Page 1


CONTENTS Highlight of Consolidated Financial Statements 2 Message by the Chairman 4 1. GENERAL INFORMATION 9 2. NATURE OF BUSINESS 14 3. STRUCTURE OF SHAREHOLDERS AND MANAGEMENT 27 • Report by Nominating and Remuneration Committee 41 4. RISK FACTORS 54 5. RELATED PARTY TRANSACTIONS 57 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF BUSINESS PERFORMANCE 59 7. IMPORTANT CHANGES AND SIGNIFICANT EVENTS OVER THE PAST YEAR 69 Report by the Board of Directors on its Accountability to Financial Statements 77 Audit Committee Report 78 Auditor’s Report and Financial Statements Attached Sheet

Annual Report 2006 - As of December 31, 2007




HIGHLIGHT OF CONSOLIDATED FINANCIAL STATEMENTS Unit : Thousand Baht

2007

CONSOLIDATED BALANCE SHEETS

2006

2005

Assets

6,878,961

6,702,399

6,119,661

Liabilities

1,816,115

1,741,923

1,508,768

Shareholders' equity

5,062,846

4,960,476

4,610,893

Total revenues

5,611,088

5,365,455

4,728,394

Total expenses

5,351,712

5,042,638

4,421,405

Profit from operating activities

259,376

322,817

306,989

Net profit for year

174,404

396,419

263,904

Cash flows from operating activities

534,024

596,978

731,071

Cash flows from investing activities

(462,836)

(318,977)

(209,252)

Cash flows from financing activities

(71,379)

(350,119)

(505,072)

Cash and Cash equivalence at year end

275,611

275,802

347,920

1.8

1.6

1.8

Account Receivable Turnover (days)

68.2

62.5

65.4

Inventory Turnover (days)

30.0

30.2

28.7

Account Payable Turnover (days)

64.8

60.8

57.9

Gross Profit Ratio to Sales (%)

19.8

21.0

20.5

Net Profit Ratio to Total Revenues (%)

3.1

7.4

5.6

Return on Total Assets (%)

2.6

6.2

4.3

Debt to Equity Ratio (times)

0.4

0.4

0.3

CONSOLIDATED INCOME STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

KEY FINANCIAL RATIOS Current Ratio (times)



Annual Report 2006 - As of December 31, 2007


Annual Report 2006 - As of December 31, 2007



0

2,000

4,000

6,000

8,000

(Million Baht)

(Million Baht)

2005

6,120

Gross Margin

2006 Year

Net Profit

2007

Total Assets

4,611

2006

6,702

2007

Shareholders’ Equity

4,960

6,879

Year

5,063

Total Assets and Shareholder’s Equity

Sales and Hire of Work

2005

Operation Result

0.00

10.00

20.00

30.00

(Baht)

0.00

0.50

1.00

1.50

(บาท)

2005

2005

16.37

0.94

2007

2006

18.30

2007

Year

18.68

Year

0.64

Book Value per Share

2006

1.46

Earnings per Share


Message by the Chairman

In the calendar year 2007 the Thai Baht continued a trend of appreciation ending the year with a greater than 18% increase against the US dollar over the prior 2 year period. This coupled with the continued downward trend of the global valuation of the US dollar resulted in immense pressure on costs and gross margin in the Company’s domestic and export portfolios. Despite this global turbulence, Management stayed true to the course of investment in people, technology and leading edge manufacturing facilities and equipment. These investments are key to the overall strategy to prepare the Company of leadership, success and profitability Calendar 2007 saw the Company invest in new leapfrog technology in our Battery Operations, Industrial Containers, Logistics and Packaging businesses while working on developing a foot hold in the Beverage Industry. Management is united in its approval of significant investments in these areas with a holistic plan to move away from conventional and commonly used technologies and equipment in order to differentiate the Company by bold moves striking at the core of non-value added activities and costs. In addition to investments in capital technology platforms, the Management united behind a bold move to consolidate the two largest molding operations, Suksawat factory and Amata Nakorn Chonburi factory, into its world class facility in Amata Nakorn. The re-engineering and consolidation initiatives will target eliminating non value added costs, scrap, and under absorption. In conjunction with the focus on elimination of non value added costs, Management is focused on the introduction of high value added products such as Molded in Decoration for food and beverage packaging and automotive applications. Srithai Superware is recognized as a Thai icon, and as befitting the statue of this great company, Management is proud to announce that the center piece of our strategy is increased focus on our shared environment. We have made major investments in leading edge manufacturing equipments from Canada and Japan. Those equipments have the capability to process resin at greatly reduced consumption of electricity. In fact our goal is to create one of the world’s most energy efficient injection molding operations globally. We have engaged



Annual Report 2006 - As of December 31, 2007


leaders in the industry to assist us optimizing the molding operations including machine design and operation, mold process cooling, resin processing and product handling. Further to our focus on industrial resource preservation, we have a team researching the preservation of one of Thailand’s most important natural resources from the mounting commercial pressure for pallets. Deforestation is a real issue facing all Thai people, and Srithai proud to be a leader in investing in developing a solution to provide competitively priced plastic products to reduce the need for wooden pallets, boxes and other logistic products. For 45 great years we have been a people company and together we have built great brand equity in Srithai Superware both at home and abroad, however the journey to world class requires that we examine and upgrade in all areas of our businesses to benefit fully from our investments in technology and equipment, we must, and we will invest more in our Srithai people. I am delighted to report that our new Human Resource Developments (HRD) team has been embraced and supported by all Senior Management and the long road to unleashing the power of people is well under way. Our biggest asset is not our Srithai people, it will be our great Srithai people This is a demanding and endless task and the one to which I pledge my utmost support. Great people, great factories, leading technology and equipment are still incomplete if we do not unleash and empower them with the invisible backbone and network of Information Technologies and Communications. Again we are challenged by the breadth of this task, to seamlessly bind Srithai together with real time capability to communicate, plan and execute. Management again unanimously supported embracing investing in making Srithai the easiest company to do business with, with fast accurate and transparent reporting capabilities. Looking outside our company we are now exporting our global brand leading melamine table-wares to nearly 90 countries worldwide. Our continued export drive to reach 100 this year, 2008, is ambitious and now within our reach. This bold goal will bring benefits beyond increased revenues; it creates new skilled jobs for our workers and brings Thailand’s global reach spreading a better understanding for our culture and the quality of Thai products. To support our global leadership, we have increased our production capability in Ho Chi Minh City facility in Vietnam and are now engaged in due diligence with a view to expanding in India to tap the huge domestic market there. Korat is the home of Srithai Superware’s melamine products and success and this plant will receive the same scrutiny as all our other operations. We will invest in people, technology to enhance our productivity and profitability, and similar to Amata we will focus on energy consumption and the environment. Sustainable profitability is a product of excellence in execution and innovation, in this past year we at Srithai have been developing our core Direct Sales capability into a new Multi Level Marketing (MLM) This will expand our sales capability rapidly via the talented and highly motivated independent business owners in the MLM business concept. We have piloted this project this past year and now ready for a full scale launch in Q3 of 2008. Our Trading activities also allow us to rapidly expand, however without the additional burden of the capital intensive manufacturing factories and equipment. Our merchandizing experts source products of exceptional quality, value and unique characteristics from all corners of the world to be locally distributed through our existing distribution channels. The Management and I are grateful to all our stakeholders, our great Srithai people, our partners and suppliers, you our shareholders, and all who support us in our quest for global brand recognition and a world class reputation synonymous with quality and profitability.

Mr. Sanan Angubolkul Chairman Annual Report 2006 - As of December 31, 2007




BOARD OF DIRECTORS

Standing from left to right : Mr. Enghug Nontikarn, Mr. Suchat Boonbanjerdsri, Mr. Manit Ativanichayaphong, Mr. Naphol Lertsumitkul, Mr. Thawee Kongyungyuen Seated from left to right



Annual Report 2006 - As of December 31, 2007

: Mr. Prin Bholnivas, Mr. Sanan Angubolkul, Prof. Viroj Lowhaphandu, Mrs. Srisuda Lertsumitkul


SHAREHOLDING STRUCTURE OF SRITHAI SUPERWARE GROUP - BUSINESS LINE

Srithai Superware Public Company Limted Plastic

Trading

Mould & Others

Srithai (Vietnam) 95.8%

Srithai-Otto 50.0%

Srithai Moulds 71.0%

Srithai Nanoplast 70.0%

Srithai Sanko 48.0%

Srithai Miyagawa 51.0%

Thai MFC 45.0%

Srithai WBG 47.0%

S.K.I Ceramics 42.0%

Beijing Huatai 40.0%

Srithai Shin-Osaka 40.0%

PT. Srithai Maspion 32.5%

Srithai Packaging 39.2%

Thai Takahashi Plastics 25.0%

LN Srithai Comm 20.0%

Soko Srithai 24.0% Takahashi Korat 19.0% Takahashi Plastic 16.5%

Annual Report 2006 - As of December 31, 2007




SHAREHOLDING STRUCTURE OF SRITHAI SUPERWARE GROUP

Srithai Superware Public Company Limted Subsidiary

Associates

Joint Venture

Srithai (Vietnam) 95.8%

Srithai Sanko 48.0%

PT. Srithai Maspion 32.5%

Srithai Moulds 71.0%

Srithai WBG 47.0%

Thai Takahashi Plastics

Srithai Nanoplast 70.0%

Thai MFC 45.0%

Soko Srithai 24.0%

Srithai Miyagawa 51.0%

S.K.I. Ceramics 42.0%

LN Srithai Comm 20.0%

Srithai Shin-Osaka 40.0%

Beijing Huatai 40.0%

Takahashi Korat 19.0%

Srithai Packaging 39.2%

Takahashi Plastics 16.5%

Srithai-Otto 50.0%

25.0%

Remark : (1) Srithai Shin-Osaka Co., Ltd. is a subsidiary. Eventhough the Company holds shares in it less than half but the Company has controlling votes, directly or indirectly, and controlling power on its financial policy and operation. (2) Srithai (Vietnam) Co., Ltd. increased its capital by the amount equivalent to USD 1 million on August 13, 2007. The Company was the sole investor of this amount, resulting in an increase of our shareholding interest from 95.3% to 95.8%. (3) The Company purchased 1,600,000 existing shares at the price of THB 16 million from Thai MFC Co., Ltd an associated company, resulting in an increase of our shareholding interest from 30% to 70% and change of its status from an associated company to a subsidiary. (4) S.K.I. Ceramics. Co., Ltd. registered an increase of capital from THB 120 million to THB 125 million with the Ministry of Commerce on July 2, 2007. The Company has invested THB 3 million in this capital increase, resulting in the shareholding ratio of the Company rise up from 41.2% to 42%.



Annual Report 2006 - As of December 31, 2007


1. GENERAL INFORMATION Srithai Superware Public Company Limited Head Office : 355 Suksawat Rd., Soi 36, Bangpakok, Rasburana, Bangkok 10140 Tel. : 66 2427 0088 Fax : 66 2428 9675 URL : www.srithaisuperware.com Registration Number : 0107536001516 Share Registrar : Location :

Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Bldg., Rachadapisek Road, Khwaeng Klongtoey, Khet Klongtoey, Bangkok 10110 Tel. : 66 2359 1200-1 Fax : 66 2359 1259

Auditor :

Mr. Prasan Chuaphanich Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road, Bangkok 10120 Tel. : 66 2286 9999, 66 2344 1000 Fax : 66 2286 5050 Accounting Period January 1 - December 31 Niti-Pricha Office 69/33 Soi Athens Theater, Phayathai, Bangkok 10400 Tel. : 66 2252 9494, 66 2251 3225 Fax : 66 2251 3226, 66 2255 5201

Legal Advisor :

Security Agent :

Siam City Bank Public Company Limited Head Office 1101 New Petchburi Road, Rajthevi, Bangkok 10400 Tel : 66 2208 5000 Fax : 66 2253 6227

Managerial Contract :

No

Annual Report 2007 - As of December 31, 2007




JURISTIC PERSON’S SHARES OF WHICH THE COMPANY HOLDS MORE THAN 10% Subsidiary Companies 1. Company Name : Srithai (Vietnam) Co., Ltd.(1) Location : 9 Street 2, Song Than 1 Industrial Park, Di An District, Binh Duong Province, Socialist Republic of Vietnam Type of Business : Manufacture of Plastic Products Telephone : 84 650 790023-4 Fax : 84 650 790025 Paid-up Capital : Dong 109,337,834,503

Srithai (Vietnam) Co., Ltd. increased its capital by the amount equivalent to USD 1 million on August 13, 2007. The

Company was the sole investor of this amount, resulting in an increase of our shareholding interest from 95.3% to 95.8%. (1)

2. 3.

Company Name : Srithai Moulds Co., Ltd. Location : 55/1, 55/6 Moo 1, Nong-Samsak, Amphoe Ban Bueng, Chon Buri Type of Business : Manufacture of Moulds Telephone : 0 3837 9280-2 Fax : 0 3847 6352 Number of shares issued and paid up : 1,000,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 100,000,000 Company Name : Srithai Nanoplast Co., Ltd. (2) Location : 42 Moo 4, Tambon Bualoy, Amphoe Nhong Kae, Saraburi Type of Business : Manufacture of Plastic Products Telephone : 0 3637 3251-5 Fax : 0 3637 3256 Number of shares issued and paid up : 4,000,000 shares, paid-up per share : Baht 10 Paid-up Capital : Baht 40,000,000

The Company purchased 1,600,000 existing shares at the price of THB 16 million from Thai MFC Co. Ltd. an associated

company, resulting in an increase of our shareholding interest from 30% to 70% and change of its status from an associated company to a subsidiary. (2)

4.

10

Company Name : Srithai Miyagawa Co., Ltd. Location : 539 Moo 4, Tambon Prak-Sa, Amphoe Mueang, Samut Prakan Type of Business : Manufacture of Moulds and Plastic Products Telephone : 0 2324 0911 Fax : 0 2324 0427 Number of shares issued and paid up : 1,200,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 120,000,000

Annual Report 2007 - As of December 31, 2007


5. Company Name : Srithai Shin-Osaka Co., Ltd. Location : 1/132 Moo 2, Tambon Ta-sai, Amphoe Mueang, Samut Sakorn Type of Business : Mould Laminating Telephone : 0 3449 0130-1 Fax : 0 3449 0132 Number of shares issued and paid up : 600,000 shares, paid-up per share : Baht 83 Paid-up Capital : Baht 49,800,000 Associated Companies 1. Company Name : Srithai Sanko Co., Ltd. Location : 355 Moo 4, Soi Suksawat 36, Suksawat Rd., Bangpakok, Rasburana, Bangkok Type of Business : Trading Company Telephone : 0 2427 0088 Fax : 0 2428 9935 Number of shares issued and paid up : 200,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 20,000,000 2. Company Name : Srithai WBG Co., Ltd. Location : 355 Moo 4, Soi Suksawat 36, Suksawat Rd, Bangpakok, Rasburana, Bangkok Type of Business : Distribution of Food Supplement and Health Care Products under

Network Marketing System Telephone : 0 2427 0088 Fax : 0 2428 9938 Number of shares issued and paid up : 800,000 shares, paid-up per share : Baht 10 Paid-up Capital : Baht 8,000,000 3. Company Name : Thai MFC Co., Ltd. Location : 1 Siam Cement Road, Bang Sue, Bangkok Type of Business : Manufacture of Melamine Powder Telephone : 0 2586 3895 Fax : 0 2586 4878 Number of shares issued and paid up : 2,000,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 200,000,000 4. Company Name : S.K.I. Ceramics Co., Ltd. (3) Location : 7/101 Moo 4, Tambon Mab Yang Porn, Amphoe Pluak Daeng, Rayong Type of Business : Manufacture of Ceramics Tableware Telephone : 0 3895 6025 Fax : 0 3895 6030 Number of shares issued and paid up : 12,500,000 shares, paid-up per share : Baht 10 Paid-up Capital : Baht 125,000,000 An increase of capital from THB 120 million to THB 125 million was registered with the Ministry of Commerce on July 2, 2007. The Company has invested THB 3 million in this capital increase, resulting in the shareholding ratio of the Company rise up from 41.2% to 42%. (3)

Annual Report 2007 - As of December 31, 2007

11


5. Company Name : Beijing Huatai Replica of Porcelain Products Co., Ltd. Location : Xi Guan Street No. 104, Tongxian, Beijing, P.R.C. Type of Business : Manufacture of Melamine Products Telephone : 86 10 6954 7477 Fax : 86 10 6954 1924 Paid-up Capital : Yuan 8,947,925 6. Company Name : Srithai Packaging Co., Ltd. Location : 30/27 Moo 2, Tambon Khok Kham, Amphoe Mueang Samut Sakhon, Samut Sakhon Type of Business : Manufacture of Packaging Telephone : 0 3445 2100-7 Fax : 0 3445 2108-9 Number of shares issued and paid up : 600,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 60,000,000 7. Company Name : PT. Srithai Maspion Indonesia Location : Ji Kembang Jepun 38, 40 Surabaya, Indonesia Type of Business : Manufacture of Melamine Products Telephone : 62 31 891 3004 Fax : 62 31 891 3630 Number of shares issued and paid up : 9,320 shares, paid-up per share : Rupiah 1,115,250 Paid-up Capital : Rupiah 10,394,130,000 8. Company Name : Thai Takahashi Plastics Co., Ltd. Location : 479 Moo 4, Tambon Prak-Sa, Amphoe Mueang, Samut Prakan Type of Business : Manufacture of Plastic Products Telephone : 0 2324 0730 Fax : 0 2324 0698-9 Number of shares issued and paid up : 200,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 20,000,000 9. Company Name : Soko Srithai Co., Ltd. Location : 94 Moo 5, Wellgrow Industrial Estate, Bangna-Trad Highway Km. 36, Tambon Bang-Samak, Amphoe Bang Pakong, Chachengsao 24130 Type of Business : Manufacture of Plastic Products Telephone : 0 3857 0265-8 Fax : 0 3857 0271 Number of shares issued and paid up : 250,000 shares, paid-up per share : Baht 1,000 Paid-up Capital : Baht 250,000,000

12

Annual Report 2007 - As of December 31, 2007


10. Company Name : LN Srithai Comm Co., Ltd. Location : 71/12 Moo 5, Tambon Tha-Kam, Amphoe Bang Pakong, Chachengsao Type of Business : Manufacture of Telephone Sets Telephone : 0 3857 3061-3 Fax : 0 3857 3064 Number of shares issued and paid up : 76,000 shares, paid-up per share : Baht 1,000 Paid-up Capital : Baht 76,000,000 11. Company Name : Takahashi Korat (1995) Co., Ltd. Location : 479 Moo 4, Tambon Prak-Sa, Amphoe Mueang, Samut Prakan Type of Business : Manufacture of Plastic Products (for electronics) Telephone : 0 2324 0730 Fax : 0 2324 0698-9 Number of shares issued and paid up : 1,500,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 150,000,000 12. Company Name : Takahashi Plastics Co., Ltd. Location : 479 Moo 4, Tambon Prak-Sa, Amphoe Mueang, Samut Prakan Type of Business : Manufacture of Plastic Products Telephone : 0 2324 0730 Fax : 0 2324 0698-9 Number of shares issued and paid up : 400,000 shares, paid-up per share : Baht 100 Paid-up Capital : Baht 40,000,000 Joint Venture Company 1. Company Name : Srithai-Otto (Thailand) Co., Ltd. Location : 355 Moo 4, Soi Suksawat 36, Suksawat Rd., Bangpakok, Rasburana, Bangkok Type of Business : Trading Company Telephone : 0 2427 0088 Fax : 0 2874 5015 Number of shares issued and paid up : 200,000 shares, paid-up per share : Baht 50 Paid-up Capital : Baht 10,000,000

Annual Report 2007 - As of December 31, 2007

13


2. NATURE OF BUSINESS 2.1 COMPANY BACKGROUND Srithai Superware Public Company Limited, “the Company”, initially operated under the name “Srithai Plastic Industry Limited Partnership”. It was found by Mr. Sumit Lertsumitkul on August 1, 1963, to operate as a manufacturer and distributor of household plasticware. In 1972, the business was renamed “Srithai Superware Limited Partnership” and the management team was reorganized. Mr. Sanan Angubolkul was appointed as Factory Manager at that time. A new product line, melamine tableware, was added. In 1979, the limited partnership was transformed into a company limited under the name “Srithai Superware Company Limited”, after which the Company kept on expanding. The Company was listed in The Stock Exchange of Thailand on October 2, 1991, with an increase of registered capital from Baht 170 million to Baht 200 million. The Company was transformed into a public company limited on December 13, 1993. The Company increased its registered capital again to Baht 470 million on January 14, 1994, and subsequently to Baht 500 million on March 19, 1996, with fully paid-up share capital of Baht 400 million. In July 1997, under the pressure of economic crisis in the Asia-Pacific region, the Company announced debt restructuring. The Company later agreed with a creditor to file a petition to Court for business reorganization under the bankruptcy law. The Court approved the petition on May 28, 1999, and the reorganization plan on December 30, 1999, by appointing SGV-Na Thalang & Co., Ltd. as plan administrator. In the first quarter of 2000, Srithai Rungruengsaap (1999) Co., Ltd., a subsidiary, was established to hold parts of assets of the Company in line with the

14

Annual Report 2007 - As of December 31, 2007

structure as indicated in the approved reorganization plan, to whom parts of land and shares in related companies of the Company were sold. On April 28, 2000, the Company converted a portion of debt to equity according to the reorganization plan. It resulted in an increase in paid-up capital from Baht 400 million to Baht 2,857 million. The remainder portion of the affected debts was converted to Secured Floating Rate Notes (FRN) amounting to USD 84.2 million, redeemable in 5 years. The Company repaid and prepaid the FRN from time to time. Implementation of the business reorganization plan of the Company had been completed. On July 15, 2002, the Southern Bangkok Civil Court passed an order to release the Company from the reorganization plan by virtue of Section 90/70 of the Bankruptcy Act B.E. 2483. As a result, the Management team of the Company resumed managerial power again. On July 19, 2002, the Company signed a Syndicated Long-term Loan Agreement with the Siam City Bank Pcl. and the Bangkok Bank Pcl. amounted THB 2,100 million. The loan was used to repay all the Secured Floating Rate Notes, and freed the Company from all offshore loans. After borrowing the syndicated long-term loan, the Company has repaid and prepaid many installments. The Company could fully repay the principal amount of the long-term loan to the two banks during the year 2007. On August 12, 2005 Mr. Sumit Lertsumitkul, late Chairman of the Board of Directors of the Company passed away. Her Royal Highness Princess Maha Chakri Sirindhorn graciously presided over the cremation ceremony of Mr. Sumit Lertsumitkul on March 10, 2006. Meanwhile, the Board of Directors in the meeting no. 5/2548, held on September 7, 2005,


unanimously appointed Mr. Sanan Angubolkul, President, to be Chairman and President of the Company. The Board did not appoint a new director to replace Mr. Sumit Lertsumitkul. On June 21, 2006, an entire business transfer agreement was signed between the Company and Srithai Rungruengsaap (1999) Co., Ltd., the subsidiary. At the 25th Annual General Meeting of Shareholders (for the year 2005) on April 28, 2006, a resolution was passed to accept the transfer of the entire business of the subsidiary in order to simplify the structure of investments within the Group. Subsequently, Srithai Rungruengsaap (1999) Co., Ltd. registered its dissolution with the Ministry of Commerce on July 14, 2006. It liquidated its assets in the year 2007. The Company has restructured its lines of businesses according to the resolution of Board Meeting no.6/2549, held on September 29, 2006. The new structure comprises a plastic business line, of which main products are industrial products and household products, a trading business line, and a supporting business line. The new structure has been in effect since October 1, 2006.

