6 Future Projects

6.1 Future Projects (PTL – Thailand)

6.1.1. Cast Polypropylene Film Project (CPP film)

  In an effort to diversify its product portfolio, which also helps in
  de-risking the current business, the company is in the process of
  implementing a CPP (Cast Polypropylene) film project. This project
  would be implemented by partially using the plot of land located
  opposite to the existing plant in Siam Eastern Industrial Park, where
  the company’s Extrusion Coating Project had been installed.

  The width of the CPP line is about 4850 mm with an annual attainable
  capacity of about 10,000 TPA. The Metallizer is about 2450 mm width
  with an attainable capacity of 4,200 TPA.

  The estimated capital cost of the project is USD 17.2 million, which
  includes an estimated working capital of USD 2.5 million.

  Product & Usage

  CPP film is quite similar to PET film with some general, Optical,
  Thermal, Mechanical and barrier properties. Some properties are better
  than that of BOPP/ PET film. For Eg: CPP film has very good barrier
  properties and it can act as a good heat sealant layer.

  There are various grades of CPP film and each grade has different
  applications as given below:

-   General Grade: The general packaging grade of CPP film is used for
    packaging in garments, breads, bakery products, flower wraps etc.

-   Lamination grade: The lamination grade of CPP film is used as a
    sealing layer in packaging of food items such as biscuits, snacks
    etc.

-   Metallised CPP film: This is also used in packaging of food items
    like potato chips, snack items etc.

-   Twist grade: This is used mostly in candy wraps.

-   Retort grade: This is used in packaging of ready to eat food
    products.

  Project Rationale

  The decision to invest in a CPP film line is a strategic investment
  decision to de-risk from current business by diversifying the product
  mix and to broad-base its product offerings to the Packaging
  converting industry. The company will be able to leverage on the
  existing sales and distribution network to develop the markets for the
  CPP film. The line to be installed by the company is a wider line and
  thus the company will have cost competitive advantages over other
  manufacturers operating with smaller width lines.

  Project Risk and mitigation plans

  The technology is fairly established and quite similar to PET
  technology, where the company has sufficient know-how and an
  experienced Project team available which has been successfully setting
  up Projects within the scheduled project time. Wherever required,
  company is considering hiring CPP technology/ process experts to
  provide their services. The company is of the opinion that the overall
  project risk is relatively low as the Investment size is also quite
  low.

  Status of the Project:

  The company has obtained the promotion certificate from the Board of
  Investment for this Project, with an approved capacity of 15,600 MT
  for Plain and Metallized CPP film.

  Civil work has started in June’09. The contracts for the machineries
  have already been signed and machineries will start arriving from
  July’09 onwards. The approval from Board of Investments for duty free
  import of machinery has also been received.

  Funding of USD 11.25 million was tied up with 2 local banks in 2008
  and disbursements of USD 1 million have been made until May 2009 and
  the balance is expected to be disbursed over the next 3-6 months. The
  balance Project cost will be financed out of internal accruals.

6.1.2. Expansion of Thin PET Film line capacity

In May 2008, the Board had approved in principle, an Investment of USD
70 million in a Polyester Film, Polyester Chips and Metallized Film line
project in Thailand.

However, pursuant to the global economic crisis and the aggressive
de-stocking along the supply chain which impacted the company’s sales
volumes/profitability in second half of last FY, it has been decided to
keep this project on hold until the actual impact on the industry, its
growth and the demand- supply is assessed. The Company would like to
ensure that the timing of the Project implementation is planned properly
so that the growth in markets can be rightly captured.

Project Details

  This project would be implemented by partially using the new plot of
  land in Siam Eastern Industrial Park, opposite to the existing plant.

  The estimated capital cost of the project is USD 62 million. The broad
  break up of the capital cost is USD 52 million for plant & equipment,
  USD 5 million for Building & Civil costs; USD 2 million for
  engineering fees and the balance USD 3 million for contingencies and
  other expenses. The working capital requirement is estimated at USD 8
  million. The company proposes to make a debt borrowing to the extent
  of 65-75% of the total project cost and fund the balance out of its
  internal accruals.

  Project Rationale

-   Improve the production capacity to tap the high growth in the
    existing markets and leveraging on existing sales & distribution
    network to develop new markets.

-   The line to be installed would be the largest line and will result
    in economies on the operational front thereby improving further the
    cost structure of the company.

-   The Company will be able to increase the share of value added
    products like Metallised films, Thermal Laminated film etc.

-   Operationally, the fixed costs especially salary and administrative
    overheads would decline significantly on a per unit basis as the
    additional costs would be a fraction of the existing levels.

-   There would be synergies and savings in inventory for spares and
    other maintenance costs.

    3.  Silicone Coating Line

In May 2009, the Board has approved an Investment in a Silicone Coating
line project, which will be another value added product in the Company’s
wide portfolio of products. The parent company in India has been
manufacturing this product since 2007 and has been quite successful in
establishing a reasonable market share. Hence, it has been decided to
Invest in another Silicone Coating line within the group.

Project Details

-   The location of this Project will be Thailand or Turkey and will be
    finalized within the next 3-4 months based on a comprehensive
    comparative evaluation of the benefits associated with each of the
    locations.

-   The Total Investment in this project (including working capital)
    would be about USD 19.44

-   Implementation of this Project would be done within 12-18 months
    from the time of financial closure

-   The capacity of this line would be dependant on the product mix run
    on the line and could vary largely from 200 to 600 million sq. mtrs.

-   Target markets would be mainly Europe, US and Asia.

-   The usage of the film would be mainly as Release Liners for Label
    Liners, Graphic Arts, Medical Liners etc

  Project Rationale

-   This Project would help in further diversification of current PET
    film business

-   Presently, the use of Paper Liners is more common and it maybe said
    that Film Liners account for only about 15% share in this
    application. However, there is a big opportunity for substitution of
    Paper liner with Film Liners due to certain characteristics of Film
    Liners which are better than Paper Liners (Eg: Film has higher tear
    resistant properties as compared with Paper and can prove to be a
    better Liner in labeling applications which operate in high speed
    machinery).

-   This would also help us in differentiating ourselves with other
    Asian film producers, none of whom are present in Siliconizing
    business

-   We will have the advantage of an integrated facility in comparison
    with stand alone siliconizing capacities in Europe and US and this
    will also enable having a more competitive cost structure as
    compared with other producers

-   Capture the shortage of capacity in this segment by leveraging on
    the experience gained in operating the similar product line in
    India.

6.2 Other Capital Expenditure

  As an ongoing effort to improve productivity, reduce losses, develop
  products and enhance quality control, PTL undertakes several
  small/medium capital expenditures on the basis of cost benefit
  analysis. The total outlay over the next 12-15 months for such
  projects is estimated at about Bt. 100 million. Some of the key
  expenses could be Prepolymer and Polymer pump, Catalyst filter in TDO,
  additional slitting machines, some insurance spares and miscellaneous
  equipments.