Multistrada investing in rubber supply, capacity expansion
Almost a year ago, PT Multistrada Arah Sarana Tbk announced plans to ensure a reliable supply of raw materials through the acquisition of up to around 30,000 hectares of rubber plantation land. In the end the tyre maker purchased 33,800 hectares in Kalimantan, Indonesia for around Rp3 trillion (£209 million) through its subsidiary PT Multistrada Agro Internasional. During a press conference held in Jakarta on 11 March, company president Pieter Tanuri shared details of this acquisition, stating that this year Multistrada aims to plant up to 1,000 hectares of rubber trees there, a project the firm has budgeted Rp398 billion (£27.7 million) for; 26 per cent of this will come from the proceeds of a recent rights issue. This is expected to be ready for harvest in the next five years.
In addition to securing its own supply of natural rubber, Tanuri said Multistrada Agro will also start construction work on a crumb rubber factory later this year. According to Indonesia Finance Today, this facility will have a 24,000 ton production capacity. Further plans from the Indonesian tyre maker involve boosting output. According to IFT, current production capacity is 30,000 passenger car tyres and 16,000 motorcycle tyres a day; it reports Multistrada intends to increase this to a total of 12.6 – 13 million units per annum in 2013 in order to meet market demand – which is targeted to reach 9.5-10 million units for passenger car tyres, an increase of 47 per cent, and 4.8 million motorcycle tyres, an rise of 45 per cent on this year’s projected sales figure.
At present export markets are said to account for 70 per cent of Multistrada’s sales. The company president shared that next year it also intends to enter new markets, including China and Brazil. “The total world’s demand for tyres this year amounted to US$140 billion,” commented Tanuri. “Our turnover last year was US$300 million to $330 million. In full capacity, the turnover can increase up to $500 million. Thus, the company has only met 0.34 per cent of the needs, and the opportunity to seize this market is huge.”
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