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| Policy and Business Operations Overview                               |
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Thai Carbon Black Public Company Limited (TCB) was incorporated in 1978
to produce Carbon Black (CB). The commercial operation began with a
capacity of 16,000 TPA of CB. With regular expansions and
debottlenecking, TCB’s present capacity stands at 275,000 TPA which is
17 times of its initial capacity. TCB also has capacity to produce 370
MT / hour of Steam and 49.70 MW / hour of Electricity. TCB is listed at
Stock Exchange of Thailand since 1992 with market capitalization of Baht
7,875 million as of 31st March 2014.

TCB factory is located in Angthong province. The company is accredited
with ISO 9001:2000, OHSAS 18001:1999, ISO/TS 16949:2002. TCB has also
been awarded the prestigious TPM Excellence award by JIPM, Japan and
Deming prize for total quality management.

Our product under brand of “Birla Carbon” offers wide range of Carbon
Black for rubber and specialty applications.

Almost half of TCB’s production is exported to more than 20 countries
worldwide. TCB’s product meets the stringent quality expectations of
customers in Japan, Australia, South Korea, Philippines, Singapore,
Malaysia, Indonesia, Vietnam, Taiwan etc

The company has been making continuous efforts to improve productivity
and quality of its products to cater high-end markets. Being a prominent
exporter, a significant contributor to exchequer and a major employer in
Angthong Province, the company is contributing to economy of Thailand.

1.1 Vision, Mission

Vision : To be the Leader In Carbon Black

-   To be the most RESPECTED global Carbon Black business

-   To be the most SUSTAINABLE global Carbon Black business

-   To be the most DYNAMIC global Carbon Black business

Mission :

-   Adopt and match best practices of the best global companies.

-   To add value to customers by continuously improving products and
    services by anticipating and exceeding their needs, and benchmarking
    the world’s top carbon black manufacturers.

-   To add value to society and state through employment, export and by
    practicing friendly environment.

-   To continuously harness human resources & develop their potential
    for organizational and self development.

1.2 Development and Significant changes in 2013-14

12^(th) July 2013 :

The Board of Directors’ Meeting passed the resolution to approve the
disposal of the Company’s investment in share of Liaoning Birla Carbon
Co., Ltd. (“LBCCL”), its subsidiary, representing 100% of the share
capital of LBCCL to Columbian Chemicals (Weifang) Holdings SARL.

9^(th) August 2013 :

The company paid dividend to shareholders at Baht 0.11 per share for 3
months period ended 31^(st) March 2013 amounting to Baht 33 million.

13^(th) August 2013 :

The Board of Directors’ recorded the intimations from Mr. Deepak Mittal
and Mr. R.S. Thakralbutra, Directors of the company as status changed to
Independent Directors

11^(th) October 2013 :

The disposal of Liaoning Birla Carbon Co., Ltd. (LBCC) was completed on
11^(th) October 2013 when all Government and other relevant approvals
were received and the subsidiary got amended business license reflecting
new ownership of the buyer.

22^(nd) May 2014 :

The Board of Directors’ passed the resolution to recommended to Annual
General Meeting of shareholders to pay dividend of Baht 0.44 per share
amounting to Baht 132 million.

1.3 INVESTMENT STRUCTURE OF THAI CARBON BLACK PUBLIC COMPANY LIMITED (as on 31 March 2014)

1.4 SHAREHOLDING STRUCTURE

+--------------+-------------+---+-------+------+------+----------------+
| Company Name | Activity    |   | Pa    | %    | Cost | Other Major    |
|              |             |   | id-up | S    | of   | Shareholders   |
|              |             |   | Ca    | hare | In   |                |
|              |             |   | pital | Hold | vest | (>10%)         |
|              |             |   |       | ings | ment |                |
|              |             |   |       |      | (MB) |                |
+--------------+-------------+---+-------+------+------+----------------+
| Subsidiary   |             |   |       |      |      |                |
| Companies    |             |   |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Birla Carbon | Manufacture | 4 |       | 9    |   1  |                |
| Mexico,      | of carbon   | . |       | 8.00 | 2.85 |                |
| S.A.DE       | black       | 5 |       |      |      |                |
|              |             | m |       |      |      |                |
| C.V.         | (under      | i |       |      |      |                |
| (Registered  | planning    | l |       |      |      |                |
| in Mexico)   | stage)      | l |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | o |       |      |      |                |
|              |             | n |       |      |      |                |
|              |             | M |       |      |      |                |
|              |             | e |       |      |      |                |
|              |             | x |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | c |       |      |      |                |
|              |             | a |       |      |      |                |
|              |             | n |       |      |      |                |
|              |             | P |       |      |      |                |
|              |             | e |       |      |      |                |
|              |             | s |       |      |      |                |
|              |             | o |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Associated   |             |   |       |      |      |                |
| Companies    |             |   |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Aditya Birla | Manufacture | B |       | 2    | 50   | 1.Thai Rayon   |
| Chemicals    | of Caustic  | a |       | 9.99 | 9.82 | Pcl (29.98%)   |
| (Thailand)   | Soda &      | h |       |      |      |                |
| Co., Ltd     | Epic        | t |       |      |      |                |
|              | hlorohydrin | 1 |       |      |      |                |
|              |             | , |       |      |      |                |
|              |             | 7 |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | M |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | l |       |      |      |                |
|              |             | l |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | o |       |      |      |                |
|              |             | n |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| P.T. Indo    | Manufacture | 4 |       | 4    | 19   | 1.Thai Rayon   |
| Liberty      | of          | 2 |       | 0.00 | 6.95 | Plc. (40%)     |
| Textiles     | Synthetic   | , |       |      |      |                |
| (Registered  | Yarn        | 5 |       |      |      | 2.Cheddington  |
| in           |             | 4 |       |      |      | Trading        |
| Indonesia)   |             | 9 |       |      |      | Company Inc.   |
|              |             | , |       |      |      | (16%)          |
|              |             | 0 |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | , |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | 0 |       |      |      |                |
|              |             | I |       |      |      |                |
|              |             | n |       |      |      |                |
|              |             | d |       |      |      |                |
|              |             | o |       |      |      |                |
|              |             | n |       |      |      |                |
|              |             | e |       |      |      |                |
|              |             | s |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | a |       |      |      |                |
|              |             | n |       |      |      |                |
|              |             | R |       |      |      |                |
|              |             | p |       |      |      |                |
|              |             | . |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Ameri Blend  | Procure and | U |       | 4    | 1    | 1. SKI         |
| Inc.         | store       | S |       | 9.00 | 6.62 | Investments    |
|              | material    | D |       |      |      | Pte. Ltd 48%   |
|              |             | 1 |       |      |      |                |
|              |             | m |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | l |       |      |      |                |
|              |             | l |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | o |       |      |      |                |
|              |             | n |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Indigold     | Manufacture | U |       | 2    | 6    | 1. SKI         |
| carbon       | of Carbon   | S |       | 0.59 | 3.60 | Investments    |
| (Mauritius)  | Black       | D |       |      |      | Pte Ltd –      |
|              |             | 1 |       |      |      | 58.82%         |
|              |             | 0 |       |      |      |                |
|              |             | m |       |      |      | 2. Alexandria  |
|              |             | i |       |      |      | Carbon Black – |
|              |             | l |       |      |      | 20.59%         |
|              |             | l |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | o |       |      |      |                |
|              |             | n |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+

