13.1 Financial Statement

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13.2 Management Discussion & Analysis (Company only)

Production

The company is no exception to the global economic recession set in last
quarter of 2008 and felt it’s after effects. The company’s performance
till 3^(rd) quarter of 2008 was quite satisfactory and it was better
than 9 months of 2007 on consolidated basis.

Despite global and industry upheavals your company’s production volumes
reduced by only 7%. Our Production during 2008 was at a level of 205,000
Mt compared to 221,000 Mt last year.

Due to current difficult market situation, the progress on expansion
project is slowed down and expected to commence production by 2010.

Sales Revenue

Despite global and industry upheavals your company’s sales volumes
reduced by only 10%.

The sales revenue registered growth of 33% from Baht 6,802 million to
Baht 9,032 million due to increase in Sales realization rates by approx
35% mainly because of cost push increase in selling price due to very
high raw material prices.

The ratio of export to local sales for the year 2008 is same as last
year ie 45:55. It is Company’s strategy to strive the optimum product
and customer mix to enhance the contribution margin and sales volume.

Other Income

The interest income of Baht 15 million is lower against Baht 38 million
last year mainly due to the reduction of interest rate in money market.

The company has recorded the proceeds from liquidation of related
company of Baht 22 million which represent a share of retained earnings
in liquidation of Pan Century Oleo chemicals Sdn. Bdn., Malaysia, which
had been dissolved in 2007.

There is a gain on exchange of Baht 15 million against loss of Baht 42
million last year mainly due to weaker Thai Baht which has improved
export sales realization in Thai Baht.

Cost and Expenses

The cost of sales was higher by 56 % to Baht 7,917 million in 2008
against Baht 5,088 million in 2007 due to continued very high raw
material cost

The company has recorded a loss of diminution in value of inventories of
416 million Baht because the company was carrying inventory of raw
material at high prices at year end and prices started falling
subsequently.

The company has finance cost of 16 million Baht comparing with 2.2
million Baht in last year because of high interest expense to meet
working capital requirement. At the same time Company’s interest income
has gone down from Baht 38 million to Baht 15 million due to lower
interest rates and reduction in surplus funds due to increased working
capital requirements.

Profits

The company has recorded net profit of Baht 185 million for company only
in the year 2008 compared to Baht 1,083 million in 2007 by registering a
reduction of 83%. This was mainly due to impact of economic slowdown in
quarter 4 of 2008, substantial increase in cost of sales and loss of
diminution in value of inventories

Financial Position (Company only)

Assets

The total assets as at 31^(st) Dec 2008 amounted to Baht 7,093 million
compared to Baht 6,896 million for the previous year, an increase by 3%.
Details of major assets are as follow

-   Cash

  The cash and cash equivalents and funds placed with financial
  institutions were lower at Baht 239 million compared to Baht 1,122
  million for 2007 mainly due to lower cash profit, investment in fixed
  assets and to meet working capital requirements.

-   Inventory

  At the year end the inventory was higher at Baht 1,465 million
  compared to Baht 984 million for the previous year. This is mainly due
  to higher raw material and finished goods inventory at year end. The
  raw material inventory is higher due to higher raw material cost
  whereas increase in finished goods inventory is due to slowdown in
  sales in quarter 4 of 2008 due to reduction in demand.

-   Property, plant and equipment

  The company purchased additional land and also expansion project in
  progress; therefore, property, plant and equipment increased by 34.1%
  to Baht 2,109 million against Baht 1,572 million last year.

Liabilities and Shareholders Equity

The total liabilities for the year ended amounted to Baht 709 million,
increased by 66% from last year.

Details of changes in Liabilities and Shareholders Equity are as follow

-   Trade accounts payable & Payable for purchase of machinery and
    equipment

  The account payable is higher both trade account payable and payable
  for purchase of machinery and equipment in the normal course of
  business and for expansion project activities.

-   Liabilities from derivative financial instruments energy swap
    contracts

  The company is having outstanding energy swap contracts at the year
  which company has entered to hedge raw material prices

Earning per share

The earning per share was Baht 0.62 in 2008 compared to Baht 3.61 in
2007 due to lower profit for 2008.

Book value per share

The book value per share decreased to Baht 21.28 in 2008 against Baht
21.56 due to lower profit during the year.

Analysis of Financial Ratios (Company only)

Liquidity

The company’s current ratio is at 4.84, decreased by 49% mainly due to
decrease in Trade accounts receivable, increase in trade accounts
payable and liabilities from derivative financial instruments energy
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 0.11:1.

Profitability

The gross profit margin of the company decreased to 7.74 % as compared
to 25 % in 2007.The net profit margin also decreased to 2 % compared to
15.7% in 2007 mainly due to higher cost of sales and loss on diminution
in value of inventories. The return on average shareholders equity based
on total profit after tax is 2.9 % compared to 17.9 % last year due to
lower net profit in 2008

Efficiency

The return on fixed assets is reduced by 86% to 19% and Return on total
assets was reduced from 16.4 % to 2.6 % due to lower profits and
increase in fixed asset mainly for expansion project. The inventory
turnover ratio is increased from 5.6 to 6.4 in 2008 due to increase in
inventory.

13.3 Remuneration to Auditors

1.  Audit fee

  Company, its subsidiary and associated companies have paid audit fee
  for year 2008 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 | Beijing Jingdu         | RMB 75,000-        |
| Co.,ltd               | Certified Accountants  |                    |
|                       | Co.,Ltd, Beijing,      | (Baht385,102)      |
|                       | 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 1,700,000-    |
| Chemicals (Thailand)  | Limited                |                    |
| Co.,Ltd               |                        |                    |
|                       | Bangkok, Thailand      |                    |
+-----------------------+------------------------+--------------------+
| P.T. Indo Liberty     | Ernst & Young,         | USD.20,000         |
| Textiles              | Purwantono, Sarwoko &  |                    |
|                       | Sandjaja, Jakata,      | (Approx. Baht      |
|                       | Indonesia              | 701,648)           |
+-----------------------+------------------------+--------------------+

Other fee

+----------------------------+-----------------------------------------+
| Thai Carbon Black Pcl      | -BOI Audit fee of Baht 120,000-         |
|                            |                                         |
| Aditya Birla Chemicals     | -BOI Audit fee of Baht 700,000-         |
| (Thailand) Co.,Ltd         |                                         |
+----------------------------+-----------------------------------------+