INDEPENDENT F/A'S OPINION (ADDITIONAL)

IBCON 017/2546 Date 2nd April 2003 Subject Independent Financial Advisor's Opinion in regard to the Connected Transaction of Thantawan Industry Public Company Limited To Independent Directors and Shareholders Thantawan Industry Public Company Limited Pursuant to the resolution of the Board of Directors of Thantawan Industry Public Co., Ltd. ("The Company"), the Board of Directors approved the lending to Sunflower Co.,Ltd. ("Sunflower"), a major shareholder of The Company, for the total of 17 times from 23rd August 2001 to 7th March 2003 detailing as follows; Board of Directors' Date Subject Resolution 1. No. 13/2544 23 Aug 01 Lend in the amount of Baht 23 million 2. No. 15/2544 20 Dec 01 Postpone the Debt Repayment in the amount of Baht 23 million 3. No. 1/2545 29 Jan 02 Postpone the Debt Repayment in the amount of Baht 23 million 4. No. 3/2545 22 Feb 02 Acknowledge the Prepayment of Debt in the amount of Baht 23 million 5. No. 4/2545 2 Mar 02Lend in the amount of Baht 9 million 6. No. 5/2545 17 Apr 02 Lend in the amount of Baht 9 million 7. No. 8/2545 17 May 02 Lend in the amount of Baht 10 million 8. No. 9/2545 4 Jul 02Lend in the amount of Baht 10 million 9. No. 10/2545 11 Jul 02 Lend in the amount of Baht 6 million 10. No. 11/2545 24 Jul 02 Lend in the amount of Baht 9 million 11. No. 14/2545 30 Aug 02 Postpone the Debt Repayment for three of P/N in the amount of Baht 25 million 12. No. 15/2545 17 Sep 02 Called for Shareholders' Meeting to approve the lending to major shareholder in the amount of Baht 25 million which is classified as Connected Transaction 13. No. 17-1/2545 30 Oct 02 Postpone the Debt Repayment for three of P/N in the amount of Baht 25 million 14. No. 19/2545 27 Dec 02 Lend in the amount of Baht 32 million 15. No. 1/2546 9 Jan 03Acknowledge the Debt Repayment in the amount of Baht 11 million results in outstanding loan in the amount of Baht 46 million 16. No. 2/2546 24 Feb 03 Postpone the Debt Repayment for one P/N in the amount of Baht 32 million 17. No. 3/2546 7 Mar 03Postpone Debt Repayment for two P/N in the amount of Baht 14 million Transaction no. 1-13 in the amount of Baht 25 million was approved by the second Extraordinary General Meeting of The Company dated 18th November 2002. In addition, The Company's Board of Directors has approved the additional loan of Baht 32 million to Sunflower. Therefore, these connected transactions have to be arranged by Board of Directors for the rectification from non-related shareholders. The transaction mentioned above is considered as Connected Transaction in regard to the rules and regulations of SET RE: Rules and Procedures and Disclosure of Connected Transactions of Listed Companies Date 18th July 1994. Hence, The Company has to received the approval of Shareholders' Meeting with the votes of at least ? of eligible paid-up shares that attended the shareholders' meeting would be required. Therefore, The Company has appointed Integrated Business Consultants Co., Ltd. ("I-BCON") to be an independent financial advisor in providing an opinion on the transaction to independent directors and minority shareholders in regard to the fairness and reasonableness of the connected transaction. I-BCON as an independent financial advisor will opine for the transaction in regard to the following concerns; 1. Reasonableness of the connected transaction 2. Reasonableness and Fairness of an interest rate and amount of loan For the consideration of the Financial Advisor in giving the opinion, I-BCON has taking into account of documents, The Company's management interview, industry analysis, and related economics issue. The circular has been performed under the assumption while giving the opinion; thereafter, the further changes may affect The Company and shareholders. Relationship of the connected persons List of ten major shareholders