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| Nature of Business                                                    |
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Revenue Structure

(Unit : Thousand Baht)

+------------------------+--------+--------+-------+-------+-------+
| Product/Service        | For    | For    | For   |       |       |
|                        | the    | the    | the   |       |       |
|                        | year   | three  | year  |       |       |
|                        | ended  | -month | ended |       |       |
|                        | 31     | period |       |       |       |
|                        | March  | ended  | 31    |       |       |
|                        |        | 31     | Dec   |       |       |
|                        |        | March  | ember |       |       |
+------------------------+--------+--------+-------+-------+-------+
|                        | 2014   | 2013   | 2012  | 2011  | 2010  |
+------------------------+--------+--------+-------+-------+-------+
| Domestic               | 4,4    | 1,2    | 4,96  | 5,15  | 5,05  |
|                        | 22,892 | 89,113 | 8,059 | 4,960 | 9,562 |
+------------------------+--------+--------+-------+-------+-------+
| Export                 | 3,3    | 8      | 4,27  | 5,00  | 3,94  |
|                        | 66,055 | 33,327 | 7,732 | 1,332 | 4,460 |
+------------------------+--------+--------+-------+-------+-------+
| Other income           | 2      | 1      | 28    | 24    | 11    |
|                        | 35,296 | 43,415 | 7,671 | 5,243 | 3,836 |
+------------------------+--------+--------+-------+-------+-------+
| Total revenue          | 8,0    | 2,2    | 9,53  | 10,40 | 9,11  |
|                        | 24,243 | 65,855 | 3,462 | 1,535 | 7,858 |
+------------------------+--------+--------+-------+-------+-------+

Revenue Structure of Associated Companies

(Unit : Million Baht)

+---------------------------+--------+--------+-------+-------+-------+
| Product/Service           | For    | For    | For   |       |       |
|                           | the    | the    | the   |       |       |
|                           | year   | three  | year  |       |       |
|                           | ended  | -month | ended |       |       |
|                           | 31     | period |       |       |       |
|                           | March  | ended  | 31    |       |       |
|                           |        | 31     | Dec   |       |       |
|                           |        | March  | ember |       |       |
+---------------------------+--------+--------+-------+-------+-------+
|                           | 2014   | 2013   | 2012  | 2011  | 2010  |
+---------------------------+--------+--------+-------+-------+-------+
| P.T. Indo Liberty         | 2,870  | 735    | 2,518 | 2,263 | 2,053 |
| Textiles                  |        |        |       |       |       |
+---------------------------+--------+--------+-------+-------+-------+
| Aditya Birla Chemicals    | 14,056 | 2,806  | 1     | 1     | 1     |
| (Thailand) Co., Ltd       |        |        | 2,357 | 2,974 | 0,816 |
+---------------------------+--------+--------+-------+-------+-------+
| Ameri Blend Inc.          | -      | -      | 202   | 271   | 197   |
+---------------------------+--------+--------+-------+-------+-------+
| Indigold carbon           | 39,637 | 9,417  | 4     | 2     | -     |
| (Mauritius)               |        |        | 1,583 | 2,354 |       |
+---------------------------+--------+--------+-------+-------+-------+
| Total revenue             | 56,563 | 12,958 | 5     | 3     | 1     |
|                           |        |        | 6,660 | 7,862 | 3,066 |
+---------------------------+--------+--------+-------+-------+-------+

