CHAPTER I

1.1 Semen Indonesia Profile

Inauguration and Shifting Ownership

The Company was established in Gresik on August 7, 1957 by the first President with installed

capacity of 250,000 tons of cement per year, and in 2013 installed capacity reached 30 million

tons / year.

On July 8, 1991 the Company's shares are listed on the Jakarta Stock Exchange and Bursa

EfekSurabaya (now the Indonesia Stock Exchange) and is the first state-owned enterprises to go

public by selling 40 million shares to the public. Composition of shareholders at the time: RI

State 73% and the public 27%.

In September 1995, the Company made a Limited Public Offering I (Right Issue I), which is

changing the composition of state ownership to 65% and the public 35%. On 15 September 1995

PT Semen Gresik consolidated with PT Semen Padang and PT Semen Tonasa.Total installed

capacity of the Company at that time amounted to 8.5 million tons of cement per year.

On September 17, 1998, the State of RI release its shareholding in the Company by 14% through

an open tender won by Cemex SA de CV, a global cement company based in Mexico.

Composition of share ownership turned into the State RI 51%, 35% public and 14% of Cemex.

Then on 30 September 1999 the composition of the shareholding changes to: The Government of

the Republic of Indonesia 51.0%, 23.4% public and 25.5% of Cemex.

On July 27, 2006, there was the sale of shares of Cemex Asia Holdings Ltd. kepadaBlue Valley

Holdings PTE Ltd. so that the composition of share ownership turned into the State of RI 51.0%

Blue Valley Holdings PTE Ltd. 24.9%, 24.0% and community. At the end of March 2010, Blue

Valley Holdings PTELtd, sold all of its shares through a private placement, so that the

composition of the Company's shareholders turned into a public government 51.0% and 48.9%.

1

CHAPTER II

2.1CURRENT PERFORMANCE

a. Finance

2

In finance aspect, Semen Indonesia or later we say Semen Gresik showed a good revenue in a

few years. As we look in finance history this company are reasonable to be pioneer cement in

indonesia that has been grow up in 1950s.

b. Market

In domestic market , java are the highest potential market. In this data , we know that java area

are the priority for segmentation but also another area must support to fulfill domestic need

This market shared show us the market spread in domestic area. Semen Indonesia have a

potential buyers then the others as we know as a pioneer of cement in Indonesia this company

grow up faster.

Competitors

3

c. Internal business process

The Company has compiled the ICT master plan with methodology that assures alignment

(alignment) between business needs and ICT initiatives. All the needs and business plans of all

operating company (OpCo) identified, both at the operational and strategic level. Then, of all the

needs and business plans are determined initiatives that ICT can support and even accelerate the

achievement of business targets and is divided into categories of ICT infrastructure, ICT

Management, and Business services. ICT master plan Phase II (ICTMP II) for the period

20,142,017 is a continuation of the Phase I (ICTMP I). While ICTMP I concentrate on providing

a plat form ERP system so that it can conduct business processes across OpCo strandarisasi,

ICTMP II seeks to revitalize and enhance the ERP modules as well as expand the ability to

support CRM (Customer Relation Management) and SCM (Supply Chain Management). CRM

and SCM is the key to improving the Company's competitiveness in the domestic and regional

markets for "growth companies". CRM will enable the Company to "move closer to the

customers" by providing better customer knowledge and customer support to win the market.

SCM will strengthen the Company's supply chain network by streamlining and integrating the

supply network as well as increase cooperation with the vendor. SCM will lead and support the

company's strategy to "manage energy security" and to "manage key risks." Overall ICTMP II

would "improve the image of the company".

4

The initiative-initiative ICT Master Plan2014-2017 period were implemented throughout

2014,including:

Implementation strategy

To ensure the successful implementation of ICTMP, supporting Strategic Alignment and

increase efficiency, the Company embedding ICT organization at Holding level. With this union,

the planning, standardization of services, strategy execution and monitoring of ICT projects done

centrally, as well as ICT operations. With good ICT governance is expected to support the

achievement of KPI and increased maturity level as targeted. For that formed the Bureau of ICT

Performance & Governance that specifically oversee its implementation. In addition, in 2014 has

been officially established subsidiary PT Semen Indonesia Synergy Informatics which main task

is to assist the smooth operation and development of information system in all group companies

PT Semen Indonesia (Persero) Tbk.

5

d. Learning and growth

Human Capital

In line with the transformation program Strategic Holding Corporation into a world-class

company with coverage of business clusters of cement and non-cement, the Company made a

Development of an integrated HR system in line with the Company's Long-Term Plan that has

been set. Development of HR system includes optimization of 3 main components: process,

technology and people. HR business processes developed from best practice business processes

HR firms run by World Class, which consists of the process: Human Capital Planning, Human

Capital Acquiring, Human Capital Development, Human Capital Maintaining, Human Capital

Retaining

6

The Human Capital Planning process, the Company took the initiative in the aspects:

- Organization Development: Transforming the Corporation in accordance with the company to

develop the HR function with the establishment of a level 2 Work Unit in the Department of

Holding, namely:

• Department of Human Resource System Development that focuses on improving human

resource policies and systems that apply across the Group, as well as talent management,

especially the Board of Directors, Echelon Echelon 1 and 2 and HR Business Process and

Technology.

• Department Center of Dynamic Learning (CDL) function Corporate University, the unit which

was established in line with the company's strategy for managing the education and learning

functions within the company with the aim of preparing human resources in order to help the

company achieve its goals. Task CDL Department include: implementing the preparation and

management of Competency Dictionary, curriculum, syllabus and Learning Module, coordinate

and implement the Leadership Development Program (LDP) for Echelon Echelon 1 through 4 in

all groups and assign

-Job Management: The Company did Evaluation and Reevaluation Weight Position (Job Grade)

in all functions of the company, in line with the corporate transformation program and the

development of organizational structures. Evaluation and Reevaluation conducted with

experienced consultants in the field of Job Evaluation. The Company has sets the Job Evaluation

Committee (KEJ), so as to gradually capabilities / competencies Job Evaluation owned by the

company's internal, and can do without the assistance Job Evaluation consultant.

