8. Management

(1) 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

  The company comprises of : - Board of Directors

  - Audit Committee

  - Management

Board of Directors and Management as of December 31, 2012 are as follows
:

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

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

  2. Dr. Viwat Trillit     Managing Director          April 19, 2011

  3. Mrs. Wantana          Director                   April 24, 2012
  Pojanalai                                           

  4. Mr. Chaovut Pojanalai Director                   April 20, 2010

  5. Mr. Suvit             Director                   April 24, 2012
  Wesaratchawest                                      

  6. Mr. Surachai          Director                   April 24, 2012
  Choengvivatkit                                      

  7. Ms. Ratchanee Trillit Director                   April 20, 2010

  8 Mr. Lertchai           Independent Director /     April 19, 2011
  Leelayonkul              Chairman of Audit          
                           Committee                  

  9 Mr. Chaiwat            Independent Director /     April 20, 2010
  Chandarasrivongs         Audit Committee Member     

  10 Dr. Chongrak          Independent Director /     April 19, 2011
  Prichanont               Audit Committee Member     

  11 Mr. Sahai             Independent Director       April 19, 2011
  Supsoontornkul                                      
  ------------------------ -------------------------- --------------------

Mr. Metha Trillit or Dr. Viwat Trillit is to co-sign with Mrs. Wantana
Pojanalai or Mr. Suvit Wesaratchawest with company seal affixed to
affect company documents.

Executive Officers as of December 31, 2012 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. Warat            Factory Manager
  Lapserisakul            

  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              
  ----------------------- -----------------------------------------------

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 Phothai (Internal Audit)

Terms for holding office : 3 Years

Latest renewal of terms for holding office is 2009. Mr.Lertchai
Leelayonul is a qualified audit committee with accounting experiences to
perform review of financial statements of the company.

Definition of Independent Directors

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 period prior 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-year period prior 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,
    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.

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
2012, the Board of Directors held 5 regular meetings as follows :

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

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

(2) Appointment of Directors

-   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 and then to propose to
    the shareholders to consider and appoint in the annual meeting of
    shareholders.

-   Shareholder(s) collectively holding shares amounting to 5% or more
    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.

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.

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 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. Chaovuth Pojanalai

-   Mr. Suvit Vesaratchawest

-   Mr. Surachai Cheongvivatkit

-   Ms. Ratchanee Trillit

-   Mr. Sahai Supsoontornkul (Independent Director)

  3 Member 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 35.08 % 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

Leadership and Vision

The board is engaged in the business plan, budget of the company and
monitor the implementation of the management.

The Board has established the internal control system and internal audit
for the company. The obligations can be examined.

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 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.

(3) 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 2012 shareholders’ meeting as follows :

-   The Board of directors of 11 persons received meeting allowances at
    7,000 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 3,000 Baht/meeting

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

  Total remuneration for 11 directors in 2011 was 1,266,000.00 baht

+--------------------------+---------------------+--------------------+
| Name                     | Position            | Remuneration in    |
|                          |                     | 2012               |
+--------------------------+---------------------+--------------------+
| 1. Mr. Metha Trillit     | Chairman            | 28,000 Baht        |
+--------------------------+---------------------+--------------------+
| 2. Dr. Viwat Trillit     | Managing Director   | 28,000 Baht        |
+--------------------------+---------------------+--------------------+
| 3. Mrs. Wantana          | Director            | 232,000 Baht       |
| Pojanalai                |                     |                    |
+--------------------------+---------------------+--------------------+
| 4. Mr. Chaovut Pojanalai | Director            | 21,000 Baht        |
+--------------------------+---------------------+--------------------+
| 5. Mr. Suvit             | Director            | 28,000 Baht        |
| Vesarachawest            |                     |                    |
+--------------------------+---------------------+--------------------+
| 6. Mr. Surachai          | Director            | 28,000 Baht        |
| Choengvivatkit           |                     |                    |
+--------------------------+---------------------+--------------------+
| 7. Ms. Ratchanee Trillit | Director            | 28,000 Baht        |
+--------------------------+---------------------+--------------------+
| 8. Mr. Sahai             | Independent         | 165,000 Baht       |
| Supsoontornkul           | Director            |                    |
+--------------------------+---------------------+--------------------+
| 9. Mr. Lertchai          | Independent         | 340,000 Baht       |
| Leelayonkul              | Director            |                    |
|                          |                     |                    |
|                          | Chairman of Audit   |                    |
|                          | Committee           |                    |
+--------------------------+---------------------+--------------------+
| 10. Mr. Chaiwat          | Independent         | 184,000 Baht       |
| Chandarasrivongs         | Director            |                    |
|                          |                     |                    |
|                          | Audit Committee     |                    |
|                          | Member              |                    |
+--------------------------+---------------------+--------------------+
| 11. Dr. Chongrak         | Independent         | 184,000 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.

