PART 1 BUSINESS OPERATION

1. Policy and Business Overview

Thai Central Chemical Public Company Limited is the producer and
distributor of chemical fertilizer, established by the government (under
cooperation of the Ministry of Finance) and private sectors, comprised
of Metro Co., Ltd., Sojitz Corporation (formerly Nissho Iwai
Corporation) and Central Glass Co., Ltd (currently the Company’s
technical advisor) of Japan, on March 6, 1973, with initial registered
capital of THB 120 Million. Later on, the Company registered on the
Stock Exchange of Thailand in October 1991, with a registered capital of
THB 700 Million and in 1993, the Company became “Public Company” with
registered capital at THB 2 Billion.

Thai Central Chemical Public Company Limited (TCCC) is Thailand's
largest producer and distributor of compound chemical fertilizers. The
Company operates 2 large and international-standard plants, located at
Phra Samut Jedee District, Samut Prakarn Province, with total annual
capacity of 850,000 metric tons, and at Nakhon Luang District, Phra
Nakhon Si Ayutthaya Province, with total annual capacity of 350,000
metric tons, having the combined total capacity of 1.2 million metric
tons a year.

1.1 Vision Objective and Strategy

The Company’s vision is “True friend of Thai farmers”. The Company will
be a part of agriculture which is necessary and cannot be lack of. The
Company’s product will be the top priority chosen by the farmers for
increase of production yield as it is a high quality product. The
Company, in addition, will be a mentor of plantation and enhancement of
production yield in order to support the agriculturist.

To accomplish the vision and the objective, the Company has stipulated
the mission as follows.

1. The Company will focus on control of manufacturing process for high
quality of the Company’s product and distribute to the farmers in the
appropriate price. The Company will not focus on only sale but will
provide advice on how to use the product in different area and crops
because chemical fertilizer can be environmental friendly when well
balanced fertilization is made considering soil and crops specifically.
It is not only production yield enhancement but soil improvement.

2. The Company will improve production process to have as less as effect
to environment including sufficient use of energy.

3. The Company will support the community around the Company for
peaceful living.

1.2 Significant Change and Development

The Company had significant change and development in 2015 as follows.

Disposal of subsidiaries’ ordinary shares

On 1 April 2015, under the resolution of Board of Directors’ Meeting
held on 25 February 2015, the Company disposed investment in the
ordinary shares that the Company held in the three subsidiaries: MC
Industrial Chemical Company Limited (“MCIC”), MC Solvents Company
Limited (“MCS”) and MC Plastics Company Limited (“MCP”) to the two
juristic persons in the total consideration of THB 240,000,000. As a
result of this transaction, the Company is no longer the shareholder of
MCIC, MCS and MCP and indirectly disposed the investment in Central
Pacific (Thailand) Co., Ltd. and Metro Tan Company Limited which was
held by MCIC. However, the Company still has 49.0000% direct
shareholding in Central Pacific (Thailand) Co., Ltd. The reason of
disposal was that the businesses of MCIC, MCS and MCP were different and
lack of synergy from the Company’s core business. Thus, the management
and the board decided to dispose the subsidiaries’ ordinary shares. In
addition, such ordinary shares disposal allows the Company to focus more
on its own core business, and it is advantageous in term of reducing
unnecessary administrative expenses of the Company.

The disposal of subsidiaries’ ordinary shares was considered as a
disposal of the company’s asset. In this regard, the Company had
disclosed the information to SET in compliance with the related rules
and regulations.

Best Public Companies Award in the Industry of Industrial Products

The Company has been awarded as the Best Public Company for the year
2015 in the industry sector by Money & Banking Magazine. The award is
business analysis of the listed companies in SET which have the highest
Market Capitalization in 300 ranking and 81 listed companies in MAI
which show profitable performance by using the SET’s information as of
the end of 2014. The award is determined by three factors: size of the
firm, ratio of profitability, and return of investment.

ISO 14001 : 2004 Standards

In 2015, the Company’s NKL Plant has been certified ISO 14001 : 2004
Standards (Environmental Management System) which is the most trusted by
organizations worldwide for managing resources and environment as well
as developing business in the mean time. The Standards mainly emphasized
on polluted prevention and green environment in order to reduce any
environmental affects including reduction of production costs.

1.3 Shareholding Structure

Please refer to the table of the Company’s Revenue Structure and
Shareholding in Subsidiaries in Page 4.

1.4 Relationship with Major Shareholders’ Business

The Company’s business character does not relate or rely on any finance,
technique, material supply, sharing trade name of the major
shareholders, and does not compete with the major shareholders.

2. Nature of Business

The Company’s Revenue Structure and Shareholding in Subsidiaries

Structure of Revenue and Shareholding (as at 31 December 2015)

  --- ------------ ------------- ------------- -------------- ------------ --------- ----------- -------- ----------- -------- ----------- --------
                                                                                                                               (Unit :     
                                                                                                                               Million     
                                                                                                                               Baht)       

      Company      Established   Type of       % Shareholding Registered   Capital   2015                 2014                 2013        
                                 Business                     Capital      Paid Up                                                         

                                                                                     Revenue     %        Revenue     %        Revenue     %

      Thai Central March 6, 1973 Chemical      -              1,754        1,754     12,500.69   96.37    14,648.94   96.86    15,945.30   96.62
      Chemical                   Fertilizer                                                                                                
      PLC.                                                                                                                                 

                                                                                                                                           

      Subsidiary                                                                                                                           
      and                                                                                                                                  
      Associated                                                                                                                           
      Company                                                                                                                              

  1   MC-Agro      January 22,   Repacking and 99.99          50           50        349.13      2.69     350.23      2.31     426.71      2.59
      Chemicals    1988          Formulating                                                                                               
      Co., Ltd.                                                                                                                            

  2   N.I.M. Co.,  February 14,  Chemical Tank 51.00          125          125       120.02      0.93     123.30      0.82     128.70      0.78
      Ltd.         1974          Yard                                                                                                      

  3   Central      January 16,   Trading       **49.00        200          200       1.09        0.01     1.31        0.01     1.40        0.01
      Pacific      1975                                                                                                                    
      (Thailand)                                                                                                                           
      Corp., Ltd.                                                                                                                          

      Total                                                                          12,970.93   100.00   15,123.78   100.00   16,502.11   100.00

                                                                                                                                           

                                                                                                                                           
  --- ------------ ------------- ------------- -------------- ------------ --------- ----------- -------- ----------- -------- ----------- --------

Remark *Thai Central Chemical PCL. disposed investment in the ordinary
shares of 3 subsidiaries, which are MC Industrial Chemical Co., Ltd., MC
Solvents Co., Ltd. and MC Plastics Co., Ltd. on April 1, 2015.

