Finnfund

Based in Teerijärvi near Vaasa, Rani Plast is a leading Nordic producer of polyethylene packaging films, with six production plants in Finland. Since the 1990s, the group has expanded operations into Slovakia, Ukraine and Sweden.

It took a new step into international markets in February 2012, when operations began at its plant near the Russian town of Kaluga. The investment of about EUR 20 million is one of the largest in the 55-year history of this family-owned company.

Managing director Juha Hakala of OOO Rani Plast Kaluga says that Rani Plast has long been planning to establish a plant in Russia but that the decision was postponed for a variety of reasons.

“We began exports to the Soviet Union back in 1963. Starting in the 1990s we carried out several feasibility studies for a production plant in Russia. The most recent, in 2005, was when we were considering a joint venture in the Moscow area.”

Production near the customer

In 2008 Rani Plast entered negotiations with Lemcon Invest (now Lemminkäinen Invest), a subsidiary of Lemminkäinen construction company. Lemcon Invest had established an industrial park at Vorotynsk in the Kaluga region. The park adjoins the industrial city of Kaluga, about 170 km south-west of Moscow.

Hakala says that the location and transport connections were ideal for Rani Plast. Most of its customers operate in the Moscow area.

“The industrial park concept also suited our needs very well. We have the resources to start up plastic film production but not for construction.”

Rani Plast had experience of project work with Lemminkäinen, which had earlier built a production plant for it at Teerijärvi.

Turnkey construction principles

After preplanning was completed at the start of 2009, a more detailed offer could be made, based on the principles used for the newest plant at Teerijärvi.

Design and financial negotiations advanced and a construction contract was signed in June 2010. Lemminkäinen Invest was to supply a turnkey plant, including the electricity, water, sewer and gas connections required for production. It was also responsible for liaison with officials concerning construction questions.

The plant starting operations in February 2012 has three film production lines producing 8,000 tonnes. It can be expanded to six lines, raising capacity to 16,000 tonnes.

Targeting market leadership

Rani Plast’s Kaluga plant will make packaging films for industry and films for processing in printing, laminating, etc.

“Russia has traditionally been important for us. Our long-term aim is to be a leading film supplier in this fast-growing market.”

Russia’s appeal was boosted by the fact that Rani Plast’s foreign customers have also expanded their operations there by establishing new plants.

“They prefer to deal with a local supplier rather than an importer,” Hakala points out. In this way they can avoid the import duty that Russia imposes on plastic materials.

Moreover, it is easier to handle logistics efficiently when the supplier operates from the same country.

Rani Plast has trained its new machine operators at Teerijärvi and Kaluga. The staff has also received courses in product development and the components of its products, data systems for production and financial management and ISO standards 9001 and 14001.

Initially Rani Plast is employing 25 people in Russia. In addition to production, it has also established a sales office. Hakala says that the job of finding suppliers and partners in the area has got off to a good start.

Financial participation by Finnfund

Finnfund is one of the organisations providing finance for the Kaluga project. Finnfund investment manager Ari Nironen points out that production in Russia not only reduces plastic imports but also lowers material costs because Rani Plast films are thinner than what Russia currently makes.

“The project is exploiting Finnish skills in plastic films, to the benefit of Russia’s own film production and other local manufacturing. Moreover, the project will indirectly promote local food processing by producing packaging films for food that meets the standards of supermarket chains. High-quality packaging improves food safety and reduces spoilage in the food chain,” Nironen notes.

The project is a major step in expanding Rani Plast’s operations. Finnfund’s participation in financing it and sharing the risk has been important for its success.

“A development finance company is needed because long-term finance from commercial sources is not widely available in the present economic situation. The launch of Rani Plast’s project will also help Lemminkäinen’s industrial park,” Nironen points out.

For more information, contact investment manager Ari Nironen tel. +358 40 547 8848 or firstname.lastname@finnfund.fi