Management Discussion and Analysis


Ref. No. IVL002/08/2012


Aug 14, 2012


The President
The Stock Exchange of Thailand


Subject: Submission of Reviewed Financial Statements of Indorama Ventures Public
Company Limited for the second quarter of 2012 and the six months ended June
30, 2012 and the Management Discussion and Analysis


We are pleased to submit:

1. A copy of the Consolidated and Company only Reviewed Financial Statements for
the second quarter of 2012 and the six months ended June 30, 2012 (a copy in
Thai and English)

2. Management Discussion and Analysis (MD&A) for the second quarter of 2012 and
the six months ended June 30, 2012 (a copy in Thai and English)

3. Company's performance report, Form F45-3 for the second quarter of 2012 and
the six months ended June 30, 2012 (a copy in Thai and English)


Please be informed accordingly.



Sincerely yours,




(Mr. Aloke Lohia)
Group Chief Executive Officer









Company Secretary
Tel: +66 (0) 2661-6661
Fax: +66 (0) 2661-6664


INDORAMA VENTURES PUBLIC COMPANY LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
FOR THE PERIOD OF 2Q 2012 AND 6 MONTHS ENDED JUNE 30, 2012 (CONSOLIDATED)

Indorama Ventures PCL (SET: "IVL") achieved a consolidated sales of US$ 1,741
million for the second quarter of 2012, consolidated Core EBITDA of US$ 151
million (Baht 4,711 million), consolidated core net profit after tax and
minority (excluding exceptional items and Inventory gain/loss) of US$ 54 million
(Baht 1,684 million), and a core return on capital employed of 11% on an
annualized basis. The consolidated financial position remains strong and at the
end of June, 2012, the Net Operating Gearing Ratio stood at 53% [post
acquisition of Indorama Ventures (Oxide and Glycols) Limited in April 2012] with
strong liquidity of around US$ 917 million that includes cash and cash
equivalents and unutilized credit lines.

The volume growth of 13% over 1Q 2012, from 1.19 million tons to 1.35 million
tons, has translated into 80% growth of Core EBITDA and 227% growth in Core
Earning Per Share (EPS). Indorama Ventures (Oxide and Glycols) Limited has been
incorporated for the first time in IVL in 2Q 2012 and is one of the key drivers
of earnings growth in 2Q 2012. IVL achieved a Core EBITDA per ton of US$ 112 in
2Q 2012 comparing with US$ 71 in 1Q 2012.

PTA margins in Asia continued to be extremely weak in 2Q 2012, driven by
oversupply outlook for PTA in Asia. IVL's PTA operations in Asia constituted 22%
of total production, contributing negligible core EBITDA in 2Q 2012. Excluding
PTA Asia production volumes and earnings, IVL achieved a Core EBITDA/ton of US$
147 in 2Q 2012 benefiting from the timely integration into Oxide and Glycols.

The global commodity selloff in 2Q 2012 has resulted in a significant inventory
loss and markdown of US$ 46 million, together with higher interest and
depreciation from the acquisition of the Oxides and Glycols business, which
lowered the net profit after tax and minority in 2Q 2012 to US$ 39 million, a
decrease of 28% over 1Q 2012 net profit of US$ 55 million.

Key Financial Information
US$ in Millions THB in Millions
2Q12 1Q12 2Q11 2Q12 1Q12 2Q11
*Consolidated Sales 1,741 1,696 1,692 54,495 52,551 51,300
PET resins 1,105 1,122 1,199 34,600 34,776 36,316
Polyester & wool 327 349 212 10,227 10,813 6,407
Feedstock 576 469 546 18,022 14,524 16,525
*Core EBITDA 151 84 181 4,711 2,594 5,476
PET resins 69 53 127 2,154 1,634 3,853
Polyester & wool 27 17 30 836 527 908
Feedstock 53 10 27 1,647 318 816
*Consolidated EBITDA 105 98 147 3,271 3,035 4,453
PET resins 45 59 85 1,398 1,820 2,569
Polyester & wool 16 20 23 511 607 711
Feedstock 41 16 41 1,287 492 1,251
Core net profit after tax and MI 54 17 114 1,684 517 3,412
Net profit after tax and minority 39 55 79 1,226 1,691 2,366
CAPEX and investment 848 267 65 26,453 8,279 1,966
Net Operating Debt 2,111 1,318 1,139 67,172 40,666 35,025
Net Operating Debt to Equity 1.1 0.7 0.6
Interest Coverage 3.8 5.3 9.3
Core ROCE 11% 5% 18%
ROCE 5% 7% 14%
Core EPS - annualized (Baht) 1.40 0.43 2.88
EPS - annualized (Baht) 1.02 1.40 1.97
See note on page 9
* consolidated financials are based upon elimination of intra-company (or intra
business segment) transactions

