Texmaco to start producing PTA next February

JAKARTA (JP): The publicly-listed PT Polysindo Eka Perkasa will start producing purified terephthalic acid (PTA) in February at its industrial complex in Karawang, West Java.

The company's president M. Sinivasan said over the weekend that the plant would produce around 340,000 tons of PTA a year.

He said when the plant is fully operational the company will no longer need to buy the chemical material to feed its polymer plant.

"Currently we have to buy PTA from Bakrie's chemical plant," he said, adding that his company's PTA production would account for about one third of the country's total capacity.

Bakrie Group produces around 500,000 tons per year.

He said Polysindo, which together with its publicly-listed subsidiary Texmaco Jaya, also produces textile machinery, garments, synthetic fibers and fabric, would use all of its PTA production at its polymer plant.

"Our polymer plant has been in operation since September with a designed capacity of 330,400 tons per year,"Sinivasan said.

The polymer plant feeds Polysindo's polyester staple fiber factory which also has been expanded to an annual capacity of of 180,000 tons per year since September.

Sinivasan said the sharp increase in the cotton price on the international market had prompted many Indonesian textile producers to substitute cotton with polyester staple fiber as raw material.

Indonesia's total production of more than one million tons of PTA is able to meet only 56 percent of total domestic PTA demand with the remainder having to be imported.

He said the local demand for PTA was projected to increase by between 15 percent and 20 percent per year over the next five years, making a capacity expansion at his PTA plant commercially viable within the near future.

He said the establishment of the plants -- PTA, polymer and staple fiber -- would take an investment of US$575 million.

"It is part of our expansion programs until the year 1998 with a total investment of about US$2 billion," he said. He did not elaborate on the source of funds.

Texmaco will also begin producing trucks in the first semester of 1998. "We've got a license for making chassis from Leyland of Britain and for engines from Cummins Engine Co. Inc. of the U.S.," he said.

He said his company would also obtain soon a license for the manufacture of axles from Eaton Co. of the U.S. and for transmission from ZETF of Germany.

The engines will be used initially to power medium-size and heavy-duty trucks to be produced by Heavyndo, a subsidiary of the Texmaco Group.

Sinivasan said the expansion program also included partnerships with a number of small companies to produce garments beginning in March.

The company is also reportedly setting up a rayon fiber plant in Irian Jaya.

When all the expansion programs are completed in 1998, the company expects to see its net sales increase to about $1 billion, of which about 20 percent will be net profit, said Sinivasan. (bnt)