Part 2. Management and Corporate Governance

7.1 Share and Shareholders

Pato Chemical Industry has a registered capital of Bt 142,455,000 (one
hundred and forty two million four hundred and fifty-five thousand
Baht), of which Bt. 140,000,000 (one hundred and forty million Baht) is
paid-up capital. There are 142,455,000 shares, valued at Bt. 1 per
share. Pato Chemical Industry invests in a subsidiary company, Pato Crop
Care Co., Ltd. Investment record in Pato Crop Care Co., Ltd. is as
follows:

+----------------------+---------+--------------------+---------------+
|   Date               | Nati    |                    |   Holding     |
|                      | onality | Investments(share) |   Ratio       |
+----------------------+---------+--------------------+---------------+
| 31 December          | Thai    |   5 Million Baht   |   99.99 %     |
| 2011-2013            |         |                    |               |
+----------------------+---------+--------------------+---------------+

Shareholders’ Equity of Pato Chemical Industry PCL, as of 31 December
2013

  ---------------------------------------- ------------------------------
                                           Unit : Thousand Baht

                                           Amount

  Registered Capital                       142,455

  Paid Up Capital                          140,000

  Retain Earning                           222,656

  Legal Reserve                            14,280

  Shareholder Equity                       521,270

  Book Value(Per Share)                    3.72

  Par Value (Per Share)                    1.00
  ---------------------------------------- ------------------------------

7.2 Shareholders Structure

+-----------------------------+--------------------+------------------+
| Name of Shareholders        | Number of Shares   | Percent          |
|                             |                    |                  |
|                             | As of 30/12/14     |                  |
+-----------------------------+--------------------+------------------+
| 1. Trillit                  | 50,100,000         | 35.79            |
|                             |                    |                  |
| Mr. Metha Trillit           |                    |                  |
|                             |                    |                  |
| Mrs. Viphanee Trillit       |                    |                  |
|                             |                    |                  |
| Dr. Viwat Trillit           |                    |                  |
|                             |                    |                  |
| Mrs. Ratchanee Trillit      |                    |                  |
+-----------------------------+--------------------+------------------+
| 2. Pojanalai                | 16,590,000         | 11.85            |
|                             |                    |                  |
| Mr. Chaovut Pojanalai       |                    |                  |
|                             |                    |                  |
| Mrs. Wantana Pojanalai      |                    |                  |
|                             |                    |                  |
| Ms. Charina Pojanalai       |                    |                  |
|                             |                    |                  |
| Mr. Churat Pojanalai        |                    |                  |
+-----------------------------+--------------------+------------------+
| 3. Wesaratchawest           | 8,788,100          | 6.28             |
|                             |                    |                  |
| Mr. Suvit Wesaratchawest    |                    |                  |
|                             |                    |                  |
|   Mr. Sutham Wesaratchawest |                    |                  |
|   Ms. Pornpring             |                    |                  |
|   Wesaratchawest            |                    |                  |
|                             |                    |                  |
| Ms. Sutaree Wesaratchawest  |                    |                  |
|                             |                    |                  |
| Mr. Boonsak Wesaratchawest  |                    |                  |
+-----------------------------+--------------------+------------------+
| 4. Choemgvivatkit           | 9,061,850          | 6.47             |
|                             |                    |                  |
| Mr. Surachai Choengvivatkit |                    |                  |
|                             |                    |                  |
| Mr. Suwat Choengvivatkit    |                    |                  |
|                             |                    |                  |
| Ms. Waraporn Choengvivatkit |                    |                  |
|                             |                    |                  |
| Ms. Ratchanee               |                    |                  |
| Choengvivatkit              |                    |                  |
|                             |                    |                  |
| Mr. Krinagkrai              |                    |                  |
| Choengvivatkit              |                    |                  |
+-----------------------------+--------------------+------------------+
| 5. Free Float               | 55,460,050         | 39.61            |
+-----------------------------+--------------------+------------------+
| Total                       | 140,000,000        | 100.00           |
+-----------------------------+--------------------+------------------+

Note: Grouping by family name including spouse, sons and daughters, and
siblings.

7.3 Issuance of other securities

In 2012, the Company issued ESOP scheme to executive and employees to
keep their spirits up as detailed below:

At the extraordinary shareholder’s meeting No.1/2012 held on 14 November
2012, the shareholders passed the resolution to allocate the ESOP
warrants of 2,800,000 units without any consideration to employees of
the Company. The warrants are 3 years maturity commencing from date of
issue. The exercise price is Baht 8.20 per share under the exercise
ratio of 1 warrant per 1 new share. Holder can exercise right 4 times,
in March 2015/ June 2015/September 2015 and December 2015.

The warrants were allocated to the employees on 2 January 2013 with the
first exercise date on 31 March 2015.

7.4 Policy on Dividend Payment

Pato Chemical Industry PCL. expects to pay dividend to shareholders not
less than 40% of net profit Dividend Payout Ratio for 2009-2014
Operational Result

Dividend Payout Ratio for 2009-2014 Operational Result of Pato Chemical
Ind. PCL.

+---------+------------+--------------+--------------+---------------+
| Year    | Earnings   | Dividend per | Percentage   | Total         |
|         | Per Share  | Share        | of Net       | Dividend Paid |
|         |            |              | Profit       |               |
|         |            | Baht         |              | Mil. Baht     |
+---------+------------+--------------+--------------+---------------+
| 2009    | 1.12       | 0.95         | 84.82        | 133.00        |
|         |            |              |              |               |
| 2010    | 1.31       | 1.12         | 85.49        | 156.8         |
|         |            |              |              |               |
| 2011    | 1.23       | 1.08         | 87.80        | 151.20        |
|         |            |              |              |               |
| 2012    | 0.61       | 0.60         | 98.36        | 84.00         |
|         |            |              |              |               |
| 2013    | 0.96       | 0.92         | 95.95        | 128.80        |
|         |            |              |              |               |
| 2014    | 0.92       | 0.92         | 99.79        | 128.80        |
+---------+------------+--------------+--------------+---------------+

Dividend Payout Ratio for 2013-2014 Operational Result of Pato Crop Care
Co.,Ltd.

+---------+------------+--------------+--------------+--------------+
| Year    | Earnings   | Dividend per | Percentage   | Total        |
|         | Per Share  | Share        | of Net       | Dividend     |
|         |            |              | Profit       | Paid         |
|         |            | Baht         |              |              |
|         |            |              |              | Mil. Baht    |
+---------+------------+--------------+--------------+--------------+
| 2013    | 9.08       | 8.00         | 88.07        | 8.00         |
|         |            |              |              |              |
| 2014    | 5.22       | 5.20         | 99.62        | 5.20         |
+---------+------------+--------------+--------------+--------------+

8. Management Structure

The company comprises of: - Board of Directors

  - Audit Committee

  - Management

8.1 Board of Directors as of December 31, 2013 are as follows:

  ------------------------- ------------------------- --------------------
  Name                      Position                  Holding office from

  1. Mr. Metha Trillit      Chairman/President        April 24, 2012

  2. Dr. Viwat Trillit      Managing Director         April 22, 2014

  3. Mrs. Wantana Pojanalai Director                  April 24, 2012

  4. Mr. Chaovut Pojanalai  Director                  April 23, 2013

  5. Mr. Suvit              Director                  April 24, 2012
  Vesaratchawest                                      

  6. Mr. Surachai           Director                  April 22, 2014
  Choengvivatkit                                      

  7. Ms. Ratchanee Trillit  Director                  April 22, 2014

  8. Mr. Sahai              Independent Director      April 22, 2014
  Supsoontornkul                                      

  9. Mr. Lertchai           Independent Director /    April 23, 2013
  Leelayonkul               Chairman of Audit         
                            Committee                 

  10. Mr. Chaiwat           Independent Director /    April 23, 2013
  Chandarasrivongs          Audit Committee Member    

  11. Dr. Chongrak          Independent Director /    April 23, 2013
  Prichanont                Audit Committee Member    
  ------------------------- ------------------------- --------------------

Directors authorized to bind the company as per the Company Affidavit:
Mr. Metha Trillit or Dr. Viwat Trillit is to co-sign with Mrs. Wantana
Pojanalai or Mr. Suvit Vesaratchawest with company seal affixed to
affect company documents.

Mr. Lertchai Leelayonkul, Chaiman of the Audit Committee has strong
knowledge and experiences to review and ensure the reliability of
financial statements.

Board of Directors meeting

The Board of Directors generally holds a meeting on a quarterly basis
and holds special additional sessions when necessary with a clear agenda
set in advance. The company’s secretary is the person to prepare
invitations to meetings and related documents 7 days before the meeting
takes place. This is so that the Directors have time to consider and
study information. Each meeting takes about two and a half hours. In
2014, the Board of Directors held 5 regular meetings, 4 A/C meeting and
1 AGM as follows:

+--------------------------+---------------+------------+-------------+
| Name                     | Regular       | A/C        | AGM         |
|                          | Meeting       | Meeting    |             |
+--------------------------+---------------+------------+-------------+
| 1. Mr. Metha Trillit     | 5/5           | -          | 1/1         |
|                          |               |            |             |
| 2. Dr. Viwat Trillit     | 5/5           | -          | 1/1         |
|                          |               |            |             |
| 3. Mrs. Wantana          | 5/5           | -          | 1/1         |
| Pojanalai                |               |            |             |
|                          | 5/5           | -          | -/1         |
| 4. Mr. Chaovut Pojanalai |               |            |             |
|                          | 5/5           | -          | 1/1         |
| 5. Mr. Suvit             |               |            |             |
| Vesaratchawest           | 5/5           | -          | -/1         |
|                          |               |            |             |
| 6. Mr. Surachai          | 5/5           | -          | 1/1         |
| Choengvivatkit           |               |            |             |
|                          | 5/5           | 4/4        | 1/1         |
| 7. Ms. Ratchanee Trillit |               |            |             |
|                          | 5/5           | 4/4        | 1/1         |
| 8. Mr. Lertchai          |               |            |             |
| Leelayonkul              | 5/5           | 3/4        | 1/1         |
|                          |               |            |             |
| 9. Mr. Chaiwat           | 5/5           | -          | -/1         |
| Chandarasrivongs         |               |            |             |
|                          |               |            |             |
| 10. Dr. Chongrak         |               |            |             |
| Prichanont               |               |            |             |
|                          |               |            |             |
| 11. Mr. Sahai            |               |            |             |
| Supsoontornkul           |               |            |             |
+--------------------------+---------------+------------+-------------+

  Minutes of the meetings have been recorded and endorsed by directors,
  so that they can be checked by related parties.

8.2 Managements as of December 31, 2014 are as follows

  ----------------------- -----------------------------------------------
  Name                    Position

  1. Mr. Metha Trillit    President

  2. Dr. Viwat Trillit    Managing Director /Acting Administration
                          Manager/Finance Manager

  3. Mr. Chanwut          Marketing Manager
  Kooniyaphantu           

  4. Mr. Lee Ji Zong      Factory Manager

  5. Mr. Visut            Accounting Manager
  Vanijcharoenkarn        

  6. Mr. Kawinharn        Research and Development Manager
  Palaharn                

  7. Mr. Sayan Wan-aree   Sales Manager

  8. Mrs. Parichart       Office Manager/Company Secretary
  Manuthasna              
  ----------------------- -----------------------------------------------

  Management Structure Organization Chart of Pato Chemical Industry
  Public Co., Ltd.

Accounting Manager Finance Manager Office Manager/ Company Secretary
Research & Development Manager Sales Manager

Mr.Visut Vanijcharoenkarn Dr.Viwat Trillit(Acting) Mrs. Parichart
Manuthasna Mr.Kawinharn Palaharn Mr.Sayan Wan-aree

8.3 Company Secretary

The Board of Directors’ Meeting No.6/2007 dated November 12, 2007
appointed Mrs. Parichart Manuthasna to be the Company’s secretary for
the responsibility of monitoring the compliance to the rules and the
Company’s regulations and also in line with principles of Good Corporate
Governance to allow effective management.