  **As disposing MC Industrial Chemical Co., Ltd. , Thai Central
  Chemical PCL. lost the indirect shareholding in the company for 25.50%
  on April 1, 2015.

2.1 Product or Service

2.1.1 The Company’s Product or Service

Thai Central Chemical Public Company Limited (“TCCC”) manufacturing
plants are capable of producing standard quality chemical fertilizers.
The chemical fertilizer production consists of basic nutrients which are
Nitrogen (N), Phosphate (P₂O₅) and Potassium (K₂O) and secondary
nutrients such as Magnesium (MgO), Sulphur (S) and other supplementary
nutrients such as Boron (B) which promotes healthy growth of crops, both
in quantity and quality. TCCC produces “Ox-Brand” Fertilizer products
that are of quality as registered with Ministry of Agriculture and
Cooperatives and its popularity has been affirmed by farmers all over
Thailand for more than 40 years. The proper application of chemical
fertilizer with suitable timing encourages greater amount and better
quality of production to meet the market demand, and helps lower the
production cost resulting in an increase of income for Thai Farmers,
which eventually contribute to better national economy as a whole.

In addition, the factory located in Samut Prakan Province (Phra Pradaeng
plant site), has got a warehouse with its total storage capacity of
100,000 metric tons for raw materials, and a wharf extended to 310
metres length, 8.4 metres (27 feet) depth below sea level which can
accommodate two 20,000-25,000 metric ton vessels simultaneously, and
unload 6,000 metric tons of raw materials per day. For the manufacturing
process, Phra Pradaeng plant site has utilized the natural gas which
helps lower the cost and produce less pollution, substituting for the
fuel oil since 2007. We also have installed and operated the
Cogeneration power plant which can produce electricity at the capacity
of 4 MW. in order to supply electricity within the plant site. The
excess of electricity will be sold to Metropolis Electricity Authority
(MEA). Moreover, the heat from the cogeneration system has been used in
the chemical fertilizers’ manufacturing process in order to save the
cost and energy, and to help reduce global warming effect since 2013.

Another factory, located in Nakhon Luang, Phra Nakhon Si Ayuttaya
Province (Nakhon Luang plant site), has got a warehouse with its total
storage of 90,000 metric tons, and a wharf extended to 189 meters
length, 5 meters (16 feet) depth below sea level which is capable to
accommodate three 500-2,500 metric ton cargo ships simultaneously, and
also unload 4,000 metric tons of raw materials and imported commodities
per day. In addition, Nakhon Luang plant site has utilized LPG which is
the clean and eco-friendly fuel in production of steam, substituting the
oil fuel.

For quality control, the two company’s laboratories, located at both
plant sites, have been certified ISO/IEC 17025:2005 international
standard assuring the quality of nutrient values of chemical
fertilizers. Moreover, Nakhon Luang plant’s laboratory has been
certified as a high-quality analysis lab for chemical fertilizer
registered from the Department of Agriculture, and the lab also provides
the nutrient analytical services for external organizations.

Furthermore, Both TCCC’s plant sites have been certified as a green
industry level 2 by the Ministry of Industry Thailand and the company is
in the process of upgrading to level 3 in the near future. The green
industry project has been set up by the Ministry of Industry Thailand
that regulated 5 levels of “green industry” to evaluate the
environmentally-friendly factories.

The character of the products is granular chemical fertilizer for
agricultural use by adding into soil. The crucial factor affecting
limitation of this business is none as the government sector still
promote use of fertilizer.

Chemical Fertilizer produced by the Company is granular chemical
fertilizer N-P-K which are Nitrogen (N), Phosphorus (P₂O5, and Potassium
(K₂O), and some grades contain secondary plant nutrients such as
Magnesium (MgO) for certain crops. The chemical fertilizer is normally
packed in 50 kilograms plastic woven bag bearing “OX” brand and other
brands which can be used with plants such as:

  N-P-K Chemical Fertilizer : Quality Product of OX-Brand Fertilizer

Orchard Fertilizer

  ----------------- ----------------- -----------------------------------------
  Formula           Rate              Application

  15-15-15 Premium  1-2               general growth
                    kgs./plant/year   

  8-24-24 Premium   1-2               flower and fruit stage / prematurity
                    kgs./plant/year   

  13-13-21 Premium  1-2               improve fruit quality
                    kgs./plant/year   

  Total not over                      
  than 5                              
  kgs./plant/year                     
  ----------------- ----------------- -----------------------------------------

Vegetable and Flower & Ornamental Plant Fertilizer

+-------------+--------------+-----------------------------------------+
| Formula     | Rate         | Application                             |
+-------------+--------------+-----------------------------------------+
| 15-15-15    | 30-50        | sowing cover the plot after planting    |
| CIS         | kgs./rai     | 3-5 days or basal application before    |
|             |              | planting or apply alongside far from    |
| 16-16-16    | basal        | tree 25-50 cm. after that 15-30 days    |
| CIS         | application  | apply again                             |
+-------------+--------------+-----------------------------------------+

Sugarcane Fertilizer

  ----------------- ---------- ------------------------------------------
  Formula           Rate       Application

  16-12-8, 16-16-8, 40-50      1^(st) application, new planting apply
  18-12-6, 25-7-7,  kgs./rai   basal application or after planting 1
  15-15-15 Premium             month ratoon planting apply after trimming
                               1 month

  12-9-21, 15-7-18, 40-50      2^(nd) application, 2-3 months after
  20-8-20, 21-7-18, kgs./rai   p;anting
  12-10-18 Premium,            
  13-13-21 Premium             
  ----------------- ---------- ------------------------------------------