of The Company as of 27th December 2002 are: Name No. of shares Percentage of - total shares 1 Sunflower Co., Ltd. 3,711,500 46.39 2 Thailand Securities Depository Co.,Ltd.for depository for local 3,403,790 42.55 3 Thailand Securities Depository Co.,Ltd.for depository for foreign 668,000 8.35 4 Ms. Uraiwan Bowornkiratikajorn 100,000 1.25 5 Mr. Qiu Yong Sheng 44,300 0.55 6 Mr. Somkiat Limsong 24,100 0.30 7 Mr. Pichai Tangvithetjit 14,200 0.18 8 Mr. Thaveewat Yinatsawapan 10,100 0.13 9 Mr. Patipan Kanjanaviroj 2,000 0.30 10 Mr. Panja Senadisai 2,000 0.30 11 Others 20,010 0.25 Total 8,000,000 100.00 Sunflower holds 46.39 percent of shares in The Company, which is considered as a major shareholder regarding to the rules and regulations of SET RE: Rules and Procedures and Disclosure of Connected Transactions of Listed Companies Date 18th July 1994. Thantawan Group Co., Ltd. (THG) Shareholding of 99.99 % Sunflower Enterprise Co., Ltd. (SE) Shareholding of 93.99 % Sunflower Co., Ltd. (S) Shareholding of 46.39 % Thantawan Industry Public Co., Ltd. (THIP) Remarks : Details of shares held by individuals THIP Has none of individuals as major shareholder S Has none of individuals as major shareholder SE Has none of individuals as major shareholder THG is 51 percent owned by Mr.Nam Mahathitirat and 12.50 percent owned by Mr.Pasit Assamongkol is major shareholder at the rate of 12.5 percent. Details of the Transaction The Company has granted short-term loan to Sunflower, who is a major shareholder. Reciprocally, Sunflower issued promissory notes with interest rate of 10 percent per annum payable at the maturity of each promissory notes to The Company. The loan has lent since 28th August 2001. Until recently, Sunflower has regularly made the repayment and rolled over the promissory notes. The outstanding loan was Baht 57 and 46 million as of 31st December 2002 and 31st March 2003 respectively. Two of the promissory notes are P/N No. S- THIP 004/2546 date 24th February 2003 and P/N No. S-THIP 005/2546 date 9th March 2003. Lists of twenty four promissory notes from 28th August 2001 to 9th March 2003 are: No. of promissory Lending Amount Due Date Interest Rate Previous notes Date (million Baht) (per annum) Promissory Notes No. 1 S-THIP 005/2546 9 March 2003 14.00 29 April 2003 10% S-THIP 002,003/2546 2 S-THIP 004/2546 24 February 2003 32.00 29 April 2003 10% S-THIP 014/2545 3 S-THIP 003/2546 23 January 2003 8.00 9 March 2003 10% S-THIP 001/2546 4 S-THIP 002/2546 9 January 2003 6.00 9 March 2003 10% S-THIP 012/2545 5 S-THIP 001/2546 3 January 2003 8.00 23 January 2003 10% S-THIP 013/2545 6 S-THIP 014/2545 27 December 2002 32.00 24 February 2003 10% - 7 S-THIP 013/2545 25 November 2002 9.00 23 January 2003 10% S-THIP 010/2545 8 S-THIP 012/2545 11 November 2002 6.00 9 January 2003 10% S-THIP 009/2545 9 S-THIP 011/2545 31 October 2002 10.00 29 December 2002 10% S-THIP 008/2545 10 S-THIP 010/2545 26 September 2002 9.00 25 November 2002 10% S-THIP 007/2545 11 S-THIP 009/2545 12 September 2002 6.00 11 November 2002 10% S-THIP 006/2545 12 S-THIP 008/2545 2 September 2002 10.00 31 October 2002 10% S-THIP 005/2545 13 S-THIP 007/2545 29 July 2002 9.00 26 September 2002 10% - 14 S-THIP 006/2545 15 July 2002 6.00 12 September 2002 10% - 15 S-THIP 005/2545 5 July 2002 10.00 2 September 2002 10% - 16 S-THIP 004/2545 28 May 2002 10.00 27 June 2002 10% - 17 S-THIP 003/2545 26 April 2002 9.00 25 June 2002 10% - 18 S-THIP 002/2545 4 March 2002 9.00 3 April 2002 10% - 19 S-THIP 001/2545 20 January 2002 23.00 20 March 2002 10% S-THIP 005/2544 20 S-THIP 005/2544 20 December 2001 23.00 20 January 2002 10% S-THIP 001-004/2544 21 S-THIP 004/2544 26 September 2001 9.00 20 December 2001 10% 22 S-THIP 003/2544 30 August 2001 4.75 20 December 2001 10% 23 S-THIP 002/2544 29 August 200 4.00 20 December 2001 10% 24 S-THIP 001/2544 28 August 2001 5.25 20 December 2001 10% Initial information of The Company and Sunflower Thantawan Industry (Public) Co., Ltd. Thantawan Industry Public Co., Ltd. (THIP) was founded on 21st September 1978 to produce and sell of plastic products. These plastic products consist of 3 main categories: 1. Products made of LDPE resin, Low Density Poly ethylene, the plastic reclosable zip bags for contains product or material and also food. 2. Products made of HDPE resin, these are shopping bag, garbage bag, hygienic glove. 