4. Product Characteristic

(1) In general, there are 2 major types of chemical pesticide (from
business aspect)

1. Specialty product : this is proprietary product belonging to a
particular company which has the patent right to produce and distribute
it. It may also refer to a product that is exclusively imported by a
national distributor/formulator. Such product has to go through
phase-registration process required by the Ministry of Agriculture. Such
process usually involves the submission and approval of complete
toxicology data experimental trials which can take up to 3-5 year to
complete.

2. Commodity product : this is generic product commonly sold and
distributed by many companies. Commodity product can be imported from
many manufacturers around the world. It is usually imported in the form
of technical grade and then formulated into finished products. Such
product is fairly simple to register, requiring only authorization
certificate from the manufacturer. Since there is no significant
difference in the quality and price, brand loyalty and image are very
important factors for commodity products.

Products by types

  -------------------- ---------------- ----------------- ----------------
                       Specialty        Commodity         Total
                       Products         Products          

  Technical Grade      13               37                50

  Finished Products    5                27                32

  Total                18               64                90

  Total Value(Million  558.98           403.24            962.22
  Baht)                                                   
  -------------------- ---------------- ----------------- ----------------

The proportion in terms of the value of imported specialty to commodity
products in Thailand is 30:70. For Pato Chemical Industry Plc, this
proportion is about 58 : 42 in 2011. Among all pesticide products used
by Thai farmers, herbicides have the highest import volume followed by
insecticides. In the past, most herbicide was imported in the form of
finished products more than in form of technical grade and vice versa
for insecticides. At present, however, the market situation has changed.
More and more herbicides are now imported in the form of technical grade
due to the increase demand and emphasis of farmers on herbicides.
Farmers are now more conscious about weeds, which naturally grow along
with the crops, and take away some of the essential water and nutrition
leaving a lowered crop yield. Herbicide usage is now more frequent and
consequently the total herbicide usage grew.

From the manufacturers' aspect, herbicide can be produced and
distributed in almost all season despite some uncooperative weather and
climate condition. In severe poor weather condition, such as drought,
herbicide sales are not affected as much compared to insecticide sales,
which is considered more risky. The reason for increasing imports of
herbicide technical grade is because farmers demand the less expensive
locally formulated herbicide in order to reduce their cost to cope with
fluctuations in their crop prices. Since there is no significant quality
difference between imported finished products and locally formulated
ones, price is the main concern for farmers when they decide on
purchases. On the other hand, in the production side, companies need to
be concerned not only about the country's principal corps, but also the
geographic suitability for different types of crop. Moreover, companies
are concerned with the efficiency, productivity, and environmental
impacts of their production facility. Sales breakdown by region as
compared to total sales of the company during 2008 –2011 is as follows :

Proportion of sales breakdown by region

  ------------------- ------------ ------------ ------------ ------------
  Region              2008         2009         2010         2011

  Central             55%          62%          70%          52%

  North               16%          15%          12%          24%

  West                1%           1%           1%           1%

  East                13%          9%           7%           12%

  Northeast           11%          10%          8%           8%

  South               4%           3%           2%           3%

  Total               100%         100%         100%         100%
  ------------------- ------------ ------------ ------------ ------------

Typed of Pesticides Distributed in Thailand

1. Water Dispersible Powder (WDP) or Wettable Powder (WP) is the
combination of active ingredients, carriers or diluent such as white
clay, talc, or other substance, including surface active ingredients
such as wetting agents, dispersing agents.

2. Emulsifiable Concentrate (EC) is the combination of active
ingredients with non-water miscible solvents and emulsifier for water
soluble which will also help the chemical to stick on the leaf or
insect’s body.

3. Solution concentrate (SC) or Water Soluble Concentrate (WSC) or
Liquid concentrate(LC) will look like emulsion and are classified in the
same type. This type of pesticide is the combination of active
ingredients and water miscible solvent without emulsifier.

4. Suspension Concentrate (F) or Flowable Formulation (For FL) is the
combination of well ground active ingredients and the carriers, e.g.,
white clay, and liquid inert ingredients. This F or For FL will be able
to dissolve in water better than the water dispersible powder, thus,
making it more convenient to use. Special additives could be added
during the production process to make this pesticide more soluble.

5. Water Soluble Powder (WSP or SP) is the combination of water soluble
active ingredients in powder, or fine flake, form mixed with surface
active agents or other additives or solvents to make chemical well
dispersed. It will dissolve in water instantly and with no
precipitation.

