The Opinion of the Independent Financial Advisor Regarding to the Acquisition of Assets Thai Plaspac Plc. Translation. Proposed to.

Transcription

1 Translation The Opinion of the Independent Financial Advisor on the Acquisition of Assets of Thai Plaspac Public Company Limited Proposed to Shareholders of Thai Plaspac Public Company Limited Prepared by Discover Management Company Limited Page 1/104

2 This English Translation has been prepared solely for the convenience of the foreign shareholders of Dental Corporation Public Company Limited and should not be relied upon as the definitive and official opinion of the Independent Financial Advisor. The Thai language version of the Opinion of the Independent Financial Advisor is the definitive and official document and shall prevail in all respects in the event of any inconsistency with the English translation. No. DM129/2017 The Opinion of the Independent Financial Advisor on the Acquisition of Assets of Thai Plaspac Public Company Limited December 7, 2017 Subject: The Opinion of the Independent Financial Advisor on the Acquisition of Assets of Thai Plaspac Public Company Limited To: Audit Committee, and Shareholders of Thai Plaspac Public Company Limited Attachment: 1) Summary of Thai Plaspac Public Company Limited 2) Summary of Appraisal Report from Rakesh Narula & Co Reference: 1) Resolution of Board of Directors meeting of Thai Plaspac Public Company Limited No. 6/2017 on November 14, ) Information Memorandum on Share Acquisition of Thai Plaspac Public Company Limited on November 14, ) Audited financial statement of Thai Plaspac Public Company Limited for 12 months ended December 31, and reviewed financial statement of Thai Plaspac Public Company Limited for 6 months ended June 30, ) Audited financial statement of Sunrise Containers Ltd. for 12 months ended March 31, and management financial statement for 6 months ended September 30, ) Sunrise Container Ltd. s Annual Report, ) Form on Annual Information of Thai Plaspac Public Company (Form 56-1) 7) Annual report 2016 (Form 56-2) of Thai Plaspac Public Company 8) Appraisal report, prepared by Rakesh Narula & Co (November 28, 2017) 9) Implementation Agreement between Thai Plaspac Public Company Limited, the Sellers and Sunrise Container Ltd. (signed on November 15, 2017) 10) Shareholders Agreement between Thai Plaspac Public Company Limited, Sunrise Containers Ltd. and KLM Group (signed on November 15, 2017) 11) Draft Term Sheet of loan from a financial institution in Thailand Discover Management Company Limited Page 2/104

3 12) Draft Term Sheet of non-convertible debenture from a financial institution abroad 13) Vendor Due Diligence Report of Sunrise Containers Ltd. (October 13, 2017) prepared by Ernst & Young LLP India 14) Environment Vendor Due Diligence Report of Sunrise Containers Ltd. (August 25, 2017) prepared by Ramboll India Private Limited. 15) Technical Vendor Due Diligence Report of Sunrise Containers Ltd. (August 25, 2017) prepared by Ramboll India Private Limited. 16) Related Documents and Interviews of Thai Plaspac Public Company Limited Personal and Independent Appraiser Disclaimers: 1) In preparing this report, Discover Management Company Limited ( Discover or Independent Financial Advisor or IFA ) has relied on information provided by the management of Thai Plaspac Public Company, the information of the Company disclosed to the public on the websites of the Securities and Exchange Commission ( the Stock Exchange of Thailand ( website of the Independent Appraiser ( information from Bloomberg, Thomson Reuter, Indian Retail Reports, Analysis by Tata Strategic, Federation of Indian Chambers of Commerce and Industry and doing Due Diligence 2) IFA shall not be responsible for the profits or the losses and any impacts resulting from this transaction 3) IFA conducted the study with knowledge, skills, and reasonable professional care. 4) IFA considered and provided opinion based on prevailing market conditions. If market conditions change in the future, the results of the study in this report may be affected. The Board of Directors Meeting No. 6/2017 of Thai Plaspac Public Company Limited (the Company ) held on November 14, 2017 resolved to approve the investment by the Company or TPAC Packaging India Private Limited (the Hold Co. ) (the Company s subsidiary to be set up in India in which the Company will directly hold 100% of its total issued shares whereas the Company already set up the Hold Co. on December 7, 2017) in Sunrise Containers Limited ( Sunrise ), an Indian non-listed public limited company engaging in the PET (Polyethylene Terephthalate) and PP (Polypropylene) preforms and containers, as well as LED casings, manufacturing business in India (The business to be acquired will not include the LED casings business, which Sunrise must dispose pursuant to the conditions precedent which the assets of LED Casing business is less than 1% of the Maximum Acquisition Costs), by either: a) acquisition of assets and liabilities of Sunrise through amalgamation of the Hold Co. and Sunrise under the Indian laws, whereby the Hold Co. will be the surviving entity (the Merged Co. ) and for such amalgamation, consideration will be paid to the shareholders of Sunrise in the following manner: (i) the Hold Co. will pay the Consideration in cash (According to the IA, the Hold Co. shall pay a consideration equivalent to 80% of (i) the aggregate enterprise valuation of Sunrise, (ii) minus its net debt, (iii) plus the calculated excess working capital or minus the calculated working capital shortfall (Items (i) to (iii) are collectively referred to as the Initial Value.), (iv) plus interest at the rate of 11% per annum calculated on the Initial Value for the period commencing from February 1, 2018 or on such other date mutually agreed Discover Management Company Limited Page 3/104

4 by the parties (the Cut-off Date ) to the completion date, (v) minus the amount of dividend or distribution made by Sunrise or value of any disposal made by Sunrise in breach of its standstill covenants under the IA or any costs or expenses incurred by Sunrise from the Cut-off Date for complying with due diligence conditions (the Consideration ), to the Sellers on the completion date of the Amalgamation or Share Acquisition. The Maximum Acquisition Costs will not be more than INR 4,692 million (or equivalent to approximately THB 2,383 million), divided into 80% of Sunrise s total enterprise value of INR 4,248 million (or equivalent to approximately THB 2,158 million); the total estimated working capital adjustments of INR 80 million (or equivalent to approximately THB 41 million); the total estimated interest expenses of INR 200 million (or equivalent to approximately THB 102 million); and the related transactional expenses (such as stamp duty and governmental fee) of INR 164 million (or equivalent to approximately THB 83 million.) to the shareholders of Sunrise holding 80% shares in Sunrise (the Sellers ) (as detailed in item 2 below) in lieu of their pro-rata 80% shares in Sunrise, and (ii) the Merged Co. will issue 20% new shares to K. L. Mundhra ( KLM )(founder of Sunrise), Hitesh Kumar Mundhra (KLM s son), Chanda Devi Mundhra (KLM s wife) และ S. K. Mundhra (KLM s brother)(collectively, the KLM Group ), the continuing shareholder, in lieu of his 20% shares in Sunrise (as detailed in item 3.1), and the Company will hold 80% shares in the Merged Co. after such share issuance to the KLM Group (the Amalgamation ) (as detailed in item 1.1.1); b) in case the Amalgamation is not sanctioned by the competent Indian authorities by June 23, 2018, direct acquisition of 80% shares in Sunrise from the Sellers by the Hold Co. whereas the KLM Group will continue to hold his 20% shares in Sunrise, followed by amalgamation of Sunrise with the Hold Co. to form the Merged Co. under the same scheme of amalgamation as set out in (a) above or under a new scheme of amalgamation as determined suitably at such time for the best interest of the Company and its shareholders, whereby the Company will hold 80% shares in the Merged Co. and the KLM Group will hold 20% shares in the Merged Co., (the Share Acquisition )(as detailed in item 1.1.2); ((a) and (b) are collectively called the Transaction ). The total consideration and expenses for the Transaction payable in either case will not exceed INR 4,692 million, or equivalent to approximately THB 2,383 million (the Maximum Acquisition Costs ), divided into 80% of Sunrise s total enterprise value of INR 4,248 million (or equivalent to approximately THB 2,158 million); the total estimated working capital adjustments of INR 80 million (or equivalent to approximately THB 41 million); the total estimated interest expenses of INR 200 million (or equivalent to approximately THB 102 million); and the related transactional expenses (such as stamp duty and governmental fee) of INR 164 million (or equivalent to approximately THB 83 million). The calculation in proportion of 80% of Sunrise can be summarized as follows: Maximum Acquisition Costs % Proportion (Million INR) % Proportion (Million THB)1/ 100% 80% 100% 80% Total enterprise value 5, , , , Total estimated working capital adjustments 3/ Discover Management Company Limited Page 4/104

5 % Proportion (Million INR) % Proportion (Million THB)1/ 100% 80% 100% 80% total estimated interest expenses 3/ Related transactional expenses 2/ Maximum Acquisition Costs 5, , , , Remark: 1/ BOT exchange rate [IND: THB = 1: ] 2/ The related transactional expenses will be the same for calculating 100% and 80% 3/ Estimated by the Company However, the total value of the Consideration that the Company will pay to the Sellers to hold 80% of Merged Co. must be calculated by the formula for the Consideration calculation in the Implementation Agreement (Detail in item 1.6) which can be calculated at the Completion-Date. If the Consideration is calculated according to the Implementation Agreement and it exceed INR 4, million or equal to approximately 2, million, the Company cannot pay the Consideration due to it exceed the Maximum Acquisition Costs that shareholders will approve in the Extraordinary General Meeting of Shareholders No. 1/2018 for INR 4, million or equal to approximately 2, million which is an appropriated price in IFA opinion, and cause the Company to call the approval from shareholders again. The Company will further inform the Stock Exchange of Thailand (the SET ) whether the Transaction will be in the form of the Amalgamation or the Share Acquisition. The PET and PP preforms and containers manufacturing business to be acquired as a result of the Transaction is part of the Company s strategy to expand its business in South Asia and Southeast Asia. The completion of the Transaction is expected to take place within June 30, 2018 after all of the conditions precedent under the IA are fully satisfied or otherwise waived by the relevant parties. However, the Transaction constitutes an acquisition of assets pursuant to the Notification of the Capital Market Supervisory Board No. TorChor. 20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposal of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E (2004) (as amended) (the Acquisition and Disposition Notifications ). The transaction size of the Transaction calculated based on the total value of consideration criterion, which gives the highest transaction value, is equivalent to %. The transaction size calculation is based on the Company s latest reviewed financial statements for the 9-month period ended September 30, The Transaction, therefore, is deemed as a Class 4 Transaction, i.e. a transaction with a transaction size of more than 100%, constituting a backdoor listing transaction; however, the Transaction qualifies for the backdoor listing exemptions under the Acquisition and Disposition Notifications due to 1) the business to be acquired is similar to and complements the business of the Company 2) the Company does not have a policy to materially change its core business 3) the Company s group, as a result of the acquisition of the business, will remain qualified for listing on the Market for Alternative Investment 4) there will be no significant change to the Board of Directors of the Company, the control over the Company, or the shareholders having control over the Company. The details are as follows: 1. The business to be acquired is similar to and complements the business of the Company. Both the Company and Sunrise are in the same line of business, which is the manufacturing of rigid plastic packaging/ containers. In addition, both companies share the following similarities in terms of business operation: Discover Management Company Limited Page 5/104

6 1.1 Raw materials: Both companies use plastic resins, such as PET and PP, and color master batches/colorants as the main raw materials. 1.2 Production process: Both companies have the same manufacturing process, which includes injection, blow molding, and injection stretch blow molding (ISBM), and also use the same type of machines. 1.3 Products: Both companies produce rigid plastic packaging products. 1.4 Customers: Most both companies customers are in the food and beverage, pharmaceutical, or fast-moving consumer goods (FMCG) industries. Therefore, the business to be acquired from entering into the Transaction is in the same line of business as the Company. 2. The Company does not have a policy to materially change its core business. The Company has an expertise in manufacturing rigid plastic packaging/ containers and it does not have a policy to materially change its core business. The main purpose of the Transaction is to fulfill the Company s expansion strategy to provide strong profits to its shareholders where the Company will still maintain its business of manufacturing rigid plastic packaging/containers after entering into the Transaction. 3. The Company s group, as a result of the acquisition of the business, will remain qualified for listing on the Market for Alternative Investment. The SET and the Market for Alternative Investment require listed companies to maintain their listing status throughout the period of their listing as detailed as follows: Criteria The directors, executives, and controlling persons of a listed company must ( a) possess qualifications and not possess any prohibited characteristics or any characteristics indicating a lack of appropriateness to be relied on to manage a company whose shares are publicly held in accordance with the relevant laws on securities and exchange or the Securities and Exchange Commission s regulations ( b) not be a person who violates any rules, regulations, notifications, orders, board resolutions, listing agreements with the SET, as well as the required SET circulars, where such violation may have a material adverse effect on the rights, benefits, or decision- making of any shareholders, investors, or change in securities prices. One third of the members of the board of directors of a listed company must be independent directors and the listed company must have at least 3 independent directors and 3 audit committee members in total. The Company (after the Transaction) The directors, executives, and controlling persons of the Company are qualified under both criteria. As of November 14, 2017, the Company s Board of Directors comprised 8 members, 3 of whom were both independent directors and members of the Audit Committee. Discover Management Company Limited Page 6/104

7 Criteria The auditor(s) of a listed company must be approved by the SEC. The Company (after the Transaction) The Company s auditors from EY Office Company Limited are approved by the SEC. Sunrise s current auditor is Jain Vijay & Company. The Company will further arrange for SR Batliboi & Co., a member firm of Ernst & Young in India, to be appointed as the auditor of the Merged Co. or Sunrise in the future. The internal control system of a listed company must be in line with the relevant notifications of the Capital Market Supervisory Board. A listed company and its subsidiaries must not have any conflicts of interests (including having conflicts of interests with a director, executive, or majority shareholder) in accordance with the relevant notifications of the Capital Market Supervisory Board A listed company must maintain its free float qualification so that there are no less than 150 retail shareholders collectively holding shares of not less than 15% of the company s paid-up capital. A listed company must have a provident fund in accordance with the laws on provident funds. The Company s internal control system complies with the relevant notifications of the Capital Market Supervisory Board. The Company has reviewed the internal control system of Sunrise from its due diligence exercise and has found no material issue. The Company will undertake to ensure that the internal control system of the Merged Co. or Sunrise complies with the relevant notifications of the Capital Market Supervisory Board or any other relevant notifications after completion of the Transaction. There will be no conflicts of interest. Even though Indorama Ventures Public Company Limited ( IVL ), a listed company whose majority shareholder is a connected person to a majority shareholder of the Company, also produces plastic containers, IVL s products are different from the Company s products. IVL focuses on producing plastic bottles, which are different from the Company s products, and IVL s revenue from producing plastic containers is not substantial. However, as IVL is one of the Company s raw material suppliers, there will be continuing relatedparty transactions between the Company and IVL where such related-party transactions are considered and reviewed by the Audit Committee to see if they contribute benefits to the Company and if they are entered into on an arm-length basis and in line with the SEC s policy, and are eventually reported to the Board of Directors. As of September 29, 2017, the Company had 859 minority shareholders collectively holding shares of approximately 27.1% of the Company s paid-up capital The Company has set up a provident fund for its employees in accordance with the Provident Fund Act B.E (1987) (as amended). Discover Management Company Limited Page 7/104

8 After considering qualifications and suitability of the group company post-acquisition, the Company views that its group of companies remains qualified and suitable for listing on the Market for Alternative Investment. 4. There will be no significant change to the Board of Directors of the Company, the control over the Company, or the shareholders having control over the Company. Following completion of the Transaction, the Board of Directors, apart from appointment of new directors to replace those who retire by rotation, and the majority shareholders of the Company will remain the same. Nevertheless, the Company is required to disclose information on the Transaction to the SET; obtain approval from the shareholders meeting of the Company with votes of not less than three- fourths of the total votes of the shareholders attending the meeting and having the right to vote, excluding shareholders having interests; and appoint an independent financial advisor to provide an opinion on the Transaction and submit such opinion to the SEC, the SET, and the shareholders of the Company for their consideration. In this regard, the Company has appointed Discover Management Co., Ltd. as the independent financial advisor ( IFA or Discover ) to render an opinion on the reasonableness of price and fairness of the entering into the transaction of the acquisition of asset for proposing to the Extraordinary General Meeting of Shareholders No. 1/2018. The independent financial advisor has given opinion based on assumption of the information from interview and doing due diligence, information received from the Company, which are the correct and true information. The independent financial advisor has considered the information carefully and reasonably on the standards of the profession ought to be done. The summary data and study results are as follows; Remark 1. Both Hold Co., and Merged Co. are TPAC-India but in a different status. Hold Co. is TPAC-India before amalgamation and Merged Co. is TPAC-India after amalgamation. 2. The exchange rate between THB and INR in this report is the exchange rate announced by the Bank of Thailand as of November 13, 2017 which 1 day before The Board of Directors Meeting No. 6/2017 which [IND: THB = 1: ] and [USD: THB = 1: ] Discover Management Company Limited Page 8/104

9 Meaning Abbreviation Abbreviation Thai Plaspac Public Company Limited : The Company or TPAC Sunrise Containers Ltd. : Sunrise or Target Company Discover Management Company Limited : Independent Financial Advisor or Discover or IFA Rakesh Narula & Co : Independent Appraiser or RNC Securities Exchange Commission : SEC Stock Exchange of Thailand : SET Market for Alternative Investment : mai National Stock Exchange of India : NSE Extraordinary General Meeting : EGM Memorandum of Understanding : MOU Implementation Agreement : Implementation Agreement or IA Shareholders Agreement : Shareholders Agreement or SHA Due Diligence Report of Sunrise Containers Ltd. (13 October 2017), prepared by : Vendor Due Diligence Report Ernst & Yong LLP India Entering into the transaction of the acquisition of asset : The Transaction TPAC Packaging India Private Limited : Hold Co. or Acquiring Company TPAC Packaging India Private Limited, subsidiary company after post- amalgamation : Merged Co. TPAC Packaging India Private Limited : TPAC-India Federation of Indian Chambers of Commerce and Industry : FICCI Fast-moving Consumer Goods : FMCG The exchange rate announced by the Bank of Thailand as of November 13, 2017 which : BOT Exchange Rate 1 day before The Board of Directors Meeting No. 6/2017IND: THB = 1: USD: THB = 1: Amalgamation : Amalgamation The National Company Law Tribunal, Mumbai Bench having jurisdiction in relation to : NCLT both the Target Company and the Acquiring Company; Light-Emitting Diode Casing Business : LED Casing Business E Y Office Company Limited : EY Polyethylene Terephthalate : PET Polypropylene : PE Non-Convertible Debenture : NCD Hindu undivided family, which is a taxable entity under the laws of India. : HUF Foreign Portfolio Investors : FPI K. L. Mundhra (founder of Sunrise) : KLM KLM, Hitesh Kumar Mundhra (KLM s son), Chanda Devi Mundhra (KLM s wife) and S. : KLM Group K. Mundhra (KLM s wife) February 1, 2018 is the day that he Sellers will not be entitled to receive any return or : Cut-Off Date profit of Sunrise as Sunrise s shareholders from the Cut-off Date. However, the Hold Co. will pay the Consideration (including the Initial Value) to the Sellers on the Discover Management Company Limited Page 9/104

10 Meaning completion date. As such, it was agreed that the Hold Co. must pay interest at the rate of 11% per annum calculated on the Initial Value from the Cut-off Date to the completion date as opportunity costs to the Sellers to compensate the Sellers who will not be paid the Initial Value on the Cut-Off Date. Such interest payment is a normal practice and is usually found in business sale and purchase transactions. The completion date of the Transaction which is June 30, 2018 and the last day. However, the Company can complete the Transaction before June 30, 2018 Target Working Capital is equal to INR 875 million which is used for calculating Working Capital Short Fall or Surplus. If Working Capital at February 1, 2018 (Cut-Off Date) is more than INR 875 million, it is considered as a Surplus which will be added to the Consideration. On the other hand, if Working Capital is less than INR 875 million, it is considered as a Short Fall which will minus from the Consideration in formula for Consideration calculation (item 1.6) The Consideration that Hold Co. will pay to Seller, excluding 20% shares of Hold Co., equivalent 80% of (i) the aggregate enterprise valuation of Sunrise, (ii) minus its net debt, (iii) plus the calculated excess working capital or minus the calculated working capital shortfall (Items (i) to (iii) are collectively referred to as the Initial Value.), (iv) plus interest at the rate of 11% per annum calculated on the Initial Value for the period commencing from February 1, 2018 or on such other date mutually agreed by the parties (the Cut-off Date ) to the completion date, (v) minus the amount of dividend or distribution made by Sunrise or value of any disposal made by Sunrise in breach of its standstill covenants under the IA or any costs or expenses incurred by Sunrise from the Cut-off Date for complying with due diligence conditions Seller 1/ : 1. Shreekishan Mundhra HUF (holding 0.07) 2/ 2. Shreekishan Mundhra (holding 10.62), KLM s brother 3. Dinesh Kumar Mundhra (holding 1.31), Shreekishan Mundhra s son 4. D. K. Mundhra (holding 10.14), KLM s brother 5. Bhagwati Devi Mundhra (holding 0.28), D.K. Mundhra s wife 6. Umesh Kumar Mundhra (holding 1.31), D.K. Mundhra s son 7. D. K. Mundhra HUF (holding 0.07) 3/ 8. Rajesh Kumar Mundhra (holding 0.18), D.K. Mundhra s son 9. S. K. Mundhra (holding 12.00) 4/ KLM s brother 10. Hitesh Plastics Private Limited (holding 3.33) 5/ 11. D. P. Mundhra (holding 12.00), KLM s brother 12. KLM (holding 31.36) 6/, founder of Sunrise 13. K. L. Mundra HUF (holding 7.38) 5/ Remark about Ultimate Shareholders: 1/ There are 13 Sellers in the Implementation Agreement which collectively hold 90.05% shares, but will sell their collective 80.00% shares only (Chanda Devi Mundhra Abbreviation : Completion-Date : Target Working Capital : Consideration : Current shareholders of Sunrise or Sellers Discover Management Company Limited Page 10/104

11 Meaning which is KLM s wife and Hitesh Kumar Mundhra which is KLM s son, are the non-selling shareholders, collectively hold 9.94% shares, and will continue to hold such shares.) 2/ The members of Shreekishan Mundhra HUF consist of Sushila Devi Mundhra, Dinesh Mundhra, and Shreekishan Mundhra where Shreekishan Mundhra is the manager. Abbreviation 3/ The members of D. K. Mundhra HUF consist of Rajesh D. Mundhra, Umesh D. Mundhra, Bhagwati Devi Mundhra, and Rekha Rajesh Mundhra where D. K. Mundhra is the manager. 4/ S.K. Mundhra and KLM will sell his 11.30% shares in Sunrise and (a) maintain his remaining 20% shares in Sunrise and the KLM Group (in case of the Share Acquisition) or (b) receive 20% new shares in the Merged Co. (in case of the Amalgamation). 5/ Hitesh Plastics Private Limited is an Indian private limited company and its ultimate shareholders are KLM with 75.27% shareholding, Chanda Devi Mundhra with % shareholding, and Hitesh Kumar Mundhra with 12.82% shareholding. 6/ The members of K. L. Mundhra HUF consist of KLM, Chanda Devi Mundhra, and Hitesh Kumar Mundhra where KLM is the manager. The Company will hold 80% of Merged Co. or Sunrise (as the case may be), the Maximum Acquisition Costs, divided into 80% of Sunrise s total enterprise value of INR 4,248 million (or equivalent to approximately THB 2,158 million); the total estimated working capital adjustments of INR 80 million (or equivalent to approximately THB 41 million); the total estimated interest expenses of INR 200 million (or equivalent to approximately THB 102 million); and the related transactional expenses (such as stamp duty and governmental fee) of INR 164 million (or equivalent to approximately THB 83 million). : the Maximum Acquisition Costs Discover Management Company Limited Page 11/104

12 Content 1. Characteristic and Details of the Transaction of the Acquisition of the Asset The Reason and Characteristic of Entering into the Transaction TPAC-India s Structure after entering into the Transaction Transaction Date Counterparties related to the Acquisition of Assets Category and Size of the Transaction The Total Value of the Consideration and Criteria of Determining the Total Value of Consideration Summaries of Important Agreement Conditions of Entering into the Transaction Expected Benefits for the Company Sources of Funding Details of the Acquired Assets (Sunrise Containers Ltd.) Details of Acquired Assets Characteristic of the Transaction Information of SUNRISE CONTAINERS LIMITED Industry Overview Relationship between the Company and Sunrise Relationship between Hitesh Plastics Private Limited and Sunrise Sunrise s contingent liabilities as of March 31, 2017 are as summarized below: Details and Important Information of TPAC The appropriateness and benefits of the Transaction Objective of entering to the Transaction Advantages, Disadvantages, and the Risks of entering to the Transaction Advantages and Disadvantages of not Entering to the Transaction Analyzing Ability to Manage Relevant Factors after Entering into the Transaction Analyzing ability to manage liabilities that the Company use for entering into the Transaction Analyzing Return on Investment The Appropriateness of the Transaction s Price Book Value Approach Adjusted Book Value Approach Market Price Approach Price to Book Value Ratio Approach or P/BV Ratio Price-to-Earnings Ratio Approach Discounted Cash Flow Approach Summary of the appropriateness of the Transaction The Summary of the Opinions of the Independent Financial Advisor 103 Discover Management Company Limited Page 12/104

13 Executive Summary According to the Board of Directors Meeting No. 6/2017 of the Company held on November 14, 2017 resolved to approve the investment by the Company or Hold Co. (the Company s subsidiary to be set up in India in which the Company will directly hold 100% of its total issued shares whereas the Company already set up the Hold Co. on December 7, 2017) Sunrise, an Indian non-listed public limited company engaging in preforms and containers manufacturing from PET (Polyethylene Terephthalate) and PP (Polypropylene), as well as LED Casing ( The business to be acquired will not include the LED casings business, which Sunrise must dispose pursuant to the conditions precedent) By either Amalgamation of assets and liabilities or Share Acquisition 80% of total Sunrise total issued shares. The total consideration and expenses for the Transaction payable in either case will not exceed INR 4,692 million, or equivalent to approximately THB 2,838 million (the Maximum Acquisition Costs ), divided into 80% of Sunrise s total enterprise value of INR 4,248 million (or equivalent to approximately THB 2,158 million); the total estimated working capital adjustments of INR 80 million (or equivalent to approximately THB 41 million); the total estimated interest expenses of INR 200 million (or equivalent to approximately THB 102 million); and the related transactional expenses (such as stamp duty and governmental fee) of INR 164 million (or equivalent to approximately THB 83 million). The calculation in proportion of 80% of Sunrise can be summarized as follows: Maximum Acquisition Costs % Proportion (Million INR) % Proportion (Million THB)1/ 100% 80% 100% 80% Total enterprise value 5, , , , Total estimated working capital adjustments 3/ total estimated interest expenses 3/ Related transactional expenses 2/ Maximum Acquisition Costs 5, , , , Remark: 1/ BOT exchange rate [IND: THB = 1: ] 2/ The related transactional expenses will be the same for calculating 100% and 80%, which come from the forecast of the Company, not from the agreement. 3/ Estimated by the Company The completion of the Transaction is expected to take place within June 30, 2018 after all of the conditions precedent under the IA (as defined in item 1) are fully satisfied or otherwise waived by the relevant parties. The Transaction constitutes an acquisition of assets pursuant to the Notification of the Capital Market Supervisory Board No. TorChor. 20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposal of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E (2004) (as amended). The transaction size of the Transaction calculated based on the total value of consideration criterion, which gives the highest transaction value, is equivalent to %. The Transaction, therefore, is deemed as a Class 4 Transaction, i.e. a transaction with a transaction size of more than 100%, constituting a backdoor listing transaction; however, the Transaction qualifies for the backdoor listing exemptions under the Acquisition and Discover Management Company Limited Page 13/104

14 Disposition Notifications for the following reasons: 1) the business to be acquired is similar to and complements the business of the Company, 2) the Company does not have a policy to materially change its core business, 3) the Company s group, as a result of the acquisition of the business, will remain qualified for listing on the Market for Alternative Investment and 4) there will be no significant change to the Board of Directors of the Company, the control over the Company, or the shareholders having control over the Company. Discover as the Independent Financial Advisor for the Company s shareholders has studied the detail and analyzed the appropriateness of the Transaction including but not limited to the fairness of the price and conditions of the Amalgamation to acquire 80% of Sunrise paid-up shares from the Sellers and has opinion that the Transaction is appropriate in both price and conditions as the details are shown below. The appropriateness of the Transactions IFA has considered both business conditions and the appropriateness of the entering into the Transaction which are summarized in the related agreements (details in section 1.7). According to all aspects including business conditions, pros/cons, risks agreement and/or conditions, they are logical and beneficial to the Company therefore the IFA has concluded the reasons of the appropriateness below: 1) The Company as the listed company has duty to generate long- term returns to its shareholders therefore expanding its business to India market, one of the highest growth in the world, is a part of the Company s overall strategy for South Asia and South- East Asia business expansion. Entering into the Transaction, therefore, align with the Company s business strategy and will provide the long- term return to its shareholders. 2) Entering into the Transaction aligns with the Company s current business. Moreover, Sunrise has business potential, good performance, big customer base and good management. Sunrise is also the third largest for plastic packaging in India, and India market is the 6 th largest in the world and one of the highest growth (Source: International Monetary Fund World Economic Outlook (April ), therefore the Company can gain immediate business opportunity from the growth of Indian market. 3) In IFA opinion, the Amalgamation structure is appropriated, therefore the Company can benefit from tax benefits 4) Conditions of entering into the Transaction are appropriate. SH is clearly drafted to motivate the Sellers to support Merged Co. to grow with in the first 3 years as it is the most important period of Amalgamation, the Company needs the support for knowledge transfer, internal management, and market expansion. Moreover, SH also has reasonable non- competition period and suitable board of directors that is most suitable for company management. According to the business conditions and the appropriateness of the Transaction, IFA has opinion that the Transaction is appropriated and could benefit to the Company in the long term. Due to the plastics packaging industry in Thailand is low growth (negative growth rate of (0.62) % in 2015) which the Company need to find a new market that Discover Management Company Limited Page 14/104

