Management

(1) Management Structure

Names of Management or Controlling Persons

Board of Directors comprises

1. Chirayu Isarangkun Na Ayuthaya Chairman

2. Air Chief Marshal Kamthon Sindhvananda Director

3. Mr. Snoh Unakul Director

4. Mr. Sivavong Changkasiri* Director

5. Mr. Sumet Tantivejkul Director

6. Mr. Pricha Attavipach Director

7. Mr. Panas Simasathien Director

8. Mr. Yos Euarchukiati Director

9. Mr. Arsa Sarasin Director

10. Mr. Chumpol NaLamlieng Director

11. Mr. Tarrin Nimmanahaeminda Director

12. Mr. Kan Trakulhoon Director, President & CEO

Mr. Worapol Jennapar Secretary to the Board

Remark: * Mr. Sivavong Changkasiri passed away on March 8, 2009

Top Executives of Siam Cement Group (SCG) comprises

  1. Mr. Kan Trakulhoon President &CEO - SCG

  2. Mr. Roongroote Rangsiyopash Vice President & CFO - SCG

  3. Mr. Cholanat Yanaranop President - SCG Chemicals

  4. Mr. Chaovalit Ekabut President - SCG Paper

  5. Mr. Pramote Techasupatkul President - SCG Cement

  6. Mr. Pichit Maipoom President - SCG Building Materials

  7. Mr. Kajohndet Sangsuban President - SCG Distribution

8. Mr. Damri Tunshevavong President - SCG Investment

The Attendance of the Directors in Relevant Committee Meetings in 2008

Unit: Time

+-------------------+--------+--------+---------+---------+---------+
| Directors         | Board  | The    | The     | The     | The     |
|                   | of     | Audit  | Gov     | Remun   | 2008    |
|                   | Dir    | Com    | ernance | eration | O       |
|                   | ectors | mittee | and     | Co      | rdinary |
|                   |        |        | Nom     | mmittee | General |
|                   |        |        | ination |         | Meeting |
|                   |        |        | Co      |         | of      |
|                   |        |        | mmittee |         | Share   |
|                   |        |        |         |         | holders |
+-------------------+--------+--------+---------+---------+---------+
|                   | (Total | (Total | (Total  | (Total  | (Total  |
|                   | 12     | 4      | 5       | 3       | 12      |
|                   | Dire   | Me     | M       | M       | Dir     |
|                   | ctors) | mbers) | embers) | embers) | ectors) |
|                   |        |        |         |         |         |
|                   | Total  | Total  | Total 5 | Total 7 | on      |
|                   | 10     | 6      | Tim     | Tim     | March   |
|                   | Time   | Time   | es/Year | es/Year | 26,     |
|                   | s/Year | s/Year |         |         | 2008    |
+-------------------+--------+--------+---------+---------+---------+
| 1. Mr. Chirayu    | 10/10  |        |         |         | 1       |
| Isarangkun Na     |        |        |         |         |         |
| Ayuthaya          |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 2. ACM Kamthon    | 9/10   | 6/6    |         |         | 1       |
| Sindhvananda      |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 3. Mr. Snoh       | 10/10  |        | 5/5     |         | 1       |
| Unakul            |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 4. Mr. Sivavong   | 9/10   |        |         | 7/7     | 1       |
| Changkasiri *     |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 5. Mr. Sumet      | 9/10   | 5/6    | 5/5     |         | 1       |
| Tantivejkul       |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 6. Mr. Pricha     | 10/10  | 6/6    |         |         | 1       |
| Attavipach        |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 7. Mr. Panas      | 10/10  |        | 5/5     |         | 1       |
| Simasatien        |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 8. Mr. Yos        | 10/10  |        |         | 7/7     | 1       |
| Euarchukiati      |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 9. Mr. Arsa       | 9/10   |        | 5/5     |         | 1       |
| Sarasin           |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 10. Mr. Chumpol   | 10/10  |        |         | 7/7     | 1       |
| NaLamlieng        |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 11. Mr. Tarrin    | 9/10   | 6/6    | 5/5     |         | 1       |
| Nimmanahaeminda   |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
| 12. Mr. Kan       | 10/10  |        |         |         | 1       |
| Trakulhoon        |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+

Notes : 1.The five independent directors are number 2,5,6,9 and 11.

2. The four Audit Committee members are number 2,5,6 and 11.

3. The five Governance and Nomination Committee members are number
3,5,7,9 and 11.

4. The three remuneration Committee members are number 4,8 and 10.

* Mr. Sivavong Changkasiri passed away on March 8, 2009

Independent Directors’ Training

Conducted by Thai Institute of Directors Association (IOD)

+------------------------+--------------+-------------+---------------+
| Independent Directors  |  Trai        |             |               |
| of the company         | ning Courses |             |               |
+------------------------+--------------+-------------+---------------+
|                        | Directors    | Directors   | Audit         |
|                        | C            | Ac          |               |
|                        | ertification | creditation | Committee     |
|                        | Program      | Program     |               |
|                        |              |             | Program       |
|                        | (DCP)        | (DAP)       |               |
|                        |              |             | (ACP)         |
+------------------------+--------------+-------------+---------------+
|                        |              |             |               |
+------------------------+--------------+-------------+---------------+
| 1. ACM Kamthon         | -            | Class 18 /  | -             |
| Sindhavananda          |              | 2004        |               |
+------------------------+--------------+-------------+---------------+
| 2. Mr. Sumet           | Class 30 /   | -           | Class 11 /    |
| Tantivejkul            | 2003         |             | 2006          |
+------------------------+--------------+-------------+---------------+
| 3. Mr. Pricha          | Class 39 /   | -           | Class 11 /    |
| Attavipach             | 2004         |             | 2006          |
+------------------------+--------------+-------------+---------------+
| 4. Mr. Arsa Sarasin    | -            | Class 5 /   | Class 11 /    |
|                        |              | 2003        | 2006          |
+------------------------+--------------+-------------+---------------+
| 5. Mr. Tarrin          | -            | -           | -             |
| Nimmanahaeminda        |              |             |               |
+------------------------+--------------+-------------+---------------+

The Board of Directors and Top Executives of Siam Cement Group (SCG)

Duly authorized directors

Two of the five directors, namely, Mr. Snoh Unakul, or Mr. Yos
Euarchukiati, or Mr. Panas Simasathien, or Mr. Sivavong Changkasiri*, or
Mr. Kan Trakulhoon jointly signed their names.

Remark: * Mr. Sivavong Changkasiri passed away on March 8, 2009

Directors' Term on Board

  At the annual general meeting each year, one-third of the total
  directors must retire from the office. If it is not possible to divide
  the total number of directors evenly by three, the number closest to
  one-third must retire from the office. In choosing those directors who
  retire, length of service on the board should be considered with those
  longest serving most eligible to retire. Nevertheless, a retiring
  director is eligible for re-election.

Scope of Authority of the Board of Directors

The Board of Directors essentially has the following authorities:

1.  Fiduciary Duty: act in a fiduciary capacity to administer the
    corporate affairs for the best interests of the shareholders by
    closely observing the following.

    1.  Duty of Care: cautiously and carefully perform its duties.

    2.  Duty of Loyalty: perform its duties with faithfulness and
        honesty.

    3.  Duty of Obedience: strictly observe the laws, the objectives,
        the Articles of Association and the resolution of shareholders’
        meeting.

    4.  Duty of Disclosure: disclose accurate, complete and transparent
        information to the shareholders.

2.  The Board is responsible for establishing corporate vision, the
    mission statement as well as the policy and strategy to align and
    sustain the interests of all stakeholders and create long-term
    shareholders’ value.

3.  The Board is responsible for reviewing the operating plan and
    ensuring maximum competitiveness in global level.

4.  The Board shall oversee and review the performance of all group
    companies as well as evaluating the performance of the top
    executives.

5.  The Board maintains proactive risk management systems as well as
    oversees and review corporate governance to ensure compliance with
    internationally accepted practice.

6.  The Board must devote their time and efforts to the Company without
    seeking personal benefits, and shall not act in conflict with the
    interests of or in competition with the Company or the Group.

7.  The Board manages and directs the Company’s operations in compliance
    with all laws, the objectives, the Articles of Association and the
    resolutions of shareholders’ meetings in good faith and with care to
    preserve the interests of the Company.

8.  The Board conducts the Company’s business in line with SCG Corporate
    Governance as well as the SET’s Code of Best Practice for Directors
    of Listed Companies and Guidelines of Securities and Exchange
    Commission in pursuit of business excellence.

9.  The Board is responsible for overseeing and monitoring the
    performance of each business unit and for the overall performance of
    SCG. The Board ensures that the Group’s operations reporting conform
    to an agreed standard while establishing a corporate policy for the
    development of the company’s operations and personnel development.

10. The Board promotes awareness of the importance of business ethics
    among employees at all levels. It also promotes internal controls
    and internal auditing to ensure corporate integrity is maintained
    and to prevent any fraudulent practices.

11. The Board treats all shareholders equally with regard to those right
    equitably. Shareholders can actively exercise their rights and
    access to corporate information with full disclosure and
    transparency.

12. Being fully aware of its duties and responsibilities, the Board
    shall respect the rights of shareholders, fairly and equally treat
    the shareholders and stakeholders, transparently manage the
    business, and disclose accurate and adequate information.

13. The Board’s performance shall be annually assessed in two
    categories: assessment of the entire Board as a whole and
    self-assessment of each individual director. The results of both
    shall be reviewed by the Board.

14. Directors must attend all meetings of the Board and shareholders.
    Under the unavoidable circumstances that the directors are not able
    to attend the meeting, they must notify the chairman of the Board or
    the secretary to the Board in advance.

\

The Board may seek external consultation or professional advice from
independent consultants or specialists, as deemed appropriate.

Definitions of Independent Director of the Company

(Definition of independent director was amended on October 22, 2008.)

Independent director must be independent from the major shareholder, the
management and the connected persons of the company, with the following
characteristics:

1.  Holds not more than 1% of the total outstanding voting shares of the
    company, the company’s major shareholder, a subsidiary or an
    associate or in any juristic person with a conflict of interests,
    including shares held by a person related to independent director.

