13.1. Report of Independent Auditor

To The Board of Directors and Shareholders of

Thai Carbon Black Public Company Limited

I have audited the accompanying consolidated balance sheets of Thai
Carbon Black Public Company Limited and its subsidiary companies as at
31 December 2005 and 2004, and the related consolidated statements of
earnings, changes in shareholders’ equity and cash flows for the years
then ended, and the separate financial statements of Thai Carbon Black
Public Company Limited for the same periods. These financial statements
are the responsibility of the Company’s management as to their
correctness and completeness of the presentation. My responsibility is
to express an opinion on these financial statements based on my audits.

The financial statements as at 31 December 2005 and for the year then
ended of an overseas subsidiary were audited by the subsidiary company’s
auditor, whose report has been furnished to me. My opinion on the
consolidated and the Company’s financial statements, insofar as they
relate to the amounts included for this subsidiary company, is based
solely on the report of that other auditor. These financial statements
reflect total assets as at 31 December 2005 and 2004 of approximately
Baht 1,299 million and Baht 569 million respectively, total revenues for
the years then ended of approximately Baht 323 million and Baht 229
million respectively, and net loss for the years then ended of
approximately Baht 47 million and Baht 43 million respectively. In
addition, the Company’s financial statements include its investment in
this subsidiary company stated under the equity method, amounting to
Baht 217 million and Baht 236 million as at 31 December 2005 and 2004,
respectively, and its share of loss for years then ended, amounting to
Baht 36 million and Baht 33 million, respectively.

I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my audits
and the report of the other auditor referred to in the second paragraph
provide a reasonable basis for my opinion.

In my opinion, based on my audits and the report of the other auditor,
the financial statements referred to above present fairly, in all
material respects, the financial position of Thai Carbon Black Public
Company Limited and its subsidiary companies and of Thai Carbon Black
Public Company Limited as at 31 December 2005 and 2004, the results of
their operations and cash flows for the years then ended in accordance
with generally accepted accounting principles.

Supachai Phanyawattano

Certified Public Accountant (Thailand) No. 3930 

13.2 Financial statement

Balance sheets

Unit : Baht

  ----------------------------------- --------------- --------------- ---------------
                                      CONSOLIDATED                    

                                      2005            2004            2003

  ASSETS                                                              

  CURRENT ASSETS                                                      

  Cash and cash equivalents           948,317,659     473,184,080     395,108,522

  Short-term investments - deposits   -               -               545,000,000
  with financial institutions                                         

  Trade accounts receivable                                           

  Unrelated parties                   869,433,009     729,618,565     576,138,899

  Related parties                     23,777,322      34,735,344      30,865,655

  Short-term loan to related party    -               -               12,000,000

  Inventories - net                   750,921,339     900,576,910     602,603,534

  Other current assets                                                

  Advance for purchases of raw        52,590,327      63,028,757      94,518,971
  materials                                                           

  Refundable input tax                81,213,605      67,054,216      51,320,068

  Duty drawback and export incentive  -               -               19,922,594
  receivable                                                          

  Others                              61,179,609      41,425,385      19,560,428

  TOTAL CURRENT ASSETS                2,787,432,870   2,309,623,257   2,347,038,671

  LONG-TERM ASSETS                                                    

  Investments accounted for under     1,351,001,287   918,782,281     517,216,127
  equity method                                                       

  Other long-term investments                                         

  Investments in related parties      322,741,663     322,741,663     322,741,663

  Investments in preference shares    -               600,000,000     600,000,000

  Advance for purchases of fixed      5,501,657       41,767,709      -
  assets                                                              

  Property, plant and equipment - net 2,137,563,685   1,295,695,343   1,183,568,494

  Intangible assets                   10,122,366      10,659,089      10,668,797

  Other long-term assets              1,023,342       2,773,342       763,342

  TOTAL LONG-TERM ASSETS              3,827,954,000   3,192419,427    2,634,958,423

  TOTAL ASSETS                        6,615,386,870   5,502,042,684   4,981,997,094
  ----------------------------------- --------------- --------------- ---------------

Balance sheets

Unit : Baht

  ------------------------------------- --------------- ------------- -------------
                                        CONSOLIDATED                  

                                        2005            2004          2003

  LIABILITIES AND SHAREHOLDERS' EQUITY                                

  CURRENT LIABILITIES                                                 

  Bank overdrafts and short-term loans  453,378,895     273,869,798   162,738,880
  from financial institutions                                         

  Trade accounts payable                                              

  Unrelated parties                     237,675,198     121,842,962   107,673,465

  Related parties                       1,084,090       10,348,037    7,578,596

  Short-term loans from related parties -               -             170,000,000

  Current portion of long-term loans    80,740,913      -             -

  Other current liabilities                                           

  Corporate income tax payable          101,177,099     100,970,419   118,867,913

  Accrued expenses                      30,272,978      27,060,233    25,450,943

  Others                                66,831,471      31,224,940    41,568,095

  TOTAL CURRENT LIABILITIES             971,160,644     565,316,389   633,877,892

  LONG-TERM LIABILITIES                                               

  Long-term loans –net of current       288,173,437     164,777,990   -
  portion                                                             

  Provision for employee retirement     57,131,693      21,398,845    21,743,900
  benefit                                                             

  TOTAL LONG-TERM LIABILITIES           345,305,130     186,176,835   21,743,900

  TOTAL LIABILITIES                     1,316,465,774   751,493,224   655,621,792
  ------------------------------------- --------------- ------------- -------------

Balance sheets

Unit : Baht

  ----------------------------------------- --------------- --------------- ---------------
                                            CONSOLIDATED                    

