During the year under review, though Thailand economy rebounded from the
severe floods but continued to be affected by the slowdown in the global
economy. Real GDP in 2012 saw moderate growth supported by household
consumption and greater investments as part of flood rehabilitation and
the government’s consumption-stimulating measures. Net exports, on other
hand, contributed negatively to GDP growth as exports were affected by
production disruptions in the first half of the year and the sharp
slowdown in demand from the EU, China, and ASEAN in the second half.

The slow-down in Europe badly affected tire manufacturers in Thailand as
exports to Europe constitute a significant part of their total sales.
All multinational tire companies in Thailand were, most part of the
year, operating at 50-60% of their capacities. Consequently the demand
of Carbon black in Thailand market was weak and this affected your
company’s sales performance.

[]Another development, which gained momentum during the year, was
Chinese exports of Carbon Black in Asian markets. During last few years,
Carbon black capacities in China have expanded rapidly to benefit from
abundant and economical supply of coal-tar from steel industry.
Competitive advantage of cheap raw material, benefit of freight cost and
low capacity utilization are enabling Chinese manufactures to increase
their sales in Asian markets and offer products at prices which are
lower than our variable cost. Export of carbon black from China
increased from 225 thousand MT in year 2010 to 658 thousand MT in year
2012, registering 71% year on year growth. About three fourth of this
export is landing in nearby Asian markets. Over the same period, total
imports into Thailand, from China increased from 37 thousand MT to 105
thousand MT. This flood of Chinese Carbon Black in Asian markets led to
a fierce price competition and declining sales and profits of the
industry.

Though market situation was very tough, the company took several steps
for performance improvements.

The business of CCC acquired in 2011 is progressing as planned. It has
sustained and improved its performance and has directly and indirectly
contributed to your company’s competitiveness. The company benchmarked
its processes against CCC in many respects and brought about necessary
improvement in process and product technology leveraging their learning
and best practices deployment. The company have had several visits from
their experts and held joint benchmarking seminars and workshops through
which its personnel got benefitted in the areas of environment, health
and safety and learnt about technology advances in the areas of
reactors, beading and drying. It also carried out many modifications and
improvements in the plant leading to yield and productivity improvement
based on these interactions and its own innovation which have protected
its profitability in very difficult economic circumstances.

The company also introduced two new grades of Carbon Black for specialty
applications, MAF12 and TBL303. These grades are likely to contribute to
sales and profits in coming years. The Grade 330K introduced last year,
recorded a sale of 2017 MT in year 2012. Company plans to introduce more
grades for specialty applications in coming years.

Another important initiative was to diversify the feedstock supplier
base and experimenting with different feed-stocks to optimize costs.
Here again, the CCC’s existing sourcing relationships played a key role.
The results were encouraging and contributed to savings in material
costs and improve competitiveness.

A sharp focus on safety, quality, cost, productivity and on-time
delivery was further strengthened. Employees were retrained on Standard
Operating Procedures through regular training programs comprehensively
covering all areas. This made possible to maintain very high levels of
customer satisfaction and loyalty in a market situation where lots of
other distractions are available.

With these initiatives, the Company recorded a sale of THB 9,246
million, which is 9% lower than sale of 10,156 million in year 2011. The
net profit of the year was THB 716 million, 18% lower than year 2011
figure of THB 870 million. On a consolidated basis, the Net profit of
the year was THB 827 million as compared to THB 806 million in year
2011.

As always, health, safety and environment remain top priority of the
Management. The 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.

During 2012, company increased its engagement with communities, and got
actively involved in many community development programs. In Oct 2012,
Company, along with other Aditya Birla Group companies in Thailand,
sponsored a program to train the Community School teachers in English
language. The program aimed to build English language capabilities among
school teachers for ultimate benefit of students in community schools.
Nation University Language Institute lecturers imparted training to 30
teachers from various schools in Angthong province. The classes were
organized during 8-26 October 2012 at Company’s plant in Angthong.
Several other initiatives like participation in community programs,
assistance to victims of natural calamities, drinking water for
communities, sponsoring meals for students, scholarships, donation to
Red Cross, etc. were continued unabated.

[]Looking to 2013, the challenge of high uncertainty in the global
economic prospects is likely to stay here. If we look at growth of key
markets of TCB, according to latest IMF outlook released in January
2013, ASEAN economies would take a breather after fast pace in 2012.
Euro-zone would continue to shrink, while Japan economy is sliding into
recession. More importantly the recent forecasts released in Jan 2013,
are downgrade, for all the regions from earlier forecasts in Oct 2012,
highlighting that recovery in 3Q of 2012 was partly influenced by
temporary factors, and any sustained recovery is still a few years away.

[]

The demand supply gap created by rapid capacity expansions in China
would correct gradually over a long period, as prolonged global
recession is providing little opportunity to absorb excess production.

While challenges continue, the Company is working on a multi-pronged
strategy, inlcuding:

-   Continuous investment in technology improvement for better costs and
    quality;

-   Developing newer markets and specialty products

-   Maintaining differentiation in quality and delivery;

-   Aggressive cost optimization

-   Investment in health, safety and environment, e.g. flue gas
    desulfurization, for a sustainable future, and stay ahead of the
    pack in regulatory compliance.

-   Conserve cash, financial resources and maintain stength of Balance
    sheet.

These steps should hopefully enable the company to tide over this cycle
and emerge much stronger.

Over a longer period, as European economy comes out of recession, and
the balance in Chinese capacity and demand of carbon black is restored,
carbon black industry should hopefully see better times.

INVESTMENT STRUCTURE OF THAI CARBON BLACK PUBLIC COMPANY LIMITED (as on 31 December 2012)

Detail of investment in, Subsidiary and Associated Companies

+--------------+-------------+---+-------+------+------+----------------+
| Company Name | Activity    |   | Pa    | %    | Cost | Other Major    |
|              |             |   | id-up | S    | of   | Shareholders   |
|              |             |   | Ca    | hare | In   |                |
|              |             |   | pital | Hold | vest | (>10%)         |
|              |             |   |       | ings | ment |                |
|              |             |   |       |      | (MB) |                |
+--------------+-------------+---+-------+------+------+----------------+
| Subsidiary   |             |   |       |      |      |                |
| Companies    |             |   |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Liaoning     | Manufacture | 1 |       | 100% |   69 |                |
| Birla Carbon | of Carbon   | 5 |       |      | 9.73 |                |
| Co.,Ltd      | Black       | 7 |       |      |      |                |
|              |             | m |       |      |      |                |
| (Registered  |             | i |       |      |      |                |
| in China)    |             | l |       |      |      |                |
|              |             | l |       |      |      |                |
|              |             | i |       |      |      |                |
|              |             | o |       |      |      |                |
|              |             | n |       |      |      |                |
|              |             | R |       |      |      |                |
|              |             | M |       |      |      |                |
|              |             | B |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| 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 |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+

Revenue structure

Company produces carbon black as a main product which is approx 97% of
total revenue.