They Reap Hockey from Business Rice

By : Aldo Bella Putra | Monday, July 24 2017 - 14:15 IWST

5166 - Jakarta - Rice consumption per capita reaches 150 kilograms per person per year in Indonesia. So do not be surprised if the rice players can double their coffers every year.

Miran's lunch menu was quite luxurious at the time. A friend who successfully migrated abroad came during the Lebaran season some time ago, and then took Miran to an American restaurant. In front of him presented various types of steaks ranging from beef steaks, chicken to seafood. Almost all the menu was eaten. But it has not made the satiety perfect because the restaurant does not provide for a spoonful of rice.

For Miran, eating without rice does not seem to eat. Do not be surprised when returning from the restaurant, Miran repeated lunch at home, of course this time with rice. Then Miran felt comfortable. Miran's story is a lifestyle portrait of "Indigenous Indonesians" where rice should be available three times a day at mealtimes.

Hence, it is not surprising if there is data that says that the population of Indonesia is one of the worlds highest rice eaters. Indonesia's per capita consumption of rice is recorded at 150 kilograms per person per year. Only Myanmar, Vietnam and Bangladesh have higher per capita consumption of rice than Indonesia.

We are listed as the third largest country producing the world's largest rice, about 79,000,000 tons per year but with a high consumption level especially Indonesia has a population of more than 225 million people, making Indonesia still need to import rice almost every year (although usually Just to keep the rice reserve level).

The picture shows how tempting the rice business is. Therefore, it is only natural that the rice players are able to multiply their coffers every year. With the record able to pump supply and production.

The top two rice players who have been enjoying rice business are PT Buyung Poetra Sembada Tbk (BPS). Sukarto Bujung, President Director of BPS, said that the company's sales reached Rp1.15 trillion in 2016. The revenue grew 74.3% compared to the achievement in 2015 of Rp658 billion. The net profit earned in the last two years amounted to Rp53 billion in 2015 and Rp44 billion in 2016.

BPS is not satisfied with the results, to boost future performance inevitably BPS must expand. Steps to the floor of the stock by selling some of its shares to the public (initial public offering / IPO) were done. In the large corporate action, BPS earned fresh funds amounting to Rp210 billion, which will be allocated for working capital. "Our plan of funds obtained from the IPO will be used as working capital to finance operational activities where since last year our factory has started the production process from rice so that it can increase the business margin," he explained.

The new company expansion will be rolled out in 2018. "Next year we will build a new factory, investment value of about Rp100 billion from internal cash," he added. After the new plant operates, BPS production capacity increases to 259.2 thousand tons of rice per year. So the total rice production generated by Buyung Poetra Sembada is 561,6 thousand tons per year.

Sukarto Bujung, said that the company currently has two factories that have been operating in Cipinang and Subang. The first factory located at Cipinang Parent Market, Jakarta, is able to produce 43.2 thousand tons of rice annually. While the rice factory in Subang, West Java, produces 259.2 thousand tons of rice per year.

As known BPS produces various kinds of rice with brands that have been widely known in the community such as Topikoki, Limas House, Belida, BPS, and a new brand that was launched last year, the Hockey. In addition BPS also produces private brand rice for companies based on agreed cooperation. Private label products that have been produced, among others, Hypermart, Lotte, Giant, Hero, Value Plus, Yogya, and others.

Return to IPO, after enjoying public fund for working capital. Ready also spur performance. The company is targeting sales growth and net profit this year by 30%. This means that when referring to the 2016 performance, then at the end of 2017 BPS will pocket sales of Rp1, 43 trillion and net profit of Rp57, 2 billion.

As for the first quarter of 2017, Sukarto said the company booked sales of Rp347, 6 billion. According to him, the target is still on the track against their annual target that is pursuing 30% growth. "This growth is in the absence of additional new plant capacity," he said.

The optimism is similar to other rice producers, PT Tiga Pilar Sejahtera Food Tbk (TPSF). This year, the company which has also been floating on the stock exchange hopes to pocket the revenue of Rp7, 6 trillion, growing 16.9% compared to last year's income Rp6, 5 trillion.

To pursue this ambition, this year TPSF allocates capital expenditure budget of Rp560 billion. The budget is planned to be divided into two, namely for the expansion of food business amounting to Rp465 billion and investment business rice Rp95 billion. To know in addition to the business of rice with the brand Ayam Jago and Maknyuss, the company is known as a manufacturer of snacks. The main brand is Taro.

For the rice business, TPSF has two rice factories in Purwakarta, West Java and in Sragen, Central Java. Total production capacity of 480,000 tons per year. Last year, TPSF actually plans to add two rice factories in South Sulawesi, with a production capacity of 240 thousand tons per year. The budget reached Rp300 billion. But the plan has not been realized until now. When looking at TPSF's capital expenditure budget of only Rp95 billion for the rice division, it seems that the construction of the plant will not be done until the end of 2017.

Corporate Secretary of Tiga Pilar Sejahtera Food Desilina said, for the continuation of the new rice factory development, it is still paying attention to the performance of rice increase in packaging. Until now, it has owned 2,200 business partners who handle rice labeled Maknyuss.

Despite the increase in rice production capacity, in terms of performance targets TPSF also has a big ambition to pursue sales targets Rp7, 61 trillion, up 10.61%. From sales in 2016 of the target, the rice division is expected to contribute Rp4.53 trillion.

Unfortunately, TPSF is now tripping over the problem. Its subsidiary PT Indo Beras Unggul has to deal with the law following the alleged fraud by selling subsidized rice medium for premium rice. This case makes investor confidence in the stock market declined and made the stock price TPSF. Will the case make the targets set by the Company to be achieved? It is difficult to guarantee.

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