2.  Is neither a director that has a management authority nor an
    employee, staff, advisor on retainer, authority figures of the
    company, the company’s major shareholder, a subsidiary, an
    associate, a subsidiary of the same tier (sister company), or any
    juristic person with a conflict

  of interests, both in the present and at least two years prior to
  taking the independent directorship.

3.  Is not involved in the following business relationship with the
    company, the company’s major shareholder, a subsidiary, an
    associate, or any juristic person with conflict of interests in a
    nature which may obstruct his independent judgment, both in the
    present and at least two years prior to taking the independent
    directorship.

    1.  Is neither an auditor nor major shareholder, non-independent
        director, management, and the managing partner of the company’s
        audit firm.

    2.  Is neither professional service provider such as legal or
        financial advisor nor asset appraiser, whose service fee exceed
        2 Million Baht per year, for the company, the company’s major
        shareholder, a subsidiary, an associate, or any juristic person
        with a conflict of interests and is neither major shareholder,
        non-independent director, management nor the managing partner of
        the such service providing firm.

    3.  Received no benefit directly or indirectly from business
        transactions namely, normal trading activities, rent or lease of
        property, transactions related to assets or services nor provide
        financial support to the company, the company’s major
        shareholder, a subsidiary, an associate, amounting to 20 Million
        Baht or equivalent to 3% of the tangible assets of the company,
        whichever is lower. The term is applicable to all transactions
        occurred within one year prior to the date of business
        relationship and the independent director must not be major
        shareholder, non-independent director, management nor the
        managing partner of such firms.

4.  No relationship by blood or legal registration, in a nature that
    makes the independent director a parent, spouse, brothers and
    sisters, children nor spouse of children of management, major
    shareholders, authority figures or nominees for management and
    authority figures of the company or a subsidiary.

5.  Is not appointed as a representative of the company’s director,
    major shareholders or shareholders who are related to the major
    shareholders of the company.

6.  Can look after the interests of all shareholders equally.

7.  Can prevent conflicts of interest.

8.  Manage to attend the Board meetings and make independent decisions.

9.  Is not a person whom SET has determined inappropriate to serve as an
    executive, according to SET regulations.

10. Has never been convicted of violating security or stock exchange
    laws, nor laws governing the investment business, securities
    brokering, or credit fonciers, or commercial banking laws, or life
    or general insurance laws, or money laundering laws, or any other
    law of a similar nature, whether Thai or foreign, and is guilty of
    wrongful acts relating to trading in shares or the perpetration of
    deceptions, embezzlement, or corruption.

11. No other impediments or impairments to express independent opinions
    concerning the operations of the company.

12. If qualified for the item 1-11, the independent director may be
    assigned by the Board of Directors to make decisions relating to
    business operations of the company, the company’s major shareholder,
    a subsidiary, an associate, a subsidiary of the same tier (sister
    company) or any juristic person with a conflict of interests, on the
    basis of collective decision, whereby such actions are not deemed
    partaking of management.

The Audit Committee

The Audit Committee of the Company comprises the following four members:

  1. ACM Kamthon Sindhvananda Chairman

  2. Mr. Sumet Tantivejkul Member

  3. Mr. Pricha Attavipach Member

  4. Mr. Tarrin Nimmanahaeminda Member

 The Audit Committee’s Term on Board

  The Audit Committee is subject to a three-year term. Nevertheless, a
  retiring director is eligible for re-election.

 Scope of Authority

The Audit Committee is authorized to fulfill the following duties:

1.  Review that the company has appropriate financial reporting system
    and the company regularly disclosed its financial statements in
    accordance with the legally defined accounting principle with
    transparency, correctness, and adequacy.

2.  Support the establishment of financial report development in
    compliance with the international accounting standards.

3.  Review that the company has appropriate and effective internal
    control and internal audit systems, which comply with the
    international accepted approaches and standards.

4.  Review that company has in place preventive operation systems to
    enhance operating effectiveness and efficiency.

5.  Review corporate risk management system.

6.  Review that the company is in full compliance with the laws on
    Securities and the Stock Exchange, and other laws relating to the
    company’s business.

7.  Review the report on dishonesty and establish preventive measures.

8.  Review the correctness and effectiveness of the information
    technology system relating to internal control, financial reports,
    and risk management and suggest an up-to-date improvement
    occasionally.

9.  Consider the connected transactions or those of possible conflict of
    interests to ensure compliance with all pertinent laws and
    requirements of SET.

10. Review that the assessment of the entire Audit Committee’s
    performance and the self-assessment of each individual member’s
    performance take place annually.

11. Review and comment on the operation of the Audit Office and
    coordinate with the company’s auditor.

12. Prepare reports on the supervision of activities of the Audit
    Committee with disclosure in the company’s annual report which is
    duly signed by the chairman of the Audit Committee and contains
    opinions as required by SET.

13. Consider, select, propose the appointment, remuneration, and assess
    the performance of the company’s auditor.

14. Set up meetings with the company’s auditor, which exclude the
    management, at least once a year.

15. Review that the evaluation of the Audit Office in compliance with
    international standards.

16. Consider the budgets and manpower of the Audit Office.

17. Give a comment to appoint, remove, transfer or terminate of
    employment of the director of the Audit Office.

18. Consider the independence of the internal Audit Office based on the
    scope of works, reports and line of command.

19. Take other actions in compliance with the law or assigned by the
    Board of Directors.

To fulfill its duties under the scope of authority, the Audit Committee
is authorized to call for and order management, heads of offices, or
employees concerned to present opinions, attend meetings or submit the
necessary documents. In addition, the committee may seek external
consultations and professional advice from independent consultants or
specialists, as deemed appropriate, at the company’s expenses.

The Audit Committee performs duties within the authority and
responsibility under the order of the Board of Directors. The Board is
responsible for the company’s operations and is directly accountable to
shareholders, stakeholders and the public.

 Responsibilities of the Audit Committee

1.  In the case that the Audit Committee is informed by the auditor
    about suspicious behaviors of directors, managers or persons
    responsible for business operation of the company, which may violate
    the paragraph 2 of Section 281/2, the Section 305, 306, 308, 309,
    310, 311, 312 or 313 of the Securities and Exchange Act, it is to
    investigate the case and submit preliminary report to the Stock
    Exchange Commission (SEC) and the auditor within 30 days of the date
    it is informed.

2.  Upon finding or having doubt about the following actions or
    transactions, which may significantly affect the financial position
    and performance of the company, the Audit Committee is to report
    such events to the Board of Directors in order to find remedy within
    a period deemed appropriate by the Audit Committee.

  (1) Transactions which may cause conflict of interest

  (2) Frauds or irregular events or material flaws to the internal
  control system

  (3) Violation of law pertaining to SEC, the regulations of SET, or
  other laws relating to business operation of the company.

Should the Board of Directors or management fail to amend the issues
within a timeline as specified by the Audit Committee; a member of the
Audit Committee may report the issue to SEC or SET.

The Governance and Nomination Committee

The Governance and Nomination Committee of the company comprises the
following five members:

  1. Mr. Sumet Tantivejkul Chairman

  2. Mr. Snoh Unakul Member

  3. Mr. Panas Simasathien Member

  4. Mr. Arsa Sarasin Member

  5. Mr. Tarrin Nimmanahaeminda Member

 The Governance and Nomination Committee’s Term on Board

  The Governance and Nomination Committee is subject to a three-year
  term. Nevertheless, a retiring director is eligible for re-election.

 Scope of Authority

The Governance and Nomination Committee is authorized to fulfill the
following duties.

Corporate Governance

1.  Draw up a policy on SCG Corporate Governance and present it to the
    Board of Directors.

2.  Make recommendations, give advices to the Board of Directors
    regarding the best practices in corporate governance.

3.  Oversee and monitor the effectiveness of the company's Board and
    management with reference to SCG Corporate Governance.

4.  Review the company's corporate governance affairs and compare them
    with those of the leading international companies. The committee
    also recommends plans for further improvement of the company's
    corporate governance from time to time.

5.  Review independency of the Board of Directors and the issues of
    conflicts of interest.

6.  Should there be a few alterations made to the directors’
    qualifications, the committee shall review the appropriateness for
    directorship.

7.  Recommend and implement a process of assessing the performance of
    the Board of Directors and the committees and report the assessment
    results to the Board of Directors for the improvement of performance
    efficiency.

8.  Annually review the process of assessing the performance of the
    Board of Directors and the committees.

9.  Regularly make a progress report on the results of performance and
    submit it to the Board of Directors after the meetings of the
    Governance and Nomination Committee.

10. Review and give advices on the structure, roles and responsibilities
    and practices of the Board of Directors and the committees. Should
    there be any alterations to the Charter of the Board of Directors
    and the committees, the Governance and Nomination Committee shall
    review and make appropriate recommendations in keeping it
    up-to-date.

11. Perform other duties as assigned by the Board of Directors.

Nomination of Directors and Top Executives

1.  Specify qualifications of a person to be nominated for directorship
    and lay down the director nomination process to replace the retiring
    director, considering an diversified candidate with skills,
    experiences and expertise.

2.  Identify qualified candidates to replace directors retiring at the
    end of their terms, or whatever the case maybe, and submit a list of
    nominees to the Board of Directors’ and/or shareholders’ meeting for
    resolution.

3.  Recommend a plan for the succession of the company’s president and
    top executives to the Board.

4.  Perform other duties as assigned by the Board of Directors.

To fulfill its duties under the scope of authority, the Governance and
Nomination Committee is authorized to call for and order the management,
head of offices or employees concerned to give opinions, attend the
meetings or submit the necessary documents. In addition, the committee
may seek external consultations and professional advice from independent
consultants or specialists, as deemed appropriate, at the company’s
expenses.

The Remuneration Committee

The Remuneration Committee of the company comprises the following three
members:

1. Mr. Sivavong Changkasiri* Chairman

2. Mr. Yos Euarchukiati Member

3. Mr. Chumpol NaLamlieng Member

 Remark:* Mr. Sivavong Changkasiri passed away on March 8, 2009

 The Remuneration Committee’s Term on Board

  The Remuneration Committee is subject to a three-year term.
  Nevertheless, a retiring director is eligible for re-election.

 Scope of Authority

The Remuneration Committee is authorized to fulfill the following dutie:

1.  Propose guidelines and methods of payment of remuneration, including
    bonus and attendance fee, to the Board of Directors and the
    committees appointed by the Board.

