Kanindotex is still battling

Kanindotex is still battling

JAKARTA (JP): The debt repayment of the Central Java-based PT Kanindotex needs further rescheduling despite an improvement in its business performance over the past four months.

Noorbasha Djunaid, who heads the debt-ridden company's new management team, said Kanindotex remains financially weak, even though the last four months had seen a substantial increase in sales.

Last September the government appointed the Federation of Indonesian Batik Cooperatives to the position of caretaker management of Kanindotex, reported to be in difficulty regarding its debt of around Rp 500 billion (US$232 million) to two state- owned banks, Bank Bumi Daya and Bank Pembangunan Indonesia (Bapindo).

The federation's chairman, Noorbasha, was subsequently installed as the president of the new management, replacing Robby Tjahjadi, the former president and the majority shareholder of the textile company.

Noorbasha said on Wednesday that the company's outstanding debts (loan principal and interest) to the two banks have grown to more than Rp 936 billion, excluding about Rp 70 billion in new debts incurred by the new management in order to save the company from a total collapse during the early stages of the rescue program.

He said that debt repayments should not only be rescheduled but also restructured, given the fact that most of the debts to the two state-owned banks carried high interest rates.

Noorbasha said that the term for repayment of the debts should be rescheduled to between 15 and 45 years, while their interest rates should be lowered to between five and 15 percent.

"If the interest rate on Kanindotex's debts were set at five percent per annum, the repayment would take at least 15 years," he said of the loan rescheduling proposal.

At present interest payments alone come to about Rp 120 billion, much higher than the company's annual sales of around Rp 100 billion, Noorbasha said.

He said that the new management has been able to double the company's yarn output to 800 bales per day and to raise its fabric output by about 25 percent to 250,000 meters per day.

The increases in the yarn and fabric production have significantly raised the company's net sales, which are now Rp 115 billion per month, he said, adding that the improvement in production performance had resulted in a profit of Rp 24.5 billion over the last four months.(hen)