PT Gajah Tunggal
The Gajah Tunggal group is said to be planning to list its Chinese GT Tyre. The group plans to list GT Tyre in Hong Kong. The listing, to take place no later than June is aimed at raising at least 400 million US dollars. GT Tyre is pushing ahead with the IPO despite the market conditions, and has engaged Credit Suisse First Boston to advise it.
Tim Chesney, the Managing Director of Romney International Limited, the exclusive distributors of GT Radial brand tyres in the UK and Ireland, would like to state unequivocally that the recent story about PT Gajah Tunggal Indonesia (GT) being acquired by Michelin, is untrue. This story first appeared earlier this month in the US based ‘Modern Tire Dealer’ magazine. It was subsequently reported on the Internet sites of other trade press. Tim Chesney says that this account is without foundation and it should be disregarded. The extent of the inaccuracy of the story is shown in the supposed facts given by Modern Tire Dealer magazine. They quoted Gajah Tunggal’s daily radial tyre production capacity as being just 12,000 pieces when the correct figure is around 25,000 pieces, says Tim Chesney. He goes on to say that the reality is Gajah Tunggal has embarked on a major and exciting expansion programme. This will see the introduction of many new sizes, series and tread patterns, including the all new GT Champiro BAX asymmetric series and the Champiro BXT.
According to Modern Tire Dealer, quoting Indonesian Newspapers, Michelin is negotiating with Singapore-based Garibaldi Venture Fund Ltd. to take over the tyre company. Garibaldi recently bought the 78 per cent share in Gajah Tunggal released by the Indonesian Bank Restructuring Agency. Gajah Tunggal is expecting sales figures for 2003 to increase by 17 per cent, with a target of a 20 per cent increase for 2004. The company’s outstanding debts totalled 550 million US dollars in 2003, and are planned to be repaid over the next six years. Gajah Tunggal is by far the largest Indonesian tyre producer with two factories in Indonesia.
‘Europe was top dog in the 1800’s, America was the great power of the last century and the next 100 years will belong to Asia’ (The Times).
A recent report by Goldman Sachs forecast that China will overtake America to become the world’s largest economy by 2040. As China’s economy grows, it will act as a magnet for raw materials and goods from surrounding Asian countries, giving a boost to the whole region. It remains one of the most exciting growth areas in Asia, with its potentially vast consumer markets and its low manufacturing cost base.
Singapore is a recognised gateway to Asia, attracting leading buyers from the whole of South East Asia and Australasia as well as the key decision makers from China and other Asian markets, providing a comprehensive mix of buyers and sellers from across the entire region.
The Asian region offers the tyre industry major opportunities for those companies committed to its long-term future. With Asian tyre consumption accounting for over 35 per cent of world demand combined with the enormous potential of tyre markets such as China and India where companies are making a name for themselves in the global tyre market, the Asian region offers investment opportunities to manufacturers and suppliers alike.
Tyrexpo Asia 2004 will be the 4th in the series of Tyrexpo Asia events that focuses on the fastest areas of growth in the tyre market and it is the only established tyre event of its kind in Asia. The 2004 event will be the largest yet and exceeds previous Tyrexpo Asia shows by over 25 per cent. The 2001 exhibition attracted visitors and exhibitors from over 63 different countries making it a truly international event. The show will once again be sponsored by Tyres & Accessories and Neue Reifenzeitung in addition to being strongly supported by specialist trade press and sponsors IE Singapore (International Enterprise Singapore). Tyrexpo Asia 2004 takes place from the 17 to 19 February at the Singapore Expo Centre and provides the perfect forum for the tyre industry to be stimulated by new ideas, products and market opportunities which reflect the importance of globalization within the region. The show focuses on every aspect of the tyre industry from tyres, retreads, tyre changing & repair equipment, to fast fit, garage equipment and parts & accessories. Amongst exhibitors are:
A-Z Formen und Maschinenbau, Big Wheel, Clipsal Airtec Pty Ltd, Collman, Columbus McKinnon, Del-Nat, Elgitread, DuroTyre, Federal Corporation, Fujikoki, Global Traco, Gummiwerk Kraiburg, Hangzhou Zhongce, Hock Lee, Italmatic, Jantsa, Kenda, Konimpex, Leka-Reifengrosshandel, Liew Koon, Mace Engineering, Midas, Mindtrac, Mohawk International, Myers Tire Supply International, Newera, Nexen Corporation, Pirelli Speciality Products, Pt Gajah Tunggal, Pt Mega Tires, Rema Tip Top, Samik Corporation, Sicam Tyre Equipment, Stamford, Tech International, Treadway Exports, Tyre Trading International, Value Tyres, Viewtum, Vipal and many more.