                                            2005            2004            2003

  SHAREHOLDERS' EQUITY                                                      

  Share capital                                                             

  Registered, issued and fully paid                                         

  300,000,000 ordinary shares of Baht 1     300,000,000     300,000,000     300,000,000
  each                                                                      

  Capital premium                                                           

  Share premium                             930,000,000     930,000,000     930,000,000

  Share of revaluation surplus of           -               102,441,142     110,743,111
  subsidiary company                                                        

  Translation adjustments                                                   

  Subsidiary company                        4,068,470       (13,272,356)    (9,194,246)

  Associated company                        (171,600,765)   (198,704,413)   (158,180,826)

  Retained earnings                                                         

  Appropriated - statutory reserve          30,000,000      30,000,000      30,000,000

  Unappropriated                            4,141,647,271   3,432,309,467   2,970,244,863

  EQUITY ATTRIBUTABLE TO THE COMPANY'S      5,234,114,976   4,582,773,840   4,173,612,902
  SHAREHOLDERS                                                              

  MINORITY INTEREST - EQUITY ATTRIBUTABLE                                   
  TO                                                                        

  MINORITY SHAREHOLDERS OF SUBSIDIARY       64,806,120      167,775,620     152,762,400
  COMPANIES                                                                 

  TOTAL SHAREHOLDERS' EQUITY                5,298,921,096   4,750,549,460   4,326,375,302

  TOTAL LIABILITIES AND SHAREHOLDERS'       6,615,386,870   5,502,042,684   4,981,997,094
  EQUITY                                                                    
  ----------------------------------------- --------------- --------------- ---------------

Balance sheets

Unit : Baht

  ----------------------------------- --------------- --------------- ---------------
                                      THE COMPANY                     
                                      ONLY                            

                                      2005            2004            2003

  ASSETS                                                              

  CURRENT ASSETS                                                      

  Cash and cash equivalents           886,146,690     410,491,667     366,350,531

  Short-term investments - deposits   -               -               545,000,000
  with financial institutions                                         

  Trade accounts receivable                                           

  Unrelated parties                   820,883,055     628,586,692     471,198,180

  Related parties                     23,777,322      24,062,270      28,191,364

  Short-term loan to related party                    -               12,000,000

  Inventories - net                   624,307,692     792,863,414     494,762,772

  Other current assets                                                

  Advance for purchases of raw        -               -               -
  materials                                                           

  Refundable input tax                22,563,028      37,388,282      33,592,465

  Duty drawback and export incentive  -               -               19,440,131
  receivable                                                          

  Others                              29,006,534      32,171,638      16,112,387

  TOTAL CURRENT ASSETS                2,406,684,321   1,925,563,963   1,986,647,830

  LONG-TERM ASSETS                                                    

  Investments accounted for under     1,567,960,904   1,300,667,164   821,316,420
  equity method                                                       

  Other long-term investments                                         

  Investments in related parties      322,741,663     322,741,663     322,741,663

  Investments in preference shares    -               600,000,000     600,000,000

  Advance for purchases of fixed      5,501,657       41,767,709      -
  assets                                                              

  Property, plant and equipment - net 1,228,946,449   598,905,109     714,895,117

  Intangible assets                   -               -               -

  Other long-term assets              1,023,342       1,043,342       763,342

  TOTAL LONG-TERM ASSETS              3,126,174,015   2,865,124,987   2,459,716,542

  TOTAL ASSETS                        5,532,858,336   4,790,688,950   4,446,364,372
  ----------------------------------- --------------- --------------- ---------------

Balance sheets

Unit : Baht

  -------------------------------------- ------------- ------------- -------------
                                         THE COMPANY                 
                                         ONLY                        

                                         2005          2004          2003

  LIABILITIES AND SHAREHOLDERS' EQUITY                               

  CURRENT LIABILITIES                                                

  Bank overdrafts and short-term loans   6,613,830     2,987         11,256,953
  from financial institutions                                        

  Trade accounts payable                                             

  Unrelated parties                      55,486,435    54,084,200    72,446,927

  Related parties                        1,084,090     1,486,747     421,919

  Current portion of long-term loans     -             -             -

  Other current liabilities                                          

  Corporate income tax payable           101,128,521   100,330,192   118,867,913

  Accrued expenses                       23,123,976    18,835,962    16,241,200

  Others                                 54,174,815    20,381,581    37,865,701

  TOTAL CURRENT LIABILITIES              241,611,667   195,121,669   257,100,613

  LONG-TERM LIABILITIES                                              

  Long-term loans –net of current        -             -             -
  portion                                                            

  Provision for employee retirement      57,131,693    12,793,441    15,650,857
  benefit                                                            

  TOTAL LONG-TERM LIABILITIES            57,131,693    12,793,441    15,650,857

  TOTAL LIABILITIES                      298,743,360   207,915,110   272,751,470
  -------------------------------------- ------------- ------------- -------------

Balance sheets

Unit : Baht

  -------------------------------------- --------------- --------------- ---------------
                                         THE COMPANY                     
                                         ONLY                            

                                         2005            2004            2003

  SHAREHOLDERS' EQUITY                                                   

  Share capital                                                          

  Registered, issued and fully paid                                      

  300,000,000 ordinary shares of Baht 1  300,000,000     300,000,000     300,000,000
  each                                                                   

  Capital premium                                                        

  Share premium                          930,000,000     930,000,000     930,000,000

  Share of revaluation surplus of        -               102,441,142     110,743,111
  subsidiary company                                                     

  Translation adjustments                                                

  Subsidiary company                     4,068,470       (13,272,356)    (9,194,246)

  Associated company                     (171,600,765)   (198,704,413)   (158,180,826)

  Retained earnings                                                      

  Appropriated - statutory reserve       30,000,000      30,000,000      30,000,000

