China Water & Drinks to Build $6 Million Plant
Posted on: Wednesday, 1 August 2007, 12:04 CDT
China Water & Drinks, a leading producer and distributor of bottled water in the People's Republic of China, has signed a contract with the government of Changchun, Jilin Province to construct a $6 million bottled water plant.
The new plant will be about 12,800 square meters on a 20,000 square meter site in the Jiutai Economic Development Zone in Changchun. The total cost to construct the plant includes land use rights for the next 50 years, working capital, and equipment and installation costs. The terms of the land use rights contract allow China Water & Drinks access to two adjacent water wells with combined capacity 36 tons per hour, which the company claims is more than sufficient to meet the supply requirements of the new plant.
The group said it plans to use a portion of the proceeds from its recent private equity financing to fund the plant, which is scheduled for completion in November 2007.
Once the plant is operating at full capacity, it is expected to produce 150 million bottles, or 130 million liters, of purified water annually, bringing the company's total annual capacity to 940 liters. Approximately 70% of the new capacity will be dedicated to produce bottled water under the company's long-term agreement with The Coca-Cola Company, and the remaining 30% will be used to produce the company's Darcunk brand and for other brands.
Annual revenue and net income generated from the plant is estimated to be about $12.9 million and $2.6 million, respectively. All the bottled water will be sold in the adjacent area of Changchun.
"The new Changchun plant is an important part of our growth strategy to reach 1.44 billion liters of bottled water capacity by the end of 2007. It also enables us to further penetrate markets in Northeastern China, and enhances our already strong relationship with Coca-Cola," said Xing Hua Chen, CEO of China Water & Drinks. "This is especially important as we directly benefit from Coca-Cola's increasing market presence in China."
Source: Datamonitor
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