Remark: Should apply after weed eradication

Rice Fertilizer

+----------------+----------+------------------------------------------+
| Formula        | Rate     | Application                              |
+----------------+----------+------------------------------------------+
| Clay soil      | 25-40    | Sown-field                               |
|                | kgs./rai |                                          |
| 16-8-8,        |          | 1^(st) application for 20-30 days plant  |
| 16-12-8,       |          | or basal application                     |
| 16-20-0,       |          |                                          |
| 25-7-7         |          | 2^(nd) application 30 days after first   |
|                |          | application                              |
| Sandy soil     |          |                                          |
|                |          | Transplant                               |
| 16-8-8,        |          |                                          |
| 16-16-8,       |          | 1^(st) application for after transplant  |
| 18-12-6,       |          | 5-7 days                                 |
| 25-7-7         |          |                                          |
|                |          | 2^(nd) application 30 days after first   |
|                |          | application                              |
+----------------+----------+------------------------------------------+

Maize Fertilizer

+----------------+----------+------------------------------------------+
| Formula        | Rate     | Application                              |
+----------------+----------+------------------------------------------+
| Clay soil      | 30-40    | 1^(st) application for 3-5 days plant    |
|                | kgs./rai | germination or basal application         |
| 16-8-8,        |          |                                          |
| 16-12-8,       |          | 2^(nd) application 30-45 days after      |
| 16-20-0,       |          | first application                        |
| 25-7-7         |          |                                          |
|                |          |                                          |
| Sandy soil     |          |                                          |
|                |          |                                          |
| 16-8-8,        |          |                                          |
| 16-16-8,       |          |                                          |
| 18-12-6,       |          |                                          |
| 25-7-7         |          |                                          |
+----------------+----------+------------------------------------------+

Cassava Fertilizer

+----------------+----------+------------------------------------------+
| Formula        | Rate     | Application                              |
+----------------+----------+------------------------------------------+
| 16-8-8,        | 30-40    | 1^(st) application, basal application    |
| 16-12-8,       | kgs./rai | before planting or after planting 1      |
| 18-12-6,       |          | month                                    |
| 25-7-7         |          |                                          |
+----------------+----------+------------------------------------------+
| 12-9-21,       | 30-50    | 2^(nd) application, 2-3 months           |
| 15-7-18,       | kgs./rai |                                          |
| 20-8-20,       |          |                                          |
| 21-7-18,       |          |                                          |
| 12-10-18       |          |                                          |
| Premium,       |          |                                          |
|                |          |                                          |
| 15-15-15       |          |                                          |
| Premium        |          |                                          |
+----------------+----------+------------------------------------------+

Remark: Should apply after weed eradication

Para rubber Fertilizer

  ---------------------- ------------------- ----------------------------
  Formula                Rate                Age of Para rubber

  16-8-4, 25-7-7         0.2-0.4             less than 3.5 years
                         kgs./plant/year     

  14-4-9, 18-4-5,        0.6-0.8             3.5-7 years
  20-8-20                kgs./plant/year     

  15-7-18, 21-7-14,      1-1.5               over 7 years or after
  21-7-18                kgs./plant/year     tapping period
  ---------------------- ------------------- ----------------------------

Oil palm Fertilizer

+----+-----------------+------------------+--------------------------+
| Ye | Formula         | Rate             | Enhance Fertilizer       |
| ar |                 |                  |                          |
+----+-----------------+------------------+--------------------------+
| 1  | 25-7-7,         | 1.5              | - kieserite 0.2          |
|    |                 | kgs./plant/year  | kgs./plant/year          |
|    | 15-15-15        |                  |                          |
|    | Premium         |                  |                          |
+----+-----------------+------------------+--------------------------+
| 2  | 12-9-21,        | 3.5-6            | - kieserite 0.4-1        |
| -4 | 20-8-20,        | kgs./plant/year  | kg./plant/year           |
|    |                 |                  |                          |
|    | 21-7-14,        |                  | - borax 35-100           |
|    | 21-7-18,        |                  | gm./plant/year           |
|    |                 |                  |                          |
|    | 13-13-21        |                  |                          |
|    | Premium         |                  |                          |
+----+-----------------+------------------+--------------------------+
| Ov | 12-9-21,        | 5-7.5            | - 0-0-60 rate 1-2        |
| er | 13-13-21,       | kgs./plant/year  | kgs./plant/year          |
|    |                 |                  |                          |
| 5  | 20-8-20,        |                  | - kieserite 1            |
| ye | 21-7-18         |                  | kg./plant/year           |
| ar |                 |                  |                          |
|    |                 |                  | - borax 150              |
|    |                 |                  | gm./plant/year           |
+----+-----------------+------------------+--------------------------+

Remark: Please select only one product per each application.

Apart from producing and marketing chemical fertilizers, the Company’s
subsidiary, MC-Agro Chemicals Co., Ltd., also handle crop protection
products (agro-chemicals) for farmers to control and protect pest and
diseases. Product ranges include insecticides, herbicides, fungicides
and hormone & plant regulators.

Principal Services are to disseminate agricultural knowledge on the
correct usage of chemical fertilizers and agro-chemical products to the
farmers, aiming at educating farmers to help preserve the environment
from the use of chemical fertilizer and agro-chemical products.

BOI Promotion Certificate on 30 October 2013, TCCC obtained Promotion
Certificate No. 9030(2)/2556 from the office of Board of Investment for
the production of chemical fertilizer to improve the efficiency of
energy saving and has been granted rights and privileges as a promoted
industry under the Investment Promotion Act B.E. 2520 (1997). The
significant rights and privileges are summarized as the following:

-   Exemption of import duty for machinery as approved by the Board of
    Investment

-   Exemption of import duty for imported raw materials and essential
    materials using in manufacturing for the export sales for one year
    form the first date of import.

-   Exemption from corporate income tax for net profit derived from
    promoted activities totally not over 70% of capital investment to
    improve the efficiency of energy saving for 3 years from the date of
    generated income from such activities (January 1, 2014).

-   Shareholders of the Company will be exempted from income tax on
    dividend derived from the promoted activities in the period in which
    the Company is granted exemption from corporate income tax.