Scope of Duties of Company’s Secretary

  1. To give initial recommendations to the Board concerning the issues
  of legality, the Articles of Association to ensure that all
  regulations properly adhered, including to report to the Board
  concerning changes which are deemed significant.

  2. To organize shareholders’ meetings and the Board of Directors’
  meeting in accordance with the Articles of Association.

3. To record and file the minutes of the shareholders’ and the Board of
Directors’ meeting, and
also follow up activities that have been approved at the meetings.

  4. To disclose information in accordance with the Securities and
  Exchange Commission, the Stock Exchange of Thailand, and other
  regulatory authorities concerned.

  5. To communicate with the shareholders, investors and regulatory
  authorities, including to provide information to interested persons
  and stakeholders.

  6. To perform any other duties assigned by the Board or Directors.

The Company’s Secretary has the experiences in the company since 1987
and completed a training course “Corporate Secretary Development
Program” arranged by Thai Listed Companies Association with The Faculty
of Commerce and Accountancy Chulalongkon University, sponsored by Stock
Exchange of Thailand and Thai Company Secretary Club. Besides, the
company’s Secretary has been attending various trainings to develop her
knowledge for the programs related consistently and regularly.

8.4 Executives’ Remuneration

Remuneration for directors: There is no remuneration committee. The
remuneration of directors was considered by the board of directors and
was approved in 2014 shareholders’ meeting as follows:

-   The Board of directors of 11 persons received meeting allowances at
    8,000 Baht/meeting.

  Chairman of audit committee’ remuneration 25,000 baht/month totaling
  300,000 baht.

  Member of audit committee’s remuneration 12,000 baht/month totaling
  144,000 baht per person.

  Meeting Allowance for audit committee members at 4,000 Baht/meeting

  Signatory Director, Mr. Wantana Pojanalai’s remuneration 17,000
  baht/month totaling 204,000 baht.

  Total remuneration for 11 directors in 2014 was 1,332,000 baht

+--------------------------+---------------------+--------------------+
| Name                     | Position            | Remuneration in    |
|                          |                     | 2014               |
+--------------------------+---------------------+--------------------+
| 1. Mr. Metha Trillit     | Chairman            | 32,000 Baht        |
+--------------------------+---------------------+--------------------+
| 2. Dr. Viwat Trillit     | Managing Director   | 32,000 Baht        |
+--------------------------+---------------------+--------------------+
| 3. Mrs. Wantana          | Director            | 236,000 Baht       |
| Pojanalai                |                     |                    |
+--------------------------+---------------------+--------------------+
| 4. Mr. Chaovut Pojanalai | Director            | 32,000 Baht        |
+--------------------------+---------------------+--------------------+
| 5. Mr. Suvit             | Director            | 32,000 Baht        |
| Vesarachawest            |                     |                    |
+--------------------------+---------------------+--------------------+
| 6. Mr. Surachai          | Director            | 32,000 Baht        |
| Choengvivatkit           |                     |                    |
+--------------------------+---------------------+--------------------+
| 7. Ms. Ratchanee Trillit | Director            | 32,000 Baht        |
+--------------------------+---------------------+--------------------+
| 8. Mr. Sahai             | Independent         | 176,000 Baht       |
| Supsoontornkul           | Director            |                    |
+--------------------------+---------------------+--------------------+
| 9. Mr. Lertchai          | Independent         | 348,000 Baht       |
| Leelayonkul              | Director            |                    |
|                          |                     |                    |
|                          | Chairman of Audit   |                    |
|                          | Committee           |                    |
+--------------------------+---------------------+--------------------+
| 10. Mr. Chaiwat          | Independent         | 192,000 Baht       |
| Chandarasrivongs         | Director            |                    |
|                          |                     |                    |
|                          | Audit Committee     |                    |
|                          | Member              |                    |
+--------------------------+---------------------+--------------------+
| 11. Dr. Chongrak         | Independent         | 192,000 Baht       |
| Prichanont               | Director            |                    |
|                          |                     |                    |
|                          | Audit Committee     |                    |
|                          | Member              |                    |
+--------------------------+---------------------+--------------------+

Remuneration for managements: The remuneration was set in line with the
industry and in accordance with the policy set by directors based on
company and individual performance.

- 8 executives received 12,702,848.07 baht which includes salary,
commission, bonus, car expense, social security expense, life, accident
and health insurance, and provident fund.

Other remuneration

-   Provident Fund

The company has established a Provident Fund to the executives paid at
the rate of 5 % of salary. In 2013, the company has contributed funds
for the 8 executives totaled 331,200 baht.

-   ESOP Scheme for executives and Employees

At the extraordinary shareholder’s meeting No.1/2012 held on 14 November
2012, the shareholders passed the resolution to allocate the ESOP
warrants of 2,800,000 units without any consideration to employees of
the Company. The warrants are 3 years maturity commencing from date of
issue. The exercise price is Baht 8.20 per share under the exercise
ratio of 1 warrant per 1 new share. Holder can exercise right 4 times,
in March 2015/ June 2015/September 2015 and December 2015. There are 6
executives who have been allocated with such warrants which regards as
70% of total warrants issued.

The warrants were allocated to the employees on 2 January 2013 with the
first exercise date on 31 March 2015.

8.5 Personnel

There are 168 employees in 2014, the company paid compensation to
employees totaled 56,345,302 baht, which include salary, overtime,
bonuses, insurance, social security welfare and provident fund. The
subsidiary company has paid the same types of compensation to employees.

  ------------------------------ --------------------- -------------------
  Year 2014                      PATO CHEMICAL         PATO CROP CARE

  Operations (People)            121                   5

  Head Office Employees (People) 39                    -

  Managements (People)           8                     -

  Total                          168                   5

  Remuneration                   55,706,267.00         639,035.00
  ------------------------------ --------------------- -------------------

9. Good Corporate Governance

9.1 Corporate Governance Policy

The company’s Board of Directors is aware of the importance of Corporate
Governance in increasing operational transparency and shareholder
confidence, creating thorough management and acting with caution for the
greatest benefit, and which can be subject to auditing. The company is
steadfast in its aim to undertake business for the satisfaction of
shareholders and provision of good return on a continuous and secure
basis.  The company has written Good Governance Policy approved by the
board of directors as follows:

1.  Accountability

2.  Responsibility

3.  Transparency

4.  Equitable Treatment to Stakeholders

5.  Vision to Create Sustainability

6.  Ethics and Moralities

9.2 Sub-committee

The company’s Board of Directors has appointed a sub-committee to help
oversee the following operations of the company. The auditing committee
was set up on December 17, 1999.

Names of members of the Audit Committee are as follows:

Chairman of the Audit Committee Mr. Lertchai Leelayonkul

Member of the Audit Committee Dr. Chongrak Prichanont

Member of the Audit Committee Mr. Chaiwat Chandarasrivongs

Secretary to the Audit Committee Ms. Navaporn Pohthai (Internal Audit)

Terms for holding office: 3 Years

Latest renewal of terms for holding office is 2013. Mr.Lertchai
Leelayonul is a qualified audit committee with accounting experiences to
perform review of financial statements of the company.

Definition of Independent Directors is indistinguishable to the
qualifications prescribed by the SEC and SET;

1.  Holding shares not more than 1% of total voting shares of the
    company, the affiliated company, the associated companies or person
    who may have the conflict of interests (counting of the person
    concerned according to Section 258 of Securities and Exchange Act).

2.  No participation in management including employee, staff, business
    consultant who receives permanent salary or the person who has the
    power to control the company, parent company, subsidiary company,
    associated company or subsidiary companies in the same level or
    juristic person which may have the conflict of interests (at present
    and 2 years prior periods to an appointment).

3.  No blood relations, nor by way of registration in the manner of
    father or mother, spouses, brothers and sisters of full blood and
    legitimate child including spouse of legitimate child and executive,
    major shareholders or person who has power to control or person who
    is supposed to be nominated as an executive or person who has power
    to control the company or subsidiary companies.

4.  Business relation with the company

    a.  Nature of relation

-   Relation in the manner of professional service

    -   Nature of relation: Auditor, person who renders professional
        service, such as legal consultant, financial consultant,
        properties appraiser etc.

    -   Key definition included in the meaning of dependence

  - In case of auditor: Not allowed in all respects.

  - In case of person who renders professional service: Value of
  transaction more than 2 million baht per year.

-   Commercial/business relations

-   Nature of relation: Extending to all kinds of business transactions,
    i.e. normal transactions, transaction of letting/renting,
    transaction relating to asset/service and transaction of giving or
    receiving financial assistance.

-   Key definition included in the meaning of dependence: value of
    transaction ≥ 20 million Baht or ≥ 3% of NTA of the company
    whichever is lower. In this matter, to consider the value of
    transactions, it is to include transactions during 6 months prior to
    the day of doing this transaction.

    a.  In case of nature of relation under (a) with juristic person,
        person deemed to be dependent i.e. major shareholders, director
        (except independent directors/audit committee) and executive or
        partners of such juristic person.

    b.  In case of nature of relation under (a) and (b): at present and
        2-years prior periods to appointment.

    c.  Exception: In case of necessity or suitability which rarely
        happens, independent directors/audit committee may have relation
        more than level of key definition prescribed during in office
        with prior approval of the board of directors and such
        resolution must be unanimous.

5.  Not a director appointed as proxy of the company, major shareholders
    or shareholder related to major shareholders of the company.

6.  No any qualifications not be able to give an opinion independently.

7.  Independent director who has the qualifications according to 1-6 may
    be appointed by the board of directors to make decision in the
    business of the company, parent company, subsidiary company, and
    associated company, subsidiary company of the same level or juristic
    person which may have conflict of interests by collective decision.

Qualifications of Audit Committee

1.  Appointed by the board of directors or shareholders

2.  All Audit Committee must be independent director.

3.  Not a director appointed by the board of directors to make decision
    in the business of the company, parent company, subsidiary company,
    associated company of the same level or the person who may have the
    conflict of interests.

4.  Not a director of the parent company, affiliated companies or
    affiliated companies of the same level.

5.  Having duties prescribed by the Securities Exchange.

6.  At least 1 Audit Committee shall have knowledge and experience
    sufficient to perform his duties to review the reliability of
    financial statement.

Risk Management Committee

Board of Directors’ meeting in 2014 approved the setting up of Risk
management Committee consisted of directors and/or executive of the
company and the internal auditor namely;

1.  Dr. Viwat Trillit                              Managing Director/
    Chairman of Risk management Committee

1.  Mr. Chanwut Kooniyapantu           Marketing Manager

2.  Mr. Lee Ji Zong                                Factory Manager

3.  Mr. Visut Vanitcharoenkarn             Accounting Manager

4.  Mrs. Parichart Manuthasna               Office manager/Company
    Secretary

5.  Ms. Navaporn Phothai                      Internal Auditor

Risk management committee's duties and responsibilities
 1.       To consider company’s policy and overall risk management
guidelines that including significant types of risk and present to audit
committee for making a report for company board of Directors.

2.       To define company’s strategy and guideline process for risk
management by evaluating, tracing, and controlling the company’s risk to
be in an appropriate level.

3.       To lay down measures for risk management that suite with
situation and risk appetite.

4.       To follow up on the risk management policy under the risk
management guidelines along with the policies set forth.

