2. Nature of Business
         The  Company  is  a  manufacturer   and  distributor  of frozen 
fruits and  vegetables with the export volume in 1999 of 98.45 %  of the 
total sale value.   The manufacture  involves  the   processing  of  raw 
materials  of  agricultural  products  to   be   frozen  at  the average 
temperature of -25 celcius degrees.  
     The products of the Company are categorized as follows:
     Frozen vegetabels  such as  Green  Beans,  Soy   Beans,  Carrot and  
                                 Baby  Corns etc.
     Frozen Fruits  such as  rambutans, Lychees, Mangosteens and Longans 

   Nature of Income                                     In thousand baht
                       Chiangmai Frozen Foods Public Company Limited
Products                     1997           1998           1999        
                         Amount    %     Amount    %    Amount     %    
Frozen Vegetabels        748,676  98.6 1,068,214  91.4  939,565   97.9  
Frozen Fruits              2,354   0.3        27    -     9,717    1.0
Gain from exchange rate     -       -     86,121   7.4    2,265    0.3
Other income               8,327   1.1    13,735   1.2    7,768    0.8
   Total                 759,357 100.0 1,168,097 100.0  959,315  100.0
Product Markets
Overseas                 745,971  98.2 1,044,514  89.4  934,523   97.4 
Domestic                   5,059   0.7    23,727   2.0   14,759    1.5
Gain from exchange rate     -       -     86,121   7.4    2,265    0.3
Other income               8,327   1.1    13,735   1.2    7,768    0.8 
   Total                 759,357 100.0 1,168,097 100.0  959,315  100.0

       Nature of customers          Oversea Market Domestic Market Total
       Total Sale value          (%)     98.45          1.55      100.00
       Sale of Frozen Vegetables (%)     94.73          5.27      100.00 
       Sale of Frozen Fruits     (%)    100.00           -        100.00 
       Operation cycle           
       Sales statistics
                     UNIT    1995   1996   1997   1998   1999
       1st Quarter    %     21.16  13.08  20.78  19.94  20.42
       2nd Quarter    %     17.93  26.55  26.71  27.36  30.58
       3rd Quarter    %     29.02  38.22  31.17  28.04  25.44
       4th Quarter    %     31.89  22.15  21.34  24.66  23.56
              Total        100.00 100.00 100.00 100.00 100.00
         Subsidiary company
         Laiyang Chongtai Frozen Foods Co.,Ltd. Produces and exports all
of its  frozen  vegetables  by  using  local agricultural produce as raw
materials to be processed and frozen at  the  average  temperature of-25
degree celsius.
      Products of the subsidiary company
      Frozen vegetables such as Taro, Spinach, Pea Pods, Gobo, Broccoli,
Cauliflower, Carrots, Green  Beans  etc.,  and  the  maximum  production 
capacity is approximately 5,000 tons per year.
      Nature of income
      Laiyang Chongtai Frozen Foods Co.,Ltd.
                                         1999               1998        
                                 Thousand baht   %   Thousand baht   %  
        Export-Frozen Vegetables     58,445     99.8     60,208     99.5
        Other income                    124      0.2        329      0.5
              Total                  58,569    100.0     60,537    100.0

         2.1 Nature of Products
         The  received  raw   materials   are  inspected  by the quality 
control staff of the Company. Thereafter, the  raw  materials are picked 
by size  selection  machine and processed such as  head  and end cutting 
and  chopping  in  to sections and pieces etc.,  stored  in chill rooms, 
gone through  machines for cleaning with water  and  sterilized, boiled, 
refrigerated  by  the  dip in  water,  processed  through  freezers  and 
stored  in  cold  storage  with -25   celcius  degrees.  Thereafter, the 
quality of the  products  are  reexamined, graded, packed  and stored in 
the cold storage for the subsequent distribution.
         2.2 Manufacture or Product Procurement
         (1)  Production Capacity and Production Volume
              Chiangmai Frozen Foods Public Company Limited
    
                Description              Units 1997  1998  1999 
    
     Full production capacity            Tons 22,04027,00027,000
     Actual production volume            Tons 15,60718,38417,915
     Actual rate of usage capacity        %    57.80 68.09 66.35
     Increase rate of production volume   %     3.41 17.79(2.55) 
     Increase rate of production value    %    11.14 24.22  8.30
    
         Remark: There are three production shifts.  Actual  production, 
which depends on the amounts of raw  materials  supplied to the factory,
ranges from one to three shifts.
         Subsidiary company
         Laiyang Chongtai Frozen Foods Co.,Ltd.
       