2.1 Products Features

Carbon Black

Carbon Black is elemental carbon in the form of extremely fine particles
having an amorphous molecular structure. It’s derived from the
incomplete combustion of through controlled process. In the older times,
the Chinese used Carbon Black produced from resins and vegetable oils in
inks and water colors. The Greeks and Romans used Carbon Black to paint
the walls of their buildings. Today, Carbon Black's biggest application
is as reinforcing filler in rubber products. Manipulation of Carbon
Black surface can enhance the physical properties of rubber. Almost all
rubber products, especially those that need to have abrasion wear
properties, use Carbon Black; hence, they are black in color. It also
helps conduct heat away from the tread and belt area of the tire,
reducing thermal damage and increasing tire life. Carbon black particles
are also employed in some radar absorbent materials and in photocopier
and laser printer toner, and other inks and paints. The high tinting
strength and stability of carbon black has also provided use in coloring
of resins and films. Additionally, carbon black has been used in various
applications for electronics. As a good conductor of electricity, carbon
black is used as filler mixed in plastics, elastomer, paints, films,
adhesives, and paints. Application of carbon black as an antistatic
agent has provided uses as an additive for fuel caps and pipes for
automobiles.

Manufacturing process

Carbon Black is produced by partial combustion of oils and pyrolysis in
the reactor. Carbon Black feed stock is suitably blended before charging
into the reactors. Predetermined quantities of process air from a
process air header system, fuel natural gas and Carbon Black feedstock
are introduced into the reactor, which has been brought up to the
desired temperature level.

At the initial stage, carbon nuclei or precursors formed from the oil
combine to form aggregates. The reaction is stopped at suitable points
by direct quenching with water, at predetermined locations with
predetermined quantities. The entire operation of flow, including the
temperature measurements is controlled by computer-supervised electronic
instrumentation.

Effluents from the reactors are essentially carbon-laden flue gases
containing some combustibles. These gases are at a temperature between
700oC and 900oC. This heat is first utilized in preheating incoming
process air in an air pre-heater and then reused to heat incoming Carbon
Black feed stock in an oil pre-heater. This process maximizes heat
recovery and process efficiency. The effluents from the reactors pass
into an inline boiler and then into a common header called smoke header.

The smoke header leads the carbon-laden flue into the main bag filter.
Inlet of the flue is controlled at about 280 degree Centigrade. The main
bag filter is a filter house consisting of multi-cylinders, where Carbon
Black is filtered. Clean gases containing combustibles pass out of the
filter to the Carbon Black pellet dryer. Carbon black is recovered from
the bag filters by reverse flow of the flue gases into the cylinders,
performed in rotation one at a time. Carbon Black thus released from the
bags accumulates in the hopper and is dropped into a pneumatic conveying
line through air lock valves. Two pneumatic conveying fans draw carbon
black from underneath the hopper.

[]

Loose Carbon Black and the conveying gases are drawn through two micro
pulverisers and transferred to the accumulator tank through a conveying
cyclone separator. The purpose of this cyclone is to separate Carbon
Black from the conveying gas. Loose Carbon Black from the cyclone
separator falls into the accumulator tank and the conveying gas is drawn
by a return fan and returned to the smoke header at the bag filter
inlet.

Carbon Black collected in the accumulator tank is in a fluffy, powdery
form, and being difficult to handle as such, has to be pelletized.
Pelletization is achieved in a proprietary machine called wet pelletizer
where the loose Carbon Black is mixed with a near equal quantity of
water and small quantities of pellet binders. An indirectly fired rotary
drum dryer is used to dry the wet pellets. Drying is achieved by burning
the part of the waste gases from the main bag filter in a specially
designed combustor. Water vapors from the dryer are drawn by an exhaust
blower and the exhaust or purge gas exits to the atmosphere.

The entire operation is completely automatic, achieved by sophisticated
electronic distributed control system of instrumentation. The dried
Carbon Black is lifted by a bucket elevator and passed through a scalper
screen — to separate lumps from the product- and a magnetic separator —
to separate accidental contamination of Carbon Black by magnetic
particles — before discharging into product storage tanks by product
screw conveyors. Lumps separated from the product are returned for
reprocessing.

The black is then packed into multi-wall paper bags, polyethylene bags
or super-sacks for dispatch to customers. The packing of paper bags/
polyethylene bags are achieved by fluidizing of Carbon Black and
super-sacks by gravity fill.

2.2 Market and Competition

The year was not one of the best periods for Thailand economy. According
Asian Development Bank’s 2014 Outlook report, the Thailand economy
slowed sharply in 2013 as domestic demand weakened and exports were
sluggish. According to the report, political tensions weighed on the
economy in the second half of 2013, dampening consumption, investment,
and government spending. Slack domestic demand and sluggish exports
confined growth in gross domestic product (GDP) for the year to 2.9%.
Growth in the fourth quarter, when political unrest intensified,
decelerated to a meager 0.6% year on year. Private consumption edged up
in the first half of 2013 but then fell, finally contributing just 0.1
percentage points of GDP growth for the year. Consumer confidence
weakened during the second half as political tensions worsened. These
issues weighed on fixed capital investment, which fell steeply in the
second half and declined by 1.9% over the year. This result reflected
weakness in both private and public investment. On the supply side,
nearly all the growth in GDP was generated by services, while
agriculture and industry barely contributed anything. The outlook for
2014 remains cloudy and growth forecast is subdued before a possible
rebounding in 2015.

