Consistent with the overall strategy of geographically diversifying manufacturing operations, PTL has decided to put up a new film line in Europe with a capacity of 24,000 TPA. This shall include an 8.7m film line with a captive cogeneration power plant of 3 MW capacity. The plant, which shall be located in the European Free Zone in Corlu, shall have a total project cost of about USD 43 million. A Free Zone provides a conducive investment environment especially for import/export intensive operations as minimal controls apply on trade, currency and investment.

With this location, we shall have ready access to an existing large market in Western Europe where no new capacity has been added in the last 3-4 years notwithstanding a continued growth in the market. This market also imports significant quantities.

The location will act as a bridge between Asia and Europe and shall also service the Middle-East, Russia/ CIS and Central and Eastern Europe markets, which though small currently, have a lot of potential given the stage of economic growth of these regions. Further, the countries around the Mediterranean rim are another possible destination for the output. Turkey has a Customs Union with EU, which facilitates duty free movement of goods between the two territories.

This project is a key element in the company’s plan to build a global footprint and associate with dominant customers in the converting and industrial segments. Savings in delivery costs and likely better pricing would offset the higher operating costs of a manufacturing set up in Europe.

Based on the initial experience at the new location and market conditions, plans call for subsequent setting up of another line alongside the proposed unit and integrating backwards into chips so that we have a facility similar to that in Thailand.

A wholly-owned subsidiary of PTL, Polyplex Europa Polyester Film Sanayi ve Ticaret A.S. has been formed and the Operating License for setting up operations in the Free Zone has been received.The project is expected to be completed in a period of about 12 months from the date of the Operating License. Based on current indications, Commencement of Commercial Operations should happen by October 1, 2005.