2.  Business Operation

During 2008 – 2010, SCG and its subsidiaries have made significant
investment / divestments as follow:

In 2010

-   SCG Paper Thai Container Group (TCG); a 70:30 joint venture between
    SCG Paper and Rengo Company Limited, acquired the entire 100% stake
    in New Asia Industries Company Limited (NAI); a Vietnam’s producer
    and distributor of corrugated containers in Vietnam. The investment
    in NAI would allow SCG Paper to expand its capacity and customer
    base within ASEAN.

-   SCG Building Materials acquired 67.6% stake in Quality Construction
    Products Public Company Limited (Q-con); the manufacturer and
    distributor of autoclave lightweight concrete.

The Group has included assets, liabilities and operating results of NAI
and Q-Con in its consolidated financial statements since the first
quarter of 2010.

Furthermore, SCG has sold its remaining 75% stake in SIC Industrial Land
Company Limited to Hemaraj Land and Development Public Company Limited
in the third quarter of 2010. In the fourth quarter of 2010, the Group
also made a divestment of 17% stake in PTT Chemical Public Company
Limited (“PTTCH”) to both local and international investors. Following
the transaction, SCG has a remaining stake of 4.93% in PTTCH’s share and
as a result, has changed PTTCH’s investment status from “associate
company” to “other company”.

In 2009

-   SCG Chemicals acquired approximately 25 % stake in GTC Technology
    (GTC); a global technology licensor and engineering services
    provider in petrochemicals and refinery industries including
    aromatics recovery and purification, paraxylene production, and
    styrene recovery from byproducts of the naphtha cracker. The
    acquisition of such stakes of GTC would help improve SCG Chemicals’
    technological capability and high value added product development
    capability, which is in line with SCC’s (High Value Added Product &
    Service) Development core strategy. Furthermore, the cooperation
    between SCG Chemicals’ and GTC’s R&D personnel would help strengthen
    SCG Chemicals’ R&D competency.

-   SCG Building Materials signed the Joint Venture Agreement with
    Sekisui Chemical Co., Ltd. (“Sekisui”) to manufacture and sell the
    Modular Home. Modular Home is an innovation of construction
    technology featuring the confident quality, safety, comfort, clean
    indoor environment, energy saving, and cost saving for life cycle of
    house. Under the Joint Venture Agreements, 2 companies have been
    established as the follows:

    1.  Sekesui – SCG Industry Co., Ltd. is an associated company which
        is the manufacturer of housing components of Modular Home.
        Sekisui and SCG Building Materials would hold 51 % and 49 % of
        the company’s stake, respectively

    2.  SCG – Sekesui Sales Co., Ltd. is a subsidiary company which
        provides the installation of housing components and selling of
        Modular Home including after sales service. Sekisui and SCG
        Building Materials would hold 49 % and 51 % of the company’s
        stake, respectively.

In 2008

-   SCG Chemicals invested in ordinary shares of a joint venture, Long
    Son Petrochemicals Co., Ltd., which was newly established to produce
    raw materials for plastic resins, Polyethylene and Polypropylene in
    Vietnam. The company is jointly controlled by companies under SCG
    with 71 percent shareholding (direct and indirect investment of The
    Siam Cement PLC is 61 percent) and a partner in Vietnam with the 29
    percent remaining stakes.

  Moreover, the group sold all of its 48 percent interest in the shares
  of Pacific Plastics (Thailand) Co., Ltd., an associate of SCG
  Chemicals, to The Dow Chemical Company.

-   SCG Building Materials acquired 61.9 percent of ordinary shares of
    Thai-German Ceramic Industry PLC (TGCI) of which principal business
    activities are manufacture and distribution of ceramic floor and
    wall tiles, and property development. The Group has included TGCI’s
    financial statements into SCG’s consolidated financial statements
    since the third quarter of 2008.

  Moreover, the Group acquired an additional 9 percent of the ordinary
  share of the Sosuco Ceramic Co., Ltd. in the fourth quarter of 2008,
  resulting in a 54 percent shareholding. Starting from 1 January 2009,
  the Group obtains control over the financial and operating policies
  and obtains benefit from activities of the company. The Group has
  included operating results of such company in the SCG’s consolidated
  financial statements from the first quarter of 2009.

