2.  Business Operation

In 2008 SCG has acquired investment as follows:

-   SCG Chemicals invested in ordinary shares of a joint venture, Long
    Son Petrochemicals Co., Ltd., which was newly established to produce
    raw materials for plastic resins, Polyethylene and Polypropylene in
    Vietnam. The company is jointly controlled by companies under SCG
    with 71 percent shareholding (direct and indirect investment of The
    Siam Cement PLC is 61 percent) and a partner in Vietnam with the 29
    percent remaining stakes.

  In addition, SCG Chemicals increased investment in ordinary shares of
  2 associates in accord with SCG’s current proportion. The investments
  are 1,986 Million Baht in Thai MMA Co., Ltd. with current stakes of 47
  percent and 1,006 Million Baht in Siam Synthetic Latex Co., Ltd with
  current stakes of 50 percent.

-   SCG Building Materials acquired 61.9 percent of ordinary shares of
    Thai-German Ceramic Industry PLC (TGCI) of which principal business
    activities are manufacture and distribution of ceramic floor and
    wall tiles, and property development. The Group has included TGCI’s
    financial statements into SCG’s consolidated financial statements
    since the third quarter of 2008.

  Moreover, the Group acquired an additional 9 percent of the ordinary
  share of the Sosuco Ceramic Co., Ltd. in the fourth quarter of 2008,
  resulting in a 54 percent shareholding. Starting from 1 January 2009,
  the Group obtains control over the financial and operating policies
  and obtains benefit from activities of the company. The Group will
  include operating results of such company in the SCG’s consolidated
  financial statements from the first quarter of 2009.

In 2008 SCG has divested main investments as follows:

The Group sold all of its 48 percent interest in the shares of Pacific
Plastics (Thailand) Co., Ltd., an associate of SCG Chemicals, to The Dow
Chemical Company.

Since The Siam Cement PLC has become a holding company, aiming for a
transparent management, efficient resource management, strong long-term
business strategy and good governance, the Company has organized its
structure as follows:

-   Five strategic business units, comprising SCG Chemicals, SCG Paper,
    SCG Cement, SCG Building Materials and SCG Distribution.

-   SCG Investment

  Attribute of each business unit is summarized hereunder:

SCG Chemicals

SCG Chemicals Co., Ltd. is a holding company for which the Chemicals
Business of The Siam Cement Group operates under, through an integrated
production of both upstream products (Olefins) and downstream products
(Polyolefins). In addition, the business also invests in Polyvinyl
Chloride (PVC) business by holding share in Thai Plastic and Chemicals
PLC (TPC).

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+---------------------+------------------------------------------------+
| Capacity            | -   Olefins 1,200,000 tons per year            |
|                     |                                                |
|                     | -   Polyolefins 1,080,000 tons per year        |
|                     |                                                |
|                     | -   PVC 828,000 tons per year                  |
+---------------------+------------------------------------------------+
| Main Products       | Olefins, Polyolefins, and PVC products         |
+---------------------+------------------------------------------------+
| Strengths           | -   High competitive advantage in upstream     |
|                     |     products.                                  |
|                     |                                                |
|                     | -   Low Olefins/ Polyolefins production costs. |
|                     |                                                |
|                     | -   Customer base cover 107 countries.         |
+---------------------+------------------------------------------------+
| Major Business      | -   Emphasize on Polyolefins and PVC product   |
| Policy              |     portfolio which is the business’s strength |
|                     |     to increase the business’s competitive     |
|                     |     advantage.                                 |
|                     |                                                |
|                     | -   Become a regional leader in Olefins,       |
|                     |     Polyolefins, and PVC business.             |
+---------------------+------------------------------------------------+
| Business            | -   Seek business opportunities in both        |
| Development Policy  |     domestic and international markets,        |
|                     |     focusing on Olefins, Polyolefins, and PVC  |
|                     |     products.                                  |
+---------------------+------------------------------------------------+

SCG Paper

SCG Paper PLC was established in 1980 by The Siam Cement PLC and Siam
Kraft Co., Ltd to engage in manufacturing and sale of pulp. Its initial
registered capital was Baht 100 million under the name of The Siam Pulp
and Paper Co., Ltd. The Company was later converted into a public
company in 1994 and raised its capital to Baht 1,400 million. Currently,
the registered capital is amounted to Baht 1,563 million. The Company
was delisted from the Stock Exchange of Thailand in 2003 and was
thereafter renamed to SCG Paper PLC in April 2007.

