3. Business Operation of Each Line of Product

3.  Nature of products and services

    The Company operates in the manufacturing and sales of the cement
    products. Its type is Insee Dang, Insee Fah and the high constraint
    cement, Insee Dum, and in the year 2002, the company launch the new
    product ‘Insee Tong’.

    The Company produced clinker and cement to serve the demand both
    domestic and export. For the domestic sales, we extent the new
    channel by sales through webSALES to the customer.

    Furthermore, the company has investment in subsidiaries and related
    company which by their own as following ;

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

-   Conwood Co., Ltd. Fiber cement products

-   Khmer Cement Industry Co., Ltd. Cement trading

-   Lanna Resources Public Co., Ltd. Lignite

  3.2 Market Situation and Competition

1.  Cement

  Core business of the Company is the manufacturing and the distributing
  of cement and cement-related products and services. The Company
  operates nationwide and has a share of about 28 % of the market.
  Approximately 65% of the Company’s sales volume are generated through
  the network of wholesalers and major retailers, the rest of 35% is
  direct sales to the concrete manufacturers, ready-mixed concrete
  business operators and construction companies.

  Major products are “INSEE Dang”, “INSEE Poon Keaw” (mixed cement) and
  “INSEE Petch” (portland cement) which make up 93 % of the Company’s
  domestic sales volume. The premium products i.e. “INSEE Dum” (high
  early strength portland cement), “INSEE Keaw” (Portland Pozzolan
  Cement) and “INSEE Tong” and “INSEE Mortar Max” make up 7 % of the
  Company’s domestic sales volume.

  In 2005, approximately 63% of domestic sales volume was bag-cement and
  37% was bulk-cement. The cement domestic demand was about 28.1 million
  tonnes, increasing from the year 2005 by 7%. The cement manufacturing
  industry of Thailand exported cement and clinker at approximately
  amount of 14 million tonnes in 2005 and the Company’s export volume
  share was about 36% thereof.

  The Company exported to South East Asia (56%), USA (19%), Middle East
  (15%), Africa (8%), South Asia (2%).

2.  Ready-mixed Concrete (RMC)

  In 2005, the overall RMC market growth was 12%, from 18.8 million m³
  to 21.09 million m³, compared to 2004, mainly driven by infrastructure
  construction works and steady demand from the residential construction
  sector. The Company operates its RMC business through Siam City
  Concrete Company Limited (“SCCO”), one of its wholly owned
  subsidiaries. SCCO’s sales volume in 2005 was up by 18% from 2004
  1.43% to 1.68 million m³. Competition in the market has been
  continually increased. SCCO’s retained approximately 8% share in the
  market.

  3.3 Procurement of Raw Materials and Services

Production Capacity

The Company has 3 cement production plants, with total 6 production
lines and total capacity of 12.3 million tonnes per year.

  ----------------------------------- ------------- ------- ------ --------
                                      Unit          2005    2004   2003

  Production Capacity for Clinker     Million Tonne 12.3    12.3   12.3

  Clinker Production Capacity         %             95.93   79     62.6
  Utilization                                                      

  Increase (decrease) of Production   %             21.43   26.2   (27.4)

  Available Workforce                 Shift         3       3      3

  Actual Workforce Used               Shift         3       3      3
  ----------------------------------- ------------- ------- ------ --------

  Raw Materials and Raw Material Suppliers

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

  Environmental Impact

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

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

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

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

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

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

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

-   Quality of Laboratory:

  ISO/IEC 17025

-   Quality Management System:

  ISO 9001; version 2000

-   Environmental Management System:

  ISO 14001

-   Occupational Health & Safety Management System:

  TIS/ OHSAS 18001

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

  3.4 Work in Progress

  None.