The Board of Directors’ meeting no. 8/2550, held on December 15, 2007, unanimously approved Re-engineering Plan and activity plan and new business as strategies for attaining sustainable growth along the path to become a World-Class Company in the future by adjusting management process and slashing production overhead costs of industrial products to enhance competitiveness, profitability and product differentiation and value-adding. A part of the plan is to relocate the industrial product plant from Suksawat to Amata Plant in Chonburi Province, replacing old machines with new machines and investment in new molds for new products. 2.2 BUSINESS OUTLOOK OF SRITHAI

SUPERWARE GROUP Business outlook of Srithai Superware Group is mostly under the same structure as that of our core businesses, i.e. Plastic Business Line which comprises industrial products and household products and Trading Business Line. The Company has set its strategy of doing integrated businesses to reduce dependency on outsiders, so that competitiveness of the Group could be enhanced. Mould-making subsidiaries and other affiliated companies that cannot be classified under the two main business lines are grouped under “other businesses”.

Annual Report 2007 - As of December 31, 2007

15


STRUCTURE OF REVENUE The structure of revenue of the Group can be classified by business lines : Plastic Business Line comprising Industrial Products and Household Products, Trading Business Line, and Mould-Making Business Line as described below :- CONSOLIDATED For the year ended December 31, 2007 (Unit : Thousand Baht) Plastics Business Household Products Domestic Production

Industrial Products

Overseas Production

Domestic Production

3,460,130

Trading and Moulds Businesses

Overseas Production

Total

Sales and hire of work

1,644,048

2,532

205,821

353,908 5,666,439

Revenues from subsidiaries Total Sales and hire of work

(4) 1,644,044

(916) (13,816) (1,215) 1,616 3,446,314 204,606

(87,033) (102,984) 266,875 5,563,455

Remark : Additional information classified by business line and geographic segments was disclosed in notes to financial statements

for the year ended December 31, 2007, page 20

STRUCTURE OF TOTAL SALES OF SRITHAI SUPERWARE GROUP Unit of Total Sales : Million Baht

2007 Sales (%) Domestic Export Plastic Businesses Srithai Superware Pcl. Srithai (Vietnam) Co., Ltd. (Sales in Vietnam) Srithai Nanoplast Co., Ltd. Srithai Miyagawa Co., Ltd. Thai MFC Co., Ltd. Beijing Huatai Replica of Porcelain Products Co., Ltd. (Sales in China) PT. Srithai Maspion Indonesia (Sales in Indonesia) Soko Srithai Co., Ltd. Takahashi Korat (1995) Co., Ltd. Takahashi Plastics Co., Ltd. Total Plastic Businesses Trading Businesses Srithai Superware Pcl.

16

Annual Report 2007 - As of December 31, 2007

2007

2006

2005

Sales

%

Sales

%

Sales

%

79 86

21 14

4,545 199

35.2 1.5

4,366 138

30.9 1.0

3,826 132

32.6 1.1

100 63 34 100

0 37 66 0

59 483 561 76

0.5 3.7 4.4 0.6

16 366 643 84

0.1 2.6 4.6 0.6

12 254 506 82

0.1 2.2 4.3 0.7

100

0

70

0.6

64

0.4

62

0.5

46 100 72

54 0 28

5 3,239 379 9,616

0.0 141 25.1 4,920 2.9 606 74.5 11,344

1.0 34.9 4.3 80.4

137 3,481 630 9,122

1.2 29.6 5.4 77.7

100

0

67

0.4

32

0.3

0.5

55


STRUCTURE OF TOTAL SALES OF SRITHAI SUPERWARE GROUP (CONT.)

Unit of Total Sales : Million Baht

2007 Sales (%) Domestic Export Srithai-Otto (Thailand) Co., Ltd. Srithai Sanko Co., Ltd. (1) Srithai WBG Co., Ltd. Srithai Plaschem (Thailand) Co., Ltd. (2) Total Trading Businesses Other Businesses - Mould-Making Srithai Superware Pcl. Srithai Moulds Co., Ltd. Srithai Miyagawa Co., Ltd. Srithai Shin-Osaka Co., Ltd. Total Mould-Making - Others Srithai Superware Pcl. Srithai Rungruengsaap (1999) Co., Ltd. (3) (Rental Income) S.K.I. Ceramics Co., Ltd. Srithai Packaging Co., Ltd. LN Srithai Comm Co., Ltd. (5) Total Others Grand Total

100 100 100 -

0 0 0 -

2007 Sales

2006 %

Sales

2005 %

Sales

%

48 52 3 0

0.4 0.4 0.0 0.0

73 19 0 15

0.5 0.2 0.0 0.1

42 0 0 25

0.4 0.0 0.0 0.2

170

1.3

162

1.2

99

0.9

75 100 100 100

25 0 0 0

45 106 96 13 260

0.4 0.8 0.7 0.1 2.0

75 127 173 33 408

0.5 0.9 1.2 0.3 2.9

137 151 169 19 476

1.2 1.3 1.4 0.2 4.1

87 -

13 -

55 0

0.4 0.0

48 27

0.3 0.2

38 57

0.3 0.5

6 100 1

94 0 99

295 2.3 341 2.4 345 2.9 105 0.8 128 0.9 130 1.1 2,409 18.7 1,653 11.7 1,468 12.5 2,864 22.2 2,197 15.5 2,038 17.3 12,910 100.0 14,111 100.0 11,735 100.0

Srithai Sanko Co., Ltd. was registered on January 20, 2006. Srithai Plaschem (Thailand) Co., Ltd. had registered its dissolution on October 31, 2006. (3) Srithai Rungruengsaap (1999) Co., Ltd. had registered its dissolution on July 14, 2006. Remarks : 1. Structure of Sales information of the Company and group companies, shown comparatively for 3 years 2005-2007, were from financial statements of each company without eliminating inter-company transactions. 2. Exchange rates used in the calculation of sales of foreign associates were as shown below:- (1) (2)

2007 2006 2005 Baht 1 = 476.190 VND Baht 1 = 454.545 VND Baht 1 = 384.615 VND

Srithai (Vietnam) Co., Ltd. Beijing Huatai Replica of Porcelain Products Co., Ltd. Baht 1 = 0.218 RMB PT. Srithai Maspion Indonesia Baht 1 = 295.412 RP

Baht 1 = 0.218 RMB Baht 1 = 266.830 RP

Baht 1 = 0.199 RMB Baht 1 = 255.951 RP

Annual Report 2007 - As of December 31, 2007

17


2.3 Vision, Mission and Business Direction of

the Company The Company has announced its Vision, Mission and Business Direction for the year 20072009 (revised version) so that the executives and all staffs could share a common understanding and coordinating among them to push forward the Company to achieve the desired direction. Besides, the Company has released its Vision, Mission and Business Direction to public, partners and stakeholders for their acknowledgement in order to increase their confidence in the future of the Company and have them proceed to do business with the Company with certainty. Vision To be a leading company of Thailand in the manufacturer and distribution of plastic products for industrial and household uses that gain international recognition. Mission 1. Mission in Marketing Gain more market share in local market,

and expand export markets with quality and standardized products. 2. Mission in Production 2.1 Offer high quality products with lower costs at competitive prices to the world markets, supported by standardized production-management system. 2.2 Improve and develop new products to fulfill demand in markets. 3. Mission in Customer Satisfaction Improve and maintain quality standard of goods so as to build up confidence and customer satisfaction by providing impressive services to customers regularly. 4. Mission in Management Promote personnel development for enhancing their value adding, advancement in career path and their safety at work places. Be aware of corporate social responsibility and environmental protection.

18

Annual Report 2007 - As of December 31, 2007

Business Direction of Srithai Superware Pcl. for period 2007- 2009 (Revision)

1. During 2007- 2009 we shall focus on quality growth as described below:- Plastic Business : • Export Markets Focus on sustainably aggressive

growth by covering markets in

100 countries. • Domestic Markets Focus on continual growth.

Maintain our market shares

and secured profitability.

Attach importance on product

lines of high market growth.

Focus on profitable products. • Product Lines Focus on development of

Expansion production technology for

industrial goods and

household goods so as to

expand new product lines in

an aim to cover as many

market targets as possible. • Production Base Target at countries of high

Expansion potential in production work

such as Vietnam and India. Trading Business : • Expand business for widening product varieties by doing trading business. 2. We shall expand our production capacity and invest in moulds and machines of high efficiency, so that worthwhile return on investment could be expected. 3. We are committed to build up corporate culture under which our staffs will work as a team with very high team spirit, so as to assure that our customers are well serviced inside and outside our organization. Focus will be given to the success of teams. Our organization will reward the persons participating in the success of their teams. 4. We shall focus on quality improvement of our goods, reduction of production costs, and punctual delivery of goods to customers. These factors will boost up our competitiveness and


maintain our leadership in the markets for our main products forever. 5. We are committed to fully utilize our modern

information technology to provide useful and timely information to our Management teams, so that decision-making process will be made effective. 6. We shall emphasize on innovations and human

resource development to fulfill need of our organizational growth. In year 2007, the Company has made a progress in proceeding as per the plan and has proceeded in accordance with the business target as described below: Plastic Business Line It consists of industrial products and household products. 1. At present, export market coverage of the Company was 90 countries worldwide, as compared with the target of 100 countries within the year 2008. 2. The Company has focused on manufacturing and distributing goods of high market growth and profitable products as following:- 2.1 The Company set up Re-engineering Plan and New Activity and Business Plan in order to use them as strategy for pushing the Company’s growth constantly and sustainably. It also determined to become world-class company in the future by changing management style, reducing cost of production of industrial products so that they can be competitive and made more profitable. It also differentiated its products and added value to them. One of the plan was to centralize production of industrial products at Amata Nakorn in Chonburi Province, replace old machines with new machines and invest in moulds to make more new products. Source of fund for investment came from operating cash flow of the Company and additional borrowing from local banks.

2.2 The Company has collaborated with its business alliance on technology transfer on designing, manufacturing and distributing toilet seats. The products were manufactured at Korat and Amata Nakorn in Chonburi plants which received BOI privilege. In the year 2007, the Company started to receive income from toilet seats. It targeted to develop its production process and quality of products in accordance with the market expansion in the future. 2.3 The Company has focused on producing and selling Material Handling product group such as crate, pallet, and pail, manufactured at Amata Nakorn in Chonburi Province. The Company has invested to increase the production capacity due to rapid growth of sales of Material Handling product group that received BOI privilege. 2.4 Automobile parts are one of the products in industrial part group of products that create a lot of sales revenue due to high increase of growth in the market. The Company tried to develop production technology and quality continuously to increase the confidence and trust of customers who are automobile and motorcycle factories. Automobile parts are products that required high quality manufacturing. In 2007, the Company has received Certificate on ISO/TS 16949:2002 for automobile parts from United Registrar of Systems (Thailand) Ltd. “URS� which is quality standard for automobile industry and is widely accepted all over the world This proofs that the Company is the leader in manufacturing of high standard automobile

parts.

Annual Report 2007 - As of December 31, 2007

19


2.5 The Company strongly determined to develop and focus on food packaging such as drinking cups, popcorn bags, yokurt cups and food packaging that can put in microwave oven or for one time use as seen in convenience stores. Technology of manufacturing of these products is Thin Wall Injection Molding in which in Thailand there are less competitors. Besides, the Company has implemented new technology called In Mold Labeling or MLM which sticked to the product without reprinting it outside. The target of development of such products has already been implemented in the Re-engineering Plan and New Activity and Business Plan of the Company and is in the stage of studying, designing and developing more products to have better quality and higher standard. The process of production is treated for better environment and social responsibility. The Company tried to expand the market of packaging products due to the market of food industry being very big with high growth that can increase its sales revenue. 3. The Company has been expanding production base of household products to Vietnam by increasing capital of Srithai (Vietnam) Co., Ltd. so as to add another production line. Srithai Vietnam is a subsidiary company in which the Company has 95.84% interest. It has long been operating in Vietnam. The expansion of production base in Vietnam will enhance price competitiveness of the Company because there are abundant low-cost labour in Vietnam. Srithai Vietnam started to earn revenue from production and sales of houseware since 3rd quarter of 2007. It has manufactured the products and sold to India and through sales agents in Vietnam. 4. Regarding our plan to set up a production base in India which is another country of high production potential, the Company is negotiating

20

Annual Report 2007 - As of December 31, 2007

with a business alliance. It will consume time to do legal and marketing feasibility studies. The Company will take due care in evaluation of this project to assure good return on investment. 5. The Company has a plan to increase production capacity of household products by investing in additional melamine compression machine, so as to support the business growth and expand both domestic and export customer bases. Trading Business line The Company has launched Lock & Lock food containers imported from Korea and gadgets for use in kitchen and catering under leading brands, i.e. Abert, Broggi and Ghidini from Italy. Besides, other products such as tables, sum loungers, and artificial rattan chairs under Evolutiff and Kettal brands imported from France and Spain are also available. Our products are recognized and welcomed by customers. The Company has been trying to select quality products to serve our customers continually by focussing on products of high market potential with reasonable prices and differentiated features. The Company also has a policy to distribute full ranges of products of the same group or products serving the same group of customers. The Company has started to access HoReCa business comprising hotels, restaurants, and catering. During the year 2008, the Company has planned to diversify its product ranges under trading business line by putting attention on consumable products such as food supplement, cosmetics, skin lotion, etc. to distribute it to customers in order to boost up sales revenue of our trading business line. The target is to promote trading business as one of major income generators in the future. Other Operations By year end 2007 the Company has set up an additional direct-sales channel to do business under MLM concept (Multi-Level Marketing), apart from the existing SLM concept (Single-Level


Marketing) which has been operating successfully during the past 35 years. The Company has full confidence in our MLM business which will be launched in the 2nd quarter of the year 2008. The MLM business will facilitate wider distribution of our various product ranges and easier access to target groups of customers. It will be an efficient income generator of the Company. In forming strategies and plans, the Company wishes to differentiate its products and make them

harder for competitors to compete, thus makes its business to expand and grow continuously and

sustainably. It has set its sales target to reach THB10 billion in the next 5 years. 2.4 Business Operation by Business Line 2.4.1 Plastic Business The Company’s plastic business unit has been categorized by its main products i.e. industrial products and household products. The categorization was made according to the function of the products and has been detailed as following:- (1) Industrial Products (a) Description of Product or Service Engineering Parts -parts that are used in the assembly of industrial products such as microwave oven, air-conditioner, refrigerator, washing machine, parts for automobiles and motorcycle fax machine, printer etc. in which the Company can provide both manufacturing and assembling parts for the above mentioned products. Battery Cases -Exterior plastic case, lid and anode & cathode of batteries for cars and motorcycles. Pallet -Low-rise rectangular plastic pedestal used for putting on with goods in warehouse. There are openings inside the pallet for forks of forklift trucks to insert for lifting. Bottle Crate -Plastic crates with inside divided into small sockets for keeping upright bottles such as soft drink and beer and other drinks, etc. Container -Pail for paint, chemical, lubricant and grease

Garbage Bin -Large garbage bin with wheels for sidewalk or public places Crate -Fish crate, spare part box, milk crate and crate for fruits & vegetables Premium Products -Made-to-order products for free gift promotional campaign of brand-owners and department stores. Mostly products are designed by brand owners and printed with customers’ brands. Other Products -Accessories, decorations, and appliances etc. (b) Marketing and Competition Description of Customer Customers who buy automotive and motorcycle parts and battery cases use the products for further assembly in their production process. Customers who buy pallets, bottle crates, pails, garbage bins, and container crates are end-users such as manufacturing plants. Premium products are directly sold to brand-owners and retailers for their promotional campaign. Accessories, decorations, and appliances are sold through sale agents or retailers who distributed the products to the consumers. Credit term Usually credit term of 30-90 days is granted to customers of plastic products. Sales in grand sales event are made in cash. Competitive Strategy Emphasis is put on high quality products, wide variety of products and complete integration of services, owing to the fact that certain related companies can produce moulds for customers. Distribution Channel Plastic products are

distributed through the following Export Sales : 10.0% Domestic Sales : 90.0% Distributors are Srithai Marketing Co., Ltd., Siam Melamine Marketing Co., Ltd., Srithai-Otto (Thailand) Co., Ltd., Tanasiri Industries Co., Ltd. and S. Sirithai Trading Co., Ltd. They have been our trade partners for a very long time.

Annual Report 2007 - As of December 31, 2007

21


22

(c) Competitive Environment Most plastic product producers focus on any one particular area of specialization, and compete only in their niche markets. For instance, producers of household plastic products will only produce household products and not other. There are about 4,000 plastic factories in the country. Mostly they are shop-house factories or household factories with low investment and low technology. Large plastic factories that are able to produce plastic products for supply to businesses and consumers are only handful as it requires large investment, high quality control, and advanced technology. Additionally, brand name is also important in creating creditability among customers, especially for manufacturing of engineering parts which requires high quality and timeliness of delivery. However, plastic resin market had driven up resin prices sharply and continually, resulting in closure of many small plasticware factories. Srithai Superware Group is the leader in plastic industry because our production capacity is as high as 40,000 tons per annum. Srithai operates 3 plastic factories. We have expertise in producing plastic precision parts such as engineering and vehicle parts. Plastic business has high potential to grow in line with economic growth of Thailand. Size of the Company as Compared to Competitors’ The Company cannot compare its size with its competitors because there are thousands of plastic injection factories, medium and small. Therefore, size can be estimated from market shares as follow:- market share battery cases 70% industrial parts 60% Material Handling 50-60% (d) Sourcing of Products or Services (Plastic Business) The Company operates 3 plastic product factories at Suksawat, Amatanakorn Chonburi and Bangpu. The 3 factories are differentiated according to specialized production skills as follows: Annual Report 2007 - As of December 31, 2007

Suksawat Factory Producing small engineering parts i.e. parts of electricity products and vehicle parts etc., household products, and accessories. Amatanakorn Chonburi Factory Producing pallets, bottle crates, container, garbage bin, decorations and industrial parts of big size - i.e. parts of electricity products and vehicle parts etc. Bangpu Factory Producing battery cases. Important raw materials are various types of plastic resin, which are purchased domestically from distributors of many producers. There are no problems about raw material quality or shortage. However, when crude oil price rose, the price of plastic resin also increased. In principle, the Company could also increase sales price of products because there was an arrangement for such increase by taking order from the customers in advance and focusing on OEM business which can reduce risk from price fluctuation of raw materials. The production process does not cause any environmental impacts. (e) Pending Orders Customer-base of the Company is extensive; therefore, the Company did not rely on big customers whose pending orders valued more than 10% of total revenue. (2) Household Products (a) Description of Product or Service Household Products comprise tableware and kitchenware made of melamine powder and beautifully decorated with printed patterns or cartoons characters. They include dish, bowl, rice bowl, ladle, spoon, cup etc. The manufacturing plant received promotional privileges from The Board of Investment. (b) Marketing and Competition Description of Customers distributed by the sale agents and direct sales and export. Credit term Usually credit term of 30 150 days is granted to wholesalers. Sales in grand sales event are made in cash and direct sales are also mostly made in cash.


Competitive Strategy Emphasis is made on high quality product with beautiful decoration and colorful design along with product shapes which are suitable for multi-purpose functions. Distribution Channel Household products have the following distribution channels: Export Sales : 39.5% Domestic Sales : 60.5% Distributors are Siam Melamine Marketing Co., Ltd. and Srithai Marketing Co., Ltd. They have been our trade partners for a very long time. (c) Competitive Environment Houseware that made of melamine powder which heat resistant up to 100 oC is suitable for manufacturing food container because it is safe for consumer and there are not so many producers in the market. Melamine products of the Company are durable and composed of many beautiful designs, and due to the use of 100% melamine powder thus make the Company’s houseware become popular in the markets both local and abroad. Export markets can be expanded to neighbouring countries and developed countries. The Company is the largest manufacturer of melamine products in Thailand. It has added production base in Vietnam in 2007 in order to reduce production cost and increase competitiveness of the Company Presently the Company is the market leader for household plastic product made of melamine

distributed under our 6 brands, i.e. Superware, Vanda, Flowerware, Melamineware, UNICA and Ektra. In Thailand, the Company is the only distributor who deploys a team force of direct sales. Size of the Company as Compared to Competitors’ The Company is biggest in term of market share and production capacity. Our production capacity is 11,000 tons per annum. The second runner-up is Melamine Thai Co., Ltd. with capacity of 1,000 tons per annum, and the third is Malaplast Co., Ltd. with capacity of 700 tons per annum.

