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outheast Asia'€™s largest textile maker, PT Sri Rejeki Isman (SRIL), is planning to spend Rp 723.06 billion (US$63.9 million) of its funds to buy an affiliated company and so boost its production capacity.

In a statement published on Wednesday, the firm '€” popularly known as '€œSritex'€ '€” said it was looking to acquire 99.9 percent of shares in yarn company PT Sinar Pantja Djaja. Sinar Pantja is a subsidiary of PT Kapas Agung Abadi, a holding company controlled by the Lukminto family, who also owns Sritex.

According to Sritex'€™s corporate secretary, Welly Salam, the firm planned to use funds generated from its initial public offering (IPO) to finance the acquisition, while expecting to secure shareholders'€™ approval during an extraordinary shareholders'€™ meeting on Nov. 15.

'€œWe are opting for the acquisition because it would be more costly for us to commit to completely new investments with high volatility with the current exchange rate,'€ Welly said when contacted via telephone.

He said Sritex would gradually increase Sinar Pantja'€™s production capacity utilization rate, which now stands at 60 percent, to 80 percent by 2014.

Sritex is expected to operate a total of 530,000 spindles and produce up to 583,000 bales of yarn per year after the takeover. It currently has 320,000 spindles, with production capacity of 352,000 bales of yarn.

The firm operates nine spinning factories, three weaving factories, three finishing facilities and six garment plants in Sukoharjo, Central Java. Its products range from military uniforms, which are ordered by more than 30 countries, to fashion apparel for foreign brands.

Sritex data shows that more than 65 percent of its revenue comes from overseas sales, which are dominated by Asian buyers, followed by those from Europe, America and Africa.

Supported by increased production capacity, the firm aims to book higher revenue and net profits than its previous targets set in May. It previously predicted that its revenue and net profits would touch Rp 5.1 trillion and Rp 325 billion, respectively.

'€œBut now we expect to see an extra 15.7 percent in revenues and an extra 12.6 percent in net profits,'€ Welly said.

With the additions, it is estimated that the firm'€™s top line will grow by 44.1 percent to Rp 5.91 trillion, with its bottom line rising by more than half to Rp 353 billion this year compared with last year.

It also expects to make at least Rp 6.2 trillion in revenue in 2014.

According to Welly, the firm'€™s future target would also be supported by its other expansion projects, including the construction of several factories.

The other projects will also be financed with Sritex'€™s IPO funds.

Sritex collected Rp 1.34 trillion from its June IPO and set aside Rp 1.17 trillion of the funds for expansion.

Following the announcement, Sritex'€™s shares closed at Rp 285 on Wednesday, up 3.6 percent from Oct. 11. The Indonesia Stock Exchange (IDX) was closed on Monday and Tuesday due to Idul Adha, the Islamic Day of Sacrifice.