Economies of other principle markets of the TCB’s products, namely Japan
and rest of the Asia, are steady. Developing Asia’s and Japan’s GDP
expanded in year 2013 by 6.1% and 1.7% respectively and outlook for 2014
is similar.

The Carbon Black market in Asia is in a long term demand supply mismatch
situation with capacities in excess of demand and capacity utilization
only around 60-70%

[]The continuing recessionary conditions in World are allowing very
little opportunity to correct the demand supply mismatch and excess
carbon black capacity situation in this region. Year 2013 again saw
fresh capacities created in China while utilizations remain at around
70%, because of weak demand growth.

A fierce competitive situation created from the above mismatch is
resulting in unusually lower prices of Carbon Black prices in China,
motivating the producers to aggressively look at every export
opportunity in the region.

During 2013, the Chinese exports reached a record level and crossed 700
thousand MT mark for first time in the history. The major destinations
of Chinese Carbon Black are nearby Asian countries like Thailand, India,
Malaysia, Indonesia, Japan, Philippines, etc. Thailand remains the
largest export destination.

  [] []

Excessive supply of Chinese Carbon Black in the Asian markets drove
prices to abysmally low levels. This has affected your company’s
performance during FY 14. During this year, the Company sold 179,994 MT
of Carbon Black as against 191,568 MT sold in immediately preceding 12
months, a drop of 6% in volume terms.

The demand supply mismatch in Asian markets is likely to take a much
longer time to correct in view of magnitude of the imbalance and global
recession.

Considering this, your Directors have decided to mothball Line 1 which
is the oldest production line and is not at par with other lines on
efficiency. The Company has capacity of 275,000 MT of Carbon Black
productions per annum and is presently operating at 60-65% capacity
utilization only. This move is expected to improve operational
efficiencies by better utilization of other production lines and savings
on repair and maintenance and other operating costs.

The company are working on multi-pronged strategy which aims at:

-   Using most economical feedstock at any given point of time. In this
    respect, the areas where company has done substantial work in past
    few years include:

-   Sourcing of feedstock effectively

-   Increasing the supplier base in the region and forging long term
    relationships with them;

-   Improving logistics capabilities to optimize freight costs;

-   Effective conversion of feedstock to Carbon Black, which means
    getting best yields and world-class quality. The Company, with
    strong technology capability, has implemented several best practices
    and Standard Operating Procedures, including capital expenditure on
    upgrading technology. The efforts have brought large benefits in
    terms of cost improvements and maintaining quality differentiation
    with Chinese products even though the Chinese manufactures have also
    kept improving their qualities rapidly.

-   Maximizing energy recovery from the process, and minimizing energy
    consumption;

-   Robust customer engagement, which not only includes best quality,
    cost and delivery, but also joint projects with customers for very
    specific QCD matrices in a multi-tier engagement model.

These strategies, for driving business performance in a very tough
competitive environment, integrate under an umbrella of Birla Carbon’s
business model of sustainable development of Economy, Society and
Environment. The model has eight pillars for active engagement of all
stakeholders, namely Organizational Governance, Human Rights, Labor
Practices, Environment Management, Fair Operating Practices, Customer
Care and Quality Assurance, and Social Participation and Community
Development.

As always, health, safety and environment remain top priority of the
Management. Your company is dedicated to provide a safe and healthy
work-place, and minimum footprints on environment. Several initiatives
were taken during the year towards fostering better environment,
reducing emissions and improving safety records as a commitment to
remain environment friendly for sustainable growth.

Market Structure

There are more than 100 carbon black producers worldwide. These are
categorized into Global, Regional and local players. The global players
have plants spread all over the world and operate regionally to keep the
freight cost low. Three big players – Birla Carbon, Cabot and Orion, who
together hold about 40% of the market share, dominate the market. The
global players compete on value propositions of global presence, R&D
capabilities, superior product quality and strong customer engagement.

Regional Players are medium size players operating in particular
continents or a group of two to three countries. OCI Company Ltd, Sid
Richardson Carbon & Energy, Bridgestone Carbon, CSRC and Tokai Carbon
Co. Ltd are important regional players. Some players like Black Cat
though operate from single country production facilities can be termed
as regional players because of their higher production capacities. The
regional players compete on varied propositions of price, optimum
quality and proximity to point of consumption.

Local players are manufacturers who have single country production
facilities and operate in smaller markets with very low percentage of
exports. These players are small in size and primarily compete in the
local markets on prices.

Carbon black, particularly the tire and rubber grade which accounts for
almost 93% of total carbon black consumption, is essentially a regional
market, because freight economics play a large role in price
competitiveness. Asia Pacific region, due to concentration of tire
manufacturers, is one of the largest consumer markets of carbon black
accounting for 61% of world’s consumption. China is the dominating
player in the market followed by India, Japan, South Korea and Thailand.

While the region was largely balanced till 2010 with Chinese consumption
very near to domestic production, thereafter rapid capacity expansion in
China, primarily led by cheap availability of coal-tar, has created a
demand supply mismatch in the region. This is leading to low capacity
utilizations, severe competition and pressures on margins. The situation
aggravated in 2012, and with production in other Asian countries
shrinking at expense of increase in production and exports from China.
The situation continued in 2013 also.

Thailand Market

Due to abundant availability of rubber, Thailand is one of the major
tire manufacturing countries. It has presence of all five global tire
producers, three major regional tire producers apart from fragmented two
wheeler tire and tube producers. Thailand mainly produces PCR tires and
is a major exporter of these tires to North America and EU. The tire
segment accounts for about 79% of the Carbon Black demand in Thailand
and the balance is consumed by manufactured rubber goods and specialty
products like inks and coatings manufacturers.