(d) Sourcing of Product or Service The Company produces its household plastic products made of melamine at the factory in Nakorn Rachasrima province, in Suranaree Industrial Estate. Total production capacity is 11,000 tons per year, the largest melamine product producer in Thailand. Production is mainly made to purchase orders from overseas, and to satisfy demand for certain popular designs in the domestic market. Major raw material is melamine powder, almost all purchased from domestic producers, i.e. Thai MFC Co., Ltd., Thai K.K. Co., Ltd. and Matsushita Electric Works (Ayuthaya) Ltd. These companies have maintained good relationship with the Company. There are no problems on quality or shortage of raw material, and the production process causes no environmental impacts. The Company buys melamine powder from Thai MFC Co., Ltd. more than 50% of total purchase. Apart from the standard quality, purchase price is reasonable due to Thai MFC Co., Ltd. being an affiliate. (e) Pending Orders The Company sells to tens of thousands of customers in domestic and export markets, both

consumers and distributors. There is no pending order amounted more than 10% of total revenue. “Ektra” products are made of plastic or melamine. It is designed for Metro living people to be in line with the popularity of designed products that are suitable for modern living. This creates the expansion of upper-class customers. Ektra products are popular quite satisfactorily, especially Modern Catering products that are tableware in modern style. The Company sells these products through direct sales, department stores, shops and export market. 2.4.2 Trading Business Line Trading business is a new business line resulting from the restructuring of the Company’s businesses. The purpose of trading business line is to be another source of revenue of the Company in Annual Report 2007 - As of December 31, 2007

23


addition to the main source of revenue from plastic business and to support the increasing role of the Company’s trading business so that business planning and management could be clarified. Details of trading business and products are as follow:- (a) Description of Product or Service Products categorized under trading business line comprise:- Domestic Products Bedding and cooking utensils. Imported Products Lock & Lock food preservation box imported from Korea, Gadgets used in kitchen and catering under brand names “Albert”, “Broggi”, and “Ghidini” from Italy, tables, sun loungers, and artificial rattan chairs under brand name “Evolutif” and “Kettal” from France and Spain respectively. (b) Marketing and Competition Description of Customer End users and HoReCa business which consists of Hotel, Restaurant, and Catering. Credit term Usually credit term of 90 150 days is granted to wholesalers. Sales in grand sales event are made in cash and direct sales are also mostly made in cash. Competitive Strategy Emphasis on products that are high potential in the market and reasonable price as well as are differentiated from existing products locally, and mostly imported. Besides, the Company emphasizes on selling products in full cycle or group of products that can be offered to same group of customers or sell through direct selling system of the Company in order to more approach its target groups of customers. Distribution Channel Partly distributed through sale agents and distributed through direct selling to consumers. (c) Competitive Environment The Company committed itself to pick up products of high quality and popularity to be distributed to customers. We also do the market

24

Annual Report 2007 - As of December 31, 2007

survey in order to pick up the right product that could satisfy the customer. We continually launch marketing and sales activities. Moreover, distribution channels of the Company - sales agents, direct sales, and department stores allow recognition and make easy access to our product for consumers. As a result, our products become well-known and accepted among customers, and have high potential to be the products of common use and to gain more sales in the future. Anyway, the Company carefully studied products and market in order to avoid unnecessary risk and competition. Besides, trading business does not require large investment. If any product is not lucrative or not welcome by consumers, the Company could give up distribution of that product with very little impact. It is a good point of this type of business.

Size of the Company as Compared to Competitors’ The Company cannot compare size of trading

business with its competitors’ because there are many types of products and of different applications. Therefore, there are many competitors of many sizes. Besides, trading business of the Company is at its early stage so that the Company could not evaluate market condition of each product and determine market share. (d) Sourcing of Products or Services The Company procures products from both local and international sources. The Company does not face product shortage problem eventhough most products are popular and well-accepted among customers since the Company has had good relationship with the manufacturers.

(e) Pending Orders The Company distributed products to various types of customers - i.e. end users, retailers, sales agents and HoReCa (Hotel, Restaurant, and Catering).

In addition, revenue proportion of trading business

in the year 2007 is still small as compared to total revenue of the Company. Therefore, there is no pending order amounted more than 10% of total revenue.


2.4.3 Other Business Other business line comprises mould-making business which is supporting plastic business, and other businesses other than plastic business and trading business as following:- (1) Mould-Making Business The Company does not itself make moulds for sale to outsiders. Mould-making business has been operated by our subsidiaries, namely Srithai Miyagawa Co., Ltd. and Srithai Moulds Co., Ltd. Both companies are leaders in this business. Their products are supplied to automobile industry, electrical appliance industry and toiletry products which require very high precision of injected parts. Srithai Shin-Osaka Co., Ltd., another company in Srithai Group, has been providing mould laminating business. (a) Description of Product or Service It is a hire-of-work to make moulds for plastic injection or melamine compression as per designs and sizes described by clients, including mould repair services. (b) Marketing and Competition Plastic Injection molding business still expands continuously due to other manufacturers trying to reduce cost by switching raw materials from metal to plastic. This includes automobile parts industry, electrical appliance industry, toiletry industry, etc., thus enables plastic injection molding business to expand greatly in Thailand. Meanwhile, both Thai and foreign investors are interested in plastic injection molding business more and more, from small-scale enterprise investing THB 5 million to large-scale enterprise investing more than THB 100 million. Computer software and modern machines help increase efficiency of production of molds greatly. Enterprise has provided and developed personnel who can use computer software and modern machines efficiently in order to reduce production cost and can be competitive in mold industry. However, at present manufacturers of molds in the Republic of Korea, Taiwan, and China are competing with each other

strongly in offering lower price to customers eventhough there was problem about quality. Due to high competition in some industry such as electrical appliances, the manufacturers prefer using molds offered at lower prices. Small enterprises in Thailand are increasing their competitiveness in producing small-sized molds. Therefore, mold makers should compete with themselves in increasing the competitiveness in producing injection molds that are more complicated and reduce production cost. (c) Status and Competitiveness Molds that are use for producing automobile parts, electrical appliances and toiletry products must be high quality molds in order to get nice and durable products and can be competitive in the market. At present, Srithai Miyakawa Co., Ltd. and Srithai Mold Co., Ltd. have provided machines with computer software and other modern equipments to produce plastic injection 200-300 molds per year for total value of THB 200-300 million. Customers are confident in these two moldmakers and lire them. In 2007 production capacity of the two companies were not at full scale throughout the year due to higher competition

in pricing. However, both companies have tried to reduce cost in order to increase ability of price

competitiveness. Size of the Company as Compared to

Competitors’ Srithai Miyagawa Co., Ltd. has invested in tools, machinery and man-power to be able to make moulds of weight 200 kgs. up to 5,000 kgs., whereas Srithai Moulds Co., Ltd. can make large mould of weight up to 10,000 kgs. There are about 50 competitors of the same size with us. However, those competitors have special skill in different areas of products. As a result, competition is not so high. (d) Sourcing of Product or Service (MouldMaking Business) Iron ingot is the raw material of mouldmaking. There are many import agents for iron ingots in Thailand. Hence, competition among those Annual Report 2007 - As of December 31, 2007

25


import agents is high. Mould-making companies of ours can then procure iron ingots easily without shortage of supply. (e) Pending Orders As at December 31, 2007, Srithai Miyakawa Co., Ltd. and Srithai Shin-Osaka Co., Ltd. showed that their work to be submitted to customers were not more than 10% of total income but Srithai Mold Co., Ltd. contained work that had not been submitted to customers more than 10% of its total revenue due to the need of more time for production and its order coming at the end of 2007. Such pending work is expected to deliver to customers within 2-3 months. (2) Other Businesses (a) Description of Product or Service S.K.I. Ceramics Co., Ltd. Manufacturing ceramic tablewares. Srithai Packaging Co., Ltd. Manufacturing paper box for industrial users. LN Srithai Comm Co., Ltd. Manufacturing telephone equipments, both with cord and cordless, and switching board. (b) Marketing, Competition, and Competitive Environment S.K.I. Ceramics Co., Ltd. Very high competition in business. Products of the company are exported to U.S.A. and Japan under brand names of customers. Besides, the company has sold ceramic products under “Miyako� Brand for local customers in order to increase sales channels for the company. Srithai Packaging Co., Ltd. Facing strong competition. However, it can retain a group of loyal customers with its quality and service, so there is no problem.

26

Annual Report 2007 - As of December 31, 2007

LN Srithai Comm Co., Ltd. Most of its products are for export. Major customer is the parent company in Korea. The company acts as a production base for the parent company. (c) Sourcing of Product or Service S.K.I. Ceramics Co., Ltd. Major raw materials are clay which are purchased from both local trader and abroad; stickers and coating solution which are purchased from a shareholder, Iwatani International Corporation (Osaka). There is no raw material shortage problem. Srithai Packaging Co., Ltd. Major raw materials are card board and craft

paper, which are all purchased from domestic suppliers. Sometimes price of paper pulp rises, causing price of paper to increase to some extent. There is no problem of raw material shortage. LN Srithai Comm Co., Ltd. Major raw materials are IC and electronics parts imported from overseas distributors. There is no raw material shortage problem as these products

are generally available. Plastic components are

outsourced from local plastic injection factories. Since there are so many plastic injection factories, there is no problem of shortage of supplier. (d) Pending Orders S.K.I. Ceramics Co., Ltd., Srithai Packaging

Co., Ltd., and LN Srithai Comm Co., Ltd. had no pending order valued more than 10% of total revenue.


3. STRUCTURE OF SHAREHOLDERS AND MANAGEMENT 3.1 LIST OF 10 MAJOR SHAREHOLDERS As of January 4, 2008 3.1.1 SHAREHOLDERS WHO COULD PARTICIPATE IN FORMULATION OF POLICIES Name MR. SANAN ANGUBOLKUL

Rank Shares % Major Business 1 37,082,351 12.98 Chairman and President of Srithai Superware Pcl. MRS. SRISUDA LERTSUMITKUL 3 15,206,400 5.32 Director of Srithai Superware Pcl. 3.1.2 SHAREHOLDERS WHO COULD NOT PARTICIPATE IN FORMULATION OF

CORPORATE POLICIES Name Rank Shares % MS. MAYUREE SIRIVAJANANGKUL

2

15,336,449

5.37

PERSHING LLC-CUSTOMER SAFEKEEPING

4

13,630,200

4.77

MR. SOMBAT & MS. NALINEE LERTSUMITKUL

5

11,411,700

3.99

HSBC BANK PLC - CLIENTS GENERAL A/C

6

10,680,000

3.74

MR. SOMYOD LERTSUMITKUL

7

10,070,796

3.52

MS. BUNNAPA LERTSUMITKUL

8

7,320,000

2.56

MR. SOMSAK LERTSUMITKUL

9

7,103,570

2.49

MR. KAMONPLUST MEKWORAWUT

10

6,652,500

2.33

134,493,966

47.07

Total shares of 10 major shareholders Total common shares

285,714,286 100.00

Remark : 1. The Company has purchased the treasury stocks of 14,723,806 shares or 5.15% of total ordinary shares. 2. Investors can check name-list of the current top 10 major shareholders shown in the Company’s website before arrival of the Annual General Meeting of Shareholders. 3.2 MANAGEMENT The Board of Directors is responsible for overall management of the Company. According to the Articles of Association, the Board consists of at least 5 directors but not more than 12 directors, and at least 3 of them must be independent directors. At least half a number of Directors representing in the Meeting of the Board of

Directors constitutes a quorum. The Meeting of Shareholders nominates Directors. The term of Directorship is 3 years. Any director whose term is expired can be re-elected by the Meeting of Shareholders. Management conducts business on behalf of the Board of Directors.

Annual Report 2007 - As of December 31, 2007

27


28

Annual Report 2007 - As of December 31, 2007

Mr. Pawat Chalermpong Marketing Director Industrial Products

Mr. Apisit Tangsatit Bangpoo & Amatanakorn Chonbuti Plants

Mr. Naphol Lertsumitkul Assistant to the President

Mr. Manit Ativanichayaphong (Acting) Chief Operating Officer

Audit Committee

Mr. Prayoon Kaijitte Personnel & Administration Director

Mr. Prin Bholnivas (Acting) Finance Director

Chief Financial Officer

Mr. Prin Bholnivas

Internal Audit Department

คณะอนุ กรรมการบริหSub-Committee ารความเสี่ยง Risk Management

Mr. Sanan Angubolkul President

Executive Committee

Board of Directors

Ms. Nitaya Mr. Manit Mr. Thawee Mr. Manit Prasertnukulphol Ativanichayaphong Kongyungyuen Ativanichayaphong Marketing (Acting) Factory Director Trading Business Director Direct Sales Korat Plant Director Household Director Products

Safety Section

Nominating and Remuneration Committee

3.2.1 STRUCTURE OF ORGANIZATION

Mr. Pongsak Kantiratanawong Marketing Director Pakaging ∏Products

Ms. Bunnapa Lertsumitkul Human Resources Development Director


3.2.2 BOARD OF DIRECTORS : AUTHORITY AND RESPONSIBILITIES BOARD OF DIRECTORS 1. Mr. Sanan Angubolkul Chairman, President and Nominating and Remuneration Committee Member 2. Prof. Viroj Lowhaphandu Independent Director and Chairman of the Audit Committee Independent Director, Audit Committee Member and 3. Mr. Enghug Nontikarn Chairman of the Nominating and Remuneration Committee 4. Mr. Suchat Boonbanjerdsri Independent Director and Audit Committee Member 5. Mrs. Srisuda Lertsumitkul Director 6. Mr. Manit Ativanichayaphong Director and Risk Management Sub-Committee Member 7. Mr. Thawee Kongyungyuen Director 8. Mr. Naphol Lertsumitkul Director Director, Nominating and Remuneration Committee Member, 9. Mr. Prin Bholnivas Chairman of the Risk Management Sub-Committee and Board of Directors Secretary Remark : Mr. Thawee Kongyungyuen passed away on January 12, 2008. AUTHORITY AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS The Board of Directors has the following authorities and responsibilities : 1. Performing duties in accordance with the law, the Objects and Articles of Association of the Company as well as the resolution of the Meeting of Shareholders; 2. Prescribing business policies and targets for the Management to follow; 3. Monitoring and controlling Management to conduct business efficiently and in good faith, and to follow shareholders’ resolution; 4. Calling for the Meeting of the Shareholders at least once a year to report business performance and to request for the resolutions on matters beyond the power of the Board of Directors e.g. declaration of dividend; 5. Calling for the Meeting of the Board of Directors at least once every three month; 6. Entering into any transaction or any act which may have material effect on financial position, obligation on liabilities, and reputation of the Company, e.g. borrowing money from financial institution;

7. Entering into any connected transaction that requires no approval of Shareholders’ Meeting between the Company, its subsidiaries, or affiliated companies and connected persons; 8. Setting up internal control system and efficient internal auditing procedure; 9. Directing and monitoring the accuracy, completeness, and transparency of financial reporting and reporting of other information to shareholders and other concerned parties; 10. Nominating and defining scope of duties and responsibilities of ad-hoc committee in any particular issue; 11. Nominating and changing authorized signatories who can bind the Company; 12. Setting up policies, business strategies, business plan, and annual budget for the Company; 13. Following up results of work and business results quarterly and annually of the Company, and comparing it to budget; 14. Entering into any contract that is not normal business of the Company, or any material contract of normal business nature; Annual Report 2007 - As of December 31, 2007

29


15. Directing and monitoring the compliance to principles of good corporate governance; and 16. Amending or changing the scope of authorities and responsibilities of the Board as mentioned above. 3.2.3 MANAGEMENT : AUTHORITY AND RESPONSIBILITIES MANAGEMENT (Definitions as set by the Office of the Securities and Exchange Commission) 1. Mr. Sanan Angubolkul Chairman and President 2. Mr. Prin Bholnivas Chief Financial Officer 3. Mr. Manit Ativanichayaphong Acting Chief Operating Officer, Trading Business Director and Acting Direct Sale Director 4. Mr. Naphol Lertsumitkul Assistant to the President 5. Mr. Thawee Kongyungyuen Factory Director (Korat) 6. Mr. Prayoon Kajitte Personnel and Administration Director 7. Ms. Bunnapa Lertsumitkul Human Resource Development Director 8. Mr. Apisit Tangsatit Factory Director (Bangpoo & Amatanakorn Chonburi) 9. Mr. Pawat Chalermpong Marketing Director (Industrial Products) 10. Ms. Nitaya Prasertnukulphol Marketing Director (Household Products) 11. Mr. Pongsak Kantiratanawong Marketing Director - Packaging Products Remark : Mr. Thawee Kongyungyuen passed away on January 12, 2008. AUTHORITY AND RESPONSIBILITIES OF THE MANAGEMENT The Management will manage the Company so as to assure that work plan being implemented and policies of the Board being followed. The Management will carry out any assignment from the Board as follows: 1. Managing, directing and monitoring the performance of the Company in order to be efficient, comply with the direction and objectives of the Company and keep up the strength of business as stated by policies of the Board of Directors; 2. Screening any agenda to be proposed to the Board of Directors and carrying out any assignment from the Board;

30

Annual Report 2007 - As of December 31, 2007

3. Reporting to the Board; 4. Planning and screening all short-term and

long-term plans so as to achieve purpose and objectives of the Company; 5. Planning financial management so as to diminish financial burdens and to solidify the financing structure of the Company; and 6. Performing duties in compliance with the laws, the objectives and Articles of Association of the Company. BOARD OF DIRECTORS SECRETARY Mr. Prin Bholnivas


3.2.4 BACKGROUND INFORMATION ABOUNT DIRECTORS AND EXECUTIVES 1) Mr. Sanan Angubolkul Age 62 Years 2) Prof. Viroj Lowhaphandu Age 78 Years

Position

: Chairman, President and Nominating and Remuneration Committee Member Has authority to sign for the Company as per Certification Document Education : Bachelor Degree in Business Administration University of Oglethorpe, Atlanta, Georgia, U.S.A. Honorary Doctorate Degree in Business Administration

From Chiang-Mai University Honorary Doctorate Degree in Marketing from Sripatum University Certificate of Achievement, 3rd Class

The National Defence College of Thailand Training : Chairman 2000 Program, class no. 4/2001 Thai Institute of Directors Association Experience : 1972 - Present Srithai Superware Pcl. No. of Share : 37,082,351 Shares or 12.98 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company Position : Independent Director and Chairman of the Audit Committee Has no authority to sign for the Company Education : Bachelor of Commerce and Bachelor of Law Thammasat University Higher Diploma in Accountancy, Thammasat University Master of Business Administration The American University, Washington D.C., U.S.A. Honorary Doctorate Degree in Accounting Thammasat University Certificate of Achievement, 22nd Class

The National Defence College of Thailand Honorary Doctorate Degree (Business Administration-Banking) Sripatum University Training : Director Certification Program (DCP) Thai Institute of Directors Association Certified Professional Internal Auditors Certified Public Accountant (Thailand) Experience : 1980 - 1985 Director General of Treasury Department 1985 - 1986 Director General of Revenue Department 1986 - 1990 Director General of Customs Department 1990 - 1991 Director General of Excise Department 1976 - Present Director and Treasurer, Ajinomoto Foundation 1987 - Present Chairman Bangpra Golf International Co., Ltd. 1991 - Present Executive Director Central Plaza Hotel Pcl. 1991 - Present Member of the Board of Trustee and Chairman

of the Audit Committee

The University of the Thai Chamber of

Commerce Annual Report 2007 - As of December 31, 2007

31


3) Mr. Enghug Nontikarn Age 52 Years

32

Annual Report 2007 - As of December 31, 2007

1999 - Present Director and Chairman of the Audit Committee

Don Muang Tollway Pcl. 1999 - Present Director and Chairman of the Audit Committee

Siam Food Products Pcl. 2004 - Present Chairman of the CPA Examination Sub-Committee

Federation of Accounting Professions 2002 - Present Independent Director and Chairman of the

Audit Committee

Srithai Superware Pcl. No. of Share : 0 Share or 0.00 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company Position : Independent Director, Audit Committee Member and Chairman of the Nominating and Remuneration Committee Has no authority to sign for the Company Education : M.B.A. - Faculty of Commerce & Accountancy, Thammasat University Training : Director Accreditation Program (DAP) Thai Institute of Directors Association Experience : 1979 - 1991 Krung Thai Bank Pcl. 1991 - 1995 Bangkok Metropolitan Bank Pcl. 1995 - 1998 Senior Vice President

Siam City Bank Pcl. 1998 - 2001 Executive Vice President

Siam City Bank Pcl. 2002 - 2006 First Executive Vice President Siam City Bank Pcl. 2006 - Present Vice President

Siam City Bank Pcl. 2002 - Present Independent Director, Audit Committee

Member and Chairman of the Nominating

and Remuneration Committee

Srithai Superware Pcl. No. of Share

: 5,900 Share or 0.00 percent (as of January 4, 2008) (included shares held by spouse) Relationship among Directors : None Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company


4) Mr. Suchat Boonbanjerdsri Age 49 Years

Position Education Training Experience

: Independent Director and Audit Committee Member Has no authority to sign for the Company : M.B.A. - Finance & Marketing Wharton School, University of Pennsylvania, U.S.A. Bachelor of Quantitative Economics, 2nd class honor Chulalongkorn University : Directors Certification Program (DCP) Audit Committee Program (ACP) Thai Institute of Directors Association : 1985 - 1986 Dealer - Treasury Department Kasikornbank Pcl. 1986 - 1994 Manager, Los Angeles Branch Kasikornbank Pcl. 1987 Guest Lecturer, M.B.A. Program Thammasat University

Kasetsart University 1994 - 1996 Senior Vice President Asset Plus Securities Co., Ltd. 1996 - 1997 Managing Director

Dynamic Eastern Pcl. 1997 - 1998 Non core Sale Department

Financial Restructuring Authority of Thailand 1999 - 2000 Advisor

Sub-Committee on Fiscal,

Banking and Financial Institution

House of Representatives 2000 Guest Lecturer, M.B.A. Program Siam University 2001 - 2002 Director

Aeronautical Radio of Thailand Co., Ltd. A state enterprise under the Ministry of

Transport and Communication 2001 - 2002 Director

Siam Syntech Construction Pcl. 2001 - 2005 Advisor

Sub-Committee on Economics

Development House of Representatives 2002 - 2006 Advisor, Risk Management Committee Aeronautical Radio of Thailand Co., Ltd. 2002 - Present Director

Practicum Engineering Co., Ltd. 2002 - Present Independent Director and Audit Committee

Member

Srithai Superware Pcl. No. of Share : 0 Shares or 0.00 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company

Annual Report 2007 - As of December 31, 2007

33


: Director Has no authority to sign for the Company : Elementary school : Co-Founder of Srithai Superware Pcl. : Never take any training course of Thai Institute of Directors

Association No. of Share : 15,206,400 Shares or 5.32 percent (as of January 4, 2008) Relationship among Directors : Mother of Mr. Naphol and Ms. Bunnapa Lertsumitkul Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company 6) Mr. Manit Ativanichayaphong Position : Director, Risk Management Sub-Committee Member, Acting Chief Operating Office, Trading Business Age 63 Years Director and Acting Direct Sale Director Has authority to sign for the Company as per Certification

Document Education : Bachelor Degree in Marketing, Ramkamhaeng University Training : Director Certification Program (DCP) Thai Institute of Directors Association Experience : 1967 - 1974 Account Executive Grant Advertising International Inc. 1974 - Present Srithai Superware Pcl. No. of Share

: 1,148,720 Shares or 0.40 percent (as of January 4, 2008) (included shares held by spouse) Relationship among Directors : None Illegal acts in the past 10 years : None Position in competing : None companies /company related to business of the Company 7) Mr. Thawee Kongyungyuen Position : Director and Factory Director (Korat) Has authority to sign for the Company as per Certification

Age 61 Years Document Education : Associate Degree, Thai-German Technical Institute Training : Director Accreditation Program (DAP) Thai Institute of Directors Association Experience : 1972 - January 12, 2008 Srithai Superware Pcl.