- Managers received 11,484,580.01 baht which includes salary,
commission, bonus, car expense, social security expense, life, accident
and health insurance, and provident fund.

Other remuneration

-   None

(4) Good Corporate Governance

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 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.

In 2012 the company conduct annual general meeting of shareholders on
April 24, 2012. Therefore, 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.
Registration procedure is opened at least 1 hour before the meeting
time.

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.

Equitable Treatment of Shareholders

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. Directors, the Audit Committee
and managements attended the general shareholders’ meeting held in 2012.
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. The auditor and legal advisor also
observed the meeting.

Shareholders will be able to propose any agendas to the board for
consideration before 20 February 2013 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 28, 2013.

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. 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.

Sustainability 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.
Besides, the Thai agricultural sector has been expanding the lines of
produces to include other economic plants in order to meet the domestic
and international market’s demands, i.e. not only two-three major
produces, Thai agricultural sector has focused on more than rice, for
example, cassava, rubber trees, palms, oil, sugar canes, corns, tobacco,
peanuts and soybeans. The things that Thai agriculturists have to bear
in mind are “how to cultivate more to the point that they want without
expanding the farming land”. To protect their produces from insects,
pests, weeds and other plant diseases in order to gain more yields per
rai is what the agriculturists keep in mind.

Pato Chemical Industry PLC has been founded to answer that question for
the quality and quantity of the produces by providing the agrochemical
products with less cost than those imported products, therefore, the
agriculturists can cut down their cost. Through the history of 30-year
operation, it can be proved their reliability and trusts placed by the
Thai farmers. Nevertheless, the Company has still kept forwarding to
develop their environmental-friendly products, and commit themselves to
enhance the agricultural understanding and knowledge through training on
how to use the products to reduce the toxic residues. This is
sustainably beneficial to the farmers and the consumers, including the
resources which are brought for the product manufacturing.

Corporate Social Responsibility Policy

Pato Chemical Industry Co., Ltd. (Thailand) is committed in the course
of doing business in accordance with the principles of good corporate
governance. The company 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.

2. To create enterprise value focusing on activities that are correct
and honest and take into account the meaningful existence of the company
with society and recognition of relationship to environment.

The implementation of the policies, the company takes into account the
well-balanced and prioritized rights of all stakeholders including
employees, customers, competitors, commercial creditors, environment and
society. So all parties are satisfied and contribute to the lasting
success.

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 check up, 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.

In 2012, the Company set up ESOP scheme to bring up morale of employees
as details below.