2.  Propose policy on management incentives, including salary and bonus,
    in line with the company’s operating results, and the performance of
    each executive. Whenever it deems appropriate, the committee shall
    consider the hiring of consulting firms to advise on project
    implementation.

3.  Prior to the submission of the president’s remuneration for the
    Board of Directors’ approval, the Remuneration Committee shall
    assess the president’s performance on an annual basis.

4.  Prior to the submission of remuneration of each top executive for
    the Board of Directors’ approval, the Remuneration Committee shall
    assess the performance of each top executive on an annual basis,
    based on the president’s recommendations.

5.  Consider, before presenting to the Board of Directors, the budget
    for the salary increase, change of wage/remuneration and bonus of
    the senior executives.

6.  Regularly review, study and track the changes and trends in
    remuneration for the Board of Directors and top executives and
    report its findings to the Board for approval.

7.  Consider the annual remuneration for the Board of Directors and the
    executives, as compared to the remuneration offered by other listed
    companies operating in the same business, to ensure that SCG retains
    its leadership in that industry and to motivate them to foster the
    continuing development of the company.

8.  Regularly make a progress report on the results of performance and
    submit it to the Board of Directors after the meetings of the
    Remuneration Committee.

9.  Assess the Remuneration Committee’s performance and report the
    results to the Board of Directors.

10. Should there be any alteration to the Charter, the Remuneration
    Committee shall review and recommend appropriate improvements,
    revisions to the Board of Directors for its resolution in keeping it
    up-to-date and applicable.

11. Perform other duties as assigned by the Board of Directors.

To fulfill its duties under the scope of authority, the Remuneration
Committee is authorized to call for and order the management, head of
offices or employees concerned to give opinions, attend the meetings or
submit the necessary documents. In addition, the committee may seek
external consultations and professional advice from independent
consultants or specialists, as deemed appropriate, at the company’s
expenses.

Top Executives

SCG top executives are empowered with an authority to operate business
under the policy, strategies and goals directed by the Board of
Directors, which approves a clear and definite scope of responsibilities
to ensure transparency and flexibility of operation.

The eight members of top executives have no forbidden qualification as
following:

1. Never dishonestly committed an offence against property.

2. Never entered into any transaction which may cause conflicts of
interest against SCG during the year.

(2) Election of Directors and Executives

  Election of Directors

Rules and procedures for the election of directors are as follows:

1.  The Governance and Nomination Committee proposes the names of
    persons to replace directors who are retired by rotation to the
    Board for consideration prior to the ordinary general shareholders
    meeting for election during the meeting. All shareholders have an
    equal right to propose other candidates, since the authority to
    choose directors rests with the shareholders.

2.  In case the number of candidates nominated for directors does not
    exceed the number of directors required for that election, the
    meeting shall elect all of them as directors.

3.  In case the number of candidates nominated for directors exceeds the
    number of directors required for that election, it shall be decided
    by vote at the shareholders’ meeting. The shareholders may elect the
    candidates nominated for director, but not exceeding the number of
    directors required for that election and the directors shall be
    individually elected. Each shareholder or proxy shall have one vote
    for each share he/she holds or represents for the election of each
    director. The candidates shall be ranked in descending order from
    the highest number of votes received to the lowest, and shall be
    appointed as directors in that order until all of the director
    positions are filled. If the votes cast for candidates in descending
    order are tied, which would otherwise cause the number of directors
    to be exceeded, the remaining appointment shall be made by the
    chairman of the meeting who shall cast the deciding vote.

At the 2008 ordinary general meeting of the shareholders, the four Board
members who due to retire by rotation were 1) Mr. Sumet Tantivejkul 2)
Mr. Yos Euarchukiati 3) Mr. Pricha Attavipach and 4) Mr. Kan Trakulhoon.
According to the company’s Articles of Association, one-third of the
directors must retire from the office and the director who has longest
serving shall retire. In nomination process, each director has proposed
appropriate persons to the Governance and Nomination Committee.
Selection of nominees was made by the Governance and Nomination
Committee, chaired by Mr. Arsa Sarasin and excluded Mr. Sumet
Tantivejkul who was due to retire by rotation. Five qualified persons
were nominated, four of which were former directors and the other was
proposed by the shareholders in compliance with shareholders’ right to
nominate candidates for directorship positions. The Governance and
Nomination Committee nominated four qualified nominees namely, 1) Mr.
Sumet Tantivejkul 2) Mr. Yos Euarchukiati 3) Mr. Pricha Attavipach and
4) Mr. Kan Trakulhoon, all of which were elected by the majority votes
as per the resolution passed in the ordinary general meeting of
shareholders held on March 26, 2008.

Selecting top executive replacements

  The top executive nomination process for SCG starts with selecting
  talented and ethical people. The Group seeks young talent with the
  potential to develop into senior management. Selection includes a
  number of stages, each with an assessment of such considerations as
  integrity, leadership qualities, and management capabilities. The
  outstanding employees who demonstrate high potential will have an
  individualized development plan that includes challenging job
  assignments and job rotation throughout the organization to ensure
  they gain a broad knowledge and understanding as a result they are
  properly prepared to replace the positions at all level that may
  become vacant. The Board of Director will select employees who show
  the greatest potential and have the appropriate credentials for the
  placement in top executive positions.

(3) Director and Executive Remuneration

Director Remuneration

  In the eleventh ordinary general meeting of shareholders held on March
  24, 2004, a resolution passed concerning the remuneration and bonus of
  directors. Monthly remuneration for all directors was set at Baht
  1,800,000 and shall be distributed amongst the directors in such
  manner they may themselves consider appropriately. Regarding bonuses,
  permission was granted that the Board itself would determine the
  appropriate amount, but that amount cannot exceed 0.5 percent of total
  dividends paid to shareholders and shall be distributed amongst the
  directors in such manner they may themselves consider appropriately.
  This would be in effect from the day the resolution was passed by a
  vote of the shareholders onwards until the shareholders’ meeting
  determined otherwise.

The Apportionment of Board Remuneration and Bonuses

Monthly Remuneration

The Board of Directors passed a resolution to pay the chairman a 1.5
portion, or Baht 216,000 per month, and the other eleven board members 1
portion, or Baht 144,000 per month.

Director Bonuses

The Board of Directors passed a resolution to pay the chairman a bonus
of 1.5 portion and each of the other eleven board members bonuses of 1
portion of total bonuses as approved in the shareholders’ meeting.

Remuneration for the Committees

  The Board of Directors passed a resolution to remunerate members of
  the committees on the basis of fixed fee and attendance fee, as
  follows:

+---------------------------------+------------------+-----------------+
|                                 | Annual fixed fee | Attendance fee  |
|                                 | (Baht)           | (Baht)          |
+---------------------------------+------------------+-----------------+
| The Audit Committee             | 96,000           | 24,000          |
|                                 |                  |                 |
|   Chairman                      | 64,000           | 16,000          |
|                                 |                  |                 |
|   Director                      |                  |                 |
+---------------------------------+------------------+-----------------+
| The Governance and Nomination   | 72,000           | 18,000          |
| Committee                       |                  |                 |
|                                 | 48,000           | 12,000          |
|   Chairman                      |                  |                 |
|                                 |                  |                 |
|   Director                      |                  |                 |
+---------------------------------+------------------+-----------------+
| The Remuneration Committee      | 72,000           | 18,000          |
|                                 |                  |                 |
|   Chairman                      | 48,000           | 12,000          |
|                                 |                  |                 |
|   Director                      |                  |                 |
+---------------------------------+------------------+-----------------+

  The chairman of the committees’ remuneration gets 1.5 portion while
  each member of the committees get 1 portion.

The Remuneration for the Board of Directors and the Committees in 2008

  (Baht)

  -------------------- -------------- ----------- ------------ -------------- ------------ ------------
  Directors            Remuneration                                           Directors’   Total
                                                                              bonus paid   
                                                                              in 2008      

                       The Board of   The Audit   The          The                         
                       Directors      Committee   Governance   Remuneration                
                                                  and          Committee                   
                                                  Nomination                               
                                                  Committee                                

  1. Mr. Chirayu       2,592,200      -           -            -              5,840,000    8,432,000
  Isarangkun Na                                                                            
  Ayuthaya                                                                                 

  2. ACM Kamthon       1,728,000      240,000     -            -              4,160,000    6,128,000
  Sindhvananda                                                                             

  3. Mr. Snoh Unakul   1,728,000      -           108,000      -              4,160,000    5,996,000

  4. Mr. Sivavong      1,728,000      -           -            198,000        4,160,000    6,086,000
  Changkasiri *                                                                            

  5. Mr. Sumet         1,728,000      144,000     162,000      -              4,160,000    6,194,000
  Tantivejkul                                                                              

  6. Mr. Pricha        1,728,000      160,000     -            -              4,160,000    6,048,000
  Attavipach                                                                               

  7. Mr. Panas         1,728,000      -           108,000      -              4,160,000    5,996,000
  Simasathien                                                                              

  8. Mr. Yos           1,728,000      -           -            132,000        4,160,000    6,020,000
  Euarchukiati                                                                             

  9. Mr. Arsa Sarasin  1,728,000      -           108,000      -              4,160,000    5,996,000

  10. Mr. Chumpol      1,728,000      -           -            132,000        4,160,000    6,020,000
  NaLamlieng                                                                               

  11. Mr. Tarrin       1,728,000      160,000     108,000      -              2,660,000    4,656,000
  Nimmanahaeminda                                                                          

  12. Mr. Kan          1,728,000      -           -            -              4,160,000    5,888,000
  Trakulhoon                                                                               

  Total                21,600,000     704,000     594,000      462,000        50,100,000   73,460,000
  -------------------- -------------- ----------- ------------ -------------- ------------ ------------

  Notes:

  No.1 = Chairman of the Board of Directors

  No.2 = Chairman of the Audit Committee

  No.4 = Chairman of the Remuneration Committee

  No.5 = Chairman of the Governance and Nomination Committee

  * Mr. Sivavong Changkasiri passed away on March 8, 2009

Executive Remuneration

  The total remuneration for eight executives in the form of salaries
  and other compensation such as bonuses and variable pay amounted to
  102,722,000 Baht. For 2008, the company made the contributions of
  6,461,300 Baht to the provident fund for the executives, being the
  company’s employees.

