2.  Business Operation

According to the corporate restructuring plan of The Siam Cement Group,
in 2004, SCG sold its investments in shares of certain affiliated
companies such as Millennium Steel Pcl., and The Aromatics (Thailand)
Pcl. Regarding to the additional investment in 2004, The Siam Pulp and
Paper Pcl. increased investment stakes in Phoenix Pulp and Paper Pcl. to
98.68 % and Thai Cane Paper Pcl. to 57.59 % which the proportion of
direct and indirect investment stakes by The Siam Cement Pcl. are 96.83
% and 56.51 % respectively. Furthermore, The Siam Cement Pcl. increased
investment stakes in The Siam Pulp and Paper Pcl. to 98.13 % and Thai
Plastic and Chemicals Pcl. to 39.61 %

In 2005, the Company and subsidiaries sold their investments in shares
of The Siam Industrial Wire Co., Ltd., Michelin Siam Group Co., Ltd.,
and also sold portion of its investments in shares of IT One Co., Ltd.,
and SIL Industrial Land Co., Ltd. In addition, the Company and
subsidiaries increased investment of certain significant companies as
follows:

-   The Siam Cement Pcl. increased investment stakes in The Siam Pulp
    and Paper Pcl. to 98.17%, Thai Plastic and Chemicals Pcl. to 42.83%
    and PTT Chemical Pcl. (The merger between The National Petrochemical
    Pcl. and Thai Olefins Pcl.) to 20.09% which the proportion of direct
    and indirect investment stakes by The Siam Cement Pcl. is 20.93%

-   Chemicals Business

    -   Cementhai Chemicals Co., Ltd. increased investment stakes in
        Grand Siam Composites Co., Ltd. to 46.17%

    -   Siam TPC (Singapore) Pte., Ltd. purchased investment in PT. TPC
        Indo Plastic and Chemicals (formerly named PT. Siam Maspion
        Polymers) Indonesia for 100% (The proportion of direct and
        indirect investment stakes by The Siam Cement Pcl. is 77.13%)

    -   Alliance Petrochemical Investment (Singapore) Pte., Ltd.
        invested in Mehr Petrochemical Co., Ltd., Iran for 60% (The
        proportion of direct and indirect investment stakes by The Siam
        Cement Pcl. is 40.10%)

-   Paper Business

    -   The Siam Pulp and Paper Pcl. increased investment stakes in
        Phoenix Pulp and Paper Pcl. to 98.76 %, Thai Cane Paper Pcl. to
        64.85 %, and Thai British Security Printing Pcl. to 49.79% (The
        proportion of direct and indirect investment stakes by The Siam
        Cement Pcl. are 96.95%, 63.66% and 48.91% respectively)

-   Cementhai Holding

    -   Cementhai Holding Co., Ltd. increased investment stakes in Thai
        CRT Co;, Ltd. to 64.88%

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

-   Five Strategic Business Units, comprising Chemicals, Paper, Cement,
    Building Products and Distribution.

-   Two Holding Companies, consisting of, Cementhai Holding Co., Ltd.
    and Cementhai Property (2001) Pcl.

  Attribute of each business unit is summarized hereunder:

Chemicals Business

A holding company called “Cementhai Chemicals Co., Ltd.” looks after The
Chemicals Business of The Siam Cement Group. The Business is an
integrated producer of both upstream products (Olefins) and downstream
products (Polyolefins).

