PT. Japfa Comfeed, TBK continues to expand.
PT. Japfa Comfeed, Tbk, which operates business in animal feed industry, poultry farm and shrimp farms, has good prospects with the potential market in this predominantly Muslim country. The business is heavily dependent on imports for basic materials. Therefore, only financially powerful investors have the chance of operating in the business integrated from upstream to downstream sectors such as Japfa, which has enjoyed growth with good prospects.
The key to success in this industry is integration of business in the basic material procurement, feed production, DOC production, chicken farms, chicken slaughterhouses and distribution.
PT. Japfa Comfeed is among the big players in integrated business of animal feed industry, poultry farm and aquaculture industry. This company issued a bond of Rp 500 billion in 2007 to finance business expansion. It also succeeded in restructuring its debts with capital injection by its shareholders to its subsidiaries.
Business map of PT. Japfa Comfeed, Tbk
PT. Jafpa Comfeed was established in 1971 as a 50:50 joint venture between PT. Perusahaan Dagang & Industri Ometraco and International Graanhandel Thegra NV from the Netherlands. Japfa started business by producing copra pellets.
In 1989, this company was listed on the Surabaya Stock Exchange and Jakarta Stock Exchange and in 1990 it launched rights issue to strengthen its capital to start business in animal feed industry.
The company has taken major steps in its bid for expansion with acquisition of a number of companies such as PT Ometraco Satwafeed (animal feed producer), PT Indopell Raya (pellet producer) and PT. Suri Tani Pemuka (shrimp feed producer).
In 1992, Japfa acquired two other companies--PT. Multibreeder Adirama Indonesia (chicken breeding) and PT. Ciomas Adisatwa (poultry processing industry) and a business unit of shrimp pond and cold storage from PT.Suri Tani Pemuka.
Currently Japfa has expanded into a company operating integrated industries covering animal feed, poultry and shrimp farm sectors and processing industry of poultry farm products.
Poultry Division on
Poultry division on is the largest contributor to the income of Japfa, accounting for 83% to its total sales. This division on is in charge of animal feed industry, production of day old chicken (DOC), and chicken processing industry. Corn accounts for 50% of the basic materials that make up animal feed, soybean meal fishmeal, meat bone meal, etc. account for the rest.
The animal feed production capacity of PT. Japfa Comfeed, Tbk is 1.5 million tons a year or 16.9 % of the country's total capacity of 11.3 million tons.
Meanwhile, 10 % of its production of animal feed is supplied to its farms and he rest is sold to open market.
The poultry division on is also in charge of poultry breeding under its subsidiary PT. Multibreeder Adirama Indonesia Tbk, which was established in 1985 and listed on the Jakarta Stock Exchange in 1994.
PT. Multibreeder Adirama Indonesia, Tbk has a number of facilities to breed DOCs both broilers and egg layers located in various areas in the country. It has a 20% share of DOC market in the country. Most of its DOCs imported form suppliers such as Aviagen and Lohman Tierzucht are sold to local poultry farms in addition to final stock DOCs, its also produces parent stock including farm grandparent stock and broiler and layer parent stock.
Aquaculture Division on
This division on is under PT. Suri Tani Pemuka, which is wholly owned by PT. Japfa Comfeed, Tbk. Its aquaculture business is an integrated business including shrimp feed, shrimp breeding farms, shrimp pond and shrimp processing industries. The upstream sector of the business is shrimp and fish feed manufacture. Its production of shrimp and fish feed averages 50,000 tons including 80% in fish feed and 20% in shrimp feed.
PT. Suri Tani Pemuka also produces shrimp fry. The company has breeding facility for multi species in North Bali with a breeding capacity of more than 200 million shrimp fry a year.
The fry are then raised in its ponds, which total 1,400 hectares including 400 hectares in East Java and 1,000 hectares in South Kalimantan.
