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  [] Thai Stanley Electric Public Company Limited Form 56-1

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4. Conduct of business

4.1 Nature of products

The Company's core business is to manufacture and sell products in a
single sector, both locally and abroad, namely lighting equipment for
use in motorcars, motorcycles and other vehicles. There are two core
products: light bulbs and lamps. In addition to the core products, the
Company also manufactures all kinds of dies and molds in support of the
core business and for sale to other industrial operators. The details of
the dies and molds segment are not identified in this filing because
their sales account for only 4.08% of the Company's total sales.

The Company's customers include manufacturers and distributors of
motorcycles and motorcars (passenger cars and commercial vehicles). The
Sittipol 1919 Co., Ltd. is the Company's dealer in automotive spare
parts.

Certificate of Promotion

The company received investment promotion from The Board Of Investment
total 16 certificates of promotion as follows :

(1) Manufacture Automotive Bulbs (Certificate of Promotion No. 1038/Sor.
Aor./2533)

(2) Manufacture Automotive Lamps (Certificate of Promotion No.
1044/2527)

(3) Manufacture Die & Mold (Certificate of Promotion No. 1214/Sor.
Aor./2530)

(4) Manufacture Die & Mold (Certificate of Promotion No. 1078/Sor.
Aor./2533)

(5) Manufacture of Automotive Lighting Equipment and parts

(Certificate of Promotion No. 1279/Sor. Aor./2533)

(6) Research & Development of Automotive Lighting Equipment

(Certificate of Promotion No. 1176/2534)

(7) Manufacture Die & Mold (Certificate of Promotion No 1767/2538)

(8) Manufacture of automotive Lighting Equipment, Machine or Electrical

(Certificate of promotion No. 5675/2539)

(9) Manufacture Electronic Bulbs (Certificate of promotion No.
1016/2541)

(10) Manufacture Engineering Plastic parts

  (Certificate of Promotion No. 1017/2541)

(11) Manufacture of automotive Lighting Equipment, Machine or Electrical

(Certificate of Promotion No. 4290/2541)

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  [] Thai Stanley Electric Public Company Limited Form 56-1

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(12) Manufacture of automotive Lighting Equipment, Machine or Electrical

(Certificate of promotion No. 4573/2541)

  (13)) Manufacture Die & Mold (Certificate of Promotion No 1096/2543)

  (14) Electronic Design (Certificate of promotion No. 1294 (2)/2545)

(15) Manufacture and repair Die & Mold (Certificate of promotion No.
1539 (2)/2545)

(16) Manufacture of Automotive Parts (Certificate of Promotion No.1545
(2)/2546)

In conducting its business in Thailand, the Company enjoys tax
incentives under 2 certificates of promotion, certificate nos.14 and 15,
granted by the BOI as follows:

1. Certificate of Promotion No. 1294 (2)/2545 was issued on 2 May 2002
for the Company’s business of Prototype Design Machine or Equipment for
the industrial under Category 5.7: Electronic Design. The privileges and
benefits under Certificate of Promotion No. 1294(2)/2545 include the
following:

1. The Company is exempt from import duties on the machinery, as
approved by the BOI.

  2. The Company is exempt from corporate income tax on the net profit
  derived from the operation of the promoted business not exceeding 100%
  of investment exclusive cost of Land and working capital for eight
  years from the date that income is first derived from the business.

  3. The dividend derived from the promoted business must not be
  included when computing taxable income while the Company remains tax
  exempt.

2. Certificate of Promotion No. 1539 (2)/2545 was issued on 30 August
2002 for the Company’s business of manufacturing Die & Mold and machine
or equipment for repair Die & Mold of the industrial under category 4.2
: Manufacture of machine and equipment. The privileges and benefits
under Certificate of Promotion No. 1539(2)/2545 include the following:

1. The Company is exempt from import duties on the machinery, as
approved by the BOI.

  2. The Company is exempt from corporate income tax on the net profit
  derived from the operation of the promoted business not exceeding 100%
  of investment exclusive cost of Land and working capital for eight
  years from the date that income is first derived from the business. If
  any loss is incurred during the exemption period, the Company may set
  off that loss against the net profit which accrues in one or more
  years at any time within five years after the exemption period ends.

[] Thai Stanley Electric Public Company Limited Form 56-1

  3. The dividend derived from the promoted business must not be
  included when computing taxable income while the Company remains tax
  exempt.

  4. The Company is exempt from import duties on any raw materials and
  necessary items imported for production and export for one year from
  the date that they are first imported.