  Since The Siam Cement PLC has become a holding company, aiming for a
  transparent management, efficient resource management, strong
  long-term business strategy and good governance, the Company has
  organized its structure as follows:

-   Five strategic business units, comprising of SCG Chemicals, SCG
    Paper, SCG Cement, SCG Building Materials and SCG Distribution.

-   SCG Investment

  Attribute of each business unit is summarized hereunder:

SCG Chemicals

SCG Chemicals Co., Ltd. is a holding company for which the Chemicals
Business of The Siam Cement Group operates under, through an integrated
production of both upstream products (Olefins) and downstream products
(Polyolefins). In addition, the business also invests in Polyvinyl
Chloride (PVC) business through holding shares in Thai Plastic and
Chemicals PLC (TPC).

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+---------------------+------------------------------------------------+
| Capacity            | -   Olefins 2,900,000 tons per year            |
|                     |                                                |
|                     | -   Polyolefins 1,880,000 tons per year        |
|                     |                                                |
|                     | -   PVC 813,000 tons per year                  |
+---------------------+------------------------------------------------+
| Main Products       | Olefins, Polyolefins, and PVC products         |
+---------------------+------------------------------------------------+
| Strengths           | -   High competitive advantage in upstream     |
|                     |     products.                                  |
|                     |                                                |
|                     | -   Low Olefins/ Polyolefins production costs. |
|                     |                                                |
|                     | -   Customer base in 116 countries.            |
+---------------------+------------------------------------------------+
| Major Business      | -   Emphasize on Polyolefins and PVC product   |
| Policy              |     portfolio which is the business’s strength |
|                     |     to increase the business’s competitive     |
|                     |     advantage and products varieties.          |
|                     |                                                |
|                     | -   Become a regional leader in Olefins,       |
|                     |     Polyolefins, and PVC business.             |
|                     |                                                |
|                     | -   Expand global business reach to minimize   |
|                     |     risks from market fluctuation and to       |
|                     |     receive prompt market insights and news    |
+---------------------+------------------------------------------------+
| Business            | -   Seek business opportunities in both        |
| Development Policy  |     domestic and international markets,        |
|                     |     focusing on Olefins, Polyolefins, and PVC  |
|                     |     products.                                  |
|                     |                                                |
|                     | -   Focus on R&D and innovation of new         |
|                     |     products and services to address           |
|                     |     customers’ needs and business              |
|                     |     competitiveness.                           |
|                     |                                                |
|                     | -   Improve effectiveness of production and    |
|                     |     supply chain processes through Total       |
|                     |     Production Management (TPM) system and     |
|                     |     Total Quality Management (TQM) system in   |
|                     |     order to reduce costs, control quality of  |
|                     |     production process, and continuously       |
|                     |     develop sustainable environment            |
|                     |     management.                                |
+---------------------+------------------------------------------------+

SCG Paper

SCG Paper PLC was established in 1980 by The Siam Cement PLC and Siam
Kraft Co., Ltd to engage in manufacturing and sale of pulp. Its initial
registered capital was Baht 100 million under the name of The Siam Pulp
and Paper Co., Ltd. The Company was later converted into a public
company in 1994 and raised its capital to Baht 1,400 million. Currently,
the registered capital is amounted to Baht 1,563 million. The Company
was delisted from the Stock Exchange of Thailand in 2003 and was
thereafter renamed to SCG Paper PLC in April 2007.