The SCG Paper PLC and subsidiaries is the country’s only integrated
producer of high quality pulp, paper, and containers. Their main
businesses are Pulp, Printing and Writing Paper, Packaging Paper, and
Corrugated Containers.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | -   Packaging Paper 1,660,000 tons per year    |
|                     |                                                |
|                     | -   Corrugated Containers 637,000 tons per     |
|                     |     year                                       |
|                     |                                                |
|                     | -   Pulp 430,000 tons per year                 |
|                     |                                                |
|                     | -   Printing and Writing paper 570,000 tons    |
|                     |     per year                                   |
+---------------------+------------------------------------------------+
| Main Products       | Kraft paper, duplex board, corrugated          |
|                     | containers, pulp and printing & writing paper. |
+---------------------+------------------------------------------------+
| Strengths           | -   Only integrated producer of pulp, paper,   |
|                     |     and containers in Thailand.                |
|                     |                                                |
|                     | -   World-class quality.                       |
|                     |                                                |
|                     | -   Continual offering innovative products and |
|                     |     services.                                  |
|                     |                                                |
|                     | -   Strong domestic distribution channel and   |
|                     |     marketing system, as well as the worldwide |
|                     |     exports.                                   |
|                     |                                                |
|                     | -   Efficient production cost control.         |
|                     |                                                |
|                     | -   Total Quality Management – TQM.            |
+---------------------+------------------------------------------------+
| Major Business      | -   Maintain domestic market leadership.       |
| Policy              |                                                |
|                     | -   Aspiring for regional leadership in paper  |
|                     |     and packaging business.                    |
|                     |                                                |
|                     | -   Focus on sustainable growth strategy and   |
|                     |     providing good returns to shareholders and |
|                     |     stakeholders.                              |
|                     |                                                |
|                     | -   Conserve the environment.                  |
+---------------------+------------------------------------------------+
| Business            | -   Improve existing machines for higher       |
| Development Policy  |     efficiency.                                |
|                     |                                                |
|                     | -   Develop innovative products to better      |
|                     |     serve customers’ needs                     |
|                     |                                                |
|                     | -   Seek opportunities in expanding its        |
|                     |     business with Merger and Acquisition as a  |
|                     |     priority.                                  |
|                     |                                                |
|                     | -   Develop knowledge, skill and experience    |
|                     |     for all levels of employee to maintain     |
|                     |     competitive advantage to achieve a         |
|                     |     regional leader.                           |
+---------------------+------------------------------------------------+

SCG Cement

SCG Cement Co.,Ltd. was founded on November 11, 1998, upon the transfer
of all cement related assets from The Siam Cement Public Company
Limited. The business is primarily responsible for producing various
types of cements and concrete products of which comprise: 1) Grey Cement
2) Concrete Products 3) Dry Mortar 4) White Cement 5) Refractory
Products. It also provides plant and machinery installation and
maintenance service, instrument metrological service, including energy
conservation consultation and disposal of industrial waste.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | Grey Cement                                    |
|                     |                                                |
|                     | -   Domestic: 23.2 million tons per year       |
|                     |                                                |
|                     | -   Cambodia: 0.85 million tons per year       |
+---------------------+------------------------------------------------+
| Main Products       | Grey cement, concrete product (ready-mixed     |
|                     | concrete, prefabricated concrete floor, and    |
|                     | post tension concrete floor), dry mortar,      |
|                     | white cement, fireclay bricks, and special     |
|                     | refractory.                                    |
+---------------------+------------------------------------------------+
| Brand               | -   Cement: Elephant, Tiger Brands             |
|                     |                                                |
|                     | -   Ready-Mixed Concrete: CPAC Brand           |
+---------------------+------------------------------------------------+
| Major Business      | -   Step up as a regional leader.              |
| Policy              |                                                |
|                     | -   Maintain price level and market stability. |
|                     |     Enhance its domestic market leadership.    |
|                     |                                                |
|                     | -   Create high value products & services      |
|                     |                                                |
|                     | -   Continuously conserve natural resources    |
|                     |     and environment as well as join creative   |
|                     |     activities with local community and social |
|                     |     development program.                       |
+---------------------+------------------------------------------------+
| Business            | -   Continuously develop and improve product   |
| Development Policy  |     quality.                                   |
|                     |                                                |
|                     | -   Continuously reduce costs and expenses,    |
|                     |     especially energy costs and raw material   |
|                     |     costs, with fuel and raw material          |
|                     |     substitutes.                               |
|                     |                                                |
|                     | -   Develop knowledge, skills, and competency  |
|                     |     for every employee with assorted methods.  |
|                     |                                                |
|                     | -   Bring innovative idea to develop products  |
|                     |     and working process.                       |
+---------------------+------------------------------------------------+