5.       Review the adequacy of policies and risk management systems,
including the effectiveness of the system.

9.3 Appointment of Directors and Managements

-   The selection of director has not been undertaken by the nominating
    committee but the board of directors or shareholders holding more
    than 5 % of shares desires to nominate such through the process of
    joint consideration of the board of directors. The board should have
    come from a variety of professions, gender, age, and experiences
    (Board Diversity) to empower the organization with their various
    knowledge. List of nominees will then be proposed to shareholders
    for consideration and appointment in the annual general meeting of
    shareholders.

-   Shareholder(s) collectively holding shares amounting to at least 5%
    of total shares may submit their names to nominate a qualified
    director to the board of directors and propose to general
    shareholders meeting for consideration. Presently, seven directors
    represent major shareholders.

-   The company shall have a board of directors comprising of at least 5
    directors to conduct the business of the company, not less than half
    of whom shall reside within the Kingdom.

-   The directors shall be elected at the shareholder meeting in
    accordance with the following rules and procedures:

  - Each shareholder shall have a number of votes equal to the number of
  shares held.

- Each shareholder may exercise all the votes he or she has under (1) to
elect one or several persons as director or directors but the
shareholder shall not allot his or her votes to any person in any
number.

- After the vote, the candidates shall be ranked in order descending
from the highest number of votes received to the lowest, and shall be
appointed as directors in that order until all of the director positions
are filled. Where the votes cast for candidates in descending order are
tied, which would otherwise cause the number of directors to be
exceeded, the chairman shall make the decision for the remaining
appointment.

Senior Executive Recruitment

1. Set qualification for candidates on experiences, knowledge and skills
that benefit the company.

2. Nominate qualified candidates to the board of the directors for
consideration and approval.

3. Propose a succession plan of a managing director to the board of
directors for approval.

Vacancy of Directors

-   At every annual general meeting, one-third of the directors shall
    retire. If the number of directors is not a multiple of three, the
    number of directors closest to one-third shall retire for the first
    year. For the second year after the registration of the company, the
    retirement shall be selected by drawing lots. In subsequent years,
    the director who has held office longest shall retire.

-   Apart from vacation upon the expiry of his or her term, a director
    shall vacate office upon:

1)  death;

2)  resignation;

3)  lack of qualifications or possession of prohibited characteristics
    under Section 68; of Public Limited Companies Act BE.2535

4)  Removal by a resolution of the shareholder meeting of not less than
    three quarters of the number shareholders attending the meeting who
    have the right to vote and who have shares totaling not less than
    half of the number of shares held by the shareholders attending the
    meeting and having the right to vote.

5)  Removal by a court order.

-   In the case of a vacancy in the board of directors for reasons other
    than the expiration of the director's term of office, the board of
    directors shall elect a person who has the qualifications and who
    possesses no prohibited characteristics under Section 68 as the
    substitute director at the next meeting of the board of directors,
    unless the remaining term of office of the said director is less
    than two months. The substitute director shall hold office only for
    the remaining term of office of the director whom he or she
    replaces. The resolution of the board of directors shall be by a
    vote of not less than three-quarters of the number of directors
    remaining.

Leadership and Vision

The board is engaged in the business plan, budget of the company and
monitor the implementation of the management and set guidelines to
achieve concrete effectiveness with honesty, fairness and
responsibility, creativity and ability to work as a team. The Board has
established the internal control system and internal audit for the
company. The company's vision, mission and strategy have been reviewed
and sought for approval every year.

Power and Obligation of the Board of Directors

  1. To supervise and manage in order to make sure that the operations
  of the company are in accordance with the law, the objectives and
  Articles of Association of the company as well as the resolution of
  the Shareholders’ Meeting, and to protect the company’s interest based
  on good corporate governance.

2.  To establish the policy and operation direction of the company and
    to supervise the management to operate as approved plan.

3.  To make the arrangement of the Shareholders’ Meeting as an Annual
    Ordinary Shareholders’ Meeting within 4 months as from the end of
    the fiscal year of the company and the arrangement of the
    Shareholders’ Meeting as an Extraordinary Shareholders’ Meeting when
    necessary.

4.  To hold the Board of Directors’ Meeting every three months and not
    less than half of the directors will attend the meeting. The
    resolutions of any meeting of directors are decided by the majority
    of votes, in case of an equality of votes, the chairman has a
    casting vote.

5.  To make an arrangement of the balance-sheet and the profit and loss
    statement as at the end of the fiscal year of the company in order
    to present to the General Ordinary Shareholder’s Meeting to
    scrutinize the balance-sheet and the profit and loss statement, and
    the Board of Directors shall have the auditor to finish the auditing
    prior to the presentation to the Shareholders’ Meeting.

6.  To assign the power of management to the Managing Director to carry
    out the business of the company including the power to appoint or
    remove the staff of the company as well as the fixing of the
    remuneration.

7.  To scrutinize and approve the annual budget for investment and for
    business operation of the company.

8.  To implement the internal control and internal audit including
    financial control system, operation and to supervise the performance
    as well as risk control and risk management.

9.  To make an arrangement of financial information report, information
    and general information important for the shareholders properly,
    completely and sufficiently together with the verification of the
    report.

10. A director must not, without the notification to the general meeting
    of shareholders prior to the appointment, undertake commercial
    transactions, nor he or she be a partner, an executive or a
    shareholder in another juristic person of the same nature as and
    compete with that of the company.

11. The director who has a special interest in the contract entered with
    the company or the increase or decrease of the shareholders or of
    the debentures of the company, must notify the company without
    delay.

The Power and Obligations of the Chairman.

        1. To be Chairman of the Board of Directors and control such meeting to go smoothly.

         2. To oversee the general operations of the Company to be in line with obligations and company policies.

         3. To sign the document in accordance with the regulations and company’s requirements.

         4. To perform any other act designated by the Board under the laws and regulations of the Association and / or the resolutions of the Board of Directors or resolutions of the shareholders' meeting.

Power and Obligations of Executive Directors 

1.  To establish the strategic directions and business operation with
    highest effectiveness and efficiency.

2.  To evaluate and to scrutinize the investment project and annual
    budget in order to be approved by the Board of Directors.

3.  To sign in the documents binding on the company as appointed by the
    Board of Directors.

4.  To consider and approve the executing of forward contract as risk
    management of currency and foreign exchange.

5.  To allot the resources and recruit the personnel of potential for
    the highest benefit of the company.

Power and obligations of Managing Director

              1. To oversee and implement normal management and
operations of the company in accordance with regulations, policies, and
resolutions of the Board of Directors and / or the resolutions of the
shareholders' meeting.

2. To prepare business policy, business strategy and planning, and
budget funding for various projects to the Board of Directors for
approval and report on progress.

                3. To supervise, consider and approve the appointment,
dismissal and disciplinary action against employees in accordance with
the company regulations.

                 4. To sign the contract, orders, or documents on behalf
of the company.

5. To authorize other person to act on behalf for specific operations
under the scope of the mandate or orders prescribed by the Board.

6. To approve the appointment of consultants required by any project
through the Board of Directors.

7. To be a leader and a role model for ethical conduct and business
ethics.

Power and Obligations of Audit Committee 

An audit committee has the duties as delegated by the Company’s board of
directors, as follows:

(1) to review the Company’s financial reporting process to ensure that
it is accurate and adequate;

(2) to review the Company’s internal control system and internal audit
system to ensure that they are suitable and efficient, to determine an
internal audit unit’s independence, as well as to approve the
appointment, transfer and dismissal of the chief of an internal audit
unit or any other unit in charge of an internal audit;

(3) to review the Company’s compliance with the law on securities and
exchange, the Exchange’s regulations, and the laws relating to the
Company’s business;

(4) to consider, select and nominate an independent person to be the
Company’s auditor, and to propose such person’s remuneration, as well as
to attend a non-management meeting with an auditor at least once a year;

(5) to review the Connected Transactions, or the transactions that may
lead to conflicts of interests, to ensure that they are in compliance
with the laws and the Exchange’s regulations, and are reasonable and for
the highest benefit of the Company;

(6) to prepare, and to disclose in the Company’s annual report, an audit
committee’s report which must be signed by the audit committee’s
chairman and consist of at least the following information:

(6.1) an opinion on the accuracy, completeness and creditability of the
Company’s financial report,

(6.2) an opinion on the adequacy of the Company’s internal control
system,

(6.3) an opinion on the compliance with the law on securities and
exchange, the Exchange’s regulations, or the laws relating to the
Company’s business,

(6.4) an opinion on the suitability of an auditor,

(6.5) an opinion on the transactions that may lead to conflicts of
interests,

(6.6) the number of the audit committee meetings, and the attendance of
such meetings by each committee member,

(6.7) an opinion or overview comment received by the audit committee
from its performance of duties in accordance with the charter, and

(6.8) other transactions which, according to the audit committee’s
opinion, should be known to the shareholders and general investors,
subject to the scope of duties and responsibilities assigned by the
Company’s board of directors

(7) to perform any other act as assigned by the Company’s board of
directors, with the approval of the audit committee.

Summary of Significant Transaction Approved

  ------------------------------------- ---------------- ----------------
  Transaction approved                  Board of         President and
                                        Directors        Managing
                                                         Director

  1. Approval for purchasing and        Above 40 Million Less than 40
  procurement per transaction           Baht             million baht

  2. Approval for sale of inventories,  Above 40 Million Less than 40
  and fix assets per transaction        Baht             million baht
  ------------------------------------- ---------------- ----------------

  Balanced composition of Directors who are not management

  The company’s Board consists of 11 directors

2 Executive Directors namely;

-   Mr. Metha Trillit

-   Dr. Viwat Trillit

 6 Non-Executive Directors namely;

-   Mrs. Wantana Pojanalai

-   Mr. Chaovut Pojanalai

-   Mr. Suvit Vesaratchawest

-   Mr. Surachai Cheongwiwatkit

-   Ms. Ratchanee Trillit

-   Mr. Sahai Supsoontornkul (Independent Director)

  3 Members of Audit Committee namely;

1. Mr. Lertchai Leelayonkul: A qualified audit committee with accounting experiences to perform review of financial statements of the company. 

2.  Mr. Chaiwat Chandarasirvongs

3.  Dr. Chongrak Prichanont

Aggregation and Segregation of Positions

The Chairman of the Board of Directors comes from the major shareholder
group which holds 35.79% of total shares. The Chairman and the managing
director are not the same person. All work and administration must have
the approval from the board which comprises representatives of
various major shareholder groups and includes the auditing committee
which helps to re-examine and provide a counter-balance

The responsibilities of the board of directors

The company’s board of directors is the key to good governance. The
board of directors has important roles in the governance to achieve
maximum benefits for the company and is responsible for duties and
responsibilities of directors.

The structure of good governance and area of authority of the board of
directors which comprise of qualifications, appointment, position roles
as well as operations of directors and operators are clearly set
including policy, regulations, practices and working manuals which are
entirely in written documents in order to achieve mutual balance and
monitoring. At the same time, an independent internal auditor which has
roles and duties as approved by the audit committee will monitor the
operations to ensure that the company has effectively complied with the
guidelines of related laws and regulations.

The company’s board of directors has fulfilled its duties with honesty,
transparency, caution, carefulness and understanding of their roles and
responsibilities on the basis of law, regulations, rules, the company’s
restrictions, consensus of shareholders’ meeting and good governance
without any actions against the company’s benefits in order to build
confidence among investors. The company has set a rule for directors to
be appointed as director of other listed company for a maximum of 5
companies.

Board of Directors Self-Assessment

The Board of Directors has been evaluated as a collective body once a
year to review the sufficiency and effectiveness of good governance in
order to set guidelines to achieve concrete effectiveness. The result
will be used as information supporting the management to revise their
works and duties as appropriate.

Orientation of new directors
The Company is aware of the importance of the performances of directors,
an orientation has been arranged to introduce them to the Company’s
overall operations, the organization structures in order to provide them
with insights into working procedures. Essential information necessary
for their performances as the directors such as the internal work flow,
related laws, the format of the financial statements and notes to the
financial statements are also provided.

