Fiskaragung to increase production capacity<\/p>\n
JAKARTA (JP): PT Fiskaragung Perkasa, the country's largest
\nproducer of iodized salt, said that it will triple its production
\ncapacity by 1998 to take the advantage of the government's
\niodizing program.<\/p>\n
Fiskaragung's president, Hendrawan Setiadi, told a stock
\nanalyst meeting late last week the government-sponsored
\nstandardization of iodized salt is expected to significantly
\nraise his company's sales.<\/p>\n
Setiadi said that as a producer which has already obtained SNI
\ncertification, Fiskaragung will triple its production capacity
\nfrom the current level of 172,800 tons per annum to around
\n518,400 tons by 1998 from its three production lines in Gresik,
\nEast Java.<\/p>\n
He said that the first expansion project is currently under
\nconstruction and will commercially produce in November,
\nincreasing the company's output capacity to 216,000 tons.<\/p>\n
The second expansion will start next year. Commercial
\nproduction is scheduled for late next year.<\/p>\n
The government launched the standardization of iodized salt
\nproduction early this year to reduce the use of non-iodized salt
\nfor human consumption, which is considered unhealthy.<\/p>\n
Iodized salt companies, under such a program, are required to
\nsell and market the salt according to the government's industrial
\nstandards, more popularly called Standar Nasional Indonesia
\n(SNI).<\/p>\n
The Ministry of Trade and Industry was reported to have
\nextended the deadline on the use of the SNI standards to the end
\nof this year, as many salt companies have not yet prepared to
\nfollow the standardization. The initial deadline was January.<\/p>\n
According to earlier reports, only 10 percent of iodized salt
\ncompanies produce their salt products according to the SNI
\nstandards.<\/p>\n
Domestic demand for human consumption salt was estimated at
\n1.02 million tons last year, of which only 200,000 tons were
\ncategorized as healthy iodized salt. The other 300,000 tons were
\nunhealthy iodized salt and the remaining 500,000 were un-iodized
\nsalt.<\/p>\n
Responding to an analyst's question as to whether the
\ngovernment will really go ahead with its program by banning
\nlicenses of low-iodized salt producers, Setiadi said \"It might
\nnot have been easy so far, because of an undersupply of iodized
\nsalt.\"<\/p>\n
\"It's also not easy to gain the SNI certification because the
\nproducers should take costly preparations to meet the standard.\"<\/p>\n
Fiskaragung is currently the second largest salt producer
\nafter PT Garam, which has an annual capacity of 300,000 tons.<\/p>\n
Other big players in the salt industry are Susanti Mega (with
\nan annual capacity of 120,000 tons), Garindo (75,000 tons) and
\nBudiono (75,000 tons).<\/p>\n
Setiadi said that unlike Fiskaragung's production, the
\nproduction of the other four companies are mostly washed, not
\niodized salt.<\/p>\n
Financing<\/p>\n
Fiskaragung is the first salt producer to go public by issuing
\n100 million shares, or 20 percent of its enlarged capital,
\nraising funds of approximately Rp 132 billion last month.<\/p>\n
The company said that total funds would be used to finance its
\nfirst and second expansion project.<\/p>\n
It is, however, worth noting that the company has also issued
\nmandatory exchangeable bonds amounting to US$27 million bought by
\nGSIC of Singapore recently.<\/p>\n
However, the bond became controversial, as its issuance was
\nnot disclosed to the public during the company's initial public
\noffering.<\/p>\n
\"At that time, we were negotiating with a foreign partner to
\nbuy the bonds. We got the deal on July 25, just coinciding with
\nthe listing of our shares on the Jakarta Stock Exchange,\" Setiadi
\nsaid when asked why the issuance of the bond was not unveiled to
\nthe public.<\/p>\n
He said that the bonds, which have an interest rate of 4.5
\npercent per annum, will be converted into 10 percent common
\nshares after a lock-up period, or it is then considered as a
\nfounding shareholders loan.<\/p>\n
He said of the total proceeds, which reached a total of US$15
\nmillion, will be used to finance the planned expansion projects.
\nThe remaining $12 million will be injected into its subsidiary,
\nwhich is operating as its distributor, PT Fiskarindo Niaga Abadi.<\/p>\n
He also said that Fiskarindo has planned to acquire PT
\nMitrapangan in the effort to strengthen its distribution network.<\/p>\n
In line with capacity expansion and a stronger distribution
\nnetwork, Fiskaragung is projected to book consolidated net sales
\nrevenues of Rp 254 billion (US$108 million) this year against
\nlast year's figure of Rp 127 billion, Rp 417 billion in 1997, Rp
\n599 billion in 1998 and Rp 736 billion in 1999.<\/p>\n
Consolidated net profit is estimated to increase from Rp 30
\nbillion last year to Rp 71.8 billion this year, Rp 104 billion in
\n1997, Rp 136 billion in 1998 and Rp 176 billion in 1999. (alo)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fiskaragung-to-increase-production-capacity-1447893297",
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