Sritex is an Indonesian textile company that exports military uniforms to 35 countries. Half of its garment sales are military uniforms, although it also supplies fashion brands such as H&M. While some Indonesian companies have been buffeted by a volatile local currency, Sritex has managed to shield its supply chain from currency risks.
Sritex is less exposed to currency risks because it produces its own raw materials in its home base for yarn spinning, weaving and garment finishing. Indonesia’s currency, the rupiah, is one of emerging Asia’s worst performing currencies this year, having lost nine per cent against the dollar and is trading at its lowest for 20 years, hurt by rising US interest rates and global trade tensions.
While currency depreciation should in theory benefit exporters, it is often not the case in Indonesia where an estimated 70 per cent of raw materials used by manufacturers have to be imported. Sritex has a RS&D center in Germany, which has helped it develop special fabrics for the German military, such as those that are able to offer protection from mosquitoes.
Sales at Sritex jumped 35.6 per cent in the first six months and net income rose nearly 70 per cent, which would support the company’s plan to invest in a new weaving factory next year.