The Extraordinary General Meeting of Shareholders held on November 14,
2012 resolved to increase the registered capital of 140,000,000 Baht to
142,800,000 Baht by issuing 2,800,000 shares at par value of Baht 1.00
per share. Details of the each type of capital increase are:-

+------------------------+-----------+----------+----------+--------+
| Type of capital        | Type of   | Number   | Par      | Total  |
| increase               | share     | of       | value    |  Baht  |
|                        |           |          | (TH      |        |
|                        |           | shares   | B/share) |        |
|                        |           | (shares) |          |        |
+------------------------+-----------+----------+----------+--------+
|  Specifying the       | Ordinary  | 2        | 1.00     | 2,8    |
| purpose of utilizing   |           | ,800,000 |          | 00,000 |
| proceeds               |           |          |          |        |
+------------------------+-----------+----------+----------+--------+
|                        | Preferred | -        | -        | -      |
+------------------------+-----------+----------+----------+--------+

Characteristic of securities offered

+------------------------+---------------------------------------------+
| Type of Securities     | Warrants to purchase common stock of Pato   |
|                        | Chemical Industry Public Co., Ltd.          |
|                        | “PATO-WA”                                   |
+------------------------+---------------------------------------------+
| Kind of Warrants       | Identify the holder. Non-transferable       |
|                        | except by inheritance                       |
+------------------------+---------------------------------------------+
| Unit Issued and        | 2,800,000 Units                             |
| Offered                |                                             |
+------------------------+---------------------------------------------+
| Price per Unit         | 0 Baht                                      |
+------------------------+---------------------------------------------+
| Exercise Ratio and     | 1 Unit of PATO-Wa is equal to 1 ordinary    |
| Exercise Price         | share with the exercise price of 8.20 Baht. |
|                        | Warrant holders exercising his right, will  |
|                        | receive a round number of not less than 100 |
|                        | shares or in multiples of 100 shares only.  |
|                        |                                             |
|                        | Warrant holders can exercise the right to   |
|                        | buy shares at any number of each time.      |
+------------------------+---------------------------------------------+
| Number of Shares       | 2,800,000 shares Par Value 1.00 baht per    |
| Issued to Support the  | share. It represents 2% of total paid up    |
| Exercise               | capital of 140,000,000 shares as of         |
|                        | November 14, 2012.                          |
+------------------------+---------------------------------------------+
| Warrant Term           | 3 year from the date of issuing and         |
|                        | offering                                    |
+------------------------+---------------------------------------------+
| Issuance and Offering  | January 2, 2013                             |
| Date                   |                                             |
+------------------------+---------------------------------------------+
| Duration of the        | The offering will be completed within one   |
| Allocation :           | year from the date receiving shareholders'  |
|                        | resolution. The Board of Directors and/or   |
|                        | the Executive Directors and/or President,   |
|                        | Chief Executive Officer and/or the          |
|                        | authorized delegate will determine the      |
|                        | criterion and conditions.                   |
+------------------------+---------------------------------------------+
| Exercise Period:       | The Exercise can be done four times on the  |
|                        | last official day of March, June, September |
|                        | and December of 2015. Please submit         |
|                        | application form to the Company between     |
|                        | 9.30 am to 15.30 pm. 5 days before the      |
|                        | exercise each time, or within 15 days       |
|                        | before the date scheduled for the final     |
|                        | exercise. The first exercise date and the   |
|                        | last exercise date is March 31, and         |
|                        | December 30, 2015 respectively.             |
|                        |                                             |
|                        | The Company will inform the duration of the |
|                        | exercise, exercise Price, Place and         |
|                        | Procedures by announcement made at the      |
|                        | company's headquarter and factory office in |
|                        | Bangpoo 5 days prior to each exercise       |
|                        | period.                                     |
|                        |                                             |
|                        | The company will not close the share        |
|                        | registration book for each of the exercise  |
|                        | of warrants, except for the last exercise   |
|                        | which share registration book will be       |
|                        | closed 21 days prior to the expiration of   |
|                        | the last exercise. It will be closed in the |
|                        | case of a meeting of the warrant holders as |
|                        | well.                                       |
+------------------------+---------------------------------------------+
| Secondary market for   | The warrants will not be listed on the      |
| the Warrants.          | Stock Exchange of Thailand.                 |
+------------------------+---------------------------------------------+
| Secondary market of    | The company will list its common shares     |
| common shares          | arising from the exercise of warrants to be |
| resulting from the     | traded on the Stock Exchange of Thailand    |
| exercise               | within 30 days from the last day of each    |
|                        | exercise period. Thus, the shares will be   |
|                        | able to trade on the Stock Exchange of      |
|                        | Thailand as well as the existing shares of  |
|                        | the company.                                |
+------------------------+---------------------------------------------+
| Returned or remaining  | If the warrants are not exercised for any   |
| warrants               | reasons, then there will be shares          |
|                        | remaining, the Board of Directors and / or  |
|                        | the person designated by the Board of       |
|                        | Directors will determine the allocation of  |
|                        | the remaining shares to executives or       |
|                        | employees who are not directors of the      |
|                        | Company, as appropriate. We may also cancel |
|                        | the remaining warrants.                     |
+------------------------+---------------------------------------------+

