Board of Director Report

Assalamu ’alaikum Wr. Wb

Stakeholders whom we respect, Thank God we pray to God Almighty who has given His blessings, grace, and guidance, so the management of PT Rajawali Nusantara Indonesia is present the Company’s Annual Report in 2011.

2011 is a tough year for PT RNI. Climate anomalies in 2010, in the form of rain throughout the year is very disturbing, especially to the sugar sectors of Agro Industry which is the core business of the company. The impact is still affect the performance in 2011. With the pressure on the core business sector, the financial performance of PT RNI was not optimal within the last decade with a loss of Rp. 68 billion and achieved health value in BBB with Total Score 58.64. As seen in the industry groups, the sugar does not contribute to profit. The non-sugar industry groups, namely palm oil, rubber and tea provide a return, but has not reached the budget because of additional expenses in the purchase of TBS on a third party. Group of pharmaceutical and medical devices have not achieved due to the high cost of the budget. Nevertheless, the prospect of agro-industrial enterprises is still very good. Therefore, PT RNI is always pushing to improve existing deficiencies in the plantation (on farm) and in the factory (off farm) and the sales strategy for next year’s performance will reverse the situation for the better.

PT RNI policy in the management of the company in 2011 is to continue the strategic policies of the foundation has been done before that is more focused on agro-industry as the company’s core business. Thus, the theme of the management of PT RNI was named to the “On The Right Business” or translated as “Being In The Right Business”. On The Right Business, means, the company in making strategic moves to divest in areas outside the core business and the business sectors that have less potential for the company. In 2011, PT RNI divest PT Trophy Rajawali that specializes in medical devices and PT Kebun Grati Agung which is engaged in the sugar cane plantation. PT RNI is also out of BPPG (Sugar Factory Management Agency) in PG Takalar, PG Bone and PG Camming. This is done solely in order to focus on RNI in its own internal performance improvement. Moreover, the company is to prepare measures to expand the business aggressively in the field of oil and pharmaceutical fields.

PT RNI working optimally for the better, improvements continue to be pursued, among others, make improvements to the company’s liquidity by making continuous efficiency in order to raise productivity and the emergence of new innovations in the process of improving the cost of production and other operating expenses. With the high current obligations, re-scheduling of payment should be done gradually, planned and sustainable in order to reduce the interest expenses on bank loans so that the RNI products Group can compete with similar products on the market. In 2011, PT RNI has invested funds amounting to Rp. 496.06 billion. 41% of the funds invested in the oil via the PT Perkebunan Mitra Ogan, 23% in the sugar industry PT PG Rajawali I and 8% of funds invested in the pharmaceutical field and the remaining 28% is allocated to the nine subsidiaries. Focus on agro-industries can be seen from the value of investments spent more than 70% or Rp. 561 billion. The Company continues to expand its oil palm plantation in South Sumatra, through its subsidiary PT Perkebunan Mitra Ogan, PT Laras Astra Kartika and Sub-subdiaries of PT Sawit Menang Sejahtera. By the end of 2011 PT RNI palm area increased 107 hectares to 24.500 hectares from the previous 24.503 (24.393?) hectares. The value we invest in the expansion of plantations worth Rp. 293 billion with the increase of the plasma 64% and 36% core area. So is the number of TBS increased to 397 585 tons, 19.63% up. Sugar Factory revitalization activities carried out by performing repairs in the field of on-farm and off farm by increasing the capacity of the plant up to the ground. 2011 reached 33.350 TCD of 9 sugar factories, with total funds of Rp. 106.714 billion. The area covering 53.994 hectares of sugarcane was recorded, with total cane milled as many as 4 million tons. With a 7.15% yield performance, the amount of sugar produced reached 292.000 tons. Results are still far below the budget that have been implemented. So also with derivative products like molasses, alcohol, spirits and wine has not yet reached its budget. The Company will focus on improving the condition of the garden, especially at PG Jatitujuh and PG Subang which is HGU plantation so that the productivity of sugarcane in the next year will return to above average levels of the national sugar production. The Company is also very concerned about the performance of the sector managed to produce palm oil plantations are on a budget or by 89.698 tons and 20.518 tons of PK implanted. For rubber and tea production sector, still below the production budget. The Company will perform the optimization of rubber tapping, as for the planned development of tea sector are planned for development of micro hydro power plants to substitute the use of fuel demand in the fabric, lighting up to the utilization of sprinkling plantation pump.

Implementation of IFRS

The performance degradation is caused by the transformation of many records or financial statements of an international standard known as IFRS (International Finance Report Standard), because PT RNI do a full costing of the various costs that are in doubt. Thus, the financial statements of PT RNI is a responsible financial statement. So that the trust from the stakeholders can be increased. Application of IFRS, not only at the holding, but held to the whole subsidiaries.

Quality of human resources development

The Company continued to prepare human resources to excel in the face of free market competition in the era of globalization. Excellence demonstrated by an increase in competitiveness is primarily concerned with the quality of human resources, information technology, market access and innovation. To improve the competitiveness associated with the quality of human resources, PT RNI has made improvements on the components of the competitiveness. For human resource development, the first thing we did was an effort to make PT RNI become a safe and convenient place for professionals and to those who dedicated. Safety and comfort in the work environment is measured by the level of employee turnover. The employees were satisfied with a good level of satisfaction showed more than 2.75 (above the average of the set target 2.75). In general, the general goal has been achieved viewed from the employee turnover rate is relatively very low and even zero. We also do corporate value and the investment process always works based spirituality (spirituality at work), increases employee competence and productivity above the average industrial productivity. Several subsidiaries (PT Phapros, PT Rajawali Nusindo and PT GIEB Indonesia) showed that growth tends to increase from year 2007 to 2011 with average growth of HCVA (Human Capital Value Added) and HCROI (Human Capital Return on Investment) 10% - 20 %.

Best Technology Innovation Enterprises

In the middle of the pressure weighing on business in the sugar sector, we can also tell which company achievements in 2011, the company succeeded in obtaining an award in the Award Night II SOE 2011 SOE category for Best Technology Innovation. Likewise, PT Phapros Tbk successfully won the Award for Top Brand Products Partners Antimo and PT Perkebunan Mitra Kerinci state won Best tea plantation area. To boost performance while the performance of the subsidiary, PT RNI held Innovation Award and Festival. In 2011, PT Perkebunan Mitra Ogan made it out to be the best RNI Group subsidiaries The various achievements of the company boost morale, especially for children companies that still shows shortcomings that could be better in the next year. Thus us, on behalf of the Board of Directors of PT Rajawali Nusantara Indonesia, submit an annual report as required by the regulations. We express our gratitude and highest appreciation to all corporate stakeholders, especially employees of the company that has done the best for the company. For a more complete and clear explanations, we submit the 2011 annual report which has been prepared according to the requirements of the Annual Report Award.

Wassalamu’alaikum Wr. Wb.
Sincerely,

 

Ismed Hasan Putro
President Director