Financial Highlight

  (A) Auditor report

The auditor has reported the financial statements of Pato Chemical
Industry Public Co.,Ltd. as of 31 December of 1997, 1998, 1999 and 2000
without any conditions.

(B) Balance Sheet, Statement of Income, Statement of cash flows

Pato Chemical Industry Public Co.,Ltd. Balance Sheet for the year ended
December 31

  -------------------------------------- ------------ --------- ------------ -------- ------ ------------ ------------ -------- ------------ ------ ------------ --------
                                         1997                   1998                  1999                                                   2000                

                                         Amount       %         Amount       %               Amount                    %                            Amount       %

  Assets                                                                                                                                                         

  CURRENT ASSETS                                                                                                                                                 

  Cash in hand and at Bank               139          0.03      1,087        0.24            70,151                    14.46                        9,377        2.29

  Short-term investment                  26,357       4.59                                                                                                       

  Fixed deposit                                       -         35,593       7.91            359                       0.07                         25,558       6.25

  Deposit with financial institutions                           -            -               -                         -                            -            -

  Investment in listed company           56,340       10.82     -            -               2,020                     0.42                         -            -

  Accounts and note receivable -net      155,775      29.92     139,345      30.95           118,314                   24.39                        134,419      34.08
                                                      26.15                                                                                                      

  Loan to related company                - 8,000      -         -            -               6,000                     1.24                         9,262        2.26

  Inventories                            179,017      34.39     133,305      29.61           147,034                   30.32                        88,267       21.58
                                                      35.95                                                                                                      

  Other current assets                                                                                                                                           

  Vat receivable                         -            -         -            -               -                         -                            -            -

  Others                                 6,538        1.26 0.43 7,777        1.73            7,974                     1.64                         6,349        1.55

  Total current assets                   397,809      76.41     317,107      70.44           351,852                   72.54                        278,232      68.02
                                                      68.62                                                                                                      

  Investment in subsidiary               -            - 10.91   -            -               -                         -                            22,557       5.51

  Property, Plant and Equipment Net      118,214      22.71     113,925      25.31           115,849                   23.89                        107,966      26.39
                                                      19.46                                                                                                      

  Excess of Cost of Investment Over      -            -         -            -               -                         -                            -            -

  Other Assets                                                                                                                                                   

  Deposit with financial institutions                           15,543       3.45            15,543                    3.20                         -            -

  Deposits and guarantee                 442          0.08 1.01 541          0.12            140                       0.03                         220          0.05

  Deferred charge                        4,128        0.79      3,089        0.69            1,632                     0.34                         74           0.02

  Total other assets                     4,570        0.88      19,173       4.26            17,315                    3.57                         294          0.07

  Total assets                           520,593      100.00    450,205      100.00          485,016                   100.00                       409,049      100.00
                                         100.00                                                                                                                  
                                         574,009                                                                                                                 

  Liabilities and Shareholders' Equity                                                                                                                           

  Current Liabilities                                                                                                                                            

  Bank Overdrafts and loans from bank    201,212      38.65     -            -               55,805                    11.51                        1,629        0.40
                                                      8.11                                                                                                       

  Accounts and notes payable – Associate -            -         91,177       20.25           57,861                    11.93                        63,689       15.57
  Company                                                                                                                                                        

  - Other Companies                      21,183       4.07      15,548       3.45            13,902                    2.87                         17,406       4.26
                                                      14.70                                                                                                      

  Current portion of long-term loans     -            -         -            -               5,053                     1.04                         295          0.07

  Short Term Loans from Subsidiary       2,000        0.38      -            -               -                         -                            -            -
  Company                                                                                                                                                        

  Other current liabilities                                                                                                                                      

  Accrued income tax and accrued         5,821        1.12 2.45 7,453        1.66            7,256                     1.50                         8,007        1.96
  expenses                                                                                                                                                       

  Other                                  1,765        0.34 0.18 3,144        0.70            138                       0.03                         264          0.06

  Total Current Liabilities              231,981      44.56     117,322      26.06           140,015                   28.87                        91,290       22.32
                                                      25.44                                                                                                      

  Loan from assocoate company            -            -         -            -               -                         -                            -            -

  Long Term Loans                        -            - -       -            -               100                       0.02                         -            -

  Provision for loss in a subsidiary     6,894        1.32      202          0.04            2,463                     0.51                         -            -
  company                                                                                                                                                        

  Excess of book value over cost of      -            -         -            -               -                         -                            -            -
  investment                                                                                                                                                     

  Total Liabilities                      238,875      45.89     117,524      26.10           142,578                   29.40                        91,290       22.32
                                                      25.44                                                                                                      

  Minority Interest                      -            -         -            -               -                         -                            -            -

  Shareholders' equity                                                                                                                                           

  Share capital-common share Bht. 10 par                                                                                                                         
  value                                                                                                                                                          

  Authorized share capital 14,000,000    140,000      -         140,000      -               140,000                   -                            140,000      
  shares                                 140,000                                                                                                                 

  Issued and fully paid-up share capital 140,000      26.89     140,000      31.10           140,000                   28.87                        140,000      34.23
  14,000,000 shares                                   24.39                                                                                                      

  Premium on share capital               135,000      25.93     135,000      29.99           135,000                   27.83                        135,000      33.00
                                                      23.52                                                                                                      

  Retained earning                                    -                                                                                                          

  Appropriated for reserve fund          10,730       2.06      10,730       2.38            14,000                    2.89                         14,000       3.42
                                                      1.87(                                                                                                      

  Unappropriate                          (4,011)      (0.77)    46,951       10.43           53,418                    11.01                        28,759       7.03
                                                      24.78                                                                                                      

  Unrealised gain on securities held as  -            -         -            -               20                        0.00                         -            -
  available-for-sale                                                                                                                                             

  Total Shareholders' Equity             281,719      54.11     332,681      73.90           342,438                   70.60                        317,759      77.68
                                                      74.56                                                                                                      

  Total Liabilities and Shareholders'    520,594      100.00    450,205      100.00          485,016                   100.00                       409,049      100.00
  Equity                                              100.00                                                                                                     

  Book value per share(baht)             20.12                  23.76                        24.46                                                  22.70        

  Par Value                              10                     10                           10                                                     10           

  Common Share                           14,000,000             14,000,000                   14,000,000                                             14,000,000   
                                         14,000,000                                                                                                              

  Pato Chemical Industry Public Co.,Ltd.                                                                                                                         
  Statement of Income for the year ended                                                                                                                         
  December 31                                                                                                                                                    