3. Products made of PP resin, which finished products are drinking straws, include bending, and fancy straws, etc. under domestic sales brand name "Thantawan" using "Blowtech" registered trademark. About 93 percent of total sales were export to the buyers under OEM basis of which 86 percent were shipped to direct buyers and 14 percent were shipped to selling agents or brokers. For domestic sales, 97 percent were distributed in Bangkok and metro areas by The Company, while the rest to upcountry is through brokers channel. As of 31st December 2001, THIP's production capacity was at 12,600 tonnes, manufacturing by three factories located in the same area at Tambon Omyai, Sampran Distric, Nakornpathom. Performance and Financial Statement of The Company in the last three years are as of the following; Unit : Baht 2002 2001 2000 Cash on hand and at banks 57,890,430 47,466,589 60,456,750 Total Current Assets 289,456,509 257,950,535 268,932,656 Total Assets 551,704,188 525,768,867 522,016,517 Total Current Liabilities 110,687,295 104,970,963 131,941,216 Authorized share capital 10,000,000 ordinary 100,000,000 100,000,000 100,000,000 shares, Baht 10 par value Issued and fully paid-up share capital 80,000,000 80,000,000 80,000,000 8,000,000ordinary shares, Baht 10 par value Premium on share capital 136,800,000 136,800,000 136,800,000 Retained Earnings Appropriated-Legal Reserve 10,000,000 10,000,000 10,000,000 Unappropriated 214,216,893 193,997,904 163,275,301 Total Shareholders' Equity 441,016,893 420,797,904 390,075,301 Sales 696,436,751 756,663,982 754,052,935 Interest Income 2,798,559 1,829,249 1,690,192 Total Revenues 731,087,188 782,280,791 779,875,936 Total Expenses 690,148,334 722,892,189 723,607,391 Net Profit 30,211,489 40,722,603 38,362,085 Earnings per share 3.78 5.09 4.80 Sunflower Co., Ltd. Founded on 11th January 1973, Sunflower Co., Ltd. has objectives in running business of investment in equity market and locates at 123 Suntower B 36th Fl., Vibhavaderangsit Rd., Ladyao, Chatuchak, Bangkok. Sunflower's performance and financial statement are: Unit : Baht 2002* 2001 2000 Current Assets 319,176,152 271,276,403 220,958,371 Total Assets 566,203,068 523,986,713 454,316,062 Total Current Liabilities 235,770,452 193,452,936 151,881,461 Authorized share capital 70,000 ordinary 70,000,000 70,000,000 70,000,000 shares,Baht 1,000 par value Retained Earnings Appropriated-Legal Reserve 7,000,000 7,000,000 7,000,000 Unappropriated 253,432,617 253,533,777 225,434,601 Total Shareholders' Equity 330,432,617 330,533,777 302,434,601 Total Revenues 17,832,026 40,517,119 44,825,590 Total Expenses 17,919,262 14,429,340 20,408,859 Net Profit -101,160 28,099,176 97,146,073 Earnings per share -1.45 401.41 1,387.80 Remarks : Unaudited Financial Statement as of 31st December 2002 In the year 2000 and 2001, Sunflower has gain from debt restructuring in the amount of Baht 72.73 and 2.01 million respectively. Opinion of Independent Financial Advisor 1. Reasonableness of the connected transaction The alternative in cash management Since The Company has net profit in the past, it has high liquidity in its operation with the current liabilities of 49.06, 40.69, and 38.24 percent of current assets in the year 2000, 2001, and 2002 respectively. With regard to the balance sheet of The Company as of 31st December 2000 - 2002, it has cash or cash equivalent