INDONESIA: Gajah Tunggal curbs plan to expand amid spending cuts

Gajah Tunggal, majority-controlled by Indonesia's Nursalim family, said it had reduced its capital expenditure to between USD 110 million to USD 120 million for 2013 from its original target of betweenUSD 140 million to USD 150 million.

There was a cut as "some of the investment in truck and bus radial tires have been reduced,” Catharina Widjaya, a director at Gajah Tunggal, said.

Chatarina said the company has delayed its plan to develop a proving ground until 2014. Total investment for the site is estimated at USD 40 million.

Chatarina said Gajah Tunggal would spend USD 50 million of its intact investment this year on plant maintenance, USD 20 million to USD 30 million on a debottlenecking plan (increasing production capacity of existing facilities through various efficiency modifications), USD 10 million for research and development and USD 10 million to USD 20 million for the development of truck and bus radial tires.

Chatarina said in June that demand for tires made by the company was expected to increase in the medium term after the government approved incentives for the production of a low-cost, eco-friendly vehicle. Chatarina gave no further details on the issue last week.

Catharina said in June that the company had signed a memorandum of understanding with several undisclosed original equipment manufacturers, but the OEMs have yet to disclose how many tires will be required.

The company produced a combined volume of 36.7 million units and expects production to increase this year by up to 8 percent, Catharina had said in June.

Gajah Tunggal operates two tire plants, one in Karawang and another in Tangerang.

Source: Daily "The Jakarta Globe", Jakarta; 10 Sept 2013
(Syed Rashid Ali, Karachi, Pakistan)