                                         1997                   1998                                      1999                  2000                             

                                         Amount       %         Amount       %                            Amount       %        Amount                           %

  Revenues                                                                                                                                                       

  Sales                                  375,299      97.43     519,522      92.33                        520,219      98.46    508,478                          97.29
                                                      95.68                                                                                                      

  Share of profit(loss)in subsidiary     (3,686)      (0.96)    6,692        1.19                         -            -        5,019                            0.96
                                                      1.17                                                                                                       

  Profit from exchange rate                                     19,826       3.52                         -            -        -                                -

  Other income                           13,579       3.53 3.15 16,653       2.96                         8.152        1.54     9,153                            1.75

  Total Revenues                         385,192      100.00    562,693      100.00                       528,371      100.00   522,650                          100.00
                                                      100.00                                                                                                     

  Expenses                                                                                                                                                       

  Cost of sales                          335,716      87.16     452,662      80.45                        440,408      83.35    446,658                          85.46
                                                      73.79                                                                                                      

  Selling and administrative expenses    35,647       8.38                                                                                                       
  expenses??????????????????????????                                                                                                                             

  Bad debt and doubtful debt             16,307       4.23      14,445       2.57                         3,861        0.73     1,611                            0.31

  Diminution in value of Short term      37,560       9.75      -            -                            -            -        -                                -
  investment                                                                                                                                                     
  of??????????????????????????????????                                                                                                                           

  Others                                 39,132       10.16     34,086       6.06                         43,252       8.19     43,721                           8.37

  Loss from exchange rate                -            -         -            -                            7,094        1.34     7,456                            1.43

  Share of loss in subsidiary            -            -         -            -                            2,261        0.43     -                                -

  Interest Expenses                      12,861       3.34 1.28 10,282       1.83                         401          0.08     1,453                            0.28

  Directors remuneration                 340          0.09      256          0.05                         356          0.07     600                              0.11

  Total Expenses                         441,916      114.73    511,731      90.94                        497,633      94.18    501,499                          95.95
                                                      88.33                                                                                                      

  Net Income(Loss) before Income Tax and (56,724)     (14.73)   50,962       9.06                         30,738       5.82     21,151                           4.05
  extraordinary                          49,633                                                                                                                  

  Income Tax                             -            - 4.88    -            -                            -            -        (3,810)                          (0.73)

  Net Income (Loss) from operation       (56,724)     (14.73)   50,962       9.06                         30,738       5.82     17,341                           3.32
                                         10.00                                                                                                                   

  (Profit)Loss of minority equity in     - 14,000,000 -         -            -                            -            -        -                                -
  subidiary company                                                                                                                                              

  Net Income (Loss) before extraordinary (56,724)     (14.73)   50,962       9.06                         30,738       5.82     17,341                           3.32
  item                                                                                                                                                           

  Loss on exchange rate from adoption                                                                                                                            
  the manage float                                                                                                                                               

  The company and subsidiary             (12,839)     (3.33)    -            -                            -            -        -                                -

  Share of loss in subsidiary            (55,679)     (14.45)   -            -                            -            -        -                                -

  Net income (loss)                      (125,242)    (32.51)   50,962       9.06                         30,738       5.82     17,341                           3.32

  Earning per share                      (8.95)                 3.64                                      2.20                  1.24                             

  Par value                              10.00                  10.00                                     10.00                 10.00                            

  Weight average (Share)                 14,000,000             14,000,000                                14,000,000            14,000,000                       
  -------------------------------------- ------------ --------- ------------ -------- ------ ------------ ------------ -------- ------------ ------ ------------ --------

  -------------------------------------- ----------- --------- ---------- ----------
  Pato Chemical Industry Public Co.,Ltd.                                  

  Statement of Cash Flows for the Year                                    
  Ended December 31                                                       

                                         1997        1998      1999       2000

  Cash Flows from Operating Activities                                    

  Net Income                             (125,243)   50,962    30,738     17,341

  Adjustments to reconcile net income to                                  
  net cash                                                                

  provided by operating activities                                        

  Unrealized gain on exchange rate       (40,927)    (6,970)   (2,642)    37

  Unrealized loss on exchange rate       46,081      -         -          -

  Gain on disposal of short-term         -           (4,460)   -          -
  investment                                                              

  Minority interest                      -           -         -          -

  Share of (profit) loss in subsidiary   59,365      (6,692)   2,261      (5,019)

  Short-term Investment                  -           37,560    -          -

  Provision for absolence                -           -         -          -

  Depreciation and amortization          14,696      14,982    12,501     13,995

  Allowance for doubtful accounts        16,307      14,445    3,860      1,611

  Gain on disposal of fixed assets       (1,581)     (700)     (2,346)    -

  Gain on disposal of investments in     (1,842)     -         -          -
  subsidiary                                                              

  Excess of cost of investment over the  -           -         -          -
  net book                                                                

  Income from operating before changing                                   
  in operating                                                            

  assets and liabilities                 4,416       61,567    44,372     27,965

  (Increase) decrease in operating                                        
  assets                                                                  

  Account and note receivables           (21,968)    1,985     17,170     (22,716)

  Inventories                            27,331      45,712    (13,728)   58,767

  Other current assets                   (4,072)     (1,238)   (198)      1,626

  Other assets                           (141)       (816)     456        (143)

  Increase(decrease) in operating                                         
  liabilities                                                             

  Notes and account payable              (63,181)    92,513    9,331      9,331

  Accrued income tax and accrued         (8,240)     1,631     751        751
  expenses                                                                

  Other current liabilities              700         1,379     (3,007)    126

  Net cash provided by(use in) operating (65,155)    202,733   11,119     75,707
  activities                                                              
  -------------------------------------- ----------- --------- ---------- ----------

  -------------------------------------- ---------- ----------- ---------- ----------
  Pato Chemical Industry Public Co.,Ltd.                                   

