PT UIC plans to establish $7.25m subsidiary in Vietnam
JAKARTA (JP): PT Unggul Indah Corporation (UIC), Indonesia's only producer of alkylbenzene, will establish a subsidiary in Vietnam, distribute cash and share dividends and issue bonus shares.
The company's president, Johannes Kotjo, said after annual and extraordinary meetings of its shareholders yesterday that the planned Vietnamese subsidiary, called UIC Vietnam Co. Ltd, will produce alkylbenzene sulfonic acid and sodium lauryl ether sulfate, chemical substances used for the production of detergent.
"The operation of UIC Vietnam will be beneficial because it will use Alkylbenzene from UIC and the prospect of its business is bright because it will be the only producer of such a chemical substance in Vietnam, a country with a population of 70 million people whose economy is expanding rapidly," Kotjo said.
The establishment of UIC Vietnam will need US$7.25 million in investment, of which $2.75 million will be provided by UIC and the other $4.5 million from banking loans, he said.
"The company's expansion in Vietnam will not cause capital flight because the borrowing will come from foreign banks," he said. Furthermore, profits from the Vietnamese operation will go back to Indonesia."
He said UIC, listed on the Jakarta and Surabaya stock exchanges, will be the sole owner of UIC Vietnam which is expected to start operating later this year with a production capacity of 30,000 tons per annum.
New unit
Kotjo said UIC will also invest about $50 million to $60 million for the construction of its third processing unit in its industrial complex in Serang, West Java.
The new unit will not increase UIC's annual production capacity, which last year increased to 150,000 tons from 90,000 tons, but it will make the company more flexible in making biodegradable Linear Alkylbenzene and use cheaper raw materials.
Kotjo also explained that UIC will distribute 1-for-7 share dividends and cash dividends of Rp 150 per share from its 1993 profit.
The operational profit actually increased by 17.1 percent from Rp 38.85 billion in 1992 to Rp 45.52 billion last year but because its non-operational revenues fell by 37.1 percent while its tax payments rose 32.8 percent, its after-tax profit declined by 10.6 percent from Rp 38.48 billion or Rp 583 per share to Rp 34.37 billion or Rp 521 per share.
The issuance of bonus shares, which will come from the capitalization of agio from the public offering in 1989, will not increase the value of investors' capital and can cause declines in the prices of the company's shares on the capital market.
UIC's shares were quoted at Rp 6,075 per share on the JSX on Wednesday.
The cash dividends will be distributed on Sept. 12 to those listed as share holders on August 12, while the stock dividends and bonuses will be distributed after an approval from Ministry of Justice on the changing of the company's statute.
Kotjo said PT UIC's production last year increased by 34 percent to 120,000 tons.
UIC's main products are branched alkylbenzene (BAB) and linear alkylbenzene and its byproducts are heavy alkylate and light alkylate.
UIC's subsidiary, PT Petrocentral, produced 44,192 tons of sodium trypoly phosphate last year, which indicated a 10 percent increase over 1992.
IUC's sales increased by 18.6 percent to Rp 175 billion last year, while the sales of Petrocentral rose 13 percent to Rp 62.8 billion. About 95 percent of the two companies' production is sold domestically and the remainder is exported.(yns)