To maintain its competitive edge and to grow its business, the Group intends to adopt the following business strategies and future plans:-

Acquire Production Plants

The Group intends to acquire production plants which are currently leased. The ownership of the production plants will safeguard their core production assets and capabilities.

Construct power generator system for its New Plant

Currently, the Group has the ability to generate about 35% of its electricity needs. It intends to construct power generator plants to increase the proportion of self-generated electricity to 70.0% of its electricity needs. This is expected to be completed in 1Q08. This will allow the Group to be self-sufficient and lower cost of production.

Railway extension to New Plant

The Group intends to construct a railway extension from Xinxiang East Railway Station directly to their New Plant in July 2007. By building a railway extension, they are able to load and unload their raw materials and products directly from its plant to the railway station thus further reducing its transportation cost.

Double compound fertiliser production capacity

The Group intends to construct 3 additional production lines for compound fertiliser to meet the increasing market demand, with additional 1 line per year from FY2007 to FY2009. With the completion of 3 lines, annual compound fertiliser production capacity will be doubled from current 300,000 tons to 600,000 tons.

Reduce production costs through technical upgrades and advanced technology

The Group has adopted fully automatic processes for its urea production in the PRC. The incorporation of advanced technology enables them to use their resources more efficiently, and reduce wastage resulting in increase of production yields.

Growth through acquisitions, JVs and strategic alliances

The Group intends to take advantage of potential deregulation of the chemical fertiliser industry. It is of the view that smaller fertiliser producers will not be able to survive should deregulation occur. The Group may take this opportunity to expand its production capacity, achieve economies of scale, lower costs and increase market share, through acquisitions, JVs and strategic alliances.