JAKARTA (TheInsiderStories) - After hit by declining of coal business, mining contracting and construction machinery firm PT United Tractors Tbk (UNTR) set up power plant producer PT Unitra Persada Energia (UPE) as part of the company’s strategy to diversify and expand its business.
Based on the company’s announcement, the new subsidiary was established on Dec.14, 2015. UNTR and its subsidiary engaging in coal construction and coal mining PT Pamapersada Nusantara own 100% of the new unit. Both companies injected capital of Rp260 million ($17,857) into the new firm.
UNTR has appointed Muliady Sutio as president director of UPE and Chinthya Theresa AM and Iwan Hadiantoro as a directors of the company, while FX Laksana Kesuma as a commissioner member.
Earlier, President Director of UNTR Gidion Hasan said that United Tractors was looking to expand to other business, outside coal and mining, to compensate declining coal business. Currently, the company is taking part in a number of power plant tenders such as the Sumatera power plant and Java power plant projects.
Apart from expanding to energy business, UNTR is also looking to enlarge its infrastructure business in the country. Early this year, the company through its unit construction services PT Karya Supra Perkasa acquired 40 percent PT ACSET Indonusa Tbk (IDX: ACST) shares from PT Cross Plus Indonesia and PT Loka Cipta Kreasi.
ACSET, founded by Tan Tiam Seng Ronnie and Hilarius Arwandhi in 1995, specializes in constructing foundation of high rise buildingss.
Currently, ACSET has become a construction company that carries out construction works, including foundations, civil works, detailed design, mechanical & electrical, plumbing and finishing.
ACSET has won new contracts on infrastructure projects worth Rp 3.1 trillion ($227.94 million) for three years period starting 2016 after securing contracts worth Rp 650 billion this year.
ACSET has developed the foundation part of a number of high risk buildings in Great Jakarta area, such as Thamrin Nine, West Vista Apartment, Indonesia 1 and Astra Biz Center at Bumi Serpong Damai in Tangerang province.
In the future, Gidion stated that ACSET may team up with PT Astratel Nusantara, a sister company of UNTR under diversified company PT Astra Internasional Tbk (ASII), to work on infrastructure projects in the country.
Annually, he said, Astra allocated around 15 percent of its capital expenditure for infrastructure projects. On average, Astra as a group spends around Rp 13 trillion in capex every year.
Finance Director Iwan Hadiantoro added that in 2016, the company plans to spend up to $250 million from this year target around $200 million.
In nine months of 2015, UNTR’s heavy equipment sales dropped 40 percent to 1,799 units from last year 2,982 units because of weak demand. Based on the current situation, UNTR slashed its sales target from 4,100 units to only 2,100 units.
Moreover, coal production recorded 81.3 million tons or dropped 4 percent from last year 85.1 million tons, overburden removal declined form 611.0 million bank cubic meters (BCM) to 593.1 BCM until September.
Next year, United Tractors sees the market condition to be unchanged and its business is projected to still grow flat. The company estimates that the coal production to drop by 5 percent and overburden removal to decline by 10-15 percent from 2015. (*)