Sritex plans to expand its export market to five more countries this year

Sri Rejeki Isman, known as Sritex a leading vertically integrated textile and garment company in a bid to boost its total revenue by a minimum 10 percent this year is planning to expand its export market to at least five more countries.

Kosovo was the company’s newest overseas market, the country in the first quarter ordering military uniforms, which contributed 20 percent of Sritex’s total sales last year. Next is Cambodia, which is expected to buy 100,000 military uniforms, said President director Iwan Setiawan Lukminto.

The company is also in negotiations to export garments to Australia and several African countries.

Sritex, which is also engaged in midstream segments like spinning, weaving, finishing and garment production, currently exports 48 percent of its products to around 30 countries in Asia, including Papua New Guinea and Timor Leste, the Middle East, including the UAE and Qatar, Europe, including Germany, Sweden, Norway and the Netherlands, the US and Africa.

Following the expansion plan, the company targets a 7 to 10 percent increase in sales to between US$594 and $611 million and an 8 to 15 percent increase in net profits to between $49 million and $52 million this year.

Last year, Sritex booked $555 million in total sales, up 23 percent from a year earlier, with profits jumping 50 percent to $45 million.

Garment-finishing products are the most lucrative segments in their production, so they will boost exports of uniforms and fashion garments, Iwan said.

Sritex finance director Allan Moran Severino said that the country’s economic slowdown had not greatly affected the company’s performance, revealing that it had booked a 7 percent increase in sales to $166 million and a 12 percent increase in profits to $14.8 million during the January-March period. They use dollar-denominated transactions and 40 percent local raw materials.

In domestic sales, the company only sold uniforms to institutional buyers such as the country’s largest taxi operator Blue Bird Group, state-owned postal firm Pos Indonesia, cigarette producer Djarum and state institutions including the Indonesian Military (TNI) and National Police (Polri). The rupiah’s depreciation mostly hit manufacturers selling to retailers.

Meanwhile, the company’s overseas buyers include Japanese trading company Marubeni Corporations and Belgian textile trader Chemitex for spinning, as well as India’s yarn and fibers manufacturer Filatex Co and Turkish garment producer Sunteks for weaving.

Customers in the finishing segment include Chinese textile company Shengrun Textile, while fashion customers include retailers like Swedish-based H&M, US-based Macy’s and Japan-based Ito Yokado Fashion.

This year, Sritex has spent $104 million in capital expenditure (capex), partly on a factory in Sukoharjo, Central Java, to boost the production capacity of its finishing segment to 20 million yards per month, from a current 10 million yards per month. The rest of the capex will buy several new operational machines.

For the next year’s capex, Sritex has allocated $86 million which expected to be sourced from internal cash, to enter the retail business, expanding to downstream textile operations by acquiring local or global brands.

They prefer to buy existing brands. Starting their own brands would be more difficult as they would need designers, outlets. They’d rather buy brands that already have all that. As the company was still searching for suitable brands they plan to launch it next year.

Next year, Sritex is optimistic it will reach its targets of a 21 percent increase in sales and a 31 percent rise in profits, and claims to be the archipelago’s biggest textiles player.

In the global market, Sritex competes with India’s Vardhman Textiles Ltd. and Arvind Limited, China’s Shenzhou International Group and Texhong Textile Group Ltd. and Taiwan’s Makalot Industrial Co. Ltd.

According to the company’s data, Sritex is the top manufacturer company in Indonesia because it had the highest revenues during the first quarter this year, defeating its competitors PT Ever Shine Tex Tbk with $10.2 million in sales, PT UNITEX Tbk with $4.5 million, PT Apac Citra Cantertex Tbk with $42.3 million and PT Pan Brothers Tbk with $75.76 million.

Sritex has 9 spinning plants, 3 weaving plants, 3 dyeing/printing plants and 7 garment plants, occupying an area of 50 ha in Sukoharjo, Solo, Central Java, Indonesia and employing approximately 16,000 workforce.