Starting from this quarter, we will look at IVL business as three major
segments: PET resins, Polyester & Wool, and Feedstocks. The Feedstock segment
comprises the PTA and Oxide & Glycols businesses, which largely contribute key
raw materials for the other two segments. In addition, there is no allocation of
PTA earnings to the PET and Polyester segments (based on the proportion of
sales) from this quarter and its comparable periods.

The table below provides details on Consolidated EBITDA and Core EBITDA:

US$ in Millions THB in million
2Q12 1Q12 2Q11 2Q12 1Q12 2Q11
Consolidated EBITDA 105 98 147 3,271 3,035 4,453
Inventory (gain) loss 46 (14) 34 1,440 (441) 1023
Core EBITDA 151 84 181 4,711 2,594 5,476

The table below shows movement from reported net profit after tax and minority
interest to core net profit after tax and minority interest:

US$ in Millions THB in million
2Q12 1Q12 2Q11 2Q12 1Q12 2Q11
Net profit after tax and MI 39 55 79 1,226 1,691 2,366
Gain on a bargain purchase - (22) - - (687) -
Acquisition related costs 5 1 1 169 24 23
Flood related (income) expenses and other extraordinary items (37) (2) -
(1,150) (71) -
Inventory (gain) loss 46 (14) 34 1,440 (441) 1,023
Core net profit after tax and MI 54 17 114 1,684 517 3,412

The graph below portrays the volatility that commodities have faced over the
last 18 months created by Paraxylene price fluctuations, which peaked in March
2011 to $1700 per ton and crashed to $1200 in June 2012 with sharp gains and
falls periodically in between.

PTA spreads in June 2012 reached their historical bottom of $50 per ton in Asia,
a steep but gradual decline from the record high of $400 in March 2011.


Source: Industry analysis


Top line growth in this quarter does not clearly reflect the 13% sequential
growth in volumes due to the steep drop in crude oil-led commodity prices and
due to the strong dollar that resulted in lower reported sales in US dollars
terms. The results for 1Q 2012 and 2Q 2012 (partially) reflect the
unavailability of Lopburi operations (LTM 3Q 2011 sales of $325 million), which
remained offline during these period and have gradually come to life in May
2012. The first full year of operations there is expected to be 2013.

Recent acquisition of Indorama Ventures (Oxide & Glycols) in North America in
April 2012 has added a new line of business to IVL and has enabled the group to
integrate into MEG (a major feedstock for making Polyester products) for the
first time, making IVL the only global polyester producer with integration into
PTA and MEG feedstock. With this acquisition, IVL also gains about 30% market
share of merchant PEO (Purified Ethylene Oxide) in North America.

Completed acquisitions of hygiene segment leader, FiberVisions, with operations
in America, Europe and China in January 2012 places IVL as a leading global
player in this fast growing segment. The acquisition of recycled PET and fiber
manufacturing businesses of Wellman International in Europe in November 2011
makes IVL Europe's most prominent producer, with a footprint across the
polyester value chain. Together with the improvement in the utilization rate of
existing plants, the partial startup of the Lopburi site and the addition of
Indorama Ventures (Oxide & Glycols) has resulted in a total production volume of
1.35 million tons in 2Q 2012, that is, growth of 13% over 1Q 2012.

The charts below provide details of quarterly production volumes and US Dollar
sales, both regional and segment wise. IVL continues to gain market share in all
regions and segments.







