries producing
  regular films.

  2008 has been an exceptional year, witnessing a stable demand in the
  first half, with a sharp contraction in demand later during the year.
  Most of the demand contraction was on account of inventory correction,
  especially in the packaging segment. However, as a result of the
  global economic slowdown, there has been erosion in the demand of the
  end-products of the Industrial and Electrical applications.

  We expect PET film growth rates to be higher than the global economic
  growth rates following a broadly similar pattern. Some of the
  capacities being added across the globe over the next 2 years had been
  planned assuming a continuation of the higher pre-recessionary growth
  rates. This could depress the operating rates of the PET film lines
  after the commencement of these new capacities till the time that
  demand growth catches up with the increase in production capacity.
  Owing to the increasingly regional nature of the business, the
  demand-supply situation would vary across regions and some regions
  like China are expected to witness relatively lower operating rates.
  Companies with better quality, access to international customers and a
  better supply chain model stand a better chance of emerging as winners
  from a potential slowdown.

4.4.2 Industry condition

  Global competition

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

(i) World majors with production capacity of over 100,000 tons per year
    (e.g. Dupont-Teijin, Mitsubishi and Toray, Cifu etc). With the start
    up of the 2^(nd) PET thin film line in Turkey, Polyplex group has
    also attained a capacity level of more than 100,000 tons and become
    one of the world major players.

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

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

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

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

  Domestic competition

  Thailand’s PET film market is of small scale as compared to the global
  PET film market. As per our estimates, demand in Thailand is
  approximately 20,000 tons per year with an annual historic growth rate
  of about 6-8%. In the past, domestic producers have put emphasis on
  producing BOPP film rather than any other types. PTL has principally
  focused on PET film since its inception in Thailand and started with
  one PET film line, within nine months set up a second line as well.
  Over the years, PTL has had several other expansions in film capacity
  i.e value added films like metallized film, Extrusion Coated film etc
  and is presently having the largest PET film production capacity in
  the country.

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

+-------------------+-----------------------+--------------+---------+
| Production line   | Thai Film Industrials | A.J. Plast.  | PTL*    |
|                   | Plc.                  | Plc.         |         |
| (tons per year)   |                       |              |         |
+-------------------+-----------------------+--------------+---------+
| BOPP film         | 103,000               | 70,500       | -       |
+-------------------+-----------------------+--------------+---------+
| PET film          | 3,500                 | 28,500       | 48,000  |
+-------------------+-----------------------+--------------+---------+
| CPP film          | 3,500                 | -            | -**     |
+-------------------+-----------------------+--------------+---------+
| BOPA film         | -                     | 8,000        | -       |
+-------------------+-----------------------+--------------+---------+
| Metallized film   | 7,000                 | 9,275        | 16,200  |
+-------------------+-----------------------+--------------+---------+
| Extrusion Coating | -                     | -            | 9,000   |
| film              |                       |              |         |
+-------------------+-----------------------+--------------+---------+
| Other coated      | 3,000                 | -            | -       |
| films             |                       |              |         |
+-------------------+-----------------------+--------------+---------+
| Total             | 120,000               | 116,275      | 73,200  |
+-------------------+-----------------------+--------------+---------+

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

  * PTL capacities are as approved by BOI

  ** CPP film project with a capacity of 10,000 MT per annum is under
  implementation, expected to start operations by Q3 of 2009-10.

  In 2002, Thailand’s production capacity of PET film was around 12,000
  tons, and has increased to about 80,000 tons currently.

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

Conclusion on PET film industry

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

However, from 2004 onwards, as a result of excess capacity built up, the
average capacity utilization for thin films has declined to lower
levels, in the range of 70-80%. During the year 2006, there was a down
cycle in the PET film industry and the utilization rates dropped to a
low of about 73%. With the growth in demand catching up with the
capacity additions, the utilization rates had recovered in 2007 and
first half of 2008 to up to 80% levels. However, due to the global
economic slowdown, the second half of 2008 witnessed a sharp contraction
in demand thereby impacting the utilization rates in the PET film
industry.

[]

Note: Figures for 2008 are tentative estimates from industry sources

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

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

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

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

As regards Thailand, an Anti Dumping petition was launched by the USA
manufacturers of PET film against PET imports from 4 countries i.e.
China, Brazil, Thailand and UAE in September 2007. In the final
determination by the International Trade Commission (ITC), a negative
injury ruling was given in favor of Thailand, whereas the following
anti-dumping duty rates have been notified against the other countries’
imports:

China – 3.49 – 76.72%

Brazil – 28.72%- 44.36%

UAE - 4.80%

This will provide an opportunity for Thailand to increase its market
share in USA.

In March-2007, the appropriate authority in the Government of Brazil had
initiated an anti dumping investigation against Thailand besides India,
against imports of PET films into Brazil. The company as also its parent
company in India had fully cooperated with the same and submitted their
detailed questionnaire responses. As a final outcome of this
investigation, an Anti Dumping duty of about 28 cents/Kg on imports from
Thailand to Brazil and about 9 cents/Kg of Anti Dumping and
Countervailing Duty on imports from India to Brazil has been levied.
PTL’s export sale to Brazil is insignificant as compared to the total
sales volumes. (only about 200-300 MT pa) . As such, the adverse fall
out of the investigation by the Government of Brazil has had a minimal
impact on our sales.

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

Outlook for the PET film industry:

-   Addition to global capacity during the next 1-2 years which was
    earlier expected to be commensurate with growth in demand of 8-10%,
    may result in under utilization of some capacities with the drop in
    overall demand growth rate

-   The increase in production capacity is coming up mainly in China and
    India ( about 150,000 – 200,000 MT) over the next 1-2 years.