15 has potential growth (according to the information from FICCI, plastics packaging in India is expected to grow 18% p.a. until 2021). However, shareholder should consider disadvantages and risk of entering into the Transaction as well. Disadvantages of entering to the Transaction 1) Increase interest bearing debts and interest expenses: The money for acquiring Sunrise is estimated to be THB 2, million. The Company is expecting to use the loan of THB 2,000 million from local financial institution and NON-Convertible Debenture of INR 2,600 million (estimated to be THB 1, million). As the result, the Company is estimated to have additional interest expense of THB million per year. TPAC is estimated to have additional interest expenses of THB 100 million per year ( assuming 5% p. a. interest) and additional of THB of million per year (assuming 9% p.a. interest) for Merged Co. Company EBITDA as of latest audited financial statement (THB million) Interest before the Transaction (THB million) Pro-forma interest after the Transaction 3/ (THB million) TPAC 1/ Hold Co 2/ Note: 1/ Audited financial statement 2016 (January 2016 December 2016) 2/ Audited financial statement 2017 (April 2016 March 2017) 3/ Assume 5% p.a. for local financial institution and 9% p.a. for non-convertible debenture. However, the interest payment is subject to change depending on the actual money draw down which company will use loan from financial institution in Thailand THB 2,000 million and Non-Convertible Debenture THB million. The IFA calculates interest as a whole year instead of calculate interest based on actual date on the draft term sheet so that investor can see the interest as the overall. (loan is estimated by the IFA. The actual loan amount depends on the appropriateness and debt structure plan in the future.) IFA has opinion that both companies EBITDAs are sufficient for additional interest expense, but it is a risk that both companies can repay the principles as the result, both company may have to increase their registered capital or refinance their debts in the future. However, according to the draft term sheet from financial institution in Thailand, IFA views that there is high possibility that company must comply with the draft of draft term sheet so, the company must raise the capital by issuing shares which will help the company can repay principle as according to the payment term. 2) The Company will invest more than its total assets: The Company is investing % of its total assets for the Transaction which is INR 4, million or equal to approximately THB 2, million. As the result, the Company s interest-bearing debt to equity ratio (only Company financial statement as of 30 September 2017) will increase from 0 to 1.88 times and 1.21 times for consolidated financial statement as of 30 September 2017 ( IFA calculates consolidated financial statement based on TPAC review financial statement as of 30 September 2017 and Sunrise management financial statement as of 30 September 2017, IFA provides Discover Management Company Limited Page 15/104

16 consolidated financial statement just for overview purposes and it may be different from audited financial statement) As of 30 September, 2017 Before the Transaction After the Transaction Pro-forma after the TPAC Sunrise TPAC Sunrise Transaction Total Interest-Bearing Debt (THB million) , , Shareholder Equities (THB million) 1, , , Total Interest-Bearing Debt to Equity Ratio (times) Notes: 1/ BOT Exchange rate [IND: THB = 1: ] 2/ Sunrise management financial statement as of 30 September 2017 After the Transaction, interest-bearing debt ratio will increase substantially to the maximum limit of draft term sheets. The Company therefore has potential to breach agreements for both local financial institution and bond holders especially Merged Co., which is at high potential growth market ( expected growth of 18% p.a.). However, the Company s board of directors are aware of this problem and on the process of finding the best solution. According to the draft term sheet from financial institution in Thailand, IFA views that there is high possibility that company must comply with the draft term sheet so, the company must raise the capital by issuing shares which will help the company can repay principle as according to the payment term. 3) Ability to pay dividend is reduced: Entering to the Transaction, the Company is expecting additional interest payment of THB million a year ( THB 100 million for TPAC and THB million for Merged Co. based on IFA estimate of 5% p. a. for local financial institution and 9% p. a. for non- convertible bond of international financial institution. According to the Company s last 4 quarters net profit as of 30 September 2017 and Sunrise based on 31 March 2017, the profits are THB million and THB million, respectively (excluding LED Casing business). Entering to the Transaction will have affect to the Company ability to pay the dividend, however the Company s board of directors are aware of the problem and on the process of finding the best solution. The IFA views that entering in to the Transaction is a significant change of the company from being a company that has high dividend payout turn to be growth company. Such change reflects the changing of business strategy and may have a significant impact on future dividend policy. However, for growth company, there will be no dividends as the company considers its investment as high profitable investment such as technology companies in foreign country. Theoretically, the shareholders will benefit from the increased share price of the company instead of dividend. 4) The Company cannot fully control Merged Co. even though the Company hold 80% of Merged Co. According to Shareholders Agreement, shareholders meeting requires directors from both parties, and the resolution of fundamental issues requires the approval from the directors from both parties, so the company cannot fully manage Merge Co. even the company hold 80% of Merge Co. IFA views that this agreement obviously show that company treat KLM group as a partner and also want KLM to maintain share proportion Discover Management Company Limited Page 16/104

17 which is respecting each other, because the Transaction is both willing. Normally, acquiring company want to hear the opinion of former directors before make such decision. However, there are more representative directors of the Company, which the company has power to control Merged Co. because the quorum requires at least 1 directors from the Company. For the issues that requires the approval from both parties, the independent financial advisor views that company requires to have KLM as its business partner and would like KLM to maintain the share proportion. For fundamental issue, the company is required threefourths of the total votes for the approval in order to protect the minority shareholders (same principle is also applied in India). As the fundamental minority shareholder (KLM group) in Merge Co., Ltd. holds 20% of shares, company has deducted the minimum shareholders rights according to the regulation from 25% down to 20% and the said rights shall be terminated if KLM group holds less than 10% of total shares. IFA views that this agreement is a normal practice for strategic business partner that holds less than 25% of total shares. The Risks of entering to the Transaction 1) Risk of losing the deposit of USD 3 million or THB million: If TPAC fail to complete the Transaction, the Sellers may forfeit the deposit as a break fee in case of failure or refusal by the Hold Co. to complete the Transaction according to the summary of the Implementation Agreement (item 1.7.1). 2) Risk of not getting approval from related government agencies for Amalgamation: As the Amalgamation process needs approval from related government agencies (NCLT), therefore if TPAC is not getting approval from such agencies. TPAC will have to directly purchase the shares from the Sellers and will not get tax benefits from Amalgamation process as stated in section which will have direct affect to its cash flow and tax benefits. 3) Foreign exchange rate risk: The Company is planning to use THB from financial institution in Thailand and INR from non-convertible debenture. However, for the original registered capital for Hold Co. before merger, the Company needs INR. The Company will have exchange rate risk on the transaction. The first registered capital increase transaction for Hold Co. is one-time transaction. However, the IFA also analyses standard deviation of 2 years historical movement of INR/ THB, and the standard deviation is equal to 1.44% which is quite low as comparing to the fluctuation of other currency. Future transactions that may related to INR will be matched with Merged Co. s INR revenue and profit therefore the foreign exchange rate risk is limited Discover Management Company Limited Page 17/104

18 INR/ THB Graph Source: Thomson Reuters 4) Risk of breaching its bond covenants and draft term sheet: According to draft terms and conditions, the Company and Merged Co. has restrictions on interest-bearing debt to equity ratio: D/ E Ratio, less than 2 and 2.5 times of consolidated financial statement for foreign financial institution and Thai financial institution respectively. IFA has estimated interest bearing debt to equity ratio after the Transaction to be times ( IFA calculates consolidated financial statement based on TPAC review financial statement as of 30 September 2017 and Sunrise management financial statement as of 30 September 2017, IFA provides consolidated financial statement just for overview purposes and it may be different from audited financial statement). As the market is expanding, there is high possibility for Merged Co. to expand its production capacity therefore interest-bearing debt to equity ratio is likely to increase which leads to breaching the covenants. Moreover, Thai financial institution also demand the Company to increase its paid- up capital (under negotiation) therefore if the Company can t renegotiate or not be able to increase its paid-up capital, the Company has a risk of breaching its covenants. The Company board of directors are aware of the situation and has ensured the IFA that if the Company needs to increase its paid- up capital, existing shareholders are the priority. 5) Risk of capital increase: According to draft term sheet and conditions from Thai financial institution, the Company needs to increase its paid-up capital to THB 500 million within 1 year after drawdown and has to maintain its interest bearing debt to equity ratio: D/E Ratio at lower than 2 times of its consolidated financial statement which IFA is estimated the interest-bearing debt to equity ratio after the Transaction will be 1.40 ( IFA calculates consolidated financial statement based on TPAC review financial statement as of 30 September 2017 and Sunrise management financial statement as of 30 September 2017, IFA provides consolidated financial statement just for overview purposes and it may be different from audited financial statement). Therefore, if the Company can t renegotiate or not be able to increase its paid-up capital, the Company has a risk of breaching its covenants. The Company board of directors are aware of the situation and has informed the IFA that if the Company needs to increase its paid- up capital to maintain interest- Discover Management Company Limited Page 18/104

19 bearing debt to equity ratio in a flexible level and reduce risk of breaking the covenant with financial institution, benefits of existing shareholders are the priority. However, to help shareholders can clearly understand the overview, the IFA simulates the possibility that the Company increase its registered capital by not less than THB 500 million within 10 months from the drawdown date and procure the shares to be paid- up within 12 months. The IFA sets the assumption as follows: - Issue share by Right Offering or RO for million shares at Par Value of THB1 which is current Par Value - For the price of RO, IFA assumes the Company will use market price (the average market price of 7-15 days after The Board of Directors Meeting No. 6/2017 of Thai Plaspac Public Company Limited ( the Company ) held on November 14, 2017 resolved to approve the Transaction) and discount by 10% for existing shareholders. - The summaries are as follows: Current Registered and Paid-Up Capital (Million THB) Registered Capital as required by financial institution (Million THB) Number of Issued Shares (Million Shares) Price of Issued Share (THB/Share)1/ Amount that TPAC will receive after raising capital Loans amount from financial institution Available cash after debt repayment , , , Remark: 1/ Average market price of 7-15 days after The Board of Directors Meeting No. 6/2017 of Thai Plaspac Public Company Limited ( the Company ) held on November 14, 2017 resolved to approve the Transaction, and discount by 10% (Source: SET) According to the aforementioned assumption, the Company will receive THB 3, ,322 million, which is higher than loans amount from financial institution for the Transaction. 6) Risk of Control Dilution and Earnings Dilution: As the Company has the risk to increase its paid-up capital to maintain its interest-bearing debt to equity ratio, if the Company increases its paid- up capital by way of Private Placement, existing shareholders will have Control Dilution and Earnings Dilution. The Company board of directors are well aware of such dilution effect and had ensure the IFA that if the Company needs to increase its paid- up capital to meets terms and conditions of its loan agreement. Existing shareholders are the priority. If the Company increases its paid-up capital by the way of right offering, there will be no risk of control and earnings dilution. However, there is a possibility of price dilution, if the Company issues additional shares at lower the market price. 7) Risk of unexpected performance of Merged Co.: As the Company has no experience managing Indian company, the Company may face the risk of unexpected performance of Merged Co. However, the Discover Management Company Limited Page 19/104

20 Company has more than 20 years of experiences managing the same business therefore the risk of unexpected performance is low. The risk of external forces that could lead to unexpected performance is minimal due an expected market growth of 18% p.a. for the next 4-5 years. 8) Risk of option price from put option: Since KLM Group may request that the Company buy all his shares in the Merged Co. or Sunrise ( as the case may be) in 2021 which the option price is determined by EBITDA mainly. Therefore, in the next 3 years, Merged Co. may have good performance which will drive the EBITDA to be significantly higher so, the Company have to purchase shares of KLM Group (20% of Merged Co.) at a significantly higher price which directly affect shareholders for this burden. On the other hand, the Company, major shareholder of Merged Co., also benefit in 80% of EBITDA that will increase in the future and will affect directly shareholders return as well. 9) Risk of losing business partner in the future: Since KLM Group the KLM Group may request that the Company buy all his shares in the Merged Co., the Company will loss business partner in the future and will make management may not be as convenient as it should be. However, according to the interview with the executive, the Amalgamation is willing both parties and business partner that both parties will to work together in the future. 10) Risk of unable to enter into the Transaction even though it gets the approval from shareholders: Since the Company call of shareholders meeting at the Maximum Acquisition Costs of not more than INR 4,692 or equal to approximately THB 2, which is the consideration that the Sellers will receive, calculated by the formula for the Consideration calculation ( item 1. 6) which can be calculate at the Completion- Date. Therefore, at the Completion- Date, if the Consideration is higher than INR 4,692 or equal to approximately THB 2, which is the appropriate price calculated by the IFA, the Company can t enter into the Transaction. However, according to the formula for the Consideration calculation (item 1.6) if Sunrise doesn t have a significant change to the business, the Consideration may not exceed the Transaction size calling the shareholders meeting for the approval. Discover Management Company Limited Page 20/104

21 The Appropriateness of Price IFA views that the most appropriate approach is Discounted Cash Flow Approach which can reflect the profitability and cash flow in the future with risk adjusted. The value is between INR per share or equal to approximately THB per share so, 80% of Sunrise s value is between INR 4, , million or THB 2, , million. Therefore, the IFA has opinion that the value for entering into the Transaction of 2, to hold 80% of Sunrise is in an appropriated price due to it is in the appropriated price range, calculated by the IFA. Maximum Acquisition Costs % Proportion (Million INR) % Proportion (Million THB) 1/ 100% 80% 100% 80% Total enterprise value 5, , , , Total estimated working capital adjustments 3/ total estimated interest expenses 3/ Related transactional expenses 2/ Maximum Acquisition Costs 5, , , , Remark: 1/ BOT exchange rate [IND: THB = 1: ] 2/ The related transactional expenses will be the same for calculating 100% and 80% which come from the forecast of the Company, not from the agreement. 3/ Estimated by the Company However, the total value of the Consideration that the Company will pay to the Sellers to hold 80% of Merged Co. must be calculated by the formula for the Consideration calculation in the Implementation Agreement (Detail in item 1.6) which can be calculated at the Completion-Date. However, if the Consideration is calculated according to the Implementation Discover Management Company Limited Page 21/104

22 Agreement and it exceed INR 4, million or equal to approximately 2, million, the Company cannot pay the Consideration due to it exceed the Maximum Acquisition Costs that shareholders will approve in the Extraordinary General Meeting of Shareholders No. 1/2018 for INR 4, million or equal to approximately 2, million which is an appropriated price in IFA opinion, and cause the Company to call the approval from shareholders again (the Company has been aware the problem). Based on the above rationale, the IFA has opinion that entering into the Transaction is appropriate in both price and conditions. Therefore, in IFA opinion, the shareholder should vote in favor of the entering into the Transaction. To avoid confusion, the IFA would like to explain more about the Consideration for entering into the Transaction and the opinion of the IFA about the possibility of the Consideration. 1. If the Company enter into the Transaction with the Maximum Acquisition Costs more than INR 4, million or equal to approximately THB 2, million which is the highest value calculated by the IFA, The IFA views that shareholders should not vote in flavor to approve the Transaction due to the price is not appropriate. IFA s opinion about the appropriated price for entering into the Transaction is not change even though the Transaction s size, calling shareholder for the approval (INR 4, million or equal to approximately THB 2, million, is close to the value, calculated from IFA due to the IFA has already consider condition, advantages, disadvantages, and risk of entering into the Transaction. However, the IFA views that the Company cannot pay the Maximum Acquisition Costs more than the Transaction size, calling the shareholders for the approval (INR 4, million or equal to approximately THB 2, million), regarding to the section 85 of the Public Limited Companies Act B.E. 2535, as amended, which state clearly that in operating business of the company, the directors shall perform their duty in accordance with the law, objective, and articles of association of the company as well as resolution of the meeting of shareholders in good faith and with care to maintain interests of the company. The Company has consistent view with the IFA. 2. For the Consideration which can be finalized at the Completion-Date, has 5 relevant factors: 1. = The exchange rate 2. (A) = 80% [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus] 3. (B) = 11% of 80% [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus ] 4. (C) = The amount of dividend or distribution made by Sunrise or value of any disposal made by Sunrise in breach of its Standstill Covenants 5. = Related transactional expenses The IFA has opinion about these 5 factors that has impact to the Consideration as follows: Factor 1 = The exchange rate has no impact to the calculation of appropriate value of the IFA due to the IFA calculate the appropriate value of Sunrise in INR currency. Even though there is a change in the exchange rate, the appropriate value, calculated by the IFA, will change accordingly. However, the Consideration that the Company will pay to the shareholders Discover Management Company Limited Page 22/104

23 of Sunrise is less than INR 4, million or equal to approximately THB 2, million, therefore, it is an appropriate value in IFA s opinion. Factor 2 (A) = 80% [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus] - Aggregated Enterprise Value (fixed at INR 5,310 million) - Net debt as of Cut-Off Date is still uncertain (as of September 30, 2017 is approximately INR 156 million or equal to approximately THB million), which can change due to the change of short term loan only(sunrise has Standstill Covenant, therefore, long term loan may not change significantly). However, net debt causes the Consideration to decrease, therefore the IFA views that forecasting net debt to be 0 will not cause the Maximum Acquisition Costs to be more than the Transaction size that shareholders will approve in the Extraordinary General Meeting No.1/ Working Capital Shortfall or Surplus calculated from the difference between Target Working Capital which is INR 875 million and working capital as of February 1, 2018 (Cut-Off Date). According to the information Memorandum on Share Acquisition of Thai Plaspac Public Company Limited ( List 1) in SET s website on December 6, 2017, the company estimates working capital higher than the Target Working Capital for INR 100 million which is working capital of INR 975 million or equal to approximately THB million while working capital as of September 30, 2017 Sunrise has working capital of INR 769 million (IFA shows the example of the calculation by using working capital from Sunrise s financial statement as of September 30, 2017) which is lower than the Target Working Capital for INR 79 million. Therefore, estimating Net Working Capital Surplus of INR 100 million means that the Company has excess working capital from the Target Working Capital for INR 179 million. The IFA views that estimating Net Working Capital of INR 100 million is appropriate which may not exceed the Transaction s size. According to the agreement, the Consideration (A) = 80% [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus)], and can be calculated as the example below: (A) as of September 30, 2017 = 80%* [5, ] = 80%*5,075 = INR 4,060 million (A) as of Cut-Off Date, according to the forecast of the Company, 80% * [5, ] = 4, = INR 4,328 million According to the calculation above, the IFA has views that the forecast of the Company is reliable and possible. Factor 3 (B) = 11% of 80% [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus) The period between Cut-Off date and Completion-Date is 0-5 months, therefore, forecasting the maximum of the interest of 11%*4,328*5/12 = INR million aligns with the forecast of the Company. The IFA view that such forecast of the Company is appropriate. Discover Management Company Limited Page 23/104

24 Factor 4 (C) = The amount of dividend or distribution made by Sunrise or value of any disposal made by Sunrise in breach of its Standstill Covenants. The IFA view that having no forecast number is appropriate. Factor 5 = Related transactional expenses are an expense forecasted by the Company and legal advisor in India. The details are as follows: No. Related transactional expenses (forecasted by legal advisor in India) Million INR 1 SIIDCUL 1/ land lease agreement transfer fee 50 2 Stamp Duty (for transferring the assets) 2/ NCLT 3/ Scheme expenses 10 4 NCD 4/ Issuance expenses 4 Total 164 หมายเหต : 1/ Land lease agreement transfer fee of State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd which is about 30% of the market value according to the long term land lease agreement (INR 160 million) = INR 48 million. 2/ Stamp Duty in India is different and depends on the provinces which can be between 5% % (about 9% of the tangible asset at the date of transferring (INR 1,100 million) = INR 99 million. 3/ Scheme expenses for National Company Law Tribunal for the amalgamation approval. 4/ Issuance expenses for Non-Convertible Debenture. The IFA cannot investigate the detail of this part, but according to the interview with the executives, the forecasted expense is sufficient and appropriate. According to the aforementioned reason, the IFA views that the Maximum Acquisition Costs, forecasted by the Company, adhere conservative basis and possible. The shareholders shall carefully consider the risks for entering into the Transaction. As the risks could affect the Company s financial result in the future. However, the decision making of approving or not approving the Transaction is to be made at the shareholder s own discretion. The shareholders are advised to study the information and documents attached in the invitation package for the Extraordinary General Meeting No.1/2018 to ensure the appropriated voting decision.. Discover Management Company Limited Page 24/104

25 1. Characteristic and Details of the Transaction of the Acquisition of the Asset 1.1. The Reason and Characteristic of Entering into the Transaction According to the Board of Director s meeting of the company No. 6/ 2017 held on November 14, 2017, the company has intention to purchase 80% of Sunrise (an Indian registered company, located in No. 405, Acme Industrial Park, Off 1. B. Patel Road, Goregaon East, Mumbai, Maharashtra, India). However, since there is a possibility that the company will acquire all of Sunrise s shares, the Company is required to disclose information in the information Memorandum on Share Acquisition of Thai Plaspac Public Company Limited (List 1) where calculate the transaction size based on the acquisition of 100% of Sunrise s shares by purchasing shares from a group of current shareholders of Sunrise which is not related persons to the company. However, there are 2 options of the acquisition of assets; 1) acquisition through Amalgamation of assets and liabilities or 2) acquisition through Share Acquisition ( TPAC might purchase Sunrise shares directly or through Hold Co. which TPAC hold 100% of shares) in case the Amalgamation of assets and liabilities is not sanctioned by the competent Indian authorities by June 23, The details are as follows: However, both Hold Co., and Merged Co. are TPAC- India but in a different status. Hold Co. is TPAC- India before amalgamation and Merged Co. is TPAC-India after amalgamation The Acquisition of Assets though Amalgamation. In case that TPAC want to use tax benefit, the company will enter into the acquisition of assets though amalgamation which this option of acquisition has 3 phrases. Phrase 1: TPAC established a subsidiary (Hold Co. 1/, hold by TPAC 100%) (on December 7, 2017, Hold Co. has registered capital of INR 100,000 or equivalent to approximately THB 50,795) Discover Management Company Limited Page 25/104

26 Phrase 2: Sunrise will amalgamate with the Hold Co., where details are as follows: 1. Before Amalgamation, TPAC will raise capital in Hold Co. by loan from financial institution in Thailand for THB 2,000 million 2. Hold Co. will have additional loan from financial institution from foreign country for THB 1,321 million in order to fulfill the payment for Sunrise s shares. 3. Pay Sunrise by Cash for 80% of asset s value (INR 4, million or equivalent to approximately THB2, million) 4. Pay Sunrise 20% of asset s value by issue share of Hold Co. to the KLM Group, which is equal to 20% of post-amalgamation Hold Co. 5. Portion of loan from financial institution in Thailand and loan from financial institution in foreign country is currently under the consideration of the company. However, the company has credit limit approximately THB 3,320 million 2/, which is THB 2,000 million from financial institution in Thailand, and INR 2,600 million from financial institution from foreign country. Phrase 3: After amalgamation, Hold Co. will change to Merged Co. 3/ However, after the amalgamation of TPAC and the KLM Group will hold Merged Co. s shares for proportion of 80% and 20%, respectively, and there will be no Sunrise after all. Remark: 1/Detail of Hold Co., a subsidiary of TPAC before amalgamation with Sunrise (In India, foreign company can hold 100% shares of company, registered in India) Company Name : TPAC Packaging India Private Limited Incorporation under the laws of : India Type of Business : Investment in other companies and/or plastic packaging manufacturing Registered capital : INR 0.1 million, which is equivalent to approximately THB 50,795 (initial incorporation capital) Discover Management Company Limited Page 26/104

27 Paid-up capital : INR 0.1 million, which is equivalent to approximately THB 50,795 (initial incorporation capital) Shareholding ratio : The Company will have 100% direct shareholding. 2/ Calculated by using BOT exchange rate [IND: THB = 1: ] 3/ Merged Co. is a subsidiary of TPAC after amalgamation with Sunrise, and still named, TPAC Packaging India Private Limited The Amalgamation of Asset through Share Acquisition In case the Amalgamation of assets and liabilities is not sanctioned by the competent Indian authorities by June 23, 2018, the Company will enter into the acquisition of Sunrise though share acquisition TPAC might purchase Sunrise shares directly or through Hold Co. which TPAC hold 100% of shares. The detail are as follows: Phrase 1: TPAC establishes a subsidiary ( Hold Co. 1/, held by TPAC 100% ) ( as of December , Hold Co. has registered capital of INR 100,000 or equivalent to approximately THB 50,795) Phrase 2: Hold Co. purchases 80% of Sunrise s share directly from current shareholders. The details are as follows: 1. Before entering into amalgamation, TPAC will raise capital in Hold Co. by loan from financial institution in Thailand for THB 2,000 million 2. Hold Co. will have additional loan from financial institution in foreign country for million in order to fulfill the payment for Sunrise s shares. 3. Pay Sunrise by Cash for 80% of asset s value (INR 4, million or equivalent to approximately THB 2, million) 1/ Discover Management Company Limited Page 27/104

28 Phrase 3: Hold Co. enter into the amalgamation with Sunrise by issue share to the KLM Group, which is equal to 20% of post-amalgamation Hold Co. Phrase 4: After amalgamation, Hold Co. will change to Merged Co. However, after the amalgamation TPAC and the KLM Group will hold Merged Co. s shares for proportion of 80% and 20%, respectively, and there will be no Sunrise after all. Remark: 1/ Calculated by using BOT exchange rate [IND: THB = 1: ] 1.2. TPAC-India s Structure after entering into the Transaction The Company wishes to acquire 80% shares in the Merged Co. or Sunrise and to have the KLM Group retain their 20% shares since the KLM Group is a strong business partner and has the knowledge and experience in the industry in India. However, the terms on put option and call option are normal commercial terms of share sale and purchase agreements to provide an exit to the parties in case they do not wish to retain their investment. In addition, having business partner is very important for doing business in foreign country. Discover Management Company Limited Page 28/104

29 In any case, if the Company acquires the remaining 20% shares from the KLM Group in the future, such acquisition of the remaining 20% shares will be treated as an asset acquisition by the Company and the Company will compute the value of the actual total consideration paid for the acquisition of such 20% shares in the transaction size calculation to comply with the requirements under the Acquisition and Disposition Notifications concerning such acquisition. Thailand India 1.3. Transaction Date After the meeting of the Board of Directors of the Company has approved the Transaction, the Company and the Hold Co. have executed the Implementation Agreement with Sunrise and the Sellers on November 20, The completion of the Transaction is expected to take place within June 30, 2018 after all the conditions precedent under the IA ( according to item 1. 7 Summaries of Important Agreement) are fully satisfied or otherwise waived by the relevant parties Counterparties related to the Acquisition of Assets Counterparties related to Implementation Agreement All Counterparties: 1. TPAC / Hold Co. 2. Shreekishan Mundhra HUF (holding 0.07) 3. Shreekishan Mundhra (holding 10.62) KLM s brother 4. Dinesh Kumar Mundhra (holding 1.31) Shreekishan Mundhra s son 5. D. K. Mundhra (holding 10.14) KLM s brother 6. Bhagwati Devi Mundhra (holding 0.28) D. K. Mundhra s wife 7. Umesh Kumar Mundhra (holding 1.31) D. K. Mundhra s son 8. D. K. Mundhra HUF (holding 0.07) 9. Rajesh Kumar Mundhra (holding 0.18) D. K. Mundhra s son 10. S. K. Mundhra (holding 12.00) KLM s brother 11. Hitesh Plastics Private Limited (holding 3.33) Discover Management Company Limited Page 29/104

30 12. D. P. Mundhra (holding 12.00) KLM s brother 13. KLM (holding 31.36) founder of Sunrise 14. K. L. Mundhra HUF (holding 7.38) 15. Sunrise There are 13 Sellers in the Implementation Agreement which collectively hold 90.05% shares, but will sell their collective 80.00% shares only (Chanda Devi Mundhra which is KLM s wife and Hitesh Kumar Mundhra which is KLM s son, are the non-selling shareholders, collectively hold 9.94% shares, and will continue to hold such shares.) Counterparties related to Shareholder Agreement All Counterparties: 1. TPAC / Hold Co. 2. Sunrise 3. Chanda Devi Mundhra (holding 3.62%) KLM s wife 4. Hitesh Kumar Mundhra (holding 6.32%) KLM s son 5. S. K. Mundhra (holding 12.00%) KLM s brother 6. KLM (holding 31.36%) founder of Sunrise Counterparties related to Draft Term Sheet of TPAC Borrower: TPAC Lender: Financial institution in Thailand Counterparties related to Non-Convertible Debenture Term Sheet of Hold Co. Borrower: Hold Co. Lender: Financial institution in foreign country The Sellers, including their members, managers, and/or ultimate shareholders, do not have any relationship with the Company and are not the Company s connected persons. The Transaction, therefore, is not considered a connected transaction under the Notification of the Capital Market Supervisory Board No. TorChor. 21/2551 Re: Rules on Connected Transactions and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Connected Transactions B.E (2003) Category and Size of the Transaction The Company is acquiring 80% of Sunrise share. Sunrise is a producer of rigid plastic packaging which is a similar business to the Company. The company estimates the invested capital and expenses for the transaction payable in either case will not exceed 80% of INR 5,774 million which is equal to INR 4, million, or equivalent to approximately THB 2, million Discover Management Company Limited Page 30/104