SCG Building Materials

SCG Building Materials Co., Ltd. was established to concentrate in the
production of building materials and related products of SCG. The
business employs modern production technology and quality control along
with its experts, enabling the business to become market leaders for
both domestic market and ASEAN countries.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | -   Fiber-cement roof sheet 40 million Sq. M.  |
|                     |     per year                                   |
|                     |                                                |
|                     | -   Concrete roof tile 30 million Sq. M. per   |
|                     |     year                                       |
|                     |                                                |
|                     | -   Ceramic tile 85 million Sq. M. per year    |
|                     |                                                |
|                     | -   Ceiling and wall products 50 million       |
|                     |     Sq. M. per year                            |
|                     |                                                |
|                     | -   Concrete products 3.5 million Sq. M. per   |
|                     |     year                                       |
+---------------------+------------------------------------------------+
| Main Products       | -   Roofing products: fiber-cement roof sheet, |
|                     |     concrete roof tile,                        |
|                     |                                                |
|                     |   and ceramic roof tile.                       |
|                     |                                                |
|                     | -   Ceramic floor and wall tile.               |
|                     |                                                |
|                     | -   Ceiling and wall products                  |
|                     |                                                |
|                     | -   Concrete blocks, concrete floor tiles, and |
|                     |     precast concrete walls.                    |
+---------------------+------------------------------------------------+
| Brand               | -   Roofing products: Elephant, CPAC Monier,   |
|                     |     Excella, NeuStile and Ayara                |
|                     |                                                |
|                     | -   Ceramic floor and wall tiles: COTTO, SGI   |
|                     |     Tiles and CAMPANA                          |
|                     |                                                |
|                     | -   Ceiling and wall products: Elephant        |
|                     |                                                |
|                     | -   Concrete blocks, concrete floor tiles, and |
|                     |     precast concrete walls: CPAC               |
+---------------------+------------------------------------------------+
| Strengths           | -   Market leader with continuous product      |
|                     |     development.                               |
|                     |                                                |
|                     | -   Competitive production costs.              |
|                     |                                                |
|                     | -   Good distribution network: exclusive       |
|                     |     dealer network.                            |
+---------------------+------------------------------------------------+
| Major Business      | -   Maintain market leadership by developing   |
| Policy              |     products and services that highest respond |
|                     |     to customer needs.                         |
|                     |                                                |
|                     | -   Continuously develop organization and      |
|                     |     employees.                                 |
+---------------------+------------------------------------------------+
| Business            | -   Develop innovative idea in developing a    |
| Development Policy  |     product, production and working process.   |
|                     |                                                |
|                     | -   Build growth by adding related new         |
|                     |     products and services and developing       |
|                     |     distribution channels which customers can  |
|                     |     receive product information, consultation  |
|                     |     and design service and purchase products   |
|                     |     and services completely at one shop.       |
|                     |                                                |
|                     | -   Enhance a strong leadership of building    |
|                     |     products in ASEAN by expanding             |
|                     |     distribution network.                      |
+---------------------+------------------------------------------------+

SCG Distribution

SCG Distribution Co., Ltd. was established in accordance to the Group’s
restructuring plan in 1998 as a holding company for local and overseas
trading, selling and distribution, for industrial supplies, building
materials and home improvement products. Over 50,000 product items from
the Group and external companies are presented. Non-group products will
be added to increase the assortment in the future.

Core companies are:

-   SCG Network Management Co., Ltd.: Domestic distribution.

-   SCG Logistics Management Co., Ltd.: Distribution and Intra-Regional
    logistics services including transportation and warehouse
    management.

-   SCT Co., Ltd.: International trading.

In addition, The Company indirectly invests in port business through
Thai Prosperity Terminal Co., Ltd.

Vision

By the year 2015, SCG Distribution will be recognized as an ASEAN market
leader by utilizing supply chain insights to deliver localized logistics
services, constantly develop and manage multiple distribution channels,
and offer customized global trading services, focusing on the building
materials and industrial supplies.

We will be a trustworthy, responsive business partner and a
customer-centric organization through world-class operational excellence
and technology alignment.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Main Products       | Group products and external products sold      |
|                     | through Home Mart and SCG Authorized Dealer    |
|                     | stores, overseas distribution network, and     |
|                     | logistics                                      |
+---------------------+------------------------------------------------+
| Strengths           | -   Distribution network through dealers and   |
|                     |     company-owned outlets throughout the       |
|                     |     country.                                   |
|                     |                                                |
|                     | -   Modern, accurate, and fast transportation  |
|                     |     network and warehouse management.          |
|                     |                                                |
|                     | -   31 foreign branches in 19 countries around |
|                     |     the world.                                 |
|                     |                                                |
|                     | -   Well-accepted products.                    |
+---------------------+------------------------------------------------+
| Major Business      | -   Strengthen existing businesses whereas     |
| Policy              |     creating continuous growth for new         |
|                     |     potential businesses.                      |
+---------------------+------------------------------------------------+
| Business            | -   Strengthen logistics business for both     |
| Development Policy  |     domestic and overseas.                     |
|                     |                                                |
|                     | -   Develop both domestic and overseas         |
|                     |     channels of distribution.                  |
|                     |                                                |
|                     | -   Improve key fundamentals in distribution   |
|                     |     business.                                  |
|                     |                                                |
|                     | -   IT development                             |
|                     |                                                |
|                     | -   Organization development                   |
|                     |                                                |
|                     | -   Innovation driving                         |
|                     |                                                |
|                     | -   Synergy and benchmarking                   |
+---------------------+------------------------------------------------+

SCG Investment

SCG Investment was established to manage investment in non-core
businesses of SCG, such as automotive-part, agricultural machinery,
steel, and industrial estate.

SCG Investment, with cooperation from major investors, develop
businesses within the Group in terms of budget planning, new product
introduction or oversea expansion as well as customer service
improvement to ultimately achieve objectives of both operating
performance and cash generation.

Revenue Structure for 2008

[]

  Remark: Financial figures classified according to business unit before
  inter-group adjustments.

  * Equity income from associates by equity method.

[]

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Remark: * Directly and indirectly holding through the Company,
subsidiaries, associates and other companies.