Succession plans

The company has prepared a plan of succession for key managements to
accommodate the expansion and replacement of retirees to ensure
continuity in the administration. The company also develop staff to be
ready for such succession by considering from knowledge, ability,
experience, and vision.

9.4 The governance of the subsidiary’s operations

Pato Chemical Industry Public Company Limited holds 99.99% stake of its
subsidiary, Pato Crop Care Company Limited, directors and management of
both companies are entirely the same. Same guideline, principles, scope
of practice, policies and responsibilities are all applied in equal
manner.

9.5 Protecting against the use of insider information

The company has a policy and method to prevent company executives from
using the company’s inside information for personal gain or for the
purchase of securities before the company’s financial statement is
disclosed to public.

1. The company has set a policy for the directors and the executives to
inform the board of the directors or an authorized person about the
execution of shares, 1 day prior to the trading date.

2. The company has kept its directors, management and staff informed
about relevant announcements from Securities and Exchange Commission
(SEC). The company’s directors, management and staff are required to
report their changes in security holding to SEC in accordance with
section 59 of the Securities and Exchange Act B.E. 2535 within 3 days
from the date of changes in their security holding. At the same time,
they have to inform the company’s secretary to record the changes and
update the amount of security of each director and management in order
to present to the company’s board of directors. The company’s directors,
management and staff are also informed about their punishments in case
of violation or failure to abide by the aforementioned regulations.

3. The company has regulations to prohibit its staff to reveal its
financial information and other information that may affect the price of
its security to the public. The company’s staff are also forbidden to
sell their securities within one month prior to the disclosure of the
company’s security prices to the public. Those who fail to comply with
the aforementioned regulations will be considered violently breaking the
company’s discipline and shall receive penalties ranging from warning,
wage reduction, suspension without pay to termination of employment.

9.6 Remuneration to Auditors

The company paid 530,000 Baht to the auditor for audit fee which was the
same rate as 2013. There was no non-audit fee.

9.7 Other Good Governance Practice

Conflict of interest

- The Board of Directors has received knowledge of items with conflict
of interest, and related items. These have come under careful
consideration so as to void actions that may pose a conflict of
interest, on the other hand promote liberal trade and competition.
Besides, stock market regulations concerning the revelation of such
items have been adhered to. In 2009, as required by Section 89/14 of the
Securities and Exchange Act, all directors and managements are to submit
their first report on interest of Directors, Executives to Chairman of
Audit committee and Chairman of the Board of Directors to sign for
acknowledgement. The reports must be submitted for every change. The
Company secretary will be responsible for the filing of the report.

Investor Relations

The Board of Directors places importance on presenting correct,
complete, transparent and thorough information in financial reports and
in the presentation of general information, as well as vital information
concerning company assets. The various information is disseminated via
stock market channels and communications. The company has not yet
established an investor relations work unit , but has assigned Mrs.
Parichart Manuthasna, the Office Manager and Company Secretary, to
undertake contacts with institutional investors, shareholders and as
well as analysts and related government sectors. Investors can contact
for more information at Tel 0-2318-0360-9 ext. 118 or e-mail:
pato2@cscoms.com ; mailbox@patochemical.com

Work ethics

The company has come out with a written code of ethics for the Board of
Directors and employees, to serve as a guideline for those concerned in
executing their duties with honesty. The company also holds staff
meetings on a regular basis.

Code of conduct for Directors of Pato Chemical Industry PCL.

1.  Conduct their duties honestly and with integrity, comply with all
    laws, the objectives and the articles of association of the company,
    and the resolutions of any shareholder meetings in good faith, and
    with care to preserve the interests of the company.

2.  Implement and direct the company’s policies, as well as monitor and
    supervise its operations to maximize economic value and
    shareholders’ wealth.

3.  Ensure management’s accountability to shareholders: preserve their
    rights and interests, clearly and fully disclose information.

4.  Determine to carry on the business continuously.

5.  Continuously follow and monitor the business performance and
    operations of the company according to its law and regulations.

6.  Avoid any other positions or jobs that may lead to conflicts of
    interest.

Code of Conduct for Employees of Pato Chemical Industry PCL.

Managers and employees should demonstrate their commitment to this code
by maintaining a workplace environment that require compliance with the
code. The code of conduct is not possibly inclusive for all situations
which may arise. In the event that employees run into the situations
which have not been described herewith please rely on each employee’s
good sense of what is right and also seek guidance from supervisors for
appropriate course of conduct.

1.  Perform their duties with responsibility and honesty.

2.  Increase knowledge and experience to promote integrity and personal
    growth and ability to perform more effectively and efficiently.

3.  Must be polite, considerate and maintain good relationships with
    colleagues, must not conceal any information necessary for the
    colleague to execute his/her duties, and must try to become
    well-adjusted to work in harmonious relationship with others.

4.  Maintain and promote unity among colleagues and legitimately assist
    each other of the company operational benefit as a whole.

5.  Treat subordinate fairly and compassionately, groom and develop
    subordinates for their career advancement by imparting work related
    knowledge, training and providing them with opportunities to
    increase knowledge and experience.

6.  Listen to supervisor’s opinion and recommendations relating to work,
    and deliberate on applying them to benefit company’s operations.

7.  Refrain from unethically seeking position, merit or benefits from
    supervisors or others.

8.  Must not utilize company’s information or news which have not yet
    been disclosed to the public that may be material to the company’s
    share price, to seek profit or benefit from trading of company
    stock, directly and indirectly.

9.  Avoid accepting materials, money or other benefits from individuals
    doing business with the company that may influence the business
    decisions they make on behalf of the company, except on traditional
    events or to maintain normal business relationship; however the cost
    must not be overly expensive or immoderate.

10. Keep company’s confidential information which may damageable the
    company by preventing any document or information from falling into
    the hands of outsiders.

11. Be very careful when expressing opinions to outsiders on issue that
    may detrimental to the company’s image and reputation.

12. Avoid disclosing other employees’ personal or work related
    information, and avoid any criticism that may be detrimental to the
    employee or to the company’s image and reputation.

13. Refrain from gambling, drugs, and any other behave that may damage
    personal and the company’s honor and reputation.

14. Protect the company’s property from loss, damage, misuse and
    cautiously use the company’s property in a way that maximizes
    company benefit, and must not use the property for personal benefit.

15. Perform their duties with concern about impact on health and safety
    of own self, others, and environment.

  Board of Directors report

The company’s Board of Directors is responsible for the balance sheet of
the company, and for financial information appearing in the annual
report. The said balance sheet is prepared under an accounting standard
certified throughout Thailand, with an appropriate accounting balance
that has been practiced on a regular basis chosen, and prepared with
utmost consideration and estimation. Sufficient key financial
information is also provided in remarks included in the balance sheet.
The board of directors has prepared the evaluation form to evaluate the
board of directors’ operations in order to set guidelines to achieve
concrete effectiveness.  

The Board of Directors has seen to it that effective internal control
system is maintained, so that there is good reasonable confidence that
the recorded financial information is correct, complete and sufficient
enough to maintain assets and to be aware of weak spots in order to
prevent corrupt or dubious practices. The audit committee and managing
directors have done the evaluation test of sufficiency in internal
control and assigned an independent internal auditor to summarize the
evaluation in order to receive advices on necessary adjustments.

For this reason, the company’s Board of Directors has appointed an Audit
Committee which comprises Directors not dealing in management and who
are responsible for quality of financial reports and internal control.
The views of the Audit Committee on these matters appears in the report
by the Audit Committee, which is shown in the annual report.

The Board of Directors views that the company’s overall internal control
system is at a satisfactory level and is able to create good reasonable
confidence in the consolidated balance sheet for the company as at
December 31, 2013.

(Mr. Metha Trillit)

President

10. Corporate Social Responsibility

CSR Report

Thailand is recognized as an agricultural country, despite the fact that
the agricultural sector does not take the major role to generate incomes
to the country. However the agricultural sector has still played an
important role to feed the nation, and also yield the national incomes
through export. Over the past, several countries worldwide have been
trying to increase their farming areas in order to cultivate more. Even
the countries which were unable to farm have also tried to lease
cultivated lands of other countries for this purpose. Consequently, it
can be said that the farming sector is significantly important role.

Food Security is a modern problem faced by many countries, especially
developing countries, where such problem is increasingly severe due to
the change of climate and limited area of agriculture. Therefore, each
country has to come up with measures to cope with this problem.

For Thailand, we are capable of producing sufficient food crops for
domestic consumption and exporting to other countries. However, the
government should pay attention to the following factors in order to
avoid future problems.

1.  Energy crisis has encouraged people to place less emphasis on
    producing food crops and turn to energy crops such as oil palm,
    sugar cane, cassava and physic nut.

2.  Agricultural areas have been used for producing alternative energy
    such as solar farm, which has gained increasing popularity,
    especially in Northeastern area.

3.  Agricultural labor force has continuously decreased as new
    generations prefer to work in industrial sector. Therefore,
    agricultural sector has lacked of labor force due to its high demand
    in labor.

4.  More foreigners have used legal loopholes to occupy agricultural
    areas causing some Thai people to lose the possessory right of their
    land and unable to use their land for agricultural purpose.

5.  Factors of production such as chemical fertilizer and pesticide
    chemicals must be imported from other countries causing high
    manufacturing cost.

Due to the aforementioned factors, Thai farmers have to find the way to
“produce more without expanding the area while making the efficient use
of their existing labor”. Pato Chemical Public Company Limited was,
therefore, established to answer the needs of Thai farmers for quality,
increasing productivity, and rely on less labor by providing
high-quality and effective pesticides at reasonable price while
multinational companies focus on importing finished products, which are
more expensive.

Pato Chemical Industry PCL. has imported both finished products and
Technical Grade chemicals and laid down the policy to focus on import
the Technical Grade materials as much as possible as having considered
that the Technical Grade chemicals can be formulated for their own
manufacturing process and this would cut down the production cost and
help promote the domestic income distribution since other chemical
elements, including packaging materials can be supplied domestically.
The most important thing is that the Company can monitor and control the
quality of the products better than the imported finished ones.
Definitely, this will bring about big advantages to Thai farmers and
agriculturists as they can access to the good quality agricultural
products with the lower price and cut down the farming cost.
Consequently, the past 30-year history of the company’s operation have
been secured by the reliability and trust of Thai agriculturists until
today.

10.1 Corporate Social Responsibility Policy

Pato Chemical Industry Co., Ltd. (Thailand) is a part of society, thus
the importance of doing business with social, community and
environmental awareness is to be concerned for sustainable growth and
achievement of recognition. To encourage the directors, managements and
employees to the same directions, the company takes into consideration,
the Corporate Social Responsibility and set the policies as follows:

1. To raise awareness of all employees the realization of social
responsibility and take into account the promotion of social
responsibility through corporate governance and internal control, as
well as create enterprise value focusing on activities that are correct
and honest.

2. To consider the meaningful existence of the company, moreover, the
company emphasizes the rights of all stakeholders including employees,
customers, competitors, commercial creditors, environment and society at
the well-balanced and prioritized appropriately, so all parties are
satisfied and contribute to the sustainability.