- Man Power Planning: In line with the implementation of the Company's Long Term Plan

(RJPP), the Company conducted a review of the human resource planning, with the aim to

validate alignment kualifkasi, number and additional human resources to match business growth.

To reinforce the validity of the review, the Company did Workload Analysis. Through these

efforts, the Company then formulate the optimal number of HR operational support in the future

in Manpower Planning documents up to 2030.

- The general process adopted Human Capital management in any corporate actions such as

business expansion both at home and abroad are doing the calculations Man Power Planning. If

of sufficient internal company stated it will use the power of the Company's internal. However,

when judged lacking, it will be followed up with Recruitment Program, in accordance with the

7

required fields and competencies required for each job position.

- Meanwhile, when a new organization abroad is no vacancy, then the first thing to do is make

the filling HC field position using a standard assessment of competence and performance needed

in that position and will be filled with employees who have the right performance and

competence. This will be obtained from the mapping Talent in Talent Management Company

Program.

The Human Capital Acquiring process, the Company has initiated in aspects:

- Recruitment: Man Power Planning in accordance with predetermined, the company recruit new

employees. Strip acceptance of new employees in the Company consists of:

• Management Trainee: equivalent of graduate Bachelor (S1), is projected to occupy the post of

Head of Section (Echelon 3)

• Supervisory Trainee: equivalent of graduate Diploma (D3), is projected to occupy the post of

Head Team (Echelon 4)

• Operator Trainee: graduates of vocational equivalent, occupying the post of Executive (Echelon

5)

- On Boarding: New employees who have been recruited, given briefing materials that support

the process of understanding and acceptance of new employees for Culture, Work Environment

and competencies needed to deliver the best performance in the company. On Boarding Process

consists of Susbintal, Corporate Profile, Corporate Culture (CHAMPS), Basic Management,

Technical Competence, Personal Mastery, ESQ, Safety Riding, Plant & Office Visit, On the Job

Training (OJT) and administration tasks during OJT.

The Human Capital Development process, the Company has initiated in aspects:

- Job Competencies: according to the business needs of the company's current and future

development in accordance RJPP, the Company developed a plan to update the Employee

Competence. Job Competencies development will be in accordance with the Job Description and

Job Family from each position, resulting in the identification and assessment of competence level

gap for each competency can be integrated with a valid method according to the needs of the

company.

- Training Program: to support the initiative of the Indonesian Cement Center of CHAMPS

(SICC) as the power house of the Indonesian Cement become a World Class Company,

particularly the Center of Dynamic Learning (CDL) and the Center of Knowledge Management

8

(CKM), the Department of CDL, have established a framework & CDL organizational structure

that will perform the functions of the Corporate University. Framework and organizational

structure CDL is as follows:

In terms of training, most of the employees in the HR function that has a role as the

Administration Expert, Strategic Business Partner, Change Agent and Employee Champion, has

been running the HR Professional Certification program in collaboration with leading HR

9

practitioners and academics. For other functions, the Company has developed competence in

accordance with the needs of the organization and potential employees are formulated in the

Training Need Analysis (TNA). As the realization of training and development programs based

on TNA, in 2014 the Company has held a variety of internal and external training programs were

attended by employees from various levels of positions. This type of training is conducted also

vary according to the needs and competency development program that has been set. The

allocation of funds for the implementation of training and education amounted Rp45,3 billion, or

an average of Rp2,97 million per employee, with details of the type of training, number of

participants and training costs as follows:

- Performance Management: In terms of employee performance appraisal, the Company will use

the assessment unit and individual performance-based Balanced Scorecard. By using the Human

Resources Information System (HRIS), performance appraisals work units managed in the

CPMS Application (Corporate Performance Management System) and assessment of employee

performance is managed in the application ePMS (Employee Performance Management System).

The Company will have a performance appraisal data and competence of employees routinely

conducted and managed in an integrated way throughout the company. This data will be very

useful for determining the amount of employee performance incentives, implementation of

promotion, transfer and various interests in the management of other Human Capital. In

corporates, Key Performance Indicators and targets - targets individual employee performance

assessment is derived from the KPI targets and performance appraisals work units. Performance

assessment unit called Corporate Performance Management System (CPMS) starting from the

corporate level to the smallest unit in the Company or in other subsidiary companies. With

individual performance assessment, placement of employees to fill positions in the organization,

especially when there are overseas expansion, then employees are selected that have the best

performance and competence.

10

- Career Path: In connection with the development of rapidly growing companies as well as the

need for a Career Path System definite and orderly at all levels of employment at the company's

organizational structure which aims to ensure the sustainability of careers for all employees of

the Indonesian Cement Group Company is planning the implementation Career Path, assisted by

leading HR consultant, aiming in order to obtain optimal results in the employee career planning.

- Knowledge Management: in line with the initiative of the Center of Knowledge Management

(CKM) in the power house SICC, the Company establishes a framework Knowledge

Management and developing supporting technologies that support the activities of Knowledge

Management & Collaboration.

Maintaining Human Capital in the process, the Company has initiated in aspects:

- Remuneration: The Company has completed and implement standardization job grading as the

basis for the implementation of reward management system using the Hay reference level,

though still requiring more intensive phase of socialization.

- In addition to laying the groundwork grading system, the Company has also designed the

standardization of the remuneration structure throughout the Operating Company (OpCo).

Powered by HRIS facilitate the standardization of the administrative processes mainly related

kepersonaliaan tour of duty for employees throughout the OpCo.

