Bakrie building cooking oil, steel plants

JAKARTA (JP): Publicly listed PT Bakrie & Brothers is determined to enter the growing cooking oil business and finalize a steel plant project.

Bakrie & Brothers' president, Tanri Abeng, said after yesterday's company shareholders meeting that the company, through PT Kilang Vecolina, was building a US$30 million crude palm oil refinery plant in Serang, West Java.

The plant, which will be able to make 350 tons of cooking oil a day, will start production by early 1998.

Kilang Vecolina will market its cooking oil, under the name of K-Vita, both domestically and overseas, especially in the United States.

"We are determined to enter the food industry through cooking oil. This way, we can expand more of our agro-industry sector to the downstream," Tanri said.

He said his company aimed to capture about 2.5 percent to 3 percent of the domestic market.

The domestic cooking oil market is dominated by the giant Salim and Sinar Mas groups.

Tanri said he was confident K-Vita cooking oil could enter the U.S. market.

"Cooking palm oil is currently not popular in the United States because of its cholesterol content. As K-Vita will cholesterol free, we are confident it can enter the U.S. market," Tanri said.

Speaking on the company's plans to build a steel-making plant, Tanri said the feasibility study had been done and now the company was looking for a location.

Tanri said his company was talking with possible venture partners, including British Steel, to build a steel plant in Lampung.

He said it was still evaluating Lampung and Cilegon, West Java, as possible sites. Assurances about electricity were needed if Lampung was chosen, he said.

The project will cost US$800 million.

"Most likely, we will make a decision by the third quarter of this year," Tanri said.

Bonus shares

Bakrie & Brothers shareholders rejected yesterday plans to issue bonus shares worth Rp 322.32 billion (US$132.36 million).

Tanri said shareholders asked management to chose the right time to issue the bonus shares, which would be taken from the share agio -- the capital gain raised by the company during its initial public offering (IPO).

Shareholders said it was not the right time because Rp 726.57 billion in bonus shares were issued last November.

The company reported yesterday a 56 percent increase in net profit to Rp 187.1 billion last year, up from Rp 120 billion in 1995.

The company's net profit is projected to rise to Rp 235 billion in 1997 and to Rp 300 billion in 1998.

During the first quarter of this year, the company's has booked a Rp 161 billion net profit, up from Rp 20.6 billion for the same period last year.

"This spectacular increase was because of the inclusion of capital gains from the sale of our shares in PT Indocopper. The capital gains alone totaled Rp 137 billion," Tanri said.

Bakrie & Brothers last year sold its 49 percent stake in PT Indocopper Investama Corporation, which owns 9.36 percent of copper and gold mining firm PT Freeport Indonesia, to PT Nusamba Mineral Industri, which is controlled by timber tycoon Mohammad "Bob" Hasan.

The sale is worth more than US$300 million. (rid)