31 1.6.1 Transaction of the Acquisition of Assets The transaction is considered as asset acquisition in accordance with the Notification of the Capital Market Supervision Board No: Tor Jor 20/2008 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets dated 31 August 2008 and its amendments, and the Notification of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E dated 29 October 2004 ( the Notification of the Acquisition or Disposition of Asset ). However, if calculating by referring to the consolidated financial statement of the Company as of September 31, 2017, it accounts for % of the Company s total assets according to the total value of consideration paid, which is greater than 100% according to the total value of consideration paid, referring to the consolidated financial statement of the Company as of September 31, 2017, which is classified as a Class 4 Transaction. Details on the calculation of the transaction size are as follows: The Company s financial information ( refer to consolidated financial statement ended September 30, 2017) Details (Unit: Million THB) Total Assets 1, Intangible Assets 4.10 Total Liabilities Net Tangible Assets (NTA) 1, Total Comprehensive Income Attributable to Equity Holders of the Parent (last quarters) 1/ Remark: 1/ Calculated from financial statement during October 31, 2016 September 30, 2017 Sunrise s financial information (refer to internal financial statement of Sunrise, excluding LED Casing business, ended September 30, 2017) THB) Transaction Size at 100% Transaction Size at 80% Details (Unit: Million (Unit: Million (Unit: Million (Unit: Million THB) INR) 3/ INR) 3/ Total Assets 1/ 2,362 1, , Intangible Assets Total Liabilities 2/ Net Tangible Assets (NTA) 1, , Total Comprehensive Income Attributable to Equity Holders of the Parent 1/ Remark: 1/ Total Assets consist of 4 factories (3 lands, machines and 4 building improvement) 2/ Total Liabilities consist of short term loan from financial institution, long term loan from financial institution, other current liabilities and account payables. 3/ Calculated from BOT Exchange rate [IND: THB = 1: ] Discover Management Company Limited Page 31/104

32 Details of the Maximum Acquisition Costs % Proportion (Million INR) % Proportion (Million THB)1/ 100% 80% 100% 80% Total enterprise value 5, , , , Total estimated working capital adjustments 3/ Total estimated interest expenses 3/ Related transactional expenses 2/ Maximum Acquisition Costs 5, , , , Remark: 1/ BOT exchange rate [IND: THB = 1: ] 2/ The related transactional expenses will be the same for calculating 100% and 80% which come from the forecast of the Company, not from the agreement. 3/ Estimated by the Company Calculate transaction size is according to the criteria ( since the Company will not purchase the LED casings business of Sunrise, the financial data of Sunrise used for the transaction size calculation was not inclusive of the LED casings business which is less than 1% of the Maximum Acquisition Costs. The calculation of the Transaction s transaction size as prescribed in the Acquisition and Disposition Notifications was based on the latest reviewed financial statements of the Company for the 9 - month period ended September 30, 2017 and based on the audited annual financial statements of Sunrise for the period ended March 31, ). Criteria Formula (THB: Million) Transaction Size (%) 1. Net Tangible Asset (NTA) NTA of Acquisition Asset (822.86) 1/ /NTA of TPAC (1,039.59) 1/ Net Profit from Operation (Last 4 Quarters) Net Profit from Operation of Acquisition Asset (132.25) 1/ / Net Profit for Last 4 Quarter of TPAC (121.09) 1/ Total Value of Consideration Value of Consideration Paid (2,383.30) 1/ / Total Assets of TPAC (1,250.12) 1/ 4. Total Value of Securities No newly- issued shares No newly- issued shares Remark: 1/ Calculated from BOT exchange rate [IND: THB = 1: ] The Transaction will have the maximum transaction size based on the criteria on net profit from operation and the criteria on total value of consideration equal to % and %, the size of which will be greater than 100 per cent, and that is considered as the Acquisition of Assets Class 4. The asset acquisition transaction is regarded as the transaction listed on The Stock Exchange of Thailand indirectly (Backdoor Listing) according to The Notification of the Acquisition or Disposition. Nevertheless, such transaction has completed and suitable conditions in accordance with the regulations to be exempt from filing a new listing application, and those conditions are: 1 After March 31, 2017, Sunrise has not entered into any material transaction that beyond the ordinary course of business. Discover Management Company Limited Page 32/104

33 1. The business to be acquired is like and complements the business of the Company which currently is producing and selling other form of plastic packaging 2. The Company does not have a policy to materially change its core business. 3. After post-acquisition, the Company views that its group of companies remains qualified and suitable for listing on the Market for Alternative Investment. 4. After post- acquisition, there will be no significant change to the Board of Directors of the Company, the control over the Company, or the shareholders having control over the Company. Therefore, where the Company is required to disclose information on the Transaction to the SET; obtain approval from the shareholders meeting of the Company with votes of not less than 3 out of 4 of the total votes of the shareholders attending the meeting and having the right to vote, excluding shareholders having interests. The Company must appoint be the independent financial advisor to render an opinion on the reasonableness of price and fairness of the entering into the transaction of the acquisition of asset The Total Value of the Consideration and Criteria of Determining the Total Value of Consideration According to the IA, the Hold Co. shall pay a consideration of acquisition in Sunrise (the value of Consideration currently is not certain due to the Consideration depends on calculation formula) and the details are as follows: Consideration = (A) + (B) + (C) (A) 80% * [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus 1/ ] (Calculate on Cut-Off Date) (B) 11% p.a. * (A) Since Cut-Off Date until Completion-Date. Cut-Off Date is the day that he Sellers will not be entitled to receive any return or profit of Sunrise as Sunrise s shareholders from the Cut-off Date. However, the Hold Co. will pay the Consideration (including the Initial Value) to the Sellers on the completion date. As such, it was agreed that the Hold Co. must pay interest at the rate of 11% per annum calculated on the Initial Value from the Cut-off Date to the completion date as opportunity costs to the Sellers to compensate the Sellers who will not be paid the Initial Value on the Cut-Off Date. Such interest payment is a normal practice and is usually found in business sale and purchase transactions (the interest rate at 11% p.a. aligns with the loan interest rate in India, Based Rate is according to Reserve bank of India as of December 15, 2017 which is estimated about 8.85% % which interest rate from commercial bank is normally higher than Base Rate about 0.5% - 1.5%). (C) the amount of dividend or distribution made by Sunrise or value of any disposal made by Sunrise in breach of its standstill covenants under the IA or any costs or expenses incurred by Sunrise from the Cut-off Date for complying with due diligence conditions Consideration 4/ = 80% [5, Working Capital Shortfall or Surplus 1/ ]+ 11% {80% [5, the difference between 3 years historical average of working capital and at the Cut-Off Date]} *X 1/ /12 C 2/ (Million INR) Remark: 1/ Calculated from Target Working Capital of INR 875 million which adhere to accounting during the past 3 years. 2/ Depends on time interval between Cut-Off Date and Completion-Date 3/ There is possibility that it will equal to 0 due to Standstill Covenant 4/ To help shareholders understand easier, the IFA just shows the example of the calculation by using the formula according to the agreement. Some factor is not stable until Cut-Off Date. Discover Management Company Limited Page 33/104

34 Aggregate enterprise value of Sunrise = INR 5,310 million or equal to approximately THB 2, million, refer to BOT exchange rate [IND: THB = 1: ] (enterprise value according to the Implementation Agreement as of November 15, 2017). Therefore, the calculation will not change. However, the aggregate enterprise value of Sunrise at INR 5,310 million, both parties follow the calculation by using EBITDA (excluding special item), multiply by 8 which will align with the India s market. According to financial statement of Sunrise as of March 31, Sunrise has EBITDA x 8 equal to x 8 = INR 5, million or equal to approximately THB 2, million Net debt as of Cut-Off Date = Examples of net debt are short-term liabilities, loan-term liabilities, current portion of long-term liabilities, accrual interest of short-term and long-term liabilities, account payable of investment, and employee benefit, including pension fund as of September 30, 2017, which is approximately INR 156 million or equal to approximately THB million. Net debt may be different due to the change of short term loans but due to Sunrise has Standstill Covenant, net debt may not change significantly. Net working capital Shortfall or Surplus as of Cut-Off Date Examples of working capital are inventory account receivable assets or current liability, etc. (as of September 30, 2017, which is approximately INR 796 million or equal to approximately THB million. Net working capital may be different due to the change of inventory, account receivables, and account payables. According to the interview with the executive of the company, net working capital may change due to the anticipating in keeping inventory of customer due to the forecast of crude oil price. Example of calculating net working capital Shortfall or Surplus: as of September 30, 2017, there are working capital INR 796 million which is less than Target Working Capital of INR 875 million for INR 79 million. If working capital as of Cut-Off Date is INR 796 million, Sunrise will have working capital shortfall equal to INR 79 million However, the calculation of the value of Consideration must calculate at the Completion-Date. Therefore, the Consideration at 80% proportionally at the Completion-Date will be more than the Transaction Size calling the approval from shareholders and the Company will not be able to enter into the transaction. However, according to the interview with the executive of the company, at the Completion-Date net debt (-) and working capital is expected to be about 3 years historical average. Therefore, according to the forecast from the executive of the company, the Company will be able to enter into the Transaction as calling the approval from shareholders. Discover Management Company Limited Page 34/104

35 1.7. Summaries of Important Agreement Implementation Agreement IFA can summarize the draft of Implementation Agreement (November 15, 2017) as follows: No. Topic Detail 1 Counterparties 1. Current shareholders of Sunrise which total holing portion is 80% or 7,128,000 shares 2. TPAC / Hold Co. 3. Sunrise (Target Company) 2 Type of agreement An Implement Agreement where the parties have agreed that the acquisition of the business of the target company by amalgamation. If the Transaction is not implemented by amalgamation, the Parties shall implement the Transaction by way of purchase of shares of the target company to the extent of 80% of its share capital. 3 Date November 15, 2017 after the approval from board of directors in the Board of Directors Meeting No. 6/ Amalgamation s approval date If the Amalgamation is not sanctioned by India s competent authorities by June 23, 2018, the Transaction will be in the form of the Share Acquisition. 5 Long-stop date for the Share June 30, 2018 or a later date as mutually agreed between the parties Acquisition 6 Proportion of shareholding TPAC or related company (in this term means TPAC-India ) to TPAC will hold 80% of the acquiring company or the target company depend on scenario, where the KLM Group will hold 20% of Merged Co. or the target company according to clause 2 7 Main Condition of the Transaction In case of acquisition by amalgamation - The acquiring company must pay the current shareholders of Sunrise according to the agreed shareholding structure. - Merged Co. must issue share to the KLM Group after post- amalgamation, while TPAC will hold 80% of the Merged Co. and the KLM Group will hold 20% of Merged Co. - The current shareholders of Sunrise other than the KLM Group will have no share in Merged Co. or Sunrise 8 Key conditions precedent - The Company must have obtained shareholder approval for entering into the Transaction. ( The Company will hold the Extraordinary General Meeting of Shareholders No. 1/2018 on January 15, 2018.) - Sunrise and Hitesh Plastics Private Limited must have obtained corporate authorization from its board of directors for entering into the Transaction (Completed information as at December 18, 2017). 1/ - Sunrise must have filed an application with the competent authorities in India for calling of shareholders meeting(s) and creditors meeting(s) for approving the Amalgamation (in case of the Amalgamation). 1/ Discover Management Company Limited Page 35/104

36 No. Topic Detail Sunrise must have disposed its LED casings business and removed all the machines related to the said business from its premises at Sunrise s cost. However, such cost will not affect the Consideration ( Pending implementation and completion is expected within January 2018 information as at December 18, 2017). 1/ - There must be no material adverse effect on Sunrise, e.g. effect on Sunrise being unable to carry on its business or its material business licenses or permits being revoked (The Sellers have confirmed that there has been no material adverse effect on Sunrise information as at December 18, 2017). 1/ Remark: 1/The conditions precedent in above must be satisfied or waived by the relevant parties on or before June 23, 2018 (in case of the Amalgamation) or June 30, 2018 (in case of the Share Acquisition). 9 In case of any dispute In case of any dispute, the parties agree to negotiate in good faith to resolve any dispute. However, if there is any dispute that cannot be resolved, the arbitration shall be conducted in Mumbai. 10 Other key terms - The Hold Co. shall deposit or cause to be deposited a sum of USD 3 million ( or equivalent to approximately THB 99 million, according to BOT exchange rate [USD: THB = 1: ]) (the Deposit ) to secure its obligation to pay the Consideration to the Sellers for the Transaction. Such deposit shall be treated as part of the Consideration payable to the Sellers. However, it may be forfeited by the Sellers as a break fee in case of failure or refusal by the Hold Co. to complete the Transaction within June 30, Moreover, the Deposit shall be returned to the Hold Co. in case of the Sellers default. - The Sellers agree not to, directly or indirectly, compete with the business of the Merged Co. or Sunrise for a period of 3 years from the Completion-Date of the Transaction. - Aggregated Enterprise Value is equal to INR 5,310 million or approximately THB 2, million 11 Stamp Duty and Transfer - For fee, stamp duty or any tax, the Purchaser and the Sellers are responsible for their own part. Expenses 12 Consideration Where the calculation formula is as follows: Consideration = (A) + (B) + (C), where (A) = 80% * [Aggregated Enterprise Value of Sunrise Net Debt + Working Capital Shortfall or Surplus] (Calculate on Cut-Off Date) (B) = 11% p.a. * (A) Since Cut-Off Date until Completion-Date (C) = the amount of dividend or distribution made by Sunrise or value of any disposal made by Sunrise in breach of its standstill covenants under the IA or any costs or expenses incurred by Sunrise from the Cut-off Date for complying with due diligence conditions 13 In case of failure to complete the Transaction, If TPAC fail to complete the Transaction, the Sellers may forfeit the deposit as a break fee in case of failure or refusal by the Hold Co. to complete the Transaction according to the Implementation Agreement. Discover Management Company Limited Page 36/104

37 Shareholder Agreement IFA can summarize the Shareholder Agreement (November 15, 2017) as follows: No. Topic Detail 1 Counterparties 1. TPAC / Hold Co. 2. Chanda Devi Mundhra 3. Hitesh Kumar Mundhra 4. S. K. Mundhra 5. KLM 6. Sunrise (Target Company) 2 Type of agreement Shareholder Agreement 3 Date November 13, Shareholder Structure TPAC or related company to TPAC (in this term means TPAC-India ) will hold 80% of Merged Co. or the target company depend on scenario, where the KLM Group will hold 20% of Merged Co. or the target company 5 Board members The board of directors consists of 3 directors nominated by the Company and 2 directors nominated by the KLM Group which are very important executives to company. However, if the KLM Group s shareholding falls (i) below 15%, he shall be entitled to nominated only 1 director and (ii) below 10%, he shall not be entitled to nominate any director. The reason the number of directors to be nominated by the Company do not reflect the Company s shareholding percentage is because the Company needs the KLM Group s knowledge and experience in the industry. 6 2/ Board quorum and vote Quorum is 3 directors which must include 1 director nominated by the Company and 1 director nominated by the KLM Group unless his shareholding is less than 10%. In case of lack of quorum, the quorum for the adjourned meeting shall be any director present. Passing a resolution requires a majority vote with an affirmative vote of a director nominated by the Company. The chairman has no casting vote (KLM is appointed as the first chairman). However, in case of fundamental issues, a resolution requires an affirmative vote of a director nominated by the KLM Group unless his shareholding is less than 10%. Such fundamental issues include (amongst others) the following: - alteration of the Memorandum of Association and/or Articles of Association; - issuance, purchase, redeem or otherwise change the share capital, including issuance of shares, warrants, and other convertible securities, except issuance of convertible debentures to the Company (if any); - acquisition of shares, assets, or business of others, except acquisition of treasury securities exceeding INR 5 million (or equivalent to approximately THB 3 million), and acquisition of assets in the ordinary course of business or within the permissible capital expenditure of INR 400 million (or equivalent to approximately THB 203 million) p.a, etc.; - change of business; - giving of any loan, guarantee, or indemnity except in the ordinary course of business; and - merger, amalgamation, or liquidation. Discover Management Company Limited Page 37/104

38 No. Topic Detail 7 3/ Shareholders quorum and vote Quorum is a minimum of 5 shareholders which must include 1 representative of the Company and 1 representative of the KLM Group. In case of lack of quorum, the quorum for the adjourned meeting shall be any shareholder present, with 1 representative of the Company. Passing a resolution requires a majority vote with an affirmative vote of the Company or its representative. The chairman has no casting vote. However, in case of the fundamental issues (as explained above), a resolution requires an affirmative vote of the KLM Group unless his shareholding is less than 10%. 8 Share transfer restrictions - No party can transfer any share to a third party (except to each party s affiliates) within the restricted period as specified in the SHA. - After the restricted period, any transfer of shares to a third party (except to each party s affiliates) must be first offered to the other existing shareholders before the said shares can be offered and sold to such third party. Shareholders can only transfer full and not part of their shareholding. In case the Company is the party making such offer, the KLM Group may elect to tag-along and require the Company to ensure that the third party also purchase all the KLM Group s shares together with the Company s shares. The price for such tag-along shares shall be the higher of (a) the Fair Market Value (as defined below) and (b) the price for the transfer of the Company s shares. The fair market value (the Fair Market Value ) shall be calculated in accordance with the following formula: (a) the fair market value of the Merged Co. or Sunrise (as the case may be) as at the relevant date as determined and calculated by external accounting firms subject to certain adjustments; (b) plus the calculated excess working capital or minus the calculated working capital shortfall; (c) minus the net debt as at the relevant date; (d) plus the add back amounts (as defined in the SHA); and (e) times the shareholding of the KLM Group. - After the restricted period, the Company may transfer all of its shares to a third party and require the KLM Group to sell all its shares together with the Company s shares. The price for such drag-along shares shall be the higher of (a) the Fair Market Value and (b) the price for the transfer of the Company s shares. 9 Put option the KLM Group may request that the Company buy all his shares in the Merged Co. or Sunrise (as the case may be) in 2021 at an option price (the Option Price ). The Option Price shall be calculated in accordance with the following formula: (a) the enterprise value of the Merged Co. or Sunrise (as the case may be) equal to the average of the EBITDA (excluding extraordinary items) for FY and FY times 8; (b) plus, the calculated excess working capital or minus the calculated working capital shortfall; (c) minus the net debt on March 31, 2021; (d) plus, the add back amounts (as defined in the SHA) such as debt occurring from acquisition or additional investment that the Sellers don t agree; and (e) times the shareholding of the KLM Group. If the KLM Group has not exercised such put option in 2021, the KLM Group may exercise the put option at any time from the period between 2024 and 2025 at the Fair Market Value. 10 Call option In case the KLM Group does not exercise the put option to sell all his shares to the Company, the Company may request that the KLM Group sell such shares to the Company at the Option Price in 2021 or at the Fair Market Value at any time from the period between 2024 and Discover Management Company Limited Page 38/104

39 No. Topic Detail 11 Other share acquisitions by the Company The Company may have the right to or may be required to purchase all of the KLM Group s shares in other scenarios, such as in case of a change in control in the Company or the Company s breach of the SHA, where the purchase price for each scenario will be calculated based on the enterprise value of the Merged Co. or Sunrise (as the case may be) subject to certain adjustments as provided under the SHA. 12 In case of any dispute In case of any dispute, the parties agree to negotiate in good faith to resolve any dispute. However, if there is any dispute that cannot be resolved, the arbitration shall be conducted in Mumbai. 13 Stamp Duty and Transfer - For fee, stamp duty or any tax, the Purchaser and the Seller are responsible for their own part. Expenses Remark: 1/The Company wishes to acquire 80% shares in the Merged Co. or Sunrise and to have the KLM Group retain their 20% shares since the KLM Group is a strong business partner and has the knowledge and experience in the industry in India. However, the terms on put option and call option are normal commercial terms of share sale and purchase agreements to provide an exit to the parties in case they do not wish to retain their investment. 2/ The IFA views that the agreement clearly shows that the Board of Directors have rights in any Board of Directors' meetings that require at least 1 from each 2 parties, which is normal for business partner to respect each other since the Transaction is both willing. Normally, the acquiring company want hear the opinions of former directors, who have experience in managing the company longer, before making the decision. However, in any resolution, there must be at least representative director from the Company, therefore, it shows that the Company have the power to control Merged Co. For the issues that requires the approval from both parties, the independent financial advisor views that company requires to have KLM as its business partner and would like KLM to maintain the share proportion. For fundamental issue, the company is required three-fourths of the total votes for the approval in order to protect the minority shareholders (same principle is also applied in India). As the fundamental minority shareholder (KLM group) in Merge Co., Ltd. holds 20% of shares, company has deducted the minimum shareholders rights according to the regulation from 25% down to 20% and the said rights shall be terminated if KLM group holds less than 10% of total shares. IFA views that this agreement is a normal practice for strategic business partner that holds less than 25% of total shares. 3/ IFA views that the voting in the shareholders meeting is an incremental part that complies with the board of directors meeting. The fundamental issue such as the one aforementioned, mostly required three-fourths of the total votes from the shareholder for the approval in order to protect the minority shareholders (same principle is also applied in India). As the fundamental minority shareholder (KLM group) in Merge Co., Ltd. holds 20% of shares, company has deducted the minimum shareholders rights according to the regulation from 25% down to 20% and the said rights shall be terminated if KLM group holds less than 10% of total shares. IFA views that this agreement is a normal practice for strategic business partner that holds less than 25% of total shares Draft Term Sheet from Thai Financial Institution For Draft Term Sheet of Loan from Thai Financial Institution (November 2017), can be summarized as follows: No. Topic Detail 1 Counterparties 1. TPAC 2. Financial institution in Thailand 2 วงเง นส นเช อ THB 2,000 million, divided into 2 tranches; Tranche A: THB 800 million Tranche B: THB 1,200 million Discover Management Company Limited Page 39/104

40 No. Topic Detail 3 Term Tranche A: THB 800 million, 3 years from the drawdown date Tranche B: THB 1,200 million, 8 years from the drawdown date 4 Interest rate MLR 1.5% p.a. (MLR in Thailand) 1/ 5 Interest Payment Quarterly basis 6 Payment Condition - If the company receive any dividend payment from Merge. Co., the company shall immediately pay for interest and principle to the Bank. - If the company receive interest from NCD of Merged Co., the company shall immediately pay for interest and principle to the Bank. - If the company receive the payment of principle from NCD od Merged Co., the company shall immediately pay for interest and principle in Tranche A before. - If the company has an increasing of capital of the borrower, the company shall immediately pay for interest and principle in Tranche B before. 7 Amalgamation The company must hold at least 80% of Merged Co. 8 Pledged Security - Land, building and building improvement of the company. - Debenture of Merged Co. - Shares of Merged Co. 9 Agreement related to the Financial Statement Consolidate Financial Statement: - Net Debt to Equity must not exceed 2.5 times Separated Financial Statement: - Debt Service Coverage Ratio DSCR must not lower than 1.1 times - Net Debt to Equity must not exceed 2.5 times 10 Other Important Agreement - The company must remain qualification for listing on the Stock Exchange of Thailand or Market for Alternative Investment. - Company may be required to increase its registered capital by not less than THB 500 million within 10 months from the drawdown date and procure the shares to be paid- up within 12 months from the drawdown date where the Company will further consider the forms of offering of its newly issued shares in the manner as it deems appropriate Remark: 1/ As of November 16, 2017, MLR from financial institution in Thailand is between 6.25% % p.a. (source: Bank of Thailand) 2/ Draft Term Sheet from Thai Financial Institution is under negotiation therefore it is subject to major changes Draft Term Sheet of Non-Convertible Debenture from Foreign Financial Institution For Draft of Term Sheet of NCD from foreign country (November 2017), the IFA can summarize as follows: No. Topic Detail 1 Counterparties 1. Merged Co. 2. Foreign Financial institution 2 Issue Size of NCD INR 2,600 million or equal to approximately THB 1,321 million (refer to BOT exchange rate [IND: THB = 1: ]) 3 Face Value INR 10,000,000/- per Debenture 4 Facility Tenor 5 years 5 Interest rate Not define 1/ 6 Interest Payment Not define Discover Management Company Limited Page 40/104

41 No. Topic Detail 7 Payment Condition Not define 8 Amalgamation The company must hold at least 80% of Merged Co. 9 Guarantee - Land, building and building improvement of Merged Co. - Obligation from the company. 10 Other Important Agreement - The company must hold at least 80% of Merged Co. - Credit Rating must not below [Not define] - Debt Service Coverage Ratio DSCR must not lower than 1.1 times - Net Debt to Equity must not exceed than 2.0 times Remark: 1/ The company estimate the interest rate will be between 9%-10% p.a. 2/ Draft of NCD Term Sheet from Foreign Financial Institution is under negotiation therefore it is subject to major changes 1.8. Conditions of Entering into the Transaction For entering into the transaction of acquisition of the assets must follow key conditions precedent in the Implementation Agreement (item 1.7.1)obtain the approval from the shareholders meeting of the Company with votes of not less than three-fourths of the total votes of the shareholders attending the meeting and having the right to vote, excluding shareholders having interests which there is not shareholders having interests, and appoint an independent financial advisor to provide an opinion and submit such opinion to the shareholders of the Company to support their consideration in approving the transaction. However, after the board of director of the company has the approval, the company must establish Hold Co. and amalgamate with Sunrise which should not be longer than 6 months and estimated to finish within June 30, Expected Benefits for the Company There are 3 main expected benefits for the company as follows: 1. It is an investing in a potential business which can give a good return to the company. 2. TPAC will have benefit from the synergies effect of merging the businesses. 3. TPAC will have a better operating performance It is an investing in a potential business which can give a good return to the company. Since Sunrise is a potential company, TPAC will has an opportunity to gain a good return from the transaction. The main potential of Sunrise can be summarized into 3 points as follow; 1) Sunrise is the leader in PET packaging business in India which is the highest growth market in the world: In present, Sunrise is one of the top 5 companies in India which has the second largest production capacity (Manjushree is No.1) (source: Vendor Due Diligence Report). In 2016, Sunrise has capacity approximately 44,000 tons per year. Sunrise, as a leader in PET packaging business, EBITDA of Sunrise has grown 30% p.a. over the past 3 years due to the Indian economic growth. Moreover, Sunrise is a well-known company in India. Therefore, TPAC will get benefits from Indian economic growth for entering into the transaction. Discover Management Company Limited Page 41/104

42 2) Sunrise is a potential risk management company: Due to Sunrise is can manage the diversity of the product and customers effectively. Source: Vendor Due Diligence Report Sunrise has appropriate balance of sales in each product. The appropriateness of diversification of products has effect on the stability of revenue and profit of the company, especially for the manufacturing company which a minimum revenue and fixed cost is very important. In addition, Sunrise also manage the diversity of their customers in terms of income per customer and type of product. When comparing the variety of sales, there is only 12% of revenue in 2016 that mainly come from top 3 customers. Sunrise has most of their customer base in FMCG, which there are more than 1,000 clients and most of them are multinational corporate. The first 10 clients of the company accounted for about 25% of total revenues which shows that Sunrise has a very good management in diversity their customers. 3) Sunrise has a potential manufacturing and appropriate locations diversification: Sunrise has factories in 4 cities: 1) Umbergaon 2) Haridwar 3) Silvassa and 4) Dadra. Due to the location diversification of all factories, Sunrise can manage the risk of production and efficiency on transportation. In addition, with government support, Sunrise also has gotten benefit from cheaper electricity cost in some part of the factory in Dadra. Source: Vendor Due Diligence Report Discover Management Company Limited Page 42/104

43 TPAC will have benefit from the synergies effect of merging the businesses. TPAC will increase its customer base, distribution channels and the procurement of raw material and labor. Due to the current customers base and distribution channel of TPAC are mostly in the country. Therefore, the expansion of production base to India for this time will lead TPAC to gain access to customer base and the procurement channel of raw material in India, which is the one of the largest market in the world. As a result, TPAC will have an opportunity to increase revenue and reduce costs. The details are as follows: 1) To acquire a new and more diversified customer base: The Company s current customer base comprises predominantly multinational FMCG companies and it serves about 100 customers with top 10 customers comprising 79% of its revenues. On the other hand, India is a major focus market of the world s leading FMCG companies and Sunrise has more than 1,000 customers, most of whom are internationally renowned FMCG companies, with top 10 customers comprising 25% of its total revenues. Because of the Transaction, the Company will be able to serve customers in both Thailand and India, thereby further increasing the value proposition offered to customers, TPAC will have a better performance. 2) To escalate the Company s competency and capability: The Company and Sunrise have been exclusively focused on consumer rigid plastic molding technologies for over 3 decades where both companies have an excellent expertise and capability in this area. Moreover, Sunrise s factories infrastructure, design, and manufacturing processes and system all meet world- class standards while the Company is continuously striving to develop its facilities to international best practices and in line with world- class manufacturing standards. The Transaction will allow the cross- learning and sharing of research and development expertise, which will further enhance both companies competence and reputation for best in class rigid plastic packaging design products and allow them to achieve quality development by the continuous development of both companies facilities. 3) To expand product line: Sunrise offers the most extensive range of wide mouth PET preforms and PET pharmaceutical bottles in the world, which the Company does not. Entering into the Transaction will enable the Company to expand its product line and hence, increase its customer base. 4) To increase bargaining power: Sunrise and the Company use the same raw materials, such as PET and PP. With the two companies combined, they will become a larger buyer, which will increase their bargaining power TPAC will has better performance. After the post- transaction, TPAC will need financial statement of Sunrise to consolidate with the company which will make the company has higher assets and profit due to Sunrise has good revenue and profit. Moreover, Sunrise will increase financial strength from a financially accretive deal. The Company will be able to increase its financial strength by entering into the Transaction as Sunrise has high gross profit margin, net profit margin, and EBITDA margin. Moreover, both the Company and Sunrise have strong cash flows from operations and low debt. Discover Management Company Limited Page 43/104