6. Dust (D) is the combination of well ground active ingredients and
inert ingredient will be the carrier to dilute for lower percentage of
active ingredient. This type of pesticide can be sprayed with the
knapsack sprayer.

7. Granule (G), is made up of carriers or other inert ingredients, such
as sands, coated with active ingredients. This type of formulation is
made for easy direct broadcast and soil burial.

There are many other types of pesticide in the market, but they are not
so widely used, such as baits (B) in liquid or grain for instant use,
ULV which is the combination of active ingredients oil-based solvent and
with low viscosity and volatility to be used with ULV sprayer only.

Pato Chemical Industry Plc formulate pesticide in following form; Water
Dispersible Power (WDP), Wettable Powder (WP) Emulsifiable Concentrate
(EC) Solution Concentrate (SC), Water Soluble Powder (WSP or SP) Dust
(D) Suspension Concentrate (F). Flowable Formulation (For FI) cannot be
produced locally but they are imported as finished products. Water
Dispersible Powder can be produced locally but are quite expensive; they
are usually imported as finished product.

Pato Chemical Industry Plc has the highest capacity of granule pesticide
in the country with production level of 14,650 tons in 2011, as compared
with 400-4,000 tons capacity at other factories (Source: Agriculture and
Co-operatives Ministry).

The percentage breakdown in terms of the company’s import volume for the
different types of agrochemical are as follows:

- Insecticide accounted for 40% of total import volume.

- Herbicide accounted for 50% of total import volume.

- Other pesticide such as Fungicide, Acaricide, Rodenticide,Mollusicide,
and plant hormones accounted for 10% of total import volume. In 2011,
sales contribution of those three types of products as Herbicide,
Insecticide and other products were 48 % : 37% : 15% respectively.

Proportion of Sales of Product Breakdown by Crop and Planting Area

+--------------------+----------------------------+-------------------+
| Crop               | Area                       | Percentage        |
+--------------------+----------------------------+-------------------+
| 1.Rice             | North, Central,            | 82                |
|                    | North-East,                |                   |
|                    |                            |                   |
|                    | South (some provinces)     |                   |
+--------------------+----------------------------+-------------------+
| 2.Fruit            | Central,                   | 4                 |
|                    |                            |                   |
|                    | East (Rayong, Chantaburi,  |                   |
|                    | Trad, Chacheongsao)        |                   |
|                    |                            |                   |
|                    | North (Chiangmai,          |                   |
|                    | Chiangrai, kampangpet)     |                   |
|                    |                            |                   |
|                    | South (Suratthani)         |                   |
+--------------------+----------------------------+-------------------+
| 3.Vegetable        | Central, North, and        | 1                 |
|                    |                            |                   |
|                    | North-East                 |                   |
+--------------------+----------------------------+-------------------+
| 4.Field Crops such | Central, South, North, and | 11                |
| as Corn, Bean,     |                            |                   |
| Sugar Cane, Cotton | North-East                 |                   |
| and Tapioca        |                            |                   |
+--------------------+----------------------------+-------------------+
| 5.Oil Palm, Para   | South , East, and          | 2                 |
| Rubber             | North-East                 |                   |
+--------------------+----------------------------+-------------------+

Source : Marketing Department: Pato Chemical Industry Plc

(2) Marketing and Competition

(A) Market strategy :

The company’s competitive advantages are

1. Standard quality of product which is well accepted by the customers
for more than 30 years

2. Strategy to specify products for sale by each dealer : Aside from its
financial status, the company will limit the products to be distributed
by each dealer to prevent price cutting of the company’s products among
its dealers in the same area.

3. Price advantage as the company will produce from technical grade
chemical.

4. Good relationship with dealers

5. Fast delivery : within the 200 kilometer radius the company will
provide delivery. Dealers outside the radius, the company may deliver
depending on order amount. Agrochemical industry pay much importance on
prompt delivery. In each particular season, the company will have prompt
delivery to meet the demand in time. For example, production and
distribution of herbicide should be able to meet the demand during rainy
season while insecticide should be able to be delivered promptly during
the insects outbreak season.

6. Pato distributes totaling 80 various products , consequently the
company will be able to share more market in more planting area for
various crops such as rice, fruit, vegetable, para rubber, palm oil and
many others. This will reduce risk from natural disaster. Performance of
the company will then be as we has expected for.

