Sewing Glory
    Category: Companies & People By : Ardian Wibisono and Siti Aisyah Rachmawati Read : 2186 Date : Friday, January 16, 2015 - 16:05:00

    Ahmad Zamroni / Forbes Indonesia

    Ludijanto Setijo, 44, always remembers his first day as a director at Pan Brothers, when he was greeted by a group of angry factory workers. Established in 1980, the garment company went under, forcing the founder to sell the company to pay debts. So when new investors came in April 1997 with new management, the workers wanted some assurances. “I didn’t make them any promises, but they can talk to me anytime, they have my phone number,” says Ludijanto, now president director. The new management took over during the Asia financial crisis of 1997, but it turned out to be a blessing in disguise. The restructuring scheme required the company to convert $11 million debt to rupiah, while Pan Brothers revenue is in U.S. dollars. During the crisis, the rupiah fell sharply from Rp 2,000 to Rp 15,000 per dollar, thus giving the company a big windfall in dollars.

    Today, Pan Brothers is the country’s biggest garment manufacturer by sales with a global footprint. It serves international well-known brands such as Adidas, H&M and Uniqlo. And since 2010 the company put in a place a bold growth strategy to expand even faster, and also beyond Indonesia. Since 2010, Pan Brothers revenue has been growing 29% CAGR, probably the highest in the industry—despite the textile industry being considered a sunset business. Last year the company booked $349 million in sales compared to $30 million at the takeover and Ludijanto hopes to increase it to $1 billion by 2018. The company’s share price has also gone up by ten fold since 2010. These strong figures put Pan Brothers on our list of the Best of the Best companies in 2014.

    Behind the success of the company is the experienced hand of the management and investors. Ludijanto represents his family’s interest, as his father Bambang Setijo has been in the textile business since 1961 and once partnered with Argo Pantes. The other investor was the Keris group, founded by Kasoom Tjokrosaputro in 1920, represented by Anne Patricia Sutanto who was involved in the due diligence prior to the takeover. She started as a director and now is vice president director of Pan Brothers (and she bought out the Keris group’s stake). The other significant shareholder is Ganda Sitorus, brother of billionaire Martua Sitorus of Wilmar, but he sits happily as a silent investor.

    From the days of disgruntled workers in 2010, the new managers have worked hard to improve employee conditions. Pan Brothers has been strictly following minimum wage and working hour regulations, as well as providing health insurance. This ethical treatment of workers is an important point for international brands that must certify their supply chains. Ludijanto says the actual average income of employees is actually higher that the minimum requirement, above Rp 3 million per month.