44 1.10. Sources of Funding To finance the Transaction via capital injection into the Hold Co. in the form of equity or debt, the Company will obtain a loan of not more than THB 2,000 million from a financial institution in Thailand, which will be secured by the assets of the Company s and/ or its subsidiaries. The said loan s terms and conditions do not affect the Company s shareholders rights. However, the company shall raise the registered capital not less than THB 500 million within 10 months since drawdown date which the company have uncertain about the condition of raising the registered capital, but the company will consider the appropriateness. Moreover, the condition of raising capital is still unclear which the company is still negotiate the financial institution, and the topic of raising registered capital will be proposed to the shareholder s meeting to approve. If there is a progress on the condition of raising registered capital, the company will inform SET and shareholder. In addition, the Company will also arrange for the Hold Co. to issue non- convertible debentures of not more than INR 2,600 million (or equivalent to approximately THB 1,321 million for private placement to investors where the shares in and assets of the Merged Co. as well as the assets of the Hold Co. (as the case may be) will be further provided as collaterals. The total amount of loan from the financial institution in Thailand and/or the issued amount of non-convertible debentures to the investors will not exceed the Consideration. IFA views that the company will has sufficient fund for Sign and Purchase Agreement due to the credit line of approximately THB 3,321 million or % of the transaction size has exceeded the value of share acquisition. However, for calculation of the transaction size, the transaction size is approximately THB 2, million which is approximately % of the total assets of the Company. After the post- transaction, interest bearing debt to equity ( D/ E ratio) will rise to times while there was no interest- bearing debt in the past. In the future if the company has better performance and repay loan according to the payment term, D/ E ratio will decrease gradually ( according to the negotiating with bank, it is expected that the repayment period will be approximately 3 years and 8 years for tranche A and tranche B, respectively and the interest rate is about MLR -1.5%. The Company expected to complete the acquisition by mid-year of Moreover, IFA views that with the portion of loan and total debt to equity ratio at times after making loan for this project for TPAC ( separated financial statement of the company) and equal to 1.21 times of the consolidated financial statement after post- transaction ( consolidated financial statement of TPAC and Sunrise which IFA calculated from audited financial statement of TPAC as of September 30, 2017 and internal financial statement of Sunrise as of September 30, However, IFA has done the calculation only to show the overview of the transaction for shareholder only. The calculation may have some discrepancies from those reviewed by an authorized auditor.) which is considered as high. However, both TPAC and Sunrise have a cash flow from business approximately THB million and THB million per year, respectively, which the Company can service the interest for the transection ( item Disadvantages of entering to the Transaction) (for TPAC, calculated from financial statement as of year ended 2016, and for Sunrise, calculated from financial statement as of year ended 2017.) However, the free cash flow may not be sufficient to service the loan principle amount during the proposed tenor of loan. Therefore, board of director had considered this issue and expressed their stance on protecting the benefit of the existing shareholder which IFA has already considered the possibility to issue new shares to the existing shareholders. The details and guidelines for raising funds or other contingency plan for future debt restructuring are under consideration. Discover Management Company Limited Page 44/104

45 2. Details of the Acquired Assets (Sunrise Containers Ltd.) 2.1. Details of Acquired Assets The company is entering into the transaction of the acquisition of the assets (either amalgamation or direct share acquisition) which the company s shareholding structure after post-transaction and will hold 80% of Merged Co. Details of the assets are as follows: Company Name Established under the Law of Country Type of the Company Address Registered Capital Paid up Capital Sunrise Containers Limited India Public Company that doesn t t listed in the stock market. 405 Acme Industrial Park off I B Patel Road Goregaon East Mumbai, Maharashtra, India INR 150 million or equal approximately THB 76 million INR 89.1 million or equal approximately THB 45 million 2.2. Characteristic of the Transaction The company is entering into the transaction of the acquisition of the assets (either amalgamation of assets and liabilities or direct share acquisition) which the company s shareholding structure after post-transaction and will hold 80% of Merged Co. TPAC expect to go through the amalgamation under the Law of India (details in 1.1 The Reason and Characteristic of Entering into the Transaction, however, the company does not have the approval from the authorized organization of transaction of direct share acquisition). However, the company has intention and high possibility in this amalgamation due to the acquisition of Sunrise has advantages as follows. Advantages of the Acquisition of Sunrise by Amalgamation 1) This Amalgamation of assets and liabilities is similar to direct asset acquisition. Merged Co. will be able to book premium its amalgamated assets therefore the depreciation will base on new amalgamated assets which leads more efficiency in tax planning. 2) The amalgamation allows Merged Co. to be an Indian resident therefore lower corporate income taxes than a foreign company (Indian company tax is approximately 33%, while foreign company tax is approximately 43%). 3) The amalgamation is similar to direct asset acquisition. Merged Co. will be able to use amalgamated assets as collateral to finance it acquisition which leads to tax planning by interest payment and reduce an exchange rate risk. 4) Simpler shareholding structure in final phrase of holding Merged Co. Disadvantages of the Acquisition of Sunrise by Amalgamation 1) The Amalgamation is subject to approval from the authorized organization of India. However, the Company s legal advisor is positive about the structure and believes the Company has high possibility to get approve. Discover Management Company Limited Page 45/104

46 2) The time of the Amalgamation (acquisition (about 4-6 month) is longer than standard acquisition due to the approving process from related government agencies. 3) Merged Co. need to use source of fund in the form of NCD in India which has higher interest rate than foreign interest rate, yet it will reduce the exchange rate risk Information of SUNRISE CONTAINERS LIMITED General Information Company Name : Sunrise Containers Limited ( Sunrise ) Location : 405, Acme Industrial Park Off I B Patel Road, Goregaon, Mumbai, India Telephone : Fax : Type of Business : A manufacturer of high-quality PET and PP preforms and containers for the pharmaceutical, FMCG, personal care products, and industrial products markets in India. Moreover, Sunrise also produces and sells plastic containers, i.e. jars, and bottles, under its own Sunpet brand CIN : U28129MH1986PLC Registration No. : Website : Registered Capital : INR 150,000,000 Capital Paid-Up : INR 89,100,000 Number of Shares : 8,910,000 shares Sunrise Business Sunrise Containers Ltd. Was founded in 1989 by Mr. K L Mundhra. Sunrise is primarily engaged in manufacturing and sales of preforms and containers from polyethylene terephthalate (PET) and polypropylene (PP) Sunrise provide variety of size and shape such as round shape, dome shape, wide mount preforms, wide mouth cylinder shape, regular bottle preforms, etc. Sunrise is also in pioneer group in develop a plastic bottle in substitute for glass bottle for pharmaceutical and alcohol beverage industry and solve the problem of such moisture control, high impact strength, heat resistance, ease, and weight for transportation. Every year, Sunrise produce and sell containers and preform under the brand name of Sunpet. Sunrise Containers Ltd. is headquartered in Mumbai and has 4 manufacturing unites; Silvassa, Dadra, Umbergaon and Haridwar. Discover Management Company Limited Page 46/104

47 Manufacturing Factories Sunrise has 4 located in 4 cities in India which has the total capacity more than 44,000 tons per year. Location of 4 factories Source: Vendor Due Diligence Report 1) Silvassa factory Silvassa factory was established in It is capable of using single stage Injection -stretch-blow molding or ISBM technique with a capacity of 4,754 tons per year (regarding to capacity in 2017). The production is mainly focusing on pharmaceutical containers. Due to it mainly produce pharmaceutical product containers so, there are clean room facility with DMF type III certificate to comply hygiene requirement. The factory has total production employees of 36 people. It s located in Survey No. 215/3, Piparia, Village Silvassa, D & N.H (U.T.) Map of the factory 2) Umbergaon factory Umbergaon factory was established in It is capable of using single stage ISBM and two stages of injection and blow molding technique. It has annual capacity of 20,837 tons per year (regarding to capacity in 2017). The factory can produce broad range of wide mouth preforms and containers. The factory has total production employees of 68 people. It s located in Dehri - Umbergaon Station Road, Village Dehri, Dist. Valsad, Umbergaon (Gujrat). Discover Management Company Limited Page 47/104

48 Map of the factory 3) Dadra factory Dadra factory was established in It is capable of using single stage ISBM and two stages reheat-stretchblow molding technique. It has annual capacity of 1,513 tons per year (regarding to capacity in 2017). The production is mainly focusing on wide mouth containers for FMCG industry. The factory has total production employees of 26 people. It s located in Gala No. F-18 TO 30 & G-1 TO 4, Zero Tax Industrial Estate, Dadra, D & N.H. (U.T) Map of the factory Discover Management Company Limited Page 48/104

49 4) Haridwar factory The first and second Haridwar factory was established in 2006 and 2016, respectively. Haridwar plants are one of the largest manufacturing of edible oil preforms. Both factory is capable of using single stage ISBM and two stages injection, molding and blowing technique. They are the largest facilities among all with capacity of 9,689 and 983 tons per year (regarding to capacity in 2017) for the first and second Haridwar respectively. The production is mainly focusing on preforms and containers. The first and second factory has production employees of 57 people and 21 people, respectively. It s located in Plot No. 6 & 7, Integrated Industrial Estate, Sector No.2 Haridwar Uttarakhand. Map of the factory Company Products Sunrise s products are clustered into 2 main product lines which are Preforms and Containers. The details of each product are as follows: 1) Preforms Sunrise preform product are divided mainly into 2 group: 1) First is wide mouth preforms. The product is used for FMCG product such as peanut butter, honey pickles, mayonnaise bottle. 2)The second is narrow mouth preforms, which is used for pharmaceutical, edible oil, lubricant oil, milk and juice. Type Product Example Diameter (mm.) Final Product Wide Mouth Preforms Peanut, Honey, Source, Candy, Butter, and biscuit. Discover Management Company Limited Page 49/104

50 Wide Mouth Preforms Pharmaceutical, Oil, Lubricant, Juice Milk, and syrup. Source: Sunrise 2) Containers There are 3 types of containers of company container product, classify by type of used: 1) Pharmaceutical bottle comes with round, dome& tapper, brute, and flat shape. 2 ) Edible oil bottle come with only regular oil bottle shape. 3) FMCG container, come with round, square, titanic and spice shape. Types Product example Capacity (ml.) Final Product Medical Supplies Bottles Medical Supplies Bottles Editable Oil Bottles 500 5,000 Editable Oil Bottles FMCG Containers 30 6,000 FMCG Containers Source: Sunrise Discover Management Company Limited Page 50/104

51 Revenue Structure Sunrise s business is clustered into 2 group, Containers, Preform, and Other Revenue. The details are as follows: Sources of Revenue Containers Preform (Unit: INR Million) Revenue Portion% Revenue Portion% Revenue Portion% 1, , , , , , / Other Revenue Total Revenues 2, , , Source: Vendor Due Diligence Report Remark: 1/Revenue from trading Caps is included in other revenue Shareholders Structure and Board of Director Shareholders before entering into the Transaction Shareholders of Sunrise as of November 15, 2017 Rank Shareholder s Name of Sunrise No. of shares % of Shares 1 K L Mundhra 2,794, S.K. Mundhra 1,069, D.P. Mundhra 1,069, Shreekishan Mundhra 946, D.K. Mundhra 903, K L Mundhra HUF 657, Hitesh Kumar Mundhra 562, Chanda Devi Mundhra 322, Hitesh Plastics Pvt Ltd 297, Dinesh Kumar Mundhra 117, Umesh Kumar Mundhra 117, Bhagwati Devi Mundhra 24, Rajesh Kumar Mundhra 16, Shreekishan Mundhra HUF 6, D.K. Mundhra HUF 6, Source: Implementation Agreement Total 8,910, Discover Management Company Limited Page 51/104

52 Shareholders after entering into the Transaction Shareholders of Sunrise or TPAC Packaging India Private Limited 1/ No. Major Shareholders 1/ Number of Shareholders % of Shares 1 The Company (and/or its designees) or the Hold Co. (and/or its designees) 2/ 7,128, KLM 718, Hitesh Kumar Mundhra 562, Chanda Devi Mundhra 322, S. K. Mundhra 178, Total 8,910, หมายเหต : 1/In case of the Amalgamation, Sunrise will be amalgamated with Hold Co. and change to Merged Co. or TPAC Packaging India Private Limited 2/It will be the Company (and/or its designees) in case of the and will be the Hold Co. (and/or its designees) in case of Share Acquisition Board of Director before entering into the Transaction Board of Directors of Sunrise as of November 15, 2017 Board of Director Name 1. KLM Managing Director 2. D.K. Mundhra Director 3. D.P. Mundhra Director 4. Hitesh Kumar Mundhra Director 5. Sudha Rathi Independent Women Director 6. Rajesh Jain Independent Director Source: Implementation Agreement Position Board of Director after entering into the Transaction Board of Directors of Sunrise or TPAC Packaging India Private Limited 1/ Board of Directors 2/ 1. Kevin Qumar Sharma 2. Aradhana Lohia Sharma 3. To be nominated by the Company 4. KLM 5. Hitesh Kumar Mundhra Remark: 1/In case of the Amalgamation, Sunrise will be amalgamated with Hold Co. and change to Merged Co. or TPAC Packaging India Private Limited 2/ In addition, 2 additional independent directors may be appointed on the board of directors, if required, in accordance with the applicable Indian laws. Discover Management Company Limited Page 52/104

53 Assets Current assets Financial Statement Statement of Financial Position 31 March March March 2017 INR Million % INR Million % INR Million % Inventories % % % Trade receivables % % % Cash and bank balances % % % Short term loans and advances % % % Other Current assets % % % Total current assets % % 1, % Non-current assets Fixed assets Tangible assets % 1, % 1, % Intangible assets % % % Capital work in progress % % / 0.28% Preoperative Expenditure % % % Non-current investments % % % Long term loans and advances % % % Total non-current assets 1, % 1, % 1, % Total assets 1, % 2, % 2, % Remark: 1/Capital work in progress, according to financial statement as of March 31, 2017 consists of building, machines, electric fitting, molds and dies under construction 31 March March March 2017 INR Million % INR Million % INR Million % Liabilities and shareholders' equity Current liabilities Short term borrowings % % % Trade payables % % % Other current liabilities % % % Short term provision % % % Total current liabilities % % % Non-current liabilities Discover Management Company Limited Page 53/104

54 31 March March March 2017 INR Million % INR Million % INR Million % Long term borrowing % % % Deferred tax liabilities(net) % % % Total non-current liabilities % % % Total liabilities % % % Shareholders' equity Share capital Registered Share capital % % % Reserve and surplus 1, % 1, % 1, % Total shareholders' equity 1, % 1, % 1, % Total liabilities and shareholders' equity 1, % 2, % 2, % Income Statement 31 March March March 2017 INR Million % INR Million % INR Million % Revenues Revenue from sales 2, % 3, % 3, % Other Income % % % Total revenues 2, % 3, % 3, % Expenses Cost of materials 1, % 1, % 1, % Change in inventories (7.16) -0.24% (26.75) -0.89% (60.35) -1.77% Cost of Goods Sold 1, % 1, % 1, % Employee benefit expenses % % % Depreciation and Amortization Expenses % % % CSR Expenditure % % % Other expenses % % % Manufacturing Expenses % % % Administrative expenses % % % Selling, distribution and other expenses % % % Net foreign exchange loss(gain) (13.41) -0.45% (10.42) -0.34% % Total expenses % % 1, % Profit before tax and finance cost % % % Finance cost % % % Discover Management Company Limited Page 54/104

55 31 March March March 2017 INR Million % INR Million % INR Million % Profit before tax % % % Tax % % % Profit for the year % % % Cash Flow Statement 31 March March March 2017 Net cash flows from (used in) operating activities Net cash flows from (used in) investing activities (167.47) (376.52) (304.93) Net cash flows from (used in) financing activities (225.07) (19.00) Net decrease in cash and cash equivalents (54.83) (1.93) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Important Financial Ratio 31 March March March 2017 Liquidity Ratio Current Ratio (time) Quick Ratio (time) Account Receivable Turnover (time) Average Collection Period (day) Inventory Turnover (time) Average Inventory Turnover (time) Account Payable Period (day) Payable Conversion Period (day) Cash Conversion Cycle (day) Profitability Ratio Gross Profit Margin (%) Operating Profit Margin (%) Net Profit Margin (%) Return on Equity (%) Efficiency Ratio Return on Asset (%) Fixed Asset Turnover (%) Total Asset Turnover (%) Discover Management Company Limited Page 55/104

56 31 March March March 2017 Leverage Ratio Debt to Total Asset Ratio (time) Debt to Equity Ratio (time) Interest Coverage Ratio (time) The Explanation of Financial Position and Operating Performance Revenue Revenue of Sunrise mainly comes from sale of preforms, and containers. Another source of revenue is other income which is primarily include interest income from fixed deposit, interest income on income tax refund, profit on sales of fixed assets and export incentive. In 2015, Sunrise had a total revenue of INR 2, million, increased by INR million or 10.44% from previous year which was a result from the increase in revenue from sales of preforms and containers that increase for INR million or 9.95% from previous year. In 2016, Sunrise had a total revenue of INR 3, million, increased by INR million or 2.12% from previous year which was a result mainly from the increase in revenue from sales that increase for INR million or 2.50% from previous year. Even though, Sunrise had growth of sales from preforms and containers for 13.88% from previous year, the plastics bread s price which is raw material of the products, decrease significantly so, Sunrise had to lower the price of products to keep the competitiveness which made Sunrise s revenue didn t increase as it should, as comparing to the increase of sales volume. In 2017, Sunrise had a total revenue of INR 3, million, increased by INR million or 12.82% from previous year which was a result from the increase in revenue from sales that increase for INR million or 12.34% from previous year due to the increase of sales of preforms and containers from previous year for 11.40%. However, in 2017 plastics beads is not fluctuation so, Sunrise doesn t need to adjust the products price as previous year. Hence, Sunrise has the increasing of revenue align with the increasing in sales volume. Cost of Goods Sold In 2015, Sunrise had cost of goods sold of INR 1, million, increased by INR million or 2.91% from previous year which align with the increasing in sales. However, in 2015 Sunrise improved the efficiency in cost of goods sold during the down trend of price of plastics beads, so cost of goods sold to revenue from sales ratio from operating decreased from 65.08% in 2014 to 60.91% in In 2016, Sunrise had cost of goods sold of INR 1, million, increased by INR million or 10.80% from previous year which moved inversely to the increasing of 2.50% in revenue from sales due to the price of plastics beads decreased significantly and Sunrise also improved the efficiency in cost of goods sold during the down trend of price of plastics beads, so cost of goods sold to revenue from sales ratio decreased from 60.91% in 2015 to 53.01% in In 2017, Sunrise had cost of goods sold of INR 1, million, increased by INR million or 15.63% from previous year which align with the increasing of 12.34% in revenue from sales. However, in 2017 plastics beads has slightly change so, cost of goods sold to revenue from sales ratio was 53.69% which was in the same level as in Discover Management Company Limited Page 56/104

57 Employee Benefit Expenses In 2015, Sunrise had employee benefit expenses of INR million, increased by INR million or 17.50% from previous year due to the increasing of wages, salaries and overtime labor expense, and factory labor which was because of Sunrise s plan to increase the production capacity and align with the increasing of capacity and sales of Sunrise. In 2016, Sunrise had employee benefit expenses of INR million, increased by INR million or 16.34% from previous year due to the increasing of wages, salaries and overtime labor expense, and factory labor for INR 9.42 million or 21.08% from previous year which align with the increasing of capacity and sales of Sunrise. In 2017, Sunrise had employee benefit expenses of INR million, increased by INR million or 29.65% from previous year due to the increasing of wages, salaries and overtime labor expense, and factory labor for INR million or 24.30% from previous year which align with the increasing of capacity and sales of Sunrise Manufacturing Expenses In 2015, Sunrise had manufacturing expenses of INR million, increased by INR million or 22.32% from 2014 which increase in the same direction as the increasing in sales of However, the increasing of manufacturing expenses had main reason from the expenses of power & fuel consumed in the production of INR million, increased by INR million or 35.78% from previous year. The manufacturing expenses to total revenue ratio increased from 13.90% to 15.39% In 2016, Sunrise had manufacturing expenses of INR million, increased by INR million or 10.75% from The increasing of manufacturing expenses had main reason from the expenses of power & fuel consumed in the production of INR million, increased by INR million or 11.25% from previous year which also align with the increase in sales of 13.88%. However, the manufacturing expenses to total revenue ratio increased slightly from in 2015 to 16.68% which was a result from changing of electricity power source of Haridwar factory. The Haridwar used to use diesel generators but in 2016 it s changing to buy electricity directly from electricity company which help reduce fuel cost. In 2017, Sunrise had manufacturing expenses of INR million, increased by INR million or 11.58% from The increasing of manufacturing expenses had main reason from packaging expenses of which increased by INR million or from previous year and align with the increasing of production capacity of 11.40%. The manufacturing expenses to total revenue ratio decreased from in 2016 to Administrative expenses In 2015, Sunrise had administrative expenses of INR million, decreased by INR (0.25) million or (0.62) % from previous year which had main reasons from the decreasing of legal & professional charge, rent rate & tax, vehicle & motor expense, etc. In 2016, Sunrise had administrative expenses of INR million, increased by INR million or % from previous year which had main reasons increasing in many expense such as legal & professional charge, to help consult and negotiate with the government for new business opportunity by initiate selling distribution channel for alcohol beverage industry, changing from using glass bottles to plastic bottles. Normally in this industry, glass bottle is a main packaging material. Therefore, entering into alcohol beverage industry will make Sunrise has higher growth in the future. Discover Management Company Limited Page 57/104

58 In 2017, Sunrise had administrative expenses of INR million, decreased by INR (0.9) million or (1.54) % from previous year which had main reasons from the decreasing of legal & professional charge, rent rate & tax. Net Profit In 2015, Sunrise had profit for the year of INR million, increased by INR million or %. Main reason was because of the increasing of sales volume 9.95% and higher gross profit margin due to company efficiency in reducing cost and used of raw material. In 2016, Sunrise had profit for the year of INR million, increased by INR million or % from A driving factor is the decreasing of raw material cost and the increasing of sales volume % from previous year. In 2017, Sunrise had profit for the year of INR million, increased by INR million or % from 2016 which align with the increasing of sales volume of preforms and containers % and there was a capacity expansion in Haridwar plant to support the increasing of sales in the future. Source of Fund During , Sunrise has interest payment equal to INR Million, INR Million, and INR Million, respectively. As the decreasing in interest payment during is related to the amount of short-term and long- term loan that has decrease due to Sunrise has repaid the debt. So, the interest burden of Sunrise decreases and result in higher Sunrise s net profit. Financial Status Asset At the end of March 2015, Sunrise has total assets of INR 1, million, increased for INR million or 3.94%. The increase was primarily driven by cash and cash equivalents from increasing in sales and purchasing of fixed assets. However, Sunrise s inventory was significantly decrease due to the price of raw material drop from At the end of March 2016, Sunrise has total assets of INR 2, million, increased for INR million or 20.70%. There are several driven factors that increase the total asset. 1) First, Sunrise has expanded the factory so, fixed assets of Sunrise increase. 2) Second is the increase in inventory to support the increasing of upcoming sales order. 3) Third is trade receivables. The increase in trade receivable was primarily because higher credit period offered to certain new customers in domestic market. At the end of March 2017, Sunrise has total assets of INR 2, million, increased for INR million or 19.10%. Various factor drove the increase. 1) First is increasing of inventory due to Sunrise was keeping raw material and inventory in anticipation of increase in raw material price. 3) The increase in trade receivable was primarily because higher credit period offered to certain new customers in domestic market and delay in collection of receivables from export customers. 3) Sunrise keep going on expansion of facilities so there was increase in fixed assets. Discover Management Company Limited Page 58/104

59 Liabilities At the end of March 2015, Sunrise has total liabilities of INR million, decreased by INR (133.64) million or (19.03) %. The main reason was that Sunrise paid back short-term and long-term borrowing for INR million to help decrease the interest burden of Sunrise. At the end of March 2016, Sunrise has total liabilities of INR million, increased by INR Million or %. In this year Sunrise has borrowed more from long term borrowing using for the expansion of factory. At the end of March 2017, Sunrise has total liabilities of INR million, increased by INR Million or 9.72% due to Sunrise has an increasing in short-term borrowing for INR million from previous year for purchasing fixed assets and for increase working capital which align with the increasing of Sunrises revenue. Shareholders Equity As of 31 March 2015, Sunrise s shareholders equal to INR 1, Million which increased by INR Million or 21.10% from the previous year due to the net profit form the operation. As of 31 March 2016, Sunrise s shareholders equal to INR 1, Million which increased by INR Million or 21.31% from the previous year which mainly increased from the increasing in net profit form the As of 31 March 2017, Sunrise s shareholders equal to INR 1, Million which increased by INR Million or 23.75% from the previous year which mainly increased from the increasing in net profit form the operation. Liquidity Net Cash Flows from Operating Activities At the end of March 2015, 2016, and 2017, Sunrise had had net cash inflow from operation activities of INR Million, INR Million and INR Million, respectively. Net Cash Flows from Investing Activities At the end of March 2015, 2016, and 2017, Sunrise had had continuingly net cash outflow from investing activities of INR (167.47) Million, INR (376.52) Million and INR (304.93) Million, respectively. Net Cash Flows from Financing Activities At the end of March 2015, 2016, and 2017, Sunrise had net cash flow from financing activities INR ( ) Million, INR (19.00) Million and INR Million, respectively. In 2015, Sunrise has net cash inflow from operating activities because of the high- sales volume growth and improvement in inventory management. For investing activities, Sunrise had net cash outflow mainly due to purchasing of fixed assets of a factory in Umbergaon for expanding capacity. In addition, Sunrise also paid back short term and long-term debt so, net cash flow from financing activities are negative. Overall, in 2015 Sunrise still has net increase in cash and cash equivalents of INR Million. The end of the March 2015 Sunrise had cash and cash equivalents equal of INR Million. Discover Management Company Limited Page 59/104

60 In 2016, even though Sunrise had a lot of cash outflow due to increase of stocking inventory, Sunrise gain more from jump in sales so, it made net cash flow from operating activities become positive. However, for net cash flow from investing activities, Sunrise purchased a lot of fixed assets in this year for capacity expansion to support the higher growth of the market. Therefore, Sunrise had net cash outflow from investing activities. Sunrise also make more of long term borrowing but also repaid short term loan and paid out dividend. Hence, Sunrise had a slightly cash out flow from financing activities. Overall, Sunrise has net decrease in cash and cash equivalents of INR (54.83) Million which made Sunrise had cash and cash equivalent at the end of March 2016 of INR 8.19 Million. In 2017, Sunrise still had a slightly increase in profit due to increase in sales and due to a lot of purchasing of fixed assets in the previous year for capacity expansion to support the higher growth of the market. So, Sunrise had a lot of depreciation and amortization to add back, even though Sunrise had been keeping more inventory because of anticipation of increase in raw material price. Hence, Sunrise even has higher net cash inflow from operating activities than previous year. For investing activities, Sunrise still had purchased fixed assets mainly due to setting up of new factory in Haridwar, such as plant & machinery, molds & dies, etc. so, it made net cash flow from investing activities become negative. Lastly, net cash flow from financing is positive due to Sunrise has loan more in for short term borrowing. As a result, Sunrise has net decrease in cash and cash equivalents for INR (1.93) Million which made Sunrise had cash and cash equivalents at the end of March 2017 of INR 6.26 Million. Important Financial Ratios Liquidity Ratio At the end March 2015, 2016 and 2017, Sunrise s current ratio were equal to 1.72, 1.95, and 2.09, respectively. Moreover, SUNIRSE s quick ratio is equal to 1.23, 1.22, and 1.28, respectively. It shows that Sunrise has been improving in liquidity over , and the reason is because of the increasing of sales. At the end March 2015, 2016 and 2017, Sunrise s average collection period were equal days, days, and days, respectively. Even though, the number has been increasing, there are no bad debt write off during the historical period and no provision for doubtful debt have been created. The increasing of average collection period was partly because new customers added in domestic and export market. At the end March 2015, 2016 and 2017, Sunrise s average inventory turnover was equal to days, days, and days, respectively. A drop in 2015 was due to decreasing in raw material price. The increasing of average collection period was mainly due to Sunrise stocking the raw material and finish goods inventory in the anticipation of increase in raw in material prices. At the end March 2015, 2016 and 2017, Sunrise s payable conversion period were equal to days, days, and days, respectively. The increasing in number of payable conversion was a result of extending the payment and accounted for stocking inventory in anticipation of increase in raw material prices, as well. However, Sunrise has average payable period due to Sunrise had to pay to main supplier of Sunrise for PET before shipping. As a result, cash conversion cycle at the end of March of and 2017 were days, days and day. The increasing in cash conversion cycle was due to Sunrise tried to engage new customers in both domestic market in export market, and stocking raw material and inventory in anticipation of increase in raw material prices. Discover Management Company Limited Page 60/104

61 Profitability Ratio At the end of March 2015, 2016 and 2017, Sunrise s gross profit margin is 39.68%, 47.35%, and 46.90% respectively. At the end of March and 2017, Sunrise s operating profit margin is 9.76%, 15.33%, and 14.33% respectively. At the end of March 2015, 2016 and 2017, Sunrise s net profit margin is 5.59%, 9.46%, and 9.63%, respectively. As aforementioned earlier, Sunrise gain more efficiency in utilizing raw material and prices of raw material drop in 2015 so, it made Sunrise s gross profit margin increase over years. In 2015, net profit margin dropped to 5.59% due to the electricity and fuel expense increased, and headcount increase to support the expansion in 2016 and 2017, which net profit margin increased to9.46% and 9.63%, respectively Efficiency Ratio At the end of 2015, 2016 and 2017, Sunrise s return on equity is %, 20.68%, and 19.19% respectively. The return on equity has been increasing due to Sunrise can keep performance better and better every year. There were many things Sunrise has done over the past few years such as engaging a new market in both export and import market, expand the capacity to support the increasing growth in sales volume and new market. Leverage Ratio At the end of March 2015, 2016 and 2017, Sunrise has debt to total asset ratio of 0.33 times, 0.33 times, and 0.30 times, respectively. Debt to equity ratio is 0.50 times, 0.49 times, and 0.44 times, respectively. As mention earlier, Sunrise had more capability of paying back debt which was result from the increasing of sales and net profit. Therefore, Sunrise can pay debt as payment term Industry Overview India India is the second world largest population which is approximately 1.28 billion people (source: Most of the population are Hinduism (approximately 79.8%). The country currently in developing and one of the fast growing economic in the world in India has GDP s growth of approximately 7.1%, where GNP is approximately USD 7.8 billion which is considered as the 6 th largest economic in the world, lower than England (Source: International Monetary Fund World Economic Outlook (April ) Plastics Industry Overview The plastic industry is a major driver for India's petrochemicals industry. Since plastic products permeate the entire spectrum of daily use items and cover almost every sphere of life like clothing, housing, construction, furniture, automobiles, household items, agriculture, horticulture, irrigation, packaging, medical appliances, electronics and electrical etc. However, a level of per capita consumption of plastic product in India is currently in low level as compared to developed countries Discover Management Company Limited Page 61/104