after the lending to Sunflower in the amount of Baht 60.50, 47.57, and 57.89 million respectively, which are mostly in saving accounts. Furthermore, The Company has large amount of excess cash because it has no large investment project, and has none of net losses in the past. Therefore, the loan granted to Sunflower is an alternative to manage its liquidity. Liquidity of The Company Current ratio of The Company has dramatically increased from 2.04 times in the year 2000 to 2.46 and 2.62 times in the year 2001 and 2002 respectively. The Company with the current ratio of 2.62 times and quick ratio of 2.00 times indicates relatively high liquidity in its operation. Providing the loan to Sunflower is considered as non-current assets, its current ratio will be calculated by total current assets deducts by loan to Sunflower divides by total current liabilities. Regarding to the calculation, the current ratio is still relatively high at 2.10 times and quick ratio is 1.48 times in the year 2002. Proportion of total liabilities in the year 2000, 2001, and 2002 is 33.82, 24.95, and 25.09 percent of total shareholders' equity, which means that total shareholders' equity is larger than total liabilities by 4 times. If The Company is lack of working capital for its operation, it still has the credit to borrow from financial institute. Moreover, The Company has overdraft, which maintains the full available credit line in the amount of Baht 35 million. 2002 2001 2000 Current Ratio 2.62 2.46 2.04 Current Ratio after the deduction loan to Sunflower 2.10 2.24 2.04 Quick Ratio 2.00 1.82 1.41 Quick Ratio after the deduction loan to Sunflower 1.48 1.60 1.41 Debt to Equity Ratio 25.09% 24.95% 33.82% No default of debt repayment That the loan lent to Sunflower has only promissory notes for the collateral, none of fixed asset has been pledged is considered as higher risk investment compare to bank deposit. However, Sunflower has good track record to The Company, which is counted as a trustable account receivables. Risk of the repayment In general, sources of repayment will be from cash flow from operation of Sunflower that operates its business as a holding company. The maximum interest expense to be paid to The Company in the amount of Baht 5.7 million (calculation by assuming that Sunflower borrows at Baht 57 million for the whole year) can acquire from dividend by The Company. The Company pays dividend approximately Baht 10 million per year, which is counted as Sunflower's income of Baht 4.6 million. Most of Sunflower's current assets is short term loan to individuals or related companies. Sunflower has current ratio at 1.40 and 1.35 times in the year 2001 and 2002 which expresses the ability to manage all the short term liabilities. Though, the liquidity of The Company should be acceptable depend on the quality of its account receivables. However, the financial statement of Sunflower as of 31st December 2002 is an un-audited financial statement that indicates loss from operation in the amount of Baht 0.10 million because the interest income is equal to zero and I-BCON has not received any explanation from the auditor. This issue will affect to the quality of account receivables of Sunflower and also increase the default risk to The Company. 2. Reasonableness and Fairness of an interest rate and amount of loan Reasonableness of interest rate Depository interest rate during the year 2001-2002 is decreased ceaselessly due to the excess liquidity and the interest rate decrease policy in regard to the government's policy. The interest rate of commercial bank has also been decreased in the year 2002 as well. Even the government bond in the amount of Baht 305 trillion during September and October 2002 will reduce some of the excess liquidity. However, that the excess liquidity is still high causes the short tem interest rate to decrease in