- In line with the standardization of the remuneration structure also made efforts to establish a

performance-based culture with a performance-based incentive model. In the sub-project

Employee Performance Management, the Company establishes standardization employee

assessment based on the criteria KPI and competency criteria. Results of the second assessment

criteria will be merit increase of the underlying decision determination and provision of

incentives. Through this way the behavior of employees is expected to be formed in line with the

company KPI. The Company provides remuneration in the form of basic salary, allowances fixed

(allowances) and allowances are not fixed (Presence, eating aid money, tasks, supervision,

overtime, location), assistance and donations (marriage, moving costs, grief, rent, legal aid ) and

the existence of incentives based or linked directly to the performance of the company to

employees in the form of 3-month performance incentives and annual production services.

- Industrial Relations: To build a harmonious Industrial Relations, dynamic and just between the

Company's management and employees, then be made to the Collective Labor Agreement

(CLA). The aim is to ensure the security of rights and obligations with mutually recognize the

11

existence of each party, to increase motivation / work productivity so as to ensure efficient

implementation of good corporate governance and true. In the CBA is set on labor relations,

working time and leave, dispensation, remuneration, and facilities and well-being. In the CBA of

the Company stated unequivocally that in terms of conduct of industrial relations, the Company

is obliged to provide welfare to employees in an open, democratic and fair and provide

employees' rights as stipulated in the company adapted to the prevailing Government Regulation.

- Benefit and Working Facility: The Company continued to improve the motivation of

employees to continue to contribute and innovate through permberian proper appreciation for

employees who excel as: GKM champion (Quality Control), SIAI (Semen Indonesia Award on

Innovation), SS (Suggestion System) , 5R, arts, sports, etc., as well as awards to employees

Exemplary Signs Inner Bonding with tenure of 10, 15, 20, 25, 30 and 35 years old. In supporting

the smooth operation of a particular aspect of improving the physical fitness of employees

(physical fitness), the Company provides health care services for employees and insured

families.

- Employee Demography: As part of the implementation process of regeneration, as well as

repositioning and reorganization in line with the Company's development and expansion plans in

the future, the Company made adjustments to the number of employees in line with business

growth. The number of employees of the Company comparative ratio of 2 (two) years experience

changes. In 2012 the number of employees of the Company amounted to 6659 people while in

2013 amounted to 6,320 people. Details of the Company's employees in 2014 based on the

management level, age, and education level are as follows:

12

Retaining Human Capital in the process, the Company has initiated in aspects:

- Talent Management: The Company has made the promotion as many mutations as many as 336

employees and 1,730 employees. Implementation of promotion done by the method of

assessment and the fit and proper test. In the whole process of recruitment, training, promotion

and remuneration, the Company made the recruitment process based on competence and

operational needs of companies regardless of race, religion and gender.

- Separation: There are 370 people who no longer existed as employees as of December 31,

2014. This makes the turn over rate of the Company was increased to 1%. Information Capital

In order to support the acceleration of business decisions to improve the efficiency and

effectiveness of operations, the Company develop and improve the quality of its main assets,

namely information capital. Improved quality is done through the development of Information

Technology's role as a catalyst that can directly accelerate the growth of our business. Therefore,

in line with the strategy and business development roadmap, the Company has consistently run

13

initiatives contained in the master plan of information and communication technology (ICT

Master plan) in order to support the business strategy and to strengthen its competitiveness in the

cement industry, where cost efficiency is one of the main keys to win the competition. The

Company also compiled Target Operating Model ICT to ensure IT support in the implementation

of business strategies with the principle of existence:

• Standardize Business Processes and Systems throughout the group Semen Indonesia

• Increasing the level of automation of the process

• Improved control

Target scheme ICT operating models to support business strategies described in the following

schemes:

1.2 Strategic Posture

a. Mission Developing cement business and related industries oriented customer satisfaction.

Realizing international standard company with competitive advantages and

synergies to increase the sustainability added value.

Realizing social responsibility and environmentally friendly.

Providing the best value to the stakeholders. Build competencies through human

resource development.

14

b. Objectives

The Company is committed to make GCG as a culture in managing the company. To achieve

these goals, the Company establishes GCG mission as follows:

1. To realize the sustainability of the company through a management system based

on the principles of transparency, accountability, responsibility, independence and

fairness.

2. Empowerment function and independence of each organ of the company, namely

the General Meeting of Shareholders, the Board of Commissioners and Board of

Directors.

3. Embody the entire organ company in decision making is always guided by high

moral values and compliance with regulations and legislation in force.

Company applies the principles of good governance to ensure the achievement of optimal results

in the implementation of GCG, include:

1. Increasing the Company's performance through the creation of a decision-making

process better, increasing operational efficiency of the Company as well as over

increasing services to stakeholders;

2. Increasing corporate value through improved financial performance and risk

minimization investment decisions conflict of interest.

3. Increased investor confidence;

4. Achieving stakeholder satisfaction due to increased corporate value and dividends

of the Company;

5. Directing and controlling the company's labor relations organ is the General

Meeting of Shareholders, the Board of Commissioners and Board of Directors;

6. Improve management accountability to shareholders of the Company by taking

into account the interests of stakeholders;

7. Creating clear working relationship between the company and stakeholders;

8. Directing the vision and mission of the company and increase the professionalism

of human resources;

15

Encourage and support the development of enterprises, enterprise resource management and risk

management more effectively so as to increase the value of the company.

Through commitment and consistency of the application of good corporate governance, the

Company believes will be able to prevent practices of corruption, collusion and nepotism (KKN)

and to improve the function of oversight in the management of the Company. In addition to this,

the consistent implementation of GCG is also expected to improve business performance and

sustained growth that will ultimately increase the value of the Company (corporate value) for its

shareholders and other stakeholders.

Management Commitment of compliance with GCG consists of several policies and related

provisions, such as by setting the duties and responsibilities of each function associated with the

planning, implementation, and management of the company's internal controls, determining the

appropriate level for managing the company's internal controls, the achievement of targets,

designing policies disclosure controls and procedures, documentation, reporting, and provide a

written statement concerning the result ICOFR effectiveness and results of the self assessment

conducted on a periodic basis.