Note: Revenue of each region and segment is after inter-region and
inter-segment elimination.
The graph below provides details of the Core EBITDA, which in 2Q 2012 saw a
healthy jump of 59% growth in core EBITDA/ton over 1Q 2012, led by the timely
integration into the Oxide and Glycols business in the USA.

The losses due to Lopburi floods, the severe decline in PTA spreads and the
subdued sentiment in Asia have significantly impacted EBITDA in Asia in 2012, or
roughly a third of the business. Management believes that overall improvement
can be anticipated firstly from the operational improvement projects that have
taken place in the first half of 2012; the debottlenecking of our China capacity
to 522kt per annum, the start up of the Nigeria SSP plant, and the acquisition
of PET capacity in Indonesia in 3Q 2012. Secondly, the improvement in the macro
environment in China and India is anticipated to lead to potentially improved
sentiment and therefore partial recovery of PTA spreads that are currently below
cash costs for the majority of the industry in Asia.

Nevertheless, IVL's segment EBITDA increased across all our platforms with the
addition of new businesses. Regionally, North America remained the top performer
while Europe was slightly weak. However, IVL maintained its volumes by
sacrificing some margin in light of the continued Greek-led crisis that has
engulfed most of South Europe. Operational excellence measures at Spartanburg, a
Brownfield capacity addition at Rotterdam, due to commence operations in 3Q
2012, as well as the addition of the Oxide and Glycol business in North America,
will potentially offset the weak PTA margins in Asia.







Explanation of Oxides and Glycols business

The charts below help explain the IVL Oxides and Glycols business in North
America. The key difference between Asia and North America is the sourcing and
economics of ethylene feedstock and premium MEG prices.

Ethylene in Asia is priced off Naphtha feed whereas in North America it is based
on gas, which, due to shale gas discoveries, is in abundance.

MEG prices in North America are at a premium but track Asian prices due to the
large consumption in Polyesters, especially in China.

Therefore MEG margins in North America are higher and less volatile than Asia as
can be seen in the 'MEG-Ethylene Margin' chart.






Source: Industry analysis


Outlook

The last 12 months has witnessed extreme volatility that closely shadows what we
experienced in the second half of 2008. There was a considerable squeeze in
inventory across the industry then, which led to a total collapse of commodity
prices, and we have seen it happen again in 4Q 2011 and yet again in 2Q 2012.
This time, though, we are also experiencing a slowdown in growth in Asia,
particularly China and India. We will have to be more patient and wait for a
rebound in growth, something we expect to have a positive impact on the company,
just as in 2009 and 2010.

Our continuing top-line growth, despite the turbulent global markets, is a
testament to Indorama Ventures's business, which is a "bridge" between upstream
chemical suppliers and consumer staple products. IVL products primarily go to
consumer necessities and affordable segments and therefore are much more
resilient in economic downturns. IVL products are truly everywhere in the daily
necessities that each one of us uses every day. We are an industrial segment
with integration into chemicals, which are our feedstocks like PTA and MEG. The
integration allows us to be more reliable to our customers, whereby we gain
market share.

The completion of the acquisition of the Old World (now renamed Indorama
Ventures (Oxide and Glycols) Limited) business in the USA in April, 2012, is a
strategic move by IVL to further integrate within the polyester value chain into
its key raw material Mono Ethylene Glycol (MEG) and Purified Ethylene Oxide
(PEO). Its strategic location at Clear Lake, Texas, is part of a larger site run
by the company Celanese with advantageous raw material and utilities' supply.
MEG is an essential raw material in the production of PET polymers and polyester
fibers and yarns. Further, it provides us with a platform for growth (it is the
first EO/EG business in IVL) in new products with higher margins, Indorama
Ventures (Oxide and Glycols) Limited has an established production facility,
customer base, supplier network and an experienced management team. The
acquisition is expected to be accretive to earnings of IVL and strengthen the
business for long term sustainability. Further, it is supported by positive
global outlook including in North America for EO/MEG from growth in demand, high
utilization rate and margins. North America has available merchant supply of
ethylene through network of pipelines and advantaged feedstock source based on
natural gas and shale gas. Indorama Ventures (Oxide and Glycols) Limited
creates an opportunity to realize synergies and operational efficiencies with
IVL's existing PET polymers and polyester fibers and yarns operations of around
1.8 million tons in North America.