62 Plastic Consumption 2016 (Per Capita, Kg/Person) Demand Breakup of Plastics by Type (2016) Source: FICCI Despite being a highly populated country, India still lags leading economies like U.S., China, Europe, and even Brazil in consumption of plastics. However, in the last four years demand for plastics has grown at a CAGR of 8% owning to economic slowdown and depreciating of INR. On the other hand, it also shows that the potential of the industry even the economic slowdown. However, the low level of per capita plastics consumption in India (12 kg/person/year world's average of 24kg) is indicative of the strong growth potential available in the plastic industry. Plastics in India: Outlook ( ) End Use Industries Source: FICCI HDPE, LLDPE and LDPE are accounted for the largest share i.e., 36% of total consumption which Sunrise s product are in this group of demand. However, FICCI expects the demand for plastics in India to grow by 10% p.a. until 2021, with demand for engineering plastics expected to go up by 14% p.a. A significant reason that drive plastics industry is that customers have high demand in plastics, especially in agriculture and packaging industry. The Packaging & Agriculture sectors are expected to be major growth drivers for the Plastics industry in India. Moreover, growth in construction and infrastructure, rising incomes and more & more women entering the workforce are also factors driving the demand for plastics in daily uses. Additionally, rising thrust on 100 smart cities will further propel the growth of plastic Discover Management Company Limited Page 62/104

63 industry. Considering the critical elements of any smart cities such as water management, infrastructure, waste management, etc. the usage of plastics can bring efficiency in all such fields and can therefore, make the smart cities more sustainable and cost effective Industry Overview of Plastic Packaging The main factor that drive plastics packaging industry is the growth of economic and retail business. However, the retail business still has possibility to grow by 16% p.a. until Plastics in India: Outlook ( ) Indian Retail Industry Outlook (USD Billion) Source: Indian Retail Reports, Analysis by Tata Strategic During the past few year, India has significant growth in economic which make the India s market interesting for groups of multinational retail business. The incoming of multinational firms made changes the structure of retail business in India significantly (such as improvement in technology, diversity, and form of packaging). Such the improvement, it stimulates the demand to increase significantly, especially for food and beverage, and pharmaceutical packaging. Indian Food & Beverage Industry Outlook (USD Billion) Indian Pharmaceutical Market Source: Indian Retail Reports, Analysis by Tata Strategic Growth of food and beverage industry, and pharmaceutical industry, two major industries that are main target of plastic packaging in India, were expected to growth by 25% and 13-15% p.a. until 2020, respectively. Hence, FICCI expect packaging industry to grow by 16% p.a. However, during the past 5 years ( ) the expense in food Discover Management Company Limited Page 63/104

64 industry especially for food packaging had been increasing due to the rising in per capita income and more women entering the workforce. According to data from FICCI, plastics packaging in India has high potential growth due to per capita consumption of plastic product in India is very low (4.3 kg/ person/ year) as comparing within Asia such as China and Taiwan which has per capita consumption of 6 kg and 19 kg per person per year, respectively. Therefore, it s obvious that plastics packaging is an opportunity business. Source: FICCICI Due to the variety of plastic usages and incremental benefit since its reusable by consumers, FICCI expects that plastic packaging in India will grow 18% p.a. until 2021 especially for plastics packaging for food and beverage industry, and pharmaceutical industries (source: FICCI) 2.5. Relationship between the Company and Sunrise Major shareholders and board of directors of the Company are not related to major shareholders of Sunrise and board of director of Sunrise Major Shareholders of the Company and Sunrise No. Major Shareholder of Sunrise Major Shareholders of TPAC 1 K L Mundhra Anuj Lohia 2 S.K. Mundhra Eakawut Nerngchamnong 3 D.P. Mundhra Thai NVDR Co., Ltd. 4 Shreekishan Mundhra Theerawit Busayapoka 5 D.K. Mundhra Anuttree Nerngchamnong 6 K L Mundhra HUF Niti Nerngchamnong 7 Hitesh Kumar Mundhra Yothin Nerngchamnong Discover Management Company Limited Page 64/104

65 No. Major Shareholder of Sunrise Major Shareholders of TPAC 8 Chanda Devi Mundhra Pornchai Rattananontachaisook 9 Hitesh Plastics Pvt Ltd Mr. Verakit Apiratphachasin 10 Dinesh Kumar Mundhra Mrs. Somsalit Ploybuth 11 Umesh Kumar Mundhra 12 Bhagwati Devi Mundhra 13 Rajesh Kumar Mundhra 14 Shreekishan Mundhra HUF 15 D.K. Mundhra HUF Board of Directors of the Company and Sunrise No. Board of Directors of Sunrise Board of Directors of TPAC 1 KLM (Director) Kevin Qumar Sharma (Chief Executive Officer) 2 D. K. Mundhra (Director) Theerawit Busayapoka (Managing Director) 3 D. P. Mundhra (Director) Pairoj Poungpong (Assistant Managing Director) 4 Hitesh Kumar Mundhra (Director) Anil Kumar Kohli (Chief Technical Officer) 5 Sudha Rathi (Independent Director) Anong Sompitthayanurak Vice President Finance and Administration) 6 Rajesh Jain (Independent Director) Pirom Popirom (Vice President Business Development) 7 Chakkaphan Sukhinthawarin (Vice President Production) 2.6. Relationship between Hitesh Plastics Private Limited and Sunrise Hitesh Plastics Private Limited is a current shareholder of Sunrise which ultimate shareholders are KLM, holding 75.27%, Chanda Devi Mundhra, holding 11.90%, and Hitech Kumar Mundhra, holding 12.82%. Hitesh Plastics Private Limited produce and sell caps to Sunrise. Therefore, if after entering into the Transaction, Hitesh Plastics Private Limited still sell caps to Sunrise, it will be considered as a related transaction which will need the approval from audit committee. However, the order of caps of Sunrise is only 0.46 of the total cost of goods sold Sunrise s contingent liabilities as of March 31, 2017 are as summarized below: Contingent Liabilities Unit: INR million Unit: THB million Guarantees given by the bankers Excise duty/service tax under dispute 18 9 Capital commitments 5 3 Total Sunrise s contingent liabilities as summarized above will not affect the Consideration. Discover Management Company Limited Page 65/104

66 3. Details and Important Information of TPAC - Attachment 1 4. The appropriateness and benefits of the Transaction 4.1. Objective of entering to the Transaction TPAC sees the opportunity for its business expansion especially at the potential high growth market such as India, one of the highest growth market for plastic packaging industry (expected growth 18% p.a. until 2021). Comparing to the market growth in Thai, plastic packaging industry has shrined by (0.62%) in year 2016 (source: Division of Industrial Economics), Indian market has more potential. For the Company to provide the highest return to its shareholders, expanding its business is TPAC business policy. Acquisition of Sunrise will support TPAC s long term growth. As the Company is investing in to its core business, the Transaction will enhance its competency and enhancing its economy of scale and economy of scope resulting in opportunity to expand its production capacity, customer base, distribution channels, production efficiency, and knowledge of new products. Finally, this investment could lead to higher performance and profits, as the Company will have to consolidate Sunrise s financial statements in to its financial statements ( after the Amalgamation shall be Merge Coo s financial statements), as Sunrise s financial statement has been continuously profitable. IFA has opinion that the objective of entering to the Transaction is appropriate due to the Company is investing in to its core competency business and simply expand its business to the higher potential growth market which aligns with its business policy 4.2. Advantages, Disadvantages, and the Risks of entering to the Transaction Advantages of entering to the Transaction 1) The Company can immediately expand to one of the fastest growing market in the world (India): According to Industrial Analysis (details in 2.4.2), plastic packaging industry has high potential growth especially food packaging, FMCG and pharmaceutical industry. The plastic packaging is expecting to grow 18% p.a. until 2021 ( source: FICCI). Investing in Sunrise will ensure the present of TPAC in one of the highest growth markets in the (source: British Plastic Federation). Comparing to traditional expansion to such market, there is high possibility for the Company to spend more time and money to enter to the market. Moreover, traditional expansion will make the Company missing the growth window to expand its market in India. 2) Timing of the Transaction is appropriate as the Company will gain the most benefit from such high growth of Indian market which leads to lower investment risks: During India social structure and infrastructure have changed, as the result the demand for plastic packaging has gone up and expecting to grow 18% p.a. between Therefore, investing in Sunrise before, the Company may face market uncertainty, however investing in Sunrise later, the Company may miss the market growth opportunity for the next 4-5 years. Discover Management Company Limited Page 66/104

67 3) Entering to the Transaction ( Amalgamation) is appropriate and will make the Company to gain utmost benefit: Amalgamation is not only shortening the time for the Company to enter Indian market but also help the Company to manage its tax structure more effectively. Acquisition strategy is one of the most effective method to get in to different market which in the shortest period, organic expansion to Indian market may take 2-3 years to build facilities and additional few more years to gain access to customers by then the Company will miss the growth opportunity (expecting to grow 18% p.a.). Additional benefit of Amalgamation using FPI-NCD is tax planning. Under the FPI-NCD scheme, Merged Co. will be able to book its acquisition assets at the purchasing price at the same time use the assets as collateral for acquisition therefore the Company will benefit not only from high depreciation but also from the use of its acquisition assets of Sunrise or Merged Co. 4) Invest into high potential target: Sunrise has many potentials (details in 1.8.1). Sunrise is currently the 3 rd largest revenue and 2 nd largest in production for plastic packaging business. TPAC will double its production capacity after the acquisition which leads to higher revenue and profits in the future. Source: Vendor Due Diligence Report Sunrise potentials come from 3 major factors: I. Sunrise has continue developed its processes such as the first company that produced the plastics containers for pharmaceutical industry, produce wide mouth preform and the biggest producer of wide mouth preforms and containers as well as the best pharmaceutical package production line. Currently, Sunrise is negotiating the replacement of the glass packaging (source: Vendor Due Diligence Report). Source: Vendor Due Diligence Report Discover Management Company Limited Page 67/104

68 II. Sunrise has lower risk comparing to its peer. Sunrise can diversity its incomes and products therefore its performance is not depending on each particular product or. Source: Vendor Due Diligence Report III. Sunrise has 4 with total production estimated 44,000 tons / year. Spreading production facilities to 4 cities is reducing the locational risks. Moreover, Sunrise also benefits from such lower electrical rate in Umbergaon and Dadra (40% of production cost is electrical) (Source: Vendor Due Diligence Report) Source: Vendor Due Diligence Report 5) Invest in to sustainable growth company which could leads to good return on investment: According to Sunrise s financial statements for the past 3 years, its revenues and profits has increased continuously for INR million from 2014 to INR 3, million in 2017, compounded annual growth rate of 8. 38% p. a. (compounded annual growth rate = (Beginning value/ending value) (1/Number of years) -1). Net profit has increased for INR million from 2014 to INR million in 2017, compounded annual growth rate f 15. 9% p. a. (compounded annual growth rate = (Beginning value/ending value) (1/Number of years) -1). The increase of revenue and net profit are clearly shown the potential of the company. Source: Vendor Due Diligence Report Discover Management Company Limited Page 68/104

69 Moreover, based on management financial statement as of 30 September 2017, Sunrise has interest bearing debt of INR million and the interest bearing debt to total equity ratio at 0.10 time therefore Sunrise has more room for additional loans in the future. 6) Potential for customer expansion: As the major customers of TPAC and Sunrise are different therefore it is a potential for customer expansion especially international customers. 7) Potential Business Synergies: As the Company can expand its customer base, distribution channels, raw material saving and high skill labor management and knowledge sharing, TPAC and Sunrise could both benefits from such synergies, which could increase the revenues and reduce its production costs. Moreover, both companies have been in the business for more than 30 years and have continued developed production process and factory management and Sunrise is currently the world class player. Moreover, not only TPAC and Sunrise have similar production process and machines, both also has similar product and differences as detailed in the table below: Similar Group of Products between TPAC and Sunrise Group of Products TPAC Sunrise -Packaging for foods and beverages TPAC -Packaging for personal cares Different Group of Products Sunrise -Packaging for pharmaceuticals Discover Management Company Limited Page 69/104

70 -Packaging for kitchenware and household -Packaging for editable oil -Product for industrial -Preforms From doing Due-Diligence, the IFA has analyzed the similarity and difference of TPAC and Sunrise s products, and found that even both company has different product, the production process are the same. There might be some differences in the mixture of raw material, characteristics, and customers base, but main concentration of both company is packaging for foods and beverages. Investing in Sunrise will make both companies shares knowledge and technique in production of similar product, exchange labor force, and develop the products which will help to improve the efficiency in production of both companies. In addition, both companies can also be a sales distributor of one another and share knowledge about the different products, especially for packaging for pharmaceuticals (TPAC has not has this group of products yet) which is the most expensive among plastic packaging and has complicated production process and must comply with hygiene standard more than other packaging in for other industry products 8) The company can have an efficient tax planning from takeover of Sunrise by Amalgamation: However, this amalgamation, TPAC will take over Sunrise by Amalgamation(FPI-NCD) which can be recorded as an asset in term of tangible asset that equal to asset that paid for Sunrise s shareholder. As a result of Amalgamation, the company can reduce the amount of depreciation based on amount that paid for Sunrise s shareholder. In addition, the Amalgamation will allow TPAC to make use of cash flow and asset of Sunrise as a collateral to borrow money to repay for Sunrise s shareholder in entering to the transaction. Since TPAC able to record asset from Amalgamation as tangible asset and can make use of it to make loan that paid for Sunrise shareholders, TPAC will have efficient tax planning by paying less tax significantly (as comparing to buying shares directly from Sunrise s shareholder). The details are as follows. Discover Management Company Limited Page 70/104

71 Unit: Million INR Income Statement as of March 30, 2017 Income Statement after Tax Planning Total Revenue 3, , Total Expense 2, , Difference Depreciation / Earning Before Tax Tax rate 33.99% Tax / Net Profit Remark: 1 The IFA forecast depreciation calculated from cost of assets without lands as in financial statement 12 months ended March 30, / Actual Tax paid according to financial statement 12 months ended March 30, 2017 Even though tax planning for Amalgamation(FPI-NCD) will make net profit of Sunrise decrease to be INR million (if consider from separated financial statement of Sunrise), when consolidate with TPAC s financial statement, TPAC will have cash flow addback from depreciation of INR and could save tax for INR million, which is higher than the decreasing in net profit. Hence, it shows that TPAC will have tax benefit after Amalgamation (FPI-NCD). 9) Source of fund for the Transaction comes from loans: therefore, the Company s shareholders are not getting immediate effect Disadvantages of entering to the Transaction 1) Increase interest bearing debts and interest expenses: The money for acquiring Sunrise is estimated to be THB 2, million. The Company is expecting to use the loan of THB 2,000 million from local financial institution and NON-Convertible Debenture of INR 2,600 million (estimated to be THB 1, million). As the result, the Company is estimated to have additional interest expense of THB million per year. TPAC is estimated to have additional interest expenses of THB 100 million per year ( assuming 5% p. a. interest) and additional of THB of million per year (assuming 9% p.a. interest) for Merged Co. Company EBITDA as of latest audited financial statement (THB million) Interest before the Transaction (THB million) Pro-forma interest after the Transaction 3/ (THB million) TPAC 1/ Hold Co 2/ Note: 1/ Audited financial statement 2016 (January 2016 December 2016) 2/ Audited financial statement 2017 (April 2016 March 2017) 3/ Assume 5% p.a. for local financial institution and 9% p.a. for non-convertible debenture. However, the interest payment is subject to change depending on the actual money draw down which company will use Discover Management Company Limited Page 71/104

72 loan from financial institution in Thailand THB 2,000 million and Non-Convertible Debenture THB million. The IFA calculates interest as a whole year instead of calculate interest based on actual date on the draft term sheet so that investor can see the interest as the overall. (loan is estimated by the IFA. The actual loan amount depends on the appropriateness and debt structure plan in the future.) IFA has opinion that both companies EBITDAs are sufficient for additional interest expense, but it is a risk that both companies can repay the principles as the result, both company may have to increase their registered capital or refinance their debts in the future. However, according to the draft term sheet from financial institution in Thailand, IFA views that there is high possibility that company must comply with the draft of draft term sheet so, the company must raise the capital by issuing shares which will help the company can repay principle as according to the payment term. 2) The Company will invest more than its total assets: The Company is investing % of its total assets for the Transaction which is INR 4, million or equal to approximately THB 2, million. As the result, the Company s interest-bearing debt to equity ratio (only Company financial statement as of 30 September 2017) will increase from 0 to 1.88 times and 1.21 times for consolidated financial statement as of 30 September 2017 ( IFA calculates consolidated financial statement based on TPAC review financial statement as of 30 September 2017 and Sunrise management financial statement as of 30 September 2017, IFA provides consolidated financial statement just for overview purposes and it may be different from audited financial statement) As of 30 September, 2017 Before the Transaction After the Transaction Pro-forma after the TPAC Sunrise TPAC Sunrise Transaction Total Interest-Bearing Debt (THB , , million) Shareholder Equities (THB million) 1, , , Total Interest-Bearing Debt to Equity Ratio (times) Notes: 1/ BOT Exchange rate [IND: THB = 1: ] 2/ Sunrise management financial statement as of 30 September 2017 After the Transaction, interest-bearing debt to equity ratio will increase substantially to the maximum limit of draft term sheets. The Company therefore has potential to breach agreements for both local financial institution and bond holders especially Merged Co., which is at high potential growth market ( expected growth of 18% p. a. ). However, the Company s board of directors are aware of this problem and on the process of finding the best solution. According to the draft term sheet from financial institution in Thailand, IFA views that there is high possibility that company must comply with the draft term sheet so, the company must raise the capital by issuing shares which will help the company can repay principle as according to the payment term. Discover Management Company Limited Page 72/104

73 3) Ability to pay dividend is reduced: Entering to the Transaction, the Company is expecting additional interest payment of THB million a year ( THB 100 million for TPAC and THB million for Merged Co. based on IFA estimate of 5% p.a. for local financial institution and 9% p.a. for non-convertible bond of international financial institution. According to the Company s last 4 quarters net profit as of 30 September 2017 and Sunrise based on 31 March 2017, the profits are THB million and THB million, respectively (excluding LED Casing business). Entering to the Transaction will have affect to the Company ability to pay the dividend, however the Company s board of directors are aware of the problem and on the process of finding the best solution. The IFA views that entering in to the Transaction is a significant change of the company from being a company that has high dividend payout turn to be growth company. Such change reflects the changing of business strategy and may have a significant impact on future dividend policy. However, for growth company, there will be no dividends as the company considers its investment as high profitable investment such as technology companies in foreign country. Theoretically, the shareholders will benefit from the increased share price of the company instead of dividend. 4) The Company cannot fully control Merged Co. even though the Company hold 80% of Merged Co. According to Shareholders Agreement, shareholders meeting requires directors from both parties, and the resolution of fundamental issues requires the approval from the directors from both parties, so the company cannot fully manage Merge Co. even the company hold 80% of Merge Co. IFA views that this agreement obviously show that company treat KLM group as a partner and also want KLM to maintain share proportion which is respecting each other, because the Transaction is both willing. Normally, acquiring company want to hear the opinion of former directors before make such decision. However, there are more representative directors of the Company, which the company has power to control Merged Co. because the quorum requires at least 1 directors from the Company. For the issues that requires the approval from both parties, the independent financial advisor views that company requires to have KLM as its business partner and would like KLM to maintain the share proportion. For fundamental issue, the company is required threefourths of the total votes for the approval in order to protect the minority shareholders (same principle is also applied in India). As the fundamental minority shareholder (KLM group) in Merge Co., Ltd. holds 20% of shares, company has deducted the minimum shareholders rights according to the regulation from 25% down to 20% and the said rights shall be terminated if KLM group holds less than 10% of total shares. IFA views that this agreement is a normal practice for strategic business partner that holds less than 25% of total shares. Discover Management Company Limited Page 73/104

74 The Risks of entering to the Transaction 1) Risk of losing the deposit of USD 3 million or THB million: If TPAC fail to complete the Transaction, the Sellers may forfeit the deposit as a break fee in case of failure or refusal by the Hold Co. to complete the Transaction according to the summary of the Implementation Agreement (item 1.7.1). 2) Risk of not getting approval from related government agencies for Amalgamation: As the Amalgamation process needs approval from related government agencies (NCLT), therefore if TPAC is not getting approval from such agencies. TPAC will have to directly purchase the shares from the Sellers and will not get tax benefits from Amalgamation process as stated in section which will have direct affect to its cash flow and tax benefits. 3) Foreign exchange rate risk: The Company is planning to use THB from financial institution in Thailand and INR from non-convertible debenture. However, for the original registered capital for Hold Co. before merger, the Company needs INR. The Company will have exchange rate risk on the transaction. The first registered capital increase transaction for Hold Co. is one-time transaction. However, the IFA also analyses standard deviation of 2 years historical movement of INR/ THB, and the standard deviation is equal to 1.44% which is quite low as comparing to the fluctuation of other currency. Future transactions that may related to INR will be matched with Merged Co. s INR revenue and profit therefore the foreign exchange rate risk is limited INR/ THB Graph Source: Thomson Reuters 4) Risk of breaching its bond covenants and draft term sheet: According to draft terms and conditions, the Company and Merged Co. has restrictions on interest-bearing debt to equity ratio: D/ E Ratio, less than 2 and 2.5 times of consolidated financial statement for foreign financial institution and Thai financial institution respectively. IFA has estimated interest-bearing debt to equity ratio after the Transaction to be 1.21 times ( IFA calculates consolidated financial statement based on TPAC review financial statement as of 30 Discover Management Company Limited Page 74/104

75 September 2017 and Sunrise management financial statement as of 30 September 2017, IFA provides consolidated financial statement just for overview purposes and it may be different from audited financial statement). As the market is expanding, there is high possibility for Merged Co. to expand its production capacity therefore interest-bearing debt to equity ratio is likely to increase which leads to breaching the covenants. Moreover, Thai financial institution also demand the Company to increase its paid- up capital (under negotiation) therefore if the Company can t renegotiate or not be able to increase its paid-up capital, the Company has a risk of breaching its covenants. The Company board of directors are aware of the situation and has ensured the IFA that if the Company needs to increase its paid- up capital, existing shareholders are the priority. 5) Risk of capital increase: According to draft term sheet and conditions from Thai financial institution, the Company needs to increase its paid-up capital to THB 500 million within 1 year after drawdown and has to maintain its interest-bearing debt to equity ratio: D/E Ratio at lower than 2 times of its consolidated financial statement which IFA is estimated the interest-bearing debt to equity ratio after the Transaction will be 1.40 ( IFA calculates consolidated financial statement based on TPAC review financial statement as of 30 September 2017 and Sunrise management financial statement as of 30 September 2017, IFA provides consolidated financial statement just for overview purposes and it may be different from audited financial statement). Therefore, if the Company can t renegotiate or not be able to increase its paid-up capital, the Company has a risk of breaching its covenants. The Company board of directors are aware of the situation and has informed the IFA that if the Company needs to increase its paid- up capital to maintain interestbearing debt to equity ratio in a flexible level and reduce risk of breaking the covenant with financial institution, benefits of existing shareholders are the priority. However, to help shareholders can clearly understand the overview, the IFA simulates the possibility that the Company increase its registered capital by not less than THB 500 million within 10 months from the drawdown date and procure the shares to be paid- up within 12 months. The IFA sets the assumption as follows: - Issue share by Right Offering or RO for million shares at Par Value of THB1 which is current Par Value - For the price of RO, IFA assumes the Company will use market price (the average market price of 7-15 days after The Board of Directors Meeting No. 6/2017 of Thai Plaspac Public Company Limited ( the Company ) held on November 14, 2017 resolved to approve the Transaction) and discount by 10% for existing shareholders. - The summaries are as follows: Discover Management Company Limited Page 75/104

76 Current Registered and Paid-Up Capital (Million THB) Registered Capital as required by financial institution (Million THB) Number of Issued Shares (Million Shares) Price of Issued Share (THB/Share)1/ Amount that TPAC will receive after raising capital Loans amount from financial institution Available cash after debt repayment , , , Remark: 1/ Average market price of 7-15 days after The Board of Directors Meeting No. 6/2017 of Thai Plaspac Public Company Limited ( the Company ) held on November 14, 2017 resolved to approve the Transaction, and discount by 10% (Source: SET) According to the aforementioned assumption, the Company will receive THB 3, ,322 million, which is higher than loans amount from financial institution for the Transaction. 6) Risk of Control Dilution and Earnings Dilution: As the Company has the risk to increase its paid-up capital to maintain its interest-bearing debt to equity ratio, if the Company increases its paid-up capital by way of Private Placement, existing shareholders will have Control Dilution and Earnings Dilution. The Company board of directors are well aware of such dilution effect and had ensure the IFA that if the Company needs to increase its paid-up capital to meets terms and conditions of its loan agreement. Existing shareholders are the priority. If the Company increases its paid-up capital by the way of right offering, there will be no risk of control and earnings dilution. However, there is a possibility of price dilution, if the Company issues additional shares at lower the market price. 7) Risk of unexpected performance of Merged Co.: As the Company has no experience managing Indian company, the Company may face the risk of unexpected performance of Merged Co. However, the Company has more than 20 years of experiences managing the same business therefore the risk of unexpected performance is low. The risk of external forces that could lead to unexpected performance is minimal due an expected market growth of 18% p.a. for the next 4-5 years. 8) Risk of option price from put option: Since KLM Group may request that the Company buy all his shares in the Merged Co. or Sunrise (as the case may be) in 2021 which the option price is determined by EBITDA mainly. Therefore, in the next 3 years, Merged Co. may have good performance which will drive the EBITDA to be significantly higher so, the Company have to purchase shares of KLM Group (20% of Merged Co.) at a significantly higher price which directly affect shareholders for this burden. On the other hand, the Company, major shareholder of Merged Co., also benefit in 80% of EBITDA that will increase in the future and will affect directly shareholders return as well. 9) Risk of losing business partner in the future: Since KLM Group the KLM Group may request that the Company buy all his shares in the Merged Co., the Company will loss business partner in the future and will make management may not be as convenient as it should be. However, according to the interview Discover Management Company Limited Page 76/104

77 with the executive, the Amalgamation is willing both parties and business partner that both parties will to work together in the future. 10) Risk of unable to enter into the Transaction even though it gets the approval from shareholders: Since the Company call of shareholders meeting at the Maximum Acquisition Costs of not more than INR 4,692 or equal to approximately THB 2, which is the consideration that the Sellers will receive, calculated by the formula for the Consideration calculation ( item 1. 6) which can be calculate at the Completion- Date. Therefore, at the Completion- Date, if the Consideration is higher than INR 4,692 or equal to approximately THB 2, which is the appropriate price calculated by the IFA, the Company can t enter into the Transaction. However, according to the formula for the Consideration calculation ( item 1. 6) if Sunrise doesn t t have a significant change to the business, the Consideration may not exceed the Transaction size calling the shareholders meeting for the approval Advantages and Disadvantages of not Entering to the Transaction Advantages of not entering to the Transaction 1) No need to put the Company to very high leverage and the Company can use its working capital for investment in local expansion which may need less investment: If the Company is not entering to the Transaction, the Company will not require to increase its leverage of THB million and responsible for such interest expense. However, acquiring Sunrise and expanding its business to potential market will provide long term growth to the Company. 2) The Company can reduce its risk for investment in India: The Company will have the risk of conducting the business in India which the Company never had experiences. However, India is one of the fastest growing for plastic packaging business. Acquiring Sunrise, experiences running the business in the country, is calculated risks the Company is willing to take and will benefits the Company in the long term Disadvantages of not entering to the Transaction 1) The Company will lose business opportunity: Not entering to the Transaction, the Company will lose the opportunity to enter Indian market, highest growth in the world. As Thailand market is shrinking, not entering to Indian market will cut its opportunity for growth and could reduce the long-term growth to the Company and its shareholders return. Discover Management Company Limited Page 77/104

78 5. Analyzing Ability to Manage Relevant Factors after Entering into the Transaction 5.1. Analyzing ability to manage liabilities that the Company use for entering into the Transaction The IFA has analyzed the impact on loans payment capability into 2 cases 1) The Company will raise capital according to draft term sheet from financial institution in foreign country (detail in item ): The Company will raise the capital increase its registered capital by not less than THB 500 million which can be used to repay all of the liabilities. 2) The Company will not raise the capital but will use Cash flow to pay interest and principle from forecasted income statement and cash flow statement: The IFA has done the financial projection of TPAC for 5 years ( ), based on TPAC s financial statement during 2014 quarter 3, 2017 and public information, and forecasts income statement and cash flow statement as post- Transaction under the following assumption: - IFA assumes that in 2018, selling price of TPAC is equal to 3 years historical average and fixed throughout the forecasted period. - IFA assumes that quantity growth in 2018 from 2017 is 1.30% p.a., regarding to 5 years historical average of core inflation from BOT, and fixed throughout the forecasted period. - IFA assumes that cost of goods sold is % of total revenue from sales, regarding to 2 years historical average ( ) due to in 2015 there was high fluctuation in crude oil price which relate to plastic bead price, therefore IFA doesn t t take that number into calculation - IFA assumes that wages and salaries growth in 2018 from 2017 is 1.30 p.a., regarding to 5 years historical average of core inflation from BOT, and fixed throughout the forecasted period. - However, the assumption for TPAC s projection bases on public information and conservative basis which the IFA doesn t t use information from the Company Based on aforementioned assumption, TPAC s financial projection can be summarized as follows: Unit: Million THB 2014A 2015A 2016A 2017F 2018F 2019F 2020F 2021F 2022F Total Revenue 1, , , , , , , , , Cost of Goods Sold 1, , , , , , , , , Selling Expense Administrative Expense Total Expense 1, , , , , , , , , Financial Cost Earning before Tax (EBT) Tax Net Profit Net profit margin 5.54% 6.53% 6.84% 6.89% 6.76% 6.76% 6.76% 6.76% 6.76% Discover Management Company Limited Page 78/104

