Plantation firms wants to set up holding company
Plantation firms wants to set up holding company
JAKARTA (JP): The PTP XXXII group of state-owned plantation companies has proposed establishing a holding company with PTP XXXII as the parent firm and PTP XXVIII and PT Bina Mulia Ternak as its subsidiaries.
President of the Eastern Indonesia-based PTP XXXII group, Sjamsir, said yesterday the merger is expected to be an effective means to improve the poor financial condition of the group's individual firms.
Speaking at a hearing with members of the House of Representatives' Commission IV for agriculture and forestry, Sjamsir said the pooling of resources through the merger would also help strengthen the group's capital structure.
After the merger, he added, the group's paid up equity capital will increase to Rp 580 billion (US$253.27 million) and its debt- equity ratio will improve to 15:85.
The group is one of the 14 groups established by the Ministry of Agriculture to improve performance and efficiency of state- owned plantation firms.
In 1994, 32 of these firms were consolidated into nine groups according to geographic location. But earlier this year, the grouping was reorganized and extended to 14.
Apparently the consolidation process has yet to be completed.
A number of observers, including the World Bank, late last year said the delay was mainly due to difficulties in consolidating the financial records of the 32 plantation firms and the existence of "vested interests" on the part of the state officials managing the firms.
Other analysts have blamed the delay on the absence of a political and legal basis for the establishment of the state- owned holding companies.
Yesterday, however, informed sources at the Ministry of Agriculture said the government regulation on the reform of the plantation companies was issued about three days ago, but has not been made public yet.
Sjamsir said yesterday that among the three firms, only the Sulawesi-based PTP XXXII, the main business of which is sugar, has a high rate of solvency.
The other two firms, PTP XXVIII and PT Bina Mulia Ternak should have legally been declared bankrupt because their debts account for 75 percent of their equity capital.
PTP XXVIII has businesses in Sulawesi and Maluku covering "general food crops", which includes palm oil, rubber, cacao, hybrid coconuts and nutmeg.
Sjamsir said that Bina Mulia Ternak, an animal husbandry firm, since its establishment in 1972 has never performed soundly, although in 1994 it made a profit for the first time. Last year it gained Rp 40 million in profits from a total revenue of Rp 5.4 billion.
Sjamsir said the group plans to adjust its business scale, diversify its businesses and seek joint ventures with other firms.
One of the group's plans is to extend its sugar plantations in Sulawesi and gradually increase the refining capacity of its sugar mills from 8,400 tons of cane per day to about 18,000 tons a day until 1999. (pwn)