Feasible Study

For
Setting Up A Glove Factory in Long Khanh Vietnam

Editor: Eddy Liou

Version: 1
Date: 06/11/2010
 CONTENTS

1. PREFACE

2. PLANT LAYOUT & CONSTRUCTION COST

2-1. LAND AND LOCATION
2-2. PLANT LAYOUT
2-3. CONSTRUCTION COST

3. ORGANIZATION & MAN POWER DEMAND

3-1. MAN POWER DEMAND AND LABOR COST
3-2. ORGANIZATION CHART

4. PRODUCTION
4-1. PRODUCTION PROCESS CHART &ILLUSTRATION
4-2. GLOVE DIPPING MACHINE FLOW DRAWING

5. COST ANALYSIS 15
5-1. EQUIPMENT & MACHINERY LIST AND COST
5-2. ENERGY & UTILITIES CONSUMPTION AND COST
5-3. MATERIAL COST
5-4. OPERATIING COST

6. INVESTMENT CAPITAL AND FINANCIAL ANALYSIS

6-1. INVESTMENT CAPITAL
6-2. FINANCIAL ANALYSIS
6-3. CONCLUSIONS
1. PREFACE

WRP Asia Pacific Sdn Bhd is one of top 5 companies in the glove industry having the
technology and reputation of making medical devices such as medical gloves, catheter,
finger cots in Malaysia. Dong Nai Rubber Corp is a well known natural rubber and latex
supplier having plenty of resources in Viet Nam. Both parties joint hands to set up a joint
venture company for producing latex examination gloves at Lot no. M1, M10 of Long Khanh
Industrial Zone (LKIZ), Viet Nam.

The project goal is building up 6 glove production lines in the beginning, after successful
running and then expanding another 6 production lines as the phase I of project; after phase
I successful running and then expanding another 15 production lines as phase II of the
project; and after phase II successful running and then building up catheter and finger cots
production lines as phase III of the project.

According to LKIZ information, the basic infrastructure will complete on the end of March,
2011. The present project construction and engineering is planning to embark from January,
2011 to June, 2012 with total 18 months working period. The factory building and
construction period takes about 7 months to accomplish, and the equipment & machinery
installation period takes 12 months to commission.

The scope of present feasible study is only including the phase I of the project having the
main features as followings:
Investment Capital: US$24,000,000
Employee No.: 460
Land Size: 3.11 hector
Products: Powdered NR Latex Examination Glove
Maximum Capacity: 1,550,400,000 pieces glove/year
Main equipment: 12 sets of 99 meter 8 tiers glove making machine
Water Consumption: 2500 CMD
Energy Coal consumption: 166 ton/day of coal
Electricity Capacity: 2.28 MVA
2. PLANT LAYOUT & CONSTRUCTION COST
2-1. LAND AND LOCATION
-
A. Location Geographical Features

B. Land Cost
The joint venture company will setup at LKIZ Lot no. M1 and M10 with land size
3.11 hectors for project Phase I, and the reserved Lot no. M2 and M9 with land size
3.11 hectors for Phase II and III development.
Following information is provided by LKIZ:
A. Land rental fee: Government hire LKIZ is 1500 VND / m² / year, will be adjusted in
accordance with regulation in force At present, land rental fee that Government hire
LKIZ is free..
B. Infrastructure fee: Annual payment: US $ 1.60 / m²
One time payment: US $ 30.00 / m² / 48 years
This price is only applied for investor release land with area over 50000 m². Using
infrastructure fee will be adjusted in accordance with area and location of land rental.
Land rental duration is 48 years.
2-2. PLANT LAYOUT
A. Building Floor Size
B. Plant Layout Drawing

WRP VIETNAM PLANT LAYOUT (M1, M10)

 C. Construction and Engineering Schedule

2.3 Construction Cost

3. ORGANIZATION & MAN POWER DEMAND
3-1 MAN POWER DEMAND AND LABOR COST
3-2. ORGANIZATION CHART
4. PRODUCTION
4-1. PRODUCTION PROCESS CHART & ILLUSTRATION
PRODUCTION PROCESS ILLUSTRATION
Raw Materials & Chemicals Preparing and Latex Compounding:

The solid form chemicals are grinded into fine powder by a bean or ball mill for easy dispersing
mix with latex, the compounding latex is continuously agitating 12-18 hours to pre-mature or
per-vulcanize the latex; and then send to latex tank for making glove by gravity with leveling
control system to control the effluent volume. The coagulant agent contains calcium nitrate,
calcium carbonate and wetting agent that is well mixed and agitating to prevent from
sedimentation and send to coagulant tank for making gloves.

