Budi Acid Jaya acquires two firms to raise output

JAKARTA (JP): PT Budi Acid Jaya (BAJ) of the Sungai Budi Group, a publicly-listed tapioca producer, has acquired two firms to increase its citric acid output by 66.6 percent and diversify into modified tapioca starch production.

The company's shareholders yesterday approved the Rp 40.88 billion (US$17.4 million) acquisition in an extraordinary meeting.

BAJ bought all the assets of PT Budi Acid Makmur (BAM), a citric acid producer, for Rp 35 billion, according to a brief statement after the shareholders' meeting.

It also acquired 50 percent of the total shares of PT Budi Raisio International (BRI), a producer of modified tapioca starch, which was owned by the Raisio Group of Finland.

Both companies were BAJ affiliates.

BAJ president Santoso Winata said that by acquiring BAM, his company would be the largest producer of citric acid in Southeast Asia because it would be able to increase its production by 66.6 percent to 25,000 tons a year from 15,000 tons a year.

Citric acid is a preservative used in drinks, medicine and vitamins. It is also used to refine cooking oil, and as a raw material in detergent.

He did not elaborate on the company's production of modified tapioca starch, which is used to make paper. But he said PT BRI would get a $2 million interest-free loan from its former shareholders -- Widarto and himself -- to produce the starch.

"Our business' diversification is aimed at anticipating the rapid growth in paper demand," he said.

The company expects the acquisition will increase its net profit next year.

BAJ's net profit tripled to Rp 30.23 billion last year from Rp 10.02 billion in 1994. "This resulted from an increase in our total sales to Rp 148.6 billion last year, compared to Rp 73.6 billion in 1994," he said.

The higher sales and net profits resulted after the company acquired six tapioca factories, owned by the Sungai Budi Group, last November.

The acquisition allowed the company to expand its tapioca production capacity from 225,000 tons to 510,000 tons a year.

Tapioca contributed 75 percent of the company's total sales revenue last year, citric acid contributed 20 percent and sulfuric acid 5 percent. (bnt)