  2.1.2 Product of subsidiaries and associated companies

Subsidiary Companies

+-------------------+---------------------------------+---------------+
| Company           | Business Line.                  | Address       |
+-------------------+---------------------------------+---------------+
| MC Agro-Chemicals | Import and distribute both      | 581 Moo 4,    |
| Co., Ltd.         | technical pesticide and         | Bangpoo       |
|                   | finished product which used in  | Industrial    |
|                   | Agriculture, Public Health and  | Estate, Soi   |
|                   | Livestock. The business sector  | 12B,          |
|                   | includes the marketing of       | Sukhumvit     |
|                   | formulated, finished products,  | Road,         |
|                   | repacking service and quality   | Praekasa      |
|                   | control checks by modern        | Sub-district, |
|                   | laboratory.                     | Muang         |
|                   |                                 | District,     |
|                   | Policy on Dividends : No policy | Samutprakarn  |
|                   | on Dividend                     | 10280         |
+-------------------+---------------------------------+---------------+
| N.I.M. Co., Ltd.  | The Company is engaged in       | 205 United    |
|                   | liquid chemical storage tank    | Flour Mill    |
|                   | terminal operation for the      | Building,     |
|                   | storage of liquid chemicals     | 8^(th) Floor, |
|                   | mostly the raw materials for    | Ratchawong    |
|                   | use in various industries.      | Road,         |
|                   |                                 | Sa            |
|                   | Policy on Dividends: Dividend   | mphanthawong, |
|                   | will be allocated depending     | Bangkok       |
|                   | upon Company’s profit.          | 10100.        |
+-------------------+---------------------------------+---------------+
| Central Pacific   | Importer and distributor of     | 180-184       |
| (Thailand) Corp., | fertilizers, agro-chemicals,    | Ratchawong    |
| Ltd.              | minerals and etc.               | Road,         |
|                   |                                 | Sa            |
|                   | Policy on Dividends : None      | mphanthawong, |
|                   |                                 | Bangkok       |
|                   |                                 | 10100.        |
+-------------------+---------------------------------+---------------+

2.2 Marketing and Status of Industry and Competition

  2.2.1 Marketing

Chemical fertilizer is selling in both cash and credit. Selling prices
in cash will be cheaper than selling on credit. As most of the customers
are in the provincial area, remittance of draft or money transfer with 7
days will also be regarded as cash sales. Selling credit term will rely
on many factors such as competition, seasonal climatic conditions and
fertilizer grades. Since fertilizer is classified under seasonal
products, peak selling period will be in the rainy season, season is one
of the important factors in setting up marketing plan for the company.

(1) Marketing Strategies

Under the marketing principles:

  PRODUCT: The company emphasizes on manufacturing and importing good
  quality products that are well accepted by the farmers and help
  farmers boost up production and income.

  PRICE: The company has set the policy to sell quality products at
  optimal cost in order to help farmers increasing yield of production
  and able to compete in the world market.

  PLACE: The company provides distribution channel throughout the
  country by appointing dealers to facilitates the customer.

  PROMOTION: Sales promotion has been continuously enforced to increase
  the sales volume and to maintain product’s brand-name to be well
  recognized by customers. The sales promotion at various levels of
  customers includes:

- TV commercial and mass media

- Raffle at various level of customers

- Regular Dealers’ meeting and farmers’ meeting

- Advertising posters and banners

- Coordinating in Technical Meeting/Symposium

  PACKAGING : The company emphasizes on developing strong and attractive

  packaging designed to match with farmers demand and to resist

  rough handling during transportation.

(2) Marketing and Distribution Channels

Pricing and distributing process

Fertilizers are mainly delivered to the customers and farmers by
10-wheel trucks as contracted by the customers themselves to pick up the
fertilizers at the quantity as stipulated in each Delivery Order (D/O)
from the company’s warehouses. Price quotation is quoted by metric ton.
One metric ton will consist of 20 sacks and each sack contained 50
kilograms of fertilizers. The payment methods can be both cash and
credit. With cash payment, customers can obtained lower price than
credit payment.

Selling prices of fertilizers have to be approved by the Ministry of
Commerce under the law on commodity price and service B.E. 2542, which
abolished the law on commodity and anti-profiteering.

  (3) Distribution Channels

The company has dealers throughout the country.

The appointment of dealers will be considered under the following
criteria:

  1. No dealer has been appointed in such area or otherwise the existing

dealer does not perform well in expanding the outlet.

  2. Marketing area of the dealers must not duplicate each other.

  3. The dealers must have the fair financial status covering the
  business

  volume.

  4. The dealers must not be involved with illegal activities.

  5. Business in the first year must be in cash basis, or having to
  submit Bank

  Guarantee or having securities mortgaged for credit terms which has to
  be approved by the Company.

Dealer Flow Chart:

  (4) TYPE OF CUSTOMERS

  Type of customers and relationship

Customers are mainly local traders undertaking business on any one type
of the following businesses:

  ----------------------------------- -----------------------------------
  Type of Business Operations of the  Agricultural Institutions
  Customers                           

  1. Chemical fertilizer and          1. Agricultural Cooperatives
  agro-chemicals                      

  2. Chemical fertilizer              2. Farmers Groups

  3. Construction materials           3. Various Paddy Farming Groups

  4. Miscellaneous goods retailers    

  5. Drug store                       

  6. Agricultural produce trading     

  7. Rice mill operator               
  ----------------------------------- -----------------------------------

  (5) Structure of Revenue from Sales During the Past 3 Years

  ---------------------------- -------------- --------- ------------------- --------- -------------- --------
                               2015                     2014-Reclassified             2013            

                               Baht'Million   %         Baht'Million        %         Baht'Million   %

  Revenue from Local Sales                                                                            

  Chemical Fertilizers and     11,834.04      94.82     14,199.93           95.95     21,691.85      97.55
  Others Product                                                                                     

  TOTAL REVENUE FROM LOCAL     11,834.04      94.82     14,199.93           95.95     21,691.85      97.55
  SALES                                                                                              

  Revenue from Export Sales                                                                           

  Chemical Fertilizers and     645.90         5.18      599.01              4.05      543.83         2.45
  Others Product                                                                                     

  TOTAL REVENUE FROM EXPORT    645.90         5.18      599.01              4.05      543.83         2.45
  SALES                                                                                              

  Revenue from Local & Export                                                                         
  Sales                                                                                              

  Chemical Fertilizers and     12,479.94      100.00    14,798.94           100.00    22,235.68      100.00
  Others Product                                                                                     

  TOTAL REVENUE SALES & EXPORT 12,479.94      100.00    14,798.94           100.00    22,235.68      100.00
  SALES                                                                                              

  GROWTH RATE FROM SALES (%)                  (15.67)                       (33.45)                  0.49
  ---------------------------- -------------- --------- ------------------- --------- -------------- --------

