Indofarma to stay in the red this year: CEO
Indofarma to stay in the red this year: CEO
Rendi A. Witular
The Jakarta Post
Jakarta
State-owned pharmaceutical company PT Indofarma said on
Tuesday that it will remain in the red this year as it strives to
restructure its business and sales strategy, which are considered
uncompetitive.
"We are trying to revise our business and sales strategy this
year. The sales policy applied by the previous management has
simply caused our products to be uncompetitive," Indofarma newly-
elected president Dani Partomo said on the sidelines of a hearing
with House of Representatives Commission V for industry and
trade.
Dani said that the production cost of Indofarma's drugs was
still high compared with similar types of drugs produced by other
companies.
The publicly listed company forecast that this year it would
book a loss of Rp 12 billion (US$1.4 million), down from a loss
of Rp 59.8 billion the previous year.
For the first semester of this year the company managed to
reduce its losses to Rp 37.4 billion.
In order to overcome its cash flow problems, the company plans
to issue three-year medium term notes worth Rp 150 billion for
refinancing most of its debts, worth Rp 215 billion.
The company said that with the new debt issue, it expected to
save around Rp 8 billion per year in interest payments?
Dani said that the note issuance was scheduled to take place
later in the fourth quarter of this year.
Indofarma, led by its previous management, was under scrutiny
by the Jakarta Stock Exchange earlier this year for financial
report irregularities.
The company reported to the bourse a net loss for financial
year 2002, whereas previously it had reported a net profit of Rp
88.6 billion in the first three quarters of 2002.
The company said that mistakes in inventory during the first
three quarters, and costly programs, such as giving massive
discounts to pharmacies in the fourth quarter, had contributed to
more than Rp 108.6 billion in discrepancies.
However, many analysts raised questions over the
discrepancies, saying that mistakes were caused by sloppiness.
Due to the mistakes, the government took tough action by
replacing the company's management.
Indofarma is about 19 percent owned by the public and 81
percent by the government.
The company is among several state-owned firms scheduled to be
sold to strategic investors.