PT KIA will spend $350m on expansion

JAKARTA (JP): PT Keramika Indonesia Assosiasi (KIA), a major local producer of roof and floor tiles, will spend about US$350 million in the next two years to raise its production capacity, its president said.

After the annual shareholders meeting here yesterday, KIA president Sugiarta Gandasaputra said production had to increase to anticipate next year's strengthening property market.

"The property market has been sluggish in the last few years. But now after the general election it has started strengthening. Next year it will be booming," he said.

Sugiarta said that roof tiles and floor tiles for houses accounted for about 70 percent of KIA's total sales.

"We'll start operating several new plants in Belitung (South Sumatra), Cileungsi (West Java) and Surabaya this year. Now we're building a new floor-tile plant in Karawang, West Java," he said.

By late next year, after the expansion, the company would have an annual production capacity of 42 million roof tiles, 15.1 million square meters of floor tiles, 11.5 million square meters of wall tiles and 1.2 million square meters of granite tiles, he said.

He said KIA was aiming for a Rp 28 billion ($11.67 million) net profit this year, up 68 percent on last year. Its total sales are expected to increase 140 percent to about Rp 260 billion this year.

Last year, the company booked a Rp 16.6 billion net profit, up 49 percent from Rp 11.1 billion in 1995.

During the annual meeting, shareholders approved management's plan to distribute a dividend of Rp 25 a share, totaling Rp 4.25 billion.

The shareholders also agreed to KIA increasing its stakes in PT KIA Serpih Mas (KSM), a maker of floor tiles, and PT KIA Keramik Mas (KKM), a producer of roof tiles. "KIA will raise its share holdings in the two firms up to 99.99 percent," he said.

KSM is 69 percent owned by the Ongko Group, 10 percent by PT International Finance Corporation (IFC) and 21 percent by KIA. KKM is 85 percent owned by KIA and 15 percent by IFC.

Sugiarta said his company would soon issue rights shares to raise about Rp 125 billion to finance the acquisitions. (bnt)