Carbon black consumption in Thailand has been growing at a steady rate
of 8-10% p.a. in tandem with tire production, barring the dip in 2009.
The market demand for carbon black is being driven by an increase in
passenger car tire output, largely driven by an increase in export
shipments, and an increase in vehicle production.

However Thailand Carbon Black manufacturers are gradually losing
competitiveness against Chinese products due to costlier oil imports,
freight disadvantage, and increase in operational costs. In Thailand,
Carbon Black output reduced in year 2012 despite having increased demand
as the imports from China far outpaced the demand growth. In 2012 for
first time, Thailand became a net importer of Carbon Black and since
then the trade gap is widening rapidly.

[]Thailand has three Carbon Black producers

1.  Thai Carbon Black Public Company Limited - capacity of approx
    275,000 MT/ year.

2.  Thai Tokai Carbon Product Co. Ltd. - capacity of approx 180,000 MT/
    year.

3.  Bridgestone Carbon Black (Thailand) Co. Ltd - capacity of approx
    50,000 MT/ year. (Mostly produces for captive consumption for their
    Thailand and overseas tire plants)

The increased imports from China owing to surplus capacities in China
and cheaper raw material sources emerge as the fourth key player in
domestic market.

Thai Carbon Black is the largest producers of Carbon Black in Thailand.
Being part of Birla Carbon gives a distinctive advantage of having
global foot prints and access to customers in various export markets
compared to other players in the region. The products are well accepted
and established in the international market including the Japanese
customers which form a major portion of the South East Asia region. The
company exports approx 40-45% of its production and is able to meet
stringent customer quality requirements through advanced TQM and Quality
Circle processes.

Key Success Factors

-   Robust customer engagement and regular technical collaborations with
    Key customers.

-   Excellent and consistent product quality, approved by all tire
    manufacturers worldwide enables a strong brand image in Asia Pacific
    region.

-   Major quality accreditations : ISO/TS 16949, ISO 14001, IQRS Level
    7, TPM Special award, TPM Consistency award, TPM Excellence award
    and Deming Prize

-   Low cost of production through efficient utilization of production
    facility, and continuous improvements in technology and process.
    Columbian acquisition has proved invaluable for TCB by providing it
    access to latest technology developments in Carbon black process.

-   Excellent customer services including just In Time delivery to major
    customers

-   Experienced, Qualified and motivated workforce and management team

-   Sound financial position for making required investments in process,
    technology and environment

-   Focus on sustainable development, excellent relations with all
    stakeholders, high business ethics and good corporate governance

Opportunities

-   With access to technology from Columbian acquisition, move into high
    value added products and specialty grades for various tire and
    non-tire applications.

-   Offer packaged solutions to customers with a mix of Thailand,
    Chinese and Korean products to cater to complete spectrum of
    requirements

-   Increase share with existing global customers leveraging the global
    engagements and excellent service history

-   Become a cost leader in Domestic market through technology and
    process improvements

Threats

-   Partial product substitute may be developed in long term period.
    Trends in tire labeling may prompt tire companies to switch to
    costlier, less effective but greener products like silica.

-   Stringent pollution control norms may require huge investments time
    to time.

External Factors

-   Recession in development economies, and also the regional imbalance
    in demand supply situation in Asia pacific may take much longer time
    to correct.

-   Volatility in Thai Baht exchange rate with USD, and other major
    currencies

-   Volatility in feedstock prices

-   Natural Calamities like flood, Tsunami etc in either Thailand or any
    of major export countries

-   Some countries may impose trade barriers to protect domestic
    industry.

Work-in-process

-No-

+-----------------------------------------------------------------------+
| Risk Factors                                                          |
+-----------------------------------------------------------------------+

Risk factors

The company has a systematic method of risk identification, impact assessment, and mitigation. A committee of senior executives supervises risk management. Also the audit committee of Board reviews various risks associated with the business and advices management from time to time about the appropriateness of the company’s risk management policies and measures. Company has identified following major risks related to its business:

1. External risks

Business cycles

The business of the company is affected by upturn and downturn in economic conditions. The cycles affect sales volumes, competitive situation, prices of finished goods and raw material, operating costs, and also raw material availability. Present conditions in European economies have forced company’s key customers to operate at 60-70% capacity utilization affecting demand of carbon black. 

Regional demand supply mismatches

Rapid expansion of Chinese capacities in last few years, have created demand supply mismatch in the region leading to fierce competition and driving the prices and margins southwards. 

Company has taken various initiatives to keep ahead in competition and
mitigate to a large extent the impact of downturn in business cycles and
also regional demand supply mismatches. The initiatives include:

-   Maintaining differentiation with competitors through superb quality,
    and on-time deliveries

-   Strengthening customer relationship through an active engagement and
    personalized solutions

-   Annual contract negotiations with key customers

-   Identifying and developing new markets

-   Introduction of new product lines

-   Strengthening sales and marketing team for rubber goods and
    specialty blacks

-   Continuous investment in technology and process to improve costs and
    operating efficiencies

-   Offering packaged solutions to customers through combined sales and
    marketing efforts and high level of synergy with other Birla Carbon
    units in the regions.