4.2 Market and competition

a. Policy and marketing

Given the limited competition in this industry, the Company's strategy
is to manufacture high-quality products at a reasonable price. The
pricing policy is based on the cost of manufacturing with a standard
profit margin. The Company also has a policy of expanding additional
lines of automotive products to meet the demand in the automotive
market.

Distribution channels and customer base

1.  Local channels

    1.  Original equipment market: The products are sold directly to
        local assembly plants in Thailand. Usually, they are used in the
        manufacturing process or kept as spare parts.

    2.  Replacement equipment market: The products are sold through the
        Company's dealer, The Sittipol 1919 Co., Ltd. In this market,
        the products are as replacements.

        2. International channels

    1.  Original equipment market: The products are sold directly to
        local assembly plants abroad. Usually, they are used for
        manufacturing or kept as spare parts.

    2.  Inter-member market: The products are sold abroad to each
        international member of the Stanley Group which engages in
        automotive assembly. This is to enable those members to assure
        the availability and quality of their stock. Deliveries are made
        on their orders from time to time on the basis of a single
        source. That means the Company is the sole manufacturer and
        distributor of these kinds of products for the Stanley Group
        worldwide. This creates economies of scale and efficient cost
        control. For some members in the Stanley Group, if only a few
        items are required and it is not cost-effective

[] Thai Stanley Electric Public Company Limited Form 56-1

to order them directly from another manufacturer, an occasional
deliveryfrom the Company is a better alternative.

Currently, The company had domestic sale approximately 82.775% and
export sales approximately 17.23% of the Company's total sales. The
majority of foreign customers are in Asia, Europe and the US.

b. Industry and competition

In the local automotive lighting equipment industry, the competition is
limited with very few market players. Basically, there are only two
manufacturers in Thailand, i.e. the Company and Thai Koito Co., Ltd.
However, the Company is the larger manufacturer and in terms of
competition, the Company definitely has the edge over its competitor
because the Company's business integrates research and development,
design, moulding, manufacturing, assembly and quality control. As
regards cost, the Company can take advantage of its being a listed
company by obtaining lower cost financing through the SET, compared with
its competitor.

The barriers to entry are high for the following reasons:

1.  Significant investment is needed to acquire the costly machinery,
    tools and devices, including the equipment for quality testing.

2.  The specialist training for workers is expensive and time-consuming.

3.  The business naturally relies on specialised technology and must
    conform strictly to each country's safety standards.

4.  The Company benefits greatly from the modern technology and valuable
    experience transferred from its joint venture partner, Stanley
    Electric Co., Ltd. of Japan, thereby increasing customers'
    confidence in the Company.

    Because there are so few operators in this industry, the Company has
    the bargaining power over its customers at a particular level.
    However, the course of business is still based on the facts,
    especially, the basis of the actual cost of manufacturing plus
    standard profit.
    Despite the limited number of operators in this industry, there are
    many suppliers. The Company has a non-monopoly policy with suppliers
    so that it can negotiate for the lowest price possible.

    Critical factors in the Company's success and strengths

[] Thai Stanley Electric Public Company Limited Form 56-1

The Company's strengths and critical success factors include the
following:

1)  Being an integrated business

2)  Having a competitive edge over its competitor and possessing a
    substantial market share

3)  Having very few competitors

4)  Using advanced facilities due to the parent company's technical
    support and its own research and development centre

5)  Having human resources of great potential and extensive experience

6)  Being able to obtain low cost financing through the SET

7)  Having a large customer base

8)  Having bargaining power over its suppliers

    Competition in the automotive lighting industry is rather low
    because the business relies significantly onhigh technology and huge
    investment in the facilities needed. As a result, there are very few
    participants in the market. The Company is the first and only
    operator which uses the cutting-edge integrated technology in this
    industry. Its local customers include all Japan-based automotive
    assemblers and some of the Europe- or America-based car companies.
    As a result, the Company's competitiveness goes far beyond its
    competitor, which has only recently penetrated the market. As a
    company listed on the SET, the Company can obtain low cost
    financing, thus substantially enhancing its price competitiveness.

    The automotive industry plays an essential role in the country's
    overall industrial development. Structurally, the automotive
    industry is linked to a wide range of other industries. That starts
    with basic materials, such as steel, plastic, rubber, glass and
    animal hides and the manufacture of automotive parts. The final
    process ends with assembly. Over the past decade, Thailand's
    automotive industry has improved substantially, making Thailand the
    largest manufacturer of vehicles and component parts in Asia. The
    growth of the automotive industry over the past decade can be
    classified by types of vehicles: motorcars and motorcycles.

