PT Branta Mulia gaining excellence through quality

JAKARTA: Ten years old is quite young. Nonetheless, as the first and leading tire cord manufacturer in Southeast Asia, PT Branta Mulia is a mature establishment.

With production bases in Indonesia and Thailand -- and later in Malaysia and the Philippines -- Branta Mulia has been penetrating overseas tire cord markets ranging from Japan in Far East Asia to Tanzania in Africa.

More than 50 percent of its products are sold on overseas markets, particularly countries in the Asia-Pacific rim, including Japan, China, Thailand, the Philippines, Malaysia, Australia and New Zealand, and a number of countries in the Middle East and Africa, including Iran, Kenya and Tanzania.

"Even a country like Iran, which used to import tire cords from Turkey, turns to us. It shows that the price of our tire cords is very competitive," Branta Mulia's president, Ibrahim Risjad, said. "We invite competition to prove that our price is competitive."

Founded in 1981, Branta Mulia commenced its production of tire cords at its plant in Citeureup in Bogor, West Java, in 1985, with an initial annual production capacity of 12,000 tons. The company then several times expanded the capacity of its production facilities in Citeureup to the current level of 21,000 tons per annum.

In 1990, Branta Mulia floated 12.5 million shares or 10 percent of its total common stocks, to the public through an initial public offering on the Jakarta Stock Exchange. After going public, Branta Mulia is 23 percent owned by Robby Sumampow, 22 percent by Henry Pribadi's family, 10 percent by the public and seven percent by Ibrahim Risjad.

Branta Mulia has acquired a 49 percent stake in a joint venture tire cord plant at Ayuthya, north of Bangkok, Thailand, which began commercial production in 1993 with a capacity of 12,000 tons per year.

Last year the company recorded a 9.6 percent increase in net sales to Rp 308 billion (US$132 million) and a 5.7 percent rise in its net profit to Rp 37.1 billion over the previous year.

Branta Mulia's impressive performance is due largely to its business strategy. All Branta Mulia's tire reinforcement products can be made in line with its clients' specifications and the company welcomes specific orders.

Currently, the company serves many of the world's leading tire manufacturers, most notably Goodyear, Bridgestone, Firestone, General Tire, Sime Darby Group, South Pacific Tires Group, Michelin and Siam Tire Group.

Branta Mulia has also secured a new product approval from Goodyear and Michelin for the use of its tire cord fabrics in aircraft tires.

In ensuring the quality of its products, the company is committed to using the best quality materials, the best modern technology and quality-assured manufacturing processes.

The company secures its raw materials from the Du Pont Company of the United States and other third-party suppliers. However, raw materials represent only a small percentage of its production costs.

"Tire cord is a high technology product. Thus, raw material serves as a very marginal aspect in the structure of our production costs. Similarly in the cement industry, most of our production costs go towards the technology and machinery of the plants," Risjad said.

In addition to checking the physical properties of the materials secured for production and the purity of the chemicals purchased, Branta Mulia's research and development center monitors the production process in all stages, performs sampling and testing as well as analyzes the products so that they can meet approved international standards.

Due to its continuing efforts in assuring high-quality products and production process, the company was awarded the Quality Assurance Standard of ISO-9002 in October 1994.

Integration

Branta Mulia is concentrating on deepening its core business and strengthening its market access rather than going downstream to the tire manufacturing industry.

"No need to worry on the parts of tire manufacturers that we will go downstream. No, we don't want to go downstream. We'd better strengthen our production base," Ibrahim Risjad said.

To achieve the goal, Branta Mulia is engineering further upstream integration. Currently it is building a polyester yarn plant, with an annual production capacity of 12,000 tons. It also plans to establish a rayon plant and a steel cord plant in the near future.

Currently Branta Mulia is expanding the tire cord production capacity of its Thailand plant to 16,500 tons per annum, which is expected to be ready at the end of this year, and the capacity of its nylon-66 yarn plant to 34,000 tons, which is projected to commence production next year.

To strengthen its already strong market position in the Association of Southeast Asian Nations (ASEAN) and tap more benefits from the ASEAN Free Trade Area -- which will fully come into affect in 2003, or could be accelerated to 2000 -- Branta Mulia is expanding its production base to Malaysia and the Philippines.

Besides Indonesia, Malaysia and the Philippines, ASEAN also groups Brunei, Singapore, Thailand and Vietnam.

On August 25 in Kuala Lumpur of Malaysia, PT Branta Mulia signed a joint venture agreement with Silver Image Investment, Ltd., Seacorp Venture Capital Sdn. Bhd. and Kampong Yarn Corporation Sdn. Bhd. for the establishment of the third tire cord fabric manufacturing facility: Branta Industries (Malaysia) Sdn. Bhd.

The construction of Branta Mulia's Malaysia plant, which will have an annual production capacity of 12,000 tons of tire cords, is expected to be ready early 1997.

The company has incorporated into its production facilities tire cord technology from Goodyear Tire and Rubber Company of the United States and collaborated with the Bridgestone Corporation of Japan, to produce a full range of tire cord products.

Branta Mulia is already producing Nylon-66 under a licensing agreement from Du Pont. Nylon 66 is a more superior quality product compared to Nylon-6. Nylon-66 is used for high quality radial tires, while the latter is used mostly for conventional tires.

"This is the first and in fact, the only license ever granted by Du Pont to an independent producer like Branta Mulia," Johannes Mung Harjono, a member of the company's board of directors, said.