Fluctuations in Raw material prices

Prices of raw material, i.e. Carbon black feedstock oil, have shown high volatility in tandem with crude and fuel oil prices. This creates risks in developing suitable pricing methods, business forecasting, inventory management, and maintaining constant operating margins period to period. 

The company is employing suitable pricing models, within the flexibility allowed by market conditions, to hedge against the raw material prices. Also a very lean manufacturing model protects against risks from changes in inventory valuations. In case of abrupt changes in demand, Company suitably hedges the inventory through commodity hedging instruments. 

Changes in Government policies

World economic situation has brought high level of uncertainty in Government policies, and timing of policy actions is not always predictable. Government decisions like preferential treatment, anti-dumping duties, tax rates, wage rates, inflation measures, etc. directly impact Company’s business. Company proactively engages with the Government to represent the management view points, influence the policies in right direction, and be prepared in advance for policy actions. 

High degree of volatility in foreign exchange rates

Volatility in key currencies which affect company’s business results like THB, USD, Yen have increased with economic uncertainty. To some extent company’s operations create a natural hedge in short term. Also an appropriate use of available hedging instruments like currency swaps, forward contracts, etc. also protect against impact of currency volatility on profits. Several cost improvements undertaken by the Company help against erosion of competitiveness through directional changes in exchange rates. 

Volatility in interest rates

Company’s borrowing arrangements are linked to LIBOR and volatility in
interest rates affects interest and financing costs. Company is using
interest rate swaps to protect from interest rate fluctuations.

Natural Disasters like floods, earthquake, tsunami, hurricane, etc. in
any of the operating regions, supplier locations, and markets served,
affect company’s business. Though company has insurance programs to
cover financial impact of natural disasters, the impact of any large
scale natural disaster cannot be totally avoided.

2. Internal risks

High concentration of sales in tire customers 

Majority of the Company’s sales come from Tire customers, so Company’s sales are sensitive to developments in tire, rubber, and automobile markets. Company has chalked out a focused program to increase the sales to non-tire customers, e.g. rubber goods, inks, coatings. The program includes strengthening sales and marketing team, introducing new product lines, synergies with other Birla Carbon units in the region, etc. 

Dependence on Key business partners for port infrastructure, transportation, steam and electricity sales

Company depends heavily on a few key business partners for port
infrastructure to unload bulk raw material imports, transportation of
oil and carbon black, and sale of steam. Company has entered into long
term agreements with key business partners to ensure uninterrupted
operations and most beneficial prices.

Equipment failure

Failure of critical production and utility equipment can cause long
stoppage of plant. Company has a well experienced plant maintenance
team, employs best practices of plant operations and maintenance, has an
exhaustive preventive and predictive maintenance system to ensure good
health of all its manufacturing equipments, uses standard operating
procedures in all areas, and also maintains adequate inventory of
critical spares.

Availability of technically trained manpower

As there are very few carbon black manufacturers in Thailand,
availability of skilled manpower in carbon black manufacturing process
and technology is very limited.

Company has many internal and external training programs for its
employees. A development plan is prepared and monitored for every
employee. Also there are frequent knowledge sharing and information
exchange programs with other Birla carbon units across the world for
prompt and effective horizontal deployment of any technology
advancement. Time-to-time Company draws on technical resources of other
Birla Carbon units and technology centers too.

Risk from storage and handling

Feedstock oil or carbon black, in event of any damage to the container
during transportation or storage, could release and pollute a very
limited area. To prevent this, the company follows all international
standards stipulated for their safe transportation and storage. Though
there has never been any accident relating to these products,
theoretically the risk exists. Company has appropriate insurance covers
to safeguard financial losses from such release.

Environment, health and safety risks

The Company assigns highest priority to health, safety and environment.
This is directly looked after by senior management of the Company. In
fact the Company is the first Asian Carbon Black manufacturer to receive
ISO 14001 certificate for ensuring the highest standards of environment
cleanliness.

The production process of Carbon black does not generate any solid
wastes. The liquid waste which is process water is fully recycled in the
process and no discharge. For this initiative, the Company received
River Conservation & Restoration Outstanding Award from Ministry of
Industry in 2009. Flue gas samples are collected and tested regularly
which are well within the standard limits set by the government. The
company also has the cogeneration system of using the waste heat gases
in generation of steam and electricity thereby reducing the carbon
foot-print.

The company also have plan of further investment in phase manner in
equipments to have improved environmental control systems. Also for any
of expansion projects, company carries out environment impact assessment
(EIA) study from an independent consultant and obtains the necessary
approval from Ministry of Industry (MOI).

Besides a very high level of safety consciousness amongst all employees,
inculcated through rigorous training and investment in all necessary
safety equipment, the company conducts mock drills, emergency plan
simulation etc. to ensure high alertness on health and safety aspects.
The company has the robust system of ‘near-miss’ identification and
rectification as part of its preventive system to reduce the
possibilities of any health or safety incident. The company also has
emergency plans in place.

The company is certified for ISO/TS 16949, OHSAS 18001 & ISO 14001 from
BV Certification (Thailand) for its quality system as well as
Occupational Health, Safety & Environment and ISO/IEC 17025; Lab
Accreditation from Thai Industrial Standards Institute and these
certifications demonstrates company's commitment to Quality, Safety &
Environment.