  Statement of Cash Flows for the year                                     
  ended December 31                                                        

                                         1997       1998        1999       2000

  Cash Flows from Investing Activities                                     

  Increase in called and fixed deposit   -          -           -          (5,098)

  Increase in short-term investment      (26,615)   60,800      (2,000)    2,000

  (Increase)decrease in deposit with     -          (15,543)    -          15,543
  financial institution                                                    

  Proceeds from sale of fixed assets     2,625      920         2,663      -

  Acquisition of fixed assets            (20,893)   (9,157)     (8,186)    (9,349)

  Proceeds from sales of short-term      -          -           -          -
  investment                                                               

  Proceeds from sales of investment in   12,000     -           -          -
  subsidiary                                                               

  Increase in investment in subsidiary   -          -           -          (20,000)

  Decrease in loans to                   -          -           (6,000)    (3,262)

  Net cash used in investing activities  (32,883)   37,020      (13,523)   (20,166)

  Cash Flows from Financing Activities                                     

  Increase(decrease)I in bank overdrafts 108,574    (201,212)   57,235     (54,214)
  and loan                                                                 

  (Increase) decrease in loans to        8,000      -           -          -
  associated company                                                       

  Increase in loan from subsidiary       2,000      (2,000)     -          -

  Increase in long-term loans            -          -           -          -

  Repayment of long-term loan            -          -           -          -

  Cash received from minority interest   -          -           -          -

  Increase in premium and share capital  -          -           -          -

  Dividend paid                          (21,000)   -           (21,000)   (42,000)

  Minority interest                      -          -           -          -

  Net cash provided by (used in)         97,574     (203,212)   36,235     (96,214)
  financing activities                                                     

  Increase(decrease) in cash             (464)      36,541      33,831     (40,673)

  Cash beginning of year                 603        139         36,680     70,510

  Cash end of year                       139        36,680      70,511     29,837
  -------------------------------------- ---------- ----------- ---------- ----------

Pato Chemical Industry Public Co.,Ltd. and Subsidiary

Balance Sheet for the year ended December 31

  -------------------------- ------------ -------- ------------ -------- ------------ -------- ------------ --------
  Balance Sheet year ended   1997                  1998                  1999                  2000         
  December 31                                                                                               

                             Amount       %        Amount       %        Amount       %        Amount       %

  Assets                                                                                                    

  CURRENT ASSETS                                                                                            

  Cash in hand and at Bank   24,336       3.04     4,883        0.69     105,528      12.86    54,371       6.48
                                          0.11                                                              

  Short-term investment      26,357       4.59                                                              

  Fixed deposit                                    35,593       5.06     816          0.10     25,558       3.05

  Deposit with financial     -            - -      -            -        -            -        -            -
  institutions                                                                                              

  Investment in listed       56,340       7.03     -            -        2,020        0.25     -            -
  company                                                                                                   

  Accounts and note          217,863      27.20    193,210      27.45    216,651      26.40    224,510      26.75
  receivable -net                         26.15                                                             

  Loan to related company    - 8,000      -        -            -        -            -        -            -

  Inventories                248,872      31.07    219,884      31.24    214,229      26.10    261,661      31.18
                                          35.95                                                             

  Other current assets       -            -                                                                 

  Vat receivable             9,452        1.18     7,207        1.02     12,351       1.50     12,370       1.47

  Others                     7,535        0.94     8,471        1.20     10,401       1.27     10,537       1.26
                                          0.43                                                              

  Total current assets       564,398      70.46    469,248      66.67    561,996      68.48    589,007      70.18
                                          68.62                                                             

  Investment in subsidiary   -            - 10.91  -            -        -            -        -            -

  Property, Plant and        201,902      25.20    200,977      28.56    227,156      27.68    238,667      28.44
  Equipment Net                           19.46                                                             

  Excess of Cost of          -            -        -            -        -            -        -            -
  Investment Over                                                                                           

  Other Assets                                                                                              

  Deposit with financial     15,543       1.94     15,543       2.21     15,543       1.89     -            -
  institutions                                                                                              

  Deposits and guarantee     14,606       1.82     14,708       2.09     14,227       1.73     11,221       1.34
                                          1.01                                                              

  Deferred charge            4,592        0.57     3,345        0.48     1,744        0.21     422          0.05

  Total other assets         34,741       4.34     33,596       4.77     31,514       3.84     11,643       1.39

  Total assets               801,041      100.00   703,821      100.00   820,666      100.00   839,317      100.00
                             100.00                                                                         
                             574,009                                                                        

  Liabilities and                                                                                           
  Shareholders' Equity                                                                                      

  Current Liabilities                                                                                       

  Bank Overdrafts and loans  253,849      31.69    32,697       4.65     143,351      17.47    174,810      20.83
  from bank                               8.11                                                              

  Account and note payable – -            -        185,874      26.41    163,958      19.98    168,162      20.04
  Associated Company                                                                                        

  Accounts and notes payable 138,162      17.25    42,046       5.97     38,941       4.75     58,987       7.03
                                          14.70                                                             

  Current portion of         39,213       4.90 -   27,183       3.86     35,443       4.32     25,777       3.07
  long-term loans                                                                                           

  Loan from subsidiary       -            -        -            -        -            -        -            -
  company                                                                                                   

  Other current liabilities                                                                                 

  Accrued income tax and     9,840        1.23     8,664        1.23     11,305       1.38     11,103       1.32
  accrued expenses                        2.45                                                              

  Other                      1,848        0.23     3,847        0.55     876          0.11     1,304        0.16
                                          0.18                                                              

  Total Current Liabilities  442,912      55.29    300,311      42.67    393,874      48.00    440,143      52.44
                                          25.44                                                             

  Loans from Associated      -            -        -            -        44,505       5.42     22,826       2.72
  Company                                                                                                   

  Long Term Loans            95,459       11.92 -  78,434       11.14    45,396       5.53     36,365       4.33

  Provision for loss in a    -            -        -            -        -            -        -            -
  subsidiary company                                                                                        

  Excess of book value over  -            -        -            -        -            -        -            -
  cost of investment                                                                                        

  Total Liabilities          538,371      67.21    378,745      53.81    483,775      58.95    499,334      59.49

  Minority Interest          (19,049)     (2.38)   (7,605)      (1.08)   (5,547)      (0.68)   22,224       2.65

  Shareholders' equity                                                                                      

  Share capital-common share                                                                                
  Bht. 10 par value                                                                                         

  Authorized share capital   140,000      -        140,000      -        140,000      -        140,000      -
  14,000,000 shares          140,000                                                                        

  Issued and fully paid-up   140,000      17.48    140,000      19.89    140,000      17.06    140,000      16.68
  share capital 14,000,000                24.39                                                             
  shares                                                                                                    

  Premium on share capital   135,000      16.85    135,000      19.18    135,000      16.45    135,000      16.08
                                          23.52                                                             

  Retained earning                        -                                                                 

  Appropriated for reserve   10,730       1.34     14,000       1.99     14,000       1.71     14,000       1.67
  fund                                    1.87(                                                             

