Sri Rejeki Isman (Sritex) Plans to Acquire German Uniform Producer
Sri Rejeki Isman (Sritex), one of Indonesia's leading textile and garment manufacturers, plans to acquire a German military uniform manufacturer. Iwan Kurniawan Lukminto, Vice President Director of Sritex, said the acquisition of the German company should be completed in 2017. The aim of this acquisition is to enhance Sritex' business in the European Union. The German uniform manufacturer will be the "extended arm" of Sritex in Europe according to Lukminto's words. Currently, about 15 percent of Sritex' total export revenue is generated from shipments to Europe.
Lukminto said exports of Sri Rejeki Isman (Sritex) to Europe are still not too significant relative to the company's total exports. However, he added that the company's philosophy is to diversify its business, and not to become dependent on one particular export destination.
Exports are becoming an increasingly important source of earnings for Sritex. Whereas in 2014 a total of 39 percent of the company's sales consisted of exports (worldwide), in 2015 this figure had risen to 48 percent, implying nearly half of the company's earnings are generated through exports. Lukminto added that Sritex exports good-quality cotton to China.
In 2015 Sritex' revenue rose 12 percent (y/y) to USD $622 million, while its net profit climbed 10.3 percent (y/y) to USD $55.7 million. Sritex, which labels itself as Southeast Asia’s largest integrated textile manufacturer, has four production units: spinning, weaving, dyeing, and garment. Spinning contributes 39.3 percent to the company's total earnings, followed by dyeing (27.3 percent), garment (21.8 percent), and weaving (11.6 percent).
Lukminto believes that the textile industry in Indonesia has good future prospects. Contrary to the general opinion in Indonesia's banking sector where financial institutions are hesitant to lend to Indonesian textile companies because they see too much competition from China and India, Lukminto expects Indonesia's textile industry to gain market share on the international market. Whereas China controlled 38 percent of the global textile market in 2012 (and Indonesia only 3 percent), China's market share has been on the decline ever since. If Indonesia manages to add just two percentage points, then it would already exceed Indonesia's current installed textile production capacity.
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