The SCG Paper PLC and subsidiaries is the country’s only integrated
producer of high quality pulp, paper, and containers. Their main
businesses are Pulp, Printing and Writing Paper, Packaging Paper, and
Corrugated Containers.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | -   Packaging Paper 1,880,000 tons per year    |
|                     |                                                |
|                     | -   Corrugated Containers 741,000 tons per     |
|                     |     year                                       |
|                     |                                                |
|                     | -   Pulp 430,000 tons per year                 |
|                     |                                                |
|                     | -   Printing and Writing paper 570,000 tons    |
|                     |     per year                                   |
+---------------------+------------------------------------------------+
| Main Products       | Kraft paper, duplex board, corrugated          |
|                     | containers, pulp and printing & writing paper. |
+---------------------+------------------------------------------------+
| Strengths           | -   Only integrated producer of pulp, paper,   |
|                     |     and containers in Thailand.                |
|                     |                                                |
|                     | -   World-class quality.                       |
|                     |                                                |
|                     | -   Continual offering innovative products and |
|                     |     services.                                  |
|                     |                                                |
|                     | -   Strong domestic distribution channel and   |
|                     |     marketing system, as well as the worldwide |
|                     |     exports.                                   |
|                     |                                                |
|                     | -   Efficient production cost control.         |
|                     |                                                |
|                     | -   Total Quality Management – TQM.            |
+---------------------+------------------------------------------------+
| Major Business      | -   Maintain domestic market leadership.       |
| Policy              |                                                |
|                     | -   Aspiring for regional leadership in paper  |
|                     |     and packaging business.                    |
|                     |                                                |
|                     | -   Focus on sustainable growth strategy and   |
|                     |     providing good returns to shareholders and |
|                     |     stakeholders.                              |
|                     |                                                |
|                     | -   Conserve the environment.                  |
+---------------------+------------------------------------------------+
| Business            | -   Improve existing machines for higher       |
| Development Policy  |     efficiency.                                |
|                     |                                                |
|                     | -   Develop innovative products to better      |
|                     |     serve customers’ needs                     |
|                     |                                                |
|                     | -   Seek opportunities in expanding its        |
|                     |     business with Merger and Acquisition as a  |
|                     |     priority.                                  |
|                     |                                                |
|                     | -   Develop knowledge, skill and experience    |
|                     |     for all levels of employees to maintain    |
|                     |     competitive advantage and become a         |
|                     |     regional leader.                           |
+---------------------+------------------------------------------------+

SCG Cement

SCG Cement Co., Ltd, previously the cement business unit of the Sian
Cement Public Company (SCC), was founded on November 11, 1998, upon the
transfer of all cement related businesses from SCC. SCG Cement is
primarily responsible for production of various cement types and
concrete products of which comprise: 1) Grey Cement 2) Concrete Products
3) Dry Mortar 4) White Cement 5) Refractory Products. Besides, we also
provide plant and machinery installation and maintenance services,
instrument metrological services, including energy conservation
consultation and disposal of industrial waste.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Capacity            | Grey Cement – Domestic: 23.2 million tons per  |
|                     | year                                           |
|                     |                                                |
|                     | Grey Cement – Cambodia: 0.90 million tons per  |
|                     | year                                           |
+---------------------+------------------------------------------------+
| Main Products       | Grey cement, concrete products (ready-mixed    |
|                     | concrete, prefabricated concrete floor, and    |
|                     | post tension concrete floor), dry mortar,      |
|                     | white cement, fireclay bricks, and special     |
|                     | refractory                                     |
+---------------------+------------------------------------------------+
| Brand               | -   Cement: Elephant and Tiger Brands          |
|                     |                                                |
|                     | -   Ready-Mixed Concrete: CPAC Brand           |
+---------------------+------------------------------------------------+
| Major Business      | -   Expand cement business mainly in ASEAN in  |
| Policy              |     order to be a regional leader              |
|                     |                                                |
|                     | -   Maintain price level and market stability  |
|                     |     as well as enhance its domestic market     |
|                     |     leadership                                 |
|                     |                                                |
|                     | -   Create high value products and services to |
|                     |     increase customer satisfaction             |
|                     |                                                |
|                     | -   Continuously conserve natural resources    |
|                     |     and environment as well as take part in    |
|                     |     creative activities and social development |
|                     |     program with local community.              |
+---------------------+------------------------------------------------+
| Business            | -   Constantly enhance and improve product     |
| Development Policy  |     quality.                                   |
|                     |                                                |
|                     | -   Continuously reduce costs and expenses,    |
|                     |     especially energy and raw material costs,  |
|                     |     by using fuel and raw material             |
|                     |     substitutes.                               |
|                     |                                                |
|                     | -   Develop all employees’ working skills and  |
|                     |     knowledge as well as competency through    |
|                     |     various methods in response to the         |
|                     |     corporate growth strategy.                 |
|                     |                                                |
|                     | -   Encourage innovative ideas and put into    |
|                     |     practice in order to develop products and  |
|                     |     improve working process.                   |
+---------------------+------------------------------------------------+

SCG Building Materials

SCG Building Materials Co., Ltd. was established to concentrate on the
production of building materials and related products of SCG. The
business employs modern production technology and quality control along
with its experts, enabling the business to become market leaders for
both domestic market and ASEAN countries.