regard to the policy of Bank of Thailand that reduce from 2.00 to 1.75 percent on 19th September 2002 with respect to the uncertainty of worldwide economics. All of the commercial banks have decreased their depository interest rate and lending interest rate at the beginning and the end of the year regarding to the policy of Bank of Thailand and the liquidity of each commercial bank. Average three-month fixed interest rate of five commercial banks has been decreased from 2.25 percent per annum in December 2001 to 1.75 percent per annum in December 2002. MLR has been decrease from 7.125 percent per annum in December 2001 to 6.690 percent per annum in December 2002. Quarterly weighted average depository interest rate of all commercial banks has continuously decrease in the last two years for approximately 25 percent from the first quarter of 2001 which has been shown as follow; Weighted Average Depository Interest Rate of all Commercial Banks in 2001 - 2002 Unit : percent 5 Major Thai Siam Commercial Branch Foreign Total Commercial Banks Bank PLC. Commercial Banks Commercial Banks 2001 1st Quarter 2.40 2.58 1.56 2.53 2nd Quarter 2.25 2.42 1.43 2.37 3rd Quarter 2.19 2.37 1.54 2.33 4th Quarter 2.11 2.29 1.44 2.25 2002 1st Quarter 1.95 2.13 1.19 2.07 2nd Quarter 1.92 2.07 1.16 2.03 3rd Quarter 1.92 2.06 1.08 2.01 4th Quarter 1.79 1.93 0.99 1.88 Source : Bank of Thailand Depository Interest Rate of Major 5 Commercial Banks as of 31st March 2003 Percent Saving Account 1.25 Fixed Account 3 months1.5 6 months1.5 12 months 1.75 - 2.00 24 months 2.00 Source : Bank of Thailand Five major commercial banks are included of Bangkok Bank, Krung Thai Bank, Bank of Ayudhya, Thai Farmer Bank, and Siam Commercial Bank. - Investment in government bond Investment in government bond is one of alternative for cash management, which is considered as non-risk investment. The investors can choose to invest in state enterprise bond, government bond, and treasury bills. From quarterly average return from investment in government bond from 2001 to 28th February 2003, the highest return from investment was in the third quarter of 2001 as the following; - Highest interest rate of state enterprise bond at 6.11 percent - Highest interest rate of one-year government bond at 2.73 percent - Highest interest rate of two-year government bond at 3.83 percent - Highest interest rate of three-year government bond at 4.41 percent - Highest interest rate of one-day to thirty-day treasury bills at 2.52 percent - Highest interest rate of over ninety-day treasury bills at 2.74 percent The return from investment in government bond is lower than the return from loan to Sunflower. 2001 2002 2003 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Feb Interest Rate of State 4.23 3.63 6.11 4.68 2.76 4.73 4.04 2.48 n.a. 3.45 Enterprise Bond 2/ 3/ Interest Rate of Government Bond 1/ 1 year 2.37 2.52 3.34 2.73 2.24 2.16 2.05 1.88 1.67 1.55 2 years 2.68 3.07 3.83 2.95 2.51 2.48 2.21 2.00 1.73 1.69 3 years 2.90 3.38 4.41 3.24 2.84 2.80 2.44 2.12 1.84 1.80 Interest Rate of Treasury Bills 1/ 1 - 30 days 1.92 1.92 2.52 2.33 1.92 1.89 1.80 1.75 1.60 1.45 exceed 90 days 2.00 2.07 2.74 2.49 2.05 1.99 1.91 1.78 1.62 1.49 Source : Bank of Thailand Remarks : 1/ The series is average 2/ Weighted average interest rates of new issues in each month. 