-   New entrants from China have been increasingly dominating the market
    for PET film in the last 2-3 years, but their production is expected
    to mainly fulfill domestic demand which is growing rapidly.
    Moreover, with their limited skills, expertise and experience, their
    production cost and productivity levels fail to be competitive
    globally. They will need more time to develop the technical
    expertise to be at par with the existing global players.

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

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

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

-   Demand growth for the products in the Packaging, Industrial and
    Electrical (PIE) segment is likely to be flat, due to the economic
    slowdown. The industrial segment has been adversely hit by the
    slowdown and is expected to have a negative growth in the current
    year. Packaging growth is expected to remain positive, however at
    lower rate of 2-4%. So the overall growth in the PIE segment is
    expected to remain flat for this year.

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

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

4.5 Manufacturing of product

4.5.1 Production

PTL is having 2 plots of land, one at No. 60/24 Moo 3, Siam Eastern
Industrial Park, Rayong Province, with an area of 28 rai 50.9 square wah
and the second one is located opposite to this plot, at 60/91 Moo 3,
Siam Eastern Industrial Park, Tambol Marbyangporn, Amphur Pluakdaeng ,
Rayong 21140having an area of 35 rai, 2 nang, 54.80 square wah. The
Company’s PET thin film lines, Metallized film lines and the Polyester
Chips plant are located on the first plot of land. The Extrusion Coating
line, which started commercial production in April 2008, has been set up
on the second plot of land. The new Cast Polypropylene (CPP) project is
under implementation on the second plot of land. The future expansion
projects may also be set up in the same plot of land, as there will be
vacant land even after the implementation of the CPP line.

4.5.2 Production capacity

  PTL currently has two PET film production lines, two Metallised film
  lines, one Continuous Processing PET resin manufacturing plant, one
  Batch processing PET resin plant and one Extrusion Coating line. A
  project for setting up a CPP film line with a CPP metallized film line
  is underway and is expected to start operations by Q3 2009-10.

  Capacity of Polyplex group, present and projected as on 31^(st) March
  2009, is as follows:

  ­

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

                                31^(st) March, 2009 Projected as at
                                                    31^(st) March 2010#

  a) PET film                                       

  India                         20,000              51,000

  Thailand*                     48,000              48,000

  Turkey                        48,000              58,000

  Total capacity                116,000             157,000

  b) PET resin                                      

  India                         20,000              77,600

  Thailand*                     52,500              57,000**

  Turkey                        45,500              57,600

  Total capacity                118,000             192,200

  c) PET Metallized film                            

  India                         4,800               11,800

  Thailand*                     11,000              11,000

  Turkey                        11,000              11,000

  Total capacity                26,800              33,800

  d) Extrusion Coating film                         

  India                                             -

  Thailand*                     9,000               9,000

  Turkey                                            -

  Total capacity                9,000               9,000

  d) BOPP film                                      

  India                                             35,000

  Thailand                                          -

  Turkey                                            -

  Total capacity                                    35,000

  d) BOPP Metallised film                           

  India                                             4,500

  Thailand                                          -

  Turkey                                            -

  Total capacity                                    4,500

  e) CPP Film (Plain                                
  +Metallized CPP)                                  

  India                                             

  Thailand*                                         15,600

  Turkey                                            

  Total capacity                                    15,600

                                                    

  f) Silicone Coating Line                          

  India                         160 million sq.mtrs 160 million sq.mtrs

  Thailand##                                        ##

  Turkey                                            

  Total capacity                160 million sq.mtrs 160 million sq.mtrs
  ----------------------------- ------------------- ---------------------

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

  ** BOI approved capacity for Polyester Chips has been increased from
  52,500 MT to 57,000 MT w.e.f 19^(th) May’09

  # Due to attainment of higher productivity levels (> 100% in the
  past), all the attainable capacities in the group have been restated
  from FY 2009-10 onwards

  ## Investment in a Silicone coating line has been approved by the
  Board of PTL in May 2009, location of the project to be Thailand or
  Turkey.

  The capacity utilization rates for the Plain and Metallized film lines
  in Thailand and in Turkey are as follows:

[]

[]

4.5.3 Major raw materials

  PET resin

  PET Resin (polyethylene terephthalate resin) is the major raw material
  in the production process for PET films. In beginning, the company had
  procured most of its PET resin requirements from two unrelated
  suppliers. The requirement of procuring PET resin from outside
  suppliers have gone down since 2004/05 after the company commenced
  production of its captive PET resin in two phases.

  ­

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

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

The value chain for the Company’s business is depicted below:

  []

4.5.4 Impact on the environment

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

  Since its commencement of production in March 2003, PTL has not faced
  any significant problems relating to the environment. Inspection by
  the Industrial Factory Department has been undertaken on a regular
  basis, the result of which has come out that the Company’s
  manufacturing process poses no environmental impacts. PTL has renewed
  its ISO 14001:2004 certification on environment management system and
  ISO 9001: 2000 certification on quality management system on March 9,
  2007 for its film plants and the same has been extended for the resin
  and Metallizer plants also. The company has also obtained the EIA
  approval for its resin plant. The OHSAS 18001:2007 (Occupational
  Health and Safety management system) certification has also been
  received for all the products – Polyester Film, Polyester Chips,
  Metallized Film and Thermal Lamination Film. The Extrusion Coating
  line is also certified with the ISO 9001:2000 and ISO 14001:2004
  quality certifications.