The Tale of the Conglomerates (Serial 2): Sri Prakash Lohia, Selling Threads to Abundant Money

JAKARTA – The outbreak of the COVID-19 virus has made almost all countries in the world chaotic. This pandemic situation has caused the global economy to tumble.

Indonesia itself experienced a recession in 2020 because the economy contracted twice in a row. First, the figure was minus 5.32% in the second quarter and minus 3.49% in the third quarter of last year.

The economic weakening has made many performance of companies from different industrial sectors plummeted. Even the conglomerates have experienced a decline in wealth. However, a number of names remained on the perch until their wealth was depleted and were named the richest person in Indonesia.

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One that stuck out was Sri Prakash Lohia. This name appears in third place on the Forbes list of the 50 richest people in Indonesia 2021 on Wednesday, April 21, 2021. This is a two places elevation after previously being the 5th richest person in Indonesia in 2019 and 2020.

Lohia currently ranks 404th with a wealth of US$6.6 billion in the world, equivalent to Rp95.68 trillion. Although it fell to US$4.3 billion in 2020 and US$4.2 billion in 2016, every year Lohia’s wealth tends to experience an increase.

Lohia’s wealth was recorded at US$2 billion in 2012, then for two consecutive years it increased to US$3.4 billion and US$3.5 billion in 2013 and 2014 respectively. His wealth was continuously increasing to US$4.7 billion in 2015, until the highest peak of US$7.3 billion in 2019.

Move to Indonesia

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Lohia was born on August 11, 1952 in India, to Mohan Lal Lohia and Kanchan Devi Lohia. He has three brothers, namely Ajay Prakash, Anil Prakash, and Aruna.

Lohia decided to move and became an Indonesian citizen (WNI) in 1970, when she turned 18 years old. However, the man who has two sons currently lives in London.

The man, who graduated from a Bachelor of Commerce from the University of Delhi in 1971, has decades of experience in industry.

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Lohia’s career began when he moved to Indonesia with his father. His actions began with the establishment of PT Indorama Synthetics Tbk (INDR), a company engaged in the petrochemical sector and producing spun yarn.

The company’s production year began in 1976. In 1991, INDR began to diversify its products and penetrate the polyester fiber industry of the type of Polyethylene Terephthalate (PET).

Lohia’s character of not easily complacent made him think of opening another business. In 1992, he founded Indorama Ventures as a development wing of the company. Products from Indorama Ventures include raw materials from plastic bottles of Coca Cola, Pepsi and Aqua.

His position in serving at INDR companies also varies. He has been a director of the company since 1975, then appointed as vice president director in 1990 and president director in 2004. His career continued in 2009 where he rose to become the president commissioner.

In fact, he also serves as the main commissioner in various Indorama Group subsidiaries in 37 countries. The number of employees employed reaches 19,000 workers spread across several countries, such as Nigeria, Turkey, Thailand and the United States.

Then in 2006, Lohia’s investment was developed in the petrochemical industry through the acquisition of Nigeria-based Eleme Petrochemicals Company. The takeover value of this business reached US$225 million, as part of the company’s expansion.

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INDR conducted an Initial Public Offering (IPO) at the Indonesia Stock Exchange (IDX) on August 3, 1990. At that time, the total number of registered shares was 32,363,340 shares, and the funds raised were Rp87.5 billion.

Investors that are listed as owners of INDR shares include Indorama Holdings BV (IHBV) as controlling shareholder of 34.03%, followed by foreign investors of 31.71%, PT Irama Investama Indonesia (PTII) with 25%, and public or local with 4.37%.

By the end of 2020, this listed manufacturer of textile industry’s raw material has acquired ownership of PT Cikondang Kancana Prima (CKP).

Citing the disclosure of information at the Indonesia Stock Exchange (IDX), the signing of the two parties was carried out on December 23, 2020. INDR took over 80% of share ownership in the gold mining and processing company.

The nominal issued in this transaction reached Rp300 billion. With this action, CKP officially became a subsidiary of INDR.

Indorama Performance

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Throughout 2020 the issuer coded INDR recorded a decline in profit attributable to the parent entity of 83.65% year-on-year (yoy) to US$6.23 million or equivalent to Rp87.22 billion (assuming an exchange rate of Rp14,000 per US$). In 2019, INDR’s profit was recorded at US$38.11 million.

The company’s revenue was also eroded 23.27% yoy from US$767.75 million in 2019 to US$589.04 million in this period.
However, INDR’s total cash and cash equivalents are still increasing, from US$19.15 million in 2019 to US$36.7 million in 2020.

However, INDR’s total cash and cash equivalents are still increasing, from US$19.15 million in 2019 to US$36.7 million in 2020.

The total long-term liabilities increased from US$127.3 million to US$ 128.3 million. Similar to the short-term liabilities, amounting to US$259.07 million, from the previous US$258.29 million.

The total of equity increased to US$376.47 million in 2020, from the previous year which amounted to US$367.91 million. INDR’s total assets also increased during this period from US$753.55 million in 2019 to US$763.85 million.

This article is a series of special reports that will be continued in the next issue entitled “The Tale of the Conglomerates.”

The Tale of the Conglomerates (Serial 1): Michael Bambang Hartono, from Fireworks Factory to the Richest

Writer: Aprilia Ciptaning
Editor: Sukirno