+---------------------+------------------------------------------------+
|  Key Information    |                                                |
+=====================+================================================+
| Capacity            | -   Fiber-cement roof sheet 40 million Sq. M.  |
|                     |     per year                                   |
|                     |                                                |
|                     | -   Concrete roof tile 30 million Sq. M. per   |
|                     |     year                                       |
|                     |                                                |
|                     | -   Ceramic tile 105 million Sq. M. per year   |
|                     |                                                |
|                     | -   Board & Wood substitutions 57 million      |
|                     |     Sq. M. per year                            |
|                     |                                                |
|                     | -   Aerated lightweight concrete 15 million    |
|                     |     Sq. M. per year                            |
+---------------------+------------------------------------------------+
| Main Products       | -   Roofing products: fiber-cement roof sheet, |
|                     |     concrete roof tile and ceramic roof tile.  |
|                     |                                                |
|                     | -   Ceramic floor and wall tile.               |
|                     |                                                |
|                     | -   Board & Wood substitutions Fiber Cement    |
|                     |                                                |
|                     | -   Aerated lightweight concrete               |
|                     |                                                |
|                     | -   Concrete blocks, concrete floor tiles, and |
|                     |     precast concrete walls.                    |
+---------------------+------------------------------------------------+
| Brand               | -   Roofing products: Chang, CPAC Monier,      |
|                     |     Excella, NeuStile and Ayara                |
|                     |                                                |
|                     | -   Ceramic floor and wall tiles: COTTO, SGI   |
|                     |     Tiles, SOSUCO and CAMPANA                  |
|                     |                                                |
|                     | -   Board & Wood substitutions: Chang          |
|                     |                                                |
|                     | -   Concrete blocks, concrete floor tiles, and |
|                     |     precast concrete walls: Chang              |
|                     |                                                |
|                     | -   Aerated lightweight concrete: Q-Con        |
+---------------------+------------------------------------------------+
| Strengths           | -   Market leader with continuous product      |
|                     |     development.                               |
|                     |                                                |
|                     | -   Competitive production costs.              |
|                     |                                                |
|                     | -   Good distribution network: exclusive       |
|                     |     dealer network.                            |
+---------------------+------------------------------------------------+
| Major Business      | -   Maintain market leadership by developing   |
| Policy              |     products and services that highest respond |
|                     |     to customer needs.                         |
|                     |                                                |
|                     | -   Continuously develop organization and      |
|                     |     employees.                                 |
+---------------------+------------------------------------------------+
| Business            | -   Develop innovative idea in developing a    |
| Development Policy  |     product, production and working process.   |
|                     |                                                |
|                     | -   Build growth by adding related new         |
|                     |     products and services and developing       |
|                     |     distribution channels which customers can  |
|                     |     receive product information, consultation  |
|                     |     and design service and purchase products   |
|                     |     and services completely at one shop.       |
|                     |                                                |
|                     | -   Enhance a strong leadership of building    |
|                     |     products in ASEAN by expanding             |
|                     |     distribution network.                      |
+---------------------+------------------------------------------------+

SCG Distribution

SCG Distribution Co., Ltd. is a holding company for distribution,
logistics, and trading business in Thailand and overseas. The company’s
main products include over 50,000 items of building materials and home
improvement products as well as industrial supplies from SCG and non-SCG
sources. The company plans to source more non-SCG products to increase
the variety of products.

Major companies are:

-   SCG Network Management Co., Ltd.: Domestic distribution.

-   SCG Logistics Management Co., Ltd.: Logistics services including
    transportation and warehouse management for SCG and non-SCG
    customers

-   SCG Trading Co., Ltd.: International trading.

-   SCG Experience Co., Ltd.: SCG Flagship Store to showcase the
    company’s innovations in building and decoration

Vision

By the year 2015, SCG Distribution will be recognized as an ASEAN market
leader by utilizing supply chain insights to deliver localized logistics
services, constantly developing and managing multiple distribution
channels, offering customized global trading services and focusing on
the building materials and industrial supplies.

