Jul 14 2010
China Ruitai International Holdings Co., Ltd. ("China Ruitai" or the "Company") (OTC Bulletin Board: CRUI), a manufacturer of cellulose ether additives for use in the production of pharmaceuticals, construction materials, PVC products, foods, and cosmetics, today announced it has completed the installation and will begin production on its new ethyl cellulose ("EC") production line for the pharmaceutical markets in China and international markets.
The additional 500 tons of new production will increase China Ruitai's current capacity to 620 annual tons of ethyl cellulose. Valued at $9,500 per ton, the new 500-ton ethyl cellulose production line can contribute $4.8 million in yearly revenues at approximately 45% gross margins. The total cost of the production line and building on 90-acres of land was $2.2 million, which the Company financed through debt and cash flows from operations. The payback period on the new production line is expected to be less than three years. In total, China Ruitai has 8,500 tons of capacity for its 12 cellulose ether product categories and more than 260 unique cellulose ether formulations. The principal raw material for Ruitai's organic cellulose ether is ginned cotton grown and harvested in northeast China.
Ethyl cellulose manufactured by China Ruitai is used primarily as a chemical additive in the production and manufacturing of pharmaceutical medicine tablets. The company maintains more than a dozen domestic and international customers who have shown preference for China Ruitai's high-standards and product quality. This particular formulation of ethyl cellulose is not water soluble and added to formulas of tablet-form medicines as a binding agent to shape tablets and maintain their resistance to moisture. By making changes in the concentration and formula of ethyl cellulose, EC manufactured by China Ruitai can also be used in other industries including PVC manufacturing, paints, rubber and food additives as a binding and adhesive agent in products.
Pharmaceutical companies are the target customers for EC in both domestic and international markets. China Ruitai reported that upon its successful production runs of its new EC line, the Company received three orders from domestic and international customers of EC totaling 22 tons valued at approximately $0.2 million. The production line can manufacture an average of 1.7 tons of EC daily under the full capacity production.
"China Ruitai was the first company in China to develop and manufacture ethyl cellulose in 2001 when we brought on line our first EC line," began Dianmin Ma, Chairman and CEO of China Ruitai. "A significant focus on research and development is primary to our success in developing and marketing EC in China and abroad. EC customers are challenging to obtain since the requirements for pharmaceutical additives are stringent. As demand for EC has grown over the years, adding an additional 500-ton line was needed to meet EC demand from our domestic and particularly international customer base, which accounts for 80% of our EC production. It also reflects our strategy to shift our focus to the high margin product in this competitive market. We are confident our sales and marketing teams will be able to secure orders for our new capacity enabling accretive revenues and earnings from our new line in 2010 and in the years ahead."
Source: http://www.rutocel.com/