May 5 - In November 2007, the Board of Directors of China Sun Bio-chem Technology Group Company Ltd. (the “Company”) announced that its wholly-owned subsidiary, Sky Bright Group Limited (“Sky Bright”) had completed its acquisition of the entire share capital of Tieling Wanshunda Starch Co. Limited (“Tieling Wanshunda”) from Harvest Rich Investment Limited. Tieling Wanshunda is the owner of a corn processing plant (the “Plant”), located in Tieling City, Liaoning Province, PRC. The Plant commenced commercial production in 1Q2008, with an annual starch production capacity of 300,000 tonnes per annum (“t/a”). Optimal production is expected to be reached in 4Q FY2008.
To meet the growing domestic demand for corn starch products, the Company intends to further increase its current production capacity, by constructing a new production line capable of producing an additional production capacity of 100,000 t/a, to the existing Plant. The enlarged plant would bring about better economies of scale to enable the Group to tap on existing infrastructure. The proposed expansion works is expected to be completed in 4Q 2008, and optimal production of the Plant with the increased production capacity of 400,000 t/a is expected to be achieved in 2Q FY2009.
The Company has set aside a capital expenditure of approximately RMB80 million for the expansion. The increased production capacity is expected to contribute to the Company’s operating profit in FY2009.
The above expansion is funded by internal sources of funds and is not expected to have any material impact on the net tangible assets and earnings per share of the Company for the current financial year.