Remark: 1. Revenue comes from Sales Product only

  2. For the year 2014 - Reclassified

2.2.2 Status of Industry and Competition

  Economic Review of 2015

Thailand economy continued its gradual recovery in 2015 to record 2.8%
growth of GDP. It was mainly driven by increased government expenditure
and thriving tourism industry, while exports contracted by 5.8% and
production in the agriculture sector dropped significantly by 4.2% from
2014. In 2015 two major issues of global economy were slowdown of
Chinese economy and turnaround of the U.S. monetary policy, which both
affected the economy of Thailand. As like the other leading countries in
ASEAN, deceleration of the economy of China made negative impact to
Thailand as well with sluggish exports of both industrial products and
agricultural products like natural rubber. The prediction of interest
hike by the U.S. caused weakening currencies in Asian countries
including Thai Baht, which decreased against U.S. dollars by 10% through
the year.

Most serious problem of the Thailand economy in 2015 for the Company was
slump of agriculture brought by drought and depressed prices of
agricultural products. The output of agriculture industry in Thailand
declined by 4.2% in 2015, which is contrary from 0.7% growth in 2014. It
is estimated by the Office of Agricultural Economics of the Ministry of
Agriculture and Cooperatives that rice production in the main season of
2015 was 15% less than that of 2014. The decrease of cultivation area
because of shortage of rainfall made demand of fertilizer less than last
year. Moreover with depressed prices of agricultural products the farmer
purchasing power remained very weak through the year, which also curved
demand of fertilizer.

  Fertilizer Industry in 2015

The Company estimates total demand of chemical fertilizer in 2015 was
approximately 4.6 million tons, about 14% less than demand in 2014. The
decrease of demand was caused mainly by decrease of cultivation of major
crops because of severe drought, and by poor purchasing power of the
farmers. These factors also affected farmers’ choice of fertilizer to
prefer cheap ones like single fertilizers to high quality compound NPK.

Under such situation the fertilizer industry cooperated with the
government to support farmers by following the government initiatives of
controlling prices through the year, which made the Company’s selling
prices kept lower than the last year.

On the other hand, as to fertilizer raw materials like urea, phosphates,
and potash international market stayed stable with relatively lower
commodity prices due to increasing capacities of global supplies. This
benefit of lower prices was off-set by decreasing of Thai Baht for the
fertilizer industry in Thailand.

  2016 Economy Outlook

The international financial market has been in sensitive mood for the
U.S. hiked interest rates and the Chinese struggling economy. And
growing of geopolitical tension in the Middle East and Russia increases
uncertainty of global economy. It is anticipated that the global economy
will keep gradual recovering lead by the developed countries enjoying
the benefits of low prices of crude oil, whilst it may suffer negative
effects if structural reform of the Chinese economy would fail and
overcapacity of China would cause pressure of deflation.

In Thailand consumption by private sector would not recover soon due to
high level of household debt and slump of the agriculture sector. The
major encouraging factors for the Thai economy are the government
expenditures mainly for infrastructure projects, which should increase
national investments, and the government measures to stimulate local
economy by supporting the farmers and SMEs, which should generate
national consumption. NESDB predicts that Thailand GDP will grow by 3.3%
in 2016.

  Fertilizer Industry in 2016

The OAE predicts that the agriculture sector in Thailand will grow by
2.5-3.5% from the last year. Actually, however, this year started with
historical low level of cultivation of dry season crops especially
off-season rice because of critical level of water reserves of the
country. The government announced a policy to control total production
of rice in 2016 season to be 27 million tons, 10% less than the last
year season. With the existing stock of rice still hold by the
government it is assumed that the rice prices will not recover soon, and
the rice farmers’ income will not improve drastically. The Company
estimates that fertilizer demand for less water needed crops like fruits
and vegetables will increase. Nevertheless total consumption of
fertilizer in 2016 will drop by 10% from the last year.

Consequently competition will be intense and the prices will have
downward pressure through the year.

As for raw materials the Company anticipates that international market
will remain balanced with new capacities coming on stream. Thai Baht
will have weaker trend against U.S. dollar, which is not favorable for
the Company’s cost of raw materials.

2.3 Production and Product Procurement

Thai Central Chemical Public Company Limited have set up 2 chemical
fertilizer plants which are located at:

1^(st) Plant: 284, Kilometer 17.5^(th), Suksawad Road,

Tambon Pakklong Bang Plakod,

  Amphoe Phra Samut Chedi, Samut Prakan Province 10290

Telephone: (662) 462-5904, 463-3715-20, 463-5572-5

462-7870-7

Fax: (662) 816-1276 816-1263 816-1268

2^(nd) Plant: 50 Mu 5, Nakhon Luang-Phachi Road,

Tambon Khlong Sakae, Amphoe Nakhon Luang

Phra Nakhon Si Ayutthaya Province 13260

Telephone: (035) 359 011-9

Fax: (035) 359 377

Warehouses

  Hat Yai 124 Moo 1, Thakam Sub-district, Hat Yai District,

  Songkhla Province 90110, Thailand

  Tel. (6674) 333-035-7 Fax: (6674) 333-034

(1) PRODUCTION CAPACITY AND OUTPUT:

  Production, Production Capacity:

(Unit : Metric Tons)

  ----------------------------------- ------------ ------------ -----------
                                      2014         2013         2012

  Production Capacity                 1,200,000    1,200,000    1,200,000
  ----------------------------------- ------------ ------------ -----------

  (2) RAW MATERIAL SOURCES OF SUPPLY

Raw materials and main sources of supply:

  --------------------------------- -------------------------------------
  Ammonium Sulphate                 Thailand, China, South Korea

  Urea                              Kuwait, Indonesia, Malaysia, China,
                                    Vietnam

  MAP(Mono-Ammonium Phosphate) and  U.S.A., Morocco, Saudi Arabia, China
  DAP (Di-Ammonium Phosphate)       

  Potassium Chloride                Canada, Germany, Taiwan

  KAOLIN                            Thailand
  --------------------------------- -------------------------------------

Almost 80% of raw materials for the production process are imported and
the rest such as Ammonium Sulphate and kaolin are acquired locally.
Since raw material prices are fluctuated following the international
market price trend which will be mainly based on demand and supply of
each time interval or each year; therefore, the Company has laid down
the policy to procure raw material from many suppliers in different
locations by entering into long term contract. This will ensure that
there is less risk on shortage of raw material and the raw material will
meet the Company’s required specification at the appropriate price.
Procurement from some suppliers will be on FOB term and shipped by
chartered vessels to Thailand for the best benefit in term of
international trade.