There are reports in the Asian press that the Indonesian Bank Restructuring Agency (IBRA) has sold tyre manufacturer Gajah Tunggal and Gajah Tunggal Petrochem Industries for the equivalent of US$214 million. The purchaser is Singapore-based Garibaldi Venture Fund; one of five bidders. IBRA took over Gajah Tunggal as a debt settlement by Indonesian tycoon Sjamsul Nursalim, after the financial crisis of the late 90s.
Gajah Tunggal was established in 1951 to produce bicycle tyres and inner tubes. 20 years later production of motorcycle tyres began, followed in 1981 by car tyre production. Gajah Tunggal produced its first car and light truck radial tyres in 1989, and was listed on the Jakarta Stock Exchange in 1990. In the past ten years Gajah Tunggal has grown by acquisition of suppliers such as GT Petrochem, a producer of tyre cord and nylon filament, Langgeng Bajapratma, a wire manufacturer, and Meshindo Alloy Wheel Corporation. These developments linked to constant improvements in quality control, gaining ISO 9002 quality certification in 1995, along with TÜV Certification from Germany, helped create Gajah Tunggal as one of the leading tyre manufacturers in South East Asia. The Gajah Tunggal radial tyre plant gained ISO 9001 in 1997 and has also received quality certification from several countries i.e. E-Mark from the European Community, TÜV CERT from Germany, quality testing certification from the U.S. Department of Transportation, the BPS from the Philippines and a similar certification from the Government of Brazil. Currently Gajah Tunggal sources 36% of its raw materials from its subsidiary companies. Further vertical integration and synergy of its group activities to develop higher technology and higher value-added products, are a key policy in future development of the business operation. The company has entered into an off-take agreement with Pirelli to manufacture tyres for North America and Europe.
Reports in the Straits Times claim that a 20 day detention order has been issued against Gajah Tunggal President Sjamsul Nursalim on money-swindling charges. There has been speculation that the move, which is one of a number against businessmen, might be politically motivated. A separate report asks whether the group will have to sell off assets to repay debts.
The two managing directors of Reifen Gundlach, Gebhard and Joachim Jansen, once again invited a number of important guests to visit the Gajah Tunggal factory in Jakarta. This journey was to make it clear to everybody that, with the German wholesaler on one the side and the Indonesian tyre manufacturer on the other, two promising partners have been found to make progress in the hotly-disputed home market. The official reason for visiting the company was the introduction of the latest uhp tyres GT Radial Champiro HPZ 40/45 and the Maxmiler CX, which could also be tested on the Sentul racing track. For the management it was important to keep in touch with the world’s leading tyre manufacturers. Referring to marketing, GT was already cooperating with the German wholesaler Reifen Gundlach before the Japanese world trading group Itochu acquired a majority holding in the trading enterprise from Raubach, in September 1998, which is said to be have since grown to 75 percent. Reifen Gundlach’s market acceptance has grown so far, because being part of Itochu has been very important, not least, for the cooperation with Michelin. This is a strategic partnership selected by Reifen Gundlach, in order to bring those customers to the tyre manufacturer that it finds difficult to reach, and to help Reifen Gundlach itself to successfully expand its tyre range.
In February Reifen Gundlach GmbH organised the “GT-Radial Tour 2000”, a trip to GT-Radial’s country of origin. The name is a brand of radial tyres (car summer/winter, van, light truck, off-road) produced by the Indonesian tyre manufacturer Gajah Tunggal. Under the brand name “Gajah Tunggal” the company also produces cross-ply tyres for trucks and buses as well as industrial tyres and motorcycle tyres under brand names “Nitto Tyre” and “IRC”. In Germany GT-Radial tyres have been sold exclusively by wholesaler Reifen Gundlach (part of the Japanese Itochu group) for about six years. During the event the tyre manufacturer presented (among others) two new tyres, “Preciro” (available from May, eleven sizes, series 60 and 65) and “Classiro” (QIII/2000, seven sizes, series 70). The current range of products has also been enlarged by new sizes/versions and the Indonesians also become increasingly interested in the small transporter and van segment. When Gajah Tunggal speaks of the intention to enter the radial truck tyre business, the company is probably taking the long view. Further volume growth in the winter car tyre segment is targeted, too. Especially in Germany, one of the most important markets for the company anyway. The export business (80 to 90 p.c.) in GT-Radial tyres is (more than) vital for the manufacturer, since sales figures in the non-radial tyre segment have fallen sharply due to the Asian crisis.
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