The Remuneration for the directors and executives of subsidiaries, which
are SCG’s core businesses (as at the year ended December 31, 2008)

1.  Director Remuneration listed accordingly to the core businesses:

  Directors of the core businesses, which encompass SCG Chemicals, SCG
  Paper, SCG Cement, SCG Building Materials and SCG Distribution, are
  the executives who are not subjected to remuneration paid for being
  the directors. Names of the directors in each business are listed
  here.

+--------------------------------+-------------------------------------+
| SCG Chemicals Co., Ltd.        | SCG Building Materials Co., Ltd.    |
+--------------------------------+-------------------------------------+
| 1)  Mr. Kan Trakulhoon *       | 1)  Mr. Kan Trakulhoon *            |
|                                |                                     |
| 2)  Mr. Pramote Techasupatkul  | 2)  Mr. Kajohndet Sangsuban         |
|                                |                                     |
| 3)  Mr. Roongrote Rangsiyopash | 3)  Mr. Pramote Techasupatkul       |
|                                |                                     |
| 4)  Mr. Chonlanat Yanaranop ** | 4)  Mr. Roongrote Rangsiyopash      |
|                                |                                     |
| SCG Paper Public Company       | 5)  Mr. Pichit Maipoom **           |
| Limited                        |                                     |
|                                | SCG Distribution Co., Ltd.          |
| 1)  Mr. Kan Trakulhoon *       |                                     |
|                                | 1)  Mr. Kan Trakulhoon *            |
| 2)  Mr. Kajohndet Sangsuban    |                                     |
|                                | 2)  Mr. Pramote Techasupatkul       |
| 3)  Mr. Pramote Techasupatkul  |                                     |
|                                | 3)  Mr. Damri Tunshevavong          |
| 4)  Mr. Damri Tunshevavong     |                                     |
|                                | 4)  Mr. Chonlanat Yanaranop         |
| 5)  Mr. Pichit Maipoom         |                                     |
|                                | 5)  Mr. Pichit Maipoom              |
| 6)  Mr. Chonlanat Yanaranop    |                                     |
|                                | 6)  Mr. Roongrote Rangsiyopash      |
| 7)  Mr. Roongrote Rangsiyopash |                                     |
|                                | 7)  Mr. Kajohndet Sangsuban **      |
| 8)  Mr. Chaovalit Ekabut **    |                                     |
|                                | Remark * Chairman                   |
| SCG Cement Co., Ltd.           |                                     |
|                                | ** President                        |
| 1)  Mr. Kan Trakulhoon *       |                                     |
|                                |                                     |
| 2)  Mr. Kajohndet Sangsuban    |                                     |
|                                |                                     |
| 3)  Mr. Pichit Maipoom         |                                     |
|                                |                                     |
| 4)  Mr. Damri Tunshevavong     |                                     |
|                                |                                     |
| 5)  Mr. Roongrote Rangsiyopash |                                     |
|                                |                                     |
| 6)  Mr. Pramote Techasupatkul  |                                     |
|     **                         |                                     |
+--------------------------------+-------------------------------------+

2.  The total remuneration for executives of subsidiaries which are
    SCG’s core business

1)  Remuneration paid as money such as monthly salary, bonus and
    variable payment

2)  Other compensation such as provident fund contributions. Details of
    other remuneration are as follows:

  ---- --------------------------- ------------ --------------- --------------
       Subsidiaries which are core Number of    Total           Other
       businesses                  executives   remuneration in compensation
                                                the form of     (Baht)
                                                money (Baht)    

  1.   SCG Chemicals Co.,Ltd.      4            14,344,250      1,000,800

  2.   SCG Paper PLC               4            12,334,500      940,200

  3.   SCG Cement Co.,Ltd.         4            20,276,400      1,407,840

  4.   SCG Building Materials      4            12,434,850      914,760
       Co.,Ltd.                                                 

  5.   SCG Distribution Co.,Ltd.   4            11,844,400      885,960
  ---- --------------------------- ------------ --------------- --------------

Note: Number of executives and remuneration for the above-mentioned executives, excluding the presidents of subsidiaries that are the SCG’s core businesses, included the number and remuneration of the top executives of the Siam Cement Public Company Limited, as appeared under Executive Remuneration section

(4) Principles of Good Corporate Governance

SCG conducts business with responsibility and fairness, adheres to the
long-practiced principles defined by the ethical framework, constant
improve appropriately with changes in the economy and society, while
balancing the sustainable benefits of all stakeholders.

SCG considers corporate governance to be a part of its business policy
as the company’s Board of Directors has agreed that monitoring and
evaluation be performed annually. Also, improvements, amendments and
changes have been made in accordance with the changing economic and
social situation. The Board of Directors has assigned the Governance and
Nomination Committee to take charge of corporate governance matters as
well as to consider trends and movements at the international level. For
example, the rules and practices of the world’s leading companies and
stock exchanges are compared with those of SCG in order to find areas
for improvement. The Board of Directors, moreover, specifies corporate
governance as one of the main items on the agenda at the Board of
Directors’ meeting. The company also prepares booklets for SCG Corporate
Governance policies and SCG Code of Conduct to distribute to its
employees with activities to create clear understanding for effective
practice. Those interested are welcome to study the content and details
shown on SCG’s website, www.scg.co.th

In 2007, SCG updated SCG Code of Conduct by adding guidelines of each
business, examples, clearer practices, and setting up the Whistleblower
Policy, in order to protect an employee who files a complaint or reports
improprieties or suspected violations of laws, rules, regulations, and
SCG Code of Conduct. Moreover, a working team responsible for devising
the policies and providing consultancy regarding SCG Code of Conduct has
been formed, chaired by SCG Vice President & CFO, while top management
from functions responsible for matters regarding to ethics and
representatives from the businesses act as a team member. The working
team will monitor the performance and give an advice on concerning
issues. Moreover, the internal Audit Office is also responsible for
channels to receive any complaint and the Whistleblower Policy. In 2008,
the working team has monitored the performances and consultancies
relating to SCG Code of Conduct and reported to the Governance and
Nomination Committee on a regular basis, in order to enable all
practices to be well in line with SCG Code of Conduct.

SCG sees its corporate governance and SCG Code of Conduct as essential
guidelines for the organization; therefore, the emphasis is strongly
laid upon principles and practices concerning responsibility and
fairness towards all stakeholders. The principles include a clear
outline of the structure, components, duties, independence and the
performance of the Board of Directors, transparency of information
disclosure, a strict auditing system and risk management policies. These
build trust and create additional value among the shareholders. SCG has
disclosed information regarding this matter through various media, for
instance, annual report, 56-1 form, websites of the Stock Exchange of
Thailand (SET) and of SCG to allow easy access to the information
through a greater variety of channels for the stakeholders. In addition,
the stakeholders will have the opportunity to participate in
strengthening operating results by communicating their thoughts to
Investor Relations Department via e-mail, invest@scg.co.th. Suggestions
made will be carefully considered prior to reporting to SCG top
executives and the Board of Directors.

Guideline of SCG Corporate Governance

The Rights of Shareholders

SCG ensures that the shareholders are entitled to all basic rights at
acceptable and trusted standards: the rights of investors in the stock
exchange and the rights of owners of the company, for instance, the
right to buy new shares, sell or transfer their own shares, the right to
receive dividends from the company, the right to attend the
shareholders’ meeting, the right to express opinions freely, the right
to make decisions on important affairs of the company e.g. the
nomination of directors, approval of significant transactions
influencing the direction of the company, amendment of Articles of
Association and regulations of the company, etc. Shareholders have the
right to vote at meetings according the number of shares owned by each
shareholder, whereby one share is for one vote and no particular share
allows them privilege to limit the rights of other shareholders.

Apart from the above mentioned rights of the shareholders, SCG has
carried out the following tasks to encourage and facilitate shareholders
in the exercising of their rights.

1.  Provide essential, clear and up-to-date information for shareholders
    regarding the company’s business. Even though some information is
    not required to be disclosed by law, if SCG considers that it is of
    significance to the shareholders, the company will notify the
    shareholders of the information through SCG’s website and SET.

2.  Prior to a meeting, each shareholder will receive significant and
    sufficient detailed information concerning the date and the agenda.
    This will be posted on SCG’s website around two months before
    sending out the documents. The shareholders’ right to attend the
    meetings and the right to vote on resolutions will be mentioned in
    the notice to shareholders.

3.  In cases where the shareholders are unable to attend the meetings,
    they are entitled to appoint a representative e.g. an independent
    director or a person to act as their proxy, using any proxy form
    attached to the notice of the meeting. The company has prepared the
    proxy forms in compliance with the specifications defined by the
    Ministry of Commerce in which the shareholders can exercise their
    voting rights as wished. These forms can also be downloaded from
    SCG’s website. Shareholders who arrive after the meeting has
    commenced are able to vote on the agenda item being considered
    provided that a resolution is not yet made. They shall constitute
    part of the quorum starting from the agenda item that they are in
    attendance and exercise their voting rights unless the meeting
    states otherwise.

4.  Prior to the meeting, one or several shareholders holding in
    aggregate of at least 5% of all the issued shares of the company
    have the right to suggest issues for the agenda of the ordinary
    general meeting of shareholders. For 2009, the shareholders were
    allowed to exercise such right from November 5 to December 4, 2008
    so that the Governance and Nomination Committee could screen the
    issues before presenting them to the Board for consideration. Should
    the proposed issue be included on the meeting agenda, the company
    shall specify in the notice of the meeting that the agenda item was
    proposed by a shareholder. However, in case the proposed issue is
    rejected, the company shall inform shareholders of the reasons at
    the ordinary general meeting of shareholders. Moreover, any
    shareholder is entitled to nominate any qualified candidate for the
    election of the Board member in advance. The Governance and
    Nomination Committee shall consider the proposed nominees together
    with other nominated persons according to the company’s criteria on
    the nomination of directors. The committee then presents the
    nominees to the Board for consideration before proposing them to the
    shareholders’ meeting for approval.

5.  For shareholders’ convenience, on the date of the meetings, the
    company provides an electronic system for registration to speed up
    the process. The barcode will show each shareholder’s reference
    number which is included in the proxy form. In addition, for every
    vote, the company will collect the ballot paper from the shareholder
    in order to calculate the result of the vote. After the meeting, the
    shareholders are entitled to verify.