3/ Almost all of the state enterprise bonds have initial maturities of 3-10 years. - Investment in debenture Investment in debenture is another alternatives for cash management. The investors usually invest in debentures that issued by large corporation with favorable credit rating, which can determine the risk of investment. The return from investment in debenture as of the month end in the last 12 months are as of the following: Highest Lowest Name of TTM Quotation Name of TTM Quotation Security (years) Yield (%) Security (years) Yield (%) 31 March 2003 BAY#1 2.62 7.02 BCP#15 0.21 1.69 28 February 2003 TMB#4 2.72 10.27 BCP#15 0.29 1.53 31 January 2003 TMB#4 2.80 10.09 BCP#15 0.37 1.66 27 December 2002BAY#1 2.88 10.12 BCP#15 0.46 1.82 29 November 2002BAY#1 2.95 9.99 BCP#15 0.54 1.85 31 October 2002 TMB#1 3.05 10.34 BCP#15 0.62 2.06 30 September 2002 TMB#4 3.13 10.24 BCP#15 0.70 2.11 31 August 2002 QH#2 1.07 13.12 BCP#15 0.79 2.11 31 July 2002 QH#2 1.15 12.42 BCP#15 0.87 2.28 28 June 2002 QH#2 1.24 15.08 BCP#15 0.96 2.34 31 May 2002 UCOM#1 1.54 14.09 IFCT045 A 1.93 2.62 30 April 2002 UCOM#1 1.63 13.93 BCP#15 1.12 2.46 *TTM = Time To Maturity Source : The Thai Bond Dealing Center Even the investment in debenture of some corporation will confer the return of higher than 10 percent, but the corporate risk is relatively high. The credit rating of the corporation by Thai Rating and Information Services (TRIS) is considered at BBB- which is the lowest investment grade for 2 companies, TMB and UCOM. However, there are the other two companies that does not have any rating. Credit Rating Bank of Ayudhya Plc. ( BAY ) Non Rating Thai Military Bank Plc. ( TMB ) BBB - Quality House Plc. ( QH ) Non Rating United Communication Plc. ( UCOM ) BBB - Moreover, the investment in other companies' securities that The Company does not have information concerning policy, corporate risk, or any major changes which will affect to the ability to repay their debts in the future is one of the most critical issue to be considered in determining The Company's investment as well. Therefore, the loan lend to Sunflower at the interest rate of 10 percent per annum is the reasonable interest rate and benefit to The Company and its shareholders. Reasonableness of the amount of loan The Company's balance sheet as of 31st December 2000-2002 was indicated its cash and cash equivalent after loan to Sunflower in the amount of Baht 60.56, 47.57, and 57.89 million respectively. The outstanding loan to Sunflower at the year-end of 2001 was Baht 23 million while the outstanding loan in the year 2002 had increased by Baht 34 million to Baht 57 million. Conservatively, the possess of quick current assets such as cash, cash equivalent, short-term investment, short-term investment in securities, account receivables, and notes receivables should be equal or greater than short-term obligation or current liabilities. In this case, The Company's quick current assets as of 31st December 2002 are Baht 147.74 million, while the current liabilities are Baht 110.69 million, which are 33 percent greater than its current liabilities. That's mean in any circumstances, The Company is capable to settle all of the short-term liabilities. For any further operation, if The Company can maintain this ratio to be greater than 1X at any time, there should not be any liquidity problem. However, the quality of account receivables and notes receivables has to take into account for the consideration. Notwithstanding, the consideration is performed under the assumption that the industry, related economics concerns, and The Company's operation policy while giving the opinion only. Conclusion of Independent Financial Advisor's Opinion In our opinion, and for the reasons given above, we are of the opinion that the Connected Transaction is fair and reasonable from the point of view of The Company and its minority shareholders. Since the connected transaction is one of the most efficient alternatives to manage cash of The Company under the circumstance of low short-term interest rate in the past two years. Moreover, the loan does not cause any liquidity problem to The Company even if the loan to Sunflower is considered as non-current assets. Best Regards, Integrated Business Consultants Co., Ltd. (Mr. Arak Ratboriharn) (Ms. Pimfun Ainamtip) Managing Director Financial Advisors who have been given an approval by the Office of the SEC