  Unappropriated                         4,141,647,271   3,432,309,467   2,970,244,863

  EQUITY ATTRIBUTABLE TO THE COMPANY'S   5,234,114,976   4,582,773,840   4,173,612,902
  SHAREHOLDERS                                                           

  MINORITY INTEREST - EQUITY                                             
  ATTRIBUTABLE TO                                                        

  MINORITY SHAREHOLDERS OF SUBSIDIARY    -               -               -
  COMPANIES                                                              

  TOTAL SHAREHOLDERS' EQUITY             5,234,114,976   4,582,773,840   4,173,612,902

  TOTAL LIABILITIES AND SHAREHOLDERS'    5,532,858,336   4,790,688,950   4,446,364,372
  EQUITY                                                                 
  -------------------------------------- --------------- --------------- ---------------

Earnings statements

Unit : Baht

  ---------------------------------- --------------- --------------- ---------------
                                                     CONSOLIDATED     

                                     2005            2004            2003

  REVENUES                                                           

  Sales                              4,934,805,317   4,236,551,316   3,720,972,784

  Share of profit (loss) from                                        
  investments accounted for under                                    
  equity method                                                      

  Associated companies               286,153,994     79,773,020      13,719,991

  Other income                                                       

  Dividend income                    12,557,713      87,479,365      19,156,546

  Interest income                    12,754,177      11,869,073      18,806,773

  Tax refund from the Revenue        -               -               17,082,237
  Department                                                         

  Gain on exchange                   17,377,071      -               -

  Gain on sale of investment in      32,411,394      -               -
  subsidiary                                                         

  Others                             8,907,060       12,181,394      38,345,505

  TOTAL REVENUES                     5,304,966,726   4,427,854,168   3,828,083,836

  EXPENSES                                                           

  Cost of sales                      3,730,684,345   3,144,515,830   2,667,161,492

  Selling and administrative                                         
  expenses                                                           

  Selling expenses                   244,339,197     286,151,648     235,268,439

  Administrative expenses            196,956,439     162,763,312     171,595,405

  Other expenses                                                     

  Directors' remuneration            660,000         740,000         590,750

  Loss on Exchange                   -               1,245,086       4,635,406

  TOTAL EXPENSES                     4,172,639,981   3,595,415,876   3,079,251,492

  EARNINGS BEFORE INTEREST EXPENSES  1,132,326,745   832,438,292     748,832,344
  AND INCOME TAX                                                     

  INTEREST EXPENSES                  (16,134,287)    (7,571,554)     (8,575,378)

  CORPORATE INCOME TAX                                               

  Corporate income tax of current    (239,776,538)   (178,502,259)   (182,615,155)
  year                                                               

  Adjustment of prior year's         -               1,104,513       352,167
  corporate income tax                                               

  EARNINGS BEFORE MINORITY INTEREST  876,415,920     647,468,992     557,993,978

  MINORITY INTEREST IN SUBSIDIARY    10,846,392      (13,706,357)    (16,635,758)
  COMPANIES                                                          

  NET EARNINGS FOR THE YEAR          887,262,312     633,762,635     541,358,220
  ---------------------------------- --------------- --------------- ---------------

Earnings statements

Unit : Baht

  ------------------------------------- --------------- --------------- ---------------
                                        THE COMPANY                     
                                        ONLY                            

                                        2005            2004            2003

  REVENUES                                                              

  Sales                                 4,617,671,977   3,500,488,566   3,219,059,680

  Share of profit (loss)from                                            
  investments accounted for under                                       
  equity method                                                         

  Subsidiary companies                  (36,311,836)    2,304,273       18,865,081

  Associated companies                  286,153,994     79,773,020      13,719,991

  Other income                                                          

  Dividend income                       12,557,713      87,479,365      19,156,546

  Interest income                       12,358,753      11,869,073      18,806,773

  Tax refund from the Revenue           -               -               17,082,237
  Department                                                            

  Gain on exchange                      12,383,795      -               -

  Gain on sale of investment in         32,411,394      -               -
  subsidiary                                                            

  Others                                8,907,060       7,147,715       24,335,774

  TOTAL REVENUES                        4,946,132,850   3,689,062,012   3,331,026,082

  EXPENSES                                                              

  Cost of sales                         3,454,274,228   2,583,289,152   2,309,307,827

  Selling and administrative expenses                                   

  Selling expenses                      229,823,151     186,821,753     172,506,902

  Administrative expenses               133,779,926     108,191,059     119,611,435

  Other expenses                                                        

  Directors' remuneration               660,000         740,000         590,750

  Loss on Exchange                      -               240,007         3,049,044

  TOTAL EXPENSES                        3,818,537,305   2,879,281,971   2,605,065,958

  EARNINGS BEFORE INTEREST EXPENSES AND 1,127,595,545   809,780,041     725,960,124
  INCOME TAX                                                            

  INTEREST EXPENSES                     (556,695)       (698,086)       (2,338,916)

  CORPORATE INCOME TAX                                                  

  Corporate income tax of current year  (239,776,538)   (176,423,833)   (182,615,155)

  Adjustment of prior year's corporate  -               1,104,513       352,167
  income tax                                                            

  EARNINGS BEFORE MINORITY INTEREST     887,262,312     633,762,635     541,358,220

  NET EARNINGS FOR THE YEAR             887,262,312     633,762,635     541,358,220
  ------------------------------------- --------------- --------------- ---------------

Statements of changes in shareholders’ equity

Unit : Baht

  ----------------- -------------- ------------- --------------- -------------- --------------- -------------- --- ---------------- ----------- ----------------- ---------------
                    CONSOLIDATED                                                                                                                                  