  Unappropriate              (4,011)      (0.50    43,681       6.21     53,418       6.51     28,759       3.43
                                          24.78                                                             

  Unrealised gain on         -            - 24.78  -            -        20           0.00     -            -
  securities held as                                                                                        
  available-for-sale                                                                                        

  Total Shareholders' Equity 281,719      35.17    332,681      47.27    342,418      41.73    317,759      37.86
                                          74.56                                                             

  Total Liabilities and      801,041      100.00   703,820      100.00   820,646      100.00   839,317      100.00
  Shareholders' Equity                                                                                      

  Book value per share(baht) 20.12                 23.76                 24.46                 22.70        

  Par Value                  10                    10                    10                    10           

  Common Share               14,000,000            14,000,000            14,000,000            14,000,000   
                                                   14,000,000            14,000,000            14,000,000   
  -------------------------- ------------ -------- ------------ -------- ------------ -------- ------------ --------

Pato Chemical Industry Public Co.,Ltd. and Subsidiary Statement of
Income

for the year end December 31

[TABLE]

+--------------------------------------+-------+-------+-------+-------+
| Pato Chemical Industry Public        |       |       |       |       |
| Co.,Ltd. and Subsidiary              |       |       |       |       |
|                                      |       |       |       |       |
| Statement of Cash Flows for the Year |       |       |       |       |
| Ended December 31                    |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
|                                      | 1997  | 1998  | 1999  | 2000  |
+--------------------------------------+-------+-------+-------+-------+
| Cash Flows from Operating Activities |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Net Income                           | (125  | 5     | 3     | 1     |
|                                      | ,243) | 0,962 | 0,738 | 7,341 |
+--------------------------------------+-------+-------+-------+-------+
| Adjustments to reconcile net income  |       |       |       |       |
| to net cash                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| provided by operating activities     |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized gain on exchange rate     | (41   | (46   | -     | -     |
|                                      | ,930) | ,154) |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized loss on exchange rate     | 11    | -     | 2,671 | (438) |
|                                      | 1,353 |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of short-term       | -     | (4    | -     | -     |
| investment                           |       | ,460) |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Minority interest                    | (68   | 7,464 | (2    | 5,771 |
|                                      | ,690) |       | ,522) |       |
+--------------------------------------+-------+-------+-------+-------+
| Share of (profit) loss in subsidiary | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Short-term Investment                | 3     | -     | -     | -     |
|                                      | 7,560 |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Provision for absolence              | -     | 2     | -     | 2,200 |
|                                      |       | 8,142 |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Depreciation and amortization        | 2     | 2     | 2     | 2     |
|                                      | 3,994 | 5,125 | 3,438 | 9,806 |
+--------------------------------------+-------+-------+-------+-------+
| Allowance for doubtful accounts      | 1     | 2     | 3,861 | 1,611 |
|                                      | 9,648 | 2,200 |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of fixed assets     | (1    | (716) | (2    | (583) |
|                                      | ,861) |       | ,274) |       |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of investments in   | -     | -     | -     | -     |
| subsidiary                           |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Excess of cost of investment over    | 988   | 460   | -     | -     |
| the net book                         |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Income from operating before         |       |       |       |       |
| changing in operating                |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| assets and liabilities               | (44   | 8     | 5     | 5     |
|                                      | ,709) | 2,563 | 5,912 | 5,708 |
+--------------------------------------+-------+-------+-------+-------+
| (Increase) decrease in operating     |       |       |       |       |
| assets                               |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Account and note receivables         | (45   | 2,452 | (27   | (9    |
|                                      | ,105) |       | ,302) | ,776) |
+--------------------------------------+-------+-------+-------+-------+
| Inventories                          | (9    | 846   | 5,655 | (49   |
|                                      | ,229) |       |       | ,633) |
+--------------------------------------+-------+-------+-------+-------+
| Other current assets                 | (12   | 1,100 | (7    | (155) |
|                                      | ,481) |       | ,074) |       |
+--------------------------------------+-------+-------+-------+-------+
| Other assets                         | (205) | (819) | 356   | 2,504 |
+--------------------------------------+-------+-------+-------+-------+
| Increase(decrease) in operating      |       |       |       |       |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Notes and account payable            | 4     | 10    | (21   | 2     |
|                                      | 6,729 | 6,552 | ,512) | 4,368 |
+--------------------------------------+-------+-------+-------+-------+
| Accrued income tax and accrued       | (8    | (1    | 2,641 | (201) |
| expenses                             | ,796) | ,176) |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Other current liabilities            | 356   | 1,999 | (2    | 428   |
|                                      |       |       | ,971) |       |
+--------------------------------------+-------+-------+-------+-------+
| Net cash provided by(use in)         | (73   | 19    | 5,705 | 2     |
| operating activities                 | ,440) | 3,517 |       | 3,243 |
+--------------------------------------+-------+-------+-------+-------+