16

c. StrategicSTRATEGIC HOLDING

Transformation of the Company as an effort to improve the performance, after the adoption of

Functional Holding through synergy of their respective competence of companies, both in

operations and in marketing. Company to improve the quality of the organization and conduct

more intensive communication with stakeholders in each operating company.

In 2012, the Company intensified efforts to establish a more strategic holding company ensures

the implementation of synergies in all operational aspects of the company that shelter under

the group of companies. Through the establishment of strategic holding, the Company believes

the full potential and competence of the company in the group either in operations, production

and marketing especially, can be the one with the better mix to deliver optimal performance.

Through the application of strategic holding, then the position "Holding" of the subsidiary (ie

cement company and a subsidiary that will come) to be very clear, namely:

1. HoldCo determine the direction of the group    

2. In the coming period, each additional OpCo will be at the same level as the existing OpCo

Witha clearposition and function ofthese, you will geta variety ofkey benefits, including:

1. Theclearseparationbetween the roles ofHoldCovsOpCowithclear separationof the

rolesandresponsibilitiesunderseparate legalentities. AllowingHoldCoHoldCoto operateasa

"pure" tomanageallsubsidiariesOpCo.

2.In the short term: Potentialbenefitsof highersynergiescan be derivedfor betterrelationshipand

increasedcooperation betweenOpCo.

3.In the long run:

a. Support thefuture growthof the Companyin the implementation ofregionaland

internationalexpansion strategythroughthe acquisition ofothercementcompanies.

b. Maximizingthe knowledgeandability ofthe groupin a variety ofoperational areas, including:

marketing, procurement, R & D, to driveoperational improvementsand performance

optimizationthrough the implementationof best practicesineachof these fields.

17

d. Policies

PT Semen Indonesia (Persero) Tbk as the company seeks in industrial, cement, mining,

production, trade in goods and services, energy, waste management, investment and the

provision of related services to the cement industry and / or other industries have committed to

always increase the value added for the stakeholders. In managing the Company, the Board of

Directors determines the policy as follows:

1. Always strive to meet the expectations and needs of consumers and give priority to quality,

availability and service.

2. Make efforts increase efficiency, productivity and production capacity in order to meet market

demand and maintain domestic market share and developing regional markets.

3. Make an effort to fulfill the raw materials and energy as well as the development of

Organization Capital, Information Capital and Human Capital to ensure continuity of operations

and business growth.

4. Increase the value of the company through the development of enterprises by optimizing the

potential of their resources and existing business opportunities and implement strategic projects

productive and effective independently.

5. Strengthening group synergy in efforts to increase competitiveness by optimizing network

resources and business-owned enterprise.

6. Manage and control all activities of the company by way of:

a. Always obey the laws and regulations relevant to the company's business

b. Better environmental management to anticipate the impact of global warming, including the

reduction of air pollutants; reduction and utilization of B3 waste and / or non-B3; water

conservation; protection of biodiversity; energy efficiency; as well as the prevention of accidents

and occupational diseases

c. Fulfillment of the Indonesian National Standard (SNI) and international standards, conduct

testing using calibrated equipment, standard testing methods and supported human resources

competent and free of pressure

18

d. Proactively increase the commitment to the development of the surrounding communities.

Improved profitability, environmental management and community empowerment by the

company in line with the function of the triple bottom line and always pay attention to aspects of

risk as well as the best practices of good corporate governance (GCG) to create an international

company.

Company policy is communicated to stakeholders and consistently implemented, evaluated and

improved continuously in the action plan outlined in the Target Company.

2. STRATEGIC MANAGER

BOARD OF DIRECTOR

President Director

Suparni, born on December 13, 1958, was appointed as President Director in Extra Ordinary

General Meeting in 2015. Previousle he was appointed as Acting President Director based on a

decision of the Board of Commissioners of PT Semen Indonesia (Persero) Tbk No. 017 / SI /

Kep.DK / 12.2014. The current term of his appointment as Director of the Company will expire

in 2017. Join the Semen Gresik in 1986. Previously been Head of Production Plant

Compartment Tuban 2007 and Head of the Department of Corporate Development (2006-

2007). Head of Tuban Plant Production II (2002-2006). Electrical Engineer graduate from ITS

Surabaya.

19

Director

Ahyanizzaman, born on July 6, 1966, was appointed as a Director at the Extraordinary General

Meeting 2011. The current term of his appointment as Director will expire in 2016, previously

served as Chief of the Division of Finance (2006-2010), Chief of the Division of Finance and

Accounting (2010-2011) PT Semen Gresik (Persero) Tbk. He began his career in PT Semen

Gresik (Persero) Tbk since 1991. S1 graduate accounting Airlangga University Surabaya

Director

AunurRosyidi, was born on April 20, 1968, was appointed as a Director at Annual General

Meeting 2015. The current term of his appointment as Director of the Company will expire in

2020. He previously served as Commercial Director of PT Semen Gresik 2013-2015. He also

served as the SVP Commercial Commercial Director of PT Semen Indonesia (Persero) Tbk.

Served as President Commissioner of PT KawasanIndustri Gresik and GM of Procurement &

Inventory Management PT Semen Indonesia (Persero) Tbk. He completed his postgraduate

(S2) with major in strategic management in SepuluhNopember Institute of Technology.