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| 1.  Operating Assets                                                  |
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Land, Buildings, and Machines

The details of various locations and land area are as follows:

Location Land Area (Company only) Ownership Rai Ngan Wah

1. Factory at Angthong 186 1 305.4 Owned by the company

2. Worker Colony at Angthong 3 0 0 Owned by the company

3. Storage tanks at Sriracha 12 0 76 Owned by the company

4. New Colony at Angthong 17 3 87 Owned by the company

Total 218 4 468

Hence Total will be 219 1 68

Total Book Value of Land = Baht 138,225,412 Baht

The company does not have any machines and equipment which is having the
Book Value of more than 10% of the total assets. All the assets are
shown at Net Book Value in the financial statement.

Details of Property, Plant, and Equipment (Unit : Thousand Baht)

  ------- --------------------------------------- ------------- --------------
  Sr.     Items                                   The Company   Consolidated

  1       Land                                    138,225       138,225

  2       Building, Roads & Lease Rights          460,697       460,697

  3       Plant & Machinery                       4,864,201     4,864,201

  4       Furniture, Office Equipments, Hardware  71,505        71,528
          & Software                                            

  5       Motor Vehicle                           16,751        16,751

  6       Construction in Progress                308,551       308,551

          Total Cost                              5,859,930     5,859,953

  Less:   Accumulated Depreciation                4,121,067     4,121,090

          Total Net Book Value                    1,738,863     1,738,863
  ------- --------------------------------------- ------------- --------------

Property, plant and equipment

+-------------+-------+-------+-------+-------+-------+-------+-------+
|             |       |       |       |   Fix |       |   A   |       |
|             |  Land |  Buil | Plant | tures | Motor | ssets | Total |
|             |       | dings |   and |   and |   veh |       |       |
|             |       |   and |       |   o   | icles | under |       |
|             |       |       |  mach | ffice |       |   in  |       |
|             |       |  road | inery |       |       | stall |       |
|             |       |       |       |  equi |       | ation |       |
|             |       |       |       | pment |       |   and |       |
|             |       |       |       |       |       |   co  |       |
|             |       |       |       |       |       | nstru |       |
|             |       |       |       |       |       | ction |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Cost:       |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 1 January   |   13  | 63    | 5,65  | 8     | 2     | 23    | 6,76  |
| 2013        | 8,225 | 5,118 | 6,938 | 2,043 | 0,284 | 3,111 | 5,719 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Additions   |   -   | 5,440 | 7,313 | -     | -     | 4     | 5     |
|             |       |       |       |       |       | 7,068 | 9,821 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Disposals/  |   -   | -     | -     | (5    | (540) | -     | (5    |
| write off   |       |       |       | ,440) |       |       | ,980) |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Transfers   |   -   | -     | 5     | -     | -     | (53   | -     |
|             |       |       | 3,550 |       |       | ,550) |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Translation |   -   | (6    | (33   | (322) | (70)  | (293) | (40   |
| adjustments |       | ,795) | ,021) |       |       |       | ,501) |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 31 March    |   13  | 63    | 5,68  | 7     | 1     | 22    | 6,77  |
| 2013        | 8,225 | 3,763 | 4,780 | 6,281 | 9,674 | 6,336 | 9,059 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Additions   |   -   | -     | 623   | 26    | 2,276 | 10    | 11    |
|             |       |       |       |       |       | 7,237 | 0,162 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Disposals/  |   -   | -     | (6    | (9)   | (3    | -     | (9    |
| write off   |       |       | ,369) |       | ,438) |       | ,816) |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Transfers   |   -   | 1,149 | 2     | -     | -     | (22   | -     |
|             |       |       | 1,185 |       |       | ,334) |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Sales       |   -   | (189  | (908  | (5    | (1    | (2    | (     |
| assets of   |       | ,336) | ,572) | ,183) | ,912) | ,906) | 1,107 |
| subsidiary  |       |       |       |       |       |       | ,909) |
| (Note 10)   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Translation |   -   | 1     | 7     | 413   | 151   | 218   | 8     |
| adjustments |       | 5,121 | 2,554 |       |       |       | 8,457 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 31 March    |   13  | 46    | 4,86  | 7     | 1     | 30    | 5,85  |
| 2014        | 8,225 | 0,697 | 4,201 | 1,528 | 6,751 | 8,551 | 9,953 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             |       |       |       |       |       |       |       |
| Accumulated |       |       |       |       |       |       |       |
|   de        |       |       |       |       |       |       |       |
| preciation: |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 1 January   |   -   | 25    | 3,95  | 7     | 1     | -     | 4,29  |
| 2013        |       | 3,777 | 3,155 | 3,996 | 2,045 |       | 2,973 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| D           |   -   | 1     | 10    | 499   | 583   | -     | 11    |
| epreciation |       | 0,638 | 1,619 |       |       |       | 3,339 |
| for the     |       |       |       |       |       |       |       |
| year        |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| D           |   -   | -     | -     | (4    | (540) | -     | (4    |
| epreciation |       |       |       | ,439) |       |       | ,979) |
| on          |       |       |       |       |       |       |       |
| disposals/  |       |       |       |       |       |       |       |
|             |       |       |       |       |       |       |       |
| write off   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Translation |   -   | (2    | (19   | (267) | (63)  | -     | (21   |
| adjustments |       | ,263) | ,352) |       |       |       | ,945) |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 31 March    |   -   | 26    | 4,03  | 6     | 1     | -     | 4,37  |
| 2013        |       | 2,152 | 5,422 | 9,789 | 2,025 |       | 9,388 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| D           |   -   | 2     | 33    | 1,698 | 2,021 | -     | 35    |
| epreciation |       | 0,997 | 4,795 |       |       |       | 9,511 |
| for the     |       |       |       |       |       |       |       |
| period      |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| D           |   -   | -     | (6    | (9)   | (3    | -     | (9    |
| epreciation |       |       | ,369) |       | ,438) |       | ,816) |
| on          |       |       |       |       |       |       |       |
| disposals/  |       |       |       |       |       |       |       |
|             |       |       |       |       |       |       |       |
| write off   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Sales       |   -   | (70   | (581  | (4    | (1    | -     | (658  |
| assets of   |       | ,258) | ,808) | ,308) | ,780) |       | ,154) |
| subsidiary  |       |       |       |       |       |       |       |
| (Note 10)   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Translation |   -   | 5,388 | 4     | 345   | 139   | -     | 5     |
| adjustments |       |       | 4,289 |       |       |       | 0,161 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 31 March    |   -   | 21    | 3,82  | 6     | 8,967 | -     | 4,12  |
| 2014        |       | 8,279 | 6,329 | 7,515 |       |       | 1,090 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Net book    |       |       |       |       |       |       |       |
| value:      |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 31 March    |   13  | 37    | 1,64  | 6,492 | 7,649 | 22    | 2,39  |
| 2013        | 8,225 | 1,611 | 9,358 |       |       | 6,336 | 9,671 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| 31 March    |   13  | 24    | 1,03  | 4,013 | 7,784 | 30    | 1,73  |
| 2014        | 8,225 | 2,418 | 7,872 |       |       | 8,551 | 8,863 |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|   D         |       |       |       |       |       |       |       |
| epreciation |       |       |       |       |       |       |       |
|   for the   |       |       |       |       |       |       |       |
|   period    |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| For the     |       |       |       |       |       |       |   11  |
| three-month |       |       |       |       |       |       | 3,339 |
| period      |       |       |       |       |       |       |       |
| ended 31    |       |       |       |       |       |       |       |
| March 2013  |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| For the     |       |       |       |       |       |       |   35  |
| year ended  |       |       |       |       |       |       | 9,511 |
| 31 March    |       |       |       |       |       |       |       |
| 2014        |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+

