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Holding company: The Astra International way
Budi Gunadi Sadikin - JP/Ricky YudhistiraThe operation of holding companies conceived by the State-Owned Enterprises (SOEs) Ministry may replicate the success story of diversified conglomerate PT Astra International
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Budi Gunadi Sadikin - JP/Ricky Yudhistira
The operation of holding companies conceived by the State-Owned Enterprises (SOEs) Ministry may replicate the success story of diversified conglomerate PT Astra International.
Former Bank Mandiri president director Budi Gunadi Sadikin, who is now special staff to the SOE minister, said he would use the Astra model for decision making and responsibility in the planned mining holding company.
“The president director of each SOE will hold a position as director in the holding company, and he or she will be responsible for certain areas or responsibilities in the synergized companies,” said Budi, who is tipped to head the holding company.
Among Indonesia’s most valuable publicly listed companies, Astra has an array of units, from car manufacturing and distribution to plantations and financial services.
“The holding company will only decide on major issues, such as large investments, human resources and grand strategies,” said Budi.
The ministry has decided that aluminum producer PT Indonesia Asahan Aluminium (Inalum) will be the parent company for diversified mining company PT Antam, coal miner PT Bukit Asam and tin miner PT Timah. Inalum will also hold 9.36 percent of the government’s shares in copper and gold producer PT Freeport McMoran Indonesia.
The ministry has projected the holding company’s return of asset (ROA) will rise to 4.3 percent this year from 2.7 percent last year in average when the companies operated independently while return on equity (ROE) will soar to 8 percent from 3.6 percent last year.
Its net margin will also expand to 11 percent from 6.5 percent, while its earnings before interest, taxes, depreciation and amortization (EBITDA)/interest will decline to 3.44 times from 10.49 times.
While the numbers look good, Budi has warned of the humongous tasks ahead.
The business process should also be standardized, encompassing the many mining contractors and their operation costs, as well as the accounting, said Budi.
“It will probably take three years for the consolidation to gain ground,” he said.