Asian PTA margins will remain low throughout 2012 but our plants will continue
to operate at high utilization rates and benefit from the increase in captive
consumption of PTA of above 50% in our PET polymers and Polyester fibers and
yarns business. The management focus will be on consolidation and operational
excellence to translate each business to be accretive to IVL earnings and on
completion of various brownfield growth plans that are underway. Please see each
segment commentary that further explains the improvements underway in 2012 to
mitigate the impact of lower Asian PTA margins.

In line with the affordable nature of Polyester and its application in daily
consumer staples (food, beverage and clothing), we expect to benefit from a
favorable geographical mix in key regions where we have attained market
leadership and consolidation. Our investments in innovation or value-added
product lines are expected to gain traction going forward and to provide new
growth areas for IVL, especially in emerging markets.

IVL will continue to see increasing sales into the second half of 2012 and into
2013 from more than 500 kt/annum of new capacity coming on-stream in Rotterdam
and Kaiping, China, at very attractive incremental costs as they are essentially
the debottlenecking of existing sites. The acquisition of Polypet in Indonesia
has already been completed on August 9, 2012, and Indonesia will continue to
play a very significant role within IVL with its attractive resource profile and
large population base. The company's most dynamic polyester site is under
construction in Indonesia aiming for completion by the end of 2013.

IVL business model of global diversity, product diversity and integration
creates meaningful hedges and as such delivers above average returns. Management
is focused on the consolidation of businesses acquired to bring about
significant gains from synergies and as well from new products by leveraging on
our leading innovation platform. We remain very optimistic about the Polyester
Value Chain and IVL leadership within this chain. We are well-positioned to take
significant advantage when the global recovery takes place. Meanwhile, we are
confident that our portfolio will continue to deliver the lowest cost quartile
results.
Ongoing Projects under Implementation


Announced Date Project Location Capacity
(tonnes per annum) Timeline
Expansion in Existing Location
May'2010 Brownfield expansion of PET production in Rotterdam Rotterdam,
Netherlands 187,000 2012
Mar'2011 Investment in continuous polymerization resin plant in Indonesia
Purwakarta, Indonesia 300,000 2H 2013
Apr'2011 Brownfield expansion of PET polymers' production in Poland
Poland 220,000 1H 2014
May'2011 Brownfield expansion of PTA in Rotterdam, enhancing integration for PET
production in Europe Rotterdam, Netherlands 250,000 2013
Jun'2011 42% joint venture investment in PT Polyprima Karyesreska, a PTA
producer, using Invista technology. The plant is currently under maintenance,
revamping and capacity de-bottlenecking. This investment will secure the PTA
supplies for IVL PET & Polyester plants in Indonesia Cilegon,
West Java, Indonesia 500,000 2013
Q2'2011 Debottlenecking of PET production in China Kaiping Guangdong,
China 116,000 Completed
Mar'2012 100% acquisition of the PET resin assets of PT Polypet Karyapersada,
located adjacent to IVL's joint venture PTA assets of PT Indorama
Petrochemicals Cilegon, Indonesia 100,800 Completed
Expansion in Other Geographies
Aug'2010 Investment in SSP plant to produce PET in Nigeria. This is the first
investment of IVL in Africa. Port Harcourt, Nigeria 84,000 Completed
Recycling and Innovation
Aug'2011 Investment in production of recycled PET in IPI Nakhon Pathom Nakhon
Pathom, Thailand 28,500 2013
Aug'2011 Investment in bi-component fibers project for hygiene application, with
Japan's Toyobo technology Rayong, Thailand 21,000 2012
Aug'2011 Investment in high quality bi-component yarns "FINNE" through a single
step process at PT IVI plant Tangerang, Indonesia 16,000 2013
Cost Savings & Efficiency Improvement
Q2'2011 Modification of feedstock process from DMT to PTA in Auriga PET and
Polyester plant Spartanburg, South Carolina United States - 2012
Jan'2012 Strategic reorganization of Trevira GmbH texturizing facility from
Poland to Germany Guben, Germany - 2012


On completion of all the announced acquisitions and expansions, IVL will have an
increasingly advantaged portfolio of regional business with a total capacity of
8.5 million tons per annum (including joint ventures Ottana Polimeri, Trevira
and Polyprima, which will be accounted for as equity income). IVL has a leading
market position within the Polyester Value Chain in Thailand, North America and
Europe.