There are 3 main of distribution channels:

1. Distributors : They are mostly in Bangkok and distribute products
under their own brand to dealers. They have Pato formulated, packed
under distributors’ registered label and brand.

2. Local Repackers : They are packaging companies who purchase the
products from producer to repackage and distribute under their own
brand. These companies will register the pesticide by themselves by
getting the authorization certificate from the formulator/manufacturer.

3. Dealers or Free Market : They are small dealers or retailers in the
upcountry and some in Bangkok who sell pesticides to the end users under
Pato Globe Trade Mark.

Sales contribution for Distributors : Local Repackers : Dealers
currently is 22 : 9 : 69

Types of Customers and its Relationships

In the pesticide industry, there are 2 main markets; general customers
market (Free market) which is bigger, and markets for distributors and
market for local repackers which is less important respectively. The
company emphasizes in customers in rural area. By thorough selection of
dealer for each particular area will sell different products to avoid
competition. In doing so, the company will be able to sell variety of
products and to reduce the risk of distributor’s business. However, the
company still needs to check its relationship with the customers to
avoid any possible problems. The company aims to develop new products
and variety, and, at the same time, aims to distribute the information
on proper and efficient use of all pesticides to customers.

Criteria for selection of dealer for each are:

1. Financial status

2. Sales network and its coverage

3. No conflict agreement to sell the same product of different producers

4. Strong intention to commit to the company’s products

Product Distribution of Pato Chemical Industry Plc in 2008 - 2011

+-----------+------+------+------+------+-----+------+-----+------+
|           | 2008 |      | 2009 |      | 2   |      | 2   |      |
|           |      |      |      |      | 010 |      | 011 |      |
+-----------+------+------+------+------+-----+------+-----+------+
| Area      | Nu   | Nu   | Nu   | T    | Num | T    | Num | T    |
|           | mber | mber | mber | otal | ber | otal | ber | otal |
|           |      |      |      | Sale |     | Sale |     | Sale |
|           | of   | of   | of   |      | of  |      | of  |      |
|           | C    | C    | C    | Thou | Cus | Thou | Cus | Thou |
|           | usto | usto | usto | sand | tom | sand | tom | sand |
|           | mers | mers | mers | Baht | ers | Baht | ers | Baht |
+-----------+------+------+------+------+-----+------+-----+------+
| 1.        | 14   | 11   | 24   | 15   | 25  | 19   | 25  | 21   |
| DIS       |      | 3.41 |      | 8.39 |     | 6.34 |     | 4.43 |
| TRIBUTORS | 18   |      | 31   |      | 24  |      | 19  |      |
|           |      | 9    |      | 9    |     | 5    |     | 8    |
| 2.        | 460  | 5.86 | 428  | 7.63 | 431 | 7.89 | 451 | 4.04 |
| LOCAL     |      |      |      |      |     |      |     |      |
| REPACKERS |      | 55   |      | 60   |     | 65   |     | 66   |
|           |      | 6.32 |      | 3.01 |     | 1.18 |     | 3.75 |
| 3. FREE   |      |      |      |      |     |      |     |      |
| MARKET    |      |      |      |      |     |      |     |      |
+-----------+------+------+------+------+-----+------+-----+------+
|   Total   | 492  | 76   | 483  | 85   | 480 | 90   | 495 | 96   |
|           |      | 5.59 |      | 8.79 |     | 5.41 |     | 2.22 |
+-----------+------+------+------+------+-----+------+-----+------+

Percentage of 10 major customers in 2008-2011

(Unit : %)

  ------------------ ------------- ------------- ------------- -------------
  Customers          2008          2009          2010          2011

  10 Major Customers 26.17         21.48         22.60         28.99

  Others             73.83         78.52         77.40         71.01

  Total              100.00        100.00        100.00        100.00
  ------------------ ------------- ------------- ------------- -------------

Note : There is no customer whose accounts of greater than 10%. Most
customers are of long connection and of good payment. However, new
customer is strictly selected to avoid bad debt.

Pricing Policy

In general, the company will set the price at the level, which is
slightly higher than average price of its local competitors and slightly
lower than average price of the international market, of the same
product. Other factors for the price consideration are:

1. If the product already exists in the market, the company will set its
price within that product market price range.

2. If the product does not yet exist in the market, the company will
conduct research on quality; the amount used and instruction for use to
determine the efficacy of its product to determine the price in
comparison with the pesticide farmers are currently using.