Investment in associates

[TABLE]

Investment policy 

The manufacturing of carbon black is Company’s core business and Company
always looks for the opportunities to expand and grow and emphasize on
future growth of the business. Due to Company’s growth policy, the
company grew from the initial capacity of 16,000 MT to 275,000 MT/ year
by way of 6 expansions and debottlenecking and continuous improvement in
the production process.

The decision of Company’s investment mainly depends on growth
opportunities, return on investment and sustainable growth of Company
business and its investment in other companies.

Company’s investment is focused on its core business carbon black where
the company and Aditya Birla Group have major growth plans for carbon
black business and at present company is exploring possibilities for
putting up carbon black projects in emerging markets.

The company will continue to explore possibilities to invest and expand
in carbon black and other business to maximize return on shareholders’
funds.

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| 2.  Legal Dispute                                                     |
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-None-

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| 3.  General and Other Significant Information                         |
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General Information

Company Name : Thai Carbon Black Public Company Limited

Company Registration No. : 0107537001251

Type of business : Manufacturer of carbon black

Location of Head Office : 888/122, 888/128, Mahatun Plaza Building,
12^(th) Floor, Ploenchit Road, Lumpini, Patumwan, Bangkok 10330

Tel. 0-2253-6745-54

Fax 0-2254-9031, 0-2253-2812

E-mail : prabhat.g@adityabirla.com

rajesh.k.jha@adityabirla.com

Website: http://www.birlacarbon.com

http://www.adityabirla.com

Location of Factory : 44 Moo1, Ayuthaya-Angthong Highway, Tumbol Posa,

Amphur Muang, Angthong 14000

Tel. (035) 672-150-4

Fax (035) 672-148-9

E-mail : prabhat.g@adityabirla.com

rajesh.k.jha@adityabirla.com

Investor Relations

Corporate Finance Department : 1. Mr. Prabhat Gupta 

(Investor Relation) Tel 035-617104, 035-672150-4 (Ext 104)

Fax - 035-617-124

Email : prabhat.g@adityabirla.com

2. Mr. Rajesh K Jha

Tel - 02-617 120

Fax - 0-2254-9031

Email : rajesh.k.jha@adityabirla.com

References

Share Registrar : Thailand Securities Depository Co.,Ltd.

No.62 Ratchadapisek Road,

Klongtoey, Bangkok 10110.

Tel : 0-2229-2800

  Fax : 0-2359-1259

Trustee : - None -

Auditors : 1. Mr. Termphong Opanaphon Registered License no. 4501

  2. Ms. Thipawan Nananuwat Registered License no. 3459

  3. Ms. Siraporn Ouaanunkun Registered License no. 3844

  EY Office Ltd. (Formerly known as “Ernst & Young Office Limited”)

  Lake Rachda Building 33rd floor,

  193/136-137 Rachdapisek Road Bangkok

Tel : 0-2264-0777, 0-2661-9190

Fax : 0-2661-9192

Bankers : 1. Bangkok Bank Public Co.,Ltd.

2. The Siam Commercial Bank Public Co.,Ltd.

3. Kasikorn Bank Public Co.,Ltd.

4. Citibank N.A.

5. Hongkong & Shanghai Banking Corp.Ltd.

6. Standard Chartered Bank (Thai) Public Co.,Ltd

7. Indian Overseas Bank

8. Krung Thai Bank