The Global economy is emerging from the throes of meltdown of 2008.
While the growth rate has picked up, it will still be a while to get
back to pre crisis path. However the fundamental of the global economy
appears to be reasonably good. IMF had forecasted a growth of 2.3% for
the advance countries and 6.3% for the emerging economies for 2010.

Asian economies including Thailand have shown strong resilience with
growth at nearly 8% as compared to 3.6% in 2009. In USA, Europe and
Japan, growth levels continued to be low and fragile.

In line with the economic recovery the global automobile industry has
witnessed an upward trend. Similar growth was also witnessed in the Tyre
Industry. The tyre industry grew globally by almost 23% as compared to
2009.

During the year under review your company recorded highest Sales of
248,578 MT reflecting a growth of 43% over the previous year. The
increase was seen as 34% in the domestic market and 57% in the export
market. The corresponding increase in production was 50%.

Your company’s net profit from operations rose to 1,029 Mn Baht upward
of 17% over 2009. Associated companies also performed better during the
year. Accordingly net profit on consolidated basis also improved to
1,274 Mn Baht from 1,074 Mn Baht recording a growth of 19%

Higher volume, better capacity utilization including the volume from new
line have been the main drivers of profitability.

The increased sales in volume resulted from a continuous focus on the
new product development, continuous focus on the high quality, timely
delivery of the products and making inroads into developing new
customers in MRG segments.

Several initiatives were taken during the year towards fostering a
better friendly environment reducing emissions and improving safety
records. Your company has significantly strengthened its engagement with
communities.

The steep appreciation of Thai Baht vis a vis USD coupled with currency
war among major countries in the world poses a fresh challenge for
companies in the emerging countries. Your company is no exception.
Increased volatility in the oil prices will fuel uncertainties in our
business also.

Your company has managed challenges well by continuing to follow prudent
financial policy, a razor sharp focus on improving productivity and
reigning in on cost in a disciplined manner.

There was a rigorous focus on retraining the employees on SOP’s in all
areas of operations.

Considering the improvement in the net profit for the year 2010 after
taking into account the requirement of funds for the on going expansion
project, Capex initiatives and working capital, the board of directors
is pleased to recommend a dividend of Baht 1.00 per share for the year
2010.

Further more we would like to inform that pursuant to the Board’s
approval on January 28, 2011 your company will be entering it to an
agreement to acquire 20.59% of interest in Columbian Chemical Company
with a total investment of USD 175 Mn from TCB as its share of
investment.

Source of funds will be through long term loan of USD 175 million from
commercial banks, secured by charge on company’s assets with principal
repayment of 5 years.

Rationale and benefits of such acquisition are:

• To achieve the vision of being the global company in the carbon black
industry.

• To provide better servicing capabilities to the global customer by
being one stop for their global sourcing solution in terms of complete
solution to both products and services.

• As per Notch Consultancy report, in the current industry situation ,
supply is in excess of demand, thus acquisition will provide a leap in
growth in a short period without further aggravating the present excess
supply situation by way of organic expansion.

• Access to strong R&D and technological capabilities.

Benefits of acquisition

• Combined 17 plants spanning entire major continents, result in better
serving the customers.

• Business value addition from the yield improvement.

• Increase profitability from developing specialty grades product to
serve the market demand.

• Increased efficiency and cost reduction in procurement due to
economies of scale.

Overview of business operation of Subsidiary Company

The subsidiary company in China namely Liaoning Birla Carbon Co., Ltd
(LBCC) recorded net loss of RMB 30.22 million. The company has taken
following initiatives to improve the operational efficiency & cost
reduction by optimization of product mix to maximize the capacity
utilization to improve the overall performance.

• Took complete shut down of plant in Aug- Sept for 45 days and did
thorough repair and modification including the design issues to tackle
acute winter & therefore to achieve stable plant operations.

• After restart, the plant achieved capacity utilization of 95% in
subsequent months

• Have already started selling power after receiving the approval for
power sale.

• Modified soft black reactor to use lower cost oil with stable quality
thereby reducing over all cost of production by around 10%.

• Aggressive focus in Domestic marketing has helped in winning some key
domestic accounts increasing domestic sales

The progress on Mexico project is quite slow due to current difficult
market & economic situation.

INVESTMENT STRUCTURE OF THAI CARBON BLACK PUBLIC COMPANY LIMITED (as on 31 December 2010)

Detail of investment in, Subsidiary and Associated Companies

+--------------+-------------+---+-------+------+------+----------------+
| Company Name | Activity    |   | Pa    | %    | Cost | Other Major    |
|              |             |   | id-up | S    | of   | Shareholders   |
|              |             |   | Ca    | hare | In   |                |
|              |             |   | pital | Hold | vest | (>10%)         |
|              |             |   |       | ings | ment |                |
|              |             |   |       |      | (MB) |                |
+--------------+-------------+---+-------+------+------+----------------+
| Subsidiary   |             |   |       |      |      |                |
| Companies    |             |   |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Liaoning     | Manufacture | 1 |       | 100% |   69 |                |
| Birla Carbon | of Carbon   | 5 |       |      | 9.73 |                |
| Co.,Ltd      | Black       | 7 |       |      |      |                |
|              |             | m |       |      |      |                |
| (Registered  |             | i |       |      |      |                |
| in China)    |             | l |       |      |      |                |
|              |             | l |       |      |      |                |
|              |             | i |       |      |      |                |
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|              |             | R |       |      |      |                |
|              |             | M |       |      |      |                |
|              |             | B |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Birla Carbon | Manufacture | 3 |       | 9    |   1  |                |
| Mexico,      | of carbon   | . |       | 8.00 | 1.39 |                |
| S.A.DE       | black       | 2 |       |      |      |                |
|              |             | m |       |      |      |                |
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+--------------+-------------+---+-------+------+------+----------------+
| Associated   |             |   |       |      |      |                |
| Companies    |             |   |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| Aditya Birla | Manufacture | B |       | 2    | 50   | 1.Thai Rayon   |
| Chemicals    | of Caustic  | a |       | 9.99 | 9.82 | Pcl (29.98%)   |
| (Thailand)   | Soda &      | h |       |      |      |                |
| Co.,Ltd      | Epic        | t |       |      |      |                |
|              | hlorohydrin | 1 |       |      |      |                |
|              |             | , |       |      |      |                |
|              |             | 7 |       |      |      |                |
|              |             | 0 |       |      |      |                |
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|              |             | n |       |      |      |                |
+--------------+-------------+---+-------+------+------+----------------+
| P.T. Indo    | Manufacture | 4 |       | 4    | 19   | 1.Thai Rayon   |
| Liberty      | of          | 2 |       | 0.00 | 6.95 | Plc. (40%)     |
| Textiles     | Synthetic   | , |       |      |      |                |
| (Registered  | Yarn        | 5 |       |      |      | 2.Cheddington  |
| in           |             | 4 |       |      |      | Trading        |
| Indonesia)   |             | 9 |       |      |      | Company Inc.   |
|              |             | , |       |      |      | (16%)          |
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+--------------+-------------+---+-------+------+------+----------------+
| Ameri Blend  | Procure and | U |       | 4    | 1    | 1. SKI         |
| Inc.         | store       | S |       | 9.00 | 3.62 | Investments    |
|              | material    | D |       |      |      | Pte. Ltd 48%   |
|              |             | 1 |       |      |      |                |
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+--------------+-------------+---+-------+------+------+----------------+

Revenue structure

Company produces carbon black as a main product which is approx 95% of
total revenue.