                 Description               units   1998     1999   
       
       Full production capacity             Tons   5,000    5,000  
       Actual production volume             Tons   1,569    1,986  
       Actual rate of usage capacity         %     31.38    39.72  
       Increase rate of production volume    %       -      26.58  
       Increase rate of production value     %       -      11.67  
       
        Remark: - Operation commenced on April 1, 1998.
                - The number of  production  shifts is two.  The  number 
of actual production shifts is  one  to  two depending on the amounts of
raw materials supplied to the factory.                 

         (2) Raw Materials and Dealers of Raw Materials
         The Company purchases the  raw  materials from the present more
than  20,000  farmers'  families  joining  the  project and covering the 
eight northern provinces of Chiangmai, Chiangrai,  Phrae,  Nan, Lampang, 
Phayao, Lumphun and Mae  Hong  Sorn.   The Company  provides the farmers 
with  planting  seeds,  fertilizers   and   insecticides.   The  Company 
guarantees  the  purchase  prices  of  the  raw  materials.   During the 
planting seasons, the  Company  provides  the farmers with  the  experts 
who are the agricultural promotion staff of the Company to  educate  and 
advise  the  farmers  in  the  taking  care,  fertilization,  and use of 
chemical  products  so  that the farmers are able to have  good  harvest 
and maximum quantity of crops per rai.    When the crops are  harvested, 
the  Company  purchases  the  crops  at  the  guaranteed prices with the 
deduction of the costs of planting seeds,  fertilizers  and insecticides  
from the purchase prices.

          The company's average purchase prices of raw materials.
            - Green Beans and Soy Beans  5.50 - 15.50  Baht/Kg.
            - Others                     5.00 - 25.00  Baht/Kg.

          Statistics on the proportions of raw materials supplied to
          the factories.
                          UNIT     1995   1996   1997   1998   1999
          1st Quarter      %      20.42  27.46  21.71  34.27  36.49
          2nd Quarter      %       5.47   4.71  15.94  13.10  17.75
          3rd Quarter      %      45.46  35.16  24.99  23.59  18.22
          4th Quarter      %      28.65  32.67  37.36  29.04  27.54
              Total              100.00 100.00 100.00 100.00 100.00

          Changes of the main raw materials cost in five years.
                          UNIT     1995   1996   1997   1998   1999
          Green Beans      %      (7.89) (6.34)  1.04   1.33  (2.73)
          Soy Beans        %      (3.71) (4.55) (1.35) (0.87) 11.25 

          Proportions usage of raw materials
                          UNIT     1995   1996   1997   1998   1999
          Green Beans      %      70.60  50.17  56.73  51.21  37.24
          Soy Beans        %      21.99  45.47  36.94  42.34  47.34
          Others           %       7.41   4.36   6.33   6.45  15.42
                Total            100.00 100.00 100.00 100.00 100.00

          - Changes  in  technology  do  not  affect  the  usage  of raw 
materials, but it will  affect  the  labour  due to high labour costs at 
present.
          - Raw materials  used  by  the  company can not be substituted 
by other materials.  If  raw  materials  are not sufficient, the company
will  increase  the quantities of planting in the following seasons.  or 
procures raw materials by importing from China and Taiwan, however,  the  
costs of  imported  raw materials are higher than the costs of local raw 
materials.
           Subsidiary company
           Laiyang  Chongtai  Frozen Foods Co.,Ltd.   purchases  produce
from groups of  farmers  and  the  prices  of  raw  materials  fluctuate 
depending  on  the  bargaining  power  and  the  mutually agreed prices.
Semi-Products and  Finished  Products  are  also  purchased  from  other
factories for further processing or repacking.