20

Director

AmatPriaDarma, was born on August 13, 1961, was appointed as a Director at the

Extraordinary General Meeting Shareholders Semen Gresik 2012. The current term of his

appointment as Director of the Company will expire in 2017. Previously, he served as Head of

Distribution and Transportation Division. His career in PT Semen Gresik (Persero) Tbk started

in 1986. 1 He completed his undergraduate degree with a major in Chemical Engineering

Institute of Technology Surabaya 1985

Director

GatotKustyadji, was born on July 25, 1963. He was appointed as a Director at the Annual

General Meeting 2014. The current term of his appointment as our Director will expire in

2019 . Previously, he served as Research Director of PT Semen Tonasa( 2005-2010 ) , Director

of Research and Operations of PT Semen Tonasa ( 2011-2012 ) , Production Director of PT

Semen Tonasa (2012-2014) and as Director of PT . Semen Gresik . He completed his

undergraduate degree with a major in Chemical Engineering Institute of Technology Sepuluh

November and Management at the University of Indonesia. He also completed his master in

Economic Development Planning , University of Andalas. He received his Doctorate majoring

in human resource at University of Brawijaya.

21

Director

Johan Samudra, was born on June 22, 1956. He was appointed as a Director at the Annual

General Meeting 2014. The current term of his appointment as our Director will expire in 2019.

Previously, he served as CEO of Thang Long Cement Vietnam, Research and Development

Director of PT Semen Padang (2003-2005) and as GM Capex Management Group PT Semen

Gresik. He completed his master education (S2) inFinance Management at Andalas University.

Director

Rizkan Chandra, was born in Jakarta on January 27, 1969. He was appointed as a Director at

the EGM in 2015. The current term of his appointment as Director will expire in 2020.

Previously, he served as Director of Network, IT & Solution PT Telekomunikasi Indonesia

(Persero) Tbk, Commissioner of PT Telkomsel and Managing Director PT Sigma CiptaCaraka.

He completed his under graduated degree with  a majoring in Informatics Engineering ITB and

master education majoring in Management of Technology (MSc) National University of

Singapore.

22

BOARD OF COMMISIONERS

President Commisioners

MahendraSiregar, was born on October 17, 1962, was appointed as the Commissioner in

Extraordinary General Meeting of Shareholders June 26, 2012. The current term of his

appointment as our Commissioner will expire in 2017. He also served as Deputy Minister of

Finance 2011-2016 period. The end of 2001 he joined Indonesian Coordinating Ministry of

Economic Affairs as Special Staff. In 2005 was sworn in as Deputy Minister for Coordination

of International Cooperation. He was then appointed as Chairman and CEO of Indonesia

Eximbank in 2009 and was appointed as Vice Minister of Trade in the same year. In addition,

the Adaptation Fund Board to be a member of the United Nations Framework Convention on

Climate Change (UNFCCC) representing Asia in the year 2007-2009. Getting a degree in

Economics from the University of Indonesia in 1986 and S-2 Economics from Monash

University, Australia in 1991.

Independent Commssioners

HadiWaluyo, was born on April 3, 1950, graduated from the military academy in 1972,

retired in 2006 with the rank of letnanJenderal who once held several positions, among others,

the U.S. Military Command OPS / BRAWIJAYA 1995 and Rindam V / BRAWIJAYA 1996,

23

PABANLAT SOPSAD 1997, TNI-DIRLAT Kodiklat AD 1998, the army Chief of Staff

WAASOPS 1998 1999 DANPUSTER army PANGDAM VI / TPR 2003 and army Chief of

Staff from 2000 to 2002 ASOPS Kodiklat and Pangkostrad army (2004-2006) military

education SESKOAD LEMHANAS 1998 1994 1985 SESKOGA got a political science degree

in 1994 at the Open University and been President Commissioner of PT Mandala Airlines

(2004-2006) was appointed Commissioner on the General Meeting of Shareholders 2011,

which will expire on the General Meeting of Shareholders 2016.

Independent Commssioners

MuchammadZaidun,was born on May 29, 1952, was appointed as a Commissioner at the

Annual General Meeting 2014. The current term of his appointment as our Commissioner will

expire in 2019. Currently serves as Dean of the Faculty of Law, Airlangga University (2007-

present). He also serves as a mediator of Indonesian Association Management (AMINDO) and

a Board Member of the Constitution Court Ethics since 2011. He completed a Bachelor of

Laws degree and a Master of Science in Social Sciences from Airlangga University.

Commssioners

AchmadJazidie, was born on February 19, 1959. Appointed as The Commissioner in 2007,

the current term of office will expire in 2017. Currently a Professor at the Department of

24

Electrical Engineering Faculty of Industrial Technology, at the InstitutTeknologiSepuluh

November (ITS) Surabaya (2006 - present), Head of Project Implementation Board for

PREDICT - ITS (Project for Research and Education Development on ICT in ITS), JICA -

ITS cooperation (2006 - 2010). Previously Vice Rector III of ITS (2003 - 2007),

Commissioner of ITS Partnership (2006 - 2007), Visiting Professor at Saga University, Japan

(2004) and Head of Public Program University Links System, East Java (2003 - 2007),

Institutional and Cooperation Director, Higher Education, Kemdikbud (2010 - present).

Awarded a Doctorate in Industrial and Systems Engineering from Hiroshima University, Japan

and a Masters in Information Engineering from the same university, as well as a Bachelor

degree in Electrical Engineering from ITS.

Commssioners

MarwantoHarjowiryono, was born on June 6, 1959, was appointed as a Commissioner at the

Annual General Meeting 2014. The current term of his appointment as our Commissioner will

expire in 2019. Currently he serves as Director General of Treasury, Ministry of Finance since

November 2013. Previously served as Director General of Fiscal Balance Ministry and

became Executive Director of the Asian Development Bank. He completed his education at

the University of Gajah Mada S1, S2 education at Vanderbilt University, Nashville,

Tennessee, USA and S3 education at the University of Gajah Mada.

25

Commssioners

WahyuHidayat, was born on July 3, 1954. He was appointed as a Commissioner at the Annual

General Meeting 2014. The current term of his appointment as our Commissioner will expire

in 2019. He currently serves as a Deputy of Restructuring and Strategic Planning, Ministry of

SOEs since March 2013. Previously served as Secretary of the Ministry of SOEs in 2012 and as

Commissioner of PT Bank Mandiri (Persero) until 2014. He graduated Bachelor of Economics

at GadjahMada University.

