3. business operation OF EACH LINE OF PRODUCT

3.  Nature of products and services

    The Company operates in the manufacturing and sales of the cement
    and mortar products under INSEE brands as follows:

    INSEE Cement

  --------------------------- -------------------------------------------
  Brand                       Type

  INSEE Tong                  Mansonry Cement, specially formulated for
                              plastering and bricklaying works

  INSEE Dang                  Mixed cement, for masonry, plastering and
                              ordinary concrete works

  INSEE Petch                 Portland Type-1, for the production of high
                              strength reinforced concrete

  INSEE Dum                   Portland Type-3, for High Early Strength
                              concrete

  INSEE Keaw                  Portland Pozzolan (Fly ash Cement), for
                              high durability concrete or mass concrete
                              structures

  INSEE Samut                 Portland Pozzolan, Sulfate and Choride
                              Resisting Cement

  INSEE Fah                   Portland Type-5, Sulfate Resisting Cement

  INSEE Poon Keaw             Mixed cement, for masonry, plastering and
                              ordinary concrete works
  --------------------------- -------------------------------------------

INSEE Mortar

  --------------------------- -------------------------------------------
  Brand                       Type

  INSEE Mortar Max (Red)      Fine Plastering

  INSEE Mortar Max (Navy      Normal Bricklaying
  blue)                       

  INSEE Mortar Max (Sky blue) Light Weight Block (LWB) Plastering

  INSEE Mortar Max (Green)    General Plastering

  INSEE Mortar Max (Purple)   Light Weight Block (LWB) Bricklaying

  INSEE Mortar Max (Brown)    Mortar Floor Leveling

  INSEE Mortar Max (Gold)     Premium Light Weight Block(LWB) Plastering

  INSEE Mortar Max (Gray)     Mortar Concrete Plastering
  --------------------------- -------------------------------------------

The Company produced clinker and cement to serve the demand both
domestic and export. For the domestic sales, we extent the new channel
by sales through WebSALES to the customer. Moreover, The Company has
developed a new channel concept, called “INSEE SuperPro” to be an agents
from traditional stores to a more modern look with systematic processes.
Our customer and sales consultants have also been professionally trained
to take care of valued dealers in all aspects, providing service,
sharing knowledge, offering consultation, and most importantly,
delivering solutions. In addition to quality checks, The company
increased the number of Mobile Lab for mobile lab crew can also provide
consultation, advice, and any technical solutions that may be needed.

Furthermore, the company has investment in subsidiaries and related
company as following ;

-   Siam City Concrete Co., Ltd. Ready-mix concrete and aggregates

-   Conwood Co., Ltd. Construction Material

-   Khmer Cement Industry Co., Ltd. Cement trading

-   Lanna Resources Public Co., Ltd. Coal mining

3.2 Market Situation and Competition

  Business Overview of the Cement Industry in 2007

  The year 2007 marked a very challenging times for the Thai cement
  industry as the country experienced an economic slowdown which was the
  result of several domestic and overseas factors; postponements of many
  government mega-projects, lower investor / consumer confidence due to
  political uncertainties, and continuously rising energy prices
  affecting production costs.

  The country’s domestic demand decreased by 4-5 percent in comparison
  with 2006, and at the same time, the cost of production increased. To
  cope with this economic downturn, leading cement manufacturers made
  efforts to adjust themselves structurally and administratively over
  the course of last year.

  Export

  The decline in domestic cement demand has affected the whole industry
  since late 2006 and into 2007, so cement manufacturers focused more on
  their export to keep production running at full capacity. However,
  current record-high freight costs are forcing cement exporters to
  focus their businesses on nearby countries such as Vietnam, Bangladesh
  and Cambodia. Thailand’s cement export volume in 2007 was 18.2 million
  tons, a 24 percent increase over the previous year.

  Higher production costs, together with a stronger Thai Baht have
  influenced Siam City Cement Public Company Limited (SCCC) to
  temporarily lower its production capacity, starting in early 2008.
  This will unavoidably result in the country’s cement export volume
  decreasing and the 2008 year-end figure could decline from 18.2
  million tons to around 14.5 -15.0 million tons.

  Business Forecast for the Cement Industry in 2008

  Looking ahead, it is believed that domestic cement demand will remain
  much the same, or only slightly higher, with important factors being
  the many transportation projects of the government. Private investment
  in property development projects is thought unlikely to be
  significant, at least for the first half of the year. However, the
  number of residential condominium projects along the existing and new
  BTS Skytrain routes will continue to rise. The biggest factor is
  whether or not the newly formed government will be able to restore
  investor confidence. If so, this will help significantly to boost many
  industrial sectors.

  Following the national cement price increase in November 2007, the
  company sees that there is still the possibility of another increase
  this year due to rising oil prices continuing to affect both
  production and transportation costs.

  3.3 Procurement of Raw Materials and Services

Production Capacity

The Company has 3 cement production plants, with total clinker
production capacity of 12.3 million tones per year and cement production
capacity of 14.5 million tones per year.

  Raw Materials and Raw Material Suppliers

  95% of raw materials are produced in-house. The Company possesses
  mining concessions, which entitle it to produce major raw materials
  for cement manufacturing, i.e. limestone, shale and gypsum. The rest
  of 5% is procured from outside sources, both domestically and
  overseas.

  In January 2007, INSEE Aggregates commenced its operation of a
  limestone quarry at Suphanburi supplying high quality aggregates to
  Bangkok. The crushing plant at Suphanburi was upgraded in mid-year and
  the production capacity increased to over 1 million tons per year.

  Also in 2007, modifications to the sand processing plant at Ayudhya
  were successful, and a new RMX (Ready-mix) sand designed for concrete
  products was launched in mid-year. Further, a sand processing plant at
  Cholburi commenced production of high quality sand in August.

  Environmental Impact

  In doing the business, social responsibility is always taking into
  consideration. The Company believes in sustainable growth, which
  cannot be accomplished without social responsibility. The Company
  considers environment conservation as one of its most important
  responsibilities to the society. The following are activities that
  have been done by the Company in order to protect and conserve the
  environment:

-   Environment impact assessments have been performed to ensure that
    the activities, such as mining, will not inflict unacceptable
    adverse damage to the environment.

-   Reforestation and various rehabilitation activities have been done
    in the areas where the mining has been finished. The reforestation
    is included as part of the master mining plan of the Company.

-   Alternative fuels and raw materials, e.g. industrial wastes,
    agricultural wastes, have been used to replace of conventional fuels
    such as coal and lignite. This not only reduces production cost but
    also conserves natural resources.

-   Safety of employee and communities surrounding the plant has been
    place at the highest priority. The Company cares for safety in every
    step of operation whether within the Company’s premises or outside.

-   Waste control and disposal and pollution prevention are also placed
    as a high priority. For example, dust from kilns is controlled and
    reduced by highly efficient and state-of-the-art technology. The
    Company also provides the system to inspect, monitor and control
    dust dispersion to ensure the health and safety of its employees and
    communities.

  The following certifications prove the Company’s determination in
  maintaining its social responsibility, environment-friendly business
  and product quality:

-   Quality of Laboratory:

  ISO/IEC 17025

-   Quality Management System:

  ISO 9001; version 2000

-   Environmental Management System:

  ISO 14001

-   Occupational Health & Safety Management System:

  TIS/ OHSAS 18001

  The above certifications confirm that the Company is environmental law
  compliance.

  3.4 Work in Progress

  None.