(B) Competition

There are 2 major types of chemical pesticide companies:

1. International Companies. These companies have their own products or
buy few products from other companies. Most of them, either, imports
finished products for repackaging by local repackers, or import
technical grades for resell to local companies eg, Syngenta Crop
Protection Co.,Ltd. Dow Agro Science Co.,Ltd.

2. Local Companies. There are 4 groups as follows :

2.1 Formulators and distributors : These companies have their own
factory for formulating and reprocessing, and their own sales and
promotion team. Most of them imports technical grade products.

eg, Pato Chemcial Industry Plc., S&P Formulator Co.,Ltd.,

2.2 Formulators : These companies have their own factory for toll
formulating and reprocessing, but do not have their own sales and
promotion team eg, Sharp Formulator Co.,Ltd., Ladda Co.,Ltd.,

2.3 Distributors : These companies only have their own sales and
promotion team eg.

Pitsulin Co.,Ltd., Sotus International Co.,Ltd.

The company has policy to gain more market share from the multinational
or local companies in order to strengthen its competitiveness as
follows:

1. Compared with other formulators, the company’s factory in Bangpoo
Industrial Estate is well equipped with modern machinery for higher
capacity. Moreover, the company has sufficient trucks for quick delivery
to serve customers better. In addition, many types of formulation such
as Emulsifiable Concentrate (EC) Suspension Concentrate(SP), Wettable
Powder(WP) and Granule (G) are available.

2. Compared with Formulators and Distributors, the company’s advantages
are shown below :

2.1 Lower costs of production from the use of technical grade

2.2 Extensive marketing team with experience and expertise

2.3 Wider coverage of area all over the country

2.4 More product variety of various agrochemical types and uses

3. Compared with Distributor, the company’s advantages over these
companies are the same as those over the Formulator and Distributors.
Moreover, the company has strategy to gain market share by:

3.1 Adding more products of comparable quality to those of the
multi-national companies. With lower costs of production. It is expected
that the company will be able to achieve more market share, initially,
by 5-10% of total sales of such product, and will increase gradually.

3.2 Penetrating into new area i.e. area in the Northeast region, or in
developing area of the country which is accounted for 60% of total area
of Thailand. The company will send promotion team to the area to
introduce the proper the quality of its produce to serve the demand in
the market. By this way, farmers will also earn higher income.

To fulfill the special needs of the agricultural sector, the
agricultural chemical industry must supply a wide range of products.
These can be divided into four main categories: Herbicides,
Insecticides, Fungicides, Acaricides & Hormones. Diversification,
therefore, is vital to the success and growth of the agricultural
chemical industry. Other factors contributing to the success of the
industry include:

1. Range of products

Production must include herbicide, insecticide, fungicide and acaricide
and mollusicide, according to the market share ratio.

2. Products

Selection of products depends on the company's policy and the
fluctuating price of crops.

3. Market distribution

Nationwide distribution is essential, as the type of crops grown varies
from region to region. Regional productivity is also effected by
rainfall, irrigation and even the demand for pesticide products.

4. Rainfall

The amount of land allotted to agricultural purposes has a direct impact
on the growth of the agricultural chemical industry. The amount of
rainfall also plays an important role in influencing the success, or
otherwise, of land cultivation. If there is an abundant supply of
rainwater, agricultural activities can be carried out throughout the
country. Conversely, when rainfall is in short supply, land cultivation
can only be done successfully in irrigated areas. Accordingly, during a
drought, agricultural sector profits shrink drastically, and the overall
economy is badly affected.

The demand for pesticides is also largely influenced by rainfall. When
the water supply was good, the demand for herbicides grew to such an
extent that a significant volume had to be imported, at great expense.
However, when rain water was scarce, an insect epidemic occurred,
resulting in large imports of concentrated insecticides, known as
"Technical Grade", which had to be reformulated, before they could be
sold on the domestic market.

5. Price of crops

As crop prices are so heavily influenced by importing opportunities and
global prices, figures on each serve as indicators for industry trends.

(3) Production and Produce Procurement for Sale

Pato Chemical Industry Plc’s factory is located at 569 Soi 12, Bangpoo
Industrial Estate, Sukhumvit Road, Tambon Praksa, Amphur Muang,
Samutprakarn Province.