6.  At the ordinary general meeting of shareholders each year, one-third
    of the directors must retire from office on a rotation basis and the
    election of directors to replace those retired directors takes
    place. In the election, the Board shall inform the shareholders that
    in cases where the nominated persons do not exceed the number of
    directors required for that election, all of them shall be elected
    as directors. However, if the numbers of candidates exceed the
    number of directors required, each candidate is then elected
    individually. During the meeting, shareholders are entitled to
    propose the name of an individual for directorship of the company.

7.  At the meetings, shareholders are allowed to freely express their
    opinions, give suggestions, and raise questions on any agenda item
    before casting votes to ensure that shareholders have sufficient
    detailed information on the matters. Should shareholders have
    questions or inquiries, specialists in specific fields are available
    to answer queries under the responsibility of the Board.

8.  For any item on the agenda at the shareholders’ meeting, the
    shareholders can call for vote casting by secret ballots if one
    shareholder makes such request with the approval of five other
    shareholders. The shareholders’ meeting shall resolve to approve the
    vote casting by secret ballots with a majority of votes.

9.  An agenda on the Board’s remuneration is included to inform the
    shareholders of the amount and type of remuneration received by each
    director including meeting allowance and the Board’s bonus. The
    detailed information can be found on page 102-106.

The Equitable Treatment of Shareholders

The company is aware and shall provide equitable treatment to every
individual shareholder, major or minor, as well as institutional or
foreign investors. To that effect, SCG strives to find tools to ensure
equality especially for minor shareholders which are:

Assigning independent directors to take care of minor shareholders

The minor shareholders can contact the independent directors directly to
give suggestions, express opinions or make complaints through e-mail:
ind_dir@scg.co.th. The independent directors are responsible for
handling each matter appropriately. For example, in case of a complaint,
the independent directors shall investigate the matter and seek proper
methods to resolve the matter. On the other hand, if there is a
suggestion that considered affecting the stakeholders or the business
operations, the independent directors shall present it to the Board of
Directors’ meetings for consideration and set it as the agenda item at
the meetings of shareholders.

Internal information control

The Board of Directors has established measures to control the usage and
prevent the misuse of internal information (insider trading) for the
personal benefit of the concerned person, namely the Board of Directors,
SCG top executives and employees working in related departments
(including their spouses and minors).

-   All concerned persons are prohibited from trading the company shares
    for a two-week period prior to and a 24-hour period after the
    release of the company’s quarterly and annual financial statements
    (blackout period).

-   Should they have knowledge of confidential information that could
    have any impact on the company’s share price, they are prohibited
    from trading the company shares until after a 24-hour period from
    the public disclosure.

  Preventing conflict of interest

  The Board has established policies and measures as follows:

  - SCG has a clear and transparent shareholder structure. There is no
  cross-holding of major shareholders, thereby, preventing any conflict
  of interests or transfer of benefits to one party or another. The
  shareholder structure of SCG and its subsidiaries is published in the
  company’s annual report, also the Board member’s common share and
  debentures in SCG and subsidiaries.

  - There is a clear separation of duties and responsibilities of the
  Board, the management, and shareholders, thereby, ensuring no
  overlapping of their duties and responsibilities. The directors or
  executives who may have interests in any agenda under consideration
  must not attend the meeting nor vote on such agenda. This is to ensure
  that the Board and executives make decisions in a fair manner for the
  utmost benefits of shareholders.

  - The company has an established policy governing the use of internal
  information and has incorporated it into employee regulations with
  penalties for the executives or employees in the event the internal
  information is disclosed to the public or used for personal benefit.

The Role of Stakeholders in Corporate Governance

SCG conducts business with the highest responsibility to ensure
sustainable and mutual benefits to all related parties. The Board of
Directors oversees the management system to ensure that the company
acknowledges the right of stakeholders, both as stated by law and as
clearly written in SCG Corporate Governance and SCG Code of Conduct. The
company also ensures that those rights are protected and the
shareholders, employees, customers and business partners are treated
equally.

-   Shareholders: Besides the basic rights of shareholders and the
    rights stipulated by the law and the company’s regulations, such as
    the right to request a determination of the number of shares, the
    right to receive share certificates, the right to attend the
    shareholders’ meetings, the right to vote at the meetings, the right
    to freely express opinions at the shareholders’ meetings, and the
    right to receive a fair return, SCG also gives shareholders the
    right, as being the owner of the company, to make suggestions and
    comments on the company’s affairs to the independent directors. Each
    comment and suggestion will be carefully considered and presented to
    the Board of Directors.

-   Employees: SCG truly believes that employees are the most valuable
    assets and is determined to ensure that every employee is proud of
    and confident in the organization. In the previous year, SCG
    organized activities to promote a collaborative working environment
    to drive innovations and enhance the competence of employees,
    readying them for working overseas and coping with volatile economic
    situations. Furthermore, the company focuses on promoting employees’
    health, safety, as well as excellent working conditions and
    competitive remuneration.

-   Customers: It is of great concern to SCG that customers be provided
    with the maximum benefits in terms of quality and price, and the
    company is determined to develop and maintain sustainable
    relationships with customers. It has set up a support office to
    provide product information, solve problems and receive complaints
    in order to ensure total satisfaction for customers.

-   Business partners: SCG operates its business within a competitive
    context by strictly upholds promises, SCG Code of Conduct and
    commitments to trading partners including quality products and
    on-time delivery.

-   Competitors: SCG operates its business within a competitive context
    by being fair and strictly following the laws and SCG Code of
    Conduct. No dispute with competitors arose during 2008.

-   Creditors: SCG practices under the terms of loans and obligations to
    its creditors such as business creditors and depositors. The
    company, moreover, organizes various projects in order to keep good
    relations with creditors such as debenture relations.

-   Society: SCG pledges to support activities contributing to improving
    the quality of life and benefits of communities and societies where
    SCG operates, both in Thailand and in the ASEAN region. The company
    has provided constant support to socially-beneficial activities,
    particularly youth potential development in the areas of education,
    science, technology, sports, and art. The company’s philanthropic
    efforts also extend to continually making financial contributions in
    support of activities beneficial to society. SCG firmly believes
    that the company’s sustainable success rests with the responsibility
    for the operating results and the commitment to addressing the needs
    of the communities in the fields of economy, society, the
    environment, occupational health, safety, tradition, and culture.
    Moreover, the company encourages its employees and related parties
    in SCG’s businesses to be good citizens, contributing to society and
    the community so that the company grows alongside society and
    community in a sustainable manner.

-   Environment: SCG is committed to environmental stewardship and
    natural resource conservation to ensure a sustainable healthy
    balance of the ecological system. To achieve the goals, the company
    is determined to design and improve production processes, machinery,
    and technology as well as developing environmentally-friendly
    products and services. The emphasis is also placed on conserving the
    environment through the 3Rs concept (Reuse, Reduce/Recycle, and
    Replenish). A clear environmental conservation plan has been put in
    place with on-going performance assessment. The company commits
    itself to environmental stewardship to live in harmony with the
    community in a sustainable way. Chief among the efforts is the “SCG
    Conserving Water for Tomorrow” project dedicated to solving the
    problems about water shortage, water excess, and wastewater and to
    mitigating global warming. To date, SCG has constructed over 10,000
    check dams.

Information about SCG social, environmental, and safety activities can
be found in SCG Sustainability Report, which has been published since
2001 and also on www.scg.co.th.

Disclosure and Transparency

SCG realizes the importance of information disclosure as it greatly
affects the decision-making of investors and stakeholders. It is,
therefore, necessary to control and define measures concerning the
disclosure of information, both financial and non-financial. Information
disclosed via the SET Community Portal and SCG’s website shall be
complete, sufficient, reliable and up-to-date, written both in Thai and
in English.

SCG is committed to obeying the law, regulations and obligations
mandated by the Securities and Exchange Commission (SEC), SET and other
related government sectors. Regular amendment takes place to ensure that
the law, regulations and obligations SCG abided by are up-to-date and to
guarantee transparency in conducting business, for example:

1.  Disclose accurate, complete and timely financial information and
    non-financial information.

2.  Prepare the report of the Board’s responsibility for financial
    statements and present it along with the Audit Committee’s report in
    an annual report.

3.  Require the company’s directors, executives, and their persons
    involved to disclose their interests in connection with those of
    SCG.

4.  Disclose procedures about Board selection and its performance
    assessment.

5.  Disclose the performance and attendance record of each member of the
    committee.

6.  Disclose detailed information on the operation and investment
    structure in subsidiaries and associates.

7.  Disclose information on remuneration each director receives as a
    member of the committee.

8.  Disclose the policy on remuneration for the directors and the top
    executives, including forms, types and amount of remuneration for
    each member of the committees.

9.  Disclose the policy on environmental and social responsibilities,
    including the operating results.

10. Report on Corporate Governance policies and the operating results.

Moreover, in 2008, the Board of Directors prepared guidelines on the
disclosure of information related to SCG so as to systematize the
company’s information disclosure and avert any damage caused by improper
disclosure. This reassure shareholders, investors, the general public,
and all stakeholders that SCG is committed to disclosing information
clearly, equitably, and in compliance with the law. To that effect, the
existing practices have been compiled and formulated into SCG’s
Disclosure Policy.

The company has designated the persons responsible for disclosing
non-public information as well as establishing guidelines on disclosure
of different types of information to the public and setting up critical
periods in which extreme caution should be taken prior to the disclosure
of information to the public. The detail of the guideline is available
for the stakeholders and the general public on SCG’s website.

SCG has also formed the Investor Relations Department to contact
institutional investors, shareholders, analysts, and related government
sectors on a fair basis. Should the shareholders require additional
information, they can contact the Investor Relations Department
directly.

The Responsibilities of the Board, Structure, and the Committee

Structure of the Board of Directors

  The Board of Directors comprises nationally accepted knowledgeable and
  competent persons who are responsible for drawing up corporate policy
  and collaborating with the top executives in making the operating
  plans both short-term and long-term plans, including financial policy,
  risk management policy and the organization overview. The Board shall
  play an important role in overseeing, monitoring and assessing the
  performance of the company and the top executives on an independent
  basis.