+--------------------------------------+-------+-------+-------+-------+---+
| Pato Chemical In                     |       |       |       |       |   |
| dustry Public Co.,Ltd and Subsidiary |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Statement of Cash Flows for the year |       |       |       |       |   |
| ended December 31                    |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
|                                      | 1997  | 1998  | 1999  | 2000  |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Cash Flows from Investing Activities |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase in called and fixed deposit | -     | -     | -     | (5    |   |
|                                      |       |       |       | ,052) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase in short-term investment    | (25   | 6     | (2    | 2,000 |   |
|                                      | ,615) | 0,800 | ,000) |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| (Increase)decrease in deposit with   | 1     | -     | -     | 1     |   |
| financial institution                | 2,456 |       |       | 5,543 |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Proceeds from sale of fixed assets   | 3,135 | 957   | 2,806 | 1,053 |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Acquisition of fixed assets          | (31   | (23   | (42   | (45   |   |
|                                      | ,343) | ,079) | ,846) | ,413) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Proceeds from sales of short-term    | -     | -     | -     | -     |   |
| investment                           |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Proceeds from sales of investment in | -     | -     | -     | -     |   |
| subsidiary                           |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase in investment in subsidiary | -     | -     | -     | -     |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Decrease in loans to                 | -     | -     | -     | -     |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Net cash used in investing           | (41   | 3     | (42   | (31   |   |
| activities                           | ,367) | 8,678 | ,040) | ,869) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Cash Flows from Financing Activities |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase(decrease)I in bank          | 11    | (212  | 10    | 3     |   |
| overdrafts and loan                  | 3,678 | ,152) | 3,084 | 1,004 |   |
+--------------------------------------+-------+-------+-------+-------+---+
| (Increase) decrease in loans to      | 8,000 | -     | -     | -     |   |
| associated company                   |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Repayment of loan from subsidiary    | -     | -     | -     | -     |   |
| company                              |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase in loan from subsidiary     | -     | -     | 3     | (20   |   |
|                                      |       |       | 8,535 | ,599) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase in long-term loans          | -     | -     | -     | -     |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Repayment of long-term loan          | (7    | (7    | (22   | (13   |   |
|                                      | ,290) | ,883) | ,996) | ,246) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Cash received from minority interest | -     | -     | -     | 2     |   |
|                                      |       |       |       | 2,000 |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase in premium and share        | -     | -     | -     | -     |   |
| capital                              |       |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Dividend paid                        | (21   | -     | (21   | (42   |   |
|                                      | ,000) |       | ,000) | ,000) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Minority interest                    | 2     | 3,980 | 4,580 | -     |   |
|                                      | 8,717 |       |       |       |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Net cash provided by (used in)       | 12    | (216  | 10    | (22   |   |
| financing activities                 | 2,105 | ,055) | 2,203 | ,841) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Increase(decrease) in cash           | 7,298 | 1     | 6     | (31   |   |
|                                      |       | 6,140 | 5,868 | ,467) |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Cash beginning of year               | 1     | 2     | 4     | 10    |   |
|                                      | 7,037 | 4,336 | 0,476 | 6,344 |   |
+--------------------------------------+-------+-------+-------+-------+---+
| Cash end of year                     | 2     | 4     | 10    | 7     |   |
|                                      | 4,335 | 0,476 | 6,344 | 4,877 |   |
+--------------------------------------+-------+-------+-------+-------+---+

(c) Financial Ratio

Pato Chemical Industry Public Co.,Ltd. Financial Ratio 1997-2000

  ------------------------------------- ---------- ---------- --------- ---------
                                        1997       1998       1999      2000

  Liquidity Ratio                                                       

  Current Ratio (Time)                  1.71       2.70       2.51      3.05

  Quick Ratio (Time)                    0.91       1.50       1.41      2.01

  Cash Flow Ratio (Time)                (0.34)     1.16       0.09      0.65

  Receivable Turnover (Time)            2.45       3.52       4.04      3.95

  Collection Period (Day)               147        102        89        91

  Inventory Turnover (Time)             1.74       2.90       3.14      3.80

  Inventory T/Period (Day)              207        124        114       95

  Account payable Turnover (Time)       6.36       7.08       4.93      5.84

  Payment Period (Day)                  57         51         73        62

  Cash Cycle (Day)                      297        176        130       124

  Profitability Ratio                                                   

  Gross Profit Margin (%)               10.55      12.87      15.34     12.16

  Profit from operation (%)             (14.32)    3.48       6.22      3.12

  Other profit (%)                      2.57       7.67       (0.00)    1.28

  Cash (%)                              121.21     1,121.75   34.38     476.50

  Net Profit Margin (%)                 (32.51)    9.06       5.84      3.32

  Return on Equity (%)                  (35.30)    16.59      9.11      5.25

  Efficiency Ratio                                                      

  Return on Total Assets (%)            (22.88)    10.50      6.57      3.88

  Return on Fixed Assets (%)            (97.37)    55.97      36.42     26.55

  Assets Turnover (Time)                0.70       1.16       1.13      1.17

  Financial Ratio                                                       

  Debt to Equity (Time)                 0.85       0.35       0.42      0.29

  Interest Coverage (Time)              (4.07)     20.72      28.73     55.73

  Cash Basis (Time)                     (0.95)     0.90       0.37      0.57

  Payout Ratio (%)                      -          41.21      136.36    

  Per Share (Baht)                                                      

  Book Value (Baht)                     20.12      23.76      24.46     22.70

  Earning per Share (Baht)              (8.95)     3.64       2.20      1.24

  Dividend per Share (Baht)             -          1.50       3.00      2.00

  Growth Rate                                                           

  Total Sale (%)                        (9.31)     (13.52)    7.73      (15.66)

  Cost of Goods Sold (%)                63.56      (50.80)    21.32     (35.97)

  Sales Revenue (%)                     (8.56)     38.43      0.13      (2.26)

  Selling & Admin Expense (%)           161.84     (47.73)    11.84     (2.15)

  Net Profit (%)                        (352.34)   140.69     (39.68)   43.58
  ------------------------------------- ---------- ---------- --------- ---------

Pato Chemical Industry Public Co.,Ltd. and Subsidiary Financial Ratio
1997-2000

  -------------------------------------- ---------- ---------- --------- ---------
                                         1997       1998       1999      2000

  Liquidity Ratio                                                        

  Current Ratio (Time)                   1.27       1.56       1.43      1.34

  Quick Ratio (Time)                     0.67       0.78       0.83      0.69

  Cash Flow Ratio (Time)                 (0.26)     0.42       0.02      0.06

  Receivable Turnover (Time)             2.74       4.01       4.31      4.37

  Collection Period (Day)                131        90         84        82

  Inventory Turnover (Time)              2.08       3.24       3.43      3.45

  Inventory T/Period (Day)               173        111        105       104

  Account payable Turnover (Time)        4.43       4.15       3.45      3.82

  Payment Period (Day)                   81         87         104       94

  Cash Cycle (Day)                       223        114        85        92

  Profitability Ratio                                                    

  Gross Profit Margin (%)                9.31       8.02       15.75     14.92

  Profit form Operation (%)              (10.02)    1.96       6.41      4.91

  Other profit (%)                       3.23       11.55      (1.20)    (0.37)

  Cash (%)                               130.63     1,197.58   10.08     49.11

  Net Profit Margin (%)                  (21.59)    5.46       3.44      1.77

  Return on Equity (%)                   (35.30)    16.59      9.11      5.08

  Efficiency Ratio                                                       

  Return on Total Assets (%)             (16.35)    6.77       4.03      2.09

  Return on Fixed Assets (%)             (51.92)    36.48      24.53     14.15

  Assets Turnover (Time)                 0.76       1.24       1.17      1.17

  Financial Ratio                                                        

  Debt to Equity (Time)                  1.91       1.14       1.41      1.47

  Interest Coverage (Time)               (3.84)     6.84       1.32      2.61

  Cash Basis (Time)                      (0.86)     0.80       0.06      0.18

  Payout Ratio (%)                       -          41.21      136.36    161.47

  Per Share (Baht)                                                       

