Paris-based cosmetics giant L’Oreal says it is building its largest factory in the Jababeka industrial area in Cikarang, West Java, with a total investment of US$50 million as part of its expansion plan this year.

The factory is scheduled be ready in October this year, PT L’Oreal Indonesia president director Jean-Christophe Letellier said Thursday.

He said the factory, built on a 200,000-square-meter plot of land, was expected to produce 300 million cosmetic items per year, with an enhanced production capacity of more than 500 million units by 2015. A hundred millionunits would generate between Rp 2 trillion (US$226 million) and Rp 3 trillion, he said.

Out of the total production, 25 per cent of the items would be sold on the domestic market, while the rest would be for export.

"The development of this new factory shall facilitate the exponential growth of the domestic and ASEAN markets in particular,” Letellier said in a written statement.

L’Oreal Group is targeting 1 billion new customers in 2020, adding to the current 1.2 billion consumers, mainly on the back of its Asia Pacific market.

Consumer product division general manager Ashwin Rajgopal said that Indonesia, along with China, was set to contribute to half of the one billion target.

Customers in Southeast Asia’s largest economy alone was expected to top 50 million in 2020, a significant increase from the current 20 million.

"Indonesia possesses a huge mass-market potential and L’Oreal has drastically accelerated in this segment over the past three years,” Rajgopal said, adding that the country’s beauty market was worth around Rp 15.2 trillion in 2010.

He said his company recorded significant increases both in unit growth and sales last year.

"Specific to Indonesia, our 2010 performance has been no less encouraging. With a 61 per cent growth in units and 28 per cent in net sales, L’Oreal becomes the fastest growing company in its industry in Indonesia and the third fastest growing subsidiary within L’Oreal Group worldwide,” said Letellier.

Corporate communications and public relations manager Melanie Kridaman said the unit’s growth covered all kinds of hair and skin care products, makeup and fragrances.

According to Melanie, besides building the factory, the company will also spend $50 million for promotional and marketing activities.

To attract new customers, Raj-gopal said the company would tap into the men’s market by launching various products, such as Garnier for men.

L’Oreal global net sales increased by 11.6 per cent to $19.5 billion last year from 2009’s $16.8 billion. It currently operates one factory in Indonesia and China, and two factories in Japan.