                                                                                                                                                Minority          

                                                                                                                                                interest-equity   

                                                 Share of        Translation                    Retained                                        attributable to   Total
                                                 revaluation     adjustments                    earnings                                        minority          

                    Issued and     Premium on    surplus from    Subsidiary     Associated      Appropriated                                    shareholders of   
                    paid-up                                                                                                                                       

                    share capital  share capital subsidiary      Company        Company         Statutory          Unappropriated               subsidiary         
                                                 company                                        reserve                                         companies         

  Balance beginning 300,000,000    930,000,000   110,743,111     (9,194,246)    (158,180,826)   30,000,000         2,970,244,863                152,762,400       4,326,375,302
  of 2004                                                                                                                                                         

  Share of                                                                                                                                                        -
  amortisation of                                                                                                                                                 
  revaluation                                                                                                                                                     
  surplus from                                                                                                                                                    

  subsidiary        -              -             (8,301,966)     -              -               -                  8,301,966                    -                 -
  company                                                                                                                                                         

  Payment of        -              -             -               -              -               -                  (180,000,000)                -                 (180,000,000)
  dividend                                                                                                                                                        

  Translation       -              -             -               (4,078,110)    (40,523,587)    -                  -                            1,306,863         (43,294,834)
  adjustments                                                                                                                                                     

  Net earnings      -              -             -               -              -               -                  633,762,635                  13,706,357        647,468,992

  Balance end of    300,000,000    930,000,000   102,441,142     (13,272,356)   (198,704,413)   30,000,000         3,432,309,467                167,775,620       4,750,549,460
  2004                                                                                                                                                            

  Share of                                                                                                                                                        -
  amortisation of                                                                                                                                                 
  revaluation                                                                                                                                                     
  surplus from                                                                                                                                                    

  subsidiary        -              -             (2,075,492)     -              -               -                  2,075,492                    -                 -
  company                                                                                                                                                         

  Reversal of       -              -             (100,365,650)   -              -               -                  -                            -                 (100,365,650)
  revaluation                                                                                                                                                     
  surplus of                                                                                                                                                      
  subsidiary                                                                                                                                                      
  company                                                                                                                                                         

  Payment of        -              -             -               -              -               -                  (180,000,000)                -                 (180,000,000)
  dividend                                                                                                                                                        

  Translation       -              -             -               17,340,826     27,103,648      -              -                    5,179,728                     49,624,202
  adjustments                                                                                                                                                     

  Decrease in       -              -             -               -              -               -                  -                            (97,302,836)      (97,302,836)
  minority interest                                                                                                                                               
  in subsidiary                                                                                                                                                   
  company                                                                                                                                                         

  Net earnings      -              -             -               -              -               -                  887,262,312                  (10,846,392)      876,415,920
  (loss)                                                                                                                                                          

  Balance end of    300,000,000    930,000,000   -               4,068,470      (171,600,765)   30,000,000         4,141,647,271                64,806,120        5,298,921,096
  2005                                                                                                                                                            
  ----------------- -------------- ------------- --------------- -------------- --------------- -------------- --- ---------------- ----------- ----------------- ---------------

Statements of changes in shareholders’ equity

Unit:Baht

[TABLE]

Statements of changes in shareholders’ equity

Unit : Baht

  -------------------- ------------- ------------- ----- --------------- -------------- ------------- --------------- ---------- -------------- ---------------- ---------------
                       The Company                                                                                                                               
                       Only                                                                                                                                      

                                                         Share of                       Translation                   Retained                                   Total
                                                         revaluation                    adjustments                   earnings                                   

                       Issued and    Premium on          surplus from    Subsidiary                   Associated                 Appropriated                    
                       paid-up                                                                                                                                   

                       share capital share capital       subsidiary      Company                      Company                    Statutory      Unappropriated    
                                                         company                                                                 reserve                         

  Balance beginning of 300,000,000   930,000,000         110,743,111     (9,194,246)                  (158,180,826)              30,000,00      2,970,244,863    4,173,612,902
  2004                                                                                                                                                           

  Share of                                                                                                                                                       
  amortisation of                                                                                                                                                
  revaluation surplus                                                                                                                                            
  from                                                                                                                                                           

  subsidiary company   -             -                   (8,301,969)     -                            -                          -              8,301,969        -

  Payment of dividend  -             -                   -               -                            -                          -              (180,000,000)    (180,000,000)

  Translation          -             -                   -               (4,078,110)                  (40,523,587)               -              -                (44,601,697)
  adjustments                                                                                                                                                    

  Net earnings         -             -                   -               -                            -                          -              633,762,635      633,762,635

  Balance end of 2004  300,000,000   930,000,000         102,441,142     (13,272,356)                 (198,704,413)              30,000,000     3,432,309,467    4,582,773,840

  Share of                                                                                                                                                       
  amortisation of                                                                                                                                                
  revaluation surplus                                                                                                                                            
  from                                                                                                                                                           

  subsidiary company   -             -                   (2,075,492)     -                            -                          -              2,075,492        -

  Reversal of          -             -                   (100,365,650)   -                            -                          -              -                (100,365,650)
  revaluation surplus                                                                                                                                            
  of subsidiary                                                                                                                                                  
  company                                                                                                                                                        

  Payment of dividend  -             -                   -               -                            -                          -              (180,000,000)    (180,000,000)

  Translation          -             -                   -               17,340,826                   27,103,648                 -              -                44,444,474
  adjustments                                                                                                                                                    

  Net earnings         -             -                   -               -                            -                          -              887,262,312      887,262,312

  Balance end of 2005  300,000,000   930,000,000         -               4,068,470                    (171,600,765)              30,000,000     4,141,647,271    5,234,114,976
  -------------------- ------------- ------------- ----- --------------- -------------- ------------- --------------- ---------- -------------- ---------------- ---------------

