6 Future Projects

6.1 Future Projects

6.1.1. PET Thick Film Line – Thailand

In February 2011, the Board had approved an investment in a Thick
Polyester Film Line along with Batch Resin Plant. This project is being
implemented in Thailand by partially using the new plot of land
purchased in 2010, located close to the existing factory in Siam Eastern
Industrial Park.

Project Details

-   The total Investment in this project is about $ 90 million,
    including working capital.

-   The PET Thick Film Line is of 5.9 meters width, with a capacity of
    about 28,800 TPA.

-   Polyester Batch Process Chips manufacturing facility is with a
    capacity of about 28,000 TPA

-   The product range from this new film line would be PET thick film in
    the range of 23-350 micron thickness.

-   Funding of the Project is through Long Term Debt borrowing of $ 60
    million and balance is funded out of internal cash flows/ WC lines
    of the Company.

-   The expected commercial start up of the project is in H1 of 2013-14.

-   The project is promoted by the BOI.

6.1.2. PET Thin Film line - USA

The PET thin film line project is being implemented in Decatur, Alabama
State, USA, under Polyplex USA LLC (PU). PU is held by Polyplex Americas
Holding Inc (PAH) which is 100% held by Polyplex (Thailand) Plc.

Project Details

-   Total investment is estimated to be about $ 140 million including
    working capital.

-   This would include a PET Thin Film Line of 8.7 meters width with a
    capacity of about 31,000 TPA, PET Resin line of 57,600 TPA

-   During the year, the US entity has acquired some metalizing assets
    with an aggregate capacity of 13,500 MT.

-   Funding of the Project is through Long Term Debt borrowing of $ 75
    million and balance will be funded out of internal cash flows of
    Polyplex (Thailand) Plc and/or its subsidiaries

-   The Film line has started commercial production in Q1 of 2013-14 and
    the Resin plant is expected to start up in H2 of 2013-14. Until
    then, the chips requirement is being managed through related party
    supplies as well as external purchase of Polyester chips.

6.1.3. Blown PP Film line - Thailand

In July 2011, the Blown PP film line project was approved by the Board.
This project is being implemented in Thailand, in the same plot of land
in Siam Eastern Industrial Park where Silicone Coating film line was
implemented.

Project Details

-   The total Investment in this project is about $ 10 million,
    including working capital.

-   The company has tied up Long term Debt financing of $ 7 million for
    financing the project.

-   Annual capacity of the Blown PP line will be 4,645 TPA

-   Film will be used mainly as captive input for the silicone coating
    line, with a view to enable better utilization levels and expand the
    product mix of the Silicone Coating line.

-   BOI approval for the Project has been received, by amending the
    Silicone Coated Film line approval, to include manufacture of Blown
    PP Film as base film as well as to include external sales of Blown
    PP.

-   The expected commercial start up of the project is in H1 of 2013-14.

6.1.4. Extrusion Coated Film Line II - Thailand

In November 2011, the Extrusion Coated Film line II project was approved
by the Board. This project is implemented in Thailand, in the same plot
of land in Siam Eastern Industrial Park where Extrusion Coated Film Line
I was implemented.

Project Details

-   The total Investment in this project is about $ 13 million,
    including working capital.

-   The company has tied up Long term Debt financing of $ 6.5 million
    for financing the project and balance Project cost is funded out of
    internal accruals/ WC lines of the Company.

-   Annual capacity is 215 million Sqm, higher than the capacity of the
    first line which is 150 million Sqm pa.

-   The expected commercial start up of the project is H1 of2013-14.

-   Main market for this product would be USA and Europe

-   The BOI promotion certificate has been received

6.1.5. PET Bottle Grade Resin plant- Turkey

  A PET Bottle Grade Resin project is being implemented under Polyplex
  Resins Sanayi Ve Ticaret Anonim Sirketi (PR), in Turkey. This new
  company is held 67% by Polyplex Europa Polyester Film Sanayi Ve
  Ticaret Anonim Sirketi (PE), a 100% subsidiary of Polyplex (Thailand)
  Plc and the balance 33% is held by Polyplex Asia Pte Ltd (PAPL).

Project Details

-   The total Investment in this project is about $ 80 million,
    including working capital of $ 8 million.

-   The company has tied up Long term Debt financing of Euro 41 million
    and WC Line of Euro 6 million. The balance Project cost is funded
    out of Equity investment from PE and PAPL and inter-company loans
    from PAPL.

-   Annual capacity is 210,000 MT per annum.

