Polysindo improved

Integrated polyester producer PT Polysindo Eka Perkasa Tbk reported operating loss of Rp119.5 billion in the first half 2009, improved from net loss of Rp197 billion in the same period last year.

Polysindo, producer of purified therephthalic acid and polyester fibers, reported net sales revenue of Rp1.758 trillion or about US$175 million in H1 2009, declined 16% from H1 2008. Meanwhile its cost of goods sold declined from Rp2.16 trillion to Rp1.74 trillion, resulting in a loss of Rp15.46 billion against Rp60 billion in H1 2008.

Polysindo, initially controlled by Marimutu Sinivasan, also reported lower operating expenses, which cut its operating loss accordingly.

Polysindo gained Rp747 billion from foreign exchange translation and as a result, the company reported net profit of Rp613 billion. The company is struggling to restructure its debts of over US$1 billion. The company had current liabilities of Rp12.5 trillion or about US$1.25 billion, while its current asset was only Rp1.5 trillion. Still, the company managed to collect more cash at Rp104 billion in June 2009 against Rp48 billion in June 2008.

State-owned PT Perusahaan Pengelola Aset (PPA) is the current majority shareholder of the company. 

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Texmaco, what price?

Feb 20, investors should submit final bid for Texmaco assets (Rp29 trillion or around USD3.3 billion) currently controlled by PT Perusahaan Pengelola Aset (PPA)---successor of IBRA. Three investors are reportedly expressed their interests to acquire the assets. The problem, how much of these assets could be recovered by the state?

Detik.com reported VP Jusuf Kalla visited Texmaco's main site in Purwakarta today. There, he met Texmaco management. Texmaco's facilities are running at a very low rate at 20% of installed capacity. Kalla, unusually, said only few words during the visit. Kalla's visit was no coincidence as he knew for sure the bidding will be conducted next week.
"But before we let someone takeover the company, we have to see first what's the company all about. We clearly need investor who could revive Texmaco," Kalla said as quoted by Detik.com.
Kalla is not the first high level officer to visit the plant site. President Soeharto was there to officially inaugurate some facilities, BJ Habibie promised to revive the company, Wahid even asked everybody not to 'touch' Texmaco for the sake of exports, and Megawati's husband Taufik Kiemas visited the factory many times with the same promises.
As for Marimutu Sinivasan, the former controlling owner, he is currently on the police wanted list. Rumors said last week that the businessman had been caught in India and on his way back home to stand the trial on corruption allegation, but no follow up of the story.
Sinivasan's relatives urged government to restructure Texmaco, and that's probably why Kalla visited the plant site today.
Should PPA proceed with the bidding next week, whoever wins would have access to control 70% of PT Bina Prima Perdana (BPP), a holding company established by IBRA pursuant to debt restructuring of Texmaco. BPP has controlling stakes in some of Texmaco's key assets such as PT Polysindo Eka Perkasa (PTA, chips & staple fiber), PT Texmaco Jaya (garment), etc.
At what price?
Well, the previous bids were range between Rp90 billion to Rp290 billion or less than 1% of recovery or 99% haircut. I imagine the next administration might launch an investigation toward this administration if haircut is still considered a 'corruption' like what this administration has done to some haircuts given by the previous administrations.

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PPA offloads Texmaco loans

After repeated failures to get qualified investors, PT Perusahaan Pengelola Aset (PPA) is betting its luck in divesting almost Rp30 trillion debts of Texmaco Group. It's strange to divest assets when most people are on their way for long holidays. The debts are the single largest batch left after the closure of Indonesia Bank Restructuring Agency (IBRA) two-and-half years ago. Mirzan Mahathir, son of former Malaysia PM Mahathir Mohammad was among the early bidders when IBRA launched the Texmaco divestment few years back. Farallon Capital, the owner of BCA, once submitted few dollars bid. But all of them didn't match government's minimum requirements. Considering the group's assets & huge workforce, it's still worth-watching the bidders!

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Corporate briefs

Bisnis Indonesia reported that polyester producer PT Polysindo Eka Perkasa Tbk (Texmaco Group) secured USD50 million financing from Damiano Investment. Damiano is the biggest shareholder of Polysindo with 82.75%.

Meanwhile, foreign investors control almost 16% shares of PT Bank Mega Tbk. Para Global Investama, owned by Chaerul Tanjung family, remains the largest shareholder with 31%.

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Just outsmart Berkeley Mafia!

A group of economists appeared in a seminar titled 40 Years of Mafia Berkeley vs Alternative Ideas of Indonesia's economic development, yesterday. They're former chief economic minister Rizal Ramli (under Abdurrahman Wahid administration), Kwik Kian Gie (former chief economic minister under Wahid, replaced by Ramli), Ichsanuddin Noorsy, Revrisond Baswir, and Sri Edi Swasono (son-in-law of first Vice President Mohammad Hatta). Guest speaker was Jeffrey Winters (Northwestern University).