Statements of changes in shareholders’ equity

Unit : Baht

  -------------------- -------------- ------------- ------------- -------------- --------------- -------------- ---------------- ---------------
                       THE COMPANY                                                                                               
                       ONLY                                                                                                      

                                                    Share of      Translation                                                    
                                                    revaluation   adjustments                                                    

                       Issued and     Premium on    surplus from  Subsidiary     Accociated      Retained                        
                       paid-up                                                                   earnings                        

                       share capital  share capital subsidiary    Companies      Companies       Appropriated   Unappropriated   Total
                                                    company                                                                      

  Balance beginning of 3000,000,000   930,000,000   119,045,082   -              (141,412,118)   30,000,000     2,600,584,672    3,838,217,636
  2003                                                                                                                           

  Share of                                                                                                                       
  amortisation of                                                                                                                
  revaluation surplus                                                                                                            
  from                                                                                                                           

  subsidiary company   -              -             (8,301,971)   -              -               -              8,301,971        -

  Payment of dividend  -              -             -                            -               -              (180,000,000)    (180,000,000)

  Translation          -              -             -             (9,194,246)    (16,768,708)    -              -                (25,962,954)
  adjustments                                                                                                                    

  Net earnings                                                                                                  541,358,220      541,358,220

  Balance end of 2003  300,000,000    930,000,000   110,743,111   (9,194,246)    (158,180,826)   30,000,000     2,970,244,863    4,173,612,902

  Share of                                                                                                                       
  amortisation of                                                                                                                
  revaluation surplus                                                                                                            
  from                                                                                                                           

  subsidiary company   -              -             (8301,969)    -              -               -              8,301,969        -

  Payment of dividend  -              -             -             -              -               -              (180,000,000)    (180,000,000)

  Translation                         -             -             (4,078,110)    (40,523,587)    -              -                (44,601,697)
  adjustments                                                                                                                    

  Net earnings                                                                                                  633,762,635      633,762,635

  Balance end of 2004  300,000,000    930,000,000   102,441,142   (13,272,356)   (198,704,413)   30,000,000     3,432,309,467    4,582,773,840
  -------------------- -------------- ------------- ------------- -------------- --------------- -------------- ---------------- ---------------

Statements of Cash Flows

Unit : Baht

  ---------------------------------------- --------------- --------------- ---------------
                                                           CONSOLIDATED     

                                           2005            2004            2003

  Cash flows from (used in) operating                                      
  activities                                                               

  Net earnings                             887,262,312     633,762,635     541,358,220

  Adjustments to reconcile earnings to net                                 
  cash Provided by (used in) operating                                     
  activities:-                                                             

  Dividend income                          (12,557,713)    (87,479,365)    (19,156,546)

  Unrealized loss (gain) on exchange       (6,340,200)     1,897,229       666,752

  Provision for stock obsolescence         10,775,717      -               3,285,009

  Depreciation and amortization            156,192,377     223,356,161     213,517,127

  Minority interest in net earnings of     (10,846,392)    13,706,357      16,635,758
  subsidiary companies                                                     

  Gain on sales of investment in           (32,411,394)    -               -
  subsidiary company                                                       

  Loss (gain) on disposals of fixed assets 1,272,849       (265,206)       -

  Provision for employee retirement        47,721,038      6,093,043       21,743,900
  benefit                                                                  

  Share of loss (profit) from investments                                  
  accounted for under equity method                                        

  Associated companies                     (286,153,994)   (79,773,020)    (13,719,991)

  Earnings from operating activities                                       
  before changes in operating assets                                       

  and liabilities                          754,914,600     711,297,834     764,330,229

  Decrease (increase) in operating assets                                  
  :-                                                                       

  Accounts receivable - unrelated parties  (211,552,841)   (155,376,895)   (15,386,322)

  Accounts receivable - related parties    284,948         (3,869,689)     (304,965)

  Inventories                              77,602,688      (297,973,376)   (167,468,446)

  Advance for purchases of raw materials   -               -               (94,518,971)

  Other current assets                     (36,054,018)    13,813,703      (51,753,065)

  Intangible assets                        -               -               (7,534,490)

  Other long-term assets                   (966,875)       (4,398,234)     129,612

  Increase (decrease) in operating                                         
  liabilities :-                                                           

  Accounts payable - unrelated parties     171,026,861     14,169,497      (35,122,130)

  Accounts payable - related parties       (402,657)       2,769,441       (2,265,201)

  Other current liabilities                47,154,784      (30,212,041)    (20,618,011)

  Payment of employee retirement benefit   (3,382,786)     (2,857,416)     -

  Net cash from operating activities       788,624,704     247,362,824     369,488,240
  ---------------------------------------- --------------- --------------- ---------------

Statements of Cash Flows

Unit : Baht

  --------------------------------------- ----------------- --------------- ---------------
                                          CONSOLIDATED                      

                                          2005              2004            2003

  Cash flows from (used in) investing                                       
  activities                                                                

  Dividend income                         12,557,713        87,479,365      19,156,546

  Dividend received from associated       1,038,636         1,135,500       -
  company                                                                   

  Decrease in deposit with maturity more  -                 545,000,000     30,000,000
  than 3 months                                                             

  Decrease in short-term loan to related  -                 12,000,000      -
  company                                                                   

  Proceeds from sales of investment in    78,000,000        -               -
  subsidiary company                                                        

  Proceeds from capital reduction of      600,000,000       -               -
  preference shares of associated company                                   

  Payment of additional investments in    (120,000,000)     (363,452,220)   -
  subsidiary and associated companies                                       