79 Assumption for forecasting consolidated financial statement of Sunrise and TPAC - In forecasting consolidate financial statement of Sunrise and TPAC, the IFA has done only for the purpose that shareholders can see the overview of the financial statement after the Amalgamation. The consolidated financial statement of Sunrise and TPAC may have discrepancy from the certified auditor due to TPAC and Sunrise has different accounting period. TPAC has accounting period ends on December 31 while Sunrise s accounting period ends on March The IFA use financial statement ended December 31 of TPAC to consolidate with financial statement ended March 31 of previous year of Sunrise. - IFA assumes that there will be loans of THB 2,383 million from Thai financial institution and foreign financial institution for THB 2,000 million with 5% interest and THB 383 million with 9% interest, respectively. - IFA uses projection of Sunrise financial statement before entering into the Transaction, in parts of revenue, expense, depreciation, and tax without considers tax benefit from the Amalgamation. Projection of consolidated financial statement of TPAC and Sunrise Unit: million 2014A 2015A 2016A 2017F 2018F 2019F 2020F 2021F 2022F Total Revenue 3, , , , , , , , , Cost of Goods Sold and Total Expense 2, , , , , , , , , Financial Cost after Entering into the Transaction Earning Before Tax (EBT) Tax Net Profit Cash and Cash equivalent , Total Assets 2, , , , , , , , , Interest Bearing Liabilities , , , Total Liability , , , , , Total Equity 1, , , , , , , , , D/E Ratio EBITDA Interest and Principle repayment DSCR Discover Management Company Limited Page 79/104

80 However, by simulating virtual financial statement of TPAC and sunrise, IFA can analyze financial ratio as required in draft term sheet from financial institution. The details are as follows: DSCR: according to the drafts term sheet from Thai and foreign financial institution, after the Amalgamation DCSR must not less than 1.1 times. The virtual financial statement indicates that in 2021 DSCR is equal to 0.85 times which is lower the requirement, therefore it shows that TPAC may have chance that the Company will break the covenant of drafts term sheet. D/E Ratio: according to the draft term sheet from foreign financial institution, after the Amalgamation the Company must maintain D/E ratio according to its consolidated financial statement must not higher than 2.0 times. From virtual financial statement, it indicates that the Company can maintain D/E Ratio Net available cash: the IFA has simulated virtual cash inflow of TPAC after entering into the Transaction to analyze interest and principle repayment and found that in 2019 TPAC may not be able to repay principle an interest as state in draft term sheet from financial institution due to net available cash after interest is THB million, which is low. From analyzing DSCR, D/E Ratio and net available cash flow, TPAC cannot maintain financial ratio as required by financial institution. In addition, IFA may not have sufficient cash for principle and interest repayment to financial institution. However, the Board of Directors of the company have been aware the problem and stated their position clearly to protect the best interest of the shareholders as priority. IFA has reviewed in details of the possibility of raising capital by issuing shares for the existing shareholder, which is under the consideration about details and process as well as alternative for future debt to equity structure Analyzing Return on Investment From analyzing ability to manage liabilities that the Company use for entering into the Transaction (item 5.1) TPAC may need to raise the capital. If TPAC raise the capital as aforementioned (registered capital of not less than THB 500 million), Sunrise will generate cash flow to the Company within 2023 or in the next 6 years which aligns with the calculation of company s value which is 8 times of EBITDA. Million INR 2018F 2019F 2020F 2021F 2022F 2023F EBITDA Cumulative EBITDA , , , , The Appropriateness of the Transaction s Price The IFA considers the appropriateness of price of Sunrise s share based on information and assumption of business operation, received from Sunrise, interview from executives and related officer, Vendor Due Diligence Report, Environment Vendor Due Diligence Report, Site Visit and information that published to the public in SEC s website Discover Management Company Limited Page 80/104

81 ( SET s website ( National Stock Exchange of India s website ( and Bank of Thailand s website ( However, the opinion of the Independent Financial Advisor base on the assumption that all the information and important document, are complete and true, along with observing the situation and information. If there is any significant change in those factors, it may impact the operation and the Company s operation. Discover consider the appropriateness of Sunrise s share by 6 following approaches which are; 1. Book Value Approach 2. Adjusted Book Value Approach 3. Market Price Approach 4. Price to Book Value Ratio Approach: P/BV Ratio 5. Price to Earnings Ratio Approach: P/E Ratio 6. Enterprise Value to Earnings Before Interest, Tax, Depreciation and Amortization Ratio Approach: EV/EBITDA Ratio 7. Discounted Cash Flow Approach After receiving information and document of Sunrise, along with other relevant information, the IFA can summarize the appropriate price of Sunrise s shares as follows: 6.1. Book Value Approach In this valuation approach, it shows the company s value of Sunrise as shown in financial statement as of March 31, 2017 (Sunrise s fiscal year end is on March 31 in every years) audited by Jain Vijay & Company, a licensed accounting auditor firm (Company s license no W and company is also a member of The Institute of Chartered Accountants of India (No )). The summary of the Company s share valuation is as follow: No. Details Value (Million: INR) 1 Paid-up Capital Premium on Ordinary Shares Retained earnings (losses) 1, Equity of Sunrise (4) = (1) +(2) +(3) 1, % of Equity of Sunrise 80%*(4) 6 Number of shares issued and fully paid-up (million shares)1/ Book value per share (INR) Remarks: 1/ Par value per share is INR According to this valuation approach, Sunrise s value is INR per share or equal to approximately per share so, 80% of Sunrise s value is equal to INR 1,367 million or equal to approximately THB million. However, this approach only measures the accounting value of Sunrise at the date of valuation, without considering expectations Discover Management Company Limited Page 81/104

82 of future operating performance, industry trends, and fair value of Sunrise s assets and liabilities. Therefore, IFA views that this approach is not an appropriate valuation approach for this transaction Adjusted Book Value Approach By this approach, the share value is derived from the total assets, reduced by total liabilities including commitments and contingent liabilities as shown in the financial statements as of March 31, 2017, and adjusted by the items occurred after the end of accounting period or the items that may reflect the actual value of the company such as asset revaluation or impairment, reversal of allowance for doubtful account or bad debt, business licenses, goodwill, patent, brand value, losses carried forward, etc., to reflect prevailing market value of net assets and then divided by total number of paid-up shares of the Company to arrive at per share value. In deriving the value of the Company s shares, the IFA used Book value of the Company as shown in the most recent financial statement as of March 31, 2017 audited by the certified auditor and adjusted by financial statement as of November 31, 2017 and the increase and decrease in the revaluation of fixed assets, according to the Independent Appraisal report, by Rakesh Narula & Co ( RNC ), a famous and well know appraiser in India. Source: RNC is an India company, founded in 1982 by Mr. Rakesh Narula. RNC is a leading valuation advisory firm with expertise in the areas of valuation of fixed assets for M&A, Bank lending, dispute resolution, insolvency, financial report, statutory compliance etc. RNC is specialized in insurance survey and loss assessor, registered and government approved valuers, techno economic viability studies, independent engineer, technical due diligence, real estate and industrial advisory and chartered certification. With multi different field of experts, RNC can providing a comprehensive assignment and advise for various industries clients. Company has 4 different office located in India, which is in Mumbai, Vadodara, Ahmedabad, and Surat. RNC clients include publicly traded company and privately held company, bank, insurance company, law firm, insurance advisors, government entities, investment organization, audited firm, etc. Discover Management Company Limited Page 82/104

83 Example of RNC s clients Source: RNC s company profile RNC is a Government Registered and Approved Valuer. It also has a IRDA licensed category A, a license granted by Insurance Regulatory and Development Authority of India for an insurance surveyor & loss assessor and consultant for valuation of property, plant and equipment. Moreover Mr. Rakesh Narula has been awarded the membership of RICS (Royal Institute of Chartered Surveyors), the world's leading professional body for qualifications and standards in valuation, management and development in land, property, infrastructure and construction. Source: rics.org Discover Management Company Limited Page 83/104

84 Source: RNC has been in expertise in their service for 30 years and the leading firm in appraising services and also have been associated with leading chartered accountancy firm, law firm, international property consultants, asset reconstruction companies, bank and financial institution. Hence, IFA assures that RNC will conduct an appropriate appraisal report with reasonable fair value to shareholders of TPAC. IFA has review all appraisal reports, methodologies and assumptions in the appraisal report dated on November 28, 2017 of the IFA, and found that the Independent Appraiser has appraised fair value on the assumption that purchaser and seller agree and willing to buy and purchase without any obligation and both parties has power over one another. Moreover, the methodology that independent appraiser uses to appraise for each methodology are appropriate and follows the standard. Therefore, the IFA has adjusted book value of the company based on appraisal report from the Independent Appraisal. Independent Appraiser appraises buildings by estimating replacement cost of building construction and equipment at the current replacement cost and deducted the depreciation (Cost Approach) and the market value of land (Market Approach). The details of appraisal value comparing to the book value as of March 31, 2017 are shown below Land RNC has appraised the land in Haridwar, Umergaon and Silvassa (factory in Dadra is rental so, the independent appraiser does not appraise that) by using market approach which is an international common approach and also the same approach that independent appraiser uses for appraising land for listed company. The market approach is comparing market price of near land that are available for sales by land lord or broker, then adjust with environment for similarity and differences such as shape, size, location, accessibility, road, infrastructure, potential in development, supply and demand, advantages and disadvantages Building and Building Improvement The appraised assets consist of factory with office building, factory, other improvements on all 4 factories land. The independent appraisal used Market Value and Replacement Cost method to appraise the assets. However, the independent appraiser views that factory building, office and improvement were built especially to be part of production (Best Use) and there is no rent area so, using Income Approach may not reflect the true value. Therefore, independent Discover Management Company Limited Page 84/104

85 appraiser chooses Replacement Cost Approach which more appropriate and can reflect its true value of building and building improvement Machines and Equipment The independent appraiser has appraised only the machines to find the market value under the assumption that buyer and seller are willing to trade without pressure and both buyer and seller have knowledge about the machines, including other relevant factors. The independent appraiser use replacement cost approach which is the most appropriate approach, and assumes the useful life of machines between 5 15 years The result of the appraisal can be summarized as follows: No. Remark: Lists Book Value as of March 31, 2017 (INR: Million) Value by Independent Appraiser (INR: Million) Increase(Decrease) (INR: Million) 1 Land Building Flat (2.44) 4 Motorcycle , Other Assets 1/ that excluded from appraising / Other assets consists of Vehicle, Office Equipment and Computer (2.44) Therefore, adjusted book value of the Company is shown below. No. Detail Value (INR: Million) 1 Shareholder Equities (according to financial statement as of March 31, 2017) 1, Add - Premium (Discount) of Shareholder Equity according to Sunrise financial statement as of September 30, / 3 Add - Premium (Discount) from appraisal report Shareholder equities after adjustment with land, building and machines appraisal report (1) + (2) + (3) 2, % of Shareholder equities after adjustment (80%*[(1) +(2) +(3)]) 2, Number of Shares (Million Shares)) 2/ Adjusted Book Value (INR / Share) (4)/ (5) / Add - Premium (Discount) of Shareholder Equity calculated from the difference of equity from financial statement as of September 30,2017 and as of March 31, 2017 (1, , = INR million), excluding LED Casing Business 2/ Par Value is INR 10 By using valuation approach, company s value of Sunrise is INR per share or equal to approximately THB per share so, 80% of Sunrise s value is equal to INR 2,001 million or THB 1, million. The IFA views that this approach does not take into account the profitability and operating performance. So, this valuation approach Discover Management Company Limited Page 85/104

86 cannot reflect its true fair value of shareholders, but it can be used as a reference to determine the value of Sunrise. Therefore, the IFA views that this valuation approach is not an appropriate valuation approach for this transaction Market Price Approach This valuation approach uses the weighted average market price of the trading value of securities of the Company through the SET (IFA refers to the market price as defined by the SEC Office, namely, the weighted average closing price of ordinary shares in the SET not less than 7 consecutive days but not more than 15 consecutive days) over the past period up until the day that price is determined or the day that board of director approved the transaction. However, due to Sunrise is not listed in National Stock Exchange of India, IFA cannot use market price approach to determine the company s value of Sunrise Price to Book Value Ratio Approach or P/BV Ratio This valuation approach is based on the book value of the Sunrise (as shown in the latest consolidated financial statements as of March 31, 2017 as audited by the Company s auditor) which is INR per share, multiplied by median of closing price to book value of 7days, 15days, 30days, 60days, 90days, 120days, 180days and 360days of listed companies in National Stock Exchange of India(NSE) of similar business to Sunrise, up until 13 November 2017 (it s 1 day before the board of director has approved the transaction). For choosing peer company for comparison, IFA choose companies that has similar business, production and finish product to Sunrise which is the plastics packaging for pharmaceutical industry, consumer products, kitchenware, food and beverage, and edible oil without considering size and operating performance. However, there are only 2 companies that have similar business to Sunrise; 1) Pearl Polymers Ltd ( PRLP:IN ) and 2) AMD industries Ltd ( AMDM: NSE ) but the Transaction is the Acquisition of the Assets, therefore, the IFA also include Thai Plaspac Public Company Limited( TPAC ), which is listed company in Stock Exchange of Thailand ( SET ) and purchaser of Sunrise, as a peer company of Sunrise due to it helps the information become more appropriate and reflect condition of the transaction. However, peer companies that the IFA choose for comparison has business similar to Sunrise, but size may be different due to there is a few companies in NSE that has similar business to Sunrise. Therefore, the IFA mainly choose peer companies by business similarity. In addition, TPAC not only has a similarity in business, but also similar in revenue and profit. However, TPAC still different from Sunrise in some factors such as accounting standard, country and market of comparable listed companies. Lists and details of the companies that has operation similar to Sunrise are as follows: Company Abbreviation Listed in Business 1. Pearl Polymers Ltd PRLP: NSE NSE PRLP was established in 1984 to produce and sell PET bottles and jars, used for food and beverage under a brand, named PEARLPET. PRLP located on A97/2 Okhla Industrial Area Phase 2 New Delhi, India. PRLP has machines over 100 machines. According to financial statement year ended march 31, 2017, company has total revenue of INR 1,740.9 million and net profit of INR 3.60 million. Discover Management Company Limited Page 86/104

87 Company Abbreviation Listed in Business 2. AMD Industries Ltd AMDM: NSE NSE AMDM was established in 1953 to produce and sell PET preform bottles and PET Bottle, used for liquid container food and beverage, and pharmaceutical. AMDM is located on8, Pusa Road, Ist Floor, Karol Bagh, New Delhi, India According to financial statement year ended march 31, 2017, company has total revenue of INR 1, million and net profit of INR 2.34 million. 3. THAI PLASPAC PUBLIC COMPANY LIMITED 4. SUNRISE CONTAINERS LTD. TPAC: MAI MAI Produce a plastic bottles and cap and other form of plastic container as order from each customer industries such as food and beverage, container for kitchen uses and pharmaceutical. Revenue for 12 months ended September 30, 2017 is equal THB 1, million and net profit of THB million. Sunrise Not listed in the National Stock Exchange of India Sunrise is engaged in manufacturing and sales of preforms and containers and trading of caps in many shapes as demand from customers from various industries such as pharmaceutical industry, consumer products, kitchenware, food, and beverage. All products are under brand name, Sunpet. Sunrise Containers Ltd. is headquartered in Mumbai and has 5 manufacturing unites, located in Silvassa, Dadra, Umbergaon, and Haridwar. Sunrise currently has maximum capacity for preforms and container of 28, tons per year and 15, tons per year. Revenue for 12 months ended March 31, 2017 is equal THB 3, million and net profit of THB million P/BV of the listed companies as of November 13, 2017 can be summarized as follows. Average (days) P/BV: (times) PRLP: NSE AMDM: NSE TPAC: MAI Median Value of Sunrise s share (INR/share) Source: 1/ Bloomberg 2/ Financial statement as of March 31, 2017 According to this valuation approach, company s value of Sunrise is INR per share or equal to approximately THB per share so, 80% of Sunrise s value is equal to INR 1, , million or equal to approximately THB million. However, median of the comparable companies is between , which is close to the book value of Sunrise. The IFA views that valuation by this approach can only reflect the fair value of Sunrise s shares but this transaction is the acquisition of the business therefore, the IFA views that this approach is not appropriate due to the value of Sunrise s share doesn t t reflect the requirement of investors, future operating Discover Management Company Limited Page 87/104

88 performance, and industry trends. Therefore, IFA views that this approach is not an appropriate valuation approach for this transaction Price-to-Earnings Ratio Approach The valuation by this approach is taking the latest earnings per share from the audited financial statement as of March 31, Sunrise s earnings per share is INR per share. Then, multiply with closing price to earnings ratio (P/E) of 7 days, 15 days, 30 days, 60 days, 90 days, 180 days, and 360 days of listed companies that have the operation similar to Sunrise as shown in 5.4 Price to Book Value Ratio Approach or P/BV Ratio. The details can be summarized as follows: Average (days) P/E: (times) PRLP: NSE 3/ AMDM: NSE TPAC: MAI Median Value of Sunrise s share (INR/share) Source: 1/ Bloomberg 2/ Financial statement as of March 31, / The IFA does not take PRLP: NSE in to calculation due to the median of price to earnings ratio is significantly higher than other company According to this valuation approach, the company s value of Sunrise is INR per share or equal to approximately THB per share so, 80% of Sunrise s value is equal to INR 5, , million or equal to approximately THB 2, , million. The IFA views that valuation by this approach is possible to value ordinary share of Sunrise due to the value from this approach can reflect requirement, view and expected of investor toward the potential growth of business according to performance and business strategy of the business. Therefore, IFA views that this approach could use as the reference point for this valuation approach for this transaction but may not be an appropriated valuation approach due to the range of the price is too wide Enterprise Value to Earnings Before Interest, Tax, Depreciation and Amortization Ratio: EV/EBITDA ratio The valuation by this approach is taking the latest EBITDA for the past 12 months. Sunrise s EBITDA is INR per share. Then, multiply with EV/EBITDA ratio (P/E) of 7 days, 15 days, 30 days, 60 days, 90 days, 180 days, and 360 days (use data up until November 13, 2017 which is 1 day before the Board of Directors Meeting No. 6/2017) of listed companies that have the operation similar to Sunrise as shown in 5.4 Price to Book Value Ratio Approach or P/BV Ratio to find the Enterprise Value. Then, add with cash and minus by interest bearing liabilities from audited financial statement as of March 31, However, the IFA has research EV/EBITDA ratio of peer companies from Bloomberg and found that data are not complete up until November 13, If the IFA use this uncomplete data, the result of Sunrise s value cannot reflect it current value. Therefore, the IFA cannot use this valuation approach for determining Sunrise s value (as Discover Management Company Limited Page 88/104

89 can see in the table, the latest data of EV/EBITDA of AMDM: NSE, TPAC: MAI and, PRLP: NSE are on March 24, 2013, September 28, 2017, and March 24, 2014, respectively. Source: Bloomberg However, valuation by this approach is widely used in India and around the world due to the value of share by this approach can reflect investors requirement, view, and expectation toward potential growth in the future of the company from its operating performance and business strategy. This valuation approach can be used for making decision in terms of price of entering into the Transaction, but the IFA doesn t have sufficient data to analyze and find the value. However, IFA has view that this valuation approach can be used as a reference price for making decision for this Transaction of Acquisition of the Assets Discounted Cash Flow Approach This valuation approach uses present value of projected future Free Cash Flows (FCF) discounted at Weighted Average Cost of Capital (WACC). To calculate present value of FCF of Sunrise, the IFA prepared financial projections of Sunrise for period of 5 years ( , however the year ended financial statement on Sunrise end on March 31 of every year Therefore, IFA uses this fiscal year for reference for forecasted period in the financial projection) and under the assumption that business of Sunrise will continue to operate on going concern basis in economic conditions substantially similar to currently prevailing conditions and without significant effect from natural disaster that may arise in the future (however, the IFA doesn t t take revenue and expense related to LED Casing business into calculation due to LED Casing business isn t in the part of business that is in this transaction.) IFA prepared the projection of Sunrise on basis of information obtained from Sunrise, interviews and discussions with related management and employees of Sunrise, only for the purpose of valuation for fair value of ordinary shares of company for comparing with the ordinary shares price that will issue for the transaction. If there is any significant change in economy and other external factors, which materially affect the Company s operation, the fair value of Sunrise s shares will change accordingly. Key assumptions of financial forecasts of DSGT can be summarized as follows: Discover Management Company Limited Page 89/104

90 Characteristic of the Industry and Growth Due to India has 1.28 billion people of population, there are growth of economic, sales and products from low to high. However, the growth of economic in 2017 is expected to grow by 7.1% and forecasted that gross nation product will be approximately USD 8.7 billion, while comparing to Thailand, the growth of economic in 2017 is expected to grow by 3.6% and forecasted that gross nation product will be approximately USD 3.4 billion. It s obvious that Thailand s economic is smaller than India s economic. For growth of plastic packaging in India, FICCI expects that India will grow be 18% until 2021, while Thailand s growth of plastics packaging is negative for (0.62) % in Characteristic of the business Sunrise is engaged in manufacturing and sales of preforms and containers and trading of caps in many shapes as demand from customers from various industries such as pharmaceutical industry, consumer products, kitchenware, food, and beverage. All products are under brand name, Sunpet. Sunrise Containers Ltd. is headquartered in Mumbai and has 4 manufacturing unites, located in Silvassa, Dadra, Umbergaon, and Haridwar. Sunrise currently has maximum capacity for preforms and container of 28, tons per year and 15, tons per year. The detail of Sunrises products are as follows: Preform Type Product Example Diameter (mm.) Final Product Wide Mouth Preforms Peanut, Honey, Source, Candy, Butter, and biscuit. Wide Mouth Preforms Pharmaceutical, Oil, Lubricant, Juice Milk, and syrup. Discover Management Company Limited Page 90/104

91 Containers Types Product example Capacity (ml.) Final Product Medical Supplies Medical Supplies Bottles Bottles Editable Oil Bottles 500 5,000 Editable Oil Bottles FMCG Containers 30 6,000 FMCG Containers Moreover, Sunrise has a business of manufacturing and selling LED Casing (light-emitting diode Casing) but TPAC doesn t t purchase asset related to LED Casing business in this transaction. Hence, IFA doesn t t take revenue from LED business into forecasting Production Capacity and Selling - The IFA assumes that growth of production capacity and selling of preforms is 15% p.a. during (In 2017, Sunrise has utilization rate at 53.32% of the maximum capacity. Therefore, 15% of growth doesn t t exceed the maximum capacity of Sunrise) and decline to 10.00% and 5.00% in , respectively, regarding to a forecast from Sunrise and market growth with the adjustment from IFA as conservative basis. The growth assumption throughout the forecasted period is lower than the historical growth for the past 2 years which grow p.a. and FICCI expects growth of plastics packaging consumption in India will grow by 18.00% p.a. until 2021, especially plastics packaging for food and beverage and pharmaceutical (source: FICCI). However, IFA adjusted the growth rate during to decline as conservative basis (due to there is not reliable source of market growth rate to support). - According to the Sunrise s plan to increase the production capacity to support market growth by using cash from operation, therefore, IFA assumes that in Sunrise will invest in machines to Discover Management Company Limited Page 91/104

92 support production for 1,000 tons per year in order to align with the utilization rate of the machines in each year. - IFA assumes that growth of production capacity and selling of containers is 10.00% during (In 2017, Sunrise has Utilization Rate of containers at 67.97% of total capacity of containers so, assuming growth of 10% is not exceed the production capacity that Sunrise can handle) and decline to 5.00% in 2023, respectively regarding to a forecast from Sunrise. The growth assumption throughout the forecasted period aligns with the historical growth for the past 2 years which grow 7.51 p.a. and align with expected growth of plastics packaging consumption in India which FICCI expects to grow 18.00% p.a. until 2021, especially plastics packaging for food and beverage and pharmaceutical (source: FICCI). However, IFA adjusted the growth rate during to decline as conservative basis (due to there is no reliable source of market growth rate to support the growth rate to support) - According to the Sunrise s plan to increase4 the production capacity to support market growth by using cash from operation, therefore, IFA assumes that in Sunrise will invest in machines to support production for 2,000 tons per year in order to align with the utilization rate of the machines in each year. - Due to Sunrise has not manufacturing cap for sell, but Sunrise will order caps to be a part of containers and sell to customer. Hence selling cap is considered as trading, which IFA assumes sale volume of caps is fixed throughout the forecasted period Selling Price - The IFA cannot forecast the price of Sunrise s product due to the plastics packaging depends on the raw material price (plastics) which is a commodity product and rely on crude oil price. Therefore, IFA has not sufficient knowledge in forecasting the commodity price and crude oil price. - IFA assume price of preforms, containers and caps in 2018,, equal to INR 105, INR 156, and INR 213, per ton, respectively, regarding to average selling price for the past 2 years (due to its period that price is not fluctuate significantly) and assumes to be fixed throughout forecasted period as conservative basis because the operating performance in the past, Sunrise mark up selling price on cost which will make Sunrise has stable gross profit margin Other Income - Other income consists of job work income and export incentive, which IFA assumes by using 3 years historical average since which is equal to 0.94% of revenue from sales and assumes to be fixed throughout the forecasted period. Discover Management Company Limited Page 92/104

93 5.1.1 Cost of Materials (Unit: Million INR) Revenues 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F Preforms Maximum Capacity (Tons) 23, , , , , , , , , Actual Produced (Tons) 11, , , , , , , , , Capacity Utilization 48.40% 50.69% 53.32% 59.23% 65.88% 73.35% 81.75% 89.93% 94.43% Average Selling Price (INR/Tons) 120, , , , , , , , , Containers Maximum Capacity (Tons) 13, , , , , , , , , Actual Produced (Tons) 9, , , , , , , , , Capacity Utilization 71.25% 66.97% 67.97% 74.77% 82.25% 80.28% 79.36% 87.30% 91.66% Average Selling Price (INR/Tons) 167, , , , , , , , , Caps (Trading) Trading Volume (Tons) Average Selling Price (INR/Tons) 167, , , , , , , , , Total Revenue from Sales 2, , , , , , , , , Other Income Portion to Total Revenues from Sales 0.99% 0.69% 1.14% 0.94% 0.94% 0.94% 0.94% 0.94% 0.94% Total Revenues 2, , , , , , , , , Source: Cost of materials of preforms and containers are plastics beads such as polyethylene, polypropylene, and other chemicals. IFA assumes the cost of materials of preforms and containers in 2018 equal to 60.30% and 49.62% of revenue of each product, respectively regarding to 2 years average cost of materials ( ) (due to it s a period that crude oil price is not fluctuate significantly) and assumes to be fixed throughout the forecasted period. In 2016, price of crude oil, raw material of plastics beads, was expensive and very fluctuate, hence IFA doesn t t take number in 2015 into account because it cannot reflect the current market price. In addition, there were not differences in structure of cost of materials and Sunrise uses fixed margin to set up the price so, the assumption about cost of materials is reasonable. Discover Management Company Limited Page 93/104

94 - For cost of materials for caps in 2018, which is considered as trading activity, IFA assumes cost of materials is 27.70% of revenue from caps, regarding to 2 years average cost of material ( ), and assumes to be fixed throughout the forecasted period. (Unit: Million INR) Cost of Materials 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F Preforms Cost of Materials (1) 1, , , , , , , Portion to Revenues from Preforms (%) 75.60% 60.55% 60.04% 60.30% 60.30% 60.30% 60.30% 60.30% 60.30% Containers Cost of Materials (2) , , , , , Portion to Revenues from Containers (%) 49.39% 48.62% 50.63% 49.62% 49.62% 49.62% 49.62% 49.62% 49.62% Caps (Trading) Cost of Materials (3) Portion to Revenues from Caps (%) 31.72% 20.92% 34.48% 27.70% 27.70% 27.70% 27.70% 27.70% 27.70% Total Cost of Materials (1) +(2) +(3) 1, , , , , , , , , Manufacturing Expense - Manufacturing Expense consists of direct labor cost, transportation cost, packaging cost, repairs and maintenance expense for plants and machines, and excise duty expense. The IFA assumes manufacturing expense to be % of revenue from sales in 2018, expect for direct labor cost, regarding to 3 years historical average and assumes to be fixed throughout the forecasted period - IFA assumes growth of direct labor cost to align with growth of the manufacturing and sell of preforms and containers which grow in average rate of 5.00% 13.09% p.a. (Unit: Million INR) Manufacturing Expense 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F Manufacturing Expense , Portion to Revenue from Sales (%) 15.55% 16.84% 16.98% 16.56% 16.56% 16.57% 16.57% 16.57% 16.57% Administrative Expense - Administrative Expense consists of auditor remuneration, donation, insurance, legal and professional charge, travelling expense, security expense, and other administrative expense. The IFA assumes administrative expense to be 0. 81% of revenue from sales in 2018, except for auditor remuneration, legal and professional charge, and Discover Management Company Limited Page 94/104

