Similar to other businesses, the Company is not isolated from business risks that are influenced by external and internal factors which may impact the Company business:
Supply and the fluctuation of main raw material prices
To overcome these issues, the company tried to reduce its dependence on one supplier, maintain good relationship and purchase from various suppliers, both foreign and domestic.
Currently there are several substitution materials of aluminum; i.e. steel, stainless steel, zinc for the industrial roofing, and plastic for packaging material. To reduce this risk, the Company continues to promote the quality and characteristics of its products. However, the company believes each material type has different characteristics and its own excellence over the others.
Aluminum sheet and foil products have diverse markets and high level of competition. The Company's major competitors in export market especially from China, have been subsidized by the government with export tax rebate scheme. To face this risk, the Company has several times expanded the capacity to achieve efficiency in production costs in order to compete in the global market. The Company also tries to improve its quality control, diversity of products, delivery, services and distribution capabilities.
Credit and Liquidity Risk
The existence of global commodity crisis has negatively impacted creditors’ perspective on metal industry, and may influence the credit facilities of the Company. To minimize this risk, the Company has gained the full support from its Group, and the commitment of the controlling shareholders.
The Company’s production process generates gas and solid waste. Environmental sustainability and pollution control are governed by BAPEDAL (Environmental Impact Control Agency), and there is a risk on regulatory changes. Therefore, the Company would still emphasize the precautionary principle in waste treatment management.
Risk on Foreign Currency Fluctuation
The Company has bank loans in foreign currency, and any fluctuation on Rupiah exchange rate against the foreign currencies, may increase the risk of higher interest expense and outstanding of the loan, and may affect the income of the Company. The Company strives to maintain a balance on the assets and liabilities currencies, and minimize the exposures to foreign exchange rate differences.
Government Policy Changes
Any changes on the Government of Indonesia and other countries’ policies on aluminium import duties may affect production costs and revenues of the Company. Therefore, the Company seeks to maintain good relationship with customers, other similar players, and the Government, and also to maintain the efficiency of production and other expenses, to minimize those effects on the Company’s income.