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+---------------------+------------------------------------------------+
| Capacity            | 1.1 Million tons per year for Polyolefins      |
+---------------------+------------------------------------------------+
| Main Products       | Olefins and Polyolefins.                       |
+---------------------+------------------------------------------------+
| Strengths           | -   High competitive advantage in upstream     |
|                     |     products.                                  |
|                     |                                                |
|                     | -   Low olefins/ polyolefins production costs. |
+---------------------+------------------------------------------------+

+---------------------+------------------------------------------------+
| Major Business      | -   Emphasize polyolefins product portfolio    |
| Policy              |     with high competitive advantage.           |
|                     |                                                |
|                     | -   Become a regional leader for olefins/      |
|                     |     polyolefins.                               |
+---------------------+------------------------------------------------+
| Business            | -   Seek business opportunities in local and   |
| Development Policy  |     foreign industries, especially in olefins/ |
|                     |     polyolefins.                               |
+---------------------+------------------------------------------------+

Paper Business

The Siam Pulp and Paper Pcl. was established in 1980 by The Siam Cement
Pcl. and Siam Kraft Co., Ltd., to produce and sell pulp. Its original
capital was Baht 100 million under the name of The Siam Pulp and Paper
Co., Ltd. In 1994, it was converted into a public company under the
current name with a capital of Baht 1,400 million. Its capital is now
Baht 1,536 million and was delisted from the Stock Exchange of Thailand.

The Siam Pulp and Paper Pcl. and subsidiaries are the country only
integrated producers of high quality pulp, paper, and containers. Their
main businesses are Pulp, Printing and Writing Paper, Packaging Paper,
and Containers.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | Packaging paper 1,432,000 Tons per year        |
|                     |                                                |
|                     | Pulp 643,000 Tons per year                     |
|                     |                                                |
|                     |   (including short-fibered pulp 408,000 Tons   |
|                     |   per year)                                    |
|                     |                                                |
|                     | Printing and writing paper 364,000 Tons per    |
|                     | year                                           |
+---------------------+------------------------------------------------+
| Main Products       | Kraft paper, corrugated paper boxes, pulp and  |
|                     | printing & writing paper.                      |
+---------------------+------------------------------------------------+

+---------------------+------------------------------------------------+
| Strengths           | -   Only integrated producer of pulp, paper,   |
|                     |     and containers in Thailand.                |
|                     |                                                |
|                     | -   World-class quality.                       |
|                     |                                                |
|                     | -   Continuously create innovative production  |
|                     |     and services.                              |
|                     |                                                |
|                     | -   Strong domestic channel of distribution    |
|                     |     and marketing system. Exports throughout   |
|                     |     the world available.                       |
|                     |                                                |
|                     | -   Efficient production cost control.         |
|                     |                                                |
|                     | -   Total Quality Management – TQM.            |
+---------------------+------------------------------------------------+
| Major Business      | -   Maintain domestic market leadership.       |
| Policy              |                                                |
|                     | -   Go to regional leadership for pulp and     |
|                     |     paper.                                     |
|                     |                                                |
|                     | -   Sustainable grow for a valuable return to  |
|                     |     shareholders and stakeholders              |
|                     |                                                |
|                     | -   Conserve environment.                      |
+---------------------+------------------------------------------------+
| Business            | -   Seek opportunities in expanding its        |
| Development Policy  |     business by purchasing, merging with pulp  |
|                     |     and paper producer both domestic and       |
|                     |     overseas.                                  |
|                     |                                                |
|                     | -   Improve existing machine to get higher     |
|                     |     efficiency.                                |
|                     |                                                |
|                     | -   Develop knowledge, skill and experience    |
|                     |     for all level of employee to maintain      |
|                     |     competitive advantage to achieve a         |
|                     |     regional leader.                           |
+---------------------+------------------------------------------------+

