2.  Business Operation

    1.  Background

Establishment: The Company was established with Baht 8 million initial
registered capital and commenced its operation on April, 1952. Pepsi was
first produced in Silom plant and introduced to the market on March 18,
1953.

Invested Capital: With the start up capital since 1952 until now, the
Company has the following capital increase:

1952 Registered capital Baht 8,000,000

1953 Registered capital increased to Baht 15,000,000

1966 Registered capital increased to Baht 30,000,000

1969 Registered capital increased to Baht 45,000,000

1986 Registered capital increased to Baht 105,000,000

  Pepsi-Cola International Ltd. purchased 300,000 of the Company shares
  Representing 28.57 percent.

1991. Par value of the Company’s shares reduced from Baht 100 to Baht 10
      per share

1994 Registered capital increased to Baht 260,000,000

  Pepsi-Cola International Ltd. increased its shares from 28.57percent
  to 42.49 percent.

  The Company has registered its status from a company limited to a
  public company limited.

  1999 Registered capital increased to Baht 265,000,000

  To support the exercise of warrants under Employees Stock Ownership
  Program

    Set up a subsidiary company - Serm Suk YHS Beverage Co. Ltd. as a
    joint venture business with YHS Singapore Pte. Ltd., to manufacture
    and distribute soy milk products and fruit juice, with registered
    capital of Baht 439,586,150 of which 51% held by Serm Suk.

  2001 Registered capital increased to Baht 267,957,660 to support the
  exercise of right to purchase the Company’s securities under Employees
  Stock Incentive Plan.

  2003 Par value of the Company’s shares reduced from Baht 10 to Baht 1
  per share.

2004 Acquired all shares in the subsidiary from the Singaporean partner,
resulting the Company holding total shares in the subsidiary with name
changed to Serm Suk Beverage Co., Ltd.

2006 Increased additional Baht 250 million registered and fully paid
capital of Serm Suk Beverage Co., Ltd.

Set up a new subsidiary company, Serm Suk Holdings Co., Ltd., with an
objective to hold shares and manage investment in Serm Suk Group with
registered capital of Baht 500 million, Baht 350 million paid-up.

Sold and transferred all shares held in Serm Suk Beverage Co., Ltd. to
Serm Suk Holdings Co., Ltd.

2007. Sold shares in Lao Soft Drink Co., Ltd. of which the Company held
      10% of its share capital.

2008. Increase investment in Bangkok Glass Co., Ltd. with the purchase
      of 41,625 newly issued shares at Baht 450 per share for total
      amount of Baht 18.7 million. First payment for the subscription of
      these new shares of Baht 9.4 million was made in December 2008.

Business Expansion

1952. Constructed and commenced its operations at Silom Plant

1967. Operated Bang Khaen Plant on a 15 rais property and removing
      machinery and equipment from Silom Plant

1968. Operated Nakornratchasima Plant on a 30 rais property; sold the
        property at Silom as it was not suitable for manufacturing
        activities

1973. Operated Nakornsawan Plant on a 29 rais property

1974. Listed in the Stock Exchange of Thailand

1978 Operated Pathumthani Plant on a 160 rais property

1984. Appointed as a sole distributor of M-100 and M-150 for Osotspa
      Co., Ltd.

1992 Added in the distribution of M Sport and M Coffee for Osotspa Co.,
Ltd

1993 Appointed as a sole distributor of Volvic mineral water for BSN
Group of France

Commenced the production of Crystal drinking water

1997. Appointed as a sole manufacturer and distributor of Lipton Iced
        Tea for Unilever Thai Holdings Co., Ltd.

  Commenced the production of PET filling line at Pathumthani plant

1998 Operated Suratthani Plant on a 70 rais property

1999. Appointed as a sole distributor of Yeo’s products for Serm Suk YHS
      Beverage Co., Ltd

2002. Commenced the operation of Chonburi Plant on a 42 rais property

Cancellation of distribution contract for M products and be appointed as
a sole distributor of Red Carabao for Carabao Tawandang Co., Ltd.

