JAKARTA: Paper producers PT Pabrik Kertas Tjiwi Kimia Tbk and PT Indah Kiat Pulp and Paper Tbk, of the Sinar Mas Group, will spend US$250 million (IDR2.25 trillion) this year to add equipment and boost capacity.Tjiwi Kimia will build 13 units of paper making machinery worth US$100 million, Director of Finance Arman Sutedja told Bisnis. The fund was from financial institutions loan and internal cash.The new machinery would add another capacity of 100,000 tons. We hope the construction to be finished this year, he said over the week end.Indah Kiats Director of Finance Kurniawan Yuwono stated the company plans to build 16 units of paper making machinery worth US$100 million-US$150 million in Perawang, Riau.This will increase production capacity by 500,000 per year. The construction is expected to finish in the third and fourth quarter of 2012, Kurniawan said.In addition to the construction, Indah Kiat will also spend US$100 million-US$150 million capital expenditure this year for machinery maintenance.The fund will be taken from internal cash but the possibility for external funding is open, he added.To date, Tjiwi Kimia is able to produce 1.13 million tons of paper per year, consisting of stationary and packaging paper.Indah Kiat produces 2.31 million ton pulp per year, 1.07 million ton paper per year and 1.5 million ton packing paper per year.Growth targetFor 2011, both paper producers target to achieve net sales growth of between 5%-10%.Tjiwi kimia targets to reach US$1.41 billion-US$1.47 billion sales while Indah Kiat aims to achieve US$2.63 billion-US$2.76 billion this year. Both companies rely on export sales to Asia.Tjiwi Kimia booked US$1.34 billion net sales last year or rising 14% from US$1.17 billion in 2009, while Indah Kiat booked US$2.51 billion sales or increasing 41.5% than US$1.77 billion in 2009.In the first 3 months of 2011, Indah Kiat realized US$644.09 million net sales or 13.4% higher than US$567.73 million on the same period last year, however it booked US$11.79 million net loss due to foreign exchange losses. (T05/NOM)
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