China Essence Group confident of expansion

The management of China Essence Group has assured its investors that it has enough cash to meet the working capital requirements, which is primarily for the purchase of potatoes for the production of potato starch during the harvest season in August 2010.

It announced during FY2008 that its plans to double its production capacity of potato protein to 16,000 tons per annum and potato fiber to 160,000 tons per annum (through additional lines in Daqing and Ahlihe).

It also planned to establish two new production facilities in Nenjiang, Heilongjiang and Zhalantun, Inner Mongolia, with a total combined capacity of 80,000 tons per annum.

Total capex requirements for the project amounted to approximately RMB620 million ($90.8 million), of which RMB480 million has been incurred and financed through bank loans and internal funds.

The company says it has sufficient cash to satisfy the remaining capex requirement of RMB141 million.

Construction of the two potato starch production facilities in Nenjiang, Heilongjiang and Zhalantun, Inner Mongolia, is on track and test production is expected to commence by October 2010.

The company is also in negotiations with DBS bank, concerning its loan of RMB342 million due 30 June 2010.