Maxwell Int buys China land for RM17.2m

Maxwell International Holdings Bhd's wholly-owned unit, Jinjiang
Zhenxing Shoes & Plastics Co Ltd, has acquired a piece of land in
Henan Province, China, for 34.5 million renminbi (RM17.2

million) via tender.



In a filing to Bursa Malaysia today, Maxwell said it planned to
build a new factory premise with an estimated floor area of
approximately 150,000 sq metres.



"The initial internal estimated cost for the construction of the
factory premise together with a staff dormitory building is
approximately 300 million renminbi (RM149.6 million)," it said.


The acquisition of land and construction of factory would be funded by internal funds, it said.







It said the construction of the new factory premise would be done
under a few phases with the initial phase of 50,000 to 60,000 sq metres
to start before year-end and was expected to be completed by end-2013.



Maxwell said the company intended to install four new production
lines together with other new machinery which included sewing machines,
roller machines, cutting machines and grinding machines in the new
factory premise.


"These additions will increase the production capacity from
approximately eight million pairs of sports shoes per annum to
approximately 16 million pairs based on a two-shift operating basis,"
it said.


On the need for expansion, Maxwell said, its current production
facilities at Zhushuxia Industrial Zone, Jinjiang City were fully
utilised and the company has been outsourcing part of its production of
sports shoes to third-party external contract manufacturers.



"Currently approximately 50 per cent of production of sports shoes
is being outsourced to third-party external contract manufacturers.



"This may post a risk to the company as the dependency on external
contract manufacturers might result in external contract manufacturers
requesting for higher sub-contracting fees," it said. -- Bernama