Independent Commssioners

Sony Subrata, Born in Jakarta. Appointed as The Commissioner at the EGM, 2015. The

current term of office will expire in 2020. Previousle served as Commissioner of PT Ciputra

Surya Tbk 1999-2003. Become Nations Foundation Chairman 1997-1999. Graduated in

Bachelor of Commercee, UNSW Australia.

3. EXTERNAL ENVIRONMENT

3.1 Natural Environment

26

A. Regulation and Permission

Based on Decree of the Minister of Industry No. 19 / M-IND / PER / 5/2006 on Standardization, Development and Supervision of Indonesian National Standards Sector Industry.

Assign:

Minister of industry of the republic of indonesia on Indonesian national standard (sni) of cement Mandatory.

Article 1

(1) Entry compulsory Indonesian National Standard (SNI) to:

1. White Portland Cement

SNI 15-0129-2004 HS: 2523.21.00.000;

2. Portland Cement Pozolan

SNI 15-0302-2004 HS: 2523.29.90.00;

3. Portland Cement

SNI 15-2049-2004 HS: 2523.29.10.00;

4. Portland Cement Mix

SNI 15-3500-2004 HS: 25223.29.90.00;

5. Cement Masonry

SNI 15-3578-2004 HS: 2523.90.00.00; and

6. Portland Composite Cement

SNI 15-7064 HS: 2523.90.00.00.

(2) If the SNI referred to in paragraph (1) is revised, SNI applicable

obligatorily is the revising SNI.

Article 2

 Industrial companies that produce cement, shall:

a. SNI applying Semen as referred to in Article 1;

27

b. has the SNI Marking Product Certificate (SPPT-SNI) Cement, according with provisions be effective;

c. Cement SNI sign on each packaging of cement products and to Bulk cement must include SPPT_SNI on shipping documents.

Section 3

Cement traded in the country, which comes from the production domestic or imported must meet the requirements of SNI as meant in Article 2

Article 4

(1) Issuance of SPPT-SNI cement as defined in Article 2 letter b, conducted by Product Certification Institution that has been accredited by the Committee National Accreditation (KAN), through:

a. quality conformance testing of semen in accordance with the provisions of the SNI;

b. audit the implementation of the quality management system SNI 19-9001-2001 / ISO 9001- 2000 / and its revision or other quality management system recognized.

(2) The results of the cement product certification referred to in paragraph (1) reported by the Institute for Product Certification to the Director General of Agro and Chemical Industries by copied to Head of Industrial Research and Development, Ministry of Industry.

(3) The test referred to in paragraph (1) letter a can sub-contract on testing laboratory has been accredited by KAN or accredited by agency accreditation which has a Mutual Recognition Agreement or Mutual Recognition Arrangement (MRA) with KAN.

(4) Audit quality management system referred to in paragraph (1) letter b based on the guarantee issued by the certification body of quality accredited by KAN or accredited by accreditation bodies which have Mutual Recognition Agreement or Mutual Recognition Arrangement (MRA) with KAN.

Article 5

(1) Cement imports entering Indonesian Customs territory shall meet

SNI provisions are proved by SPPT-SNI.

(2) Cement imports which have had to be registered by the importer SPPT_SNI to the Director General of Foreign Trade, Ministry of Commerce to obtain Goods Registration License (SPB).

Article 6

28

Cement imports which do not comply with the provisions referred to in Article 5 banned from entering Indonesian customs area and should be re-exported or destroyed.

Article 7

(1) Development and Supervision of the implementation of the application of SNI cement shall be conducted by the Director General of Agro and Chemical indsutri.

(2) The Director General of Agro and Chemical establish technical guidelines the implementation of the guidance and supervision referred to in paragraph (1).

(3) Research and Development Agency indsutri implement guidance and supervision of the Institute for Quality Conformity Assessment in order Cement SNI application is mandatory.

Article 8

Supervision of the produl Semen as referred to in Article 3 is implemented in accordance with the legislation in force.

Article 9

Entrepreneurs who violates the provisions of Article 3 shall be liable to sanctions in accordance with the legislation in force.

Article 10

With the stipulation of this regulation, the Minister of Industry No.29 / M / SK / 2/1995 on the Establishment of National Standards Ratification also Indonesia and SNI Mark compulsorily to 10 (ten) kinds of Industrial Products, all linked to the SNI cement shall be invalid.

Article 11

The regulation shall come into force six (6) months after the date specified this regulation. For public cognizance, this Ministerial Regulation shall be promulgated in the State Gazette Rapublik Indonesia.

B. Responsibility

To create sustainable development.

29

Environmental Management Program

Company carrying out various activities in the Environmental Management Program pollution prevention and pollution, as well as building "Green Cultural Production" in plant operations through the following activities:

Air Pollution Control

To prevent water pollution caused by the transport of pollutants by rain, the Company prevention efforts through: slabing making concrete, drainage manufacture, and operation of oil trap, followed by periodic monitoring of water quality, both by the Company's internal and independent laboratory.

Air Pollution Control

In the prevention of air pollution, all the Company's production facility is equipped with

dust catcher equipment like Electrostatic Precipitator (EP), cyclone, conditioning tower, and bag house filter.Selain use the proper equipment, the Company provides a buffer zone, planting trees in the green belt area around raw material and green barrier land in and around the factory which serves to reduce air pollution.

Resource Conservation Program

The Company is also giving attention to the efficiency of the utilization of natural resources and energy to maintain the continuity and availability. Therefore, the Company did resource conservation measures, through the following programs:

1. Energy Efficiency

In the framework of energy security, the Company made energy efficiency programs through the following efforts:

Utilization BBMA (Fuels and Materials

Alternative) of other industrial by products and agricultural waste as a substitute for ingredients derived from nature. Alternative energy as the fuel is used such as oil sludge and biomass from rice husk, cocopeat, residual tobacco and others. Up to 2012 BBMA realization utilization reaches 5% of total energy consumption.