  Book Value (Baht)                      20.12      23.76      24.46     24.28

  Earning per Share (Baht)               (8.95)     3.64       2.20      1.24

  Dividend per Share (Baht)              -          1.50       3.00      2.00

  Growth Rate                                                            

  Total Sale (%)                         9.64       (12.14)    16.60     2.27

  Cost of Goods Sold (%)                 91.10      (29.65)    27.73     3.22

  Sales Revenue (%)                      2.36       47.00      6.99      9.25

  Selling & Admin Expense (%)            115.89     (24.06)    25.14     9.70

  Net Profit (%)                         (352.33)   140.69     (39.68)   (43.58)
  -------------------------------------- ---------- ---------- --------- ---------

2) Management Discussion and Analysis

In the consolidated financial statement of Pato Chemical Industry Public
Co. Ltd. and its subsidiary companies, net profit (loss) totaled 50.96,
30.74 and 17.34 million baht in 1998 – 2000 respectively. These figures
represent an increase and reduction of 140.69%, (39.68%) and (43.58%)
respectively.

These changes are attributed to the continued economic slump, leading to
reduced liquidity in the business system and a reduction in consumers’
purchasing power. Although financial institutions reduced the interest
rate in a bid to stimulate investment, this was not successful.

As a result of a bid to control the effect of pesticides on the
environment, the Government enforced laws prohibiting the import and
sale of certain products, causing the company’s total sales to fall. It
was necessary for the company to urgently develop new products to
replace these prohibited products. The period was also marked by
competition from rivals with regard to quality and price. Price was used
as the basis for formulating competitive strategy. There were also
market expenses and increased costs for developing new products.
Agricultural produce prices fell in 2000 as a result of floods in the
South and the Northeast which caused great damage to farm produce. As a
result, farmers had extremely less purchasing power. At the same time,
there were fluctuating effects from foreign exchange rates and a
weakened baht, causing prices for imported raw materials to rise.

Sales revenue during 1998 – 2000 was 825.13, 822.77 and 964.39 million
baht respectively, representing increases (reductions) of 47.00%, 6.99%
and 9.25% respectively.

Consolidated revenue during 1998 – 2000 was 932.83, 892.70 and 977.28
million baht, representing increases (reductions) of 60.82%, (4.30%) and
9.47% respectively.

Sales costs in 1998 – 2000 were 758.93, 743.74 and 820.49 million baht,
representing increases (reductions) of 49.09%, (2.00%) and 10.32%
respectively.

The change in the foreign exchange rate system in 1997 caused a downturn
in the economy and tighter liquidity. Financial institutions were still
careful in releasing credit to customers, leading businesses to expand
at a slower rate. Although financial institutions reduced the interest
rate in a bid to stimulate investment, this was not successful. Due to
these conditions, business rivals could not open an L/C to order in
products for distribution. In connection to this, the Nissho Iwai Corp.
in 1998, purchased shares in PATO and supported the use of credit to
open an L/C to order products in for distribution in a bid to take the
market and increase total sales. Total sales thus increased. At the same
time, subsidiary companies doubled their production capacity to 300
M/T/Month, by building more factories to increase the production line.
This caused sales revenue to increase. Furthermore, the baht
strengthened from its low in 1997, and in 1998, there was a total profit
of 88.69 million baht from exchange rates, representing 9.51% of entire
revenue.

In 1999, there was a continued slump in the economy and the baht, which
had become stronger, weakened somewhat. However, raw material prices
still fell by about 15% leading to more efficient administration of
production costs which in turn, lowered production costs. Meanwhile,
prices for agricultural products fell, causing sales revenue of the
company alone to increase only slightly by 0.13%. Subsidiary companies
made improvements to their newly-built factories which however, were
still operating at lower than production capacity at the end of 1999.
The production capacity was increased by 50% to meet the needs of
domestic and foreign markets. Domestic distribution increased by 29.49%
while foreign distribution was up by 5.19%, and consolidated earnings
fell due to foreign exchange losses totaling 20.65 million baht or 2.31%
of total consolidated earnings.

In 2000, economic conditions still presented a major problem for
businesses, causing agricultural product prices to fall. Environmental
conditions, such as the flood and the effect of the laws mentioned
above, played a key role in causing total distribution of these products
to fall by 18.53% of total sales. By urgently developing new products as
replacement, this sparked competition with regard to price and market
expenses, including expenses for research and developing the new
products, thus leading to higher costs for these products. And as these
new products were still within the Introduction State, this meant a
smaller profit margin so as to compete with rivals in the market. The
weakened baht in 2000 made production costs higher.

At the same time, subsidiary companies completed improvements to their
factories and in January 2000 were operating at full production
capacity. Their production capacity rose to 700 M/T/month. BOI
privileges were also granted in 1999 and ISO 9002 certification was also
awarded. Thus subsidiary companies were able to meet the demand of
foreign customers and their export sales rose by 54.40%, while sales in
the domestic market rose by 11.38%. Raw material costs rose by an
average 20% in line with world oil market prices. As a result, the
company readjusted prices upward by an average of 20%. The company was
also able to increase its exports as a result of the weakened baht. This
reduced the effects of foreign exchange losses and thus caused net
profit to increase.

Consolidated revenue rose as a result of 3.47 million baht in discounts
on raw materials, and revenue from sale of assets and others totaling
2.02 million baht. Subsidiary companies were also given 2.5 million baht
in discounts on raw material purchases, leading consolidated revenue to
rise by 29.92%.

Table showing rate of increases (reduction) during 1998-2000

+----+--------+----------+--------+-------+-------+--------+--------+
| Ye | PATO   |          |        | ACRON |       |        |        |
| ar |        |          |        |       |       |        |        |
+----+--------+----------+--------+-------+-------+--------+--------+
|    | Sales  | Cons     | Cost o | Sal   |       | Consol | Cost   |
|    | R      | olidated | f Sale | es Re |       | idated | of     |
|    | evenue | revenue  |        | venue |       |        | Sales  |
|    |        |          |        |       |       | r      | nb     |
|    |        |          |        |       |       | evenue |        |
+----+--------+----------+--------+-------+-------+--------+--------+
|    |        |          |        | Dom   |   Fo  |        |        |
|    |        |          |        | estic | reign |        |        |
+----+--------+----------+--------+-------+-------+--------+--------+
| 19 | 38.43  | 46.08    | 34.83  | 53.96 | 79.20 | 97.22  | 76.68  |
| 98 |        |          |        |       |       |        |        |
+----+--------+----------+--------+-------+-------+--------+--------+
| 19 | 0.13   | (6.10)   | (2.71) | 29.49 | 5.19  | (3.63) | (0.95) |
| 99 |        |          |        |       |       |        |        |
+----+--------+----------+--------+-------+-------+--------+--------+
| 20 | (2.26) | (1.08)   | 1.42   | 11.38 | 54.40 | 28.91  | 26.44  |
| 00 |        |          |        |       |       |        |        |
+----+--------+----------+--------+-------+-------+--------+--------+

Sales and services expenses during 1998-2000 totaled 82.36, 82.42 and
96.57 million baht, representing increases (reductions) of 16.16%, 0.07%
and 17.17% respectively, not including losses from foreign exchange
rates and interest payable.