95 security expense, regarding to 3 years historical average of administrative expense and assumes to be fixed throughout the forecasted period. - For auditor remuneration, legal and professional charge, and security expense. IFA assumes growth of auditor remuneration, legal and professional charge, and security expense is equal to 4. 53% p. a., regarding to 4 years historical average of core inflation rate of India (source: Bloomberg) (Unit: Million INR) Administrative Expense 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F Administrative Expense Portion to Revenue from Sales (%) 1.38% 1.98% 1.76% 1.32% 1.29% 1.25% 1.22% 1.20% 1.20% Selling Expense - Selling Expense consists of sales promotion expense, commission expense, freight and transportation expense. IFA assumes selling expense in 2018 to be 5.27% of revenue from sales, regarding to 3 years historical average of selling expense and assumes to be fixed throughout the forecasted period. (Unit: Million INR) Selling Expense 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F Selling Expense Portion to Revenue from Sales (%) 6.19% 5.24% 4.37% 5.27% 5.27% 5.27% 5.27% 5.27% 5.27% Employee Benefit Expense - Employee Benefit Expense consists of fixed-labor cost, variable labor cost, office, improvement and others, directors remuneration, and contribution to provident fund. The IFA assumes that employee benefit expense in 2018 grow from 2017 by 4.53% and assumes to grow constantly throughout the forecasted period, regarding to 4 years historical average of core inflation of India (source: Bloomberg), except for variable labor cost. - For Variable Labor Cost, IFA assumes to grow from 2017 by throughout the forecasted period, regarding to the growth of production of preforms and container Corporate Social Responsibility Expenditure - IFA assumes that corporate social responsibility expenditure or CSR equal to 0.11% of revenue from sales, regarding to 3 years historical average of CSR, and assumes to be fixed throughout the forecasted period. CSR 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F CSR Portion to Revenue from Sales (%) 0.07% 0.10% 0.15% 0.11% 0.11% 0.11% 0.11% 0.11% 0.11% Discover Management Company Limited Page 95/104

96 5.1.7 Capital Expenditure The IFA assumes the assumptions for Sunrise s capital expenditure for operating that Sunrise will invest in building, factory, molds, office equipment, furniture, and electronics equipment which are total of approximately INR million. However, Sunrise also has plan to increase the production capacity of preforms and containers for a total of approximately 1,000 3,000 tons per year to support the growth of plastics packaging industry in India, regarding to production capacity, and selling. The IFA assumes that capacity per capital expenditure for investing in machines is approximately INR 65, per 1 additional ton in production capacity, regarding to the interview from Sunrise and executive of TPAC. Moreover, in 2018 IFA assumes that Sunrise will has repairs and maintenances for production of INR million and assumes to increase 2.21% 6.49% p.a., align with the investment plan for machines for preforms and containers production. IFA assumes that capital expenditure of Sunrise is funded cash flow from operation and there is no loan for capital expenditure. Invest in machines to increase the capacity of preforms and containers which is a total of 1,000-3,000 tons per year to support sales growth of 5 15% per year by using cash flow which is positive throughout the forecasted period (Unit: Million INR) 2018F 2019F 2020F 2021F 2022F 2023F Cashflow before investment Capital Expenditure each year (128.45) (129.19) (261.69) (263.90) (68.47) (68.47) Cashflow after Capital Expenditure In forecasting the capital expenditure, IFA considers investment capability of Sunrise in normal operating situation before entering into the Amalgamation which doesn t relate to interest burden or repayment of Sunrise, incase Sunrise borrow money for acquiring TPAC Depreciation Depreciation consists of depreciation from existing assets and new asset invested assets. The IFA assumes that each asset type is straight line depreciation method Each asset type has different useful life according to accounting standard as follows: Asset Useful Life (Year) Building, Office, and Building Improvement 20 Machine and Equipment 15 Decoration and Office Equipment 5 Vehicles Corporate Tax Corporate Tax for registered company of India is 33.99% of pre-tax income. Discover Management Company Limited Page 96/104

97 Loan from Financial Institution According to financial statement as of 31 March 2017, the company had short-term loans from financial institution for INR million and long-term loans for INR million, which average interest is 6.05% % per year. The IFA assumes Sunrise will not repay short-term loans from financial institution in order spend for business operation. However, Sunrise will repay long-term loan according to loan agreement by using cash and cash flow from operation Other Ratio of Statement of Financial Position The IFA assumes the assumption by using historical data of Sunrise during due to the number are similar and less volatile so, using this historical period can reflect the future (Average collection period is days, Average inventory period was days, and Average payable period is days). According to interviewing CEO of the company, the business plane is still the same, therefore the ratio of Average collection period, Average inventory period and Average payable period will remain the same. The IFA also adjust those ratios for more appropriate as follows: Average collection period approximately days Average inventory period approximately days Average payable period approximately days According to assumptions, the summary of Financial Statement between are as follows: (Million INR) 2015A 2016A 2017A 2018F 2019F 2020F 2021F 2022F 2023F Balance Sheet Total Assets 1, , , , , , , , , Total Liabilities Total Equity , , , , , , , , Income Statement Total Revenue 2, , , , , , , , , Total Expense 2, , , , , , , , , Net Profit (Loss) Terminal Value During forecasted period, IFA assumes the terminal value growth at 4.53%, regarding to 4 years historical core inflation rate of India (source: Bloomberg) Discount Rate Discount rate that use to calculate present value of Free Cash Flow, calculated from Weighted Average Cost of Capital: WACC) according to company s structure. The IFA calculates WACC from weighted average of Cost of Debt and Cost Equity of Sunrise which details are as follows: WACC = K e *E/(D+E) + K d *(1-T)*D/(D+E) Discover Management Company Limited Page 97/104

98 Ke = Cost of Equity or Require Rate of Return of Investor (Re) Kd = Cost of Debt or Interest rate of Company s loan T = Corporate Tax E = Total Equity D = Interest Bearing Debt Cost of Equity or Require Rate of Return of investor can be calculated from Capital Asset Pricing Model in terms of Thais perspective. Due to the asset and business of Sunrise is in India, therefore, in calculating Cost of Equity have to include Country Risk Premium (CRP), according to the theory from Professor Aswath Damodaran from New York University Stern School of Business. The Formula are as follows: K e (or R e ) = R f + β (R m - R f + CRP) Where, Risk Free Rate (R f ) = Refer to the return of 24-year government bond which is equal to 3.01% p.a. (as of November 13, 2017) which maturity is long and government has been continuously issue and sell, align with company valuation that is assumed to be on Going Concern Basis (source: Beta (β) = Refer to fluctuation between daily return of stock exchange market and average return of peer company that has similar business to Sunrise which are PRLP: NSE, AMDM: NSE and TPAC: MAI which details are in Price to Book Value Ratio Approach or P/BV Ratio, regarding to the study of Damodaran in 2016 ( July 2016), Country Default Spreads and Risk Premiums ( source: www. stern. nyu. edu) from Professor Aswath Damodaran from New York University Stern School of Business. By using time period as most update data that can reflect the require rate of return of the investors on the business, the beta is equal to 0.74 Market Risk (R m ) = A 25 years historical average return of Stock Exchange of Thailand since 1992 to November 2017 which is equal to 12.43% p.a. due to it s the most appropriate period that reflect average return and less affected by the fluctuation of the market. IFA doesn t t take the return of Stock Exchange of Thailand since 1975 to 1990 into calculation because it was the period that the Stock Exchange of Thailand had just started and there was low trading volume and only few listed company in the market, which can reflect true market return. According to the data, the Required Rate of Return of investor is approximately 13.62% 14.34% p.a. Country Risk Premium = A additional risk premium from Thai investor perspective that require additional return to compensate with additional risk of investing in foreign country, such as political risk, exchange rate risk and government risk. Therefore, IFA assumes that the Country Risk Premium is a difference from return of 24-year government bond between India and Thailand, regrading to the study of Damodaran in 2016 (Aswarth Damodaran, July 2016, Country Default Spreads Discover Management Company Limited Page 98/104

99 and Risk Premiums (source: which is country Risk Premium is equal to 4.49% The cost of equity (Re) is 13.74% 14.46% p.a. and cost of debt (Kd) is p.a. Therefore, WACC is between 13.00% % throughout the forecasted period. 2018F 2019F 2020F 2021F 2022F 2023F D/E 1/ WACC (%) 13.00% 13.04% 13.08% 13.12% 13.16% 13.18% Remark: 1/D/E calculated from interest bearing debt (according to current draft term sheet that Sunrise made with financial institution), divided by total equity in each forecasted year which vary in every year due to the IFA assumes that the company has repay debt according to term sheet. Therefore, Sunrise will have debt decrease every year. However, IFA doesn t t include loans using for entering into the Transaction for the calculation. Therefore, Free Cash Flow of Sunrise can be summarized as follows: (Unit: Million INR) 2018F 2019F 2020F 2021F 2022F 2023F EBIT Depreciation Earnings Before Interest, Tax, Depreciation , , , and Amortization (EBITDA) Tax (158.70) (186.62) (220.64) (263.40) (297.86) (315.11) Capital Expenditure (128.45) (129.19) (261.69) (263.90) (68.47) (68.47) Change in Net working Capital (82.59) (93.40) (105.67) (93.77) (51.57) Free Cash Flow (FCF) Terminal Value 7, PV of Free Cash Flow Remark: 1/ Terminal Value can be calculated as follows: TV = FCF*(1+g) / (WACC-g) where FCF = Free Cash flow in the last forecasted year WACC = Weighted Average Cost of Capital g = Growth rate after forecasted period (Unit: Million INR) PV of Terminal Value 4, Total PV of Free Cash Flow 5, Add: Cash and short-term investment as of March 31, Less: Interest-bearing liabilities as March 31, 2017 (380.13) Discover Management Company Limited Page 99/104

100 Net PV of Free Cash Flow 5, Number of paid-up shares (share) 8.91 Net PV of Free Cash Flow per share (INR/Share) Moreover, IFA also conduct Sensitivity Analysis of share value by adjust the discount rate or WACC by ± 0.25 percent per annum. Sensitivity of WACC Value of Sunrise Price per Share (INR/Share) Case % 5, Base Case 0.00% 5, Case % 5, According to the sensitivity analysis study by adjust the discount rate or WACC, the value of Sunrise will be INR INR per share or equal to approximately THB THB per share so, 80% of Sunrise s value is equal to INR 4, million or equal to approximately THB 4, million. IFA views that valuation by this approach can be used to determine the ordinary share of Sunrise due to the price from this approach, can reflect the operating performance of Sunrise in the future, growth of Sunrise, and its business s strategy. HoweJver, this valuation approach bases on the assumption received from Sunrise under economic conditions and circumstances as of the valuation date. If there is any change such as change in business plan, company policy of Sunrise, economic, or natural disaster which has effect on current Sunrise s operation or change the factors in the assumption, it may effect on the value of Sunrise to change, as well Summary of the appropriateness of the Transaction The table of comparing values of Sunrise s share with different valuation approach to the consideration. (Unit: INR/Share) Valuation Approach Company s value Offering Price Higher (Lower) than the Consideration Higher (Lower) than the Consideration as % 1) Book Value Approach 1, , (3,324.43) (70.85) 2) Adjusted Book Value Approach 2, , (2,690.11) (57.33) 3) Market Price Approach Can t be calculated 4) Price to Book Value Approach (P/BV Ratio) 1, , , (3,612.08) - (3,244.73) (76.98) - (69.15) 5) Price to Earning Approach (P/E Ratio) 5, , , , )EV/ EBITDA Approach (EV/EBITDA Ratio) Can t be calculated 7) Discounted Cash Flow Approach* 4, , , (524.64) (11.18) (0.33) Remark: * Value of the Company based on WACC between (13.00%-13.18%) Discover Management Company Limited Page 100/104

101 (Unit: THB/Share) Valuation Approach Company s value Offering Price Higher (Lower) than the Consideration Higher (Lower) than the Consideration as % 1) Book Value Approach , (1,688.64) (70.85) 2) Adjusted Book Value Approach 1, , (1,366.44) (57.33) 3) Market Price Approach Can t be calculated 4) Price to Book Value Approach (P/BV Ratio) , (1,834.76) - (1,648.16) (76.98) - (69.15) 5) Price to Earning Approach (P/E Ratio) 2, , , , )EV/ EBITDA Approach (EV/EBITDA Ratio) Can t be calculated 7) Discounted Cash Flow Approach* 2, , , (266.49) (11.18) (0.33) Remark: * Value of the Company based on WACC between (13.00%-13.18%) Each valuation approach has pros and cons and will provide the value of the share differently as shown below. 1) Book Value Approach: consider the financial position at any one point of time and the value of the property as it was recorded, without considering expectations of future operating performance, and industry trends. IFA believes this valuation approach is not an appropriate approach for valuing the fair value of the Sunrise s shares due to the account value cannot reflect the true value of the business. 2) Adjusted Book Value Approach: can reflects the net asset value of company better than Book Value Approach because it takes the account value from 1) Book Value Approach, and adjust by the updated appraisal value of land and buildings, machinery, Goodwill, Patent, and Brand Value to find the market value or fair value, then divide it by number of shares. However, this method also does not consider the ability to earn profits and operating results in the future. Thus, the IFA believes this method may not reflect the real value of the equity of Sunrise, but it can be used as a reference value of the company. 3) Market Price Approach: is a market mechanism, which determines price by the supply and demand of the company's stocks in a traded market. It can reflect the value of the stocks at that time, the fundamentals of the company, the company's future growth potential of the company as well as historical price of company s performance. It can be used as a reference price to reflect the actual price of the shares of the Company. However, due to Sunrise doesn t t listed in the stock market so, this valuation approach cannot do the valuation. 4) Price to Book Value Ratio Approach: considering company s financial statement at a point of time by comparing to the set of referral companies, without taking into account their ability of the earning profits in the future. This approach assumes that the Company s capability and potential are comparable among the group of companies. However, this method does not consider company s ability of the earning profits and operating performance in the future. However, there are 3 comparable companies (PRLP: NSE AMDM: NSE and TPAC: MAI) that IFA selects to compare. Even though, all selected companies are in the same business, each company has different assets and liabilities to Sunrise, along with different plans to utilize the assets. So, valuation by this approach is not appropriate approach for determining Sunrise s value due to this transaction is the acquisition of assets in foreign country, which TPAC proposes the price according to the profitability of Sunrise in the future, not the assets value of Sunrise. Therefore, the IFA believes that this Discover Management Company Limited Page 101/104

102 valuation approach is not an appropriate approach to determine the fair value of Sunrise s shares and reflect its true business value. 5) Price to Earnings Ratio Approach: considers current profits of the Company by comparing the average of the price to earnings ratio of the comparable group of companies. This approach is widely used, and it is based on the assumption that the Company s capability and potential are comparable among the group of companies. However, the IFA selects 3 comparable companies (PRLP: NSE, AMDM: NSE and TPAC: MAI), but the IFA use only 2 companies that listed in NSE and have similar business to Sunrise the most which are 1) Pearl Polymers Ltd ( PRLP: NSE ) and 2) AMD Industries Ltd (AMDM: NSE). Therefore, the IFA adds Thai Plaspac Plc., which is company listed in Stock Exchange of Thailand and the purchaser of Sunrise, as comparable company due to it helps the information become more appropriate and reflect condition of the transaction. However, TPAC still different from Sunrise in some factor, such as accounting standard, country bias and market that use as benchmark. The IFA views that valuation by this approach can be used as a comparable price range to understand investor s point which can determine the appropriate price of Sunrise s shares in this transaction due to it s the nature of company acquisition. 6) Enterprise Value to Earnings Before Interest, Tax, Depreciation and Amortization Ratio: EV/EBITDA Ratio Approach: is an approach that consider earnings before interest, tax, depreciation, and amortization ( EBITDA) by comparing with EV/ EBITDA Ratio of peer company to find the Enterprise Value of Sunrise. Normally, this approach is popular for Merger and Acquisition, especially for large asset size. However, the IFA has already tried to find EV/EBTIDA Ratio of 3 peer companies (PRLP: NSE, AMDM: NSE and TPAC: MAI) in Bloomberg, but found only the data up until November 13, If the IFA use that data, it will make the value of Sunrise cannot reflect the current value of Sunrise. Therefore, the IFA doesn t t use this valuation approach for valuing Sunrise s value. 7) Discounted Cash Flow Approach: reflects the Company s ability to generate profits and the future cash flow estimated from the future net cash flow based on the historical performance, ability to operate and generate profit in the future, adjusted with company s risk under current economic situation and future operating performance assumptions of company. Therefore, the IFA views that this approach is appropriate approach for determining the value of Sunrise. This approach can reflect the real value of Sunrise. Discover Management Company Limited Page 102/104

103 IFA views that the most appropriate approach is Discounted Cash Flow Approach which can reflect the profitability and cash flow in the future with risk adjusted. The value is between INR per share or equal to approximately THB per share so, 80% of Sunrise s value is between INR 4, , million or THB 2, , million. Therefore, the IFA has opinion that the value for entering into the Transaction of 2, to hold 80% of Sunrise is in an appropriated price due to it is in the appropriated price range, calculated by the IFA. 7. The Summary of the Opinions of the Independent Financial Advisor Discover as the Company Independent Financial Advisor for the Company s shareholders has studied the detail and analyzed the appropriateness of the Transaction including but not limited to the fairness of the price and conditions of the Amalgamation of acquiring 80% of Sunrise paid-up shares (possible to gain 100% shares within the next 3 years) and has opinion that the Transaction is appropriate in terms of price and conditions which has details as in the Executive Summary. The shareholders shall carefully consider the risks for entering into the Transaction. As the risks could affect the Company s financial result in the future. However, the decision making of approving or not approving the Transaction is to be made at the shareholder s own discretion. The shareholders are advised to study the information and documents attached in the invitation package for the Extraordinary General Meeting No.1/2018 to ensure the appropriated voting decision. Discover Management Company Limited Page 103/104

104 Discover Management Company Limited as the Independent Financial Advisor hereby certifies that the opinions have prudently been provided in compliance with the professional standards and principles, with due regard to the shareholders benefits. Yours sincerely, Discover Management Company Limited (Mr. Vuthichai Tumasaroj) Director รองกรรมการผ จ ดการ (Miss Kanokporn Pongjetanapong) Director รองกรรมการผ จ ดการ (Mr. Vuthichai Tumasaroj) Supervisor รองกรรมการผ จ ดการ Contact: Discover Management Co., Ltd Discover Management Company Limited Page 104/104

105 - Translation - This English Translation has been prepared solely for the convenience of the foreign shareholders of Dental Corporation Public Company Limited and should not be relied upon as the definitive and official opinion of the Independent Financial Advisor. The Thai language version of the Opinion of the Independent Financial Advisor report is the definitive and official document and shall prevail in all respects in the event of any inconsistency with the English translation. Attachment 1 Information of Thai Plaspac Public Company Limited ( the Company or TPAC ) 1. General Information Company Name : THAI PLASPAC PUBLIC COMPANY LIMITED ( the Company or TPAC ) Location : 77 Soi Thian Thaley 30 Bang Khun Thian-Chay Thaley Road, Tha Kham, Bang Khun Thian, Bangkok Telephone : (02) Fax : (02) Type of Business : Customized rigid plastic packaging solutions Registered Number : Website : Registered Share Capital : THB 255,000,000 divided into 255,000,000 ordinary shares of par value at THB 1 each Issued and Paid-up Share Capital : THB 253,817,676 divided into 253,817,676 ordinary shares of par value at THB 1 each 2. About Company 2.1. Profile of the Company Thai Plaspac Company Limited, established on 1 August 1983, is a manufacturer (by customer orders) of various types of rigid plastic packaging materials (bottles and bottle caps), and plastic wares to meet customers needs in different industries. Significant events are as follow. Year Events Established a new factory in Sathu-Pradit - Expand business continuously up to Increased registered share capital from THB 16 million to THB 40 million. Modernform Group became the major shareholder, holding 60% of ordinary shares Build factory at the Samae Dam sub-district and invest more in machines Opening of the current factory in Tha Kham Increase registered capital by existing shareholders from THB 40 million to THB 80 million. - The company became a listed company with the registered capital of THB 100 million consisting of 100 million ordinary shares at the par value of THB 1 (paid up capital is 80 million shares) Attachment 1 Page 1

106 The company received permission from SEC to issue new ordinary shares to the public. The ordinary shares were listed in MAI on 7 Dec The Company used the capital to expand business on PET (Injection-Blow Molding), plastic cup injection Thin Wall type and Hot Runner Mold The Company expanded its base at the Head Office consisting of Closed Up System Production room, adding new machines in order to meet with the demand. - The Company received Best CEO Awards-MAI and Best Performance Awards at SET AWARDS The Company increased its registered capital to THB 255 million consisting of 255 million ordinary shares at the par value of THB 1 (200 million paid up shares) and 55 million units of warrants to purchase ordinary shares of the Company (tenor 3 years) whereby 50 million units were offered to existing shareholders and 5 million units offered to the employees In 2014, investors exercised the rights of the warrants to purchase ordinary shares of the Company (including existing warrant holders and employees) for 1,141,500 units making registered and paid up shares as of 31 December 2014 equals 201,327,025 shares or THB 201,327, The Company received Company Performance Award) at SET AWARDS In 2015, investors exercised the rights of the warrants to purchase ordinary shares of the Company (including existing warrant holders and employees) for 2,734,500 units making registered and paid up shares as of 31 December 2015 equals 208,766,400 shares or THB 208,766, The Lohia family has bought 60.55% of the majority shares of the Company from the existing major shareholders and has changed the majority of the controlling power of the Company Investor exercised the rights of the warrants to purchase ordinary shares of the Company during year 2016 until the last exercise date on May 19, 2016 including existing warrant holders and employees that exercised the rights during year 2015 for 45, units making registered and paid up shares as of 31 December 2016 equals to 253,817,676 shares of THB 253,817,676. In summary, the total number of exercised warrants were 98% of the issued warrants. - The Company was granted in tax privileges by the Board of Investment for Plastic Products of consumer product under the 2 promotion certificates No on 17 October 2017 and No on 17 October 2017 under some conditions which include the exemption of corporate income tax for the profit from operating that promoted for a period of 8 years commencing from the date of commencement of the Company operations Nature of business An overview of business Thai Plaspac is Thailand s leading rigid plastic packaging solutions company with a proud 34 years track record in partnership with the world s leading consumer brands. The main business is being hired to produce plastic packaging such as plastic bottles caps, and other form of plastic according to customer request for each industry which most of them are disposable product such as Bottle of milk, cultured milk, mouthwash Household cleaning bottles Throughout our history, we have exclusively focused on the use of plastic substrates to create bespoke rigid packaging solutions, nothing else. All our packaging solutions are bespoke, uniquely designed and manufactured. Our packaging solutions Attachment 1 Page 2

107 predominantly take the form of bespoke closures, cups, bottles and specialty containers. Sustainability, functionality, aesthetics and cost effectiveness all form part of what we call the TPAC solution. Utilizing proprietary technology as developed by our in-house industry recognized R&D platform, our team of specialist formulate optimum material composition as deemed suitable to form and function. 2D technical CAD drawings and 3D printed prototypes are developed. The three main production processes are Injection Molding, Blow Molding and PET (Injection Blow Molding). The Company has obtained ISO 9001:2008 and GMP certified by AJA (Anglo Japanese American Registrars) for many years Type of Products The Company business can be divided into 4 groups as follows: 1) Food & Beverage Food & Beverage business can be divided into 5 sub-sectors. 1.1) Dairy & Coffee The dairy business packaging solutions are mainly for milk and yoghurt products. Milk packaging includes small individual sized bottles up to large multi gallons bottles. Yoghurt packaging includes thin walled cups and bottles. Closures systems applied for dairy products include Snap-On-screw-off caps, screw caps and Snap-On snap-off caps. Additionally, the Company are also active in the coffee market with products including screw top caps and bottles for coffee powder / beans. 1.2) Food condiments Comprise packaging solutions for ketchup, chili, oyster and other food condiments. Products include squeezy bottles and closure systems for the ketchup and chili sauce industry. Specialized barrier properties to the bottles are often required in order to mitigate any negative effects of oxidization to the filled product. Our product range also includes closure systems for Ketchup, Chili and Oyster sauce bottles. Closure systems can range from internal tamper evident flip top caps, external tamper evident flip top caps and closures with a broad range of orifice sizes. 1.3) Edibles The Company s edibles business mainly of customized containers for food products. These can include chewing gums, honey products, garlic flakes and many more. 1.4) Cutlery The Company s product includes forks and spoons which can be conveniently placed into the overall packaging system together with the food ingredients. These products are often made for instant noodle. 1.5) Beverages Attachment 1 Page 3

108 Here we cater to the medium volume niche beverage market. For example, we recently worked with premium brands in the coconut water and green tea market. Our customized designed beverage bottles are likely to differ in size and shape from the more commonly seen commoditized beverage bottles in the market. 2) Pharmaceutical & Personal care Personal Care and Pharmaceutical Packaging consists of bottles and bottle caps for various personal care and pharmaceutical products, such as mouthwash, hygiene supplies, medical supplies, deodorant bottles and bottle caps, skin cleansing lotion, body powder and vitamin container etc. 3) Homecare Home Care Packaging consists of bottles in various shapes and sizes and bottle caps for several home care products such as floor cleaner, sanitary ware, air freshener, deodorant perfume and insecticide (canisters), air purifier (bottles), hygiene supplies and sanitary brush handle etc. 4) Precision Tools Instrument Packaging consists of tape rule, water gauge, chair armrest, chair backrest, table cover flap, and plastic for chair backrest etc Revenue Structure Revenue Structure by Region Revenue by Region THB Million % THB Million % THB Million % Domestic 1,524 90% 1,435 90% 1,382 90% Non-Domestic 149 9% 149 9% 142 9% Total Revenue from sales 1,673 99% 1,584 99% 1,524 99% Other Revenue 1/ 13 1% 12 1% 10 1% Total Revenue 1, % 1, % 1, % Remark: 1/ Other revenue includes sales of waste / molds / machinery and equipment Revenue Structure by Products Revenue by products THB Million % THB Million % THB Million % Food and Beverage Packaging % % % Home Care Packaging % % % Instrument Packaging 52 3% % % Personal Care and Pharmaceutical Packaging % 41 3% 33 2% Total revenue from sales 1,673 99% 1,584 99% 1,524 99% Other Revenue 13 1% 12 1% 10 1% Total revenue 1,68h6 100% 1, % 1, % Source: The Company Attachment 1 Page 4

109 3. List of Shareholders, Board of Director and Executives 3.1. Shareholders List of top 10 shareholders as of a book closing date of December 15, 2017 No. Name Number of shares Percentage in comparison with the total number of outstanding shares of the business 1. Mr. Anuj Lohia 153,978, Mr. Eakawut Nuangjamnong 22,416, Thai NVDR Co., Ltd. 19,572, Mr. Theerawit Busayapoka 9,560, Miss. Anuttree Nuangjamnong 6,020, Mr. Niti Nuangjamnong 3,599, Pornchai Rattananontachaisook 2,599, Yothin Nerngchamnong 2,000, Wuttichai Piriyotaisakul 1,819, Metha Rangsiyawaranon 992, Source: company Others 31,258, Total 253,816, Board of Directors List of s of the Company as of 15 December Name Position 1. Mr. Kevin Qumar Sharma Chairman/CEO 2. Mrs. Aradhana Lohia Sharma Director 3. Mr. Yashovardhan Lohia Director 4. Mr. Anil Kumar Kohli Executive Director 5. Mr. Theerawit Busayapoka Managing Director 6. Mr. Virasak Sutanthavibul Independent Director and Chairman of Audit Committee 7. Mr. Kittiphat Suthisamphat Independent Director and Audit Committee 8. Mr. Gran Chayavichitsilp Independent Director and Audit Committee Source: SET Attachment 1 Page 5

110 3.3. Executives List of the executives of the Company as of 15 December Name Position 1. Mr. Kevin Qumar Sharma Chief Executive Officer 2. Mr. Theerawit Busayapoka Managing Director 3. Mr. Pairoj Poungpong Assistant Managing Director 4. Mr. Anil Kumar Kohli Chief Technical Officer 5. Anong Sompitthayanurak Vice President Finance and Administration 6. Pirom Popirom Vice President Business Development 7. Mr. Chakkaphan Sukhinthawarin Vice President Production Source: The Company 4. Highlights of financial position and operating results 4.1. Balance Sheet 31 December December December September 2017 THB Million % THB Million % THB Million % THB Million % Assets Current assets Cash and cash equivalents % % % % Trade and other receivables % % % % Inventories % % % % Other current assets % % % % Total current assets % % % % Non-current assets Advance for purchase of molds % % % % Property, plant and equipment % % % % Intangible assets % % % % Deferred tax assets % % % % Withholding tax deducted at source % % % Other non-current assets % % % % Total non-current assets % % % % Total assets 1, % 1, % 1, % 1, % Liabilities and shareholders' equity Current liabilities Short-term loans from banks % % % % Trade and other payables % % % % Current portion of finance lease payable % % % % Attachment 1 Page 6

111 31 December December December September 2017 THB Million % THB Million % THB Million % THB Million % Current portion of long-term loans % % % % from banks Other current liabilities % % % % Total current liabilities % % % % Non-current liabilities Finance lease payable - net of % % 0.00% 0.00% current portion Long-term loans from banks - net of % % 0.00% 0.00% current portion Provision for long-term employee % % % % benefits Total non-current liabilities % % % % Total Liabilities % % % % 31 December December December September 2017 THB Million % THB Million % THB Million % THB Million % Shareholders' equity Share capital Registered % % % % Issued and paid-up % % % % Premium on ordinary shares % % % % Capital reserve for share - based % % % % payment transactions Retained earnings % % % % Total shareholders' equity % % 1, % 1, % Total liabilities and shareholders' equity 1, % 1, % 1, % 1, % 4.2. Income Statement Revenue 31 December December December September September 2017 THB Million % THB Million % THB Million % THB Million % THB Million % Sales 1, % 1, % 1, % 1, % % Other income % % % % % Total Revenues 1, % 1, % 1, % 1, % % Expenses Cost of sales 1, % 1, % 1, % % % Attachment 1 Page 7