  (3) PRODUCTION PROCESS

+----------+-----------------------------------------------------------+
|          | 1.  Store each raw material in its individual warehouse   |
+----------+-----------------------------------------------------------+
|          | 2.  Deliver each raw material by belt conveyor to the     |
|          |     automatic weighing machine                            |
+----------+-----------------------------------------------------------+
|          | 3.  Pass through the crusher and then the mixer which     |
|          |     controls steam and water as prescribed                |
+----------+-----------------------------------------------------------+
|          | 4.  After mixing homogeneously, the product will be       |
|          |     delivered to the Granulator                           |
+----------+-----------------------------------------------------------+
|          | 5.  Deliver the product to the Dryer to control moisture  |
|          |     content in accordance with the fertilizer standards   |
|          |     (3% maximum)                                          |
+----------+-----------------------------------------------------------+
|          | 6.  Fertilizer granules will be screened through mesh     |
|          |     size control. Offsized granules will be recycled      |
|          |     through the process.                                  |
+----------+-----------------------------------------------------------+
|          | 7.  Standard granules will be delivered to the Cooler to  |
|          |     make it cool in order to avoid caking                 |
+----------+-----------------------------------------------------------+
|          | 8.  The cooled granules will then pass through the        |
|          |     coating process by spraying coating agent to prevent  |
|          |     moisture absorption                                   |
+----------+-----------------------------------------------------------+
|          | 9.  The processed products will be delivered by belt      |
|          |     conveyor to the Bulk Storage for further packing      |
+----------+-----------------------------------------------------------+

[]

3. Risk Factors

The risk factors mentioned below are the significant risk factors which
may affect the company operation and/or financial status resulting in
its lower performance than it should be in normal circumstance. These
may also affect ability to achieve the company purpose and goal setting.
However, there could be other risk factors which the company may not
presently acknowledge or the company considers that it may not
significantly affect the company operation at the moment.

The significant risk factors, which directly concerned the company and
the company considers that it will affect the company operation, if
happened, can be summarized as following.

1.  Fluctuation of raw material prices

Raw material prices are a major factor of fertilizer cost. Therefore,
change of raw material prices might significantly affect fertilizer
price setting up and profit making ability of the Company. In general,
raw materials fluctuate according to an international market as raw
materials are commodity goods whose prices are set up by many
uncontrollable factors, for instance, world economy, global weather,
crop prices, oil price and so on. This also includes market speculation
from change of the prices of commodity goods. In case there is change of
raw material prices, the Company will not affect from such incident if
it can adjust the selling price in conformity with such change. However,
in fact, adjustment of selling price cannot be done by the Company
itself as chemical fertilizer is a controlled good subject to the Goods
and Services Prices Act B.E. 2542. The Central Committee on Goods and
Services Prices, Department of Internal Trade, Ministry of Commerce has
issued an announcement to suggest the selling prices of chemical
fertilizer upon specific formulas and the producer shall comply with the
announcement by not having sold fertilizer exceeding the suggested
prices. Change of selling price exceeding the suggested prices can be
done only after obtaining permission from the Committee.

Having been governed by the controlled price policy, the Company cannot
adjust the selling prices to follow the increase of raw material prices.
Thus, the sale price of fertilizers does not reflect the actual cost.
This could cause the unachievable performance as expected.

Risk management

The Company manages the risk by controlling its inventory both in raw
materials and products. From time to time, the Company flexibly revises
production plan in accordance with market demand, then adjust the
procurement plan of raw materials to follow the revised production plan,
thus the Company can keep inventory at the optimum level.

In addition, the Company tries and adjusts selling price reflecting the
actual cost. Upon occurrence of any factor causing increase of
production cost significantly, the Company shall apply an increase of
fertilizer selling price to the Commission promptly. Moreover, the
company sends the representative attending the meeting between
fertilizer traders and the Committee to provide enough and correct
information regarding fertilizer business to the government sector
before announcing any measure affecting fertilizer producers and
traders.

2.  Governmental supporting policy to the farmer

In the previous year, the government announced several policies to
support the farmers by lowering cost of agriculture and some policies
could directly affect performance of the Company. For example, the
Central Committee on Goods and Services Prices, Department of Internal
Trade, Ministry of Commerce (“the Committee”), as the responsible agent
of this matter, had required the fertilizer manufacturers for
cooperation to decrease retail fertilizer price. The measure in
accordance with such policy covered only some formula of fertilizers
which are used with paddy and rubber. In year 2015, the price reduction
per bag (50 Kg) amounted to THB 40-60. This measure is effective until
May 2016. Price reduction following such policy aimed to support the
paddy farmers, regardless cost calculation in accordance with the
market. Therefore, it could affect the Company in lower of performance
than estimated.

Risk Management

The Company had cooperated with the government and followed the policy
to help the farmers. However, regarding the policy on paddy farmers
supporting aid, price reduction of the fertilizer did not cause too much
loss to the Company, only the Company performance could be lower than
expected. To manage loss, the Company shall discuss with the Committee
to limit the price reduction to be as less as possible by clarifying
effects which could cause loss to the Company. In addition, such measure
is a temporary measure which was effective for a specific period and
with specific paddy and rubber formulas. The other formulas have not
been affected from this measure.

  3. Drought

Drought is an uncontrollable natural disaster. Drought can happen by not
enough rainfall or delay of rainfall which leads to shortage of water
via irrigation system effecting agriculture sector directly. In year
2015 continuously to year 2016, there has been severe drought which has
the least rainfall within 10 years. Whenever drought happen, farmers
will cancel or delay cultivation until the drought has been eased. In
addition, the government has announced the policy on off-season paddy
that the farmers should avoid cultivation of off-season paddy for year
2015-2016 as there would not be enough water supplied via irrigation
system for the off-season paddy. The water should be reserved for living
and industrial purpose until rainy season of year 2016 starts. The
policy causes reduction of off-season paddy cultivation area by 6.7
million Rai or 44%

approximately across Thailand. As a consequence, demand of fertilizer
use has been dropped sharply. This could affect sales volume of the
Company which may not meet the estimated target.