Shrimps for its processing units are supplied from the ponds to produce shrimp products such as ebi sushi, hau kau, and shrimp soup and ebi chakin. Most of the products are for exports such as to Japan, the United States, Canada, and European countries.
On the domestic market its shrimp product is known with the brand of "So Good". PT. Suri Tani Pemuka's production from downstream business is the largest contributor to the income of the division on.
Consumer business division on
This division on was set up in 1996 as a strategic business unit of PT. Japfa Comfeed, Tbk. toward expansion to food business to increase the value of its products. The products of this division on include meat, candy, beverages, processed meat and milk products.
PT. Japfa Comfeed, Tbk has even expanded its food business from products of chicken meat and shrimp to biscuit and candies. Its brand for biscuits, which are imported from abroad is of "Hollanda".
The brand for its product is "Miami", and the brands for its beverages are "Fresh" and "Orson". Japfa has established distribution system for its shrimp product of "So Good" and its milk products of "Greenfields" and "Yahuii". The division on has seven factories to produce hose products.
International Division on
PT. Japfa Comfeed, Tbk has also expanded integrated poultry industry in various countries such as in Myanmar, Singapore, India, Vietnam, and Sri Lanka.
Strategic business Division on
This division on was established to strengthen its livestock business by improving quality and competitiveness. This division on has slaughterhouses in Tangerang, Lampung and Surabaya with a capacity of 6,000 chickens per hour.
Chickens processed in the slaughterhouses come from poultry farms of the company or other chicken farms. Around 70% of the production of the slaughterhouses is supplied to fast food restaurants and supermarket.
Japfa also has woven bag factories with an annual production capacity of 24 million pieces. Around 20% of the production is exported and the rest for own use.
Japfa has established a trade division. In addition to earning profit, the division serves mainly to guarantee supply of basic materials for its production facilities in the country.
In 2007, PT PT. Japfa Comfeed, Tbk Indonesia Tbk issued bond valued at Rp 500 billion to raise fund to finance business expansion. The bond is for 5 years with basic materials and finished products as collateral. Part or 20% of the bond fund was used to refinance the construction of animal feed factories in Padang and North Sumatra and Bati Bati in South Kalimantan with a total capacity to produce 360,000 ton per year and to buy a corn drying unit in Grobogan, Central Java; 50% was used to refinance a loan debt of Rp 250 billion to BRI and 30% was used to strengthen its working capital.
Its net sales in 2006 rose 19.87% to Rp 6.4 trillion from Rp 5.34 trillion in the previous year. Poultry business accounted for 77.3% of the sale value.
In the first three quarters of 2007, its net sales were valued at Rp 5.64 trillion or up 21% from Rp 4.66 trillion in the same period in 2006. Its net profit, however, declined in the first nine months of 2007 on increases in cost of goods sold, operating cost, etc.
Expansion plan of PT. Japfa Comfeed, Tbk was supported by its shareholders which injected capital amounting to US$ 55 million to its subsidiary PT. Multibreeder Adirama Indonesia, Tbk by the end of 2007.
Around US$ 16.8 million of the fund were used to acquire assets and strengthen working capital and the rest was used to repay debts maturing in December 2011.
In 2002, the company succeeded in restructuring a debt of US$ 60 million allowing it to settle the payment of US$ 36 million of the principal with 37 installments every three months.
A company official said PT. Multibreeder Adirama Indonesia, Tbk plans to increase its production capacity for DOCs in 2008 by 15%-20% from 360 million in 2007 for which it will increase the number of its breeding places by three to five units.
