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Waskita injects capital for precast unit expansion
State-run construction firm Waskita Karya said Tuesday that it had allocated nearly Rp 600 billion (US$49
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tate-run construction firm Waskita Karya said Tuesday that it had allocated nearly Rp 600 billion (US$49.27 million) for its concrete subsidiary, Waskita Beton Precast (WBP)'s, initial capital, most of which will be used to finance the newly spun-off firm's capacity expansion.
Waskita Karya announced in a statement that the publicly listed builder had disbursed Rp 592.57 billion for its precast concrete subsidiary, or equal to 99.99 percent of WBP's paid-up capital or 592,570 shares. The transaction was equivalent to 23.68 percent of Waskita Karya's equity as of Oct. 31, the statement said.
Out of the total amount, the statement reads, Rp 353.84 billion will be in cash, while the remainder will be in the form of assets, which include building and machinery.
WBP finance director Haris Gunawan said that the cash given by its holding company would mostly be used to finance the precast company's ongoing construction of its two new facilities.
'We are currently constructing two new plants in Penajam [East Kalimantan] and in Karawang [West Java]. Total investment for the two new plants will be around Rp 250 billion,' he told The Jakarta Post over the phone, adding that the remainder of the capital would be used for the company's working capital.
Haris said that new facilities would bring in an additional 600,000 to 700,000 tons to WBP's current capacity of 800,000 tons.
'We started building the two new plants this month and it will take around four months to complete. We hope to commercially operate the plant in the second quarter of next year,' he added.
The Penajam facility will be designed, among others, to supply Waskita Karya's Penajam-Balikpapan sea toll-road project.
The toll road ' worth Rp 5 trillion in total investment ' is slated to start construction in November, with completion scheduled for 2016.
Waskita Karya spun off its precast concrete subsidiary on Oct. 7, following massive expansion plans to answer growing demand in the country's precast market amid a number of infrastructure projects nationwide.
Waskita Karya president director Muhammad Choliq previously said that the precast concrete unit was also gearing up to float its shares to the public and to be listed on the Indonesia Stock Exchange (IDX) by 2016, to source more funds in support of expansion.
With Waskita Beton's plan to go public, Waskita Karya will follow in the footsteps of fellow state-run construction firm Wijaya Karya (Wika), whose precast concrete subsidiary, Wika Beton, made its stock-market debut in April.
Choliq cited Waskita Karya's Bekasi-Cawang-Kampung Melayu toll road project, which locals call Becakayu, as an example of rising material needs. The project would use 100 percent precast concrete from WBP for all of its materials.
The Becakayu toll road will connect Bekasi in West Java with Cawang and Kampung Melayu, both in East Jakarta, with total investment expected to hit Rp 5.4 trillion. Construction of the toll road's first section, which will be around 11 kilometers, was launched late October and is scheduled to conclude in 2016, the success of which Choliq said would determine WBP's initial public offering plan.
Besides spinning off its precast concrete unit, Waskita Karya previously established a toll road subsidiary, Waskita Toll Road, in an attempt to diversify its business amid dwindling construction business.
'JP/Anggi M. Lubis