Cement Business 

The Siam Cement Industry Co., Ltd., founded on November 11, 1998, upon
the transfer of all cement related assets from The Siam Cement Pcl. The
Concrete Products and Aggregate Co., Ltd. is a 100% shareholder of The
Siam Cement Industry Co., Ltd which responsible in producing various
types of cements and concrete products. The Business produces 5 main
items of cement products including grey cement, ready-mixed concrete
products, dry mortar, white cement and refractory. It also provides
plant and machinery installation and maintenance service, instrument
metrological service, and energy conservation consultation.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | 23 Million tons per year                       |
+---------------------+------------------------------------------------+
| Main Products       | Grey cement, concrete product (ready-mixed     |
|                     | concrete, prefabricated concrete floor, and    |
|                     | post tension concrete floor), dry mortar,      |
|                     | white cement, fireclay bricks, and special     |
|                     | refractory.                                    |
+---------------------+------------------------------------------------+
| Brand               | -   Cement: Elephant, Tiger Brands and Tiger   |
|                     |     Plus                                       |
|                     |                                                |
|                     | -   Ready-mixed concrete: CPAC Brand           |
+---------------------+------------------------------------------------+
| Major Business      | -   Step up as a regional leader.              |
| Policy              |                                                |
|                     | -   Maintain price level and market stability. |
|                     |     Enhance its domestic market leadership.    |
|                     |                                                |
|                     | -   Continuously conserve natural resources    |
|                     |     and environment as well as join creative   |
|                     |     activity with local community and social   |
|                     |     development program.                       |
+---------------------+------------------------------------------------+
| Business            | -   Continuously develop and improve product   |
| Development Policy  |     quality.                                   |
|                     |                                                |
|                     | -   Continuously reduce costs and expenses,    |
|                     |     especially energy costs and raw material   |
|                     |     costs, with fuel and raw material          |
|                     |     substitutes.                               |
|                     |                                                |
|                     | -   Develop knowledge, skills, and competency  |
|                     |     for every employee with assorted method.   |
|                     |                                                |
|                     | -   Bring innovative idea to develop product   |
|                     |     and working process.                       |
+---------------------+------------------------------------------------+

Building Products Business

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

+--------------------+-------------------------------------------------+
| Key Information    |                                                 |
+====================+=================================================+
| Capacity           |   Fiber-cement roof tile 110 Million Sq. M. per |
|                    |   year                                          |
|                    |                                                 |
|                    |   Concrete roof tile 30 Million Sq. M. per year |
|                    |                                                 |
|                    |   Ceramic tile 65 Million Sq. M. per year       |
|                    |                                                 |
|                    | Concrete products 3 Million Sq. M. per year     |
+--------------------+-------------------------------------------------+
| Main Products      | -   Roofing products: fiber-cement roof tile,   |
|                    |     concrete roof tile, and ceramic roof tile.  |
|                    |                                                 |
|                    | -   Ceramic floor and wall tile.                |
|                    |                                                 |
|                    | -   Concrete blocks, concrete floor tiles, and  |
|                    |     precast concrete slabs.                     |
+--------------------+-------------------------------------------------+
| Brand              | -   Roofing products: Elephant, Tiger, CPAC     |
|                    |     Monier, and Excella.                        |
|                    |                                                 |
|                    | -   Ceramic floor and wall tiles: COTTO and     |
|                    |     SGI.                                        |
|                    |                                                 |
|                    | -   Concrete blocks, concrete floor tiles, and  |
|                    |     precast concrete slabs: CPAC                |
+--------------------+-------------------------------------------------+
| Strengths          | -   Market leader with consistent product       |
|                    |     development.                                |
|                    |                                                 |
|                    | -   Low production costs.                       |
|                    |                                                 |
|                    | -   Good distribution network: exclusive dealer |
|                    |     network.                                    |
+--------------------+-------------------------------------------------+
| Major Business     | -   Maintain market leadership by developing    |
| Policy             |     products and services that highest respond  |
|                    |     to customer needs.                          |
|                    |                                                 |
|                    | -   Extend exports, especially ceramic tiles.   |
|                    |                                                 |
|                    | -   Continuously develop organization and       |
|                    |     employees.                                  |
+--------------------+-------------------------------------------------+
| Business           | -   Develop innovative idea in developing a     |
| Development Policy |     product, production and working process.    |
|                    |                                                 |
|                    | -   Build growth by adding related new products |
|                    |     and services.                               |
|                    |                                                 |
|                    | -   Enhance a strong leadership of building     |
|                    |     products in ASEAN by expanding production   |
|                    |     bases to Vietnam, Laos, and Cambodia.       |
|                    |                                                 |
|                    | -   Encourage new product usage and develop new |
|                    |     market for ceramic tiles and concrete       |
|                    |     paving blocks.                              |
+--------------------+-------------------------------------------------+

 

Distribution Business 

Cementhai Distribution Co., Ltd. was established in accordance to the
Group’s restructuring plan in 1998 as a holding company for local and
overseas trading, selling and distribution, for building products and
home mart products. Core companies are:

-   Cementhai Sales and Marketing Co., Ltd.: Local selling.