Risk management

The Company minimizes impact happened to the Company by control
inventory at the optimum level according to market demand time to time
to avoid too much inventory kept at the Company during drought or
shortage of fertilizer when drought has been eased. The Company shall
monitor and analyze market situation closely to stipulate inventory
control management policy to be suitable for each period.

4. Decrease of farmers’ purchasing power

In the last couple years, revenue of farmers has decreased as a result
of several causes, for example, drought which makes less cultivation
area and it leads to less agricultural product and less income
respectively. Decrease of agricultural product prices also causes less
income to the farmers as the products are sold at the lower prices.
Those matters, as a consequence, cause decrease of farmers’ purchasing
power. In this regard, the Company may be affected in form of decrease
of sales volume and less of revenue as fertilizer usage of the farmers
may change. The farmers may use less fertilizer or do not use it at all
or use the cheaper fertilizer instead. In addition, the farmers may not
be able to pay the fertilizer price to the dealers of the Company as
they earn less money and the Company could be repaid late.

Risk Management

For this matter, the Company therefore focuses sale activity to the area
which can be cultivated normally and can be seen the farmers’ purchasing
power. The Company also watches the situation closely and maintains
control of inventory at the optimum level according to market demand. In
addition, in order to prevent undue payment, the Company reiterates the
dealers to watch the credit to be given to the farmers who cannot repay
or likely to cannot repay the fertilizer price.

  5. Risk from flood

In year 2011, there was severe flood happened in area of various
provinces in Thailand causing business interruption and damage to place
of business in such area. The industrial sector has been severely
damaged from such incident. The Company has Nakhon Luang Plant Site
located in Ayutthaya Province which is a risky area that could be
affected from flood if happened as previously. The effect would be flood
in and around the plant area causing interruption of normal operation
and transportation difficulty. In this regard, the government has laid
down several measures to prevent flood disaster in the future.
Nevertheless, such measures are unclear and have not been

conducted substantially. Therefore, there will be uncertainty on chance
of flood disaster happening again and the company may risk encountering
flood disaster which could affect in loss of revenue while there is
business interruption at Nakhon Luang Plant Site. The capacity of
production at Nakhon Luang Plant Site is around 30% of the total
production capacity of the Company.

Risk management

The company has another plant site, Phra Pradaeng plant site, located in
Samut Prakan Province which is not a risky area. In case there is severe
flood disrupting operation of Nakhon Luang plant site totally, the
company will increase production capacity at Phra Pradaeng plant site
for substitution and will arrange goods delivery at Phra Pradaeng plant
site instead. The company, furthermore, insures its properties and
inventories against flood (and fire) so that the damage caused by flood
can be covered by such insurance. However, an insurance premium
increased drastically in contrast with sharp decrease of maximum
compensation amount. In addition, the plant floor has been risen up to
prevent damage from flood. For long term protection of the plant site,
the company has built the dyke all around Nakhon Luang plant site which
can protect flood at the same severe level as the 2011 flood.

  6. Dependent on limited number of suppliers

Some raw material in production line can be produced and supplied by
limited number of suppliers. Use of such raw material is considered as
one of risk. Forming a group of such limited number of suppliers in
order to manipulate the price of raw material with disregard of the
actual price would affect in an increase of production cost causing
lower performance of profit making ability than expectation. Moreover,
dependence on limited number of suppliers may be a risk in supply of
such raw material if such supplier could not supply raw material as much
as requirement of the company and this could affect the company
production line.

Risk Management

The company has anticipated and planned the necessity of raw material
usage in advance and entered into raw material purchase agreements in
both short term and long term with suppliers by setting up goal of
suitable risk management to be aligned with the company business plan.
Furthermore, the company has searched and contacted other suppliers to
share raw material procurement to such other suppliers in order to
diminish dependence on limited number of suppliers.

  7. Fluctuation of the international currency exchange

In production, the Company purchases raw material from many
international suppliers of which most of the payment will be made in US
dollar, approximately 90% of the total material cost. Therefore, there
could be the risk that the Company will eventually pay higher price of
the raw material than the purchase amount specified in the sales
contract if there is a change of the international currency exchange
rate resulting in the Baht depreciates against the US Dollar happened
before the Company pay the raw material price.

Risk management

In case the Company shall pay the raw material price in other currency
rate which is not the Baht, the Company will protect the risk from the
currency exchange rate by making the Forward Contract upon the purchase
date. This way, the change of the international exchange rate will
affect the Company at the very low level as the exchange rate of the
payment has been fixed already. This also helps the Company to calculate
cost and selling price precisely.

8. Fluctuation of the interest rate

In business operation, the Company may needs to use the facilities from
the financial institutions for the current capital or for enhancement of
the Company’s cash flow. Most of the loans are the short-term loan of
which the repayment term will not exceed 6 months. The Company shall pay
the interest in accordance with the rate specified by such financial
institutions for the loan capital. Therefore, there might be the risk
that the interest will be increase if there is a change of the interest
rate.

Risk management

In year 2015, the Company has not used the short-term loan facilities as
the Company has enough cash flow in business operation. However, the
Company’s subsidiary has been using the short-term loan which amounted
to 2.2% of the total short-term loan facilities amount of the Company
and the Company’s subsidiary. In this regards, the Company has
supervised and provided the policy to the subsidiary to manage the risk
on this matter by stipulating that the subsidiaries will apply for the
short-term loan only when necessary and early repayment shall be made if
possible. In addition, considering the current economic situation, the
fluctuation of the interest rate is rather at the low level as the
government would like to stimulate the country’s economy by maintaining
the policy interest rate at the low level which can boost up economy.

9. Controlling person

Sojitz Corporation (“Sojitz”) and ISTS (Thailand) Co., Ltd. (“ISTS”),
the related person of Sojitz pursuant to Section 258 of the SEC Act,
collectively own approximately 83.46% of the Company’s share
capital. Therefore, they can control voting in the shareholder meeting
on the significant agenda, for instance, dividend, capital increase,
related party transaction, acquisition or liquidation of asset etc. as
their votes are more than 75% of the total votes. In this matter, the
right to vote is solely the right of each shareholder. The Company
cannot control voting of such shareholders to be in accordance with the
Company wish or not conflict with the interest of the minor
shareholders.

