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)