Conduct audits and energy management in energy efficiency efforts electricity and thermal energy. This step is followed by:

To increase the performance of equipment and control plant operations in order to save energy.

30

Increase production capacity and optimize the operation of control, so the index of fuel costs / ton product becomes smaller.

2. B3 waste management and non-B3

B3 waste management and non-B3 is done carefully and cautiously, always prioritizing aspects of compliance with laws and regulations. Co-processing efforts are preferred to ensure that the waste produced can be recovered into the production process in accordance with the principles of the 3Rs (Reduce, Reuse, and Recycle), as follows:

Make use of used oil for lubrication equipment manufacturer.

Use rags and gloves contaminated with oil / oil to alternative fuels.

Perform reject recycle material spills to be returned to the production process. In addition to the internal waste management, the Company also uses for the waste of other industries as raw materials and alternative fuels by co-processing methods. This activity aims to help provide solutions for industrial waste treatment efforts with safe and environmentally friendly.

3. Water Conservation

Management of water conservation through rainwater utilization efforts and waste water plant for reuse (recycle) as process water in order to water use efficiency. Management is also conducted through the maintenance and inspection of water distribution lines (piping, valves, etc.) is continuous, which is necessary for clean water and irrigating rice fields surrounding communities.

4. Biodiversity

Protection of biodiversity through land reclamation and reforestation post mining.

Land reclamation land reclamation activities post mining and post miningn conducted in accordance with the EIA document-UKL / UPL. Some reclamation activities conducted by the Company include:

Former mining land use land as water storage reservoirs, fisheries, and entertainment facilities.

Utilization mined for agricultural, residential, office, industrial and as a place of business.

Revegetation most ex ex-mining land by planting cover crops and crops productive.

In 2012 the Company achieved a limestone quarry reclamation of 20 ha with a number of plants 43,000 trees that the implementation process began in 2011.

31

Greening

Company's greening efforts in a planned and continuous, with a series of activities include:

Greening the Green Belt and Green Barrier-run partnership with residents about the Company.

Planting trees at the edge of the highway between Gresik-Lamongan, Tuban-Sedayu-along about 150 km.

Mangrove Development Center in Tuban beach a mangrove tree planting.

Operational review

During the year 2012 through the implementation of various afforestation programs in various areas, the Company has managed to plant different types of trees greening plants reach the number 295 815 trees, with details of the type of activity, location and amount of investment as follows.

3.2 Societal Environment

PEST Analysis

a. Political factors

Indonesia is extremely political conditions affect the survival of PT. Indonesian cement. Unstable politics in Indonesia, and the country is getting dissolved in the euphoria of democracy regardless of the driving sectors of economic order, as well as government policies that are less favorable for foreign investors. While politics and policies that do not favor the investment climate in Indonesia, global geopolitical factors and the pressure of financial crisis that can lead to the decline of new capital investment by foreign investors in Indonesia.

Implementation of government regulation in the areas of planning, programming and budgeting also inhibits the development process because the budget process is often not related to the basic policy, too complex, inflexible and cannot accommodate the programs and projects are multi-year. As a result, the back-loading activity became more severe, and the completion of a multi-year project running slow.

Government policies also tend to be ad hoc because a comprehensive policy is not prepared, resulting in the low credibility of the government and does not improve the business and investment climate. Too bad the framework of the implementation of cross-sector policies, particularly with regard to unclear authority and cross-sector budgets no / limited for leads Organizations are given the task.

b. Economic Factors

32

Indonesian economy in 2014 is generally less conducive for businesses in almost all sectors of the economy. One reason is that the global economy still has not recovered after the crisis that began in 2008.

In 2014 the global economy is running out of balance. The economy of the United States as one of the superpowers, began to show recovery, thus making the US government and the Fed began to realize the program of Quantitative Easing, ending the stimulus program that has several years spent to stimulate economic growth. This step makes the US dollar strengthened against almost all currencies in the world, including the rupiah.

Meanwhile, the growth of the Chinese economy that has grown into a major world economic powers, is still weak. Likewise, Japan's economy and Western European countries that are still experiencing a slowdown in growth.

Global economic conditions makes the demand for the products of primary agriculture and mining, as the mainstay of Indonesian export products decreased. The result is that Indonesia experienced a trade deficit exacerbated by rising fuel subsidy burden throughout 2014 to reach more than Rp250 trillion.

Under these conditions, coupled with the tendency of strengthening of US dollar exchange rate as has been mentioned before, make the exchange rate tend to be depressed. This makes BI eventually raise the reference interest rate from 7.50% to 7.75%. This condition makes lending rates tend to be high, so does the cost of raising funds, making the banking difficulties lending to support economic growth, so that the national bank credit grew only 11.6%, far below the growth in 2013 which amounted to 21.60%.

Another thing that makes the condition of the national economy in 2014 is less conducive to the implementation of the national agenda, the House of Representatives Election and the Presidential Election. Election situation that had lasted 'warm', affecting investment decisions both by individuals and by the business world.

The whole of these conditions make Indonesian economy in 2014 and only recorded a growth of 5.02%. Relatively high inflation rate of 8.36%, relatively similar to the previous year which amounted to 8.38%, as the impact of fuel price adjustment towards the close of 2014. It is quite encouraging is Indonesia's balance of payments will be maintained, with a deficit of only 2.95 % of GDP, with the amount of foreign exchange reserves reached US $ 111.9 billion, up from US $ 99.4 billion at the end of 2013 and the exchange rate is only weakened by 2.50% on the position of Rp12.440 / US $ of numbers Rp12.189 / US $ in 2013. While consumer confidence index is maintained.

c. Social Factors

PT Semen Indonesia provides significant social impact. Due PT Semen Indonesia is a company that has a role in the construction field where construction work is labor-intensive work that absorb so much manpower, so the social impact that helped the government in reducing unemployment.