  The number of directors is currently limited to twelve, comprises
  eleven non-executive directors, which include five independent
  directors and one executive director, being the company’s president.
  The five independent directors must have qualifications as stated in
  SEC’s and the company’s regulations. The president and the five
  independent directors have no connection with any major shareholder.

  The Board has further established the following committees, Audit
  Committee, Corporate Governance and Nomination Committee, and
  Remuneration Committee, to be responsible to their specific areas and
  report directly to the Board for its consideration.

  The Audit Committee comprises five of the company’s independent
  directors, all of which are nationally accepted and have a full
  understanding of and experience in accounting or finance. At least one
  director must have enough knowledge and experience to review the
  trustworthy of the financial report. Their duties include monitoring
  if the operation has been carried out in accordance with the company’s
  regulations as well as the laws and the compliance unit’s regulations.
  Moreover, they are committed to promoting the development of the
  financial and accounting report system to meet international standards
  and to ensure that the company has an appropriate, modern and
  efficient internal control system, internal audit system, and a risk
  management system.

  The Audit Committee acts and expresses opinions freely, with the
  internal Audit Office acting as an operation unit directly reporting
  to the Audit Committee. The Audit Committee also works regularly with
  external auditors, consultants and specialists in law and accounting
  areas. The Audit Committee must set up meetings with the company’s
  external auditor, which exclude the top executives at least once a
  year. In addition, the committee may seek external consultations and
  professional advice from independent consultants or specialists, as
  deemed appropriate, at the company’s expenses.

  The Corporate Governance and Nomination Committee comprises five of
  the company’s directors, all of which are non-executive directors. The
  chairman of the Corporate Governance and Nomination Committee is an
  independent director. The committee is responsible for proposing,
  revising and supervising the company’s corporate governance matters.
  The committee is also in charge of the nomination of persons qualified
  as directors to replace those who are retired by rotation, or whatever
  the case maybe.

  In addition, they revise the performance evaluation system of the
  Board of Directors and other committees and plan the succession of the
  president of the company.

  The Remuneration Committee comprises three of the company’s directors.
  The committee is responsible for monitoring and studying changes and
  trends in the remuneration of the Board of Directors and SCG top
  executives to suggest remuneration policies as incentives to lead the
  company towards prosperity as well as to create loyalty among smart
  and ethical employees.

  Nonetheless, each committee has the rights and duties as specified by
  each committee’s regulations. An evaluation of performance and a
  revision of the operation results of committees are conducted
  annually, at least once a year. The Board of Directors, moreover, are
  entitled to form other committees suitable for changing situations.

  Separation of the Roles and Responsibilities of the Board of Directors
  and the Top Executives

  The company has made the unambiguous separation of the roles and
  responsibilities of the Board of Directors and the top executives. The
  Board shall be responsible for establishing the policies and
  overseeing the management’s implementation of those policies. The top
  executives, on the other hand, shall be responsible for implementing
  the policies formulated by the Board, and ensuring that these are
  carried out as planned.

  The chairman shall not be the top executive and shall not participate
  in the management of SCG’s business nor shall he be authorized to sign
  to bind the company. This is to clearly define separate roles between
  supervision of the company’s overall policy and management of the
  business.

  SCG top executives comprise eight executives including SCG President &
  CEO, SCG Vice President & CFO, and President of each business unit:
  SCG Chemicals, SCG Paper, SCG Cement, SCG Building Materials, SCG
  Distribution, and SCG Investment who report directly to SCG President
  & CEO. The eight executives are authorized to manage the company’s
  operations in accordance with the policies set by the Board, take
  responsibility for the company’s operating results, control expenses
  and capital expenditures limits as approved by the Board in the annual
  operating plan, manage human resources in line with the prescribed
  policy, resolve problems or conflicts that affect the company, and
  maintain effective communication with the stakeholders.

Board of Director’s Meetings

  It is the duty of a member of the Board to constantly attend the
  Board’s meetings to acknowledge and make decisions on SCG’s
  operations. The Board holds eight scheduled meetings per year,
  providing that the agendas are set clearly in advance prior to each
  meeting. In addition, special meetings to consider and determine on
  the urgent matters can be organized.

  At the meetings, the chairman and the president of the company jointly
  determine which items on the agendas are relevant to the meetings.
  Every individual member of the Board is entitled to propose the agenda
  items.

  In 2008, the Board held ten meetings, eight scheduled meetings and two
  special meetings. Prior to each meeting, all members received the
  agendas and supporting documents well in advance to allow adequate
  time for preparation. When considering the matters presented to the
  Board, the chairman of the Board presides over and duly conducts the
  meetings. All members of the Board are allowed to express their
  opinions freely. Resolutions are passed with a majority vote,
  providing that one director is eligible for one vote. A director with
  any interest in the issue under consideration or a director ineligible
  to vote is excused and/or is absent during voting. In case of a tied
  vote, the chairman of the meeting will vote and give the binding
  result.

  SCG executives are encouraged to attend the Board’s meetings to
  provide updated information to the Board, and to learn directly about
  the Board’s initiatives and policies for effective implementation.
  However, the executives are not allowed to attend the Board’s
  exclusive meetings, inclusive of non-executive directors in certain
  cases, to ensure independent discussion.

  In addition, the Board attaches significance to managing conflict of
  interests of the concerned parties with prudence, fairness, and
  transparency. The information shall also be fully disclosed. Any
  director having interests in the matter under consideration must not
  be involved in the decisions and approval process.

  After the meeting, the Corporate Secretary is responsible for
  preparing the minutes, and sending the copies to the directors. The
  minutes must then be approved at the first agenda of the following
  Board’s meeting which is duly signed by the chairman.

  Directors may make comments, corrections, or additions to ensure the
  greatest accuracy and completeness.

  After approval, minutes of the meeting are stored securely in the
  Corporate Secretary Office together with all related documents backed
  up electronically to facilitate data searches.

The Secretary to the Board of Directors and the Corporate Secretary

The Secretary to the Board

  The Board appointed Mr. Worapol Jennapar as the Secretary to the Board
  of Directors responsible for providing advice to the Board regarding
  the performance of duties in compliance with the law, preparing the
  minutes of the Board’s meetings and attending every Board’s meeting.
  The appointed Secretary to the Board is deemed by the Board to be
  highly knowledgeable and experienced, allowing him to provide advice
  to the Board in following laws, rules, regulations, and SCG
  CorporateGovernance.

The Corporate Secretary

  The Board resolved to appoint Mr. Amnuay Apichainun as the Corporate
  Secretary responsible for organizing the meetings of the Board,
  committees, and shareholders. The Corporate Secretary is also in
  charged with preparing the minutes of the Board’s meetings, the
  minutes of shareholders’ meetings, and annual reports as well as
  filing documents as stipulated by law. The appointed Corporate
  Secretary is deemed by the Board to be appropriate as he is
  knowledgeable in managing corporate secretarial work, having served as
  the director of the Corporate Secretary Office which supports the
  corporate secretarial work to comply with the laws, rules,
  regulations. In addition, the Corporate Secretary is responsible for
  conducting SCG Corporate Governance.

Remuneration for the Board and the Executives

  SCG sets appropriate remuneration for members of the Board and the top
  executives at rates comparable to those of leading listed companies in
  SET or other top companies in the same industries. Remuneration for
  the Board is also considered by SCG’s operating results before
  proposing for approval in the shareholders’ meeting. Remuneration for
  the top executives is set by the Board of Directors, based on their
  responsibilities, performance, and the operating results of each
  business.

  In addition to basic salary, SCG sets bonuses and variable pays for
  the directors according to guidelines approved by the shareholders’
  meeting, and the payments for the top executives is based on their
  performance and the operating results of each business. The
  remuneration payment method correlates with the employees’
  performance, thus reflecting the company’s operating results.

  Details of remuneration for the Board of Directors, both monthly
  payment and annual bonus, as approved by the shareholders’ meeting,
  including the remuneration for member of the committees in 2008 are
  reported individually on page 102-106.

Performance Appraisal and Knowledge Enhancement

  Performance Appraisal of the Board

  To enhance capabilities of the Board’s and the committees, the company
  requires continuous assessment of performance, involving two kinds of
  assessment, self-assessment by each individual director and assessment
  of the entire Board as a whole. The results of assessment are reviewed
  with the intention of finding ways for the continual improvement of
  the Board’s performance.

  SCG prepared a booklet for directors, which includes the summary of
  law, rules and regulations related to the directors. The booklet is
  distributed to all current and new directors for their basic
  information.

  For new directors, the Director Induction Program was established to
  facilitate the prompt performance of the duty of the new directors.
  SCG has commissioned the Secretary to the Board and the Corporate
  Secretary coordinate the work in three areas:

1.  To compile the necessary information for directors to ensure their
    compliance with law, rules, and regulations related to the
    directors.

2.  To provide important information essential for the directors’
    performance of duty for use as quick reference.

3.  To arrange a meeting with the chairman, directors, the executives or
    head of each function to learn and exchange opinions on matters
    relating to SCG’s detailed information.

  Moreover, SCG encourages all members of the Board and the top
  executives to attend various seminars and courses beneficial to their
  responsibilities, allowing them to constantly meet and exchange
  opinions with directors and the top executives of different
  organizations. Some of these courses are organized by SCG Academy, and
  some are by governmental agencies or by independent organizations,
  such as Thai Institute of Directors Association. SEC requires
  directors of all listed companies to complete at least one of the
  following training courses: Directors Certification Program (DCP),
  Directors Accreditation Program (DAP) or Audit Committee Program
  (ACP). Experiences gained from these courses are useful for SCG’s
  development.

  To support the Board’s responsibilities, SCG has appointed the
  Secretary to the Board to work in coordination with the Board and the
  top executives. In addition, the Corporate Secretary is responsible
  for overseeing legal matters, relevant standard practices and
  activities of the Board to ensure the implementation of the Board’s
  resolutions.

  Performance Assessment of SCG President and Top Executives

  The Board and the Remuneration Committee assess the performance of the
  president based on the company’s operating results, implementation of
  the Board’s policies, and the overall socio-economic circumstances.
  The Remuneration Committee will then consider the appropriate
  remuneration for the president and propose such amount to the Board
  for approval, taking into account the following factors:

  1. The business units’ operating results based on the percentage of
  EBITDA on Operating Assets (the standard rate is no less than 15%).
  The target EBITDA percentage for each business unit under SCG shall be
  set forth every year for the assessment and comparison purposes.

