Enseval expects 20% growth in 2004 despite election uncertainty

PT Enseval Putera Megatrading is a leading distributor of health products and consumer goods. The company has four divisions, that is pharmacy, consumer goods (cosmetics, health food and drinks), medical devices and raw materials for medicines and consumer goods, with the pharmacy division contributing most of the company's revenue. Enseval's president director Budi Dharma Wreksoatmodjo accompanied by managing director Teddy Iman Soewahjo talks with The Jakarta Post's Fitri Wulandari on the company's strategy and outlook for 2004.

Question: How did the company perform in 2003? Answer: In 2003, our business grew by 20.5 percent. We expected higher growth, but there was a slight correction on consumers' purchasing power in the second semester of the year so that we didn't grow as we had expected.

In 2002, we grew by more than 40 percent because we received new suppliers, which boosted our sales. Most of the products in 2002 were leading products such as Extra Joss, milk products from the Sustagen Group and products from Sara Lee.

But the 20.5 percent growth was above average because many similar companies could not reach double digit net sales.

Our net sales for 2003 was Rp 3.75 trillion (US$443 million) and net profit was Rp 160 billion.

Has your company had progress with its debt restructuring? We owe a total of $30 million to international and local banks, namely Royal Bank of Scotland, Summitomo-Mitsubishi, Mitzuho, Indosuez and Lippo Bank. We have submitted proposals to repay the loans in five years instead of seven years. And we are now awaiting their answer.

How will the current macroeconomic stability affect your business? Business in health-related products and consumer goods is a bit low because consumers' purchasing power is weakening. But we hope to get a multiplier effect in the consumer goods sector from lower interest rates. Lower interest rate would prompt people to reinvest in new businesses, which would create employment. From the employment created we would expect more purchasing power to follow.

How does the company survive competition? Compared to other companies, we can survive because we have strong infrastructure. This supports our commitment to our customers. We have two kinds of customers: suppliers and buyers, or outlets who buy products supplied to us. We try to deliver products entrusted to us by our suppliers as close as possible to the buyers.

We have 40 branches across Indonesia and 1,468 delivery vehicles. Each branch has its own warehouse and delivery vehicles.

But most important to our customer service is information technology. In 2002, we invested some Rp 15 billion in hardware and software to support our information technology infrastructure. With IT support, customers can track sales and inventory of their products in every area in Indonesia.

It also help us dispatch within 24 hours medicines, for example, to hospitals, clinics or outlets that run out of stock. In some areas, products can be delivered within four hours. Customer satisfaction is our focus.

How many suppliers do you have? About 70 suppliers, from small to big suppliers. We are distributors for leading products such as L'Oreal, which is one of the largest cosmetics producers, and other products such as Sustagen and Morinaga. We got new suppliers in 2003, but in terms of sales they are not too significant.

Of the number, 70 percent are international suppliers such as Mead Jhonson and L'oreal. The remaining are locals. But local suppliers dominate sales in terms of volume as their products are market leaders, such as Extra Joss and Procold.

We offer an opportunity for potential local suppliers to benefit from our infrastructure, which has helped make many products successful.

Do you prefer certain suppliers to others? Basically, we welcome any supplier, whether international or local, to work together with us. But we prefer aggressive suppliers who use our infrastructure to make their product more successful. In short, we prefer suppliers who have commitment to market their products in Indonesia.

Additionally, we distribute products that can improve the quality of life.

Brand is also part of our consideration. But famous brands are usually unable to expand to become more successful.

What is your outlook for 2004? We anticipate business growth of between 15 to 20 percent in 2004 and net sales of Rp 4.5 trillion. It is a conservative projection in anticipation of various events this year, including the general election. Under these circumstances, business would normally have the brakes on for a while, but the impact won't be that significant because most of our products are prime ones. These products are only used by people on the top level of society who are relatively not vulnerable to any (social and political) upheaval.