(passed away on January 12, 2008) No. of Share : 1,268,000 Shares or 0.44 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company

5) Mrs. Srisuda Lertsumitkul Age 68 Years

34

Annual Report 2007 - As of December 31, 2007

Position Education Experience Training


8) Mr. Naphol Lertsumitkul Age 47 Years 9) Mr. Prin Bholnivas Age 52 Years

Position

: Director and Assistant to the President Has authority to sign for the Company as per Certification

Document Education : Associate of Applied Science in Business Management University of Houston, Texas, U.S.A. Training : Director Certification Program (DCP) Thai Institute of Directors Association Experience : 1986 - Present Srithai Superware Pcl. No. of Share : 4,051,700 Shares or 1.42 percent (as of January 4, 2008) Relationship among Directors : Son of Mrs. Srisuda Lertsumitkul Illegal acts in the past 10 years : None Position in competing : None companies / company related to business of the Company Position : Director, Nominating and Remuneration Committee Member, Chairman of the Risk Management

Sub-Committee, Board of Directors Secretary

and Chief Financial Office Has authority to sign for the Company as per Certification

Document Education : B.B.A. (Accounting), Thammasat University M.B.A. (Accounting), University of Wisconsin - Madison, Wisconsin, U.S.A. Training : Director Certification Program (DCP) Role of the Compensation Committee (RCC) Audit Committee Program (ACP) Company Secretary Program Thai Institute of Directors Association Experience : 1982 - 1989 Chief of Financial Analysis & Planning

Division, Accounting and Finance

Department, State Railways of Thailand 1989 - 1992 Financial Controller Sunny’s Supermarket Co., Ltd. 1992 - 1993 Senior Manager - Management Information System Division, Accounting Department TelecomAsia Corporation Pcl. 1993 - 2000 Assistant Vice President - Finance & Accounting, Marketing and Distribution Business Group, Charoen Pokphand Group 2000 - Present Srithai Superware Pcl. No. of Share : 200,000 Shares or 0.07 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None : None Position in competing companies / company related

to business of the Company

Annual Report 2007 - As of December 31, 2007

35


10) Mr. Prayoon Kajitte Age 57 Years 11) Ms. Bunnapa Lertsumitkul Age 46 Years 12) Mr. Apisit Tangsatit Age 50 Years 13) Mr. Pawat Chalermpong Age 47 Years

36

Annual Report 2007 - As of December 31, 2007

Position Education Experience No. of Share Relationship among Directors Illegal acts in the past 10 years Position Education Experience No. of Share Relationship among Directors Illegal acts in the past 10 years Position Education Experience No. of Share Relationship among Directors Illegal acts in the past 10 years Position Education

: Personnel and Administration Director Has no authority to sign for the Company : Associate Degree, Rajamangala Institute Bangkok Technical Campus : 1972 - 1974 Technician, Anglo-Thai Industrial Co., Ltd. 1975 - Present Srithai Superware Pcl. : 90,000 Shares or 0.03 percent (as of January 4, 2008) : None : None : Human Resource Development Director Has no authority to sign for the Company : City of London Polytechnic : 1984 - Present Srithai Superware Pcl. : 7,320,000 Shares or 2.56 percent (as of January 4, 2008) : Daughter of Mrs. Srisuda Lertsumitkul : None : Risk Management Sub-Committee Member and Factory Director (Bangpoo & Amatanakorn Chonburi) Has no authority to sign for the Company : Bachelor Degree in Mechanics King Mongkut’s University of Technology Thonburi : 1983 - Present Srithai Superware Pcl. : 30,142 Shares or 0.01 percent (as of January 4, 2008) : None : None : Risk Management Sub-Committee Member and Marketing Director (Industrial Products) Has no authority to sign for the Company : Bachelor Degree in Business Administration (Marketing)

Ramkamhaeng University M.B.A, Webster University, St. Louis, U.S.A. Experience : 1987 - 1988 Account Executive Fareast Advertising Pcl. 1988 - 1990 Import & Export Department Siam Commercial Bank Pcl. 1990 - 1993 Manager of Finance Shinawatra Computer and

Communication Pcl. 1993 - Present Srithai Superware Pcl. No. of Share : 30,000 Shares or 0.01 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None


: Risk Management Sub-Committee Member and Marketing Director (Household Products) Has no authority to sign for the Company : M.B.A. (Marketing), Thammasat University : 1986 - 1994 Marketing Manager Berli Jucker (Public) Co., Ltd. 1994 - 2000 Director of Marketing & Sales International Beauty Products Co., Ltd.

Thailand (a subsidiary company of The Tempo

Group, Indonesia) 2000 - 2006 Senior Technical Adviser in Marketing &

Sales, PT. Barclay Products, Indonesia (a subsidiary company of The Tempo

Group, Indonesia) 2006 - Present Srithai Superware Pcl. No. of Share : 0 Shares or 0.00 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None 15) Mr. Pongsak Kantiratanawong Position : Marketing Director - Packaging Products Age 50 Years Has no authority to sign for the Company Education : B. Sc. (Biochemistry), Chulalongkorn University MBA (Marketing), Thammasat University Experience : 1980 - 1985 Technical Sales Representative Hoechst Thai Ltd. 1985 Marketing Off ice SCT Co., Ltd. 1986 - 1993 Senior Marketing Manager Thai Modern Plastic Industry Co., Ltd. 1993 - 2007 Vice President C.P. Packaging Industry Co., Ltd. 2007 - Present Srithai Superware Pcl. No. of Share : 0 Shares or 0.00 percent (as of January 4, 2008) Relationship among Directors : None Illegal acts in the past 10 years : None

14) Ms. Nitaya Prasertnukulphol Age 48 Years

Position Education Experience

Annual Report 2007 - As of December 31, 2007

37


3.2.5 Attendance of Directors at meetings In the year 2007, there were 8 Board Meetings and 4 Audit Committee Meetings. Attendance report of Directors and Audit Committee Members is shown hereunder:- Number of Meetings Attended Board of Directors’ Audit Committee’s Meetings Meetings 8 - 7 4 8 4 8 4 7 - 8 - 7 - 8 - 8 4

Board of Directors’ Name Mr. Sanan Prof. Viroj Mr. Enghug Mr. Suchat Mrs. Srisuda Mr. Manit Mr. Thawee Mr. Naphol Mr. Prin

Angubolkul Lowhaphandu Nontikarn Boonbanjerdsri Lertsumitkul Ativanichayaphong Kongyungyuen Lertsumitkul Bholnivas

3.2.6 Details of Directors and Management who have control over companies in Srithai Superware

Group Abbreviation : CM = Chairman DR = Director ED = Executive Director Company Subsidiaries Srithai (Vietnam) Co., Ltd. Srithai Moulds Co., Ltd. Srithai Nanoplast Co., Ltd. Srithai Miyagawa Co., Ltd. Srithai Shin-Osaka Co., Ltd. Associated Companies Srithai Sanko Co., Ltd. Srithai WBG Co., Ltd. Thai MFC Co., Ltd. S.K.I. Ceramics Co., Ltd. Beijing Huatai Replica of Porcelain Products Co., Ltd. Srithai Packaging Co., Ltd. PT. Srithai Maspion Indonesia Thai Takahashi Plastics Co., Ltd.

38

Annual Report 2007 - As of December 31, 2007

Mr. Manit Mr. Prin Mr. Naphol Mr. Thawee Mr. Apisit Mr. Pawat Mr. Sanan Ativanichaya Angubolkul phong Bholnivas Lertsumitkul Kongyungyuen Tangsatit Chalermpong

CM CM ED ED ED   ED ED ED ED DR

- - - - - - ED ED DR -

ED ED ED ED ED   ED DR ED DR -

- - - ED -   - - - - -

- - - - -   - - - - -

- - - DR -   DR - - - -

- - ED - -   - - - - -

ED DR DR

- - -

DR - DR

- - -

- - -

- - -

- - -


Company

Mr. Manit Mr. Prin Mr. Naphol Mr. Thawee Mr. Apisit Mr. Pawat Mr. Sanan Ativanichaya Angubolkul phong Bholnivas Lertsumitkul Kongyungyuen Tangsatit Chalermpong

Soko Srithai Co., Ltd. - LN Srithai Comm Co., Ltd. CM Takahashi Korat (1995) Co., Ltd. DR Takahashi Plastics Co., Ltd. DR Joint Venture Company Srithai-Otto (Thailand) Co., Ltd. ED Related Companies   Srithai Marketing Co., Ltd. - Siam Melamine Marketing Co., Ltd. - Srithai Stainless Co., Ltd. - Firstpoint Translogistics Co., Ltd. - P.E.T (Thailand) Co., Ltd. ED 3.2.7 Director of Subsidiaries Abbreviation CM = Chairman, Name

Mr. Sanan Angubolkul Mr. Prin Bholnivas Mr. Naphol Lertsumitkul Mr. Apisit Tangsatit Mr. Pawat Chalermpong Mr. Santi Sakgumjorn Mr. Prapon Siripanich Mr. Michio Nakai Mr. Somyod Lertsumitkul Mr. Pakornkanok Jindawuttikul Mr. Seishiro Miyagawa Mr. Shingo Miyagawa Mr. Maejima Yoshikazu Mr. Kinichi Hashimoto Mr. Masashi Sonoda

- - - - - - - - - -

ED DR DR DR ED   - - - - -

- - - - -   - - - ED -

- - - - -   - - - - -

- - DR - -   - - - - -

- - - - ED   - - - - -

DR = Director, ED = Executive Director

Srithai

(Vietnam)

Srithai

Moulds

Srithai Nanoplast

CM ED - - - ED - - - - - - - - -

CM ED - - - - ED DR - - - - - - -

ED ED - - ED - - - DR DR - - - - -

Srithai Srithai

Miyagawa Shin-Osaka

ED ED ED DR - - - - - - ED DR DR - -

ED ED - - - - - - - - - - - ED ED

Annual Report 2007 - As of December 31, 2007

39


3.2.8 NOMINATION OF DIRECTORS In the year 2005, the Company has appointed a Nominating and Remuneration Committee, of which an Independent Director is Chairman, to perform the duty of nominating new directors, and propose to the Board for approval and/or propose to the meeting of shareholders for approval. The procedure of nominating directors was described in Article no. 13 and no. 14 of the Articles of Association as following:- “(1) One shareholder has one voting right for one share held; (2) Each shareholder will cast all his votes in (1) to elect one candidate or more as Director, but he cannot split his votes, more or less, to elect any candidate;

40

Annual Report 2007 - As of December 31, 2007

(3) The candidates shall be ranked in order descending from the highest number of votes 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 have a casting vote.� Nomination of Executives When any senior executive resigns or retires, the Nominating and Remuneration Committee will nominate a new senior executive and propose to the Board for approval.


Report by Nominating and Remuneration Committee To Shareholders, Srithai Superware Public Company Limited A Nominating and Remuneration Committee, referred to as “the Nominating Committee”, was appointed by the Board of Directors as per its resolution of the Board meeting No. 4/2548, held on August 10, 2005. The Nominating Committee was set up so as to be in line with policy on the Good Corporate Governance of the Company and the principle of Good Corporate Governance of the Stock Exchange of Thailand in order to assist the Company in nominating and remunerating directors and senior executives transparently and fairly to all stakeholders and efficiently to the Company. The Nominating Committee comprises 3 directors. An independent director chairs the Nominating Committee and has a term in office not longer than 3 years. The Board of Directors in the meeting no.7/ 2550, held on November 10, 2007, has renewed term in office of the Nominating Committee to last until accounting year 2010. Tasks of Nominating and Remuneration Committee The Nominating Committee set up criteria of selecting and recruiting directors / senior executives and determined remuneration rate to be proposed to the Board of Directors or the meeting of shareholders for approval. Year 2007 The Nominating Committee held 5 meetings. Attendance of each member of the Nominating Committee was presented in the table below:- No. of attendances / Names Position No. of meetings (times) Mr. Enghug Nontikarn Chairman of the Nominating Committee 5/5 Mr. Sanan Angubolkul Member of the Nominating Committee 5/5 Mr. Prin Bholnivas Member and Secretary of the Nominating Committee 5/5 Tasks of the Nominating and Remuneration Committee in the year 2007 could be summarized as follows:- 1. Electing new directors to substitute retired directors for submission to the Annual General Meeting of Shareholders no.26 (for the year 2006). 2. Considering senior executives’ salary rates adjustment for the year 2007. 3. Considering remuneration (annual bonus) for executives for the year 2007. 4. Considering extending term in office for senior executives. 5. Considering appointing senior executives in accordance with new structure of organization of the Company. On Behalf of the Nominating and Remuneration Committee Mr. Enghug Nontikarn Chairman of the Nominating and Remuneration Committee

Annual Report 2007 - As of December 31, 2007

41


3.2.9 REMUNERATION FOR DIRECTORS, EXECUTIVES AND MANAGEMENT (Definitions as set by the Office of the Securities and Exchange Commission) (1) Financial Remuneration - Directors 2006 2007 Amount Name – Position Amount (million baht) (million baht) Meeting Allowance Mr. Sanan Angubolkul : Chairman and President 0.19 0.15 0.43 0.36 Prof. Viroj Lowhaphandu : Chairman of the Audit

Committee Mr. Enghug Nontikarn : Audit Committee Member 0.23 0.18 Mr. Suchat Boonbanjerdsri : Audit Committee Member 0.23 0.18 Mrs. Srisuda Lertsumitkul : Director Mr. Manit Ativanichayaphong : Director Mr. Thawee Kongyungyuen : Director 0.48* 0.40* Mr. Naphol Lertsumitkul : Director Mr. Prin Bholnivas : Director Total 1.56 1.27 * Meeting allowances for 5 Directors for the year 2007 and 2006 were THB 95,000 and THB 80,000

per person respectively. - Management (1) 2007 2006 Number Amount (million baht) Number Amount (million baht) Salary 11 32.58 10 27.57 (2) Bonus 11 4.11 10 9.48 Total 11 36.69 10 37.05 (2) Other Remuneration No Note : 1. Management comprise: 1.1 Mr. Sanan Angubolkul 1.2 Mr. Prin Bholnivas 1.3 Mr. Manit Ativanichayaphong 1.4 Mr. Naphol Lertsumitkul 1.5 Mr. Thawee Kongyungyuen (passed away on January 12, 2008) 1.6 Mr. Prayoon Kajitte 1.7 Ms. Bunnapa Lertsumitkul 1.8 Mr. Apisit Tangsatit 1.9 Mr. Pawat Chalermpong 1.10 Ms. Nitaya Prasertnukulphol 1.11 Mr. Pongsak Kantiratanawong (appointed in August 2007) 2. Included accrued bonus of the year.

42

Annual Report 2007 - As of December 31, 2007


3.2.10 Report on Good Corporate

Governance The Board has realized the importance of good corporate governance in view of its role to increase transparency, competitiveness of the Company, and confidence among shareholders and stakeholders. Compliance to good corporate governance could be summarized as following:- 1. Right and Equality Conduct to Shareholders In order to achieve objectives of the Company in being accountable to our duties, being transparent on basis of integrity, building-up sustainable competitive edge of our businesses, and boosting-up confidence of stakeholders, the Board of Directors therefore laid down policies on good corporate governance as following:- Providing Information The Company has made sure that the rights of shareholders were fairly protected by providing up-to-date information via the Company’s website, and arranging shareholders and investors to learn the Company’s business through the Company Visit Campaign organized by the Stock Exchange of Thailand. Convening Shareholders’ Meeting The Company has welcomed shareholders to propose additional agendas of meeting or names of candidates for directorship in the general meeting. The Company has provided details, criteria, procedures and supporting documents for proposing such agendas of meeting via the Company’s website. The Company has also announced the said right of shareholders via the IT system of the Stock Exchange of Thailand in early January each year. In the general meeting of shareholders in the year 2006, no shareholder exercised the said right. The Company has forwarded relevant information of concerned agenda to all shareholders at least 14 days before date of meeting, and also informed them about criteria, information and details of significant agendas and opinion of the Board of Directors in each agenda as following:-

- Rules and procedures of attending the meeting - Proposing at least 1 director to be proxy of shareholders - Agenda of appointing directors who have been approved by the Nominating and Remuneration Committee. The Company has disclosed resume of those directors, including his or her frequency of attendances at the Board of Directors meeting in the past year. Appointment of directors has been made one by one. - Agenda of remuneration of directors as approved by the Nominating and Remuneration Committee. Policy on remuneration, criteria and procedure of consideration, amount and method of varying remuneration according to responsibility of directors - Agenda of appointing auditor and remuneration fee as approved by the Audit Committee presenting name of auditor and auditor’s office, years of service, and opinion of the Board of Directors - Agenda of dividend declaration informing shareholders about policy on dividend payment and comparing actual payment with policy on payout ratio. The Board of Directors and the senior executives deemed it mandatory to attend the meeting of shareholders. Attending persons were Chairman of the Board/President, Chairman of the Audit Committee, Chairman of the Nominating and Remuneration Committee, independent directors and so forth. The Chairman of the Board chaired the meeting, arranged sufficient time for shareholders to raise questions, and assigned Board of Directors Secretary to inform shareholders of procedure of meeting and right voting. The Company has provided shareholders voting cards for each agenda at time of attendance registration. Legal Advisor of the Company was responsible for vote counting in each agenda of meeting. After the meeting of shareholders, the Company has submitted all relevant information via IT system of the Stock Exchange of Thailand. The Annual Report 2007 - As of December 31, 2007

43


Company has also issued minutes of shareholders’ meeting describing sufficiently significant information such as names of attending/unattending directors, method of voting and vote counting, significant explanations, resolution of the meeting under three categories, i.e. approve, disapprove, or abstain, questions of shareholders and explanations. The said minutes of shareholders’ meeting has been broadcast via the Company’s website within 14 days from the date of shareholders meeting. Control and Monitor on Insiders’ Trading The Company attached much importance on this matter. The Company has issued Regulation on Suppression of Insiders’ Trading in order to prevent manipulation of inside information for personal benefits of executives, especially the trading of shares issued by the Company within 15 days before disclosure of financial statements to the general public. Any person who violates this regulation will be subject to disciplinary punishment and personal infringement of Section 241 and Section 242 of the Securities and Exchange Act B.E. 2535. However, the policy that all directors and senior executives who have duty of reporting share possession according to regulation of the Securities and Exchange Commission have to submit the said report to the Board of Directors as well is under consideration by the Board of Directors. Disclosure of Vested Interest of Directors, Executives and Other Concerned Parties The proposal for disclosure of directors’ and executives’ vested interest to the Board of Directors is under consideration by the Board so as to enable the Board to make decision efficiently for benefits of all concerned parties. However, any director who has vested interest in any agenda, will leave the meeting room so that the decision-making process could proceed transparently and fairly for benefits of all concerned parties.