It was an unbalanced seminar as none of what they called Mafia Berkeley delivered arguments, no exchange of arguments actually, it's a kind of monologue of ideas, it's like bad idea vs good idea. That was not an academic exercise of thoughts. The speakers believe the alternative ideas they delivered are the only public goods. So that's a seminar with so many personal issues at stakes.
The speakers even failed to explain or acknowledged what they did and didn't while they have power in their hands to drive the economic policies into what they believe the right way and change the course of the nation.
Nor did they explain what's wrong or right during BJ Habibie's strong influence in the economy of the early 1990s. So don't expect them explaining what's right and wrong during the early years of Berkeley Mafia.
How we explain the massive debt settlement of 1998-2001 during which the government's domestic debt jumped to Rp700 trillion (US$80 billion) to bailout corporate debts of the like Texmaco Group's Rp30 trillion, Salim's Rp60 trillion, Sjamsul Nursalim's Rp28 trillion, or Sinar Mas's Rp14 trillion?
It were Soeharto's last year, Habibie, Wahid and Megawati administration's economic team who endorsed the debt settlement through agreements like the Master of Settlement and Acquisition Agreement (MSAA), MRNIA, or Debt Acknowledgement Acts (APU). How we explain the problems at state-owned enterprises like Habibie's aircraft company PT IPTN (now Dirgantara Indonesia), Garuda Indonesia, PLN, Pertamina and so forth?
I believe the Mafia Berkeley had committed some wrongdoings, just like the other mafias of Habibie's, Ginandjar's, Rizal Ramli's or Kwik Kian Gie's.
Look at this. Rizal Ramli and Kwik Kian Gie as the coordinating minister for the economy during Wahid administration had the chance to fix the lousy debt settlements with Salim, Nursalim, or even Sinivasan's Texmaco. But they were hopeless, not because of the Berkeley Mafia, but simply because of the complicated and fluid political situation aftermath of the 1998 reform.
I believe in one thing...when it comes to liberalization, globalization, privatization...they're all political decisions, not just economic models. There are a lot of aspects of the society at play. Simply blaming the mafi is just like you had a headache in the morning and keep blaming the traffic jam on your way to office for your bad day.
What's amazing is the acknowledgement of this alternative group of how powerful the Berkeley Mafia so it could survive almost 40 years and still in the driving seat of the economy even though none of them hold official position in the cabinet. I must say this Mafia Berkeley is so smart to control this big country four decades so far and may be more.
Other mafia groups might have to learn of how Mafia Berkeley keep its power. An old advise, if you really want to beat the members of this mafia, outsmart them all! All you have to do is to convince all the stakeholders of this nation to get their full attention on your alternative ideas. People are smart enough to make decision, they could analyze what's wrong and right with Berkeley Mafia and what's wrong or right with your ideas! Don't get mad, get even!

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Srinivashan to hit Indonesia roads

One of the most interesting results of president Susilo Bambang Yudhoyono’s visit to India is the commitment from the country’s investor to build a motorcycle manufacturing plant in Indonesia.

The anonymous investor would invest US$80 million in Indonesia, the fastest growing motorcycle consumer in the world. The investor would name the motorcycle Srinivashan. Sounds familiar, right?

Well, I guess everybody’s guessing whether the name has something to do with Marimutu Sinivasan, once one of the most powerful businessmen in Indonesia with Indian roots. But, Sinivasan’s diversified group of Texmaco, is in limbo due to huge debt to the state (US$3 billion).

I tried to google the name of Srinivashan, big zero! Then I tried to find out all the motorcycle producers in India. It is TVS Motor Company, formerly known as TVS Suzuki Limited. The Group's principal activity is to manufacture and sell automotive two-wheelers and automotive components. Its Chairman & Managing Director is Venu Srinivasan. That's the name come from.

Data shows that Honda is the largest manufacturer in India with 2.6 million units per year. Honda is also the largest manufacturer in Indonesia.

Last year, total motorcycles sold in Indonesian market almost reached 4 million units and is expected to grow 20% this year to around 5 million units, ranked third in the world after China (12 million units) and India (6 million). With average selling price of US$1,000, we are talking about US$5 billion market.

As gasoline price increasingly expensive amid poor public transportation, motorcycle is the most efficient mode of transportation in Indonesia.

Key players in the industry are trying to keep up the demand with new capacities. Honda, for example, has just opened its new US$100 million manufacturing line in Cikarang, West Java to bring the total capacity to 2.6 million units per year.

The second largest player, Yamaha, operates plants with combined capacity of 2 million units and followed by Suzuki at 1.5 million units per year. Kawasaki is ranked four.

Newcomers in the market are Lippo Group, Bosowa Motor (owned by Aksa Mahmud, brother-in-law of Vice President Jusuf Kalla), and some joint ventures between local and China motorcycle producers. The later produce what the local popularly called Mocin (motorcycle from China) to differentiate with the heavily dominating Japanese brands.

Should Srinivashan hit Indonesian roads, people might call it Moin (Motor India). With US$80 million investment, Srinivashan might perform better than Mocin and bite the market away, little bit from Japan brands.

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