Soaring construction costs put a damper on Ex-pack’s expansion plans

Amid the sharp increase in construction costs,  Kassim-family-controlled Ex-pack Corrugated Cartons (Pvt.) Ltd has downsized its original investment  plan to set up the country’s  largest state-of-the-art corrugated plant.

“As the cost of construction has escalated considerably, the company had decided to retain the current facility of 145,000 sq. ft. located on a five-acre land and construct another 150,000 sq. ft. of factory on an 870-perch plot,” the company announced in a stock market filing. The company was earlier planning to set up the country’s largest corrugated factory with a floor area exceeding 300,000 sq. ft., with a monthly capacity of 4,000MT on a 10-acre land block by investing an estimated Rs.2.98 billion. 

However, during the period, the cost of construction materials rose sharply by over 40 percent and is expected to further rise with the recent devaluation 
of rupee.

In line with these developments, Ex-pack moved to acquire two acres and 23.75 perch land block situated in Sapugaskanda on March 10 for a consideration of Rs.240.62 million.
The newly-acquired land block is also located immediately adjacent to a three-acre one rood and 7.2 perch land block owned by the company.

Accordingly, the company now plans to set up a 150,000 sq. ft. plant on the five-acre of land block.
In addition, the proposed plant is also located just 2.3 km away from the current factory premises.

As the current facility and the proposed new plant together will account for 300,000 sq. ft. of operational area, Ex-pack noted that the revised investment plans is in the line with the objectives stated in its IPO prospectus.
“The new property has the added synergies and benefit of being in close proximity (2.3KM) to the current factory premises,” it said.