         (3) Manufacture Process
                                                     
                             Raw  Materials 
                            
                                   
                             Quality Control
                            
                    
                     Size Selection and Processing 
                     
                         
                         Storage in Chill Rooms 
                           
                     
                      Water Washing and Sterilizing 
                     
                            
                             80 % Ripe Boil 
                            
                             
                              Refrigerated 
                             
                              
                                Freezing  
                              
                         
                         Stored in Cold Storage 
                        
                           
              Quality Inspection,Grade Selection and Packing
              
                        
                         Stored in Cold Storage ----> For Subsequent 
                              Distribution       





         Source of technology
         The Taiwanese  co-investors  have  transferred  the  production 
technology to the company's  employees, and  the  training  is  free-of-
charge, without related  agreements  and  there  are no expenses for the
"know-how".    The Taiwanese  co-investors  have  sent  their  executive
officers to control, supervise and  teach the  production  technology to
the company's  employees.    At present,  the  company's  employees  are
skilled and knowledgeable and capable of supervising and controlling the 
production process effectively.
         Machinery capacity and staff sufficiency
         Currently, there are sufficient machines to produce quality and
standardized  products  competitive to  products of the company's rivals
overseas.   In addition, the  employees  have been taught new production
technology by  the Taiwanese co-investors, as a result, they are capable
of controlling  the  production efficiently.  The company's products are
therefore acceptable to the consumers.
         Possibility of replacement by new technology
         The  company's production technology is modern and differs from 
other production technologies such as canning and oven-drying.  Products 
are freezed to  maintain their freshness for long-life storage,  natural
color and no preservatives added. Hence, the company believes that,there
shall be no new technologies to replace current used one.  Nevertheless, 
the company does not neglect to look for new technologies to replace the 
existing one or offer more choices to the consumers.
         Capability, necessity and expenses to improve machinery for
         competitiveness
         It will not be  necessary  to improve the machinery in the near
future because most of the company's machines are rether new with little
usage and are up-to-date.

       Summary on important provisions in technical assistance agreement
       The co-investors have mutually agreed to send Taiwanese technical
experts  to  supervise the production and transfer the technology to the
company free-of-charge.
         (4) Environmental Effects
         The  waste  water  from  the  product processing may affect the
environments.   The  Company  processes  the  waste  water through water
treatment system to have the water comply with the  standards  set forth
by  Department of  Industrial  Works  before the dispatch to  the  water
drainage system. As to the raw material refuses from  the  manufacturing
process,  the  Company  will sell them as products to be  used as animal
feeds. This creates no rubbish disposals  and  causes no adverse effects
to the environments.
         2.3 Marketing
             (1) Marketing Strategy
             The  industry of frozen  vegetabels  and  fruits is the new 
line  of  products  which  add  more choices to the consumers.  They are 
available  throughout of the year without the reservation materials.
             Important competition strategies
             1. Standardized, fresh and delicious;
             2. Regular product deliveries;
             3. Product  prices  are comparable to, or lower than prices
                of the rivals' products, but the company's  products are
                of a better quality;
             4. Discounts for big orders;
             5. Customer visits and close attention to the customers.
             Advantages
             1. The market base of the co-investors is solid.
             2. All the senior managers of the company are knowledgeable
                about trading in agriculture produce  and  have had over
                ten years of such experience.
             3. The  company's  main  products  are quality agricultural 
                produce and delicious.   The  farmlands  enable  farming
                almost  all  through  the  year  and  there are not many
                vagaries of the weather,  when  compared to some rivals'
                countries such as China and Taiwan.
             Disadvantages
             1. Much  longer  land  and sea distances,  when compared to 
                overseas competitors,  make transportation costs higher;
             2. Currency fluctuations;
             3. Farming  development  to  reduce  costs  is inhibited by 
                small farmlands.
             Target customers
            The company's target customers are department stores,hotels,
Japanese  restaurants.   The company  emphasizes  groups of middle-class
customers  and upwards  as well as  businessmen  who prefer hygienic and
semi-instant products convenient for consumption.