Capacity and Actual Production Liquid Unit : Thousand Liters

Granule Unit : Ton

Powder Unit : Ton

+---------+------+------+------+------+------+-------+------+------+
| Product | Capa | Ac   | Capa | Ac   | Capa | A     | Capa | Ac   |
|         | city | tual | city | tual | city | ctual | city | tual |
|         | 2008 |      | 2009 |      | 2010 |       | 2011 |      |
|         |      | 2008 |      | 2009 |      | 2010  |      | 2011 |
+---------+------+------+------+------+------+-------+------+------+
| Inse    | 2    | 566  | 2    | 606  | 2    | 711   | 2    | 838  |
| cticide | ,612 |      | ,612 |      | ,612 |       | ,612 |      |
|         |      | 3    |      | 7    |      | 1     |      | 6    |
|   -     | 7    | ,448 | 7    | ,054 | 14   | 0,944 | 14   | ,731 |
|         | ,200 |      | ,200 |      | ,400 |       | ,400 |      |
|  Liquid |      | 14   |      | 30   |      | 41    |      | 61   |
|         | 1    |      | 1    |      | 1    |       | 1    |      |
|   -     | ,500 | 1    | ,500 | 2    | ,500 | 1,696 | ,500 | 2    |
|         |      | ,867 |      | ,311 |      |       |      | ,480 |
| Granule | 2    |      | 2    |      | 2    | 4,625 | 2    |      |
|         | ,000 | 4    | ,600 | 4    | ,600 |       | ,600 | 7    |
|   -     |      | ,551 |      | ,391 |      | 367   |      | ,643 |
|         | 19   |      | 19   |      | 19   |       | 19   |      |
|  Powder | ,800 | 425  | ,800 | 407  | ,800 | 229   | ,800 | 466  |
|         |      |      |      |      |      |       |      |      |
| He      | 2    | 206  | 2    | 277  | 2    | -     | 2    | 335  |
| rbicide | ,000 |      | ,000 |      | ,000 |       | ,000 |      |
|         |      | -    |      | -    |      | 54    |      | -    |
|   -     | 500  |      | 500  |      | 500  |       | 500  |      |
|         |      | 49   |      | 51   |      | 93    |      | 74   |
|  Liquid | 500  |      | 500  |      | 500  |       | 500  |      |
|         |      | 99   |      | 93   |      | 45    |      | 132  |
|   -     | 500  |      | 500  |      | 500  |       | 500  |      |
|         |      | 47   |      | 40   |      | 343   |      | 118  |
| Granule | 270  |      | 270  |      | 270  |       | 270  |      |
|         |      | 709  |      | 628  |      | 20    |      | 276  |
|   -     | 500  |      | 500  |      | 500  |       | 500  |      |
|         |      | 12   |      | 13   |      | 2,774 |      | 58   |
|  Powder | 1    |      | 1    |      | 1    |       | 1    |      |
|         | ,000 | 2    | ,000 | 3    | ,000 | 1     | ,000 | 3    |
| Fu      |      | ,785 |      | ,327 |      | 5,912 |      | ,903 |
| ngicide | 60   |      | 60   |      | 60   |       | 60   |      |
|         |      | 8    |      | 12   |      | 482   |      | 14   |
| -       | 5    | ,708 | 6    | ,073 | 6    |       | 6    | ,650 |
| Liquid  | ,882 |      | ,482 |      | ,482 |       | ,482 |      |
|         |      | 500  |      | 501  |      |       |      | 659  |
| -       | 28   |      | 28   |      | 35   |       | 35   |      |
| Granule | ,500 |      | ,500 |      | ,700 |       | ,700 |      |
|         |      |      |      |      |      |       |      |      |
|   -     | 4    |      | 4    |      | 4    |       | 4    |      |
|         | ,060 |      | ,060 |      | ,060 |       | ,060 |      |
|  Powder |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| Ac      |      |      |      |      |      |       |      |      |
| aricide |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|   -     |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|  Liquid |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| Others  |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| -       |      |      |      |      |      |       |      |      |
| Liquid  |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| -       |      |      |      |      |      |       |      |      |
| Granule |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| -       |      |      |      |      |      |       |      |      |
| Powder  |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| Total   |      |      |      |      |      |       |      |      |
| C       |      |      |      |      |      |       |      |      |
| apacity |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|   -     |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|  Liquid |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|   -     |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
| Granule |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|   -     |      |      |      |      |      |       |      |      |
|         |      |      |      |      |      |       |      |      |
|  Powder |      |      |      |      |      |       |      |      |
+---------+------+------+------+------+------+-------+------+------+

Note: The factory is working 1 shift for 7 hours.