44

Annual Report 2007 - As of December 31, 2007

2. Roles of Stakeholders The Board of Directors in the meeting no.7/ 2549, held on November 14, 2006, approved the business codes of ethic so as to be a guideline for all staffs and executives to perform follow in their courses of businesses in good quality and morals. The Company has kept on developing the quality of products for sake of customer satisfaction. However, the Company has never got any complaint or accusation on violating codes of ethic. Moreover, the Board of Directors is considering setting up a channel to get clues or complaints on violation of law or codes of ethic or inaccuracy of financial statements, or defective internal control system, so as to assure that the Company’s compliance to business code of ethic is efficiently implemented. By so doing, protection of whistle blower and complaint verification process will exist. 3. Disclosure of Information and Transparency The Board of Directors has made available disclosure process of the Company’s both financial and non-financial information accurately, completely, timely, and transparently in accordance with regulations determined by the Securities and Exchange Commission and the Stock Exchange of Thailand via the IT system. In the accounting year 2007, the Company was not alleged by the Securities and Exchange Commission or the Stock Exchange of Thailand on any incorrect disclosure of information. The Company has presented significant information in our Annual Report comprising:- - Organization structure and business structure of the Company - Vision and mission of the Company - Risk factors - Business performance of the Company - Report by the Board of Directors on its accountability to financial statements which certified the compliance to generally accepted accounting principles, suitable for our businesses, applying appropriate


accounting policies consistently, and signed by Chairman of the Board - Audit Committee’s report covering the

preparation of financial statements in conformity with laws, internal control system, good corporate governance, risk management and annual appointment of external auditor - Report by Nominating and Remuneration Committee Furthermore, the Company has presented in both Thai and English versions our Annual Report via www.srithaisuperware.com, the Company’s website, so as to disseminate the said information to the general public. The Company has also assigned Office of Chief Financial Officer to furnish information to shareholders or investors who were interested in the Company’s businesses. 4. Responsibilities of the Board The Board comprises well experienced directors who are knowledgeable, efficient, and fit to business. Presently, there are 9 directors, i.e. 1. Mr. Sanan Angubolkul Chairman/President/Member of the Nominating

and Remuneration Committee 2. Prof. Viroj Lowhaphandu Chairman of the Audit Committee/ Independent

Director 3. Mr. Enghug Nontikarn Chairman of the Nominating and Remuneration Committee/Audit Committee Member/ Independent Director 4. Mr. Suchat Boonbanjerdsri Audit Committee Member/Independent Director 5. Mrs. Srisuda Lertsumitkul Director 6. Mr. Manit Ativanichayaphong Director/Executive Director 7. Mr. Thawee Kongyungyuen Director/Executive Director 8. Mr. Naphol Lertsumitkul Director/Executive Director

9. Mr. Prin Bholnivas Director/Executive Director/Member of the Nominating and Remuneration Committee/ Board of Directors Secretary There are 3 non-executive directors who are also Independent Directors under the current structure of the Board. All of the three directors have been nominated Audit Committee. The Board believes that all the 9 directors are wellexperienced, knowledgeable and capable of efficient governing of the Company. Definition of Independent Director Independent Director means any person who possesses all the requisite qualifications and is independent as described by the Stock Exchange of Thailand as following:- 1. Holding shares not more than 5% of paid-up capital of the Company, associated company, affiliated company and related company; 2. Being non-executive director. Not being employed or personnel or salary-earning advisor of the Company, associated company, affiliated company, related company, or major shareholder; 3. Having no vested interest or any benefit, directly or indirectly, in term of financial area and business administration of the Company, associated company, affiliated company, and related company; 4. Not being a connected person or a close relative of the Management or any major shareholder; 5. Not representing any body in the Board to safe-guard their interest e.g. director, major shareholder, or any shareholder connected with any major shareholder. In addition, an Independent Director is able to express opinion and making report freely in carrying out his assignment without any worry to any benefit on any asset or position. He will not be influenced by any person or any group of persons. Under no circumstance, he would be forced to refrain from expressing opinion as it should be. Annual Report 2007 - As of December 31, 2007

45


Nominating of Directors In the year 2005, the Company appointed a Nominating and Remuneration Committee to perform the duty of nominating new directors who not only possess qualifications and experiences as required by the Company, but should also be able to devote time and efforts to carry out their duties for the benefits of the Company, and to propose to the Board for approval and/or to propose to the meeting of shareholders for approval, as per the procedure described in Article no.13 and no.14 of the Articles of Association as following:- “Article 13 The shareholders’ meeting shall elect the directors in accordance with the conditions and procedures as follows: (1) One shareholder has one voting right for one share held; (2) Each shareholder will cast all his votes in (1) to elect one candidate or more as Director, but he can not split his votes, more or less, to elect any candidate; (3) The candidates shall be ranked in order descending from the highest number of votes 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 have a casting vote. Article 14 At every annual general meeting, one-third of the directors shall retire. If the number of directors cannot be divided into three, the number of directors closet to one-third shall retire. In the first and second years after the registration of the Company, the directors shall retire by drawing lots. In subsequent years, the director who has held office for the longest shall retire.” According to Article 14 of the Company’s Articles of Association, the Company did not describe maximum times of being nominated as director and qualification on limit of age for directorship.

46

Annual Report 2007 - As of December 31, 2007

Doubling of Positions The two positions, Chairman and President, are held by the same person who represents a group of major shareholders. The Company deems the doubling of positions appropriate under this circumstance due to the fact that this person has gained much experiences in this business for a very long time, and he is widely recognized among business community. Besides, number of Independent Directors is one-third of total directors. Those Independent Directors can express opinions freely, and they could review business operations of the Management efficiently. Remuneration for Directors and Executives In the year 2005, the Company had appointed a Nominating and Remuneration Committee to formulate a policy on remuneration for directors transparently and properly compared to those of other businesses in the same industry. The Nominating and Remuneration Committee determined the rate of remuneration based on the results of the survey made by the Thai Institute of Directors. Rate of remuneration for directors was approved by the shareholders’ meeting. Directors who are member of the Audit Committee have got additional pay commensurate with their work-load and increased responsibility. Directors who are executives get remuneration according to the results of their performances. The Company disclosed details of remuneration for directors and executives under the section Remuneration for Directors in the Annual Report 2007 and Annual Filing of Information Form 2007 (Form 56-1). Board Meetings Schedule of Board Meetings has been set up for 5 times of ordinary meetings per annum. Extraordinary meeting of the Board may be called for. Agendas of the ordinary meetings usually comprise acknowledgement of audit result of approved financial report and suggestions made by the Audit Committee, monitoring business operation


results in accordance with business plan and policy, approving significant business matters such as vision, mission, strategy, financial target and budget, and acknowledgement of report of Nominating and Remuneration Committee and Risk Management Subcommittee. To call for each meeting, the Office of Company Secretary under the responsibility of Chief Financial Officer, will issue letter of invitation along with agenda and accompanying relevant documents to the directors at least 7 days in advance, so that the Board members could have enough time to consider the information. Each meeting consumes approximately 2 - 3 hours. Chairman of the Board has made sure that adequate time being allocated for the meeting so that

the Board Members could express opinion independently and fairly on significant issues for the benefits of the shareholders and concerned parties. Regarding agenda which may have a conflict of interest with any director, the concerned director has to wait outside the meeting room during the time of consideration of the said agenda. Board of Directors Secretary has issued written minutes with adequate details. He has filed the adopted minutes of Board Meeting and accompanying documents for further examination by the Board and concerned parties. In the year 2007 there were 5 ordinary meetings of the Board, and 3 extraordinary meetings, totalling 8 meetings. Meeting attendance of each director was shown in table below:-

Attendance/total Attendance/total meetings (times) meetings (times) Name ordinary meeting extraordinary meeting 1. Mr. Sanan Angubolkul 5/5 3/3 2. Prof. Viroj Lowhaphandu 4/5 3/3 3. Mr. Enghug Nontikarn 5/5 3/3 4. Mr. Suchat Boonbanjerdsri 5/5 3/3 5. Mrs. Srisuda Lertsumitkul 4/5 3/3 6. Mr. Manit Ativanichayaphong 5/5 3/3 7. Mr. Thawee Kongyungyuen 4/5 3/3 8. Mr. Naphol Lertsumitkul 5/5 3/3 9. Mr. Prin Bholnivas 5/5 3/3 Performance Evaluation of the Board In the Board Meeting no. 8/2550, held on December 15, 2007, the Board evaluated its own performance by using an evaluation form provided by the Stock Exchange of Thailand. Such evaluation covered the following matters:- 1) Satisfaction of the Board on its own performance/Company’s performance and problem-solving of management. 2) Understanding of the Board on its roles/ businesses and strategies of the Company. 3) Good relationship between the Board and management.

Attendance/total meetings (times) total 8/8 7/8 8/8 8/8 7/8 8/8 7/8 8/8 8/8

4) Description of roles and duties of the President, and appropriate evaluation of his performance. 5) Efficiency in business operation of subsidiaries. 6) Efficient performance of all committees. 7) Devotion of time to carry out works of directors. 8) Preparation of directors before attending Board Meeting. 9) Expressing opinion independently by Board Members. 10) Expressing opinion without bias by Board

Members. Annual Report 2007 - As of December 31, 2007

47


11) Chairing Board Meetings by the Chairman. 12) Confidence of investors in the Board. 13) Compliance to good corporate governance. The Board has evaluated its own performance, and found that the result was satisfactory. Committees and Sub-committee The Board had appointed 3 groups of committee and sub-committee who were assigned to study in details and review various assignments, i.e. Audit Committee, Nominating and Remuneration Committee, and Risk Management Sub-committee. Policies and frame-work of the 3 Committees and Sub-committee were clearly laid down on its duties, responsibilities, meeting procedure, and reporting to the Board as follows:- 1) Audit Committee Audit Committee was set up on July 17, 2002. It comprises 3 Independent Directors who possess all requisite qualifications determined by the Stock Exchange of Thailand. They are:- 1. Prof. Viroj Lowhaphandu

Chairman of the Audit Committee 2. Mr. Enghug Nontikarn Audit Committee Member 3. Mr. Suchat Boonbanjerdsri Audit Committee Member Professor Viroj Lowhaphandu is knowledgeable and well-experienced in the areas of accounting, auditing, fnance and taxation. Mr. Enghug Nontikarn and Mr. Suchat Boonbanjerdsri are knowledgeable and well-experienced in finance & banking, investment, and accounting. The Audit Committee has been assigned by the Board the following duties and responsibilities:- 1. Assuring that financial reporting of the Company is accurately and sufficiently disclosed by coordinating with external auditor and the executive who is responsible for preparation of financial reports quarterly and annually. The Audit Committee may recommend external auditor to review or audit any particular transaction deemed necessary and significant during audit session;

48

Annual Report 2007 - As of December 31, 2007

2. Reviewing internal control and internal audit systems of the Company with external auditor and internal auditor to assure their appropriateness and effectiveness; 3. Selecting and proposing for nomination the external auditor. Proposing remuneration of external auditor for approval by taking into consideration trustworthiness, resourcefulness, and volume of works in hand of the candidates for nomination; 4. Reviewing the disclosure by the Company of any information on connected transactions or transactions with conflict of interest, so as to assure accuracy and sufficiency of such disclosure; 5. Reviewing policies on financial management, risk management, adherence to business codes of ethics by Management, and reviewing jointly with Management any significant report to be made public as required by law; 6. Preparing report on activities of the Audit Committee, and disclosing it in the Company’s annual report. The report will be signed by Chairman of the Audit Committee. The report will comprise the following information:- 6.1 Opinion on process of preparing financial reports and disclosure of information in the reports as to its accuracy, sufficiency, and reliability; 6.2 Opinion on sufficiency of internal control system of the Company; 6.3 Reasons to convince that the term of the present external auditor should be extended by another one year; 6.4 Opinion on compliance of the Company with the Securities and Exchange Act, Rules and Regulations of the Stock Exchange of Thailand, and any laws regulating the businesses of the Company; 6.5 Any report deemed necessary to be disclosed to the public and investors within the framework of duties and responsibilities assigned by the Board 7. Holding the audit committee’s meeting on topics being assigned as follows:


7.1 To review financial statements and other

relevant financial reports, accounting principles and practice, compliance to accounting standards, viability of the Company, change of significant accounting policies and the rationale of Management on formulating such accounting policies and present it to the Board for further publicizing; 7.2 To review internal control system and internal audit procedures; 7.3 To review annual internal audit plan,

coordination in each step of the audit plan, and evaluation of the auditing jointly with internal auditor and external auditor. Audit Committee will inquire the extent of the audit plan so as to assure that any irregularity or weak point of internal control system be detected; 7.4 To review together with internal auditor the problems and limitation arising during the internal audit courses, and to review the internal audit procedure; 7.5 To review together with external auditor the problems and limitation arising during the external audit courses; 7.6 To review together with internal auditor and external auditor the audit plan on procedure and control of electronic data processing. To review safety measures so

as to prevent irregularity or malpractice on computer system by staffs or outsiders; 7.7 To be compliant with the Securities and Exchange Act, regulations of the Stock Exchange of Thailand, and other laws regulating the businesses of the Company; 7.8 To carry out any work assigned by the Board; 7.9 To do self evaluation on performance and achievement of assignments; 7.10 To review and assure the accuracy and adequacy of financial reporting; 7.11 To consider jointly with the Management the evaluation on performance and merit or punishment of the head of internal audit; 7.12 To review jointly with the Management on policy and adequacy of risk management on sensitive issues of the Company; 7.13 To review financial management policy of the Company; 7.14 To report to the Board the tasks of Audit Committee; 7.15 To perform any other duties as assigned by the Board under mutual consent; 7.16 To review Charter of Audit Committee. Term in office of the Audit Committee is 3 accounting years. The present Audit Committee will complete their term in the accounting year ended 2009 (renewed for the third term in office).

In the year 2007, there were 4 Audit Committee meetings. Attendance report of Audit Committee is shown hereunder:- Name Attendance/total meetings (times) total 1. Prof. Viroj Lowhaphandu 4/4 2. Mr. Enghug Nontikarn 4/4 3. Mr. Suchat Boonbanjerdsri 4/4 The Audit Committee has reported its performance for the year 2007 in the Annual Report of the year 2007.

Annual Report 2007 - As of December 31, 2007

49


2) Nominating and Remuneration Committee and 1 secretary as following:- The Company set up a Nominating and 1. Mr. Prin Bholnivas Chairman of the Risk

Remuneration Committee by resolution of the Management Board Meeting no. 4/2548, held on August 10, Sub-Committee 2005. The committee comprises at least 3 2. Mr. Manit Ativanichayaphong Member directors, of which at least 1 director must be an 3. Mr. Apisit Tangsatit Member Independent Director. The committee comprises:- 4. Mr. Pawat Chalermpong Member 1) Mr. Enghug Nontikarn Chairman of the

5. Ms. Nitaya Prasertnukulphol Member Nominating and

6. Mr. Pramual Pinyo Member Remuneration Committee 7. Mr. Tanatch Sripan Member and Secretary 2) Mr. Sanan Angubolkul Member Authorities and Responsibilities of the Risk 3) Mr. Prin Bholnivas Member and Secretary Management Sub-committee: Authority and Responsibility of the 1. Study, review and evaluate any possible risk, including trend of probable impact on the Nominating and Remuneration Committee: organization, for both internal and external risks 1. Consider organization chart, qualification and composition of directors and executives of the covering at least 4 areas as described below:- Company; - Financial risk 2. Select capable persons and propose their names - Operational risk to the meeting of shareholders for nomination as - Business risk directors, or to the Board for nomination as - External factors risk executives if there is a vacant position, as the 2. Formulate policies on risk management, and propose it to the Board for the Board’s overview; case may be; 3. Consider and propose structure of remuneration 3. Formulate strategies, organizational structure, for directors and executives, such as salary, and resources used in the management of risks, severance pay, bonus, welfare, meeting allowance, in compliance to risk management policies and and other financial or non-financial remuneration; business directions of the Company; 4. Evaluate performance of the Nominating and 4. Set up risk-taking criteria of operation in term of Remuneration Committee, and report to the financial limit and nature of transactions; Board; 5. Monitor and review policies, strategies and implementation to assure that risk management 5. Other assignments relevant to nominating personnel and remunerating as deemed fit by the strategies are implemented appropriately; Board. 6. Be authorized to appoint working group to evaluate and keep track of risk throughout the Term in office of the Nominating and Remuneration Committee is 3 accounting years. organization; The committee will complete its term in the 7. Other matters as assigned by the Board. accounting year ended 2010. Term in office of the Risk Management The Nominating and Remuneration Committee Sub-Committee is 2 accounting years. The Subhas reported its performance for the year 2007 in Committee will complete its term in accounting the Annual Report of the year 2007. year 2009. 3) Risk Management Sub-committee Company Secretary The Company appointed a Risk Management Company Secretary is now under the Sub-committee on August 10, 2004. The Sub- responsibility of Chief Financial Officer. committee comprises executives of the Company

50

Annual Report 2007 - As of December 31, 2007


Transactions that may cause conflict of interest The Board requires that any agenda concerning transactions that may cause conflict of interest will be presented to Audit Committee for consideration before bringing it to the attention of the Company’s Board of Directors. Besides, it is required that the director who has any conflict of interest in any agenda should not take part in decision making. The Company has strictly followed the Notification of the Office of the Stock Exchange of Thailand in the year 2004 about the connected transaction. Internal Control system and internal audit The Company has a policy to set up an efficient and effective internal control system, including the evaluation of sufficiency of internal control system in which the Company has reported in section 3.2.12 regarding internal control. Remuneration for President The Board of Directors is considering a guideline to evaluate performance of the President systematically in order to set criteria for determining remuneration for the President. Development of Directors and Executives The Board has supported development of Executives and staffs concerning with Good Corporate Governance system and the roles of the Company. At present, there are 5 directors who have attended Director Certification Program (DCP), 2 directors have attended Director Accreditation Program (DAP), and 1 director has attended Company Secretary training program in order to learn about the roles of the Company Secretary. 3.2.11 Monitoring on Insiders’ Trading The Board has commanded the Executives to watch out the use of insider data in order to comply with the regulation of the Stock Exchange of Thailand and to boost up confidence among shareholders and investors in the preventive system that the Company has implemented presently. The

Company has reported about monitoring on insiders’ trading in section 3.2.10 in the report on the good corporate governance. 3.2.12 Internal Control The Company has a policy to set up an efficient and effective internal control system. It is the duties and responsibilities of the Board and the Management to set up and maintain an internal control system, including review of its efficiency from time to time, to safeguard investments of shareholders and assets of the Company. Scope of an internal control system covers financial control, business operations, monitoring to assure compliance to laws and relevant regulations, and risk management. An efficient internal control system will reasonably boost up confidence that the Company will achieve its objectives and targets as following:- - Information system and financial reports are accurate and respectable. - Compliance to regulations, policies and work procedures of the Company and relevant laws. - Assets of the Company exist and are kept in good order. - Business operations are efficient, and resources are used efficiently. - Objectives of the Company are achieved effectively. A good internal control system will be a tool to intercept irregularity, and it serves as an alarm signal. It helps to reduce risk to an acceptable level. The internal control system set up by the Company is in line with that of the Committee of Sponsoring Organization of the Treadway Commission (COSO), which could be summarized according to areas of control as following:- 1. Organization & Control Environment. The Company has a business plan that outlines the targets, strategies, vision and budget with clear performance indice. Organizational structure was adjusted to stay in line with the business plan. There was improvement on the monitoring methods of business. Qualified personnels are Annual Report 2007 - As of December 31, 2007

51


recruited and developed continually. There are policies and work procedures on financial transactions, purchasing, risk management, personnel management, and other. 2. Risk Management. The Company had introduced risk management in corporate level since the year 2004. The Risk Management Sub-Committee

and the Audit Committee played the role of monitoring. 3. Operational Control. The Company introduced segregation of duties for purpose of internal controlling, written authorization on approval of transactions variable to financial limits, procedure of works for connected transactions and intra-company transactions so as to observe the laws. 4. Information & Communication. The Company has made available information system to support decision-making. A department was set up to collect, analyze and store data in the datawarehouse system. Information system within the organization is of two-way nature. Sufficient information and documents have been furnished to the Board before its decision-making. Directors could ask for additional information from the Company freely. 5. Monitoring. The Company introduced monitoring system for its executives and directors so that business plan could be achieved. Internal Audit Department monitored and evaluated internal control system freely, and it could report the results and suggestions to the Management for further action. In the Board Meeting no.1/2550, attended by members of the Audit Committee and held on February 24, 2007, the Board evaluated internal control system by using the evaluation form of the Securities and Exchange Commission. Evaluation was made on 5 areas, i.e. organization and environment, risk management, operational control, information system and communication and monitoring. The Board formed an opinion that the Company had applied internal control sufficiently in each area.

52

Annual Report 2007 - As of December 31, 2007

In addition, the external auditor, PricewaterhouseCoopers ABAS Limited, issued a report of its observation on internal control system, and proposed it to the Audit Committee and the Board of Directors. The Company has assigned concerned departments to make improvements based on the report. Internal Audit An Internal Audit Department was set up. It reported directly to the Audit Committee and President. It played the roles of counseling, auditing, evaluating internal control system, monitoring risk management system, and corporate governing, so as to assure that risk management system, internal control system, and corporate governing were sufficient, efficient, and serving its desired objectives. Internal Audit Department was independent. It was allocated with sufficient resource and budget appropriate for carrying out its tasks on operational audits, compliance to legal requirements, rules and regulations and financial audit. In order to map out an audit plan, risk factors were taken into consideration. Every Audit results and performance of this department were reported to the Audit Committee and the President together with quarterly summarized audit results. Risk Management The Company formulated policies on risk management system for the whole organization since the year 2004. A Risk Management Sub-Committee was set up to do the functions of policy formulating, systemizing risk evaluations for both external risks and internal risks on managing and operating within the organization and setting up guidelines to manage risks so that it was at acceptable level. The Company has communicated with its personnels to assure that they have realized the significance of risk management. The Company had allocated sources of risks to all its employees, executives, and all units within the organization, so that all of them had been held


accountable to do the evaluating and managing their own risks; and as a result, the degree of risk exposure would be at acceptable level. Risk management has also been made a curriculum of executive training program of the Company. 3.2.13 DIVIDEND POLICY (1) DIVIDEND POLICY OF THE

COMPANY The Company has a policy to pay out dividend from profit at the rate not less than 50% of net profit each year as shown in the Company’s financial statements, and on a condition that the Company has no retained loss.

(2) DIVIDEND POLICY OF

SUBSIDIARIES Due to the fact that each subsidiary has its own management team who is free on formulating dividend policy, the Company could not set up dividend policy for any subsidiary. However, subsidiaries will usually pay out dividend at reasonable ratio subject to their financial standing at that time, if they have profit and there is no other concerns. There is no pre-determined dividend pay-out ratio.