  2. The operating results of the business unit compared to those of
  other companies in the same industry, both locally and
  internationally.

  3. Business development capabilities.

  In addition, a survey on manager-level employees’ opinions to the
  president and the top executives has been included into the
  consideration of the Remuneration Committee.

Nomination of Board Members

  The Governance and Nomination Committee is responsible for selecting
  qualified candidates to replace the directors retiring on rotation at
  the end of their terms, or whatever the case maybe, and proposing a
  list of nominees to the Board for resolution at the following
  shareholders’ meeting. The Governance and Nomination Committee selects
  the candidates with credentials in a wide range of professions, great
  leadership, breadth of vision, a proven record of ethical and
  integrity.

  Furthermore, the Governance and Nomination Committee shall consider
  the personal qualities of the candidates for the committees’ members
  as follows:

  • Integrity and accountability

  • Informed judgment

  • Maturity and stability, being a good listener and capable of
  expressing opinions differently and independently

  • Commitment to work principles and professionalism

  Special expertise and certain knowledge required for the Board are
  also taken into consideration so that the Board can formulate
  strategies and policies and oversee implementation of the strategies
  effectively.

Internal Controls and Internal Audit

Internal Controls

  SCG attaches importance to internal controls and internal audit. The
  company defines and develops an efficient and effective internal
  controls system according to international standards in terms of
  internal environment, risk assessment, control practices, information
  technology and communication systems, and continuous monitoring and
  assessment. The organizational structure is created to suit a business
  plan, with clear responsibility outlines, good corporate governance,
  and systematic risk management. Regulations, guidelines, a procedure
  manual suitable for the business, an efficient and up-to-date computer
  system are provided. Moreover, the Group encourages employees to
  constantly follow the internal controls. These must be regularly
  updated to keep up with the changing business environment. For 2008,
  the efforts are summarized below.

  1. Guidelines toward Sustainable Development

  SCG conducts business with responsibility and fairness. The company is
  committed to accountability to all stakeholders to ensure mutual
  sustainable benefits, a practice that has continued since the
  establishment of the company in 1913. Likewise, contributing to
  society and the environment is part of the corporate culture that has
  long been embraced. In 1991, the company elaborated a written
  environmental policy, which has been constantly updated to reflect the
  changing business environments. Most recently in 2008, “SCG
  Sustainable Development Guidelines” was prepared to provide a
  sustainable development framework encompassing economic, social, and
  environmental issues, giving an overview of the interconnection of
  each department. The guidelines also compile the environmental best
  practices adopted by different departments to ensure more effective
  implementation. The company was included in the Dow Jones
  Sustainability Index and had its standing upgraded from Silver Level,
  in the previous year, to Gold Level.

  2. Good Corporate Governance

  SCG realizes the importance of good corporate governance, therefore,
  it defines concrete policies, procedures, assessment, and appropriate
  performance index in response to the current business situation. These
  such efforts also extend to establishing management structure as well
  as the scope of authority of the Board of Directors and the committees
  to ensure good corporate governance. The Board of Directors has
  established regulations on the Board of Directors, the Audit
  Committee, the Corporate Governance and Nomination Committee, and the
  Remuneration Committee, to define their duties and responsibilities.
  The regulations are constantly updated, the latest being in 2008, to
  comply with the regulations of SEC and SET to move forward to
  international standards and ensure improved more effectiveness and
  efficiency.

  3. Development of Information Technology System

  SCG has an efficient and modern computer system with excellent data
  security. It is used as an operational tool in SCG’s internal
  communication on an accurate and timely basis. Information technology
  has been utilized in various processes from gathering, processing,
  filing, to presenting information, using an advanced computer system
  appropriate for the current business operations. This allows the
  executives to use the information in planning, supervision, and
  assessment systematically, ensuring timely and complete decision
  making, cause analysis, and follow-up.

  4. Collaboration among the Group for Transparency and Verification

  SCG believes in the value and capabilities of its employees as well as
  the internal controls that have been clearly and transparently
  established. This contributes to creating a work environment that
  focuses on disclosure and transparency. Employees are continuously
  developed so they are fully capable in their performance of duty and
  adaptation. The management and work processes are improved so as to
  provide a solid foundation for operations and building upon product
  innovations. The moves have been taken in concerted efforts to ensure
  maximum efficiency and to achieve the goals by setting work processes
  that involve collaboration. SCG Whistleblower Policy, Code of Conduct,
  and Corporate Governance have been formulated to ensure enhanced
  effectiveness and efficiency as well as creating greater benefits for
  SCG’s businesses as a whole.

Internal Audit

The Audit Committee oversees the company’s internal audit to ensure the
independence, fair, and in compliance with business ethics by evaluating
the sufficiency and efficiency of the internal control system as well as
evaluating the risks associated with activities in the company and other
work systems that have material effects on the business operations. This
ensures compliance with the company’s policies and the ever-changing
business circumstances. The goal is to enable operating officers at all
levels to perform their duties efficiently in line with the audit vision
to establish a preventive and timely internal audit whilst adhering to
SCG Code of Conduct and good corporate governance and striding toward
sustainable development. To materialize this vision, the company is
committed to developing and improving a preventive system to bring
concrete benefits to the organization, the details of which are as
follows:

1. Internal Control Instruction This defines the key control areas of
the internal audit encompassing all aspects in business operations:
revenue cycle, expenditure cycle, assets, liabilities, and shareholders’
equity, and business administration cycle. This ensures one unified
internal control standard throughout SCG, enhancing the company’s
efficiency in business operations which has continuously expanded
investment in various businesses. The internal control instruction
provides a guideline for SCG executives in management control, as well
as allowing the operating officers to understand the key control areas
related to their duties and responsibilities. The instruction is
compiled into a manual as well as operating guideline and subsequently
applied to the business operation processes in order to achieve the
business unit’s objective and plan. In addition, this allows SCG to have
an efficient, transparent, and verifiable management system which helps
boost trust and confidence of shareholders, investors, and all
stakeholders and conforms to the principles of corporate governance.

  2. Electronics-Control Self-Assessment (eCSA) More eCSAs were provided
  on website in 2008 including eCSA-Inventory management and
  eCSA-accounting management. The move was intended to expand the
  self-assessment efforts to encompass all work processes, giving the
  supervisors tools to use in management to achieve objectives/goals in
  an efficient and timely manner and in accordance with the policy to
  maintain an optimum level of inventory, an operating approach in the
  light of economic slowdown.

  3. Medium-Term Planning and Key Performance Indicators of Internal
  Audit SCG has defined and improved the Key Performance Indicators
  (KPI) to ensure the continuously enhanced effectiveness and efficiency
  of the internal audit in tune with the established vision. Major
  strategies and missions are to promote and develop the preventive
  internal audit process constructively, using advanced technology, and
  to communicate the audit results to involved parties as case studies.
  Added to these are providing consultations in an independent and fair
  manner with strict adherence to code of conduct; developing the body
  of knowledge and skills; and improving the internal audit quality
  continually in response to the changing technology and business
  environment. The missions also extend to encouraging employees to
  qualify for an internal audit certificate under international
  standards and providing the assessment of internal audit by both
  internal and external organizations.

  4. Development of Computer System Audit A number of audit programs
  have been developed to enhance the preventive efficiency of the
  computer system, for example, the accounts payable audit program to
  ensure accurate information, the ACL Script program to facilitate the
  audit of accounts receivable, and the deferred input tax program to
  conform to the accounting standard. The audit programs to ensure an
  efficient audit system in response to the specific needs of SCG’s
  businesses have also been developed such as the distribution control
  program to prevent faults and damages from failing to meet the product
  delivery terms and conditions as agreed with the customers.

  5. Auditor’s Knowledge Enhancement with Focus on Innovative Thinking
  SCG encourages self-learning and knowledge sharing among auditors
  through the organizing of in-house trainings and seminars on a regular
  basis. Various workshops and idea sharing sessions where auditors
  exchange their audit knowledge and experiences are also organized
  periodically in accordance with the e-Learning approach with focus on
  developing and improving the audit guidelines manual, keeping it
  updated and in line with the changing environments.

  6. Consultation System SCG provides a consultation system via its
  website which is effective in reducing operational weakness points;
  for example, lack of understanding about the regulations has been
  reduced. In 2008, the company formulated and published SCG Code of
  Conduct and Whistleblower Policy to provide channels for employees to
  contact, and make inquiries so as to gain better understanding and
  follow the guidelines accordingly to strengthen the preventive audit
  approach.

Risk Management

SCG ensures an appropriate risk management system that conforms to
international standards is in place by creating SCG Risk Management
manual so that all companies under SCG follow the same common standards
of practice. The assessments of risks cover the areas of economic,
social, and the environment. Those involved in risk management include
the following:

- SCG management is responsible for establishing the overall risk
management policy.

  - The management of each business unit shall appoint their respective
  risk management teams to formulate risk management policies that
  comply with SCG’s risk management policy. The teams are also charged
  with following up risk management and devising business strategies to
  keep up with the changing situations.

  - The business unit’s risk management team is responsible for
  determining material risks, establishing risk appetite and risk
  management measures, following up and developing risk management
  result, and reporting it to the management of the business unit and
  internal Audit Office on a quarterly basis.

  - The Audit Committee assesses the efficiency and effectiveness of the
  risk management process of each business unit through the internal
  Audit Office on a quarterly basis.

Risk management process starts with identify significant risks, assess
their likelihood and impact, prioritize risks, and analyze the
management of such risks, using risk map and control map as tools.
Measures must be taken to manage risks that are not acceptable, keeping
them to an acceptable level.

Moreover, the Audit Committee shall consider and approve of the criteria
about warning signs regarding risk factors proposed by the internal
Audit Office to monitor material risks which may cause damage in the
near future, taking into account financial information together with the
economic, business operating, social, and environmental indexes. To
ensure sustainable development and stable business operations whilst
maintaining leadership position and being a good role model for society,
SCG has embraced the risk assessment concept in which each business unit
must assess the risks associated with the economic, social, and the
environment at least once a year. These efforts will help enhance risk
management efficiency and add value to all stakeholders.

