Ceramic tile producer PT Arwana Citramulia has earmarked Rp 1.5 trillion (US$128.95 million) to invest in its multi-year expansion plan in Mojokerto, East Java, supporting its four plants in Java and Sumatra.

Arwana, a publicly listed company, would in the second half of this year begin the construction of its new plant in Mojosari, Mojokerto, which would cost around Rp 300 billion in its initial phase, president director Tandean Rustandy said on Wednesday.

'€œWe plan to set up three production facilities there and we will focus on the production of wall tiles,'€ he said after signing an agreement with Sacmi Imola SC in which Arwana purchased a ceramic machine from the Italian firm.

The Mojokerto plant, which is to be operated by Arwana'€™s subsidiary, PT Sinar Karya Duta Abadi, will be able to produce 8 million square meters (sq m) of ceramics each year by 2016 when it commences commercial operations.

The development of the new manufacturing plant will help Arwana boost its production capacity to 87 million sq m per year in the next five years, from 49.7 million sq m per year at present.

The output increase will cope with fast-growing demand for ceramics in the country, particularly in the low- and middle-income markets where the firm is the market leader.

Arwana runs four production facilities in Tangerang and Serang, Banten; Gresik, East Java and Palembang, South Sumatra. Its products are sold in 18,000 outlets nationwide.

Chief financial officer Rudy Sujanto said the firm would fully fund its expansion plan in Mojokerto via internal cash.

Arwana saw its net profit rise by 13.9 percent to Rp 77.12 billion in the first quarter of this year from last year, while its net sales surged by 17.26 percent to Rp 408.7 billion, driven by increases of sales volume and price by 8 and 9 percent, respectively.

Along with the construction of its Mojokerto plant, Arwana would also continue the development of its newly built facility in Palembang, Rudy said.

The firm aimed to add 6 million sq m by 2016 to its current capacity of 8 million sq m, and a final upgrade would increase its capacity to 22 million sq m by 2020, he added.

'€œWe are upbeat on the prospects in our domestic market. The take-home pay of our buyers has increased by between 20 and 50 percent each year and we are sure that their purchasing power will annually strengthen,'€ Rudy said.

Indonesia'€™s ceramics sales are estimated to increase by 20 percent to Rp 36 trillion this year, according to the Indonesian Ceramic Tile Producers Association (Asaki).

Arwana now holds around a 16 percent share in the country'€™s ceramics market, while maintaining a 24 percent share in the middle- and low-class segment.

Last year, the utilized production capacity of the national ceramics industry generated by 35 companies and 80 plants settled at 1.32 million sq m per day, nearing its full capacity of 1.4 million sq m per day. More than 85 percent of the total output is sold in the domestic market.

Popular

HSBC’s The Redefining Treasury Asia Pacific reveals shift toward real-time treasury

Bali governor seeks to pull the plug on Airbnb

Plan for new Jakarta-Bandung fast train raises questions over Whoosh