6 Future Projects

6.1 Future Projects (PTL – Thailand)

6.1.1. Cast Polypropylene Film Project ( CPP film)

  In order to de-risk the current business by diversifying its product
  portfolio, 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 has been installed and has recently commenced
  commercial production in April’08.

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

  The estimated capital cost of the project based on the estimated line
  configuration and cost estimates is likely to be about USD 12.5
  million.. The estimated working capital requirement is USD 2.5
  million.

  The orders for the machineries have already been placed with a vendor
  from USA. The long term loan agreement is in the process of being tied
  up with local bank/banks for USD 11.25 million with the balance to be
  funded from internal accruals.

  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 timing of the project is coinciding with the continued demand
  growth in South East Asia. The historic demand growth has been about
  6-8 % pa. 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.

6.1.2. Expansion of Thin PET Film line capacity

Project Details

  In order to capture the high growth in the existing markets and new
  markets, the company proposes to expand its Thin PET film production
  capacity in Thailand. In addition to the Thin PET film line, the
  project would also include a Polyester Chips facility and Metallised
  film line. 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 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.

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 between Bt. 100-125 million. Some of the key
  expenses could be TDO chain, additional slitting machine, some
  insurance spares and miscellaneous equipments.