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. 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.

During the great flood, the company considered a waiver of repayment for
customers who suffered from the crisis. In addition, the company
provided vehicles to get back products which packages were bottle and
gallons damaged by the floods to check, put on new label and return to
the client without any charge.

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.

  Environment:  As all sides attach importance to the environment, the
production base is then in the Bangpoo Industrial Estate, with
cooperation given to all sides of government and private sectors.
Cooperation is given by strictly adhering to related conditions and
regulations regarding Safety, Occupational Health and Environment. The
company hires a professional company to handle wastes and pollutants.

The company is aware of the dangers of improper use of chemical and
misuse products and types, and has thus always undertaken to provide
knowledge to all parties. It has also undertaken research to find
products that least effect the environment while at the same time
effectively increase production for farmers.

In addition, to help save energy and supplies so as protect the
environment, employees and executives are encouraged to less waste and
save energy by double-side printing, switching off possible lights and
air-conditioners during lunch hour, walking up stairs, and carpooling
are for instances.

Social : The company is attentive to social activities on a regular
basis by shifting the distribution of assistance and supports as
appropriate. Major activities in 2012 were as follows :

Donated through Thai Agro Business Association for the project “
Agrochemical to protect agricultural produce for Thai economy” to
disseminate knowledge about the use of agrochemical properly so as to
protect consumer and the environment .

Sponsored voluntary camps for university students such as, Kasem Bundit
University, so as to create awareness among students to spend time
usefully by build or repair infrastructure or building for schools in
rural areas.

Encourage office staff to teach English for students at Wat Uthai Tharam
School during lunch time.

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

The Anti-Corruption Policies

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 projects 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 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 and public
interest.

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

Internal control and auditing system

The company places importance on efficient control at both the
management level and operational level. There is supervision to ensure
that company assets are used for to bring in benefit and there is
separation of duties for work executors, monitoring people and those
undertaking evaluation. This is to ensure that a balance is created and
there is appropriate check and control. In addition, there is also
internal control concerning finances, and the company has set a system
whereby a financial report is presented to administrators in each
responsible department and adhere to written regulation set. The
internal auditing division must report their findings directly to the
audit committee.

  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 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.

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, 2012.

(Mr. Metha Trillit)

President

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. Please visit our website
www.patochemical.com for more details.

 (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. Anyone with no responsibility with compiling the
financial statement will have no access to information in the financial
statement until that financial statement is officially released to the
public. Moreover, all executives and personnel must immediately report
to the company secretary of any changes or additions to the securities
they hold, so that this information is each time reported to the
Chairman of the Board.

(6) Personnel

Total Number of Employees as of 31 December 2012 was 149.

68 employees were in operating department and 81 were in manufacturing
department.

The decrease in number of employees was in line with the decrease in production and sales.

Total remuneration for all employees

Remuneration includes salary, bonus, commission, car allowance, provident fund, social security welfare, Insurance and social security welfare for 2012 is 63,818,051.00 baht.

Personnel Development Policy

- The company arranges training and seminar programs to develop
knowledge and skills for employees at the working place every year

- The company encourages employees to attend training and seminar
arranged by various organizations to update their knowledge and skills
and equip themselves for career progression.