Dharmindo to shift core business into trade, construction

JAKARTA (JP): PT Dharmindo Adhiduta, a mining company affected by poor performance in 1993, will shift its core business into trade and construction and will consolidate three of its subsidiaries by next year.

"We will turn our business from general mining towards the trade of heavy equipment and building materials and the construction of infrastructure," the company's president, Boedijanto, told reporters in a press conference here yesterday.

He said three of the company's subsidiaries have been appointed to handle the new businesses.

Dharmindo is listed on both the Jakarta and Surabaya stock exchanges.

Boedijanto explained that PT Mekasindo Dharma International, one of the subsidiaries, will handle the trade of heavy equipment, PT Jaindo Metal Industries the trade of roof and metal products and PT Indoprima Alam Marmer Industries the trade of marble products.

Dharmindo is still in the preparatory stages of establishing an infrastructure construction company, he said.

He said that the reason for converting the company's core business was to improve the company's performance, as they could no longer cope with the mining business.

Risks

Boedijanto said mining is a business that requires a massive investment and always faces a high risk of failure.

A company will need to invest a minimum of Rp 26 billion (US$11.98 million) to enter a mining business, which is full of uncertainty on the investment recovery even after the results of surveys show a discovery of mining reserves, he said.

"Moreover, we were facing a lack of experienced workers in the field of mining," he added.

Boedijanto said Dharmindo will also reduce its investments in its affiliates -- Independent Resources Pte. Ltd, Southern Nevaria Pte. Ltd. and Woyla Alluvial-Mining Pte. Ltd.

He said the funds to be generated from the sale of shares in the three affiliates will be used to finance the company's expansion program and to repay its debts. He declined to specify the estimate of the funds expected from the share sales.

Dharmindo's financial advisor, Daniel Kong, said that last year the company suffered a 43.8-percent decrease in its after- tax profit because it terminated three contracts on unproductive mining projects in Sentani of Irian Jaya and in Aceh.

He said the contract termination has cost the company Rp 8 billion.

Daniel said the company's after-tax profit dropped to Rp 270 million last year from Rp 481 million in 1992.(02)