  Proceed from disposals of fixed assets  771,855           502,523         -

  Advances for purchases of fixed assets  36,266,052        (41,767,709)    -

  Purchase of property, plant and         (1,324,025,205)   (333,322,386)   (141,534,891)
  equipment                                                                 

  Net cash from (used in) investing       (715,390,949)     (92,424,927)    (92,378,345)
  activities                                                                

  Cash flows from (used in) financing                                       
  activities                                                                

  Increase (decrease) in bank overdrafts                                    
  and short-term loans                                                      

  from financial institutions             379,414,869       111,130,918     (288,044,077)

  Increase (decrease) in short- term loan -                 (170,000,000)   170,000,000
  from related parties                                                      

  Payment under financial lease agreement -                 -               (63,395,862)

  Increase in long-term loans             210,686,841       164,777,990     -

  Payment of Dividend                     (180,000,000)     (180,000,000)   (180,000,000)

  Net cash (used in) financing activities 410,101,710       (74,091,092)    (361,439,939)

  Translation adjustment of investment in 483,335,465       80,846,805      (9,194,246)
  new subsidiary company                                                    

  Net increase (decrease) in cash and     479,287,436       78,075,558      (93,524,290)
  cash equivalents                                                          

  Cash and cash equivalents at beginning  473,184,080       395,108,522     488,632,812
  of year                                                                   

  Less: Cash and Cash equivalents at                                        
  beginning of the year subsidiary                                          
  company                                                                   

  excluded from the consolidated          (4,153,857)       -               -
  financial statements in the current                                       
  year                                                                      

  Cash and cash equivalents at end of     948,317,659       473,184,080     395,108,522
  year                                                                      

  Supplemental cash flow information                                        

  Cash paid during the year for :-                                          

  Interest                                9,454,602         34,956,627      7,840,599

  Corporate income tax                    238,978,209       192,868,447     197,209,478
  --------------------------------------- ----------------- --------------- ---------------

Statements of Cash Flows

Unit : Baht

  --------------------------------------- --------------- --------------- ---------------
                                          THE COMPANY                     
                                          ONLY                            

                                          2005            2004            2003

  Cash flows from operating activities                                    

  Net earnings                            887,262,312     633,762,635     541,358,220

  Adjustments to reconcile earnings to                                    
  net cash provided by (used in)                                          
  operating activities :-                                                 

  Dividend income                         (12,557,713)    (87,479,365)    (19,156,546)

  Unrealized loss (gain) on exchange      210,281         1,897,229       666,752

  Provision for stock obsolescence        -               -               -

  Depreciation and amortization           140,045,207     180,305,131     176,012,679

  Gain on sales of investment in          (32,411,394)    -               -
  subsidiary company                                                      

  Loss (gain) on disposals of fixed       (181,710)       (265,206)       -
  assets                                                                  

  Provision for employee retirement       47,721,038      -               15,650,857
  benefit                                                                 

  Share of (profit) loss from investments                                 
  accounted for under equity method                                       

  Subsidiary companies                    36,311,836      (2,304,273)     (18,865,081)

  Associated companies                    (286,153,994)   (79,773,020)    (13,719,991)

  Earnings from operating activities                                      
  before changes in operating assets                                      

  and liabilities                         780,245,863     646,143,131     681,946,890

  Decrease (increase) in operating assets                                 
  :-                                                                      

  Accounts receivable - unrelated parties (192,506,644)   (159,285,741)   15,166,467

  Accounts receivable - related parties   284,948         4,129,094       2,199,253

  Inventories                             168,555,722     (298,100,642)   (116,657,040)

  Other current assets                    17,990,358      (414,937)       (34,646,847)

  Other long-term assets                  20,000          (280,000)       129,612

  Increase (decrease) in operating                                        
  liabilities :-                                                          

  Accounts payable - unrelated parties    1,402,235       (18,362,727)    (36,312,232)

  Accounts payable - related parties      (402,657)       1,064,828       (322,734)

  Other current liabilities               38,879,577      (33,427,079)    (18,182,185)

  Payment of employee retirement benefit  (3,382,786)     (2,857,416)     -

  Net cash from operating activities      811,086,616     138,608,511     493,321,184
  --------------------------------------- --------------- --------------- ---------------

Statements of Cash Flows

Unit : Baht

  ---------------------------------------- --------------- --------------- ---------------
                                           THE COMPANY                     
                                           ONLY                            

                                           2005            2004            2003

  Cash flows from investing activities                                     

  Dividend income                          12,557,713      87,479,365      19,156,546

  Dividend received from associated        1,038,636       1,135,500       -
  company                                                                  

  Decrease (increase) in deposit with      -               545,000,000     30,000,000
  maturity more than 3 months                                              

  Decrease in short-term loan to related   -               12,000,000      -
  company                                                                  

  Proceeds from sales of investment in     78,000,000      -               -
  subsidiary company                                                       

  Proceeds from capital reduction of       600,000,000     -               -
  preference shares of associated company                                  

  Payment of additional investments in     (120,000,000)   (443,010,647)   (218,438,340)
  subsidiary and associated companies                                      

  Proceeds from disposals of fixed assets  532,711         502,523         -

  Advances for purchases of fixed assets   36,266,052      (41,767,709)    -

  Purchase of property, plant and          (770,437,548)   (64,552,441)    (122,141,968)
  equipment                                                                

  Net cash from (used in) investing        (162,042,436)   96,786,591      (291,423,762)
  activities                                                               

  Cash flows from financing activities                                     

  Increase (decrease) in bank overdrafts   6,610,843       (11,253,966)    (80,547,874)
  and short-term loans from financial                                      
  institutions                                                             

  Increase (decrease) in short- term loan  -               -               -
  from related parties                                                     

  Payment under financial lease agreement  -               -               (63,395,862)