We will be a trustworthy, responsive business partner and a
customer-centric organization through world-class operational excellence
and technology alignment.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Main Products       | Distribution, logistics and trading services   |
|                     | for SCG and non-SCG products through domestic  |
|                     | distribution network including HOME MART and   |
|                     | SCG Authorized Dealer stores and international |
|                     | trading network                                |
+---------------------+------------------------------------------------+
| Strengths           | -   Strong nationwide distribution network     |
|                     |     reaching all target customers              |
|                     |                                                |
|                     | -   Modern, accurate, and fast transportation  |
|                     |     network and warehouse management           |
|                     |                                                |
|                     | -   36 foreign branches in 22 countries around |
|                     |     the world.                                 |
+---------------------+------------------------------------------------+
| Major Business      | -   Strengthen existing businesses whereas     |
| Policy              |     continuously develop new high-valued       |
|                     |     businesses and create sustainable growth   |
+---------------------+------------------------------------------------+
| Business            | -   Retain strategic customers and strategic   |
| Development Policy  |     suppliers by increasing value in Supply    |
|                     |     Chain, creating trust and long-term        |
|                     |     relationship, and developing new           |
|                     |     customers.                                 |
|                     |                                                |
|                     | -   Utilize domestic distribution and          |
|                     |     logistics network to better meet customer  |
|                     |     demand, expand distribution and logistics  |
|                     |     network in ASEAN, and strengthen overseas  |
|                     |     network.                                   |
|                     |                                                |
|                     | -   Increase operational efficiency by         |
|                     |     improving business process and IT system,  |
|                     |     applying Total Quality Management Concept  |
|                     |     into work processes, and encouraging       |
|                     |     innovation.                                |
+---------------------+------------------------------------------------+

SCG Investment

SCG Investment was established to manage investment in joint venture
businesses of SCG, such as agricultural machinery business, automotive
business, automotive accessories and equipments business, steel
business, and industrial land business.

SCG Investment, with cooperation from major investors, develops
businesses within the Group in terms of budget planning, new product
introduction or overseas expansion as well as customer service
improvement to ultimately achieve objectives of both operating
performance and cash generation.

+---------------------+------------------------------------------------+
| Key Information     |                                                |
+=====================+================================================+
| Main Products       | -   Agricultural machinery business: Tractors, |
|                     |     Combine Harvesters, Rice Transplanters,    |
|                     |     Diesel Engines, and Power Tillers,         |
|                     |                                                |
|                     | -   Automotive business: Passenger cars,       |
|                     |     Commercial cars and MPV                    |
|                     |                                                |
|                     | -   Automotive accessories and equipments      |
|                     |     business: Steel and Aluminium auto parts,  |
|                     |     Tyres, Alloy wheels, Automotive and        |
|                     |     motorcycle batteries                       |
|                     |                                                |
|                     | -   Steel business: Structural steel and       |
|                     |     Cold-rolled steel                          |
|                     |                                                |
|                     | -   Industrial Land Business: Industrial Land  |
+---------------------+------------------------------------------------+
| Brand               | -   Agricultural machinery: Kubota and Tra     |
|                     |     Chang                                      |
|                     |                                                |
|                     | -   Auto: Toyota                               |
|                     |                                                |
|                     | -   Steel: Siam Yamato                         |
|                     |                                                |
|                     | -   Tyres: Michelin, Siam Tyre                 |
|                     |                                                |
|                     | -   Batteries: FB                              |
+---------------------+------------------------------------------------+
| Major Business      | -   Operational improvement of joint venture   |
| Policy              |     companies in both                          |
|                     |                                                |
|                     |   operating performance and cash generation    |
+---------------------+------------------------------------------------+
| Business            | To mutually agree with major partners for the  |
| Development Policy  | company’s policy in the following matters:     |
|                     |                                                |
|                     | -   Controlling and reducing cost and          |
|                     |     expenditure                                |
|                     |                                                |
|                     | -   Launching new products or expanding export |
|                     |     market                                     |
|                     |                                                |
|                     | -   Developing products and services to        |
|                     |     satisfy customer needs                     |
+---------------------+------------------------------------------------+

Revenue Structure

  For 2010

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Remark: Financial figures are classified according to business unit
before inter-group adjustments

Remark: * Equity income from associates by equity method

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