Annual Report 2007 - As of December 31, 2007

53


4. RISK FACTORS 4.1 MARKETING RISK Fierce competition prevails in export market for melamine type of plastic tableware, especially competition from China. China enjoys low production cost due to her labor cost being at low level. China can therefore price her products more attractive than ours. However, product quality of China is much lower than ours and her product delivery is not punctual as well. Risk Counter-Measures: a. Sourcing for cheaper raw materials at sustainable level of quality; b. Improving production efficiency so as to bring down unit cost of production; c. Expanding customer bases by extending markets to countries in Eastern Europe, Africa and South America. Target is set for exporting to be totalled 100 countries within the year 2008, increasing from existing 90 countries worldwide; d. Increasing variety of products; e. Developing product shapes so as to be suitable for various applications and designing new decorations to make the products look modern; f. Expanding production bases to Vietnam where is full of labours and low production cost. For domestic market where there are a handful number of competitors and low-priced products are imported, the Company set up risk counter-measures by its distribution channels, i.e. direct sales system, selling agents, and direct approach to customers, including collaboration with concerned governmental agencies in setting up quality standard of imported goods from foreign countries so as to assure that quality of imported goods will be comparable to domestic goods and consumers are protected. 4.2 RISK OF CHANGES IN RAW MATERIAL

PRICE Prices of plastic resin and melamine powder, our major raw materials, in world market have strong effects on cost of goods. Raw material is byproduct of oil refinery. If price of crude oil in the world market rises up, price of raw material will

54

Annual Report 2007 - As of December 31, 2007

also increase. Eventhough the Company has been buying raw material mostly from local suppliers, raw material in domestic market has direct reference with prices of raw material denominated in US currency in the world market. Therefore, fluctuation of the exchange rate of THB against USD has direct effect on prices of raw material. In addition, demand and supply in domestic and international markets are prime factors effecting prices of raw material. In case price of raw material in the world market rises up, price of raw material in domestic market will also rise. During the past year, cost of plastic resin and melamine powder constitutes about 77 percent of cost of production. Risk Counter-Measures: a. Enquiry is made to many suppliers, before order being placed, to ensure that the best term is obtained; b. Trend of raw material price from local and overseas dealers and trend of crude oil price will be closely monitored; c. If price raw material is likely to rise, the Company will place orders for future deliveries at the volume enough for use for a period of time; d. In case raw material abroad is lower than those of local dealers, the Company will import it; e. In doing hire-of-work business for industrial parts for OEM customers, the Company takes very low risk to change of raw material price. The hirer will take that risk, and price of goods will be adjusted subject to change of raw material price by mutual agreement. 4.3 PRODUCTION RISK The Company buys nearly all of melamine powder from Thai MFC Co., Ltd. and Thai K.K. Co., Ltd. The Company has therefore faced with risk of buying from a limited number of suppliers. Risk Counter-Measures: a. The Company invested in 45 percent of shares in Thai MFC Co., Ltd., who is a major supplier


and manufacturer of melamine powder, to ensure Risk Counter-Measures: that the Company will always have an access to For long-term loan and credit facilities of the Company with interest rates floating on MLR and source of melamine powder; b. The Company can buy melamine powder from MOR respectively, the size of loan is not significantly high as compared to long-term credit other sources such as :- local source - Matsushita Electric Works, with fixed interest rate. However, the Company has set up method to reduce the interest rate risk by (Ayuthaya) Ltd. overseas sources - China, Italy, Japan, Taiwan additional prepaying installments whenever the Plastic resin could be procured locally or Company has excess financial liquidity and find additional sources of working capital. from abroad. 4.4 FINANCIAL RISK 4.4.3 RISK OF FOREIGN EXCHANGE

4.4.1 RISK OF BREACHING FINANCIAL RATES Exports of products and imports of raw COVENANTS The Company has to comply with financial materials, finished goods and machines expose the covenants, as required by the Syndicated Loans Company to risk of foreign exchange fluctuation. In Agreement signed between the Company and the such case, the Company cannot forecast income and Siam City Bank Pcl. and the Bangkok Bank Pcl. In cost accurately. case of breaching of any financial covenant, an event Risk Counter-Measures: of default may be declared. The Company has been signing forward Risk Counter-Measures: contracts with banks to prevent risk of foreign The Company has prepared a financial exchange in observation of situation of foreign projection for internal use. It can be used as a tool by exchange market at that time. Entering into forward Management to predict financial ratios of the future. contracts enables the Company to know precisely Real figures in subsequent interim periods are closely our income and cost, and facilitates our mapping of monitored to lessen the chance of breaching any appropriate business strategies. financial covenant. 4.4.4 CREDIT RISK 4.4.2 INTEREST RATE RISK Due to the majority of the Company’s sales After the long-term loan amounting to THB to the customers - both domestic and export 2,100 million was fully repaid to Siam City Bank customers being on credit, sales increase from old Pcl. and Bangkok Bank Pcl. in the year 2007, the customers dealing with the Company for a long outstanding long-term loans are new loans under time and new customers being derived from energy-conservation project, a portion of which is increasing customer bases as well as different credit bearing fixed interest charges at 3% and 4% per terms granting to the customers cause credit risk to annum for the whole tenure of 7 years. The the Company in the way that it cannot receive remainder portion is bearing interest charge at payment from the customers who are accounts MLR-1 to MLR per annum for the whole tenure of receivable. 7 years. In addition, revolving loans of the Company are bearing interest rate at MOR per Risk Counter-Measures: annum. As a result, the Company has been facing The Company has set guidelines for customer credit evaluation. By trying to find additional interest rate risk varying to MLR and MOR. information about the customer and analyzing Annual Report 2007 - As of December 31, 2007

55


fundamental data before granting credit to the customer, credit risk of the Company deems appropriate. Besides, the Company has large number of customers so as not to bunch up trade receivables. Taking the above reasons and the past experience of collection of accounts receivable into consideration, Management believes that no additional credit risk beyond the amounts provided for collection losses as being recorded. Furthermore, payment terms for most export customers require them to open letter of credit or arrange advanced payment in partial or in full amount in case of new customers or those whose financial standing is still in doubt. 4.4.5 LIQUIDITY RISK The Company needs to maintain sufficient cash and financial liquidity in order to support working capital requirement for running the business as well as to support additional investments and business expansion in the future. Failure of having sufficient financial liquidity causes the risk of losing business opportunity to compete in the market and leads to interruption in running the business. Risk Counter-Measures: The Company has been provided with sources of working capital from the Siam City Bank Pcl. and the Bangkok Bank Pcl. amounted THB 400 million, comprising bank overdraft, promissory notes, L/C, T/R, L/G etc., being deemed appropriate and sufficient for running the business. Besides, the Company keeps on trying to find additional sources of working capital in order to make sure that it will have sufficient credit facilities with reasonable conditions and cost. The Company has projected its cash flows and monitors it closely so as to assure that the Company will not face the liquidity problems.

56

Annual Report 2007 - As of December 31, 2007

4.5 RISK OF INABILITY TO DECLARE

DIVIDEND The company has adopted a dividendpayment policy that dividend will be paid out from profit at the rate not less than 50% of net profit each year as shown in the Company’s financial statements, and on a condition that the company has no retained loss. Therefore, declaration of dividend is subject to operation results and financial circumstance in each year. Risk Counter-Measures: The Company has prepared a business plan and financial projections. By so doing, the Company can predict the operation results and financial circumstance in the future, and ways of doing business can be adjusted according to the economic condition, industrial situation, and other outside factors. This is an effort to reduce risk of inability to declare dividend. The Company has appropriated its net profit of the year 2006 as legal reserve for the amount of THB 20,000,000 as approved by the shareholders’ meeting, and paid out dividend to shareholders at the rate of THB 0.75 per share, totalling THB 203,242,860, which is 51.27% of net profit as shown in the financial statements for the year ended December 31, 2006 being presented in the Annual Report of the year 2006. The dividend amount was paid out from operation result for the period of January 1 to June 30, 2006 at the rate of THB 0.30 per share, totalling THB 81,297,144 on September 8, 2006, and from operation result for the period of July 1 to December 31, 2006 at the rate of THB 0.45 per share, totalling THB 121,945,716 on May 25, 2007. The Company will pay out dividend from operating result for the year 2007 if an approval is resolved in the shareholders’ meeting.


5. RELATED PARTY TRANSACTIONS 5.1 RELATED PARTY TRANSACTIONS In the year 2007, the Company entered into many related party transactions with subsidiaries, associated companies, and other related companies for trading of merchandises, servicing, management fees, etc. In some cases, the Management or some major shareholders or authorized persons of the Company hold shares in aggregate exceeding 10% of those counter-parties, or become authorized persons of those counter-parties, resulting in the transactions being made with them to becoming connected transactions according to criteria laid Name Srithai Moulds Co., Ltd.

Srithai Nanoplast Co., Ltd.

Srithai Shin-Osaka Co., Ltd.

Srithai Packaging Co., Ltd.

Srithai Marketing Co., Ltd.

Siam Melamine Marketing Co., Ltd.

down by the Stock Exchange of Thailand. However, those transactions were of normal trade nature and charged at market prices then prevailing in businesses. That was a common policy of each company to charge the others at market prices for inter-company transactions. Details of related party transactions were disclosed in the notes to financial statements for the year ended December 31, 2007. Details of nature of business and relationship of connected companies with the Company were as follows:-

Nature of business

Relationship with the Company

Manufacture of moulds

1. A subsidiary whose 71.0% of shares held by the Company. 2. 29.0% of shares held by executives of the Company and relatives of some executives. Manufacture of 1. A subsidiary whose 70.0% of shares held plastic products by the Company. 2. 15.0% of shares held by an executive of the Company and relatives of some executives. 3. A relative of some executives of the Company serves as a director in Srithai Nanoplast Co., Ltd. Mould laminating 1. A subsidiary whose 40.0% of shares held by the Company. 2. 15.0% of shares held by executives of the Company and relatives of some executives. Manufacture of 1. An associate whose 39.2% of shares held Packaging by the Company. 2. A relative of some executives of the Company serves as a director in Srithai Packaging Co., Ltd. Distributor of 1. A related company. house-ware products 2. 52.0% of shares held by relatives of some executives of the Company. Some of them serve as directors of Srithai Marketing Co., Ltd. Distributor of plastic 1. A related company. products and 2. 45.0% of shares held by relatives of some melamine products executives of the Company.

Annual Report 2007 - As of December 31, 2007

57


Name Srithai Stainless Co., Ltd.

Nature of business

Relationship with the Company

Distributor of kitchenware and furniture

1. A related company. 2. 60.0% of shares held by relatives of some executives of the Company. They also serve as directors of Srithai Stainless Co., Ltd. Domestic cargo 1. A related company. Firstpoint Translogistics

Co., Ltd. transportation 2. 100.0% of shares held by an executive of the Company and his relatives. 3. An executive of the Company serves as a director in Firstpoint Translogistics Co., Ltd. Manufacture of PET 1. A related company. P.E.T. (Thailand) Co., Ltd. packaging 2. 25.0% of shares held by an executive of the Company and relatives of some executives. Some of them serve as directors of P.E.T. (Thailand) Co., Ltd. Remark : Executive and relative of executive mean person or persons as defined in the relevant criteria on

connected transaction as laid down by the Stock Exchange of Thailand.

5.2 THE NEEDS FOR RELATED PARTY

TRANSACTIONS The Group concerns the importance of vertical integration of business, so as to minimize any dependence on outsider, and increase competitive edge of the Group. As a result, related party transactions occur from time to time due to the necessity of purchasing and selling among related parties.

5.3 PROCEDURE OF APPROVAL ON

INTER-COMPANY TRANSACTIONS Each company in the Group has its own Management team who tries to maximize benefit of their company. Regarding inter-company transactions, terms and conditions of trade and services were based on normal transactions of outsiders. Terms and conditions of inter-company transactions were compared with those from

58

Annual Report 2007 - As of December 31, 2007

external sources of information based on reasonableness of terms and prices of inter-company transactions. Of course, exceptional cases were considered during sales promotion campaign or at time of transacting with long-term trade partner on a case by case basic. However, the Board has been very careful to assure that interest of shareholders and all stakeholders was safeguarded for transactions which might have any conflict of interest. 5.4 POLICY AND FUTURE TREND OF

RELATED PARTY TRANSACTIONS The Group has the policy to allow each company in the Group to trade freely with any party. Price and term of trade will be major factors influencing the decision of each company’s Management. The number of related party transactions is not expected to fluctuate much in each year.


6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF BUSINESS PERFORMANCE

6.1 SIGNIFICANT FINANCIAL RATIOS OF CONSOLIDATED FINANCIAL STATEMENTS Ratio Unit 2007 2006 2005 Liquidity Ratio Current Ratio Times 1.84 1.55 1.75 Quick Ratio Times 1.20 0.95 1.12 Operating Cash Flows Ratio Times 0.42 0.50 0.69 Account Receivable Turnover Times 5.28 5.76 5.51 Average Collection Period Days 68.19 62.51 65.39 Inventory Turnover* Times 12.01 11.94 12.53 Inventory Turnover Days Days 29.97 30.16 28.72 Account Payable Turnover Times 5.56 5.93 6.22 Average Payment Period Days 64.75 60.75 57.91 Cash Cycle** Days 33.41 31.93 36.21 Profitability Ratio Gross Profit Ratio to Sales % 19.83 21.03 20.52 Operating Margin to Sales % 3.83 5.13 5.78 Non-operating Margin to Total Revenues % 0.85 0.96 0.79 Operating Cash Flows Margin % 250.37 218.86 269.74 Net Profit Ratio to Total Revenues % 3.11 7.39 5.58 Return on Equity % 3.48 8.28 5.75 Efficiency Ratio Return on Total Assets % 2.57 6.18 4.25 Return on Net Fixed Assets % 13.18 20.69 17.95 Total Assets Turnover Times 0.83 0.84 0.76 Financial Policy Ratio Debt to Equity Ratio Times 0.36 0.35 0.33 Interest Coverage Ratio Times 28.98 30.46 30.86 Operating Cash Flows Coverage Times 0.68 0.74 1.03 Dividend Payout Ratio % 78.17 58.24 59.36 * Only finished goods inventory (before allowance for net realisable value and allowance for obsolescence) is used for calculation. ** Average Collection Period + Inventory Turnover Days - Average Payment Period Remark : The Company has reclassified some accounting items used to calculate financial ratios of the year 2006 in order to be in line with the classification of accounting items for the year 2007. Eventhough the reclassification had no effect to net profit or shareholders’ equity as reported, financial ratios of the year 2006 presented above might be different from those disclosed in the Annual Report 2006.

Annual Report 2007 - As of December 31, 2007

59


6.2 Management’s Discussion and Analysis Financial Ratios Analysis on Consolidated Financial Statements Liquidity. Liquidity Operating Cash Flows Ratio decreased slightly from 0.50 time in the year 2006 to 0.42 time in the year 2007 due to lower operation results of the Group and higher capital expenditure. The increase of long-term loan of the Group in the year 2007 and higher accounts receivable in line with business expansion of the Group have driven up Current Ratio slightly from 1.55 times in the year 2006 to 1.84 times in the year 2007 and Quick Ratio from 0.95 times in the year 2006 to 1.20 times in the year 2007. Cash Cycle increased slightly from 31.93 days in the year 2006 to 33.41 days in the year 2007 due to Average Collection Period increased from 62.51 days in 2006 to 68.19 days in 2007. Average Payment Period of the group was increased from 60.75 days in the year 2006 to 64.75 days in the year 2007. However, Inventory turnover Days ratio was nearly the same with that of last year. Hence, we could conclude that the group’s financial liquidity was fairly high in the year 2007. Profitability In the year 2007 Profitability Ratio of the Group decreased from that of previous year in line with lower operation results of the group. That was because the Group had to shoulder higher cost of production caused by rising oil prices, but the increased cost could not be fully reflected in the selling price adjustment. Another factor was strengthening of Thai baht currency which resulted in the decrease of export prices of the Group. The Group also suffered from higher expenses which rose up in line with sales growth and rise of salary and wages. Rising oil prices also adversely effected transportation cost of the Group. In the year 2007, profitability of the Group decreased in line with economic condition of the country and rising operating cost.

60

Annual Report 2007 - As of December 31, 2007

Efficiency Return on Total Assets decreased from 6.18% in the year 2006 to 2.57% in the year 2007 and Return on Net Fixed Assets decreased from 20.69% in the year 2006 to 13.18% in the year 2007 as a result of decrease of net profit from THB 396.42 million in the year 2006 to THB 174.40 million in the year 2007. In conclusion, Efficiency Ratio of the Group has decreased due to lower operation result. Financial Policy Debt to Equity Ratio increased slightly from 0.35 time in the year 2006 to 0.36 time in the year 2007 as a result of the increase in total liabilities which were caused by higher volume of purchase of raw materials and production supplies, including draw-down of long term loan under energy conservation project during the year. The increase of these items was relatively higher than the increase of equity. However, the Group could maintain Interest Coverage Ratio, Dividend Payout Ratio and Operating Cash Flows Coverage approximated to those of the last year. Analysis of Consolidated Financial Statements 6.2.1 Overview of Business Performance A. Revenues Srithai Superware Group has set up a strategy to do integrated businesses to reduce dependency on outside businesses. Business structure of the Group comprises Plastic Business Line and Trading Business Line. Due to Trading Business Line having been recently started, most revenues were generated by Plastic Business Line in the year 2007. The Group expects to develop its products so as to expand its markets, and focus more on Trading Business Line so as to generate more revenue in an aim of achieving the revenue target of THB 10 billion by 5 years ahead. Plastic Business Line comprised industrial products and household products. Income generated by industrial products was higher than that of household products, and its growth trend shared the


same situation because industrial products had wider applications that could satisfy needs of many industries. For example, industrial parts and automotive parts could fulfill growing demands in property and auto industries, plastic crates in beer and soft drink industries, pallets in many industries with own warehouses or material handling works. Household products could fulfill demands of consumers directly, including restaurants, food shops, etc. In conclusion, customers of industrial products were much diversified than those of household products. Sales Breakdown for the Year 2007: Plastics Business Line Comprising 95.20% - industrial products 68.93% - household products 31.07% Trading Business Line & Moulds 4.80% Total 100.00% All kinds of businesses that the Group is doing have been facing high competition. However, Srithai Superware Group is still the leader in plastic industry in all business lines, i.e. industrial products, household products, and mould - making. Moreover, the Company always maps out strategies and plans in order to differentiate and adding value of our products. The Company is alert to transfer knowledge, experience and to give advices to affiliated companies so that Srithai Superware Group could firmly grow together. B. Marketing and Trend 1) Plastic Business Line Domestic Market for Industrial Products In the year 2007, Thailand’s economy kept on slowing down and oil price increased continuously. All industries therefore reduced its investment and slowed down its purchase. However, industrial products of the Company were manufactured and distributed to many industries, e.g. automobile and motorcycle assemblers, battery manufacturers, paint manufacturers, electrical appliance manufacturers, business with own

warehouses, or logistics business. Some of which were still growing and got high demand of consumers so our sales of industrial products grew slightly in the year 2007. Hence, trend of industrial products for domestic market of the Company might, to a certain extent, depend upon the growth of the said industries. Furthermore, the Company continually increases production efficiency and product development so as to differentiate and add values to our products. It was expected that sales of industrial products for domestic market of the Company in the year 2008 will grow approximately 12 - 14%. Export Market for Industrial Products Despite the fact that Baht currency has been strengthening against the US dollars, our export value of industrial products soared up 25% in the year 2007 as compared to that of previous year. That was due to the success of export drive of plastic crates, battery cases for cars, and pallets to Indochina countries. Our export value of plastic garbage bins through our sales agent abroad was higher than that of the year 2006. It was expected that our export markets for industrial parts in Indochina countries could be maintained in the year 2008 by more export drive of battery cases for cars and pallets. Also, the Company has set a target to expand export markets to Korea, China, Singapore, Australia and the Middle-East countries. However, it was expected that sales of industrial products for export market of the Company in the year 2008 will be approximately the same as that of the year 2007 due to higher competition in plastic garbage bin markets. Domestic Market for Household Products Due to economic slowdown and decrease of consumer spending, domestic sales of household products of the Company was slightly lower than that of the year 2006. However, the Company had confidence in quality of our products and many existing channels of distribution and an efficient Annual Report 2007 - As of December 31, 2007

61


direct sales force. Moreover, domestic market for household products was growing continually because our household products could replace tableware made of other materials such as porcelain which was breakable and the Company’s market share is relatively low as compared to total market value of tablewares of all kinds. It was expected that domestic sales of our household products for the year 2008 would grow approximately 10 12% as compared to that of the year 2007. Export Market for Household Products Export value of our household products was slightly increased in the year 2007 as compared to that of the year 2006. Sales target was met despite the fact that Baht currency kept on strengthening against the US dollars, and fake products in some countries confused the consumers. The Company had recourse to legal action against fake products. In addition, export markets in the Middle-East and Europe were continually grown, thanks to the rules and standards of products prohibiting importing household products made of urea, which have effect on health, rather than 100% melamine. Besides, export to East Asia showed a marginal growth. Export to the U.S. showed no growth as a result of price-cutting competition by Chinese products. However, the Company kept on expanding export markets to the customers who give priority to quality of products. In the year 2008, it was expected that the strengthening of Baht currency against the US dollar and the increasing prices of raw materials would decrease competitiveness of our household products as compared to our competitors’. Export value of our household products for the year 2008

62

Annual Report 2007 - As of December 31, 2007

was expected to be slightly higher as compared to that of the year 2007. Furthermore, the Company has got permission from a well-known Swedish household-product manufacturer to manufacture and export household products to 37 countries, and it will result in an increase of export value of our household products. The Company had strong commitment to export household products made of melamine powder and launch new designs of shape and decoration to fulfill diversified needs. The Company was also committed to capture new export markets in Eastern Europe, Africa and South America. Our target was to have market coverage of 100 countries by the year 2008. Presently, the Company has been exporting to more than 90 countries worldwide. 2) Trading Business Line In the year 2007, most activities of trading business line were focused on marketing and distributing in domestic market. Sourcing of modern products or products popular in foreign and domestic markets was done for distributing via many channels of the Company, or selling through department stores. Products imported and distributed by the Company comprised Lock&Lock food container boxes, gadgets for kitchens, beach tables and sun-loungers. The Company had been focusing on direct selling to consumers, hotels, and food shops. Our products received good feedback and more attention from consumers. Sales value of Trading Business Line showed a growth of approximately 20% in the year 2007 as compared to that of the year 2006. It was expected to grow continually in the year 2008.