Actions taken in response to incidents of corruption

Corruptions are considered one of significant risks of business
operation that can be minimized with effective controlling measures. SCG
realizes the risk of corruptions and therefore, has set out the
following measures.

  1. Preventive measure SCG adheres to the concept of prevention and has
  set out various preventive measures. These include designing an
  organizational structure that is appropriate for control and business
  operation, preparing written code of conducts and corporate governance
  principle, putting in place an effective internal control, and
  implement control self-assessment (CSA) of all operations, determining
  rules, regulations, effective performance assessment, controlling
  through the budgeting system, effective risk assessment and
  management, and power of attorney system to employees that is
  compatible to their roles and responsibilities. In addition, the
  management has implemented the Whistleblower Policy so that employees
  can partake in minimizing any act of violation within the
  organization.

  2. Auditing process Each supervisor of each level has responsibility
  to prevent and investigate corruptions and errors in the operation
  using the abovementioned tools. Furthermore, the internal Audit
  Office, who works independently from the management, will monitor
  compliance with rules and regulations, assess the effectiveness of the
  internal control, assess corruptions risks, monitor risk signals which
  may lead to corruptions and report any corruption case to the
  management, which will further assign an investigation committee to
  see to the matter.

  3. Equitable treatment Corruptions investigation regulations stipulate
  that an investigation committee be assigned to investigate the facts
  of the case. In order to ensure equitable treatment, the committee
  should comprise members from various departments namely; the
  respondent’s supervisor, representatives from Human Resources
  Division, Legal Office and Audit Office. If corruption has been
  proven, this committee will submit to the Human Resources Committee
  for imposing the penalty in accordance to the employees’ rules and
  regulations. In addition, fair treatment will be accorded to the
  whistleblower by providing appropriate protection measures.

  4. Using the case study in a beneficial context After a corruption
  case has been concluded, preventive measures and regulations are
  established to redress the weaknesses that arose from the corrupt act.
  This course of action is meant to serve as a learning and prevention
  process. In addition, the Audit Office will educate employees at
  supervisory and management levels with details of the case while the
  names of concerned persons and departments will be withheld in order
  to minimize the recurrence of such corrupt acts.

As a result of implementing these procedures and standards established
by SCG, no significant act of corruption was identified during 2008.
This is also due to the ability of the concerned departments to detect
opportunities and trends, which may give rise to corrupt acts, before
any serious damage could occur; including the clarity and concise nature
of the existing standard procedures that help provide an effective
measure in managing and reducing the occurrence of such acts.

Information Dissemination Channels

SCG places great importance to transparency and full disclosure of
significant financial, operational, and other relevant information that
is accurate, complete, and timely. In addition to fulfilling legal and
SET reporting requirements, the Group has established a broad
infrastructure of dissemination channels to reach interested parties,
including the following:

  - Investor Relations Department to be responsible for direct
  communication with both local and international investors

  - Press conferences on a quarterly basis to announce operating results
  and press briefing regularly to announce significant investment
  projects and activities

  - Conference to announce quarterly operating result to investors and
  analysts

  - Activities to disseminate the policy and operational guideline to
  its employees

  - Activities to meet both local and international investors and other
  stakeholders

  - Speaking opportunities to share knowledge in national and
  international forum

  - Company and plant visits for shareholders, investors, analysts, NGO,
  communities, and the media

  - Systematic distribution to the media of press releases, captioned
  photographs, news scoop, and advertisement

  - Periodical publications and media, such as annual report,
  sustainability report, debenture holder journals, customer journals,
  dealer journals, and employee journals

  - Information dissemination to employees via electronics media such as
  Intranet, webboard, and e-mail

  - Website: www.scg.co.th

Report on Information Technology Application

In 2008, SCG continued to focus on the use of IT to enhance its business
potential and work efficiency, to gain competitive edge, and to provide
better services to customers. Details are summarized below.

The Group has renewed the IT outsourcing agreement, whereby the service
level agreement was tightened, the process was improved to meet
international standards and additional system management equipment was
acquired to ensure that the IT system can respond to the business needs
on a continual basis and would not in any way obstruct business
operation.

The procurement system was improved to enhance the visibility of the
process by the use of strategic sourcing-related technology in the
analysis and planning of the supply process. This will enable the Group
to have a procurement system that matches with demand, market, and
competitive production cost.

SCG Distribution has switched to the paperless documentation system, by
connected to the export-import system of the Custom Department which
reduced the steps and time of the custom workflow through ports and
frontiers. Consequently, goods are delivered to the customers in a
shorter period.

In addition, to enhance the supply chain management of SCG Paper, the
Production Planning and Scheduling and the Order Management systems were
put in place in order to ensure that production lead time fits
customers’ demands, enhancing the inventory management and cost-saving.

 (5) Internal Information Controls (Page 110)

 (6) Human Resource 

Throughout it’s over 90 years of operation, SCG consistently steps up to
the front line of the business while continuously generates attractive
return to shareholders. With the global economic crisis, current rigid
competition circumstance and the way to get competitive advantages has
been changed from focusing on cost saving to differentiate products and
services, SCG arranges strategies to achieve goal for the incoming 5
years as follows.

1.  Become a regional leader in ASEAN.

2.  Develop products and services which generate value added to SCG.

According to the strategies, human resource is a critical factor in the
organizational success. Therefore, SCG has improved the human resource
management in correspondence with business strategy. The Company draws
up tactics to foster the success by planning for the next 5 years as
following:

1.  Human resource preparedness to support the future investment

    1.  Arrange manpower to serve an expansion

  Other than the readiness in the terms of expatriate staffs and the
  allocation of local staffs to support the oversea business’s
  expansion, SCG also builds the brand to be recognized as employer of
  choice by generating the campus recruitment in leading education
  institutions, offering scholarships to students and local staffs for
  graduate to doctorial degree, and building strong relationship with
  the government, private sector, community, and leading corporate of
  the invested countries. Moreover, SCG arranges quarterly meeting with
  SCG coordinator of each country to make sure that the company’s policy
  on human resource management has been applying accordingly. Such
  meeting opens up additional information exchange channel in terms of
  business and human resource as a way of employee’s care of both local
  and expatriate staffs.

2.  Employee capability development

  SCG focuses on creating atmosphere that allows employees to be
  inspired and learned through training sessions, knowledge sharing
  activities, knowledge improvement programs, and in-work experience.
  Employees would have attitude and behavior that suits the company as
  well as broaden their knowledge, skills and visions that enable them
  to adapt to constant changing environment both local and oversea. As a
  preparation for oversea expansion, SCG improves staff’s ability in
  working at international stage by teaching them language, culture, and
  business norms of each country through Cross-Cultural Exclusive
  Development programs and international business practice program.
  Furthermore, SCG has developed SCG Orientation International Program
  for local staffs to understand the SCG’s business strategy and
  promoting the proud of being SCG employees and building working
  network. For top managements, SCG has a policy that requires them to
  have working experience in foreign countries.

3.  Modification on human resource management to encourage for working
    overseas

  Aims to have same standard of human resource management with SCG and
  also suitable for different cultures, the overseas companies have
  implemented e-HR management software. SCG brings best practices, such
  as introducing SCG Career Camp projects, monitoring employees through
  HR committee, and applying HR development methods e.g. TQM, TPM,
  Safety to the overseas companies in order to illustrate its intention
  of sustainable and long-term investment and boost working
  effectiveness. Also, the intentioned programs allow local staffs to
  have career growth opportunity in the same playing field with others
  throughout SCG. The HR system platform is a key that allows HR system
  to be applied in foreign countries much more effectively.

2.  Encourage new culture lead to innovative organization

    1.  Change the culture into innovative organization

  Through diverse activities, SCG aims to promote and alter working
  culture to be known as innovative organization as well as changing its
  employee’s working behavior. Every employees is required to adhere to
  SCG Business Philosophy and Code of Conduct which are guidelines for
  practices and also courageous to think and talk as well as having
  opened-mind and ability to change in order to create Innovative
  Workplace environment. SCG also initiated various activities such as
  Inno Award, Inno Idea Tank, Book Brief, and Eager to Learn. In
  addition, SCG sees the importance of adding number of researchers in
  subjects which are related to business direction because these staffs
  are the critical mass in driving innovation policy to be in effect
  rapidly.

2.  Develop employees’ competency who support innovative culture

  To develop employees’ competency in supporting innovative culture, SCG
  has arranged number of programs to develop them in each level. These
  programs are, for instance, Thinking Skills for Innovation, Coaching
  for Innovation, Leadership Development Program, and Inno Executive
  Coaching. In the mean time, SCG has developed SCG Inno Facilitators in
  every business to act as promoters of innovative culture within the
  organization.

3.  Modify human resource management to enhance innovative organization

  Human resource management is an importance tool in sustainably
  achieving innovation goal. The HR systems that support the mentioned
  policy are listed below:

-   Review Performance Management System to motivate employees and teams
    both output and working procedures in driving innovation

-   Define wage management and career development for researchers and
    specialists in each business.

-   Cooperate with external institutions for R&D such as AIT,
    Chulalongkorn University as well as develop skills for technicians
    in mechanical technology by cooperating with King Mongkut’s
    University of Technology North Bangkok and Model School Project , in
    cooperation with Vocational Education Committee to support SCG’ s
    future technology improvement.

  SCG believes that its focus on HR development in knowledge, skill, and
  ethic will allow the Company to achieve the goal of becoming
  international company of innovation. Such adherence will lead the
  Company to experience sustainable growth, provide benefits to related
  parties, and play important role in developing country’s economy.

  As at December 31, 2008, The Siam Cement Public Company Limited had
  437 employees with a compensation of Baht 552 million. Total employees
  of the Group were 27,305 with a compensation of Baht 15,201 million.
  (Compensation includes salary, bonuses, provident fund, and welfare)

Number of Employees in Each Business of the Siam Cement Group

As at December 31, 2008

  ---------------------------------------------- ------------------------
  Company/Business Unit                          Number of Employees

                                                 2008

  The Siam Cement Public Company Limited         437

  SCG Chemicals                                  4,038

  SCG Paper                                      7,711

  SCG Cement                                     4,940

  SCG Building Materials                         7,789

  SCG Distribution                               1,560

  Others                                         830

  Total                                          27,305
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