Unit: Million tons per annum Additions PET PTA Fibers & Yarns Glycol Total
2011 Capacity
Thailand 0.281 1.373 0.290 1.944
Indonesia 0.088 0.110 0.198
China 0.406 0.406
Europe* 0.921 0.561 0.273 1.755
Middle East & Africa -
North America 1.555 0.071 1.626
Global 3.251 1.934 0.744 5.929
*JV capacity include 0.161 0.184 0.120 0.465
Additions in 2012
North America Oxide & Glycols** 0.550 0.550
Europe IRP-Rotterdam 0.031 0.031
Indonesia Polypet 0.101 0.101
Middle East & Africa Nigeria-Greenfield 0.084 0.084
North America Fibervision 0.221 0.221
Indonesia* Polyprima 0.500 0.500
Thailand TPT-Debottl. 0.011 0.011
China China-Exp. 0.116 0.116
Thailand IPI- BICO/CP 0.021 0.021
Global 0.332 0.511 0.242 0.550 1.635
*JV capacity include 0.500 0.500
Additions in 2013
Europe IRP-Rotterdam 0.156 0.156
Europe Poland-Exp. 0.220 0.220
Indonesia CP4-Greenfield 0.300 0.300
Indonesia FINNE-Exp. 0.016 0.016
Thailand IPI- Recycling 0.028 0.028
Europe Rotterdam-Exp. 0.250 0.250
Global 0.376 0.250 0.344 0.970
Committed & Announced Capacity
Thailand 0.281 1.384 0.339 2.004
Indonesia* 0.189 0.500 0.426 1.115
China 0.522 0.522
Europe* 1.328 0.811 0.273 2.412
Middle East & Africa 0.084 0.084
North America 1.555 0.292 0.550 2.479
Global 3.959 2.695 1.330 0.550 8.534
*JV capacity include 0.161 0.684 0.120 0.965

Note:
*Reported volumes for capacity, production, sales and utilization include only
consolidated volumes and exclude Equity income volume
** Glycols & Oxide capacity is taken at 550kt pa, based on Glycols equivalent
derived capacity from Ethylene Feed capacity of 330kt pa.


Note

Starting from this quarter, we look at IVL business as three segments: PET
resins, Polyester & Wool, and Feedstocks. Feedstock segment comprises the PTA
and Oxide & Glycols businesses, of which the majority constitutes key raw
materials for the other two downstream segments. In addition, there is no
allocation of PTA earnings to PET and Polyester segment (based on the proportion
of sales) from this quarter and its comparable period.

The consolidated financials are based upon the elimination of intra-company (or
intra-business segment) transactions. For this reason the total of each segment
may not tally with consolidated financials.

Net profit after tax and minority for 2Q 2012 includes net extraordinary loss of
US$ 15 million (Baht 459 million) of which US$ 5 million (Baht 169 million)
goes towards transaction expenses incurred on acquisitions completed during the
year and pre-operational acquisitions; US$ 37 million (Baht 1,140 million)
towards insurance income received and a reversal of impairment loss due to
flood; US$ 0.4 million (Baht 11 million) towards other extraordinary gains, and
US$ 46 million (Baht 1,440 million) towards inventory loss.

Net profit after tax and minority for 1Q 2012 includes net extraordinary gain of
US$38 million (Baht 1,174 million) of which US$ 22 (Baht 687 million) is
towards income from a gain on bargain purchase, or negative goodwill, for
completed acquisitions (details are provided in the Note 3 - Acquisitions of
subsidiaries in the Reviewed Financial Statements); US$ 1 million (Baht 24
million) towards transaction expenses incurred on acquisitions completed during
the year and pre-operating acquisitions; and US$ 2 million (Baht 71 million)
towards the reversal of an allowance for impairment losses due to flood (net of
insurance income received) and US$ 14 million (Baht 441 million) towards
inventory gain.

Net profit after tax and minority for 2Q 2011 includes a net extraordinary loss
(more)