C. Operation Results (highlight from consolidated statements) 2007 2006 Amount % Amount % 5,563 100.00 5,314 100.00 (4,460) (80.17) (4,197) (78.97) 1,103 19.83 1,117 21.03 (890) (16.00) (845) (15.90) 48 0.86 51 0.97 14 0.25 63 1.19 (20) (0.36) (22) (0.41) (56) (1.01) 58 1.08 174 3.13 396 7.46

Unit : Million Baht 2005 Amount % 4,691 100.00 (3,728) (79.48) 963 20.52 (692) (14.74) 37 0.79 43 0.91 (26) (0.55) (23) (0.50) 264 5.63

Sales and hire of work Cost of sales and services Gross profit Selling & administrative expenses Other income Share of profit from associates Interest expense Income tax Net income Net profit for the year 2007 was THB 1.2 Sales of Industrial Products of domestic and 174.40 million, an decrease of THB 222.01 overseas market under Plastics Business Line million. Comparative consolidated operation results amounted THB 3,650.92 million, or and financial position for the year 2007 and 2006 65.62% of total sales, was increased by THB 381.41 million over that of previous was described as following :- year, or 11.67%. That was due to • Consolidated Statements of Income for the year ended December 31, 2007 as compared with adjustments of selling prices in line with that of the same period of previous year ended changes of raw material prices, change in December 31, 2006 (details as shown in sales structure to focus on high value Consolidated and Company Financial Statements for products, soaring of exports as well as orders the year 2007 on page 4). of new plastic products in certain categories. 1. Sales and hire of work amounted THB 5,563.46 1.3 Sales of Trading and Moulds Business Line million was higher than that of the previous year amounted THB 266.88 million, or 4.80% of total sales, was decreased by THB 147.86 by THB 249.31 million, or 4.69% due to :- 1.1 Sales of Household Products for domestic million from that of previous year, or and overseas markets under Plastics Business 35.65%. That was due to a decrease in Line amounted THB 1,645.66 million, or purchase orders for moulds from industrial product customers since their investments 29.58% of total sales, was increased by THB 15.76 million over that of previous were on the decreasing trend resulting from economic life of moulds being longer than 1 year, or 0.97%, because there was high purchasing power from SML project of year while their moulds invested in the public sector for wholesaling which was previous year being still in use, and high already ended in the year 2006. For the year competition among mould makers in the 2007, domestic economic and political market. instability, strength of the Baht currency, and 2. Gross profit was THB 1,103.28 million, a increase in competition from foreign decrease of THB 14.22 million. Gross profit on countries competitors resulted in slight sales ratio for the year ended December 31, 2007 increase for both domestic and export sales. was 19.83%, lower than that of the previous year being 21.03% due to the fluctuation of plastics

Annual Report 2007 - As of December 31, 2007

63


resin price which is the major raw material, an income tax expenses in the year 2006 according increase in manufacturing costs affected by oil to the Group’s performance. price rises, and adjustment of electricity and wage 6. Others rates. However, the Group was unable to adjust Basic earnings per share is THB 0.64, a selling price to fully cover the increased decrease of 56.16% as compared to THB 1.46 manufacturing costs. In addition, the selling price per share of previous year. That was due to a of exports was affected by the strength of Thai decrease in net profit. Baht against US Dollar. • Consolidated Balance Sheets as of December 31, 2007 comparing to that as of December 3. Selling and administrative expenses amounted 31, 2006 (detail as shown in Consolidated THB 889.98 million, an increase of THB 45.26 million over that of the previous year. Selling and and Company Financial Statements for the administrative expenses on sales ratio was year 2007, Pages 2 to 3) 16.00% for the year ended December 31, 2007, 1. Total assets amounted THB 6,878.96 million were increased by THB 176.56 million over higher 15.90% that of the previous year. The increase was due to annual salary and wages that as of December 31, 2006, or 2.63%, adjustment, higher domestic and export due to the significant changes as follows :- transportation expenses as a consequence of 1.1 Short-term investments amounted THB soaring of sales revenue, increase in transportation 46.04 million were increased by THB costs from rising oil prices as well as increase in 35.04 million over that of previous sales promotion expenses in order to push sales. year due to investments in 6 to 12month fixed deposits and subsidiaries’ 4. Share of profit from associates and joint venture business amounted THB 14.23 million, a decrease investments in mutual fund which has of THB 48.79 million as compared with that of high rate of return. previous year. That was due to one associate 1.2 Net trade accounts and notes receivable engaged in industrial product business faced with amounted THB 1,115.98 million were significant decrease in sales and gross profit ratio, increased by THB 151.08 million over resulting from high market competition and that of previous year due to soaring of increase in manufacturing costs due to rising oil sales and acquisition of an associate to prices. One associate engaged in Household become a subsidiary. Products had suffered from economic slow-down 1.3 Inventories amounted THB 722.86 resulting in lower operating performance. Besides, million were decreased by THB 10.12 in the year 2006, one associate engaged in paper million over that of previous year due packaging business recognised profit from disposal to more efficiency of inventory of land and building. management. 5. Income tax 1.4 Investments in associates and joint venture business amounted THB 443.86 Income Tax-expenses amounted THB 56.35 million compared to income tax credit of the million were decreased by THB 43.49 previous year amounted THB 57.51 million. million over that of previous year due to That was because in the year 2007 the Group their lower performance of the year 2007 recognised income tax expenses amounted THB (under equity method of accounting) as well as the acquisition of an associate to 93.98 million, netted with recognition of deferred tax assets and deferred tax liabilities become a subsidiary during the second amounted THB 37.63 million, whereas the quarter of the year 2007. Group recognised deferred tax assets greater than

64

Annual Report 2007 - As of December 31, 2007


1.5 Property, plant and equipment amounted THB 4,024.39 million were increased by THB 74.92 million due to revaluation of subsidiaries’ assets, acquisitions of new assets, netted with depreciation expenses during the year. 1.6 Deferred tax assets amounted THB 49.93 million were decreased by THB 30.66 million because of the Company’s recognition of income tax expenses amounted THB 67.00 million, netted with additional deferred income tax assets recorded during the year by THB 36.35 million. 2. Total liabilities amounted THB 1,816.12 million were increased by THB 74.19 million over that as of December 31, 2006, or 4.26%, due to the following significant changes :- 2.1 Bank overdrafts and short-term loans from bank amounted THB 14.94 million were decreased by THB 74.31 million over that of previous year due to repayment of short-term promissory notes amounted THB 60.00 million. 2.2 Trade accounts payable amounted THB 818.14 million were increased by THB 31.94 million over that of previous year because of a gradual purchase of raw materials and production supplies to prevent price fluctuation. 2.3 Current portion of long – term loans and long – term loans amounted THB 438.45 million were increased by THB 146.78 million due to the Group’s additional borrowing under energy preservation project amounted THB 322.47 million, netted with repayment of principal amounted THB 173.48 million during the year. 2.4 Payable of long – term assets amounted THB 47.42 million were decreased by THB 83.17 million over that of previous year due to payment at maturity.

2.5 Other current liabilities amounted THB 129.95 million were increased by THB 56.37 million over that of previous year due to increase of advance receipts from customers resulting from soaring of sales. 2.6 Deferred tax liabilities amounted THB 270.51 million were decreased by THB 21.02 million over that of previous year due to revaluation of subsidiaries’ assets during the year, netted with depreciation expenses of appraised assets. 3. Total shareholders’ equity amounted THB 5,062.85 million were increased by THB 102.37 million over that as of December 31, 2006, or 2.06%, due to the following significant changes :- 3.1 Net profit for the year ended December 31, 2007 amounted THB 174.40 million, netted with a final dividend payment out of the Company’s net profit for the year 2006 amounted THB 121.95 million. 3.2 Fair value reserves on assets amounted THB 1,142.67 million were decreased by THB 68.53 million over that of previous year due to assets revaluation, netted with amortization of fair value reserve, which is in line with the increase in depreciation expense of appraised assets. This resulted in increase of retained earnings. 3.3 Minority interests amounted THB 248.86 million were increased by THB 40.43 million over that of previous year due to net profit of the year 2007 amounted THB 22.63 million, acquisition of an associate to become a subsidiary amounted THB 12.13 million, and revaluation of subsidiaries’ assets during the year amounted THB 21.52 million, netted with a dividend paid out of operating performance of the year 2006 amounted THB 14.39 million. Annual Report 2007 - As of December 31, 2007

65


• Consolidated statements of cash flows for the year ended December 31, 2007 comparing to that of previous year ended December 31, 2006 showed a decrease of net cash flows THB 0.19 million, (details as shown in Consolidated and Company Financial Statements for the year 2007, Pages 7 and 60 to 61) comprising:- 1. Net cash receipts from operating activities amounted THB 534.02 million were decreased by THB 62.95 million over that of previous year due to lower operating performance of the year 2007 as well as changes in trade accounts receivable, inventories, and trade accounts payable. 2. Net cash payments for investing activities amounted THB 462.84 million were due to acquisition of assets to get prepared for business expansion for the amount of THB 473.42 million, cash payment for short – term investments amounted THB 38.94 million, net cash paid for acquired subsidiary amounted THB 12.64 million, and netted with dividends received amounted THB 45.15 million. 3. Net cash payments for financing activities amounted THB 71.38 million were due to the Group’s draw down of long – term loans under energy preservation project amounted THB 322.47 million, netted with repayment of principal amounted THB 173.48 million, repayment of short-term loans from a related party amount THB 11.00 million, a decrease in bank overdrafts and short – term loans from banks amounted THB 73.03 million, and dividends payment amounted THB 136.34 million.

66

Annual Report 2007 - As of December 31, 2007

According to the Notification of Federation of Accounting Professions, dated May 2, 2007, it has amended accounting standard of TAS 44 “Consolidated and Separate Financial Statements”, TAS 45 “Investments in Associates” and TAS 46 “Interests in Joint Ventures” which require the change from the equity method of accounting to cost method of accounting for investments in the subsidiaries and associates and interests in joint ventures presented in the company financial statements. Under the cost method, income from investments will be recorded when dividends are declared. The amendment is effective from

January 1, 2007. Therefore, the Group has applied such method for investments in subsidiaries and associates and has applied the same method of accounting for interests in joint ventures presented in the Company financial statements. The change in such accounting policy has any impact on the Company financial statements only and does not have an impact on the consolidated financial statements. Detail has as been described in Note to the Financial Statements for the year ended December 31, 2007, Pages 9 to 10, no. 2.3 “Change in accounting policies”. 6.2.2 Quality of Assets The Company has set up regulations and measures for controlling and monitoring assets, including procedural practice, so as to assure that the Company has well utilized the assets and has paid close attention to safe-guarding all shareholders and stakeholders’ interest. Besides, the Company realizes the significance of sufficiency in making allowances for assets so as to reflect accurately financial position of Srithai Superware Group. In the year 2007, allowances for assets were shown below:


Allowance for doubtful accounts – Trade accounts receivable Allowance for net realizable value and allowance for obsolescence Allowance for impairment of investments Allowance for impairment of machinery and equipment and for unrecoverable of deferred moulds 6.2.3 Borrowing 1) Srithai Superware Public Company Limited After the Company fully repaid a long-term loan amounted to THB 2,100 million to Siam City Bank Pcl. and Bangkok Bank Pcl. in the year 2007, only long-term loan under energy conservation project is outstanding amounted to THB 452.43 million. The loan is repayable every 3 months. First repayment was made in March 2005. The loan will be fully repaid in the year 2014. Outstanding balance as of December 31, 2007 was THB 356.52 million. Outstanding balance of long-term loan under energy conservation project was higher than that of the year 2006 by THB 68.54 Million because the Company has borrowed more loan for implementing energy conservation project at its Bangpu factory and Amata Nakorn Chonburi factory in the year 2007. The loan was partially drawn down by THB 63.94 million in the year 2007 and the rest in the early year 2008. The Company has no problem to repay principal or to service interest charge. Syndication Loan Agreement that the Company signed with the two banks had no covenant which may materially effect the operation or business expansion of the Company, except certain financial ratios which must be maintained under the conditions set forth in the Syndication Loan Agreement.

Consolidated Financial Statements Year 2007 Year 2006 Million Baht Million Baht 12.78 13.93 15.52 3.50

15.42 32.12

7.90

5.55

2) Subsidiaries • Srithai Moulds Co., Ltd., a subsidiary, has borrowed two long-term loans under an energy conservation project from two local banks for total credit limit of THB 24.40 million. The loans were repayable monthly and quarterly. The first installment repayment was made in July 2006, and the last one in July 2013. Outstanding balance of the longterm loan as of December 31, 2007 was THB 19.96 million. • Srithai Miyagawa Co., Ltd., a subsidiary, was granted a credit facility by a local bank for investment in an energy conservation project for the credit limit of THB 77.28 million. Principal repayments would be made on monthly installments. The first installment repayment was made in July 2006, and the last one in year 2014. Outstanding balance of the long-term loan as of December 31, 2007 was THB 39.88 million. • Srithai (Vietnam) Co., Ltd., a subsidiary, has borrowed a long-term loan from a commercial bank in the Socialist Republic of Vietnam for expansion of business. As of December 31, 2007, the outstanding balance of the loan was equivalent to THB 22.09 million.

Conclusion Amidst the economic slowdown and rising oil prices in the year 2007, raw material costs and production costs of major products of the Company had increased, whereas the Company could not fully

Annual Report 2007 - As of December 31, 2007

67


adjust the sales prices due to higher price competition and the strengthening of Baht currency against the US dollar. Net operation result of the Company therefore decreased as compared to that of the year 2006. Thanks to our current financial structure, the Company, however, has strong financial position and its financial liquidity is at appropriate level, taking into consideration business requirement and investment. Over the past years, the Company could pay dividend to shareholders and investors. As to current business operation, the Company continually sets up measures so as to alleviate adverse effect from oil price problem by focusing on hire-of-work business for which the Company does not have to take risks on fluctuation of raw material prices. Other strategies are the upward adjustment of sales prices of our goods, shortening of lead time between order-taking and date of delivery, slashing production cost by planning new production bases in other countries of high potential i.e. Vietnam and India which have abundant labour forces at lower cost. These will enhance price competitiveness, wider coverage of markets and customer base expansion. An additional production base in Vietnam has been implemented by investing in our subsidiary in Vietnam and adding in another production line for household products in the year 2007. The Company has many customer bases in domestic and export markets, and its products could fulfill needs of customers in many industries. Also, the Company has strong commitment to expand markets aggressively and to have access to new groups of customers. To do so, the Company has been focusing on launching new product designs and product development, value-adding of products, including sourcing for new products for distribution

68

Annual Report 2007 - As of December 31, 2007

to markets. Our target is to have market coverage of 100 countries by the year 2008. Our customers have confidence in the quality and brands of our products, therefore the Company is confident in good potential on sales growth and competitive edge over its competitors. The Company will focus more on Trading Business Line to be another source of revenue. As a consequence, the Company has set a target of its revenue to reach THB 10 billion in the next 5 years. Srithai Superware Group has structural strength because the group operates as integrated business, so that the Group is least dependent on outsiders’ businesses. As a result, the Company could well control quality of goods and services of the whole Group to meet the same standard. Besides, procurements could be made at appropriate prices, and income could be circulated among companies within the Group. The Group keeps on penetrating new markets and customers to increase sales. Furthermore, the Company keeps on developing in production, management, and human resource, i.e. determining re-engineering plan and new business activity plan so as to reduce production cost, create value-adding and differentiate our products. Inviting specialists to be advisors has helped the Company to gain new ideas to enhance production efficiency and develop process management. Human resource development enhances knowledge, capability and learning of new innovation. Also, up-to-date information technology was brought in to help operate the business. These activities have reinforced strong base so that the Company could grow sustainably along the path to become a world class company which will finally add value to the shareholders’ interest.


7. IMPORTANT CHANGES AND SIGNIFICANT EVENTS OVER THE PAST YEAR 7.1 SIGNIFICANT EVENTS In the year 2007, the Company faced important changes and significant events. Some events had been released to the public after the Board of Directors passed the resolution in accordance with the regulation of the Stock Exchange of Thailand through ELCID and Company’s website. The important changes and significant events were:- 1) Investment 1.1) Investment in Household Product Business in Vietnam In the year 2007, the Company had increased its investments in Srithai (Vietnam) Co., Ltd., “Srithai Vietnam”, a subsidiary, for the amount of USD 1.0 million to invest in household product in Vietnam as approved by the Board of Directors in its meeting no.7/2549, held on November 14, 2006. Therefore, stake of holding of the Company of such investment has increased from 95.32% to 95.84%. On May 18, 2007, the Company signed a corporate guarantee agreement with the Bangkok Bank Pcl. to provide guarantee in favour of Srithai Vietnam for the additional loan amounted USD 1.0 million totalling to a new credit limit of USD 3.061 million for purposes of investment, purchasing raw materials and supporting working capital for business operation regarding sales and marketing activities in household product business. Srithai Vietnam had begun getting revenue from household products manufacturing and distributing since August 2007. The products were exported to India and distributed via an agent in Vietnam. 1.2) Additional Investment in Srithai Nanoplast Co., Ltd. Srithai Nanoplast Co., Ltd, “Srithai Nanoplast’’ ,is an associated company established on October 13, 2003. Its business is plastic production of big size by applying Rotational Moulding Technology, e.g. big water tank, big garbage bin, and lawn-plaything. Registered capital is THB 40 million, and stake of holding of the

Company is 30.0%. The Company would like to increase the diversity of plastic products of which market is expanding. Therefore, the Board of Directors in the meeting no.1/2550 held on February 24, 2007 has approved an additional investment in Srithai Nanoplast by purchasing existing shares from a shareholder, Thai MFC Co., Ltd, an associate, for 1,600,000 shares, equivalent to 40% of total common shares, at price THB 10 per share. Total investment cost is THB 16,000,000.- After the share purchase, percentage of shareholding in Srithai Nanoplast by the Company increased from 30% to 70%. Status of Srithai Nanoplast was changed from an associated company to a subsidiary since the 2nd quarter of the year 2007. 1.3) Additional Investment in S.K.I. Ceramics Co., Ltd. S.K.I. Ceramics Co., Ltd, “S.K.I.”, is an associated company which stake of holding of the Company is 41.2%. Its business is manufacturing and distributing ceramics tableware mostly exported to the USA and Japan. S.K.I. required additional investment in order to increase production capacity its furnace by investing in furnace and building new factory to install the furnace. However, S.K.I. has faced liquidity problem since operating cash flow and credit facilities were not enough for the said investment. Hence, S.K.I. increased its registered capital from THB 120 million to THB 125 million. Each shareholder of S.K.I. was required to increase investment in accordance with its percentage of shareholding. However, one shareholder of S.K.I. did not increase its investment. The Company and other shareholder invested on behalf of him and gave the right to the said shareholder to purchase the share back within 3 years starting from the date of additional investment at THB 10 per share with compound interest rate on the average MLR of 2 Thai commercial banks. The Company had invested in 300,000 additional ordinary shares at price THB 10 per share for total amount of THB 3.0 million Annual Report 2007 - As of December 31, 2007

69


as approved by the Board of Directors in its meeting no.4/2550, held on May 22, 2007. After the said additional investment, shareholding of the Company in S.K.I. increased from 41.2% to 42.0%. S.K.I. has registered the additional investment with the Ministry of Commerce on July 2, 2007. 1.4) Re-engineering Plan and New Activity and Business Plan It was necessary for the Company to adjust strategy and management, especially Process Management, in plastic injection business so as to be a world class due to the lack of development for production technology, production team, and product itself for a long time. Also, being commodity products led to low sales growth, low gross profit and loss of competitiveness. Therefore, the Company set up Re-engineering plan and New Activity and Business plan as its strategies to bring to the Company stability and sustainable growth, so that the Company should be at international level in the future. To do so, management style was changed, production cost was reduced so that our industrial products could be more competitive and gain more profit, and the Company’s products were differentiated and value-added. Besides, a part of the said plan was to centralize all industrial product productions at Amata Nakorn Chonburi factory, replacing old machines with new machines, and investing in moulds for new products, as approved by Board of Directors in its meeting no.8/2550, held on December 15, 2007. Source of investment funds for the said plan came from cash flow of the Company and additional financial support from commercial banks in Thailand. Furthermore, the Company had hired a technical advisor team which is experienced and specialized in plastic injection to provide suggestion on production technology, production strategies, and process management to the Company so as to support and push forward the Re-engineering plan.

70

Annual Report 2007 - As of December 31, 2007

1.5) Sales of Shares in THAIVAN Service Co., Ltd. THAIVAN Service Co., Ltd, “THAIVAN”, was a joint-venture established on October 4, 2006 by resolution of the Board Meeting no.4/2549, held on July 6, 2006. It was engaged in local hub switching services for credit cards, debit cards, cash cards, and smart-cards. The Company held 35% of the registered capital THB 1 million. Since THAIVAN had not yet started its operation because it was a newly established company and under business development stage. The Company had found many weaknesses in pursuing this business and business environment had changed considerably as compared to the time of our initial investment decision. Competition in this business becames more intensified than expected and more complicated. It would require more time to study competitive environment of this business and to map out strategies in order to have access to target market and to get an expected market share. Subject to the reasons mentioned above, the Company considered that the business of THAIVAN, which required more time and capital investment, is not in line with our present investment policy. As a result, the Board of Directors in the meeting no.6/2550, held on September 21, 2007, decided to discontinue the investment and sell all shares in THAIVAN to an outsider at price THB 9.25 per share for total amount of THB 323,722. The Company has received the full amount already. 2) Loans Raising 2.1) Renewal of Short-term Loan to Srithai WBG Co., Ltd. The Company had supported working capital of Srithai WBG Co., Ltd, “SWBG”, as approved by the Board of Directors in the meeting no.7/2549, held on November 14, 2006, by providing a shortterm loan for the amount of THB 940,000. The Company, holding 47% of shares in SWBG, provided a short-term loan to SWBG pro-rata to


shareholding ratio for a period of 3 months bearing the interest rate of MLR per annum. However, SWBG has faced liquidity problem since operating cash flow was not enough to cover expenses because SWBG could not fully run its business or sell its products and it could not repay the

short-term loan of THB 940,000. Therefore, the Company renewed the said loan from time to time. At present, a partner has shown his intention to find a new partner to buy ordinary shares in SWBG from the Company or to conclude deal in other way as to be agreed by all shareholders of SWBG. 2.2) Entering into an Amended Syndication Loans Agreement no.5 On July 19, 2007, the Company signed an amended syndication loans agreement no.5 with the Siam City Bank Pcl. and the Bangkok Bank Pcl. to add new credit line for supporting working capital under energy conservation project amounted THB 68.54 million for investment in additional machines and equipments of Bangpu factory and Amata Nakorn Chonburi factory. 2.3) Canceling Conditions in Syndication Loan Agreement and Redeeming Mortgaged Collaterals After the Company has fully repaid the principal of long-term loan amounted THB 2,100 million to the Siam City Bank Pcl. and the Bangkok Bank Pcl. in the year 2007, the Company has cancelled almost all conditions covenanted in syndication loan agreement dated July 19, 2002 and redeemed mortgaged collaterals, i.e. land and buildings of Suksawat factory and all machines of 4 factories. Both banks have agreed with this in 4th quarter of the year 2007 in order to facilitate operation of the Company and to release unnecessary obligations. Also, the remaining value of mortgaged collaterals of the Company will be in line with the remaining outstanding debt.