(A) Raw Material and Suppliers

Major raw material is chemical of technical grade. Normally, the company
will buy active vs inert ingredients at the ratio of 90 : 10
respectively by direct order from abroad and via local agent. Table
showing types, suppliers and price. There is no substitute substance for
technical grade chemical, However, there are substitutions for other
inert ingredients such as emulsifiers, solvent, auxiliary materials for
solvent, but these substitute substance will have to pass laboratory
test before use. There are many suppliers of raw materials for those
imported and purchased locally. Diverse group of raw material suppliers
will create bargaining power for the company to set a more reasonable
price, higher quality products, and prompt delivery. However, there are
certain substances that the company buys from a sole supplier under
special condition to benefit the company such as no sale to other
company of the same productions. Price of raw material depends on the
world price which is the same as other commodity.

There is no supplier whose business accounts for more than 30% of the
company’s total raw material purchase. Most of the raw material can be
bought from many sources. However, the company may buy a material solely
from a supplier under special condition such as quality, price or
delivery, etc.

Local Purchasing Ratio of 2008-2011

Value of Purchasing Ratio (Unit : Thousand Baht)

  ------------------- -------- ------- -------- ------- --------- ------- -------- -------
  Raw Material        2008     %       2009     %       2010      %       2011     %

  1.Technical Grade   13,067   2.70    9,897    2.31    124,447   22.68   9,324    2.16

  2.Solvent           18,825   3.89    15,670   3.65    18,497    3.37    31,064   7.20

  3.Emulsifiers       6,492    1.34    5,648    1.32    9,454     1.72    12,432   2.88

  4.Auxiliary         10,287   2.13    13,152   3.07    18,114    3.30    15,331   3.55

  5.Others            8,114    1.68    11,209   2.61    15,544    2.83    13,454   3.12

  Total Amount        56,785   11.74   55,576   12.96   186,056   33.90   81,605   18.92
  ------------------- -------- ------- -------- ------- --------- ------- -------- -------

Import Purchasing Ratio of 2008 - 2011

Value of Purchasing Ratio (Unit : Thousand Baht)

  ------------------- --------- ------- --------- ------- --------- ------- --------- -------
  Raw Material        2007      %       2008      %       2009      %       2010      %

  1.Technical Grade   402,187   83.12   363,150   84.69   339,822   61.93   328,274   76.09

  2.Solvent           -         -       -         -       -         -       -         -

  3.Emulsifiers       24,141    4.99    9,356     2.18    21,592    3.94    21,364    4.95

  4.Auxiliary         162       0.03    182       0.04    179       0.03    172       0.04

  5.Others            588       0.12    542       0.13    1,102     0.20    -         -

  Total Amount        427,078   88.26   373,230   87.04   362,695   66.10   349,810   81.08
  ------------------- --------- ------- --------- ------- --------- ------- --------- -------

Local and Import Purchasing Ratio of 2008-2011

Value of Purchasing Ratio (Unit : Thousand Baht)

  -------------------- --------- ------- --------- ------- --------- ------- --------- -------
  Raw Material         2008      %       2009      %       2010      %       2011      %

  1.Technical Grade    415,254   85.82   373,047   87.00   464,269   84.61   337,598   78.25

  2.Solvent            18,825    3.89    15,670    3.65    18,497    3.37    31,064    7.20

  3.Emulsifiers        30,633    6.33    15,004    3.50    31,046    5.66    33,796    7.83

  4.Auxiliary          10,449    2.16    13,334    3.11    18,293    3.33    15,503    3.59

  5.Others             8,702     1.80    11,751    2.74    16,646    3.03    13,454    3.12

  Total Amount         483,863   100     428,806   100     548,751   100     431,415   100
  -------------------- --------- ------- --------- ------- --------- ------- --------- -------

(B) Environmental Impact from manufacturing process and the demolishing
of waste

- Procedure to reduce environmental impact

The factory situates in Bangpoo Industrial Estate, Pato strictly
complies with rules and regulations prescribed by the Industrial Estate
regarding environment and others.

Being a formulator, there is no waste from raw materials or from
formulating process. The only wastes are from some contaminated
packaging materials which Pato hires a professional licensed waste
management service to handle the collection for recycling or demolishing
process.

- Legal Case against Environmental Misconduct

PATO has never been sued against environmental misconduct.

(4) Non-Delivery Goods

There is no non-delivery goods as of 31 December 2011 for PATO.