10.2 Preparation of CSR Report

The Company has prepared the CSR report in line with the framework of
CSR guidelines outlined by SET. The report will be included in the
Company’s annual report and reflect what they have planned and actually
performed. Pato Chemical Industry PCL. has committed themselves on the
vision “Supply good quality products with fair price to Thai farmers,
secure in the performance stability with the engagement of social and
environment responsibility”. Consequently, the Company has set out the
business guidance to observe the following 8 principles of social
responsibility:

+----------------------+-----------------------------------------------+
| 1. Doing business    | Board of Directors has a policy to treat      |
| with fairness        | their business partners with fairness and     |
|                      | honesty, and therefore establishes the        |
|                      | principles below:                             |
|                      |                                               |
|                      | - Avoid any business or operations which may  |
|                      | lead to the conflict of interest.             |
|                      |                                               |
|                      | - Promote the freedom of fair competition and |
|                      | avoid favoritism treatment.                   |
|                      |                                               |
|                      | - Support the protection of intellectual      |
|                      | property or patents.                          |
|                      |                                               |
|                      | - Establish the preventive measures to ward   |
|                      | off bribery and corruption, by setting up the |
|                      | rectification process, as well as the         |
|                      | monitoring function and penalty.              |
|                      |                                               |
|                      | - Promote the anti-corruption campaign among  |
|                      | the executives and staff.                     |
|                      |                                               |
|                      | - The company has remained the political      |
|                      | neutrality and never taken a part or          |
|                      | contributed funds to any political party      |
|                      | directly or indirectly, as they have          |
|                      | considered that the political stances are     |
|                      | individual and not involved corporate         |
|                      | responsibility.                               |
+----------------------+-----------------------------------------------+
| 2. Anti - Corruption | Corruption in Thailand is recognized          |
|                      | throughout the world and Thailand is ranked   |
|                      | for corruption problem in the primary. The    |
|                      | problem affects the image and standard of     |
|                      | living of Thai people as a whole for          |
|                      | instance:                                     |
|                      |                                               |
|                      | 1. Public resources may turn to someone own   |
|                      | illegally and unethically.                    |
|                      |                                               |
|                      | 2. Distortion of resources use and as a       |
|                      | result, public do not receive full benefits   |
|                      | from funds spent on the project such as poor  |
|                      | quality road or constructions which lead to a |
|                      | shorter working life than it seems, or people |
|                      | receive poor service.                         |
|                      |                                               |
|                      | 3. Politicians may take opportunity to        |
|                      | monopolize, not promoting effective and fair  |
|                      | competition and result in weak and            |
|                      | unprogressive organization.                   |
|                      |                                               |
|                      | 4. The youth and public will value wealth     |
|                      | achieved by the fraud. Small mistake,         |
|                      | privilege for own benefit will become common  |
|                      | and done by everyone. People will not believe |
|                      | in morals and ethics and lead to              |
|                      | exploitation, rules and disciplines breaking, |
|                      | and the lack of common sense to do for        |
|                      | public.                                       |
|                      |                                               |
|                      | The Company has set anti-corruption policy    |
|                      | and anti-participation to protect ourselves   |
|                      | from being involved in any kind of            |
|                      | corruptions. Shareholders will be able to     |
|                      | learn more about this issue under article no. |
|                      | 10.5 below.                                   |
+----------------------+-----------------------------------------------+
| 3. Respect on human  | The Company has supported and respected a     |
| right                | human right protection and honor individual   |
|                      | dignity. The company has put against the      |
|                      | coercive and child labor by promoting the     |
|                      | observance of the international human right   |
|                      | codes and morality in order to secure the     |
|                      | social tranquility.                           |
|                      |                                               |
|                      | In addition, the employee recruitment has not |
|                      | been decided by inborn and physical character |
|                      | traits i.e. race, gender and religion, but    |
|                      | judged on the real competency and virtue.     |
+----------------------+-----------------------------------------------+
| 4. Attainment to the | The Company has secured the protection of     |
| goal of fair         | employment by observing the fair employment   |
| treatment to         | codes of conducts as follows:                 |
| laborers             |                                               |
|                      | 1. Put the priority on the safety and         |
|                      | sanitation by arranging appropriate           |
|                      | occupational health and safety on working.    |
|                      |                                               |
|                      | 2. Provide skills and training to enhance the |
|                      | employee’s competency and render career       |
|                      | opportunity.                                  |
|                      |                                               |
|                      | 3. Return appropriate remuneration to reflect |
|                      | the workloads and job entity.                 |
|                      |                                               |
|                      | 4. Set out the pledge and complaint process   |
|                      | appropriately.                                |
|                      |                                               |
|                      | 5. Provide appropriate benefit welfare.       |
|                      |                                               |
|                      | 6. Create balance of working life and family  |
|                      | well-being.                                   |
|                      |                                               |
|                      | 7. Prevent from unfair treatment or           |
|                      | disciplinary punishment to the employees who  |
|                      | honestly work.                                |
|                      |                                               |
|                      | 8. Seek for discussions/cooperation between   |
|                      | employer and employee for solutions and       |
|                      | respect employees’ opinions.                  |
|                      |                                               |
|                      | 9. Develop and instill morals and ethics.     |
|                      |                                               |
|                      | 10. Offer employment to the disabled to       |
|                      | return the benefits to the society.           |
+----------------------+-----------------------------------------------+
| 5. Responsibility    | The following principles are observed:        |
| for customers        |                                               |
|                      | - Manufacture the good quality products which |
|                      | have been trusted by Thai farmers over 30     |
|                      | years. The products will give an efficient    |
|                      | and safe result, when the consumers follow    |
|                      | the safety directions given on the label.     |
|                      |                                               |
|                      | - Provide correct and sufficient information  |
|                      | to the consumers without propaganda by        |
|                      | navigating easily-understood instructions     |
|                      | which include the safety handling with the    |
|                      | users who are affected by the toxic chemical, |
|                      | and how to manage the storage and disposal.   |
|                      |                                               |
|                      | - Raise awareness among the consumers and     |
|                      | manufacturers to recognize the importance of  |
|                      | using the products with the least harm to the |
|                      | environment.                                  |
|                      |                                               |
|                      | - Develop the products to give the optimum    |
|                      | benefits in an environmentally responsible    |
|                      | way i.e. supplying environmental-friendly     |
|                      | products with least toxic residues.           |
+----------------------+-----------------------------------------------+
| 6. Responsibility    | - Deploy the standard technology and          |
| for environment      | manufacturing process by keeping in mind to   |
|                      | minimize the waste amount which has been      |
|                      | undergone the treatment.                      |
|                      |                                               |
|                      | - Consume the resources in an efficient way   |
|                      | by setting out energy-saving and recycling    |
|                      | policies.                                     |
|                      |                                               |
|                      | - Develop more lines of                       |
|                      | environmental-friendly products.              |
|                      |                                               |
|                      | - Prepare for a contingency plan to handle    |
|                      | the environmental rehabilitation.             |
+----------------------+-----------------------------------------------+
| 7. Cooperation with  | - Arrange social responsibility activities to |
| society and          | fulfill the society and community             |
| community            | development.                                  |
|                      |                                               |
|                      | - Maintain the pleasant surrounding           |
|                      | environments in communities.                  |
|                      |                                               |
|                      | - Render supports to the society and          |
|                      | communities to access to the fundamental      |
|                      | infrastructure i.e. building schools through  |
|                      | the functions of universities’ volunteer      |
|                      | rural development camps.                      |
+----------------------+-----------------------------------------------+
| 8. Development/      | The Company has increased the product lines   |
| Sharing of society,  | with low toxic residues and no harm to        |
| environment &        | farmers. Having started from the registration |
| internet party –     | of the hazardous chemical for agricultural    |
| Responsible          | use, the Company has to prepare for the       |
| innovation           | academic information/data about the products  |
|                      | and submit them to the Department of          |
|                      | Agriculture. In the meantime, the standard    |
|                      | laboratory test is required carrying out to   |
|                      | find out the level of chemical residues. For  |
|                      | this process, the Company dispatches the      |
|                      | sample of the products to the international   |
|                      | laboratory in U.K. to ensure the lab result,  |
|                      | and submit it to the Department of            |
|                      | Agriculture. Then the expertise will conduct  |
|                      | a test use of the product on the variety of   |
|                      | plants to recognize the efficiency of the     |
|                      | products and appropriate doze of use which is |
|                      | the best for Thai plants. This process shall  |
|                      | take more than 1 year to fulfill.             |
+----------------------+-----------------------------------------------+

Role of Stakeholders

Regulations have been set in the business ethics and employee ethics,
and focus on every stakeholders’ rights and parties concerned. They are
Internal Stakeholders which are shareholders, board of the directors,
executives, and employees and External Stakeholders which are customers,
consumers, partners or supplier, competitors, commercial creditors,
communities, environment, and social. Participation of all stakeholders
are promoted so as to know their requirements and the company will be
able to response correctly as below:

Shareholders: The Company is steadfast in its aim to undertake business
for the satisfaction of shareholders and provision of good return on a
continuous and secure basis.  The company holds a general shareholders
meeting in which there is a quorum and participants take part
in considering various agendas and acknowledge operational results. The
company realizes the right of shareholders to receive correct,
sufficient, immediate and equal information.

The Company holds a general shareholders meeting at a location where it
is convenient for directors, executives, and shareholders. Before each
meeting, the company prepares documents and these are assigned
to Thailand securities Depository Company limited which then undertakes
to send the meeting agenda and documents for prior consideration, as is
stipulated by stock exchange regulations. The company post invitation
letter published on the company's Website at least 30 days before the
meeting. To facilitate shareholders, stamp duty is also provided for
proxy authorized to attend the meeting without charge.

In 2014, the company arranged Annual General Meeting of Shareholders on
April 22, 2014 at The Royal Golden Jubilee Building. The registration
desk was opened 2 hours ahead of the meeting. The company prepares
documents and details which shareholders should have knowledge of, and
gives these to shareholders for their consideration at least 14 day
before the meeting. In the event the shareholder cannot attend the
meeting, the company includes a documentary consent of representation
together with the invitation to the meeting. With this documentary
consent of representation, the shareholder can give power of attorney
to another person or a member of the audit committee, to attend the
meeting and exercise right to vote according to the wishes of
the shareholder.

In voting, one share is equally entitled to one vote. For any connected
transaction agendas, interested shareholders will be informed to abstain
from voting.

In addition, the company makes a complete and correct record of the
meeting, which can be checked by shareholders. Directors, Audit
Committee members, Executives attended the meeting in full force. The
representative from Thai Investors Association observed the meeting,
moreover, auditors and legal advisor are appointed to verify the votes.

The Chairman of the meeting gave shareholders equal rights and freedom
to ask questions and express views and voting procedure was clearly
explained. The chairman also announced number of votes; approve,
disapprove and abstain from voting. Software and Barcode were used for
registration and vote count for fast and correct outcome.

The Company has published minutes of the meeting on the Website of the
Company within 14 days after the meeting by recording key questions from
shareholders and explanation from directors and managements and the
result of the vote on each agenda and submitted such to the Stock
Exchange of Thailand, and the Ministry of Commerce.

In 2014 the company passed the meeting quality evaluation with the total
score of 91.38

Shareholders will be able to propose any agendas to the board for
consideration before 16 February 2015 by mail, fax or e-mail:
auditcom.pato@gmail.com. The company has made an announcement to
shareholders to propose agendas or nominate director through website of
the SET on January 13, 2015.

Employees:  The Company emphasizes unity among employees, working
together in a peaceful and facilitating atmosphere, and gives employees
the opportunity to develop their potential and to utilize their
knowledge and ability to help in creating progress for themselves and
the company. The company provides reasonable and fair compensation and
fringe benefits to the employee for example annual checkup, health and
life insurance, transportation, hygienic canteen with fair price and
free rice, sport facilities, bonus, hardship allowance, annual party and
excursion, and provident fund. For security reason, the company has
established Safety, Occupational Health and Environment Committee to
regularly control safety such as heat, light, and sound including
machineries survey and maintenance.

