PT Sri Rejeki Isman Tbk or better known as Sritex received approval from shareholders to increase business activities, namely producing personal protective equipment (PPE) and cloth masks.
Approval is obtained at the Annual General Meeting of Shareholders (AGMS). "Yes, the shareholders agree (the company adds business activities)," said Sritex Corporate Communications Joy Citradewi.
Sritex President Director Iwan Setiawan Lukminto said, from this new business activity, the company is expected to obtain net sales of Rp 208.8 billion by the end of 2021. Meanwhile, the costs incurred will reach Rp 162.8 billion. After deducting taxes and other expenses, the potential profit to be generated is Rp 30.49 billion in this year's period.
Based on the documents published in the Information Disclosure of the Indonesia Stock Exchange (IDX), Sritex intends to change its business activities in the textile industry and integrated textile products into industry and trade.
Through these changes, Sritex can increase business activities in the equipment industry for safety protection and wholesale trade in laboratory, pharmaceutical and medical equipment, namely producing PPE clothing and cloth masks.
Based on the feasibility study report, the global economic recovery is expected to run in 2020, along with the Covid 19 vaccination program in many countries. Exports of medical devices are considered to have great potential to help the recovery of the textile and apparel industry, which slumped during the Covid-19 pandemic.
However, this potential has not been able to be optimized by the Ministry of Industry, given the growth of the textile and apparel industry by -8.8% annually in 2020. The report states that one of the causes of the contraction is declining demand due to changes in people's consumption patterns.
However, the textile and apparel industry is considered to still have the opportunity to rise, one of which is by utilizing the export of medical devices, such as PPE and masks. The potential from exports is because the national production capacity is greater than domestic needs.
In the future, Sritex plans to implement a sales strategy via online (online) and other electronic trading platforms (e-commerce).
Iwan said he would maintain product quality to be able to compete with other companies that also have domestic raw materials and achieve international standards. Some of them, PT Pan Brothers Tbk, PT Surya Usaha Mandiri, PT Leading Garment Industries and PT Asia Pacific Fibers Tbk.
According to the business pattern, Sritex will distribute PPE directly through the National Disaster Management Agency (BNPB), the Ministry of Health, and government agencies. Meanwhile for hospitals, private companies, and exports will be through direct and indirect distribution.
Based on a technical study, Sritex has the machines, equipment, and human resources (HR) to produce PPE. The company plans to produce two types of PPE that meet the standards of the Association for the Advancement of Medical Instrumentation (AAMI) levels 3 and 4.
Based on the feasibility study of the management model, the company will recruit employees who are experienced in the field of textiles and textile products, particularly textile technology, finance, and marketing. This strategy was actually carried out after the company cut 1,577 employees throughout 2020.
Excuses of Efficiency, Sritex Cuts Employees
Based on the 2020 financial report, it is known that Sritex terminated the employment of 1,577 employees last year.
The number of Sritex employees as of December 31, 2020 was 17,186, a decrease of 8.4% compared to 2019 which reached 18,763 employees. The composition of the number of employees includes 17,082 employees from the production division and 104 employees from the non-production division.
In the report, Sritex reduced the number of employees due to the efficiency of non-productive age, in line with the company's strategy to perform performance efficiency by improving employee skills.
Previously, as many as four compact companies sued the Suspension of Debt Payment Obligations (PKPU) from the parent business of the Sritex Group, including five subsidiaries, to the owner and company officials.
Lawsuits were filed at the Commercial Court, Semarang District Court successively in the last two months.
Based on data from the Semarang District Court, two creditors, PT Swadaya Graha and PT Indo Bahari Ekspress sued PKPU, a subsidiary of the Sritex Group, namely PT Rayon Utama Makmur.
Furthermore, on April 19, 2021, another creditor, CV Prima Karya, directly sued the parent company PKPU, Sri Rejeki Isman. Not only that, three Sritex subsidiaries were also dragged away, namely PT Sinar Pantja Djaja, PT Rayon Utama Makmur, PT Bitratex Industries, PT Primayudha Mandirijaya.
Not long after, PT Bank QNB Indonesia Tbk sued another Sritex subsidiary, PT Happy Kharisma Textil. Interestingly, QNB Bank also sued the owner and senior official of Sritex, Iwan Setiawan Lukminto and his wife, Megawati.
Based on the chronology, it is difficult for Sritex to extend the syndicated loan which has been running since November 2020 and was finally delayed until March 2021. The delay occurred again at the last moment, namely March 19, 2021, which should be the time for signing the syndicated extension.
Based on the financial report as of December 2020, Sritex's total debt reached US$ 1.18 billion or equivalent to Rp. 17.1 trillion (RTI rate of US$ 1 = Rp. 14,524). Even though Sritex's total assets are only US$ 1.85 billion or equivalent to Rp 26.8 trillion. The accumulated debt caused the negative cash flow to be minus US$ 59.24 million or Rp 860.4 billion. Sritex's total short-term debt reached US$ 277.5 million or equivalent to Rp 4 trillion.
Of this value, PT Bank HSBC Indonesia has the largest credit balance to Sritex, reaching US$ 42.84 million. Followed by PT Bank Pembangunan Daerah Jawa Barat and Banten Tbk (Bank Jabar) with US$ 38.89 million and Bank QNB Indonesia with US$ 35.44 million.
In addition, Bank Muamalat Indonesia US$ 29.67 million, MUFG Bank Ltd. US$ 26.61 million, Standard Chartered Bank US$ 26.24 million, Taipei Fubon Commercial Bank Co US$ 20 million, and Bank of China (Hong Kong) Limited US$ 15.02 million.
The rest, PT Bank Negara Indonesia (Persero) Tbk US$ 12.16 million, PT Bank DKI US$ 10.63 million, PT Bank Central Asia Tbk US$ 7.9 million, PT Bank Woori Saudara Tbk US$ 5 million, PT Bank DBS Indonesia US$ 4.42 million, and Bank Emirates NBD US$ 2.63 million.
The uncertainty regarding the debt restructuring prompted the rating agency PT Fitch Ratings Indonesia to continue to lower Sritex's debt rating to CCC- from B- in early April 2021.