13.1 Financial Statement

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13.2 Management Discussions & Analysis (Company only)

Production

During the year 2009, the company witnessed the full blown impact of
economic crisis, production volume reduced by 21% due to starting of;
the impact of global economic recession in early 2009. Our Production
during 2009 was at a level of 160,000 Mt compared to 205,000 Mt last
year.

Due to the impact of the global economic crisis, uncertainty about
future and to conserve cash, the progress on expansion project was
slowed down during the year 2009. With the sign of economic recovery
starting Q3’2009, the progress on expansion project has picked up and it
is expected to commence production by end of Q2’2010. After expansion
our capacity will be approx 300,000 Mt/year which will be one of largest
in the world at single location.

Sales Revenue

The company was also affected from the global economic crisis as auto
industry was one of the hardest hit on which company is largely
dependent. The demand in auto sector in Thailand and in the region
dropped by approx 25-30% and company’s performance follow suit with
export sales volume declined by 31% and total sales volume declined by
21%.

The sales revenue reduced by 39% from Baht 9,032 million to Baht 5,483
million in line with reduction in raw material prices.

The ratio of export to local sales for the year 2009 has changed from
45: 55. to 41: 59. It is Company’s strategy to strive the optimum
product and customer mix to enhance the contribution margin and sales
volume.

Other Income

Other income in 2009 of Baht 22 million is lower against Baht 85 million
last year.

The interest income of Baht 9 million is lower against Baht 15 million
last year mainly due to the reduction of interest rate in money market.

Dividend income of Baht 2 million is lower against Baht 14 million last
year due to effect of recession on the investee company as well.

There is a loss on exchange of Baht 4 million against gain of Baht 15
million last year mainly due to stronger Thai Baht which has decreased
export sales realization in Thai Baht.

Cost and Expenses

The cost of sales was reduced substantially by 50% from Baht 8,333
million to Baht 4,194 million due to reduction in raw material cost as
Company’s main raw material is Carbon Black Feed Stock Oil (CBFO) whose
prices are linked with International prices in the market and in 2009
oil prices reduced substantially as compared to 2008.

2008 cost of sales includes loss of diminution in value of inventories
of 416 million Baht as the company was carrying inventory of raw
material at high prices at year end and prices started falling
subsequently.

Profits

During the year 2009 which has witnessed the full blown impact of
economic crisis, production volume reduced by 21% and sales revenue by
39%. Despite that the profit from company’s Carbon Black business
improved to Baht 878 million compared to Baht 185 million in 2008 due to
strong focus in all areas of operation where as net profit on
consolidated basis also improved to Baht 1,074 million compared to Baht
450 million in 2008.

2008 Net profit was lower mainly due to recording of loss of diminution
in value of inventory and loss from energy swap contracts.

Financial Position (Company only)

Assets

The total assets as at 31^(st) Dec 2009 amounted to Baht 7,745 million
compared to Baht 7,093 million for the previous year, an increase by 9%.
Details of major assets are as follow

-   Cash

  The cash and cash equivalents and funds placed with financial
  institutions were higher at Baht 997 million compared to Baht
  239million for 2008 mainly due to higher cash profit and better
  performance.

-   Inventory

  At the year end the inventory was lower at Baht 1,069 million compared
  to Baht 1,465 million for the previous year due to better managed
  lower raw material & finished goods inventory.

-   Property, plant and equipment

  Property, Plant and Equipment increased by 10% to Baht 2,316 million
  against Baht 2,109 million last year because the progress on expansion
  project has picked up and it is expected to commence production by end
  of Q2’2010

Liabilities and Shareholders Equity

The total liabilities for the year ended amounted to Baht 618 million,
reduced by 13% from last year mainly due to provision of liability from
energy swap contracts amounting Baht 139 million in Dec’2008. In 2009
all energy swap contracts have been settled.

The payable for purchase of machinery and equipment has reduced from
Baht 121 million to Baht 96 million due to progress on expansion
project.

Earning per share

The earning per share was Baht 2.93 in 2009 compared to Baht 0.62 in
2008 due to higher profit for 2009.

Book value per share

The book value per share increased to Baht 23.76 against Baht 21.28 in
2008 due to higher profit during the year.

Analysis of Financial Ratios (Company only)

Liquidity

The company’s current ratio is at 6.69 against 4.84 in year 2008 mainly
due to no liabilities from outstanding swap contracts.

Equity

The company has historically maintained very low debt to equity ratio.
At the year end, company did not have any long term and short term
borrowings except very minor overdrawn balance. The debt to equity ratio
is only 0.09:1.

Profitability

The gross profit margin of the company increased to 23.52% as compared
to 7.74 % in 2008.The net profit margin also increased to 15.95%
compared to 2 % in 2008 mainly due to better performance.

The return on average shareholders equity based on total profit after
tax is 13% compared to 2.9% last year due to higher net profit in 2009

Efficiency

The return on fixed assets has increased by 19% to 48 % and Return on
total assets has increased from 2.65% to 11.84 % due to high profits and
no liabilities from energy swap contracts. The inventory turnover ratio
is decreased from 6.81 to 4.42 in 2009 due to decrease in inventory.

13.3 Remuneration to Auditors

1.  Audit fee

  Company, its subsidiary and associated companies have paid audit fee
  for year 2009 as per details given below

+-----------------------+------------------------+--------------------+
| Company name          | Audit firm             | Audit fee          |
+-----------------------+------------------------+--------------------+
| Thai Carbon Black Pcl | Ernst & Young Office   | Baht 900,000-      |
|                       | Limited, Bangkok,      |                    |
|                       | Thailand               |                    |
+-----------------------+------------------------+--------------------+
| Liaoning Birla Carbon | A Liaoning Zhongheng   | RMB 55,000-        |
| Co.,ltd               | Certified Public       |                    |
|                       | Accountants Co.,Ltd.   | (Baht 271,150- )   |
|                       |                        |                    |
|                       | , China                |                    |
+-----------------------+------------------------+--------------------+
| Birla Carbon Mexico,  | No auditor appointed   | No audit fees      |
| S.A.DE                | (as company is in      |                    |
|                       | initial stage of       |                    |
| C.V.                  | activities)            |                    |
+-----------------------+------------------------+--------------------+
| Aditya Birla          | Ernst & Young Office   | Baht 1,800,000-    |
| Chemicals (Thailand)  | Limited                |                    |
| Co.,Ltd               |                        |                    |
|                       | Bangkok, Thailand      |                    |
+-----------------------+------------------------+--------------------+
| P.T. Indo Liberty     | Deloitte, Indonesia    | USD.25,000         |
| Textiles              |                        |                    |
|                       |                        | (Approx. Baht      |
|                       |                        | 837,750- )         |
+-----------------------+------------------------+--------------------+
| Ameri Blend Inc, USA. | No auditor appointed   | No audit fees      |
|                       | (as company is in      |                    |
|                       | initial stage of       |                    |
|                       | activities)            |                    |
+-----------------------+------------------------+--------------------+

Other fee

+-------------------------------+--------------------------------------+
| Thai Carbon Black Pcl         | -BOI Audit fee of Baht 120,000-      |
|                               |                                      |
| Aditya Birla Chemicals        | -BOI Audit fee of Baht 480,000-      |
| (Thailand) Co.,Ltd            |                                      |
+-------------------------------+--------------------------------------+