The expected banking credit loan did not come. In fact, a series of expansion plans have been prepared well. It is no doubt that the dream would be forcibly faded along the tight financial liquidity which makes the banks get 'stingy'. But that story is the last year. Today, PT Sierad Produce Tbk is now back knitting a beautiful dream to become real.

Last year, the company's integrated chicken farms and processing had worked on for at least three business development plans. First, Sierad will buy land and build a regional office in Bumi Serpong Damai (BSD) City, Tangerang. The investment value of this office reaches Rp 43 billion.

Furthermore, the issuer with code SIPD in Indonesia Stock Exchange is planning to build 40 breeding farms for broiler and egg-layer. The additional breeding farms are expected to increase the volume of broiler chick production, from 1.6 million to 2.05 million head per week, and the production of egg-layer chicks increased from 400,000 to 515,000 head per week.

The third plan, Sierad will add 24 hatcheries in order to produce 670,000 chickens per week. The investment value of all these projects is estimated to reach Rp. 353 billion. Unfortunately until the end of 2008, no bank dared to disburse credit due to the uncertainty of business conditions in the middle of the turmoil of financial crisis.

But over time, Sierad is able to convince banks over the business prospects. Working capital loan commitment from Bank Negara Indonesia (BNI) of Rp 300 billion had been bagged.

Although liquidity has been poured, Sierad must rearrange his plan priorities. "Operation-related expansion is the major scale," said Elies Lestari Setiawan, Corporate Secretary of PT Sierad Produce Tbk. While the office building plan seems to be delayed, they still have the option to lease a building. The total budget for such expansion, according to Elies, reached Rp 300 billion. As many as 65% or about Rp 205 billion of the funding needs will come from bank loans. The remaining 35% or about 95 billion came from internal cash.

In addition to the needs of as many as 40 breeding farms until 2011, the funds allocated to purchase 24 hatchery machines located in Lebak, Banten. "We have to free an area of 180 hectares in Lebak," says Elies.

In addition Sierad also plans to build a Chicken slaughterhouse (RPA) in Mojokerto, East Java. Until the end of this year, Sierad is optimistic to complete the construction of 9 cages through 9 BNI financing facility.

While the other 31 cages to be built in 2010 and 2011. The hatcheries and the RPA need to be built at once. "BNI loan commitment to the expansion will soon disbursed once the process of land administration completed," he said.

Through a subsidiary, PT Trans Pacific Niagareksa (TPN), Sierad also start a business of processing corn for animal feed raw materials. The Company previously even planned to buy corn plantation in South Sulawesi. However, the plan nevertheless discontinued with a reason to focus on core business. "While we only buy crops from maize farmers because after we consider we have to focus. We are afraid that all would not work, so we keep follow-up the corn, but not the plantation. " Elies said.

ACQUISITION OVER BELFOODS

Flap wings Sierad businesses do not seem to reach only organic growth targets. Inorganic growth is also afflicted. That is none other but an attempt to extend the Company's integration of their various businesses chain; animal feed, primary production, breeding and hatching, partnerships, slaughterhouse to further production and value-added chicken products. "for Sierad To be competitively pursues our vision to be a food company" says Elies.

No wonder once there is an opportunity to acquire Belfoods Indonesia, Sierad reacted instantly. "As it happens we are looking for a well-established food processing company," she said.

This strategy does not mean that Sierad unable to establish a new company, but building market share and brand awareness would took long time and of course at a very large cost. "Consumption patterns have changed into processed foods such as the stable-priced chicken nuggets, not influenced by supply and demand, so we are interested to get into the business, " said Vice President Director of PT Sierad Produce Tbk, Eko Sandjojo in one shot.

Belfoods already has a strong brand and rules second largest market share in Indonesia so Sierad would have only expand it. With Rp 60 billion capital of bad debt, Sierad converted it into Belfoods' 322,598 shares or 52.31%. Conversion price at Rp 185 thousand per share.

During time Belfoods is known as Sierad’s customer. Belfoods taking raw materials from the chicken meat produced by Sierad to further produced into nuggets, chicken patties, chicken sausages and others.

Other than Belfoods, Sierad actually already have packed chicken product with a brand of Delfarm, although relatively small in number compared to non-packed. In order to lift the brand, Sierad Meat Shop outlets are opened at Gading Serpong, Tangerang. Sierad’s first outlet was inaugurated on August 19, 2009. In addition to providing packed chicken meat and various other types of meat, the Meat Shops were also provide ready-to-served meat and chicken products that can be enjoyed directly in these outlets. "It's a kind of experimental project. If there’s good customer response, we will open another outlet in some areas, " says Elies.

Ikhsan Binarto, analyst at PT Optima Securities considered the diversification is a step forward since the outbreak of bird flu, the export market share Sierad stopped. Even so, according Ikhsan domestic market is still potential enough for Sierad to work with. "Increasing gross domestic product in Indonesia is directly correlated to the level of chicken consumption in the domestic market," he said.

Various expansions that Sierad took are an effort to increase shareholders value. Unfortunately for these shareholders, in particular the public has not yet enjoy the dividends, though Sierad have booked net profit. "The rules says that Sierad have not able to share its dividends," says Elies.

This was related with the company’s accounting records which still has in a deficit balance despite return earning of Rp 2.3 trillion. A negative earning is certainly not related to operational, but due to the forex loss record due the monetary crisis 10 years ago, which are remain recorded in the book.

Before the crisis, the Company has a debt of U.S. $ 313 million for the construction of production bases. As the crisis struck, the debt became bad since were swollen due to exchange rate pressures. Moreover Sierad sales continue to decline at that time. The result was by pursuing restructure. Now that the financial condition improved, Sierad filed a quasi reorganization plan. Corporate action is expected to have support by shareholders that could be effective by the end of year 2009. "This will benefit shareholders because the next we can distribute the dividend," he said.

Such optimism is reasonable, since its year-to-year performance growing until the end of June 2009, Sierad claimed to have won 50% of this year's sales target of Rp 2.8 trillion. According to Elies, sales figures as of May 2009 reached Rp 1.2 trillion. When you see the trend cycle of the Company's revenue from year to year, second semester is usually the harvest period for Sierad. Because, at that period there were several holidays potential to boost Sierad’s sales.

"In the first half alone had 50% revenue entered, so we are optimistic," he said. Referring to the target Sierad believe EBITDA target of Rp 150 billion with net income of Rp 49 billion will be achieved. Unfortunately the performance was not followed by the movement of SIPD stock price that tend to stagnant.