             Pricing policy   
             The company has a policy to sell its products at reasonable
prices.     The prices of the company's products are comparable with the
prices of its foreign competitors' products, or are a bit lower.
             (2) Distribution and Distribution Channels
             Almost  all  the  Company's  products are exported overseas 
through the channels of :
             Domestic
             The distribution  is done through P.P.Food Supply Co.,Ltd.,
which  accounted  for  the approximate 1.3 % of the total sale volume in 
1998.
             Overseas   There are two channels:
             1. Direct   distribution to the customers  which mainly are 
department  stores  and  supermarkets  in Japan  with  distribution rate 
approximate 86.7 % of the total sale volume.
             2.  Distribute through  the  representative  such as Itochu
Corporation,a shareholder of the Company with sale promotion approximate 
12 % of the total sale in  which the Company will pays the commission to 
the representative at the rate of 3 % of total sale.
             Representatives
             Since  most of  the  company's  products  are exported, the 
company  recruits suitable representative, however, the company does not
appoint representative,who compute with the company to obtain customers,
as its agents.   The principal  conditions  for each purchase order from
overseas is that  the  customer  has  to  open a letter of Credit in the 
company's  name  or  make  a  payment  by  telegraphic  transfer payable 
directly to the company.   Subsequently,  the company has never suffered 
any bad debt incurred from selling its products. 
             (3) Nature of Customers 
             Most  customers  of the  Company  are department stores and 
supermarkets in foreign.
            The company is confident that,based on the good relationship  
maintained  among  the  partners, the  company  will not lose any of its 
customers.  On the contrary, the company has been prosperous and has had 
continuous  good  performances since the commencement of its business in 
1990.  Nevertheless, in order to  minimize  the risk of losing important  
customers, the  company  has  been  trying  to  penetrate  more markets.  
At present, the company is able to export  more  products to  the United 
States of America and Sweden. 
             (4) Undelivered Orders
                 Since the  company  produces products to stock for sale 
and  regularly  delivers  to  the  customers according to their purchase 
orders, thus, products will not remain undelivered.

         2.4 Privileges and Limitations of Business
             (1) Promotion Certificate
                                      1st         2nd        3rd 
                                  Certificate Certificate Certificate
Running Numbers of 
Promotion Certificats            1727/SorOr./ 1063/SorOr./  1397/2537
                                     2531        2536

           List                      1st      2nd       3rd      
                                CertificateCertificateCertificate

Plant No.                            1          1          2     
Promotion Certificate date       12/12/1988 28/04/1993  7/07/1994
Business capacity (tons/year)     10,000      5,000      12,000  
Validity of Promotion                7          6          8     
Certificate (years)                                              
Effective dates of Promotion      1/02/1990  1/11/1994  1/03/1996
Certificate                                                      
Expiry dates of Promotion        31/01/1997 31/10/2000 28/02/2004
Certificate                                                      
Distribution-Export (%)             100        30         70     
            -Domestic (%)            -         70         30     
Granted investment promotion        Yes        Yes        Yes    
in the manufacture of fruits                                     
and vegetables                                                   
Type of business                    1.3        1.8        1.8    
  1.3 Food Manufacture or                                        
      preservation                                               
  1.8 Food Manufacture                                           
Exemption from company              Yes        Yes        Yes    
income tax                                                        
Deduction of two times of           Yes        Yes        Yes    
transportation and electricity                                     
fee for ten years as from                                        
income earning commencement                                      
Deduction of assessable income      Yes        Yes        Yes    
of 5 % of the increased income                                   
in preceding year for ten years                                  
After the expiry of Promotion       Yes        Yes        Yes    
Certificate,deduction of 50%/Yr.                                 
company income tax for five                                      
years                                                            

             As  an  investment promoted company,the Company is required
to  comply  with   the   conditions  and  stipulations  provided  in the 
Investment Promotion Certification.
             (2) Other privileges
                 - none -
             (3) Business Limitations
                 - The export of the  company's products is not entitled
                   to the General System of Preference (GSP).
                 - The  Company's  raw    materials    are     available 
                   seasonally  which  are  subject  to the unpredictable 
                   weather.
         2.5 Future Projects.
             The  company is  under  ordering  and  instaling  machinery 
according to the patent of  investment  promotion  edition 4 estimate to 
complete around mid of year 2000  and  will be started to manufacture by
end of year 2000  with  capacity  15,000 MT. per year and admission aged 
for 8 years.
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