3) Others 3.1) Dividend Payment The Company has appropriated for a legal reserve for the year 2006 for the sum of THB 20,000,000 as approved by the shareholders’ meeting. Dividend was paid at the rate of THB 0.75 per share. Total payment of the dividend was THB 203,242,860, or 51.27% of net profit shown in financial statements for the year ended December 31, 2006 as being presented in Annual Report 2006. The payment of dividend was from profit of the period January 1 - June 30, 2006 at the rate of THB 0.30 per share. Total payment of the dividend was THB 81,297,144, being paid out on September 8, 2006. Another payment of dividend was from profit of the period July 1 - December 31, 2006 at the rate of THB 0.45 per share. Total payment of the dividend was THB 121,945,716, being paid out on May 25, 2007. 3.2) Appointment of a Substitute Director in place of a Director who passed away Mr. Thawee Kongyungyuen, a Director, passed away on January 12, 2008. Article 17 of the Company’s Articles of Association reads “In the event of vacancy of any director for other reasons than completion of office term, the Board of Directors shall appoint a person who has the qualifications and who possesses no prohibited characteristics under Section 68 of the Public Limited Companies Act, B.E. 2535 (1992) as the substitute director in the next meeting of the Board of Directors, unless the remaining office term of the said director is less than two months. The substitute director shall hold office only for the remaining office term of the director whom he or she replaces. The resolution of the Board of Directors under paragraph one must be passed by a vote of not less than three-fourths of the number of remaining directors.” In the meeting no. 1/2551 of the Board, held on February 24, 2008, the Board has appointed Mrs. Siriporn Sailasoot who is knowledgeable and capable and possessing no prohibited characteristics under Section 68 of the Annual Report 2007 - As of December 31, 2007

71


Public Limited Companies Act B.E. 2535 as a Director in place of Mr. Thawee Kongyungyuen effective on March 3, 2008. Her term in office will be completed in line with the remaining term in office of Mr. Thawee as proposed by the Nominating and Remuneration Committee. 7.2 Human Resource Development The Company continuously focused on human resource development so as to be in line with organization growth as mentioned in business direction of the Company during 2007 - 2009 announced on September 30, 2006. Human resource development was used as a guideline to develop and enhance the knowledge and competency of the staffs, and to build up the culture of team-work effort and consciousness in shared responsibilities. The Company had determined important roles and operations of human resource development in the year 2007 as following:- 1) Establishing Office of Human Resource Development The Company had established Office of Human Resource Development by the concept of developing the organization to be a learning organization and developing competency and advancement in career path of Company staff. Developing and training are therefore other channels to increase skill, ability, and good attitude so that staff could work efficiently and happily. The purpose of establishing Office of Human Resource Development is to provide all staffs with knowledge and ability, specialization in their career path, and readiness and capability in developing themselves more in the future. Moreover, Office of Human Resource Development is expected to be an education institution in the future so as to be knowledge source of plastic industry and plastic injection technology. The Company is willing to transfer such knowledge not only to staffs but also to outsider for the sake of social contribution. To achieve the said target, Office of Human Resource

72

Annual Report 2007 - As of December 31, 2007

Development had determined 4 main missions, i.e. 1. Creating 4S organization culture; 2. Creating learning organization; 3. Professional training and development; 4. Managerial training and development 2) Creating Organization Culture The Company has a vision and mission to develop our business to be at international level. By so doing, the organization could grow firmly and for long. The personnel should be value added by enhancing their working skill and quality so as to bring achievement to the organization and bring the Company to the expected target. Hence, Office of Human Resource Development had begun with developing the organization by 4 principles of management (4S) as following:- 4 principles of management (4S) are working philosophies that focus on fostering the organization personnel to work efficiently and effectively, i.e. STRENGTH : strength of team-work leads to strength of the organization Tˇ he personnel have consciousness in morality

and virtue so as to work together in team-work and likewise appreciate the Company as a part of their lives by: • Keeping morality and virtue • Working together as a team • Feeling like organization owner • Being responsible and exerted STRETCH : to do it better today, and to be ahead of tomorrow The personnel could continually develop and improve the capability of themselves and their works to be more efficient by: • Being engrossed in work • Continually developing themselves

and work • Building diversified working skills • Managing resource to serve maximum utility


SPEED : to respond quickly with service mindfulness The personnel could support requirements of concerned persons from both inside and outside the organization with up-to-date, correct, and quick information and make service impression by : • Arranging priority of work • Quickly supporting requirements • Communicating clearly and impressively • Preparing to adapt to any changes SYSTEM : to work systematically and traceable The personnel could work systematically with principle and make decision based on correctly and precisely analyzed information by : • Working step by step • Thinking and making decision systematically • Applying technology appropriately • Associating the work together 7.3 Information Technology In the year 2007, IT work had been focused on its efficiency by installation of the following management information system:- 1) Developing IT service in organization such as report and follow up the problem via internal web. 2) Managing useless data in ERP system to increase speed in working process. 3) Network security plan. 4) Security and Disaster Recovery Plan (DRP) used to reduce loss to business due to any disaster. 5) Determining fundamental program for user for the sake of safety for data and copyright. In the year 2008, the Company has many development plans on stream, so as to increase efficiency and speed at work, i.e. 1) Developing direct sales system in order to support the expansion of business. 2) Increasing efficiency of server system and hardware tooling in order to improve the infrastructure of information technology to be more capable so as to support the inside

3) 4)

5) 6)

7)

connection throughout the organization. Improving internet and e-mail system so as to increase its efficiency. Bringing technological instruments, e.g., Remote Access, VPN, WiFi, etc. so that working system problem could be faster solved from outside the Company by logging in through security system. Upgrading Oracle system so as to improve the working efficiency Developing e-office information system, e.g., computerized document control so as to reduce the cost and improve the working efficiency of the office. Providing training to staff to enhance computer knowledge, skill, and understanding in information technology.

7.4 Remuneration to Auditors 1) Audit Fee The Company and subsidiaries paid audit fee to:- - the external auditor in the past accounting year the sum of THB 2.20 million. - audit firm for whom the auditor work and persons related to the auditor and such audit firm in the past accounting year the sum of THB 1.61 million and US dollars 13,000. 2) Non-audit fee The Company and subsidiaries paid non-audit fee for System Computer Environment Control Review, giving advice on preparation of consolidated financial statements and agreed-upon procedures in relation to BOI Promotion Certificate to:- - the Company’s auditors in the past accounting year the sum of THB 1.70 million, and the Company is obligated to pay to them in the future the sum of THB - million. - audit firm for whom the auditor work and persons related to the auditor and such audit firm in the past accounting year the sum of THB 0.30 million, and the Annual Report 2007 - As of December 31, 2007

73


Company is obligated to pay to them in that efficient implementation could be assured and suitable to business environment and safety in the future the sum of THB - million. workplace for all employees could be in creased. In 7.5 Policy and Measures on Energy Conservation 2007, the Company has proceeded to follow its The Company continually emphasizes on policy continuously. It has provided training course value of energy and performs many measures in for its employees since the very beginning of work, both factory side and office side in order that all producing safety manual and setting up a staffs perceive value of energy which shall bring committee on Safety, Hygiene at Work and energy saving to the Company. In the year 2007, Workplace Environment in each factory in order for apart from energy saving guideline determined by them to cooperate with each other in investigating the Company, the Company also allowed all staffs safety, solving the existing problem and evaluating to share their opinion, inspect the fault which may the result occurred. The Company has taken good cause the energy loss to be fixed up, and join all care of the health and safety for its employees. At energy conservation activities together so that all present, most organization have implemented safety, departments of the Company could participate. The health and work environment measures. Special benefits of energy conservation are not only cost attention on such safety policy would increase the reduction for the Company but also benefits for the potentiality of competitiveness of the organization by reducing loss concerning man-power, working country. Suksawat factory of the Company had joined time and production and bringing in good image to extending result of energy management campaign the Company. of Department of Alternative Energy Development The Company has provided training course in and Efficiency under Ministry of Energy. This was topic “Safety Officers at Management Level” and a pilot campaign joined by 40 companies “Safety Offers at Chief of Section Level” for all of throughout the country so as to try out the energy its factories and appointed them as safety officers at management system as mentioned in the Energy management and chief of section level. This training Conservation Promotion Act (2 nd edition) B.E. course was proceeded according to the requirement 2550 and the draft Energy Management Regulation of the Ministry of Labour subject “The Setting up and Ministerial Regulation determining standards, Standard of Management on Safety, Hygiene and rules, and energy management methods in Workplace Environment in Year 2006”. controlled factories and controlled buildings to be effective in the year 2008. If the Company passes 7.7 Environment the verification of the said campaigns, the Company The Company realizes its social will be benefited as it will be raised to be national responsibilities and its friendliness to the energy management standard factory. Furthermore, environment. The Company deems that it is direct the Company will get free certification of energy responsibility of each employee to follow this management system for 1 year. This is also the policy. The Company is willing to continually preparation stage for Bangpu factory, Amata improve the environmental protection system. A Nakorn factory, and Korat factory before the law policy on environment was drawn up for being guideline so as to achieve environmental being in effect. management system, ISO 14001:2004. In the year 7.6 Safety, Hygiene at Work and Workplace 2007, the Company was on process to apply for ISO 14001:2004 standard for Suksawat factory Environment The Company has set up a policy on safety, and Amata factory. Bangpu factory had already hygiene at work, and workplace environment so been certified ISO 14001:2004 by United

74

Annual Report 2007 - As of December 31, 2007


Registrar of Systems (Thailand) Ltd. (URS) in the year 2007. 7.8 Social Activities 1) Program on Students Working During Holidays. Korat Branch has recruited students who are studying at Secondary School in schools near by the company to work during holidays. The nature of work should not deal with machines and wages should be the same as minimum wage in Nakorn Rachasima Province in order to help the students get income and lessen depending on their parents. 2) Be-well Program Korat Branch was chosen to be pilot plant of “Be-well program” in the Northeastern area. The program was held by the Federation of Thai Industries which aimed at training and acknowledging the employees to follow Sufficiency Economy of His Majesty the King. 3) Long-Term Experience Training Program Korat Branch has supported the policy of committee on Vocational Education about changing method of learning and teaching, and reform of evaluation in order to train students who achieve certification in 2 years and 3 years college for long-term experience training. The Company has recruited these students for the training and all of them got paid same as other employees. 4) School in Factory Activity It is the project jointly between the Ministry of Labor and the Ministry of Education. The program was arranged in the factory to increase the opportunity on education to employees and people in the nearby community. The Company provided facilities such as classrooms and educational equipments including text books. Department of Non-Formal Education provided lecturer, Department of Labour Protection and Welfare and Department of Skill Development were program coordinators. The Company has opened Non-Formal

Education Center at its 4 branches i.e. Suksawat, Bangpoo, Amata Nakorn Chonburi and Korat. 5) Best Energy Management Program The Company held a best energy management plant competition campaign between 4 plants of the Company. Specialists from many organizations were invited to be the Committee of the campaign. The purpose of the competition is to encourage each plant to realize the importance of efficient energy management, to reduce the cost, and to comply with energy saving policy of the government 6) Basic Life-saving Training Program The Company has cooperated with the Heart Foundation in arranging training on “Basic LifeSaving Training Program” for its employee on the occasion of His Majesty’s 80th Birthday Anniversary on December 5, 2007. This training program was aimed at training people who have no knowledge in life-saving method for 8,000 persons so that they would be able to help these who suffer from disease and disaster instantly and safely. 7) Ceramics-set Production Project On the occasion of Her Royal Highness Princess Kalyaniwattana Kromluang Naradivasrachanakarin’s 84th Birthday on May 6, 2007, King Rama the Six Foundation, Boar Association, etc. jointly set up ceramics-set production project and invited Mr. Sanan Augubolkul to be Chairman of the project. The project was aimed at raising fund for repairing Pra Trai Pidok building of Wat Absornsawan in Pasi Charoen District, Bangkok. 8) Blood-Donation Program Korat Branch has joined the Ministry of Labour and Provincial Authorities in program “Blood-Donation Merit to H.M. the King” on the occasion of 80 th Birthday celebration of His Majesty. Participants in this program totalled 593 persons. The Korat Factory has participated in Blood donation program for 3 times in year 2007. Annual Report 2007 - As of December 31, 2007

75


7.9 Awards Achieved in year 2007 1) Best Enterprise on Safety, Hygiene and Workplace Environment Korat Branch has received best enterprise on Safety, Hygiene and Workplace Environment at provincial level. The award was presented in work safety week in the Northeastern part at Udonthani Province. The Company realized the importance of safety at work and supported safety equipments to its employees and provided work safety week each year. 2) Quality of Work Life Management System On June 25, 2007, the Company received certificate on Management System of Quality of Work Life from the Federation of Thai Industies. The evaluation factors including physical, emotional, social and spiritual. 3) To-Be-Number One Program On July 18, 2007, Korat Branch has received “To-Be-Number One� award. The award was presented by Deputy-Governor of Nakorn Rachasima Province. 4) Good Cooperation with Educational Institutions. On July 21, 2007, Korat Branch was presented award on the enterprise that provided good cooperation with educational institutions under Vocational Office of Nakorn Rachasima Province about method of adjusting learning, teaching and renovating evaluation process to students who joined long-term work experience.

76

Annual Report 2007 - As of December 31, 2007

5) Awarding Plate for Best Enterprise on Labour Relations and Welfare for Year 2007 On September 10, 2007, the Company was presented awarding plate for best enterprise on labour relations and welfare for year 2007 for large enterprise from the Prime Minister. The ceremony was held by Department of Labour Protection and Welfare, Ministry of Labour at the Government House. The Company has received such award for the third consecutive years, based on 3 criteria i.e., enterprise, labour relationship and labour welfare. 6) Awarded Honorable Plate for Distinguished Enterprise Who Supported Fair for the Handicapped On November 28, 2007, the Company was awarded an honourable plate for distinguished enterprise who gave support to the trade fair organized for the handicapped on the International Day for the Handicapped for the year 2007. That was because the Company has employed the handicapped persons for the ratio specified by law. Presently, the Company has employed 16 handicapped persons comprising the deaf, the blind and other limb-handicap. 7) Certification of ISO/TS 16949:2002 Automotive Parts On December 21, 2007, the Company was certified with ISO/TS 16949:2002 automotive parts by United Registrar of Systems(Thailand) Ltd. (URS) which is requirement on quality of technical standard of auto-industry recognized world-wide. The certification has covered designing, developing, manufacturing, installing, and servicing of products/ services concerning auto-industry.


Report by the Board of Directors

on its Accountability to Financial Statements

The Board of Directors is accountable for correctness of financial statements of Srithai Superware Public Company Limited and consolidated financial statements of Srithai Superware Public Company Limited and its subsidiaries including financial information presented in the Annual Report. The Company has adopted appropriate accounting policies consistently applied and conformed to generally accepted accounting standards. Also, significant information was sufficiently disclosed in notes to financial statements for sake of proper benefits to shareholders, investors, and stakeholders. Financial statements of the Company and consolidated financial statements of the Company and its subsidiaries have been audited by PricewaterhouseCoopers ABAS Limited, auditor of the Company. The Board of Directors has supported the auditor with all necessary information and documents so that external auditor could audit and express his opinion in accordance with auditing standards. The external auditor has expressed his opinion in Auditor’s Report as shown in the Annual Report. The Board of Directors has provided risk management system and maintained internal control systems with appropriateness. That was to assure reasonably of the correctness, completeness, and sufficiency of accounting records that the Company’s assets have been maintained and safeguarded, and dishonest conducts or material abnormal operations have been prevented. The Board of Directors has appointed an Audit Committee to be responsible for reviewing accounting policies, quality of financial reports, internal control system, internal audit system, risk management system, and disclosure of related party-transaction information. The Audit Committee has expressed their opinion in the Audit Committee’s Report as shown in this Annual Report. The Board of Directors opines that managerial structure and internal control system of the Company are satisfactory. The Company’s auditor did not qualify the Company’s financial statements, or raised any specific observation thereon, so we could rest assured that financial statements of Srithai Superware Public Company Limited and consolidated financial statements of Srithai Superware Public Company Limited and its subsidiaries as at December 31, 2007 present fairly in all material respects the financial position, performance, and cash flows in accordance with generally accepted accounting principles and other relevant laws and regulations. On Behalf of the Board of Directors Mr. Sanan Angubolkul Chairman of the Board

Annual Report 2007 - As of December 31, 2007

77


Audit Committee’s Report To: Shareholders Srithai Superware Public Company Limited The Audit Committee of Srithai Superware Public Company Limited comprising of Chairman of the Audit Committee, Mr. Viroj Lowhaphandu, and Audit Committee Members, Mr. Enghug Nontikarn and Mr. Suchat Boonbanjerdsri, held 4 meetings during the last accounting year ended December 31, 2007. Company executives, external auditor, and other concerned officers had attended all such meetings to clarify issues on agenda of their concern such as auditing results on financial statements, internal auditing results as well as the Company’s risks concerned. The Internal Audit Manager acted as secretary to the meetings. All resolutions of meetings could be summarized as following:- 1. Preparation of Annual Financial Statements Financial statements of the Company and its subsidiaries have been prepared in accordance with the Accounting Act B.E. 2543 and accounting standards as recommended by the Federation of Accounting Profession Under the Royal Patronage of His Majesty the King, and certified by authorities concerned e.g. Department of Business Development; Ministry of Commerce, the Stock Exchange of Thailand, and the Securities and Exchange Commission. Relevant informations have been sufficiently disclosed in the financial statements. Any suggestion recommended by the external auditor would always be reflected in accounting records correctly and appropriately. 2. Internal Control System The Company has sufficient internal control system. Internal auditors of the Company conducted internal auditing according to the plan set up annually by the Audit Committee. Internal control was evaluated by using measures form suggested by the Stock Exchange of Thailand covering organization and environment, management operating control, information system, communication and monitoring control. The evaluation results were fairly good. 3. Risk Management The Audit Committee has collaborated with the Risk Management Sub-Committee which has elaborated on financial risk, operational risk, business risk and external factors that are uncontrollable, so as to mitigate risks to acceptable level or to initiate remedial measures. The Risk Management Sub-Committee was assigned to monitor operation results as compared to business plan by taking into consideration hard-to-control external factors such as rising oil prices, and escalation of prices of raw materials which have direct impact on production cost of our main products. 4. Corporate Governance The Company has set up Good Corporate Governance policies since the year 2004, and they have been revised from time to time to gain coverage and harmony with principles of Good Corporate Governance. In the year 2006, the Board of Directors approved the ‘Codes of Ethic’ on business practice as a part of good corporate governance policies for serving as a guideline to personnel of all levels on quality performance and fair business practice according to their

assignments in compliance with good corporate governance policies.

78

Annual Report 2007 - As of December 31, 2007


5. Appointment of External Auditor and Remuneration The Audit Committee recommended the Board of Directors to propose to the Annual General Meeting of Shareholders to appoint Mr. Prasan Chuaphanich, CPA (Thailand) No. 3051, or Ms. Nangnoi Charoenthaveesub, CPA (Thailand) No. 3044, or Mr. Kajornkiet Aroonpirodkul, CPA (Thailand) No. 3445, from PricewaterhouseCoopers ABAS Limited, as auditor of the Company for the accounting year ended December 31, 2008 with the remuneration amount of THB 2,240,000. (Two Million Two Hundred and Forty Thousand Baht Only) which was considered appropriate.

Bangkok 25 February 2008

On Behalf of the Audit Committee

(Mr. Viroj Lowhaphandu) Chairman of the Audit Committee

Annual Report 2007 - As of December 31, 2007

79


SRITHAI SUPERWARE PUBLIC COMPANY LIMITED CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS 31 DECEMBER 2007


AUDITOR’S REPORT

Annual Report 2007 - As of December 31, 2007

1


BALANCE SHEETS

Srithai Superware Public Company Limited Balance Sheets As at 31 December 2007 and 2006

The notes to the consolidated and company financial statements on pages 8 to 7 form an integral part of these financial statements. 2

Annual Report 2007 - As of December 31, 2007


BALANCE SHEETS

Srithai Superware Public Company Limited Balance Sheets As at 31 December 2007 and 2006

The notes to the consolidated and company financial statements on pages 8 to 7 form an integral part of these financial statements. Annual Report 2007 - As of December 31, 2007

3


STATEMENT OF INCOME

Srithai Superware Public Company Limited Statements of Income For the years ended 31 December 2007 and 2006

4

The notes to the consolidated and company financial statements on pages 8 to 7 form an integral part of these financial statements. Annual Report 2007 - As of December 31, 2007


The notes to the consolidated and company financial statements on pages 8 to 71 from an integral part of these financial statements.

Srithai Superware Public Company Limited Statements of Changes in Shareholders’ Equity For the years ended 31 December 2007 and 2006

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Annual Report 2007 - As of December 31, 2007

5


6

Annual Report 2007 - As of December 31, 2007

The notes to the consolidated and company financial statements on pages 8 to 71 from an integral part of these financial statements.

Srithai Superware Public Company Limited Statements of Changes in Shareholders’ Equity For the years ended 31 December 2007 and 2006

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)


STATEMENTS OF CASH FLOWS

Srithai Superware Public Company Limited Statements of Cash Flows For the years ended 31 December 2007 and 2006

The notes to the consolidated and company financial statements on pages 8 to 7 form an integral part of these financial statements. Annual Report 2007 - As of December 31, 2007

7


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

8

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

9


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

10

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

11


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

12

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

13


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

14

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

15


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

16

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

17


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

18

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

19


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

20

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

21


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

22

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

23


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

24

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

25


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

26

Annual Report 2007 - As of December 31, 2007


Annual Report 2007 - As of December 31, 2007

27

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

28

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

29


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

30

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

31


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

32

Annual Report 2007 - As of December 31, 2007


Annual Report 2007 - As of December 31, 2007

33

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

34

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

35


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

36

Annual Report 2007 - As of December 31, 2007


Annual Report 2007 - As of December 31, 2007

37

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

38

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

39


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

40

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

41


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

42

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

43


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

44

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

45


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

46

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

47


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

48

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

49


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

50

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

51


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

52

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

53


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

54

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

55


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

56

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

57


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

58

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

59


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

60

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

61


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

62

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

63


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

64

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

65


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

66

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

67


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

68

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

69


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (Continued)

Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

70

Annual Report 2007 - As of December 31, 2007


Srithai Superware Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2007 and 2006

Annual Report 2007 - As of December 31, 2007

71


Sithai ar2007 en  
Sithai ar2007 en  
Advertisement