APLI to invest RM33m in Vietnam plant expansion

Latex glove manufacturer APL Industries Bhd (APLI) is investing RM33 million to increase the output of its Vietnam plant next year, as it is making losses because it is running below capacity.

Group managing director Datuk Seri Stanley Thai said on Nov 7 that it made sense to expand in Vietnam because of its cheaper labour costs and abundant natural resources, including latex.

Under the first phase of the expansion, APLI would invest RM8 million in two boilers – biomass thermal-oil heat energy generators -- and upgrade six dipping process machines, which would increase the Vietnam plant's output and achieve economies of scale.

Speaking to reporters in Subang Jaya after signing an agreement with Ecotherm Sdn Bhd for the installation of the boilers, he said the company had obtained “sufficient borrowings” to fund the expansion.

Thai said its Vietnam plant's average monthly production would increase by 92% to about 86 million pieces of gloves when the expansion is completed by June 2007. The average monthly production was 45 million pieces in 2005.

“I believe by the third quarter of 2007, the total annual production capacity of APL group will be increased to 5.3 billion pieces of gloves,” said Thai, who is also Supermax Corporation Bhd managing director. Supermax has a 12.9% stake in APLI.

The company would invest another RM25 million in December next year to install 12 new production lines for its Vietnam plant to increase APLI’s annual production capacity to 7.1 billion pieces of gloves, Thai said.

He added that APLI was confident its Vietnam plant would become profitable by raising its output and manufacturing higher-end and value-added products.

“With the completion and commissioning of the new biomass boilers and the completion of machinery upgrade, APLI group would return to profitability and be part of the prominent supplier in the glove industry,” Thai said.

Meanwhile, stock market data showed there were 20.05 million APLI shares transacted off-market on Nov 7 at RM4.31 million.

The 5.75% stake was transacted at an average price of 21.5 sen.