Table--1 Business map of PT. Japfa Comfeed, Tbk. Poultry Strategic sector Aquaculture International Business Manufacture Manufacture of Myanmar Meat of poultry shrimp feed processing feed DOC Shrimp breeding Singapore Woven sacks production Commercial Shrimp ponds India Basic material farm procurement Slaughterhouse Shrimp Vietnam Consumer processing Branding Aquaculture Sri Lanka Distribution Research and Development Source: PT. Japfa Comfeed, Tbk; Data Consult Table--2 Production facilities of PT. Japfa Comfeed, Tbk Division Type of facility Total Poultry Animal Feedmills 6 Poultry Grandparent Farm 3 and Hatchery Parent stock and 22 Hatchery Hatchery 7 Poultry 2 Processing Commercial 6 Broiler Farm Aquaculture Shrimp and Fish 3 Mill Cold Storage 2 Shrimp Pond 8 Shrimp Hatchery 2 Corn Drier 9 Edible Oil and 2 Palletizing Factory Woven Plastic 1 Bag Factory Experiment Farm 1 & Training Division Type of facility Locations Poultry Animal Feedmills Sidoarjo (E. Java), Sragen (C. Java), Cirebon (W. Java) Tangerang (Banten), Bandar Lampung (S. Sumatra), Medan (N. Sumatra) Poultry Grandparent Farm Gunung Kawi (E. Java), and Hatchery Ne alsari, Boon W. Java Dawuhan Sengon, Pucangsari, Toyomarto, Lebak Rejo, Suko Dermo, Mojokerto, Grati, Citapen (E. Java); Pemalang (C. Java), Darangdan, Bogor, Parent stock and Kertasari, Pawenang, Hatchery Subang I, Subang II (W. Java); Batungsel (Bali); Gisting Atas, Campang (S. Sumatra); Kaban Jahe (N. Sumatra), Tanjung Morawa (Deli Serdang); Tompobulu (S. Sulawesi); Samarinda E. Kalimantan). Baturiti (Bali), Mojokerto (East Java), Cipunegara, Hatchery Pemalang, Tengaran (Central Java), Sanding (W. Java), Ujung Pandan S. Sulawesi Poultry Sidoarjo (E. Java), Bandar Processing Lam un S. Sumatra) Bululawang I, Bululawang II, Commercial Bululawang III (E. Java); Broiler Farm Taman Sari, Batang Hari, Salahudin (S. Sumatra) Aquaculture Shrimp and Fish Banyuwangi, Sidoarjo Mill (East Java); Cirebon West Java Cold Storage Banyuwangi (E. Java), Bati Bati S. Kalimantan Watukebo, Bomo, Karang Tekok, Kraksaan, Shrimp Pond Lamongan , Sobo (E. Java); Tanjung Ibus (N. Sumatra), Takisun S. Kalimantan Shrimp Hatchery Pemuteran (Bali), Pagatan (S. Kalimantan) Corn Drier Kalirejo, Gunung Sugihm Way Jepara, Metro Kibang, Ketapang-Lampung (S. Sumatra); Jombang, Asem Bagus (E. Java), Garut (W. Java), Gowa (S. Sulawesi) Edible Oil and JCI Nilam, Indonesian Palletizing Factory Pelletin Woven Plastic Surabaya (E. Java) Bag Factory Experiment Farm Sidoarjo (E. Java) & Training Source: PT. Japfa Comfeed, Tbk. Table--3 Financial report of PT. PT. Japfa Comfeed, Tbk, and subsidiaries (Rp million) Description 2007 2006 (30th Sep) (30st Sep) ASSETS a. Current assets 2,593,767 2,134,125 b. Non current assets 1,465,089 1,421,796 Total Assets 4,058,857 3,555,921 LIABILITIES a. Current liabilities 1,081,610 1,057,099 b. Non current liabilities 2,037,585 1,847,276 c. Minority rights 164,966 117,159 d. Equity 774,695 534,387 Total liabilities + Equity 4,058,857 3,555,921 REVENUES a. Total income 5,639,118 4,660,424 b. Cost of goods sold (4,637,295) (3,915,72 c. Operating costs (624,429) 3) d. Other costs (96,258) (533,706) e. Taxes (88,040) (61,927) f. Minority rights over net profit (39,036) (83,097) (18,041) g. Net profit 154,050 171,783