2003 Appointed as a sole manufacturer and distributor of Gatorade Sport
Drink for Strokely Van Camp Inc. USA.

2004 Ceased sales and distribution of Yeo’s soy milk.

2005 Appointed as a distributor of Oishi green tea for Oishi Trading
Co., Ltd.

2006 Appointed as sold distributor of Tropicana Twister fruit juice for
Pepsi Cola (Thai) Trading Co., Ltd.

1.  Overview of Company’s Operations

The Company operates the beverage business, both as the manufacturer and
distributor, and has an indirect subsidiary company, Serm Suk Beverage
Co., Ltd., which manufactures and co-packs Lipton Ice Tea Gatorade, and
Tropicana Twister fruit juice and sells directly to the Company or
through Pepsi-Cola (Thai) Trading Co., Ltd who sells the products to the
Company for distribution. Currently, 99.99 percent of Serm Suk Beverage
Co., Ltd. shares are held by Serm Suk Holdings Co., Ltd., a direct
subsidiary company established on November 23, 2006 with main objective
to hold shares and manage investment in Serm Suk subsidiaries.

The Company holds 40 percent of the equity in Petform (Thailand) Ltd.,
the manufacturer and distributor of PET polymers, PET bottles, and
plastic closures.

2.  Income Structure

  2.3.1 Structure of Sales Income

+----------------------------+-----+-----+----+-----+----+-----+----+
| Baht: Million              | %   | 2   |    | 2   |    | 2   |    |
|                            | Equ | 008 |    | 007 |    | 006 |    |
|                            | ity |     |    |     |    |     |    |
|                            |     |     |    |     |    |     |    |
|                            | H   |     |    |     |    |     |    |
|                            | old |     |    |     |    |     |    |
|                            | ing |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
|                            |     | Inc | %  | Inc | %  | Inc | %  |
|                            |     | ome |    | ome |    | ome |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Manufacturing and          |     | 19, | 92 | 18, | 93 | 18, | 94 |
| Distribution of Beverage   |     | 356 | .9 | 717 | .8 | 652 | .4 |
|                            |     |     |    |     |    |     |    |
| Operated by: Serm Suk PCL  |     |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Manufacturing and          | 99. | 439 | 2  | 284 | 1  | 298 | 1  |
| Distribution of Beverage   | 99* |     | .1 |     | .4 |     | .5 |
|                            |     |     |    |     |    |     |    |
| Operated by: Serm Suk      |     |     |    |     |    |     |    |
| Beverage Co., Ltd.         |     |     |    |     |    |     |    |
|                            |     |     |    |     |    |     |    |
| (previously Serm Suk YHS   |     |     |    |     |    |     |    |
| Beverage Co., Ltd.)        |     |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Manufacturing and          | 4   | 1,  | 5  | 952 | 4  | 808 | 4  |
| Distribution of PET        | 0.0 | 050 | .0 |     | .8 |     | .1 |
| polymers                   |     |     |    |     |    |     |    |
|                            |     |     |    |     |    |     |    |
| Operated by: Petform       |     |     |    |     |    |     |    |
| (Thailand) Co., Ltd.       |     |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
|                            |     | 20, | 1  | 19, | 1  | 19, | 1  |
|                            |     | 845 | 00 | 953 | 00 | 758 | 00 |
|                            |     |     | .0 |     | .0 |     | .0 |
+----------------------------+-----+-----+----+-----+----+-----+----+

* Shares held by Serm Suk Holdings Co., Ltd a wholly owned (99.99
percent) subsidiary of Serm Suk Plc.

Income of Serm Suk Beverage Co., Ltd. is mainly derived from the sales
of its products to Serm Suk Public Co., Ltd. or the co-packing fees from
Pepsi-Cola (Thai) Trading Co., Ltd. for products that are resold to Serm
Suk Public Co. Ltd. for distribution. The costs of products purchased
from Serm Suk Beverage Co., Ltd. or Pepsi-Cola (Thai) Trading Co., Ltd.
are categorized as cost of sales for Serm Suk Public Co., Ltd.

Part of the revenues of Petform (Thailand) Co., Ltd. represents the
sales of PET bottles and pre-forms to Serm Suk Public Co., Ltd., and
this is categorized as product cost for Serm Suk Public Co., Ltd.