Manufacturing Procedure:

On-Line Procedure:
Ceramic glove former connected with disk holder and joint onto a motor driven conveyor chain
which is continuously rotated moving along with track to pass through former cleaning section
including acid and alkali treatment, round disk and plate brushing and further with hot water
rinse process to clean the residue left on the former surface; and then pass through a drying
oven to dry out water and heat up the former temperature; and then dip into a jacketed
coagulant tank which is maintained about 50℃ to coat a layer of coagulant agent; and then
pass through a 150 ℃ drying oven to dry out the coated coagulant agent; and then dip into a
jacketed latex tank which is circulated with cooling water and maintain about 28℃ to coat a
desired thickness layer of latex film onto former; and then pass through 100℃ drying oven to
semi-dry the latex film; and then dip into about 50℃ pre-leaching tank to washing out the
impurities and protein of the latex film; and then pass through beading station to brush rolling
the up portion film into a bead; and then pass through the 110-135℃main oven to dry out and
cure the latex film; and then dip into 50℃ post-leaching tank to further wash out the impurities
from the cured film, and then dip into slurry tank to coat starch powder on the glove for
lubricating; and then a pre-stripping brush rolling down the glove cuff; and then glove is stripped
off from former by a auto peeling machine and then former continuously return to repeat the
whole process.

Off-Line Procedure:

The stripped gloves are sent to tumbler dryer for post-curing and even out the powder
distribution; and then sent to Q.C. for sampling check the qualities; and the qualified gloves are
sent for packing as finished goods.

(The next two page drawings are the glove dipping machine flow chart)
5. COST ANALYSIS
5-1. EQUIPMENT & MACHINERY LIST AND COST
A. PRODUCTION EQUIPMENT
B. NON PRODUCTION EQUIPMENT
5-2. ENERGY& UTILITIES CONSUMPTION AND COST
5-3. MATERIAL COST
5-4. OPERATING COST

A. Production Output (Sept. 2011 – Aug. 2012)

B. Operating Cost (Sept. 2011 – Aug. 2012)
6. INVESTMENT CAPITAL AND FINANCIAL ANALYSIS
6.1 INVESTMENT CAPITAL

6.2 FINANCIAL ANALYSIS

6.3. CONSLUSIONS

In the present, the monsoon season and bad flooding situation in latex supply countries
cause latex output decreasing and stock shortage and the latex market price is raising up to
a 15 years record’s high. The present latex price is RM8,000/ton that is 60% higher than
RM5,000/ton of last year price. In the mean time, the latex glove industry is suffered by the
over-stock of synthetic glove such as PVC and Nitrile glove that affecting the latex glove
market price is not able to reflect the latex material cost increasing and the depreciation of
US dollar that further drop down the profit margin of latex glove exporting. We estimate that it
takes two years to digest the glove stock and improve the market situation of both latex and
glove. The setting up a glove manufacturing facility in Vietnam of the present project has
been carefully studying to make the conclusion as following:

Advantages:

A. Security of latex source

WRP cooperate with Done Nai Rubber Corp. to secure latex supply with a competitive
price.
B. Reducing market risk
The facility geometry location is in the center of Asia region with a huge population and
fast economical growth. It is a convenience for WRP to explore this new market and
reduce the market risk of concentration in the Western countries.
C. Providing sufficient man power resource
There are multi-million young generation population in Vietnam, it can provide sufficient
man power resource for labor intensive industry and with a lower labor cost compare to
Malaysia.

Disadvantages:

A. Hidden financial cost

The financial cost is increased by loaning VND under high bank interesting rate condition
(13.5-15% short term, 15-18% long term). It is more suitable to using international
banking facilities to finance present project investment and production.
B. Hidden manufacturing cost
a. Unexpected production down time loss
Non-reliable electricity power supply caused by bad weather condition, in order to
cut down the production down time loss that one set of 200Hp diesel generator is
necessary for emergency use.
b. Extra environmental control cost
 Highly restricted environmental regulation of wastewater regulation, the factory
wastewater effluent requires to discharge to LKIZ WWTP for treating wastewater
quality from standard B into standard A. The treatment fee of LKIZ remains
unknown situation. Need to further negotiate and confirm with the fee with LKIZ.
c. Land rental cost
Free of land rental fee at present, in the future will be VN$1,500m²/year and
adjusted in accordance with regulation in force.
C. High energy cost
The coal cost is about 14.35% of manufacturing cost and the transportation cost is about
23% of coal cost. The coal cost is 20% higher than Indonesia and similar with Chain, in
order to meet the global green energy trend and save the energy cost, the biomass
energy should be considered to substitute the coal as fuel source. The further study of
biomass resource and technology is required before start embarking present project.

The setting up a joint venture company of making latex powder examination glove in LKIZ
Vietnam of present project is profitable and workable with estimated investment capital
US$24,000,000 and 3.7 payback years. As for the long term strategy that setting a facility in
Vietnam will benefits WRP in a better position of exploring the Asia market and reducing the
risk; and also benefits Done Nai Rubber of providing a solid latex sale channel and a new
business opportunity.