Sanitary giant to raise capacity
AlfredLiuin Jiangmen
Monday, July 14, 2008
One of China's biggest manufacturers of sanitary paper products plans to boost its annual production capacity by 80,000 tonnes by the end of this year.
The move by Vinda International Holdings (3331) will take the sanitary giant's capacity to 320,000 tonnes, which Vinda says is required because of a fast- growing market.
"There was a total four million tonnes of production capacity last year in the mainland. We also expect the growth of the tissue paper market to reach 8 percent to 10 percent in the country each year," said chairman and chief executive officer Li Chaowang.
The company expects to further boost its annual production capacity by 50,000 tonnes in 2009 and 2010, bringing capacity to 420,000 tonnes in 2010. "We spend about 50 million yuan boosting [production] by 10,000 tonnes," he said.
According to Li, the company can expand its production capacity by using internal resources from the proceeds of last year's listing.
Vinda is also facing the challenge of increased production costs, but feels able to pass on the increased costs to customers.
The main burden is the price of wood pulp for making paper, which accounts for about 50 percent to 60 percent of total costs, according to chief marketing officer Li Peilan. She said the price of wood pulp rose 6percent in US dollar terms in the first half this year. She expects the price to increase about 1 percent in the second half. Vinda raised prices by between 5 percent and 8 percent in the first half, due to the rising cost of raw materials.