2.  Distribution of Profit/(Loss) of Investment

+----------------------------+-----+-----+----+-----+----+-----+----+
| Baht: Million              | %   | 2   |    | 2   |    | 2   |    |
|                            | Equ | 008 |    | 007 |    | 006 |    |
|                            | ity |     |    |     |    |     |    |
|                            | H   |     |    |     |    |     |    |
|                            | old |     |    |     |    |     |    |
|                            | ing |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
|                            |     | D   | %  | D   | %  | D   | %  |
|                            |     | ist |    | ist |    | ist |    |
|                            |     | ri. |    | ri. |    | ri. |    |
|                            |     | Of  |    | Of  |    | Of  |    |
|                            |     | I   |    | I   |    | I   |    |
|                            |     | nco |    | nco |    | nco |    |
|                            |     | me/ |    | me/ |    | me/ |    |
|                            |     |     |    |     |    |     |    |
|                            |     | (Lo |    | (Lo |    | (Lo |    |
|                            |     | ss) |    | ss) |    | ss) |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Manufacturing and          |     | 11  | 82 | 31  | 95 | 52  | 1  |
| Distribution of Beverage   |     | 4.8 | .2 | 4.5 | .1 | 4.6 | 00 |
|                            |     |     |    |     |    |     | .7 |
| Operated by: Serm Suk PCL  |     |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Manufacturing and          | 99. | (17 | (1 | (27 | (  | (42 | (  |
| Distribution of Beverage   | 99* | .9) | 2. | .6) | 8. | .2) | 8. |
|                            |     |     | 8) |     | 3) |     | 1) |
| Operated by: Serm Suk      |     |     |    |     |    |     |    |
| Beverage Co., Ltd.         |     |     |    |     |    |     |    |
|                            |     |     |    |     |    |     |    |
| (previously Serm Suk YHS   |     |     |    |     |    |     |    |
| Beverage Co., Ltd.)        |     |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Investment Management:     | 99  | (0  | (  | (0  | (0 | 0.0 | 0  |
| Serm Suk Holdings Co.,     | .99 | .1) | 0. | .1) | .0 |     | .0 |
| Ltd.                       |     |     | 1) |     | 3) |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
| Manufacturing and          | 4   | 4   | 30 | 4   | 13 | 3   | 7  |
| Distribution of PET        | 0.0 | 2.8 | .7 | 3.9 | .3 | 8.3 | .4 |
| polymers                   |     |     |    |     |    |     |    |
|                            |     |     |    |     |    |     |    |
| Operated by: Petform       |     |     |    |     |    |     |    |
| (Thailand) Co., Ltd.       |     |     |    |     |    |     |    |
+----------------------------+-----+-----+----+-----+----+-----+----+
|                            |     | 13  | 1  | 33  | 1  | 52  | 1  |
|                            |     | 9.6 | 00 | 0.7 | 00 | 0.7 | 00 |
|                            |     |     | .0 |     | .0 |     | .0 |
+----------------------------+-----+-----+----+-----+----+-----+----+

* Shares held by Serm Suk Holdings Co., Ltd a wholly owned (99.99
percent) subsidiary of Serm Suk Plc.

3.  Business Objectives

  The Company sets the following business objectives:

1.  Volume and Market Share Growth

To set the Company’s annual growth target for volume and market share,
several factors have been considered, for example the general economic
situation, the changes of consumers’ taste and behavior, market
competition, competitor’s strength and weakness, competitor’s activities
in the past years, etc. The Company’s target setting is based on the
analysis of market trend and future projection including the assessment
of the Company’s strength and weakness in order that the planned
activities including the introduction of new products will support the
achievement of sales and market share target.

  2.4.2 Profit Maximization

In addition to sales growth which directly results in the increase of
profit, the Company also emphasizes on efficiency and cost control. Key
Performance Indices (KPIs) have been set for each business unit as
measurement for performance and efficiency.

3.  People Development

The Company has set clear objectives in people development. Each year,
budget has been set aside for training and development to ensure that
the employees will be equipped with new working tools and techniques to
enhance their efficiency and performance.

4.  Returns to Shareholders Maximization

The Company has a policy to maximize returns to shareholders in form of
consistent dividend payment, at the reasonable rate corresponding to the
annual operating results by enhancing business assets through novel and
creative marketing initiatives as means to generate return on investment
for investors and shareholders.

2.4.5 Social Responsibility

The Company sets objective to enhance its social responsibility along
with other operating objectives and objective to maximize returns to
shareholders. In addition to the production of quality products the
Company realizes the importance of environmental issues and set up
environmental protection policies which include water conservation
programs and environmentally-friendly activities through various
projects such as waste water treatment system, environmental human
resource development, R&D support and development on water treatment
technology and natural resource protection, the reduction of raw
materials and production waste from the Company’s production process,
i.e. use of PET light weight bottles and alternative packing materials.
The Company also promotes environmental protection and energy saving
awareness among the youth by awarding Song Bulsook Foundation’s
scholarship to students participating in the annual scholarship program.
The Company is also a founder member of the Thailand Institute of
Packaging Management for Sustainable Environment (TIPMSE) participating
in several waste control and energy preservation projects.