-   The line is expected to start commercial production in H2 of FY
    2013-14.

Project Rationale:

-   Strategic:

    -   It provides an opportunity to create another stream of
        profitable growth

    -   At the same time, it allows for portfolio risk diversification,
        thereby reducing the almost complete dependence on the plastic
        film business. However, the risk of entering a new business is
        mitigated significantly as it is somewhat related due to the
        fact that Polyplex currently manufactures film grade PET resin
        at all locations for its captive needs. Thus the technology and
        production side risk is quite low.

-   Attractive Industry / Product:

    -   High growth industry with regional growth rates higher than
        corresponding GDP growth rates mainly driven by growth in the
        usage of fast growing consumer products like Mineral water
        bottles, Carbonated Soft drinks etc.

    -   PET bottles offer unmatched value along with low cost as
        compared to glass bottles and PVC polystyrene.

    -   Given the high proportion of raw material cost in the final
        product price, there is a strong correlation between the two and
        hence this product is less prone to cyclical swings as the raw
        material cost is usually a pass through to the customers.

    -   Capacities are spread regionally and regionally short markets
        are being catered by imports. Capacities are spread over
        multiple locations in Europe and a significant portion of this
        capacity is constituted by low capacity older plants (150-300
        TPD), thereby negating any benefits of economies of scale
        vis-à-vis new and larger standalone capacities like the proposed
        600 TPD plant of Polyplex.

-   Competitive Positioning of Polyplex / Project in Turkey

    -   Our business model is based on strategic location which provides
        access to large domestic (Turkey) and near shore markets (West &
        East Europe)

    -   Large target deficit markets like Bulgaria, Ukraine and Romania
        can be most efficiently served out of Turkey.

-   Significant Fiscal/Duty Advantages:

    -   Exemption from Corporate Income Tax –till Turkey joins the EU

    -   Customs Union with EU gives Turkey an edge over Asian
        manufacturers due to nil customs duty on exports from Turkey to
        the EU as compared with a normal duty rate of 6.5% or
        preferential duty rate under GSP of 3% applicable to other
        Imports.

    -   In addition, the local industry is protected by way of trade
        measures like AD/CVD measures applicable on exporters from
        specific countries. Currently such measures are applicable
        against India and other Asian/Middle East producers on imports
        in EU.

6.1.6. Recycling of plastic waste- Thailand

As another sustainability initiative, the Company is working on a
project to recycle film waste. The project, is being implemented in
Thailand, under a 80% held subsidiary of Polyplex Thailand, named
EcoBlue Limited. The project cost is USD 2.1 million, including USD 0.3
million for working capital. The project will be financed by Long term
loan borrowing to the extent of USD 1.26 million and balance is funded
out of equity from shareholders.

Project Rationale:

-   Availability of captive waste helps in the ability to segregate
    various kinds of waste at source, ability to handle the material
    better, minimizing the contamination and reduce the dependence on
    external sources for materials.

-   Co-location with PTL’s units would result in savings in capital
    costs and at an operational level savings in freight, packing &
    inventories.

This project is expected to commence commercial operations in H2 of
2013-14.

6.1.7. Off Line Coater - Turkey

In October 2012, the Board approved an investment in an Offline Coater
at Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi (PE),
Turkey.

Project Details:

-   The total Investment in this project is about Euro 5 million.

-   The funding of the project is being done out of internal cash
    accruals of PE.

-   Annual capacity is 2,300 MT pa.

-   The line is expected to start commercial production in H1 of
    2013-14.

Project Rationale:

-   Provides an opportunity for profitable deployment of cash surpluses
    at PE

-   Enhance our existing product offering and value proposition for the
    customer at low capital cost.

-   Help enhance PE’s leadership position in its natural markets, as PE
    shall be able to provide their customers a platform to jointly
    develop products and innovate along with PE.

-   The project can leverage the research and development capabilities
    and coating skill sets available within the Polyplex group.

-   There are no domestic producers in Turkey for PVDC coated and
    Peelable / peelable-sealable films which gives PE an edge over
    competition in domestic market.

-   Turkey has an edge over other Indian / Asian manufacturers on
    customs duty on exports to EU / Turkey, as also lower logistics
    costs from Turkey to Europe as against Asia to Europe.

6.2 Other Capital Expenditure

  As an ongoing effort to improve productivity, reduce losses, develop
  products and enhance quality control, PTL and its subsidiaries in
  Turkey/USA undertake 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. 400-500 million
  which includes normal insurance spares and miscellaneous equipments
  for upkeep of the machinery.