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Kimia Farma to build RI's first pharmaceutical salt plant
Publicly listed pharmaceutical manufacturer PT Kimia Farma (KAEF) plans to build Indonesiaâs first pharmaceutical salt plant later this year in partnership with salt producer PT Garam to meet growing domestic market demand
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Publicly listed pharmaceutical manufacturer PT Kimia Farma (KAEF) plans to build Indonesia's first pharmaceutical salt plant later this year in partnership with salt producer PT Garam to meet growing domestic market demand.
Under a partnership agreement signed by the two companies Tuesday, Kimia will build the plant to produce the salts, while Garam will provide the raw materials.
The plant will be located in Watudakon, Jombang in East Java, and will have an initial production capacity of 3,000 tons per year. The capacity may be upgraded to 6,000 tons per year in the next
two years.
Kimia president director Rusdi Rosman said that the plant's construction would take around six months to complete and that the whole process would require Rp 28 billion (US$2.44 million) in funds.
Kimia will use its own funds to finance the construction. At the moment, it has around Rp 198 billion in cash on hand, according to Rusdi.
He said that several companies had expressed their interest in purchasing the pharmaceutical salt for their own manufacturing processes, which include intravenous fluid, sports drink and other beauty
products.
'The domestic need for pharmaceutical salts amount to around 6,000 tons every year and is fulfilled by imported products, such as from China, Germany, Singapore and Taiwan. When the plant is completed, we will be able to reduce imports by $2.5 million per year,' Rusdi said after the signing ceremony, which was also attended by State-Owned Enterprises Minister Dahlan Iskan.
In the future, according to Rusdi, the plant's capacity will be expanded to include production of salt for consumption as well.
Garam finance and commercial director Yulian Lintang said that Indonesia needed about 320,000 tons of salt for consumption every year. Garam produced 400,000 tons of raw salt annually and was ready to supply the necessary materials for Kimia for its next production of salt for consumption, Yulian said.
'Right now, we have 6,000 hectares of salt fields on Madura Island [East Java] and hope to expand the size to more than 13,000 hectares with new fields in Kupang, East Nusa Tenggara province in 2014,' he said.
Meanwhile, on the business side, Kimia expects to gain around Rp 18 billion from the initial sale of the 3,000 tons of pharmaceutical salts, which can fetch a price of Rp 6,000 per kilogram.
The price will be lower than the current price of imported pharmaceutical salts, which stands at between Rp 9,000 and Rp 15,000 per kilogram. However, despite the lower price, Rusdi said that the company was upbeat about the business prospect, citing the relatively high profit margin.
'Hopefully salt sales will contribute significantly to our revenues in the next few years,' he said.
For 2014, Kimia aims to post 19.6 percent growth to Rp 5.2 trillion in revenues and a 9.1 percent rise in its bottom line to Rp 234 billion. In the first quarter, the company saw its revenues surge 17 percent year-on-year to Rp 935.4 billion.
Kimia's shares ended at Rp 880 on the Indonesia Stock Exchange (IDX) on Tuesday, down 0.6 percent from a day before.
