Argha Industry prepares US$42 million

photo from: http://jobsengineer.kuchika.com/wp-content/uploads/2009/10/argha.jpg

as published in Bisnis Indonesia daily newspaper

Thursday, 17/12/2009 00:00 WIB

Argha Industry prepares US$42 million

JAKARTA: PT Argha Karya Prima Industry Tbk allocated US$42 million capital expenditure next year to purchase machinery.

The machinery is meant to improve the capacity of plastic raw materials flexible biaxial oriented polypropylene (BOPP).

Finance Director of Argha Industry Jimmy Tjahjanto said the machinery will improve the production capacity of BOPP by 32,000 tons per year as from 35,000 tons into 67,000 tons per year.

The US$26 million fund is generated from export credit provided by Bayerische Hypo und Vereinsbank of Germany. The machinery purchased from Germany manufacturer, Bruckner, helps ease the company to get low lending rate.

"The other US$8 million is from our old partners, Bank CIMB Niaga and Bank Mega, and internal cash worth US$8 million," he said yesterday.

Both private banks have given the company loan for working capital worth US$16 million every year. The option loan from bank is due to the lower lending rate with long terms of payment.

The 6th machinery will be planted at the plant areas in Citeureup, Bogor.

The construction here is predicted to kick off next week and to finalize operational by 2011.

In addition to BOPP, the company also produces polyester (biaxially oriented polyethylene terephalate/BOPET) and cast polypropylene (CPP). The growing production capacity is estimated to increase sales by 30-40 percent from that of earned this year.

Plant intensification has made the total production capacity including the subsidiary firm will increase from 67,000 per year into 99,000 tons per annum.

Argha Industry has 70 percent shares of Stenta Films Sdn Bhd in Malaysia and has BOPP production of 17,000 tons per year. The other stocks are possessed by local business owners. The company also has office in Hong Kong, namely International Resources Ltd.

Now there are 53 percent of the total exported production goods and the rest is for local industry with major market of Asia Pacific. The market shares of BOPP production domestically have 25 percent and expectedly to grow by 35-40 percent.

Jimmy said after capacity rise, the local sales composition will grow by 60 percent and the rest is imported abrod.

Up to yearend, the company estimated the sales will hit IDR1.3 trillion, or rose from IDR1.06 billion of the quarter III/2009 scheme. (Bisnis/21)