Partners or Suppliers: The Company has treated their partners and
suppliers equally and kept in mind on the mutual fair interests for both
parties. They have stringently followed the agreement terms and
conditions. In case that any questions on the agreement have been
raised, the Company would mutually find the solution based on fair and
rational treatment i.e. never calling for or accepting other benefits or
interests which caused unfair business against their partners or
suppliers, and also strengthening a sustainable relation with the
partners and suppliers to maintain mutual trusts. The Company has
imposed strict measures to select and inspect their partners and
suppliers, especially ones manufactures for raw materials. Owning to the
current Hazardous Substance Act, in case that the Company decides to
register chemical products which are manufactured by partner, they are
required to import the partners’ products. Nevertheless, the Company has
set out a strategy to register each single category of chemical products
with more than one manufacturer. Therefore, the Company has laid down
policies to select the partners or suppliers who have manufactured
quality products and never had problem on delivery services with fair
price. If the products supplied do not meet the
requirements/specification, the partners or suppliers eagerly shows
their spirits and responsibilities to deliver a new lot of shipment,
take back the non-quality shipment, and pay compensation fairly on case
by case basis.

Customers:  The Company manufactures quality and standard products with
a fair price. In this regard, the company joined a core group to help
push for the Project for Manufacturing of Quality Products under the
Thai Crop Protection Association. The products must pass standard of the
Office of Agricultural Regulation, Ministry of Agriculture and
Cooperatives.

Consumers: Farmers are our consumers. Apart from high quality and fair
price, the company researches for more products to suite geographic
conditions, climate, and which are disease-controllable with regard to
insects and weeds, so as to increase production for farmers. At the same
time, through the help of a work team with high knowledge and
experience, the company also emphasizes providing knowledge
and correct product type usage and correct and method of usage, for the
safety of both farmers. The team will also report any complaint from
customers every month.

Competitors: The Company treats competitor as per normal practice and
follow frameworks according to law. The company has never got into any
legal case with competitors.

Commercial Creditors: The Company complies with all trade agreements
made with creditors and also makes on time payment. We treat creditors
fairly with accountability and transparency to maintain a sustainable
relationship with trust to each other.

Environment: The Company’s environmental policies comply with
environmental management regulations, as follows:

1. Promoting the development of technology that reduces negative impacts
on environment in the process of production, packaging, distribution and
waste elimination.

2. Promoting the reduction of negative impacts on environment by ways of
“Reduce”, “Reuse” and “Recycle” in the procurement and production
process.

3. Promoting the conservation of energy and natural resources.

4. Promoting the compliance with other relevant environmental laws and
regulations.

5. Providing training to raise environmental awareness amongst employees
at all levels as well as involved parties.

In order to formulate and distribute chemical products, the Company has
to be registered according to Hazard Substances Act B.E. 2551 (2008),
which has been in effect since 25 February 2008. In addition, the
Company has to be registered as agricultural chemical by three
government offices, comprising:

1. Department of Agriculture

The Company is required to submit information about the toxicity of its
Technical Grade and finished products. This information must come from a
laboratory, which has been certified with Good Laboratory Practice (GLP)
standards. In addition, the Company must have clear study plan,
standardized and testable operations as well as systematic and reliable
report, in accordance with Organization for Economic Co-operation and
Development (OECD). After that, the Company has to operate the field
trial to test the effectiveness of its agricultural chemical to each
crop and to find residues as well as the toxicity to the environment, in
order to ensure its efficiency and safety to users and the environment.

2. Department of Livestock, Ministry of Agriculture and Cooperatives

3. Food and Drug Administration, Ministry of Public Health

For organizations in number 2 and 3, the Company is required to submit
its hazard substances to be tested for the amount of Active Ingredient
(AI) at the Bureau of Chemicals and Hazardous Substances, Department of
Medical Sciences, and the efficiency to flying and crawling insects at
the National Institute of Health, Department of Medical Sciences, with
the reference to WHO (Pesticides and their application for the control
of vectors and pest of public health importance), to ensure that its
products are effective and have no negative impacts on consumers. After
that, the Company can be registered with Food and Drug Administration or
Department of Livestock.

The importance to the environment concern, the production base is then
in the Bangpoo Industrial Estate, with cooperation given to all sides
of government and private sectors by strictly adhering to related
conditions and regulations regarding Safety, Occupational Health and
Environment including the waste collection and segregation. Waste
collection and waste segregation in the 2014 was totally 10,223
kilograms. The company hires a professional company to handle wastes and
pollutants as per types of wastes. Official from division of public
health and environment sign his name as witness before wastes are sent
for being treated or eliminated. In order not to pollute the
environment, for waste water, a water treatment tank was built. Waste
water will be treated to the standards set by the Industrial Estate,
then let the treated water flow into the sewer of the Industrial Estate
for further treatment.

Government Agencies: The Company focus on the government agencies by
follow and abide by rules and regulations as they are considered factors
supporting smooth businesses in accordance with policy, guidance, rules
and regulations. The company has coordinated to exchange information
with officers concerned regularly on an appropriate and transparent
basis in order to build good relationships with government agencies.

Social: The Company is attentive to social activities on a regular basis
by shifting the distribution of assistance and supports as appropriate
to build a good relationships with the community we are part of.

Intellectual Property: The Company recognizes the importance of
intellectual property and copyrights of those who have put effort into
creating innovations. Therefore, the Company has set up policies to
prevent the breaking of intellectual property rights, as follows:

1. Employees must comply with laws, regulations and agreements about
intellectual property rights including patent, copyrights and trade
secrets.

2. Outside information must be carefully checked before being used to
ensure that it will not break intellectual property rights.

3. The Company uses only legal software and fonts from copyright
holders.

4. Upon termination of employment, employees must hand in information
about trade secrets in all forms back to the Company.

5. The employees who deal with trade secrets should use appropriate
measures to keep trade secrets, such as

-   Names of customers and distributors

-   Working procedure

-   Manufacturing process

-   Product formula

-   Business strategy, business plan, marketing plan and information
    about the Company’s Research and Development (R&D)

The company provides complain channels for stakeholders through audit
committee by mail to Audit Committee, Pato Chemical Industry PCL. Pato
Building, 3388 New Petchburi Rd. Bangkapi, Huaykwang, Bangkok 10310, and
Fax: 02 3180367 or e-mail: auditcom.pato@gmail.com

CSR in Process

The Company’s Risk Management Committee has studied the impacts of the
company’s business operations on stakeholders by taking into accounts
the importance of all groups of stakeholders to ensure that its
operations are appropriate, fair and complete on the basis of economy,
society and environment in order to achieve sustainable development.
After that, the committee has selected the relevant topics of risk,
which are relevant to the Company by taking the Company’s financial
report into consideration.

For 2014, the Company faced risks from considerable decrease in demand
for chemical pesticides during growing season due to outside factors,
which are uncontrollable.

1.  Thai farmers suffered from a slump of prices in various products
    such as rice and Para rubber and the government was unable to solve
    this problem.

2.  Purchasing power of most of the farmers has been greatly reduced due
    to the fact that they did not receive the money from the
    government’s rice-pledging program. The farmers, therefore, did not
    have capital for the new growing season.

3.  The most severe drought in 15 years, especially in the central area,
    caused water levels in several dams to set a new record low.
    Cultivated areas have been limited according to the amount of water
    supply. Out-of-season rice cultivation has been prohibited in
    several areas.

4.  The number of insect pests’ outbreaks has been greatly reduced due
    to the decrease in cultivation. Life cycles of insects have been cut
    short.

The Company’s management recognizes that under the circumstances of
uncontrollable risks, which lead to the materiality topics that should
be done to achieve the sustainability, which is mitigating the decreased
sale volumes and incomes by selecting appropriate activities or projects
to serve the needs.

+-----------------------+----------------------------------------------+
| Needs                 | Activities or Projects to respond            |
+-----------------------+----------------------------------------------+
| Helping farmers who   | Farmer Fund: Cooperate with Bank for         |
| have not been paid    | agriculture and agricultural co-operatives   |
| under rice-pledging   | (BAAC) by gathering deposit without interest |
| scheme                | for the government to pay outstanding debt   |
|                       | to farmers, so the farmers will be able to   |
|                       | have fund for next cultivating season.       |
+-----------------------+----------------------------------------------+
| Delivering products   | Modern Lab : Nowadays, there are many        |
| of high-quality and   | scientific equipment which have been         |
| efficiency            | modified to be more modern, more efficiency, |
|                       | easy to use, and more accuracy. So the       |
|                       | company remodel a lab with standard          |
|                       | equipment, to ensure that products delivered |
|                       | meet the needs and expectation of the        |
|                       | customers. Agrochemical products have been   |
|                       | being random sampling from stores or from    |
|                       | factory by inspectors from department of     |
|                       | agriculture to analyze active ingredient     |
|                       | (AI) for quality and efficiency regularly to |
|                       | ensure the benefit protection for farmers.   |
|                       | For over 30 years of operation, the company  |
|                       | guarantees the delivery of high-standard     |
|                       | products to customers.                       |
+-----------------------+----------------------------------------------+
| Protecting risk from  | GPS devices for trucks: Not only for more    |
| corruption            | safety to the company’s properties and       |
|                       | drivers, GPS devices help observe a driver’s |
|                       | behavior. The fuel costs decrease            |
|                       | significantly by nearly 50 percent compared  |
|                       | to the period before the devices were set    |
|                       | up.                                          |
+-----------------------+----------------------------------------------+
| Saving Energy         | 1. Using E20: Cars for sale employees and    |
|                       | directors should be able to use E20 for      |
|                       | fuels and there are very well cooperated.    |
|                       |                                              |
|                       |   2. Electric Forklifts: Electric forklifts  |
|                       |   have been replaced the diesel ones for     |
|                       |   factory and warehouse area. Such           |
|                       |   replacement not only reduces gasoline cost |
|                       |   but it also reduces air pollution in the   |
|                       |   factory and provide hygiene and safety     |
|                       |   working place for employees.               |
|                       |                                              |
|                       | 3. Energy Saving Light Bulbs: Adapting and   |
|                       | changing all electric lights to energy       |
|                       | saving light bulbs.                          |
|                       |                                              |
|                       |   4. Full Carload: Previously, the company   |
|                       |   had been delivering goods to each          |
|                       |   customers by order and frequently, not a   |
|                       |   full carload. Thus, there were plenty of   |
|                       |   costs and wasting of times and labors. The |
|                       |   company has forecasted and begun           |
|                       |   pre-production planning for products that  |
|                       |   expected to be ordered in the future to    |
|                       |   manage full carload delivery. However,     |
|                       |   customers still receive goods on time.     |
+-----------------------+----------------------------------------------+
| Safe and proper use   | Agriculturists meeting                       |
| of pesticides         |                                              |
|                       | A hearsay that Thai agriculturists use lots  |
|                       | of agrochemicals, but in fact, compared to   |
|                       | many other developed countries, the use of   |
|                       | agrochemicals are much higher than Thailand  |
|                       | several times. Statistical data collected by |
|                       | academics at Wageningen University (Leading  |
|                       | Agricultural University, Netherlands) found  |
|                       | that the use rate of agrochemicals each year |
|                       | per area in Thailand compared to other       |
|                       | developed countries are as follows: Thailand |
|                       | is 1.1 Kg. per hectare (6.25 rai) , U.S.A is |
|                       | 2.4 Kg. per hectare, German is 4 Kg. per     |
|                       | hectare, The United Kingdom is 5.8 Kg. per   |
|                       | hectare, France is 6 Kg. per hectare,        |
|                       | Belgium is 12 Kg. per hectare, Japan is 17.5 |
|                       | Kg. per hectare, and Netherlands is 20.8 Kg. |
|                       | per hectare. According to the data, it can   |
|                       | be seen that the developed countries’ use    |
|                       | rate are much higher than Thailand. Some     |
|                       | countries’ using chemicals rate are as many  |
|                       | as 18 times over Thailand. The issue of Thai |
|                       | agriculturists is not the overuse of         |
|                       | chemicals, but they are using them in the    |
|                       | wrong ways. Most of them do not carefully    |
|                       | pay attention to the instructions on the     |
|                       | label. Consequently, the Company organizes   |
|                       | the agriculturist meetings so as to give     |
|                       | them lectures about self-defense by wearing  |
|                       | a protective clothing, proper use and        |
|                       | appropriate dosage of chemicals for each     |
|                       | crop, and correct harvesting period as per   |
|                       | details prescribed on the label. Besides,    |
|                       | there are a follow up program to ensure if   |
|                       | the agriculturists follow our instructions,  |
|                       | in order to instill understanding, reduce    |
|                       | the of using wrong types and overuse of      |
|                       | agrochemicals. The overuse may cause some    |
|                       | impact to agriculturists themselves on toxic |
|                       | overdose, pest resistance, residues in       |
|                       | plants and environmental contamination and   |
|                       | adversely affect consumers. In addition, it  |
|                       | may cause the losing of opportunities to     |
|                       | export vegetables and fruits and unable to   |
|                       | be the World Kitchen eventually.             |
+-----------------------+----------------------------------------------+

