Mainboard-listed Ziwo Holdings, the China-based raw material producer of import substitution products, today announced that it plans to invest around RMB123.8 million ($24 million) to expand its production facilities to meet rising demand for its products.

Ziwo says the investment will be funded using the group’s internally generated funds and/or, if required, loans from financial institutions.

As part of this expansion plan, the group is acquiring a vacant plot of land that is adjacent to its existing premises, measuring 14,634.8 sqm, for RM28.8 million. Its wholly-owned subsidiary, Zhihe (Fujian) Technology Co., Ltd had on 5 October 2010 signed a sales and purchase agreement to acquire 100% of the registered capital of Quanzhou Yi Xiang Textile Co. which owns the land use rights for the plot. Yi Xiang Textile has not started operations since its incorporation in 17 August 2004 and its only asset is the said land use rights.

Ziwo also plans to spend an estimated RMB50.0 million to construct one six-storey multi- purpose office building and two two-storey factory buildings, and a further RMB45.0 million to add four new foamed SBR production lines. The latter will boost its production capacity for the product by 31,500 tonnes to 64,900 tonnes. Construction of the buildings is expected to start in November 2010 and the Group expects to complete the project within nine months.