Interest payable in 1998 – 2000 totaled 33.11, 17.67 and 16.81 million
baht, representing increases (reductions) of 28.23% (46.46%) and (4.86%)
respectively.

In 1998, due to the company’s higher potential, it was able to take over
the market from its competitors who suffered from poor liquidity,
resulting in total sales increasing by 47%. But at the same time, the
company bore in mind risks regarding bad debts and set aside an
additional 22.20 million in reserves for bad debts or 2.69% of total
sales, in order to reduce risk of damage from debts in the prevalent
economic slump. But subsidiary companies still shouldered the burden of
interest payable totaling 22.84%, representing an increase of 66.60%.
Pato Chemical had a burden of 10.28 million baht in interest payable, a
reduction of 20.05% from 1998.

In 1999, there was only a slight increase in sales and administrative
costs. However, revenue from sales increased by only 6.99% and
consolidated revenue fell by 4.30% due to extremely competitive market
conditions regarding product prices. This was coupled by the fact that
agricultural product prices declined. Therefore, the company focused on
cash sales for its products in order to reduce risk from bad debts. This
pushed the company’s sales costs up by 18.29 million baht for such costs
as commission fees totaling 5 million baht, sales promotion costs of 2
million baht, 1.3 million baht for salary and other costs totaling 10
million baht. These represented a 30.24% increase over last year’s sales
costs, and was due mainly to the company’s policy for promoting cash
sales of products. The company was able to reduce its risk from bad
debts to only 3.86 million baht , or a reduction of 82.61%. The company
therefore had very good liquidity, while interest payable declined by
15.45 million baht, or 46.64%. This came from effective administration
according to set policy, leading the company to enjoy better liquidity
and to be able to make long-term debt payments for subsidiary companies
and thus easing interest payable , of which 0.40 million baht was of the
mother company and 17.27 million baht of subsidiary companies.

In 2000, overall sales and administrative expenses rose by 17.17%, as a
result of a 15.69 million baht increase in expenses for sales and
administration of subsidiary companies, representing an increase of
44.89%. Because of the 54.40% increase in total foreign distribution
which equaled 78.16 million baht, export expenses rose by 6.4 million
baht, commission fees and salaries rose by 5 million baht and other
expenses totaled 5.5 million baht. Meanwhile, overall interest payable
reduced by 0.86 million baht, or by 4.86% from the previous year.
Because debt payments could be made in the long-term for subsidiary
company, their interest payable decreased by 1.5 million baht, or 8.64%.
The mother company, however, had an increase of 1.05 million baht in
interest payable, or up by 262.34% as Krungthai Tanakij promissory notes
had been sold at discounted price by 0.71 million baht, and there was
also interest payable of 0.23 million baht for automobile
hire-purchases.

The above operational results led to gross profit of 66.20, 139.02 and
143.90 million baht during 1998 – 2000 respectively.

Operational profits in 1998 –2000 totaled 16.16, 56.61 and 47.33 million
baht, representing a percentage of 1.96, 6.41 and 4.91 respectively.

Net profit in 1998 – 2000 totaled 50.96, 30.74 and 17.34 million baht or
a percentage of 5.46, 3.44 and 1.77 respectively.

Return of Equity represented a percentage of 16.59, 9.11 and 5.08 during
1998 – 2000 respectively.

In 1998, although total distribution rose by 47.00%, subsidiary
companies could not yet fully expand their production capacity, leading
to high production costs per unit and a slight increase of only 8.02% in
gross profit margin. Meanwhile, sales and administrative costs rose by
16.16%, leading operational profits to rise by only slightly. But due to
the stronger baht in 1998, 88.69 million baht was realized in foreign
exchange profit, or 9.51% of consolidated revenue. This made net profit
rise by 5.46% and the shareholder return rate to be 16.59%.

In 1999, the baht became stronger, cutting raw material costs by 15% and
increasing gross profit margin. Total sales increased because subsidiary
companies were operating at full production capacity, leading to
efficient production management and cutting production costs. Sales and
administrative expenses were successfully controlled and rose by a mere
0.07%, increasing operational profit rates. But then the baht weakened,
leading to 20.64 million baht in foreign exchange losses or 2.31% of
consolidated revenue. This resulted in the net profit to fall by 3.44%.
As a result return on equity was at a rate of 9.11%.

In 2000, new products accounted for 18% of total sales, pushing product
sales costs higher. To remain competitive, it was necessary to reduce
gross profit margin of the products. This led to an overall reduction in
gross profit margins. At the same time, subsidiary companies which
expanded their production capacity to 700 M/T/month, helped to increase
total foreign exchange gained from distribution.

Total assets during 1998 – 2000 were 703.82, 820.67 and 839.32 million
baht, representing increases (reductions) of (12.14%), 16.60% and 2.27%
respectively.

Total liabilities during 1998 – 2000 were 378.74, 483.77 and 499.33
million baht, representing increases (reductions) of (29.65%), 27.73%
and 3.22% respectively.

Shareholder equity during 1998 – 2000 was 332.68, 342.42 and 317.76
million baht, representing increases (reductions) of 18.09%, 2.93% and
(7.20%) respectively.

In 1998, sales increased substantially and joint investment by foreign
companies enabled the company to take advantage of great market
opportunities and thus increased the company’s potential. Operational
cash flow increased by as much as 363.50%, leading to better liquidity.
The liquidity ratio was better than during the same period of 1997. Debt
collections periods, product selling periods and debt repayment periods,
including cash cycle were all at a better position. Cash flow from
investment activities increased by as much as 193.50%, with a total of
60.80 million baht in short term investments sold in March 1998, The
company and its subsidiaries had moved to expand its production capacity
and therefore invested 23.08 million baht in permanent assets. Cash flow
from procurement activities reduced as 220.03 million baht in long-term
loans and bank loans was serviced.

