Bakrie building cooking oil, steel plants

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)