CSR Activities in Process (ongoing)

Project of Excellent Performance, Dividend Shares for Investors

The Company has recognized the importance of a good governance and
transparent management with professionalism to secure the stability of
business. As a result of continuous efforts, the Company has been
selected by the Stock Exchange of Thailand as the Outstanding
Performance Award in 2010 and 2011. However, as the consequence of the
new Hazardous Chemical Act, the Company sustained some operational
impacts as they were required to start the registration process of the
hazardous chemicals, as the existing registration of import,
manufacturing and possession had been annulled under the new Act. At
present, the company can apply more registrations of hazardous
substances. Moreover, the company has focused on the liquidity
management by investing in general fixed income fund, bond, and equity
fund of listed company with regular high performance and dividends paid
to investors to enjoy tax privilege.

According to the performance, the company has been awarded with its
third year of SET Awards for Outstanding Company Performance and the
first year for Best Company Performance Awards for a small company which
incomes under 2 billion baht. The company has provided shareholders with
regular good dividend as per afore mentioned Dividend Policy topic.

Project of Safety Products to Farmers and Environment

  DOA has approved products of low toxic residue and environmental
  friendly to PATO as follows:

- Isoprothiolane 41.76% w/v EC. (Fuji-One), from Japan, which can be
used as an element for herbicide to destroy plant diseases i.e.; Rice
Blast Disease

- Bispyribac-Sodium 20% WP, from China, used for controlling narrowleaf
weeds in paddy fields i.e. jungle rice, birds rice, wrinkle duck-beak,
Broadleaf weeds i.e.; gooseweed, Sedge i.e.: umbrella sedge, small
flower umbrella sedge, and tall fringe rush. 

- Fenpyroximate5% w/v EC. (Ortus), from Japan, used for killing mites in
plantation of orange, papaya, durian, rambutan, longan, chili, lime, and
cassava and Kansawai spider mite in rose gardens and orchid farms.

- Buprofezin 40% w/v SC. (Applaud 40 SC) from Japan, used for killing
cicada in cotton field.

- Difenoconazole + Propiconazole 15% +15% w/v EC (Patore 300), used for
protecting Dirty Pannicle and Sheath Blight in paddy field.

Project of Efficient Use of Resources

The Company has promoted the recycling process i.e. re-using paper,
turning off air-conditioning system and lighting during the lunch breaks
or unoccupied office space, taking stairs, taking car pools, etc. Though
the project did not give much quantitative result, but helped instill
the recycling mindset and behaviors in the employees who would treat the
same at their home and such behaviors descend from generation to
generation.

Project of Low Accident in Work Place

The company operate to reduce accidents at work by;

1. Finding risk place where accidents may occur in work place.

2. Preparing plans against conflagration, chemicals spilled/leaked
together with practice, evaluation, and review of the plans once a year.

3. Providing protector devices and arranging emergency response that
suit the situations.

4. Training with understanding on how to; safety perform, control,
solve, retrain, and mitigate hazards that may occur during operation,
however, ones must follow MSDS (Material Safety Data Sheets). The
operation will be controlled by staff who have a Qualification
Certificate of safety or Safety officer.

According to the plan, numbers of accident in the work place is low and
no serious accidents reported so far. Report submitted to the Department
of Labor Protection and Welfare on quarterly basis for 2012-2014 is as
follows:

Accident in work place from 2012 - 2014

  ------ ----------------------------------------------------------------
  Year   Numbers of accident

  2012   No accident (Stop of production line due to new Act.)

  2013   1 accident, 1 employee slightly injured

  2014   2 accidents, 2 employees slightly injured
  ------ ----------------------------------------------------------------

Project of Profit Rebates to Customers

The Company has set out the policy to strengthen relations with the
customers by implementing the following conducts:

1. Communicate with customers honestly and sincerely.

  2. Provide speedy delivery service.

  3. Facilitate easy access to the sales staff and welcome negotiation
  and bargaining with special business promotion.

  4. Recognize the importance of representative customers and focus on
  the retail business instead of the wholesale one in order to eliminate
  the problem of “big fish hunt small fish”

  5. For the products which have been put on shelves over the lengthy
  period of time, or disqualified, discolored or their labels are
  damaged by termites, the Company is welcomed to send the new of
  shipment.

  6. The Company has realized the importance on honoring the promise
  which they have given to the customers.

What’s more is that the Company has availed themselves for the profit
rebates given to the customer at the year end. It is found that the
customers have preferred the profit rebates than the tour arrangement or
New Year gift offering. Consequently, the customers are willing to sell
more the goods, and the Company can cut down the advertisement budgets.
This project has been successful and made the customers place their
royalty to the Company for more than 30 years.

Project of Beautiful Cloth and rubber gloves for Farmers

The Company had studied until the conclusions appeared that Thai farmers
have preferred the check shirt than anything. Therefore, the Company had
a shirt vendor supplied good quality check shirts which were used as
premium freebies for the company products. At present, around 300,000
shirts have been distributed to Thai farmers nationwide and it was
pleased that the shirts were well used by the farmers; moreover, some of
the farmers were wearing in daily life. Furthermore, the company has
launched a campaign of gloves wearing while applying, mixing, or
spraying agrochemicals. The company has attached a pair of rubber gloves
together with granule agrochemicals for farmers to use while sowing the
chemicals into the field.

Project of Hazardous Waste Reduction

As a manufacturer of agricultural products, the Company has to manage
the hazardous waste after the production process. However the Company
has formulated, manufactured and done the packaging process by
themselves, there were a small amount of waste after all since the raw
chemicals have been used up in the process except for the accidental
spillage. Decrease in the number of accident also helped reduce the
waste amounts.

Project of Same Family

The Company has committed themselves to create and enhance the
affections and unity in the workplace to strengthen the teamwork spirits
among the employees and management team. The company parties and trips
have been arranged by including the employees’ family members without
cost. The company regulations become flexible as appropriate where
everyone accepts. The examples of these successful activities included:

In 2014, there has been a staff’s child who suffered from seriously
illness and required a long period for health recovery. The Company has
relaxed the regulation’s restrictions on business leave with normal
salary paid so as the staff would be able to bring his/her child to see
a doctor and looking after his/her child until signs of recovery appear.
From such case, the company realized that there is a project of bone
marrow transplants of a public hospital that does not have enough funds
to support/research this project. To help people who need
transplantation of bone marrow as their last alternative, the company
has taken part of the scheme by providing some fund for the project.

When the schools are closed, the employees’ siblings, nephews or nieces
are allowed to work on internship program to support their families,
explore the new working experiences and spend their time in more
creative and useful way.

Earlier, the Company was affected by termination of registration of
import, manufacture and possession of the chemical under the new
Hazardous Chemical Act. Some staff was discouraged by the situation.
Therefore, the Company issued ESOP warrants for the employees in order
to raise their spirits as detailed below:

As per the Extraordinary Shareholders’ Meeting no. 1/2012, the meeting
adopted the conclusion that the issuance of ESOP warrants of 2,800,000
units in total would be allotted to the staff members with free of
charge with the exercise ration: 1 unit per 1 ordinary share at the
price of THB 8.20. The warrants shall be valid 3 years after the
issuance date. The holders of ESOP warrant shall have right to convert
the warrants to the Company’s ordinary shares for 4 times; namely,
March, June, September and December 2015.

The first allotment of ESOP was made on January 2, 2013 and the first
exercise of the convert will be March 31, 2015

Communication, questions and answers, complaints, and beneficial
information to quality work of life among employees are done via Social
Network Application for the same and equal understanding and practice.

Project of Health Promotion

The annual medical check-up has been provided to all employees,
moreover, employees’ family can attend this program at special discount
price from hospital that join the company’s project. The health and
personal accident insurance schemes have been applied for everyone,
apart from the social security insurance. Use of drugs has been
prohibited in the workplace. The annual blood test for employees and
workers at factory in searching for residue in blood is provided and
residue report has never been founded.

10.3 Business Operation and CSR Impact

The Company and its subsidiary have never been investigated or under
investigation significantly by the authority to have violated the rules
regarding the above 8 principles.

10.4 CSR Activities after Process

Projects of Development of Dream Schools

In the past, the Company had surveyed small schools surrounding the H.O.
and found that most of them were supported by Bangkok Metropolitan
Administration and received sufficient funds for school development.
However, it was found that Wat Uthaitaram Primary School was under the
Office of Basic Education Commission, and offered the Grade 1 – 6
educations. The school were supported the funds from the government by
headcount of students. At the time of survey, there were only 120
students; therefore, the school was rendered insufficient financial
supports for development. Most of students were from poor families.
Consequently, the Company had an opportunity to extend financial
supports and co-work with the school’s Development Committee Team by
procuring educational/sport equipment, providing school meals,
renovating the audio-visual education room which had been closed for
more than 10 years, supplying computers and offering education funds for
the students in need every year.

As the Company piloted the school development program, more volunteers
have joined in activities, for example, renovating the first-aid room,
and library, refurbishing computer room, sport field and rebuilding the
boundary walls. After that the school requested the development funds
from the government to renovate the school building. At present, there
are 300 students at this school.

In the past, there was no English teacher who graduated from the
directly related to field of studies. Therefore, none of grade 6
students could pass the basic national test or o-net in English
language. According to the test in 2010, a maximum score was 32 out of
100 and the minimum was 0. The Company’s employees volunteered to teach
English to the students during the lunch time which was a studying
period. Sometimes, English tutoring classes were arranged on Saturdays
to help the students from grade 5 and 6 to improve the score result.
Moreover, the Company also supported and provided o-net’s exam for grade
6 students. Presently, there is an English teacher in the school, the
purpose of coaching students have changed and focused on students to be
fun with English, to be more assertive, and to learn about culture and
tradition of other countries.

The statistical scores are as follows:

-   In 2011, maximum score is 77.50 and minimum score is 17.50

-   In 2012, maximum score is 75.00 and minimum score is 15.00

-   In 2013, maximum score is 56.00 and minimum score is 12.00

-   In 2014, maximum score is 75 and minimum score is 12.00

In 2013, the score dropped down because English tutoring classes’
timetable were held same period as school activities, so the English
classes were canceled more than half of actual hours.

In 2014, the company has coordinated with AFS alumni to arrange an
English camp with no expenses for students’ grade 5 and grade 6.

Every year, the Company coordinates with many parties to get sponsors
for a beach trip or a farewell party for students grade 6, depends on
convenience, in order to broaden their view of life experiences.

From such developments, the school has been chosen to be the one of a
Dreamed School Project and in 2014, the school has been selected to
receive royal award school for small school types in Bangkok. Awards
provide the school with fund to further improve the school on academic
performance.

