Jakarta. Solo-based textile giant Sri Rejeki Isman, better known as Sritex, recently denied that it had gone bankrupt due to not being able to settle its mounting debt.

Sritex also said that there was no court decision that declared the company’s bankruptcy in 2023.

“It is not true. The company is still operating, and there is no court decision on the bankruptcy,” Welly Salam, the finance director at Sritex, said on Monday.

Sritex had previously requested creditors for some relaxation on the company’s financial obligations. “They mostly have given their approval for the relaxation,” Welly said.

Sritex had postponed paying its debt in line with the Semarang commercial court’s decision. 

Welly, however, admitted that the company had undergone pressures. 

Welly blamed the declining income on the Covid-19 pandemic and intense competition in the global textile industry. The geopolitical tensions, including the Russia-Ukraine war and the Gaza conflict, had disrupted the supply chain. Exports are also on a decline following a shift in priorities among the public in Europe and the US, according to Welly. China is also witnessing an oversupply of textiles, and these goods are going to Indonesia.

“This has led to price dumping. [The oversupplied textiles] are going to countries outside Europe and China that do not have stringent import regulations, and that includes Indonesia,” Welly said.

Today, the company is running its business using internal cash and sponsor support. Sritex has also implemented a number of strategies to address these pressures, including improving the quality of its manpower, reorganizing to boost efficiency, and prioritizing products that support the company’s sustainable business targets, according to Welly.

Industry Minister Agus Gumiwang Kartasasmita recently said that the government would study the business model run by Sritex to find out the problems that the company had faced. Agus said that possible causes of the bankruptcy would include the sluggish demand in the textile industry and internal company problems. Agus added: “We have to learn why the company went bankrupt.”

The Confederation of Indonesian Trade Unions (KSPN) revealed that nearly 50,000 textile industry workers had been laid off so far this year as of early June. “Many of these companies do not want their names to be exposed,” KSPN’s president Ristadi said over the weekend.

The companies avoided exposure as they wanted to maintain the trust of their banks and buyers, Ristadi said.