Because of the better liquidity, there was 56.02 million baht in
outstanding cash and bank deposits, including fixed deposits and
financial institution savings. Debtors, receivable notes and outstanding
inventory decreased by 53.64 million baht or 11.49%. Circulating
liabilities, meanwhile decreased by 32.20 %. Bank overdrafts and
financial institution loans decreased by 87.12%. Trade accounts payable,
however, increased because of the expansion of production capacity which
led to a 64.96% increase in orders for raw materials from abroad.
Long-term loans decreased by 17.83%.

In 1999, the company still emphasized a cash sales policy aimed at
reducing risk from doubtful debts and building up the company’s good
potential. As a result, total sales rose by 6.99% and sales costs
decreased, thus making gross profit margins higher.

In 1999, operational cash flow decreased by 97.05%, liquidity ratio was
down to 1.43% from 1.56% in 1998. Quick ratio increased from 0.78% in
1998 to 0.83% in 1999 due to an increase in overall distribution. But at
the same time, although the debt collection period shortened from 90
days to 84 days in 1999, this could not outpace the increase in overall
distribution. Thus, total outstanding debtor accounts still increased by
as much as 23.44 million baht or 12.13% from 1998. Product selling
period averaged at 105 days, a reduction from the 1998 figure of 110
days. This led to a 2.57% reduction in outstanding inventory. Debt
repayment periods expanded from 87 days in 1998 to 104 days in 1999,
cutting the cash cycle down to 85 days, Trade accounts payable reduced
by 16.41%, cash flow from investment reduced by 208.69 % because of the
expansion of production capacity by subsidiary companies which built new
factories in their original areas. This led initial production capacity
increase by 150/M/T/month to 450 M/T/month. The mother company, as a
result, acquired new transport to support the increase in operations,
and by doing so, permanent assets were increased 13.03%. Cash flow from
fund procurement activities increased by 147.30%, coming from 87.55
million baht in bank overdrafts and bank loans,and 44.51 million baht in
loans from related companies, while payment of 23 million baht was made
on long-term loans. The mother company paid out 21 million baht in
dividends. Bank overdrafts and financial institution loans rose by 55.81
million baht. These were trust receipt accounts and led bank overdrafts
and financial institution loans to increase by 338.42% and loans from
related companies to rise 100%.

In 2000, total payments increased due to subsidiary companies expanding
their production capacity. These companies were able to reach their full
production capacity in January 2000 to meet foreign market demand.
Meanwhile, total distribution by the mother company decreased by 2.26%,
increasing operational cash flow by 407.41%, with liquidity ratio
reduced from 1.43 in 1999 to 1.34 in 2000. Quick ratio reduced from 0.83
in 1999 to 0.69 in 2000, because debtor accounts increased by 3.36% and
outstanding inventory rose by 22.14% in preparation to meet market
demand. Debt collection period shortened from 84 days in 1999 to 82 days
in 2000. Product selling period was unchanged, while debt repayment
period shortened from 104 days in 1999 to 94 days in 2000, causing the
cash cycle to double to 92 days. Trade accounts payable increased by
11.95% as goods were being prepared to meet market demand, particularly
for the fourth quarter during which there was an increase in purchase
orders for raw materials.

Cash flow from investment activities decreased by 24.91% as a result of
increased purchase of permanent assets and led to the value of permanent
assets to rise by 5.07%. The mother company, meanwhile, sold at a
reduced price, a total of 15.54 million baht in promissory notes. Cash
flow from procurement activities decreased by 122.35% as a result of a
13.24 million baht payment for long-term debts, 20.60 million baht
payment on loans from related companies and money received from
increasing registered capital from 66 million baht to 108 million baht.
This registered capital increase consisted of 4.2 million shares with a
par value of 10 baht, totaling 42 million baht, of which 2 million
shares with a par value of 10 baht, totaling 20 million baht, was of the
mother company, and 2.2 million shares with a par value of 10 baht,
totaling 22 million baht , was of the Itoshu Asia Co Ltd. This led to a
change in shareholder ratio in subsidiary companies from 47.27 to 47.41,
and bank overdrafts and bank loans increased by 21.95% because of the
expansion in production capacity and procurement of raw materials for
production to meet market demand, particularly in foreign markets.
Another major factor was that the price of the main raw materials used
which fluctuated according to oil prices. At present, prices are very
volatile. Thus the stability of the baht must be considered when
ordering raw materials from abroad. In 2000, the mother company paid out
42 million baht in dividends.

Regarding capital structure, the ratio of liabilities to shareholder
equity was 59.49 to 37.86 in 2000 or a debt to equity ratio of 1.47
times. This was an increase from the preceding year due to subsidiary
companies moving to expand their production capacity during 1998-2000,
leading to a two-fold increase in production. Long-term loans were used
for investment in permanent assets. In the mother company, the said
ratio is equal to 0.29 times, a decrease from the previous year.

For the main factors to affect operational results in 2001, economic
conditions are not expected to improve yet, despite efforts by the
Government to give farmers a 3-year debt moratorium. This policy will
help only certain groups of farmers and will not be able to help the
entire agricultural sector. With financial status a key factor, farmers
will have reduced purchasing power, leading to reduced agricultural
produce quality and ultimately, lower earnings for the farmers due to
lower prices for farm goods. Also, instability in the baht’s value will
affect raw material prices. The effect from foreign exchange rates will
be a crucial factor in pushing product prices higher. Oil prices will
also affect raw materials used by subsidiary companies. These are
outside factors that cannot be controlled. However, risks can be reduced
by such measures as:

1.  Company policy to undertake Forward Rate purchase on foreign
    exchange for raw material imports and distribution of exports to
    reduce risks.

2.  Practicing more caution when ordering raw materials, seeing that it
    concords with needs. This will reduce damage from excessive
    inventory.

3.  Making careful consideration before opening new trade accounts and
    expanding credit lines to prevent damage from bad debts.

4.  Disseminate knowledge on technology and correct usage of product to
    increase yields, promote safety, with no environmental effects.

These above factors affect the company’s operations and financial
position. Therefore, it is the policy of the company to try and reduce
the adverse effects from these various factors through the above
mentioned measures. Although, these are outside factors that cannot be
controlled, it is expected that this policy will reflect in better
operations for the company.