Project of Community Caretaking for Safety

It was found that the public Soi next to the Head Office has poor light
and the pilferage have often taken place. The Company has arranged
lighting installation and coordinated with Bangkok Metropolitan
Administration to install CCTV to strengthen daily- life security of the
commuters. Bangkok Metropolitan Administration set up CCTV in February,
2014. In November 2014, gang of youngsters threw hand grenades into a
bus. The company reported to the police officers and the gangster were
caught in no time.

Project of Sponsorship of University’s Rural Development Camp

The Company has recognized the importance to raise awareness among the
youth to lift up their volunteering minds and generosity to the society,
and to spend their leisure time in and appropriate way. The Company has
sponsored the rural development camp of various universities. In 2014,
the Company selected to sponsor the volunteer program from Thammasat
University improving an empty space of a community near the university
to become a sport playground and provided sport equipment for people in
the community.

Donations in 2014

Donation to Ban Juerae School, Naratiwat for the project of students’
safety by installing classroom doors, and fences.

Scholarships for faculty of engineering foundation, Mahidol University.

Scholarships to Alumni of Postgraduate, Mahidol University.

Education funds to Wat Uthaitaram Primary School.

Donation for the project of Bone Marrow Transplants, Mahidol University.

Scholarships of Rajprachasamasia Foundation for orphans whose parents
died from AIDS. The children will be taken care off and given
opportunity to study in 4 sections; elementary school, secondary school
or vocational education, and university. This project has supported as
many as 300 orphans for university graduation so far.

Donation for Patumwan Demonstration School in order to bestow the fund
to Her Royal Highness Princess Maha Chakri Sirindhorn for Royal’s
pleasure.

Sponsorship of social activities was provided under the cooperation with
Samutprakarn Chamber of Commerce.

Donation to Vajiravej Witayalai Foundation under the King’s Patronage.

In addition, The Company has participated in the religious ceremonies as
appropriate.

10.5 Protection against Corruption

The company has set anti-corruption policies as follows:

1. Help reduce the corruption problems from Thai society through good
governance and internal audit. Do not provide opportunity for anyone to
take advantage of.

2. Educate employees about diligence, honesty, common, public interest,
and training employees about policy and regulation against corruption.

3. Avoid taking part in any activities that will lead to private and
public corruptions.

The internal auditor has full independence under the supervision of the
Audit Committee has conducted a risk assessment and has done an internal
audit report on the fraud submitted to the Audit Committee for the year
2013 as follows:

The Internal Audit Report on Fraud

The internal audit report on fraud has objective to consider risks from
fraud and proper risk management. In considering risks from fraud, these
factors are taken into account:

1. Need and motivation – to consider whether the company has a policy or
factor to create need or motivation for the fraud.

2. Opportunity – to consider whether the company has structure or
process to encourage the fraud.

3. Reason and honesty – to consider factors which affect the reason and
honesty of the company’s personnel.

The consideration of risk management aims to ensure that the company has
three important processes:

1. Preventive – the company has policy or system for internal control to
prevent the risk of fraud

2. Detective – the company has channel or process to detect the
abnormality in the organization

3. Responsive – the company has clear and strict penalties for those who
broke the agreement

The Company recognizes the problems and effects of corruption.
Therefore, the Company has policies against corruption, as follows:

1.  To reduce the problem of corruption from the Thai society by
    operating with good governance and using internal audit as a tool to
    prevent the corruption in the organization.

2.  To encourage employees to work diligently and honestly while placing
    emphasis on the benefit of society at large.

3.  To avoid participating in any activities that may lead to corruption
    of the private and the government sectors.

From the audit of the company’s structure, policy and internal control,
it is found that:

1. The company has structure that clearly separates duties for each
department.

2. The management has clear policy to prevent internal fraud.

3. The company has efficient internal control system for each department
to check each other’s work. For example, Sales Department is responsible
for sales order while Operation Department is responsible for warehouse
control, operation and delivery. When the Sales Department receives the
money from customers, the payment will be delivered and monitored by the
Accounting Department.

  4. The company is careful in preparing any promotional plans that may
  lead to any corruption.

5. The management is personally close to employees so they will know if
something is likely to go wrong in the company. So far, there has been
no fraud incident in the company.

  (Ms. Navaporn Pohthai)

Independent Internal Auditor

11. Monitoring & Supervision System, Internal Control and Risk
Management

The Company has realized the importance of the effective internal
control system at the levels of both executive and operation. Therefore,
they have supervised the utilization of the company resources and
separated the internal control work from other functions. The external
internal auditor has been engaged in order to independently inspect the
operations with the balance of monitoring and supervision. In addition,
the financial internal control has been established to supervise the
financial issues. The concerned issues shall be reported to the
in-charge executives and the regulations in writing have been given to
be used as operational guidelines. The internal auditing team shall
report the audit result directly to the Board of Auditing Committee.

In the meeting of Board of Auditing Committee No. 1/2015 on February 17,
2015, Miss Navaporn Phothai has been designated as the Company’s
internal auditor for 2015. The Board of Auditing Committee has
considered that Miss Navaporn has suitable qualification for this
responsibility as she has worked independently in the auditing field,
and joined in Pato Chemical Industry PCL for 5 years. The designation,
dismissal and transfer of the chief internal auditor shall be considered
and approved by the Board of Auditing Committee. The qualification of
the internal auditor has been shown in the Attachment No. 3.

 Report of the Audit Committee

The Audit Committee of Pato Chemical Industry Public Company Limited
compose of 3 Independent Directors and Internal Auditor serves as
secretary to the Committee.

The duties and responsibilities of the Audit Committee are to review the
financial statements to be conformed to the generally accepted
accounting principles, to review the effectiveness and adequacy of
internal control system, to review the Company’s activities to abide by
the rules and laws concerned, to give recommendation to the Board of
Directors to propose an external auditor to the shareholders’ meeting
for appointment, and to execute any other duties as assigned by the
Board of Directors. The board of directors by the audit committee
undertook the hiring of advisor to evaluate risks of all business units
of the company and reviewed the internal control relatively with the
significant risk level evaluated.

During 2014, the Audit Committee convened 4 meetings with the external
auditors, internal auditor, and the managements to review the Company’s
risk evaluation result, annual audit plan, and the result of internal
control to be in compliance with standard set for the mentioned
objectives. It also reviewed the Company’s financial statements prior to
its publication. There has been one meeting where the management do not
attend the first part of meeting in order that the audit committee, the
external auditors, and the internal auditor will be able to discuss
freely and appropriately. The Audit Committee has come to the opinion
that fiscal year ended December 31, 2014, the Company has an adequate
and appropriate system of internal control covering operational risk.
The preparation and disclosures of the financial statements of the
Company is also adequate and reliable.

The Audit Committee has presented its recommendation to the Board of
Directors to nominate Mr. Pradit Rodloytook or Ms. Nongram
Laoha-areedilok from AST Master Co., Ltd. to be the Company’s auditor
for approval by the shareholders’ meeting. The auditors proposed are
independent and has no relations or interest with any managements or
major shareholders. Annual auditing fee increases by 30,000 baht from
the previous year to be 560,000 baht with no other charges in 2015.

…………………………………

 (Mr.Lerthai Leelaryonkul)

Chairman of Audit Committee

17 February 2015

12. Connected Transaction.

Space Rent (1)

  ---------------------- ------------------------ ------------------------
  Company                Company                  Connected Transaction

  Pato Chemical Industry Kentex Properties Co,Ltd Pato rents office space
  PCL.                                            in Pato Building, which
                                                  belongs to Kentex
                                                  Properties Co.,Ltd.
  ---------------------- ------------------------ ------------------------

Pato rents office space in Pato Building as per following details:

+--------------+---+----------------------------------------------------+
| Location     | : | Pato Building, 3388 New Petchburi Road Bangkapi,   |
|              |   | Huay Kwang, Bangkok 10310                          |
+--------------+---+----------------------------------------------------+
| Building     | : | Kentex Properties Co Ltd (a related company)       |
| ownership    |   |                                                    |
+--------------+---+----------------------------------------------------+
| Significant  | : | Pato Chemical Industry PCL. rents the 1st-3rd      |
| Content of   |   | floor of the building with usable space of 745.82  |
| the rent     |   | square meters. The rental fee has been adjusted to |
| contract     |   | 70,000 baht per month and the duration of the      |
|              |   | contract is from 1 June 1991 to 31 May 2021.       |
|              |   | Rental fee is adjustable every 2 years. Each       |
|              |   | adjustment shall not exceed 25% of the prevailing  |
|              |   | rental rate.                                       |
|              |   |                                                    |
|              |   | The contract stipulates that the lessor is         |
|              |   | responsible for the property tax and land tax.     |
|              |   | Other out-of-pocket expense, including tax on      |
|              |   | electricity, water and other utility services are  |
|              |   | for the lessee. At present, there have not been    |
|              |   | any adjustments for the rental fee so far.         |
+--------------+---+----------------------------------------------------+

Note: Both rent contracts indicate that landlord will be responsible for
the household and property taxes based on the actual rental fee
received. Any other tax and duty including utilities expenses will be
responsible by the renter only.

(2)

  ---------------------- ----------------------- -------------------------
  Company                Company                 RPT

  Pato Chemical Industry Pato Crop Care Co.,     Pato Crop Care Co., Ltd.
  Public Co., Ltd.       Ltd.                    rents space owned by Pato
                                                 Chemical Industry PCL. as
                                                 office, manufacturing
                                                 plant, and warehouse.
  ---------------------- ----------------------- -------------------------

Pato Crop Care rent space at the factory of Pato Chemical Industry PCL.
as office, manufacturing plant and warehouse
as per following details:

  ----------------- --- ---------------------------------------------------
  Location          :   569/1 Bangpoo Industrial Estate, Soi 12, Patana 13
                        Road, Praksa, Muang Samutprakarn

  Building          :   Pato Chemical Industry PCL.
  Ownership             

  Significant       :   Pato Crop Care Co., Ltd. rents building no. 5 and 6
  Content of the        for the total area of 1,080 sq. meter with
  rent contract         machinery of Pato Chemical Industry PCL. as office,
                        manufacturing plant and warehouse. Monthly rental
                        fee is 50,000 baht. The contract is renewed for
                        another 5 years’ rent, from November 25, 2014-
                        December 31, 2019.
  ----------------- --- ---------------------------------------------------

Service Fee

+------------------+---------------------------------------------------+
| Summary of       | - Pato Crop Care Ltd. has been hiring Pato        |
| Service          | Chemical Industry PCL. to recruit management team |
| Contracts on     | or personnel to do the organization               |
| Administration   | administration and product sales management.      |
| and Sales        |                                                   |
| Management       | - Fee will be calculated equally for              |
|                  | administration and sales management on quarterly  |
|                  | net sales basis as follows:                       |
|                  |                                                   |
|                  | 1. Net sales from 1 million baht up to 50 million |
|                  | baht subject to 2% each for administration and    |
|                  | sales management. (2%+2%)                         |
|                  |                                                   |
|                  | 2. Net sales exceeding 5 million baht up to 50    |
|                  | million baht subject to 1.5% each for             |
|                  | administration and sales management. (1.5%+1.5%)  |
|                  |                                                   |
|                  | 3. Net sales exceed 100 million baht up subject   |
|                  | to 1% each for administration and sales           |
|                  | management. (1%+1%)                               |
|                  |                                                   |
|                  | - 3 year’s period from February 2, 2013 –         |
|                  | December 31, 2015.                                |
+------------------+---------------------------------------------------+

The Hazard Substances Act B.E. 2551 (2008) allows only 3 trade names to
be registered under one product. So, Pato Crop care has been established
to solve the problem of insufficient trade names for formulation to
customers’ order under customers’ trade names.