Risk Management

The Company shall strictly comply with the concerned rules, regulations
and laws when proceeding voting in the shareholder meeting. In addition,
the Company will prepare information of such matter delivered to the
shareholders together with the notice prior to the meeting date. The
notice will state details of such matter, history, reason, necessity and
the Board’s opinion for consideration of the shareholders before
attending the meeting. In addition, the shareholders will be able to ask
question in the meeting and the Company will prepare the person in
charge of such matter to provide information to the shareholders. Once
the shareholders have enough information for consideration, the
shareholders, therefore, can decide to vote as appropriate accordingly.

4. Assets for Use in Business Operation

(1) The company’s main assets for use in business operation are as
    following.

    1.  Land with building thereon which is the location of the
        Phrapradaeng Plant Site at 284, Kilometer No. 17.5, Suksawat
        Rd., Pakklong Bang Plakod Sub-District, Phra Samut Jedee
        District, Samut Prakan Province approximately 98 rai of area,
        including machines in the fertilizer production process. The
        Company has ownership over such assets. There is no burden
        attached to such assets.

    2.  Land with building thereon which is the location of the Nakhon
        Luang Plant Site at 50 Moo 5, Nakhon Laung-Pachee Rd., Khlong
        Sa-Kae Sub-District, Nakhon Luang District, Phra Nakhon Si
        Ayutthaya Province approximately 106 rai, including machines in
        the fertilizer production process. The Company has ownership
        over such assets. However, land and building thereon is under
        mortgage with Bangkok Bank PCL for various kinds of debt at the
        amount of THB 637.7 million. The machines are also under
        mortgage with Bangkok Bank PCL for various kinds of debt at the
        amount of THB 580.9 million.

(2) The company has other asset for business operation as follows:

2.1 Trademark

The Trademark License Agreement between the Company and Metro Co., Ltd.
(“Metro”) has been made on February 2, 2004 with conditions briefly
concluded as follows:

Trademark Owner : Metro

License Period : Indefinite Period

Licensed Trademarks : Altogether 19 trademarks including OX Trademark

  Condition : Irrevocable and exclusive rights to use the trademarks

  domestically and internationally with agro-chemical and fertilizer
  products.

Royalty Fee : One time payment at the total of THB 960 Million paid

  in cash and in kind.

5. Legal Dispute

At present, the Company has no significant legal dispute.

6. General Information

1. Information of the Company

Name: Thai Central Chemical Public Company Limited

Trading Name: TCCC

  Head Office: 21/35-46 Thai Wah Tower 1, 14-16^(th) Floor., South
  Sathorn Road, Thungmahamek, Sathorn, Bangkok 10120

  Business: Manufacturing and Distributing of chemical fertilizer and
  Agrochemical

Registration No.: 0107536000277 (previously, Bor Mor Jor. 101)

Telephone: (662) 639-8888

Fax: (662) 639-8999

E-mail: mailbox@thaicentral.co.th

Home Page: http://www.tcccthai.com

  Registered Capital: THB 1,754,148,354 divided into 584,716,118
  ordinary shares @ THB 3.00 per share

Amount and type of shares sold: 584,714,068 ordinary shares

  2. Information of juristic persons of which the Company has
  shareholding more than 10%

1)  MC Agro-Chemicals Co., Ltd.

  Head Office: 581 Moo 4, Bangpoo Industrial Estate, Soi 12B, Sukhumvit
  Road, Praksa Sub-district, Muang District, Samutprakarn 10280

  Business: Import and distribute both technical pesticide and finished
  product which used in Agriculture, Public Health and Livestock. The
  business sector includes the marketing of formulated, finished
  products, repacking service and quality control checks by modern
  laboratory.

  Shareholding: 99.99%

  Telephone: (662) 709-4517-9

  Fax: (662) 709-4780

  Registered Capital: THB 50,000,000 divided into 500,000 ordinary
  shares @ THB 100 per share

Amount and type of shares sold: 500,000 ordinary shares

2)  N.I.M. Co., Ltd.

  Head Office: 205 United Flour Mill Building, 8^(th) Floor, Ratchawong
  Road, Chakrawad, Samphanthawong, Bangkok 10100

  Business: The Company is engaged in liquid chemical storage tank
  rental and terminal operation for the storage of liquid chemicals
  mostly the raw materials for use in various industries.

  Shareholding: 51%

  Telephone: (662) 222-7352

  Fax: (662) 224-5616

  Registered Capital: THB 125,000,000 divided into 12,500,000 ordinary
  shares @ THB 10 per share

Amount and type of shares sold: 12,500,000 ordinary shares

3)  Central Pacific (Thailand) Corp., Ltd.

  Head Office: 180-184 Metro Building, 5^(th) Floor, Ratchawong Road,
  Chakrawad, Samphanthawong, Bangkok 10100.

  Business: Importer and distributor of fertilizers, agro-chemicals,
  minerals and etc.

  Shareholding: 49%

  Telephone: (662) 225-0200

  Fax: (662) 622-7978

  Registered Capital: THB 200,000,000 divided into 2,000,000 ordinary
  shares @ THB 100 per share

Amount and type of shares sold: 2,000,000 ordinary shares

3. Information of other referees

1) The registrar of ordinary shares

  Thailand Securities Depository Co., Ltd.
  93 Ratchadaphisek Road, Dindaeng,
  Bangkok 10140
  Telephone : (662) 009-9000 Fax: (662) 009-9991

2) Auditor for the financial year 2015

1.  Mr. Manoon Manusook Certified Public Accountant No. 4292

2.  Mr. Chavala Tienpasertkij Certified Public Accountant No. 4301

3.  Ms. Nisakorn Songmanee Certified Public Accountant No. 5035

Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd 

  Rajanakarn Building 25^(th) – 26^(th), 28^(th) Floor,
  3 South Sathorn Road, Yannawa, Sathorn, Bangkok 10120

  Telephone : (662) 676-5700 Fax : (662) 676-5757

Investors can also find more information of the company issuing
securities from the company’s Annual Registration Statement (Form 56-1)
which is show on website www.sec.or.th or company’s website
www.tcccthai.com