Putra Surya to raise its equity subsidiary

JAKARTA (JP): Publicly listed PT Putra Surya Dumai Industry, a plywood producer, will increase its equity capital in one of its subsidiaries, PT Perawang Lumber Industry, by Rp 88.6 billion (US$36.3 million) to finance the latter's laminated veneer lumber (LVL) project.

Putra's president, Citra Gunawan, said yesterday the company's shareholders had agreed to increase its shareholding to 98.5 percent in Perawang by acquiring 88.6 million new shares.

"The fresh funds will be used to shift Perawang's core business into laminated veneer lumber (LVL) production from the medium density fiberboard (MDF)," he said after the company's first annual and extraordinary shareholders meetings.

He said LVL prospects were much better due to its higher profit margin than the MDF, which was currently experiencing an excess capacity.

The remaining 1.5 percent of Perawang is owned by the local village cooperatives around the company's factory in the Riau Province.

Citra said Perawang planned to start LVL production next year, and would export most of its output to Japan, the biggest market in the Asia-Pacific region.

The LVL factory, estimated to cost Rp 120-244 billion, will be designed with an annual capacity of 72,000 cubic meters.

Citra projected that the Perawang LVL unit would eventually contribute about 32 percent of Surya's revenue.

Perawang currently produces about 3 million cubic meters of MDF.

Surya Dumai produced plywood, including primary and value added or secondary processed plywood, and other wood products totaling 314,00 cubic meters last year.

The company's net income (profit) rose 57 percent to Rp 44 billion last year, from Rp 28 billion in 1996. Its net sales rose to Rp 333 billion, from Rp 284 billion in 1996.

This year, the company expects to increase net sales to Rp 350 billion and net income to Rp 52 billion.

The shareholders meetings also agreed on a cash dividend of Rp 100 a share.

Citra said Rp 25 a share, or Rp 10 billion of the dividend, would be paid from the 1996 net income.

The remaining Rp 75 per share, or Rp 30 billion, would be taken from its retained earnings before the company went public last year, he said. (das)