112 31 December December December September September 2017 THB % THB % THB % THB % THB % Million Million Million Million Million Selling expense % % % % % Administrative expenses % % % % % Finance cost % % % (1.89) -0.16% % Loss on exchange % % Total expenses 1, % 1, % 1, % 1, % % Profit before income tax expense % Income tax expenses (24.05) (26.68) (21.40) (17.19) -1.50% (12.00) Profit for the year % % % % % Earnings per share (THB: Share) Cash Flow Statement Q Q Million THB Million THB Million THB Million THB Million THB Net cash flows from operating activities Net cash flows from investing activities (66.70) (135.94) (54.68) (35.28) Net cash flows from financing activities (66.27) (140.61) (108.56) Net increase (decrease) in cash and cash (57.11) equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Financial Ratios Liquidity Ratio Quarter Current Ratio (time) Quick Ratio (time) Account receivables turnover (time) Average Collection Period (day) Inventory turnover (time) Day sales of inventory (day) Average Inventory Turnover (day) Payable Conversion period (day) Profitability Ratio Gross Profit Margin (%) Operating Profit Margin (%) Net Profit Margin (%) Attachment 1 Page 8

113 Quarter Efficiency Ratio Return on Asset (%) Return on Equity (%) Leverage Ratio Debt to Equity Ratio (time) Interest Coverage Ratio (time) Cash Basis (time) Dividend Ratio (%) Analysis of operating results and financial position 5.1 Statement of Income Revenue from sales Year 2015 The Company had revenue from sale total THB 1, million, a decrease of THB million or 5.32% from Although the Company s sales volume has increased in this year, but since the Company has lowered its selling price due to the world price of raw materials has dropped significantly in 2015, which cause the overall sales decreased from the previous year. Year 2016 The Company had revenue from sale total THB 1, million, a decrease of THB million or 3.81% from The decrease in sales was mainly from the lower of raw material price and the Company has expanded their business into packaging industry which demand increased levels of technical complexity due to the large volumes (high speed production) and certain non-standard product specifications, this has resulted in more sophisticated molds, machinery, robotic take-out systems and inherently more stringent product qualification procedures. This in turn results in a longer lead time to commercial production, therefore some 2016 project wins will only begin commercial production in Quarter 3, 2017 The Company had revenue from sale total THB 1, million, an increase of THB million or 5.84 % from the same period of previous year. The increase in sales was driven mainly from increasing of projects with existing customers and new customer accounts remain a key focus of management Cost of sales Year 2015 The Company had cost of sales totaled THB 1, million accounting for 84.05% of revenue from sales, decreased from 2014 by THB million or 7.27% due to the price of plastic beads which is raw material was in downward trend since mid of 2015 which is consistent with the global crude oil price and the company Attachment 1 Page 9

114 has adopted a financial instrument policy with financial institutions to manage the Company s credit by using both cash and credit term to buy plastic pellets. As a result, the cost of raw materials can be greatly reduced which also shown in cost of goods sold to revenue from sale ratio that was which reduce from previous years. Year 2016 The Company had cost of sales totaled THB 1, million accounting for 83.10% of revenue from sales, decreased by THB million or 4.89% from2015. This year the main production cost was still from the price of plastic bead was in upward trend in year 2016 which is consistent with the global crude oil price. However, the Company had strategy to seeking raw material with controllable price to maintain ratio of cost to sales to be in line with previous years and financial instrument policy to reduce cost production which also shown in cost of goods sold to revenue from sale ratio slightly decrease from previous year. Quarter 3,2017 The Company had cost of sales totaled THB million accounting for 82.61% of revenue from sales. This was increased THB million or 4.31% from the same period of previous year. The Company s cost of sales increased with an increase in purchase order from customers in the mid of this year. The Company s ratio of cost to sales slightly decrease from previous years due to the crude oil price in the first quarter was the cheapest during the year Selling Expense Year 2015 The Company had selling expense totaled THB million accounting for 7.78% of total revenue, increased by THB 3.91 million or 6.52% from year The increase was mainly due to an increase in transportation cost in consequence to higher sale volume which higher than last year. However, the ratio of selling expense to total revenue is still in line with last year which had 7.13%. Year 2016 The Company had selling expense totaled THB million accounting for 9.09% of total revenue, increased by THB million or 24.26% from year The increase was mainly due to the executive management personnel and their associated payroll. Additional management expertise was brought on board in 2016 to prepare the Company for their inorganic (M&A) growth aspirations (management continues to study areas of growth that will result in synergies for our business) and their increased operational excellence focus. Quarter 3, 2017 The Company had selling expense totaled THB million accounting for 9.39% of total revenue, increased by THB million or 11.97% from the same period of precious year. The increase was mainly due to an increased cost base attributable to annual wage inflation, additions to executive management team and IT system upgrade expense. Attachment 1 Page 10

115 5.1.4 Source of Fund During 2014 quarter 3, 2017, the company has financial cost of THB million, THB 9.35 million, THB 1.98 million and THB0.23 million, respectively. In 2015, financial cost reduced from 2014 by THB 3.32 million or 26.23% which had main reason from changing status of financial statement of the company. In 2016, the decreasing of financial cost was THB 7.37 million or 78.82% which was from the company used excess cash to repay long-term loans. Moreover, in quarter 3, 2017, financial cost reduced by THB 1.67 million which was also the effect from repaying long-term loans in 2016 and the decreasing of interest burden Net Profit Year 2015 The Company had net profit totaled THB million accounting for 6.58% of revenue from sale increased by THB million or 11.60% compared to year 2014 which had net profit of THB million. Although, this year the revenue from sale has dropped significantly by THB million from last year due to the reduction of the selling price. However, since the price of raw materials was in downward trend this year and the good management of the company. As a result, the Company s cost of sales decreased from the previous year by THB million, which is the main reason for the increased of net profit this year. Year 2016 The Company had net profit totaled THB million accounting for 6.84% of revenue from sale increased by THB 0.70 million or 0.67% compared to year 2015 which had net profit of THB million. The increased slightly in net profit this year was due to the higher SG&A expense of THB million or an increase of 9.09%, to prepare the Company for their inorganic (M&A) growth aspirations. Quarter 3, 2017 The Company had net profit totaled THB million, accounting for 7.13% of revenue from sale, increased by THB million or compared to the same period of previous. Though, there were a weak performance Q1 this year and an increased cost base attributable to annual wage inflation, additions to executive management team and IT system upgrade expenses, the company can increase the sales volume align with the growth of industry and also diversify risk by also focusing on food and beverage. Hence the company s performance improves as the overall. 5.2 Balance sheet Asset 31 December 2015 At the end of year 2015, the Company had total assets of THB 1, million, decreased from 2014 by THB million or 6.25%, which had reasons as follows. The main reasons were from current assets decreased by THB million from the previous year due to the company use excess cash to repay short-term and long-term which made cash and cash equivalent Attachment 1 Page 11

116 decreased by THB million or 93.93%, the decreasing of selling price due to the decreasing of raw material price which also affected trade accounts receivable to decreased by THB million or 13.37%. For noncurrent assets, the Company had THB million increased by million due to the decreasing of net worth of building, machinery and equipment of THB million. In addition, the increase in total asset was from the increase in advance payment for purchasing of molds and other non-current assets which increased by THB and 9.67 million from 2014 respectively. 31 December 2016 At the end of year 2016, the Company had total assets of THB 1, million, increased from 2015 by THB million or 8.90% which had reason as follows. Main reasons were from the increasing of current assets which consists of trade and other receivable, inventories and other current assets. Reasons were because trade and other receivable increased by THB million or 9.96%, inventories increased by or 25.68% due to the increased in sales order from customer, and other current assets increased by THB million due to the withholding tax of THB 30 million. Moreover, property, land and equipment increased by THB million from previous year due to the increasing of machines for the production, molds and other equipment that invested in 2016 to support the expansion of production capacity and to replace the old machines to enhance the productivity. 30 September 2017 At the end of quarter 3, 2017, the Company had total assets of THB 1, million, decreased by million or 0.91%, majorly consisting of the decreasing of advance for purchase of molds by THB million due to last year there already was the expansion of production capacity, and the decreasing of inventories, and other current assets by THB million Liabilities 31 December 2015 In 2015, the Company had total liabilities totaled THB million, decreased from 2014 by THB million or 28.33% because the company has account payable decreased from 2014 by THB million or 22.78% due to the price of raw material that the Company has purchased in 2015 was decreased since the lower of plastic pellet price. This will be in line with lower sales prices and lower sales values in year In addition, the short-term loan from banks in 2015 was THB million, decreased by THB million from previous year which had THB million and the long-term loan from banks was THB million, decreased by THB million from precious year which had THB million. This was due to the Company has used excess cash flow to early repayment short-term and long-term loan in order to save financial cost of the Company which is better than deposit the excess cash flow in the bank. Attachment 1 Page 12

117 31 December 2016 In 2016, the Company had total liabilities totaled THB million, decreased from 2015 by THB million or 35.71%. This was from the decreasing of trade and other payables by THB million or 17.56% due to the use of financial instrument by using short term loan from the bank to purchase plastic pellets, with the terms of cash payment within 15 days. As a result, the creditor has decreased and this is a strategy of the Company to reduce cost. Moreover, there was current portion of long-term loans and long-term loans from bank that decreased from 2015 by THB million and million from previous year respectively. Since the Company used cashflow from the acquisition of TPAC-W1 and TPAC-ESOP to repay all long-term loan with the bank during waiting time for a long-term investment project to reduce financial costs. Moreover, in 2016 the Company had sufficient cash flow to invest in fixed assets, machinery molds, equipment and software. 30 September 2017 In quarter , the Company had total liabilities totaled THB million, decreased by THB million from the end of year This is mainly from the decrease in short-term loans from banks by THB million from the end of year 2016 due to the Company used the excess cash from operating to repay some of short term loan to reduce loan interest burden of the Company Equity At the end of , and quarter 3, 2017, the equity is THB million, THB million, THB 1, million, and THB 1, million. It s obvious that the equity has been increasing since 2014 due to the company has a better performance in every year, so there is an increasing in retain earning in every year. However, there was the increasing in 2015 for THB million or 11.18% from 2014 which had main reason from the increasing of profit after dividend paid for THB 43.3 million and increasing of cash inflow from exercise of the companies warrants (TPAC-W1 and TPAC ESOP) for THB million. For 2016 there was an increasing in equity for THB million or 31.61% due to the increasing of cash inflow from exercise of the companies warrants (TPAC-W1 and TPAC ESOP) for THB million and increasing of net profit. 5.3 Liquidity Net Cash Flows from Operating Activities At the end of 2014, 2015 and 2016, the Company had an increase in net cash flow from operation activities of THB , and million respectively. As of 30 September 2017, the Company had a net cash flow from operating activities of THB million. Net Cash Flows from Investing Activities At the end of 2014, 2015 and 2016, the Company had an increase in net cash flow from investing activities of THB , (66.70) and (135.94) million respectively. Attachment 1 Page 13

118 As of 30 September 2017, the Company had net cash flow from investing activities of THB (35.28) million. Net Cash Flows from Financing Activities At the end of 2014, 2015 and 2016, the Company had an increase in net cash flow from financing activities of THB (66.27), (140.61) and million respectively. As of 30 September 2017, the Company had net cash flow from financing activities of THB (108.56) million. Year 2015 The Company had net cash flows from operating of THB million decreased by THB million compared with the previous year since other non-current assets in 2015 included cash flow paid from the mold, as a result net cash flows from investing activities in 2015 was THB million decreased by from the previous year which had THB million. In additional, the Company had net cash flows from financing of THB million increased from year 2014 which had THB million for THB million. As a result, the Company had cash flow at the end of the year decreased by THB million compared with the end of the previous year which increased by THB million. Year 2016 The Company had net cash flows from operating of THB million decreased by THB million from year This was due to the increased in account receivable, inventories and net cash flow paid for molds. As a result, cash flow used in investing activities in year 2016 was THB million, up from year Net cash flow in 2016 was THB million, higher than net cash flow in year 2015 which had THB million. Cash flow from financing activities increased THB million from the previous year due to there was THB million in exercising warrants in 2016 compared with THB million in year 2015 which increased by THB million. At the end of 2016, the cash flow increased by THB 2.28 million compared to decreased THB million in After combined with the beginning cash flow of THB 3.69 million, the cash balance of the year 2016 is worth THB 5.97 million. Quarter The Company has net cash flows from operating activities before changes in assets and liabilities of THB Million due to the lower profit before income tax in this year. due to lower operating results in the first quarter. However, the Company still has sufficient cash to use for working capital and pay income tax. The company also has net cash flows from operation for THB Million and net cash flows from investing for THB (35.28) Million because in the first quarter of the year, the company bought machine with better technology and invested for a new type of mold to support the capacity expansion in the future which cost THB Million. After the company paid out dividend of THB Million, paid back short-term loans of THB Million the company has cash and cash equivalents at end of September 2017 of THB Million. Attachment 1 Page 14

119 5.4 Important Financial Ratio Liquidity Ratio The Company's current ratios as of 31 December 2556, 31 December 2556, 31 December 2016 and 30 September 2016 were 1.56 times, 1.66 times, 2.34 times and 3.17 times, respectively. A slightly higher of ratio during and in the third quarter of 2017 were results from a higher current asset while the current liabilities of the company was lower. The quick ratio was 1.18, 1.19 times, 1.72 times and 2.66 times, respectively, respectively which were in the same level from 2014 to 2016 except for the second quarter of 2017 that has a higher ratio than last year because the Company has paid short-term loans from the bank for THB Million, so the current liabilities are lower than last year. The average collection period is 89 days, 86 days, 93 days and 127 days, respectively. The duration is not much different in each year due to a good management of the company, except for the third quarter of 2017 that the company has low interest burden since the company has paid back a lot of short term loan. The average inventory turnover was 28 days, 24 days, 32 days, and 38 days. The average inventory turnover increase in 2015 and 2016 due to the increasing in inventory from increasing in orders. The payable conversion period is 96 days, 94 days, 69 days and 62 days, which means that the payable period has been considerably reduced since 2016 and in the third quarter of 2017 due to the decrease in trade accounts payable in 2016 from purchasing plastic resin which made on a 15-day by cash, and also due to the short-term loans has decreased in 2017 due to the Company paid back the loan to the bank Profitability Ratio The Company's gross profit margin during were 14.18%, 15.95%, 16.89% and 16.15% respectively. Operating profit margin was 7.78%, 9.37%, 8.73% and 8.52%, respectively. Net profit margin was 5.58%, 6.56%, 6.89% and 7.19%, respectively. It s obvious that 3 profitability ratios improve every year. In 2015, the profitability ratios margin has increased from 2014 due to the decrease in raw material prices, resulting in a decrease in cost of sales this year. In 2016, profitability ratios increased slightly even there was a higher selling expense and administrative expenses that is for preparation for the business expansion and merging the business. The profitability ratios in the third quarter of 2017 had a slightly improve due to the increase in sale volume and improvement in management Efficiency Ratio The Company's return on assets during and the third quarter of 2017 were 7.52%, 9.00%, 7.90% and 6.92%, respectively. The Company's return on equity during and the third quarter of 2017 were 14.48%, 13.53%, 10.38% and 8.29%, respectively. Attachment 1 Page 15

120 The Company's return on asset in 2015 increased 2014 due to the decrease in assets from the reduction of the Company's product prices, which decrease account receivables. In the year 2016, the return on assets was lower than Although the net profit is close to that of the previous year, the ratio decreased due to the increase in assets from increase in inventories to support customers orders. For the third quarter in 2017, though the company still had investing in fixed asset, the company still has an improvement in return on asset, comparing to the same time in previous year which had the ratio of 5.89% Return on equity is in downward trend. This is due to the increase in equity from retained earnings in every year Leverage Ratio The Company's debt to equity ratio as of December 31, 2014, December 31, 2016, and September 30, 2019 were 0.79 times, 0.51 times, 0.25 times and 0.20 times, respectively. The Company's interest coverage ratio as of December 31, 2014, December 31, 2016, and September 30, 2019 were times, times, times and times, respectively. It s obvious that the debt to equity ratio of the Company is likely to decrease every year since 2014 due to the decrease in liabilities from the Company's financial strategy and the increase in equity value every year. The continuously increasing in interest coverage ratio is due to the company has keep paying back debt, so it makes the company has less and less interest burden. 6. Market Condition and industry trend The Key Factors that influence the performance of the Company is still plastic pellets which had 60% proportion of total raw material cost. The cost of raw materials is approximately 53% of sales. In 2016, the pricing of plastic pellets was on upward trend and stabilized in the last quarter. Pricing and volume of plastic pellets is fluctuating in line with the price and quantity of crude oil on the world market. In 2017, the Company forecasted that the price of crude oil will move slightly from the end of Another key factor that influence performance of the Company is energy costs and labor costs which were higher in Although, the average wage rate will not increase but there are other factors that do not encourage the economy to grow significantly. Due to the lack of confidence in the direction of the economy, private companies will invest in less risky asset instead of new investment. The government will provide tax support to accelerate investment during the year 2016, however, it is a short-term stimulus. Consumers are still spending less and be cautious, and will have to face with the competition in terms of price from both inside and outside the country. The next important factor is Politics and government in the country. During the year 2016, there is a great loss. Since the loss of King Rama 9, the public and private sectors are in mourning and adapting. The result is a significant decrease in spending in all sectors. These factors contributed to the slowdown of the domestic economy in the fourth quarter, despite the government's efforts to finance in SME and START UP Attachment 1 Page 16

121 investments both short-term and long-term to sustainability. However, it is still possible to diversify the investment effectively even the products manufactured by the company is essential to their life, but it might be affected to the Company since the psychology of consumers that will be careful to spend less or use it as necessary. 7. Business Outlook The Company will continue to focus on growing in the rigid plastic packaging business. The market expansion will be in both domestic and international markets in the form of organic growth. Moreover, the Company will seek opportunities to invest in the form of acquisitions of plastic packaging companies with skills and expertise in this business as well. The Company focuses on improving product quality and increasing capacity to support the expansion of the market. The Company is committed to providing quality products and services that meet its customers expectation. With long-term experience in the plastic packaging business, the Company has an advantage in terms of quality control and product development, which gives its customers confidence in the Company and its products and will enable the Company to remain in this business and grow sustainably. In terms of demand for the plastic packaging products, the Company believes that the plastic packaging business still has an opportunity to grow from the market demand, population increase, and evolution of consumer packaging. As a result, the plastic packaging business in Thailand and Asia is still healthy, especially in India where the Company sees the potential to grow. The Company still pursues its original goals and seeks the next opportunity to expand its capacity to meet customers needs in accordance with its vision, which is To be a world class plastic packaging company present in high growth markets. 8. Liabilities of the Company 8.1 Total Amount of Issued and Unissued Debt Instruments as of September 30, None- Attachment 1 Page 17

122 8.2 Total Amount of Term Loans and Collaterals as of September 30, 2017 Loan Type Collateral Amount (THB million) Short-term loans from banks Land and machine - Remark: The Company has fully repaid all short-term loans from banks, but has not registered a release of such mortgaged collaterals. The Company is also still entitled to drawdown from such short-term loans, whose total credit limit is THB 1,260 million. 8.3 Total Amount of Other Liabilities (Overdrafts Included) and Collaterals as of September 30, 2017 Liability Type Collateral Amount (THB million) Overdrafts Land and machine - Trade and other payables Other current liabilities - 14 Provision for long-term employee benefits - 22 Total 206 Remark: The Company has no outstanding overdrafts, but has not registered a release of such mortgaged collaterals. The Company is also still entitled to drawdown from such overdrafts, whose total credit limit is THB 75 million. 8.4 Total Amount of Contingent Liabilities as of September 30, Capital commitments of approximately THB 11 million relating to acquisition of molds and machinery Future minimum rentals and service charge payables under operating lease and other service commitments of THB 7 million Outstanding bank guarantees for electricity use of THB 13 million Unused letter of credit facility of THB 340 million 9. Possible Risk Factors Capable of Affecting the Company s Profit 9.1 Raw Material Price and Supply Risk Polyolefins (or plastic polymers) are the main raw materials for the Company s production and form a significant part of its cost of goods sold. The monthly price movement of polyolefins is correlated to the movement of oil and the relative supply demand dynamics for the specific polyolefin. To manage this raw Attachment 1 Page 18

123 material volatility, the Company has customer arrangements which allow it to adjust its pricing to be in line with price movement of polyolefins; however, there may be a quarter lag period before the pricing can be adjusted. In terms of supply and demand, there may be instances where producing plants are required to shut down for a period of time resulting in short-term supply disruptions. To minimize the risk of supply disruptions, multiple suppliers are maintained. Also with its 34 years of close relationships with many of these suppliers, the Company is often forewarned of any impending supply disruptions to ensure that it has enough time to make alternative arrangements. 9.2 Competition Risk The rigid plastics packaging business has multiple manufacturers in Thailand and market share can be gained and lost. The experience and passion of the Company s management team is crucial here in order to ensure that it continues to deliver a product that is competitively priced and of consistent high quality. 9.3 Business Operation Risk Operation risk is the prospect of loss resulting from inadequate or failed procedures, systems, or policies. This includes employee errors and system failures. The Company has been in operation for 34 years and is also ISO 9000 certified. It has built adequate procedures and systems in place and has been continuously improving procedures and systems through regular customer audits and internal audits to minimize employee errors and system failures. 9.4 Property Risk Property risk refers to risk events that specifically impact an organization s facilities and other physical infrastructure. Risk events such as fires and adverse weather conditions fall into the category of property risk. In addition to damaging and destroying physical property, property risk events also have the potential to create stoppages in business operations and material financial losses. The Company has taken adequate insurance offering all-risk coverage to protect the property and business interruption (for 12 months) resulting from damage to property. In addition to this, it has taken adequate coverage for goods in transit and vehicle policy. 9.5 Overstocking of Inventory Risk The Company has a large number of customers and product stock keeping units (SKUs) numbering in the thousands and increasing. Inventory control, warehousing, and logistics are all important processes to facilitate the on-time delivery to customers. For inventory management, management information systems covering raw material procurement, planning and production, and logistics are in place. Supply chain infrastructure was further enhanced in 2015 with the construction of a 6,000-sq. m. new distribution warehouse. Attachment 1 Page 19

124 9.6 Foreign Exchange Financial Risk Approximately 10% of the Company s revenues are denominated in USD arising from export sales. The Company s costs are denominated in THB. There is a timing gap between the invoicing of the sale and the actual receipt of the foreign funds. During this time period, it is possible that the USD loses value against the THB, thereby resulting in a potential loss of expected revenue. The Company is able to hedge this risk by entering into forward foreign exchange (FX) contracts at the time of invoicing. 9.7 Investment Projects Risk Investment projects are subjected to various forms of risk that can impact the expected performance. There are factors that come from the external environment, as well as factors that are specific to the operational and functional structure of the organization. This may result in project failure or inability to reach the expected results. The Company critically evaluates investment projects and capital expenditure (CAPEX) proposals in terms of the payback and return on investment (ROI) by using the SWOT analysis and the Risk Management Committee focuses on eliminating the negative aspects introduced by the risk probability and analyses the potential threats that can affect the projects profitability in the future in detail. 9.8 Corruption Risk All organizations are exposed to corruption risks. These risks can exist at all levels of an organization, in relation to all functions and activities, and can potentially involve any internal or external stakeholder. If corruption does occur, the short and long-term consequences for the organization include loss of reputation, loss of public confidence, direct financial loss, adverse effects on other staff, and the morale of the organization in general. The Company has a proactive risk management approach to corruption prevention by creating an open channel in its website whereby stakeholders can directly contact the Head of Compliance and by implementing the Whistle Blowing Policy to protect any person who notices and gives data and information on corruption. It also provides in-house training to all levels of employees and the anti-corruption issue is also addressed in the Code of Ethics for Employees. Moreover, a complaint box is provided so that complaints can be made anonymously. 10. Opinion of the Board of Directors on Working Capital Sufficiency The Board of Directors viewed that the Company would have no issue in terms of working capital as a result of entering into this Transaction in spite of the Company s obligation to pay interest for the loan from the financial institution given its strong financial status. In addition, the Company did not have any outstanding short-term or long-term loan from financial institutions as at September 30, Moreover, the Company s working capital of approximately THB 400 million as at September 30, 2017 together with other credit facilities from financial institutions were sufficient for its operation and entering into the Transaction would not materially affect its working capital. Attachment 1 Page 20

125 11. Pending Material Legal Actions or Disputes As at September 30, 2017, the Company had no pending material legal action or dispute that may affect its operations. 12. Benefits or Related Party Transactions between the Company and the Directors, Executives, and Shareholders with a Direct or Indirect Shareholding of 10% or More The Company s significant business transactions with related parties, which have been concluded on commercial terms and agreed upon in the ordinary course of business between the Company and those related parties, are as summarized below. Related Parties Relationship Features of Transactions Value of Transactions (Unit: THB million) As at December 31, 2016 As at September 30, Indorama Polymers Public Company Limited The Company s management, directors, and shareholders are related to Indorama Polymers Public Company Limited s shareholders and directors. Purchase of goods Account payable Indorama Ventures Polymers (Rayong) Public Company Limited The Company s management, directors, and shareholders are related to Indorama Ventures Polymers (Rayong) Public Company Limited s shareholders and directors. Purchase of goods Account payable Total Key Summary of Material Agreements within the Past 2 Years During the past two years, the Company has not entered into any material agreements with significant business commitments. However, the Company still has normal trading contracts with business partners, forward exchange rate contracts for hedging purposes, and bank guarantees for utility guarantee, all of which were entered into in the ordinary course of business. Attachment 1 Page 21

126 - Translation - This English Translation has been prepared solely for the convenience of the foreign shareholders of Dental Corporation Public Company Limited and should not be relied upon as the definitive and official opinion of the Independent Financial Advisor. The Thai language version of the Opinion of the Independent Financial Advisor report is the definitive and official document and shall prevail in all respects in the event of any inconsistency with the English translation. Attachment 2 Summary of Appraisal Report of SUNRISE CONTAINERS LIMITED In appraising lands, buildings and machines for Adjusted Book Value Approach, the company hire the Independent Appraisal, Rakesh Narula & Co ( RNC ), a famous and well know appraiser in India to appraise the assets. Source: RNC is an India company, founded in 1982 by Mr. Rakesh Narula. RNC is a leading valuation advisory firm with expertise in the areas of valuation of fixed assets for M&A, Bank lending, dispute resolution, insolvency, financial report, statutory compliance etc. RNC is specialized in insurance survey and loss assessor, registered and government approved valuers, techno economic viability studies, independent engineer, technical due diligence, real estate and industrial advisory and chartered certification. With multi different field of experts, RNC can providing a comprehensive assignment and advise for various industries clients. Company has 4 different office located in India, which is in Mumbai, Vadodara, Ahmedabad, and Surat. RNC clients include publicly traded company and privately held company, bank, insurance company, law firm, insurance advisors, government entities, investment organization, audited firm, etc. Discover Management Company Limited Attachment 2 Page 1

127 Example of RNC s clients Source: RNC s company profile RNC is a Government Registered and Approved Valuer. It also has a IRDA licensed category A, a license granted by Insurance Regulatory and Development Authority of India for an insurance surveyor & loss assessor and consultant for valuation of property, plant and equipment. Moreover Mr. Rakesh Narula has been awarded the membership of RICS (Royal Institute of Chartered Surveyors), the world's leading professional body for qualifications and standards in valuation, management and development in land, property, infrastructure and construction. Source: rics.org Discover Management Company Limited Attachment 2 Page 2

128 Source: RNC has been in expertise in their service for 30 years and the leading firm in appraising services and also have been associated with leading chartered accountancy firm, law firm, international property consultants, asset reconstruction companies, bank and financial institution. Hence, IFA assures that RNC will conduct an appropriate appraisal report with reasonable fair value to shareholders of TPAC. In this appraising asset of Sunrise, the Independent Appraiser has appraised the lands, buildings, machines and equipment, located in 4 factories in India, as of March 31, Factory at Haridwar Haridwar 1 Discover Management Company Limited Attachment 2 Page 3

129 Haridwar 2 Factory at Umbergaon Factory at Silvassa Discover Management Company Limited Attachment 2 Page 4

130 Factory at Dadra IFA has review all appraisal reports, methodologies and assumptions in the appraisal report dated on November 28, 2017 of the independent financial advisor, and found that the independent financial advisor has appraised fair value on the assumption that purchaser and seller agree and willing to buy and purchase without any obligation and both parties has power over one another. Moreover, the methodology that independent appraiser uses to appraise for each methodology are appropriate and follows the standard. Therefore, the IFA has adjusted book value of the company based on appraisal report from the Independent Appraisal. Independent Appraiser appraises buildings by estimating replacement cost of building construction and equipment at the current replacement cost and deducted the depreciation (Cost Approach) and the market value of land (Market Approach). The details of appraisal value comparing to the book value as of March 31, 2017 are shown below. 1. Summary of Appraised Valued of Lands as of November 28, 2017 RNC has appraised the land in Haridwar, Umergaon and Silvassa (factory in Dadra is rental so, the independent appraiser does not appraise that) by using market approach which is an international common approach and also the same approach that independent appraiser uses for appraising land for listed company. The market approach is comparing market price of near land that are available for sales by land lord or broker, then adjust with environment for similarity and differences such as shape, size, location, accessibility, road, infrastructure, potential in development, supply and demand, advantages and disadvantages. The details of Lands can be summarized as follows: Discover Management Company Limited Attachment 2 Page 5