-   Cementhai Logistics Co., Ltd.: Distribution, including logistics and
    domestic warehouse management.

-   SCT Co., Ltd.: International trading.

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

The Net Sales of the Distribution Business in 2005 is Baht 78,000
million, Baht 68,558 million in 2004, and Baht 56,551 million in 2003.
Over 50,000 product items from the Group and external companies are
presented. Non-group products will be added to increase the assortment
in the future.

Vision

The Company has a strong determination to provide distribution and
trading service to particularly respond to customer needs and
satisfaction in construction and home improvement in ASEAN.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Main Products       | Group products and external products sale via  |
|                     | Cementhai Home Mart and domestic and overseas  |
|                     | distribution network                           |
+---------------------+------------------------------------------------+
| Strengths           | Distribution network throughou                 |
|                     | t the country to serve every customer segment. |
|                     |                                                |
|                     | -   Modern, accurate, and fast transportation  |
|                     |     network and warehouse management.          |
|                     |                                                |
|                     | -   Seventeen foreign branches all over the    |
|                     |     world.                                     |
|                     |                                                |
|                     | -   Well-accepted products.                    |
+---------------------+------------------------------------------------+

+---------------------+------------------------------------------------+
| Major Business      | -   Enhance stronger existing business whereas |
| Policy              |     creating continuous growth for new         |
|                     |     potential business.                        |
+---------------------+------------------------------------------------+
| Business            | -   Enhance logistics business and efficiently |
| Development Policy  |     increase the distribution system for both  |
|                     |     domestic and overseas.                     |
|                     |                                                |
|                     | -   Develop both domestic and overseas         |
|                     |     channels of distribution.                  |
|                     |                                                |
|                     | -   Improve key fundamentals in distribution   |
|                     |     business.                                  |
|                     |                                                |
|                     | -   IT development                             |
|                     |                                                |
|                     | -   Organization development                   |
|                     |                                                |
|                     | -   Effective management system                |
|                     |                                                |
|                     | -   Synergy and benchmarking                   |
+---------------------+------------------------------------------------+

Cementhai Holding

Cementhai Holding Co., Ltd. oversees investments in non-core businesses,
fair-returned businesses, and the businesses that the Group is reducing
its role, mainly some joint ventures, i.e. tire and automotive parts,
electrical components, agricultural machines, and steel. Business policy
consists of cost and expense control, new product, new overseas market,
and product development to respond to customer needs. The ultimate
objective is to develop operational capability and achieve highest
operating performance and cash generation.

Cementhai Property

Cementhai Property (2001) Co., Ltd., formerly named Siam Tyre Co., Ltd.,
was founded as a private company on October 9, 1962 and became a public
company on February 7, 1994. On December 13, 2001, its name was altered
to Cementhai Property (2001) Public Company Limited to act as a holding
company to manage the Group industrial estate.

Cementhai Property Business is determined to add highest value to all
stakeholders by being a solution provider for industrial estate
customers, being a property and office building manager, as well as
finding opportunity to maximize highest value in the future.

Revenue Structure for 2005

[]

  Notes: Financial figures classified according to business type before
  inter-group adjustments.

  * Profit (Loss) from associated companies is on equity method.

  ** Figures shown on consolidations basis after adjustments, e.g. sales
  among Cement, Building Products, and Distribution Businesses were
  adjusted.

  [][][][][]