  Payment of Dividend                      (180,000,000)   (180,000,000)   (180,000,000)

  Net cash used in financing activities    (173,389,157)   (191,253,966)   (323,943,736)

  Net increase (decrease) in cash and cash 475,655,023     44,141,136      (122,046,314)
  equivalents                                                              

  Cash and cash equivalents at beginning   410,491,667     366,350,531     488,396,845
  of year                                                                  

  Cash and cash equivalents at end of year 886,146,690     410,491,667     366,350,531

  Supplemental cash flow information                                       

  Cash paid during the year for :-                                         

  Interest express                         556,695         548,086         1,170,368

  Corporate income tax                     238,978,209     187,528,757     197,209,478
  ---------------------------------------- --------------- --------------- ---------------

13.3 Ratio Analysis

(The company only)

  ---------------------------------- ------------- ----------- -----------
                                     2005          2004        2003*

  LIQUIDITY RATIOS :                                           

  Current Ratio (Times)              9.96          9.87        7.73

  Quick Ratio (Times)                7.16          5.45        5.53

  Liquidity of Cashflow (Times)      3.71          0.61        1.38

  Accounts Receivable Turnover       6.17          6.08        6.33
  (Times)                                                      

  Collection Period (Days)           58.37         59.24       56.86

  Inventory Turnover (Times)         4.87          4.01        5.29

  Average Sales Time (Days)          73.85         89.72       68.04

  Accounts Payable Turnover (Times)  61.61         40.23       25.33

  Payment Period (Days)              5.84          8.95        14.22

  Cash Cycle (Days)                  126.37        140.01      110.68

  PROFITABILITY RATIOS :                                       

  Gross Profit Margin (%)            25.19         26.20       28.26

  Net Profit Margin (%)              17.94         17.18       16.25

  Return on Networth (%)             18.08         14.48       13.51

  EFFICIENCY RATIOS :                                          

  Return on Total Assets (%)         17.19         13.72       12.39

  Return on Fixed Assets (%)         112.41        123.93      96.70

  Total Assets Turnover (Time)       95.82         79.88       76.22

  FINANCIAL POLICY RATIO:                                      

  Debt/Equity Ratio (Times)          0.06          0.05        0.07

  Interest Payment Coverage (Times)  2,025.52      1,160.00    310.38

  Pay-out Ratio (%)                  20.29         28.40       33.25

  PER SHARE VALUES :                                           

  Par Value (Baht)                   1.00          1.00        1.00

  Book Value (Baht)                  17.45         15.28       13.91

  Earning Per Share (Baht)           2.96          2.11        1.80

  Dividend Per Share (Baht)          0.60          0.60        0.60

  (Proposed for year 2004)                                     
  ---------------------------------- ------------- ----------- -----------

* Restated figures have been used wherever restated for previous year

Consolidated

  ---------------------------------- ------------- ----------- -----------
                                     2005          2004        2003*

  LIQUIDITY RATIOS :                                           

  Current Ratio (Times)              2.87          4.06        3.70

  Quick Ratio (Times)                1.90          2.19        2.46

  Liquidity of Cashflow (Times)      1.03          0.41        0.49

  Accounts Receivable Turnover       5.95          6.18        6.21
  (Times)                                                      

  Collection Period (Days)           60.46         58.27       58.00

  Inventory Turnover (Times)         4.52          4.18        5.12

  Average Sales Time (Days)          79.68         86.05       70.26

  Accounts Payable Turnover (Times)  20.11         25.42       19.91

  Payment Period (Days)              17.90         14.16       18.08

  Cash Cycle (Days)                  122.25        130.15      110.18

  PROFITABILITY RATIOS :                                       

  Gross Profit Margin (%)            24.40         25.78       28.32

  Net Profit Margin (%)              16.73         14.31       14.14

  Return on Networth (%)             17.66         13.96       13.18

  EFFICIENCY RATIOS :                                          

  Return on Total Assets (%)         14.64         12.09       11.11

  Return on Fixed Assets (%)         60.77         68.95       64.03

  Total Assets Turnover (Time)       87.56         84.47       78.57

  FINANCIAL POLICY RATIO:                                      

  Debt/Equity Ratio (Times)          0.25          0.16        0.15

  Interest Payment Coverage (Times)  70.18         109.94      87.32

  Pay-out Ratio                      20.29         28.40       33.25

  PER SHARE VALUES :                                           

  Par Value (Baht)                   1.00          1.00        1.00

  Book Value (Baht)                  17.45         15.28       13.91

  Earning Per Share (Baht)           2.96          2.11        1.80

  Dividend Per Share (Baht)          0.6           0.60        0.60

  (Proposed for year 2004)                                     
  ---------------------------------- ------------- ----------- -----------

* Restated figures have been used wherever restated for previous year

13.4 Management Discussions & Analysis

Production

The company started its expansion project during the year. Production
from expansion project started in Q4’2005 started from Nov 16^(th),
2005. With additional capacity of 45-50000 Mt per year after expansion,
the total production capacity will be approx 205,000 Mt per year.

The production of various grades of Carbon Black during the year was
higher by 11% compared to last year. This has been possible partly due
to start of new production line and also due to optimization of
production process by way of debottlenecking and improvement in the
production process. The production level has reached to 177,000 Mt
against 161,000 Mt last year.

Sales Revenue

The Sales Revenue in 2005 has registered an impressive growth of 32%,
increased from Baht 3,500 million to Baht 4,618 million. The increase
was possible mainly due to cost push increase in selling prices due to
high raw material cost both in Local and Export market and due to start
of expansion project in Q’4 of 2005.

