Bound for Growth
    Category: Companies & People By : Yessar Rosendar Read : 3046 Date : Thursday, September 05, 2013 - 05:16:28

    Mamuk Ismuntoro for Forbes Indonesia

    The growth of the country's automotive market into the biggest in Southeast Asia is good news for the auto parts industry. One major beneficiary is PT Indospring, which is now the largest automotive spring producer in Southeast Asia and the fifth largest in the world by output. It produced 114,080 tonnes of springs and related materials last year, an output doubled from 53,475 tonnes in 2009. In the last three years revenue has also doubled from Rp 720 billion in 2009 to Rp 1.47 trillion last year, while net profit has more than doubled from Rp 59 billion in 2009 to Rp 134 billion.

    For its ability to produce such stellar figures, the company has been named to the Best of the Best list for two years in a row. “The expansion of the economy and the rising middle class have been the drivers of our growth,” says Ikawati Nurhadi, 51, president director of Indospring.

    Ikawati started to work in the company 27 years ago as an internal auditor and has been the president director for 14 years. She obtained a BA in business administration from Christian University, Japan. Indospring is a part of the Indoprima group that was founded by Ikawati's father, Rianto Nurhadi. Currently Indoprima's focus is on the automotive sector but it also has interests in mining and property.

    Rianto opened a leaf spring shop in 1958 but it had to close down and did not reopen until 10 years later. Indospring was established in 1978 after the government put in local automotive component requirements and in the same year Indospring formed a partnership to produce springs with Mitsubishi Steel Manufacturing from Japan. The cooperation with Mitsubishi brought many benefits, such as getting access to the OEM market, technology and Japanese manufacturing prowess. 
The company listed 13 years ago, and as of July had a market capitalization of Rp 1.5 trillion, with a stock that has risen about 800% since 2009, although it has been stable around Rp 3,000 this year. PT Indoprima Gemilang, which is the holding company for the Indoprima group and the Nurhadi family, has a controlling stake of 88% worth about Rp 1.4 trillion, with the rest held by the public.

    The company has a clear strategy: it makes leaf springs used in commercial vehicles and passenger vehicles. Last year it produced 70,187 tonnes of leaf springs, 3,288 tonnes of coil springs and 40,605 tonnes of flat bar used to make the leaf springs. Currently its products can be found in trucks and minivans from several brands, such as Daihatsu, Hino, Mitsubishi, Nissan and Suzuki.

    Last year the company had 44% of its sales to the domestic car assembling companies (the OEM market) and about 26% sold to spare part stores. The remaining 30% was exported. The OEM market has the benefit that most goods are sold under contracts. “Selling to OEM market makes us more stable, as we can forecast our sales in the medium term,” Ikawati says.