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  [] Thai Stanley Electric Public Company Limited Form 56-1

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[] Thai Stanley Electric Public Company Limited Form 56-1

Over the past 10 years, in addition to the increasing domestic demand
(sales), the export segment has also grown rapidly. Although, In the
period from mid 2007 continued through 2009 has caused the financial
crisis Lehman Brothers. The resulting growth rate was negative 2.3%
considered the most depressed during the 11 years sincethe Asian
finanacial crisis and other political unrest in Thailand can affect
economic growth. And impact to the automotive industry in both domestic
sales and exports declined significantly. But the trend started to come
good in the early to late 2009 early 2010

Naturally, the Company's business aims at the OEM market while the
replacement market is its secondary channel. Therefore, the growth of
the Company's business over the past decade has been in line with the
direction of the country's automotive industry.

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4.3 Supplies and services

a. Manufacturing and input The Company has three manufacturing plants as
follows:
1. Light bulb plant: Production = 113 million pieces per year
Part of the production is to meet customers' orders. The other portion
supplies the
Company's lamp plant.
2. Lamp plant: Production = 40 million pieces per year
All production is to meet customers' orders
3. Die and mould plant: Production = 400 pieces per year
Part of the production is to meet customers' orders. The other portion
supplies the
Company's lamp plant.

[] Thai Stanley Electric Public Company Limited Form 56-1

The Company currently acquires 67% of its materials from local suppliers
and 33% from offshore suppliers. Fortunately, their price has not
changed significantly over the years. Details of local and foreign
acquisition of materials over the past three years are as follows

  ----------------- ---------- -------- ----------- -------- ---------- --------
  Sources           31 March            31 March             31 March   
                    2010                2009                 2008       

                    Amount     %        Amount      %        Amount     %

  Local             2,749.76   67.10    2,897.90    79.33    3,311.62   79.59

  Foreign           1,348.23   32.90    795.05      20.67    849.29     20.41

  Total             4,097.99   100.00   3,692.95    100.00   4,160.91   100.00
  ----------------- ---------- -------- ----------- -------- ---------- --------

The majority of materials are supplied by Stanley Electric Co.,Ltd. of
Japan and other company members in the Stanley Group for the following
reasons:

1.  The material has characteristic features and can be acquired in
    large quantities from a single source to save costs. Conversely, it
    is not cost-effective for the Company itself to manufacture the
    material in Thailand because of the low demand.

2.  A large order is necessary for cost-effectiveness. However, local
    demand is not large enough. In other words, a small order increases
    the cost. The Company has therefore opted to buy only essential
    material locally out of the total quantities obtained from Stanley
    Electric Co., Ltd. of Japan. This is to reduce the cost of
    procurement and the risk of dead stock.

3.  A single source provides the material on the basis of the alliance
    among the members of the Stanley Group, resulting in economies of
    scale. The material is distributed to all other members worldwide.

    The price of material provided by Stanley Electric Co., Ltd. of
    Japan and the Stanley Group is fixed at a reasonable and favourable
    level. The pricing formula is the actual cost plus administrative
    expenses. If some kinds of general material can be acquired from
    other suppliers on favourable conditions, the Company has absolute
    discretion to proceed with that procurement without abiding by any
    commitments within the Stanley Group.

[] Thai Stanley Electric Public Company Limited Form 56-1

b. Environmental impacts

In every production process , The Company to realized the effective to
do not adversely affect the environment. For the painting process, a
water shield and sludge disposal system are in place to prevent dust in
the air. In this regard, the Company has engaged Management and
Development for Environmental Conservation Public Company Limited, which
holds a waste disposal licence, to dispose of and treat the waste.
Consequently, no pollution is emitted outside the Company's facilities.
That means the environment suffers no impact from the Company's
operations.

In all circumstances, the Company recognises the importance of
environmental conservation. It has campaigned for environmental
management and was awarded ISO14001 certification , the company have
designed our products to be environmentally friendly (green products) by
relying on chemical-free substances or reducing the use of poisonous
chemicals such as mercury (Hg), lead (Pb), chromium 6 (Cr6+), cadmium
(Cd) and flame retardants (PBB & PBDE).

In addition, we also provide a green space project in the company , by
providing a tree Planting activity on the last working day of the year ,
Enhancing the green space in the company and create a habit of
environmental importance to employees.

4.4 Undelivered Projects

- None -