Dian Swastatika Sentosa, the coal and power business unit of the Sinar Mas Group, has set its capital expenditure for next year at $270 million, to fund the company’s power plant expansion.
Next year’s capital expenditure budget will be a 170 percent increase from the $100 million budget allocated in 2013.
Lanny, the finance director of Dian Swastatika, said on Monday that the company would use 70 percent of the capital expenditure to finance the construction of two new power plants in Sumatra.
The remaining 30 percent of the budget will be used for the company’s other businesses, including the fertilizer and trading activities.
“The company will fund the capital expenditure from internal cash and bank loans,” Lanny said.
Lanny did not disclose the name of the lender that would fund the company’s expansion plan.
The company, which has four power plants, plans to build two more next year. The first plant, a mine mouth power plant, to be located in Banyuasin, South Sumatra, will have two generators churning out a combined 150 megawatts. The project is budgeted at $400 million and is expected to be completed by 2015.
The company is also eyeing a power plant project with a capacity of 400 MW in Jambi, with the tender to take place in early 2014.
The company is targeting $600 million in revenues next year, almost unchanged from this year’s target, citing volatile global coal prices next year.
Coal prices have fallen 6.7 percent so far this year.
Dian Swastatika is a diversified company with many interests including in power plants, coal mining, fertilizer and chemical wholesale trading, as well as telecommunication infrastructure.
The company ventured into the multimedia business by taking over Mora Quatro Multimedia in December 2012, a company that provides multimedia services such as cable TV, broadband Internet access and telephony services.
Dian Swastatika has also diversified into agriculture by acquiring Rolinex Kimia Nusamas, a fertilizer and pesticide trading company in 2010.
“Selling fertilizers, pesticides and chemicals has great potential in Indonesia, because there are huge numbers of people who are still working in agriculture and plantations,” said Hermawan Tarjono, a director of Dian Swastatika.
The company started its operations in 1998 by providing power and steam to pulp and paper mills owned by Pindo Deli Pulp and Paper Mills, another business unit of the Sinar Mas Group.
Currently, the company has four power plants in Tangerang, Serang and Karawang, with a total combined generating capacity of 300 MW.
Dian Swastatika posted a loss of $13.74 million in the first nine months of this year, compared to a profit of $1.19 million in the corresponding period in 2012.
The Sinar Mas Group was founded by Eka Widjaja Tjipta and is active in pulp and paper, agribusiness, property and financial services.
Dian Swastatika Sentosa’s stocks were unchanged at Rp 13,500 on Monday.