The Company has maintained the same ratio of export to local sales for
the year 2005 at 45:55 as last year. It is Company’s strategy to strive
the optimum product and customer mix to enhance the contribution margin
and sales volume.

Equity Income

The share of profits in 2005 from investment accounted under equity
method was higher at Baht 257 million as compared to Baht 82 million
last year. This increase has come from better operational performance by
one of the associated company, Aditya Birla Chemicals (Thailand) Ltd.
(ABCT) (formerly knows as “Thai Organic Chemicals Co.,Ltd” (TOCC ) and
due to restructuring of its business and entire business purchase of
other chemical companies

Other Income

The dividend income of Baht 12 million from related and associated
companies is low against Baht 87 million last year mainly due to one
time dividend payment of Baht 72 million received last year from one
related company namely Thai Epoxy & Allied Products Co.,Ltd due to its
plan to sale its entire business to another Associated company namely
Aditya Birla Chemicals (Thailand) Ltd. (ABCT)

During the year, the Company has sold its entire 60% equity investment
in its subsidiary Thai Sulphites and Chemicals co ltd. to better utilize
the company’s financial resources and refocus on Carbon Black business.
This has yielded a gain of Baht 32 million.

There is a Gain on exchange of Baht 12.3 million against loss of Baht
0.2 million last year.

Cost and Expenses

The cost of sales have gone up by 38% to Baht 3,454 million in 2005
against 2,583 million last year due to increase in raw material prices .
The price of raw material which is carbon black feed stock oil were all
time high due to highest annual average crude oil prices in the world
market. The higher oil price trend is likely to continue next year,
however downward correction is possible.

The selling expense were higher by 23% at Baht 230 million compared to
Baht 187 million in 2004 mainly due to higher sales volume coupled with
higher ocean freight rates for export. Freight rates were higher world
wide due to shortage of containers and high bunker oil prices

The administrative expense were higher by 24% at Baht 134 million
compared to Baht 108 million in 2004 mainly due to provision of
severance pay its employees. The provision will be paid to eligible
employees upon their retirement and was determined in accordance with
length of service of employees at certain specified rates by reference
to labour laws and based upon the probability that employees will work
until reaching their retirement age.

Profits

The company has been able to record net profits of Baht 887 million for
the year 2005 compared to Baht 633 million in the previous year thereby
registered an impressive increase of 40% despite high raw material
prices due to cost push increase in selling prices, increase in equity
income from ABCT due to better performance and business restructuring

The equity income from subsidiary and associated companies increased
from Baht 82 million to Baht 257 million mainly due to an overall
business restructure plan of ABCT , entire business purchase of other
chemical companies and better operational performance

Financial Position (Company only)

Assets

The total assets as at 31^(st) Dec 2005 amounted to Baht 5,533 million
compared to Baht 4,791 million for the previous year, an increase of
15.5% Details of major assets are as follow

-   Cash

  The cash and cash equivalents and funds placed with financial
  institutions were higher at Baht 886 million as at 31^(st) Dec 2005
  compared to Baht 411 million as at 31^(st) Dec 2004. The increase was
  mainly due to receipt of Baht 600 million from ABCT against redemption
  of Preference shares and better cash generation from operation after
  meeting capex requirements for expansion project.

-   Inventory

  At the year end the inventory was lower at Baht 624 million compared
  to Baht 793 million for the previous year.

-   Investment

  Investments accounted for under equity method increased from 1,301
  million Baht to 1,568 million Baht in 2005 mainly due to the following
  reasons:

-   

-   Purchase of additional 12 million new shares of ABCT with a total
    addition investment amount of Baht 120 million.

-   

-   Better performance and improved share of profit in Thai Organic
    Chemical Co., Ltd due to an overall business restructure plan of
    ABCT , entire business purchase of other chemical companies and
    better operation performance

Liabilities and Shareholders Equity

The total liabilities for the year ended amounted to Baht 298 million, a
increase of Baht 90 million mainly due to provision of severance pay
amounting Baht 48 million for its employees. The provision will be paid
to eligible employees upon their retirement and was determined in
accordance with length of service of employees at certain specified
rates by reference to labour laws and based upon the probability that
employees will work until reaching their retirement age. Other current
liabilities have also increased mainly due to amount payable for its
expansion project amounting to baht 13 million.

The shareholders equity at the year-end was higher by Baht 651 million,
an increase of 14% mainly on account of profit for the year

Earning per share

The earning per share was Baht 2.96 in 2005 compared to Baht 2.11 in
2004 due to higher profit for 2005.

Book value per share

The book value per share increased to Baht 17.45 in 2005 against Baht
15.28 due to profit during the year.

Analysis of Financial Ratios (Company only)

Liquidity

The company’s current ratio was higher at 9.96 times up from 9.87 times
last year which reflects company’s very strong and comfortable liquidity
and cash flow position. The current assets increased by 25% mainly due
to increase in cash and cash equivalents due to receipt of Baht 600
million from ABCT against redemption of Preference shares & cash
generation from operations. Trade accounts receivable also increased by
30% due to increase in sales.

Equity

The company has historically maintained very low debt to equity ratio.
At the year end, company did not have any long term and short term
borrowings except very minor overdrawn balance. The debt to equity ratio
is 0.06:1

Profitability

The gross profit margin of the company marginally decreased to 25% as
compared to 26% in 2004 mainly due to higher raw material price. The net
profit margin is marginally increased to 17.9% compared to 17.2% in
2004. The return on average shareholders equity based on total profit
after tax is 18% compared to 14% last year.

Efficiency

The fixed assets turnover ratio has reduced to 3.8 in 2005 against 5.8
in 2004. The return on fixed assets has reduced from 124% to 112% in
2005. The inventory turnover ratio has improved from 4.0 to 4.9 in 2005.