33

d. Technology Factors

Implement the SAP ERP go live on July 1, 2013 to bring together information technology systems into systems that have been applied in the Indonesian Cement.

Semen Tonasa

Company to increase capacity at the plant Tonasa IV of the capacity of 7,800 tonnes per day to 8,500 tons per day, which was done partially.

Along with the increased capacity Tonasa Cement Plant, currently the Company is building a coal mill unit at the factory Tonasa IV, with a capacity of 80 tons per hour with the realization of the construction progress at the end of 2014 reached 88.49%.

Semen Gresik

In 2014, the Company has completed the construction of 1 unit of vertical cement mill in Tuban plant with a capacity of 1.5 million tons per year. With the completion of the project total Tuban plant design capacity increased to 14.7 million tons of cement per year.

Along with the increased capacity, the Company has also completed the construction of supporting facilities as follows:

- Centralized Storage Coal, which can serve the needs of the coal in Tuban I, II, III, and IV.

- Additional capacity Cement Bulk loading onto the ship.

- Centralized Storage Trass, to meet the needs of trass in cement mill Tuban I, II and Tuban

new vertical cement mill.

The Company has completed a major equipment procurement contract for modification Clinker Cooler TubanTuban II and III with the latest technology Cross Bar Cooler.To Tuban II Clinker Cooler installation has been completed in 2014. As for Tuban III targeted for completion in 2015.

Packing Plant Development

To support distribution facilities, the Company currently has 24 units packing plant spread throughout Indonesia. In 2014 the Company completed an additional one packing plant in Mamuju, West Sulawesi and one packing plant in Kendari, Southeast Sulawesi.

Currently the Company is completing the construction of several other packing plants, respectively in Lampung, Pontianak and Balikpapan. Packing plant development objectives are:

The cost efficiency of transportation, distribution and packaging.

Ensure continuity of supply of cement in the marketing area of the Company.

Expansion of the market.

34

Completion of construction of various facilities such distribution makes the Company more ready to welcome the chance to increase domestic demand and increase market share in the future.

3.3 Task Environment

Analysis ofFivePorterPowerconsistsofthe threatof substitute products, newentrants, suppliers,

buyersandindustrycompetitors. Theanalysisof fivepowerporteratPTSemen Indonesia:

1. Threats New Arrivals

Newcomers who may be a threat in the Indonesia cement industry is the Red and White, Garuda, and Poncement. In terms of economies of scale it can be concluded that the threat of new entrants relatively weak, because of the company itself will require an additional fee if you want to increase production capacity and sales. In terms of product differentiation can be concluded that the threat of new entrants relatively strong, when newcomers can make products, it produces has a different and unique characteristics superior to competitor products. In terms of working capital requirement and can be concluded that the threat of new entrants relatively weak, because quite a lot for capital to be owned by a newcomer to start a business in the cement industry. The terms transition costs incurred buyer can be concluded that the threat of new entrants is classified. Especially for new entrants have the opportunity to seize market dealer store, the manufacturer and ready mix concrete, project, and households, but it is rather difficult to seize market distributors company. In terms of access to distribution channels the threat of new entrants are

35

weak, especially if they do not have a strong channel in the cement industry. Cost disadvantage in terms of size it can be concluded that the threat of new entrants relatively weak, especially because of the cost must be removed to increase along with the increase in production and sales volume. In terms of government policy can be concluded that the threat of newcomers relatively strong, especially because the government itself is pushing the development of the cement industry in the country. From this analysis, we can conclude threat of new entrants in the cement industry is low.

2. Bargaining power of suppliers

The supply of raw materials needed for the manufacture of cement include limestone, clay, fuel, coal, iron oxide, gypsum, and some other materials. In terms of the dominance of suppliers it can be concluded that the bargaining power of suppliers is classified, due to some of the major items (main equipment) still relies on suppliers from abroad. In terms of the transition costs incurred by the company may be concluded that the bargaining power of suppliers relatively weak, especially because some of the cement company itself also has implemented a tender system for selecting reliable suppliers and have a competitive price. In terms of the availability of substitute products or services can be concluded that the bargaining power of suppliers relatively strong, because the main raw material in the manufacture of cement is still no replacement product. In terms of the integration of suppliers with buyers, bargaining power of suppliers is still relatively weak, especially because suppliers still sell the items are concentrated in one or several raw materials only. Terms of purchase in the supplier industry can be concluded that the bargaining power of suppliers is still relatively weak, because the relationship between companies and suppliers of mutual benefit to each other. In terms of the nature of the goods suppliers can be concluded that the bargaining power of suppliers relatively weak, because the goods sold are included in the general category and are not differentiated. From this analysis, we can conclude the bargaining power of suppliers in the cement industry is low.

3. Bargaining power of buyers

In terms of the number of purchases made buyers in the cement industry can be concluded that the bargaining power of buyers fall into the category of weak, because the company itself has have many distributors spread throughout Indonesia to Vietnam. In terms of the integration of the buyer to produce its own cement can be concluded that the bargaining power buyer's weak, because the potential buyers to do backward integration derived only from the manufacturer and ready mix concrete.

In terms of product differentiation can be concluded that the bargaining power of buyers is classified, especially because the buyer can make a purchase cement products that are tailored to individual needs, so the company should be able to know and try to produce the desired cement buyers.

In terms of the transition costs incurred can be concluded that the buyer bargaining power of buyers is classified, especially for distributors who are the main buyers still have to spend a large enough shift when changing companies. In terms of the cost of purchase of the product can be

36

concluded that the bargaining power of buyers relatively strong, because the use of cement holds an average of 20% of the total budget issued. In terms of profit buyer could be concluded that the bargaining power of buyers relatively strong, because buyers will purchase a product that can give them satisfaction and profits. In terms of convenience to substitute the quality or price of the product, the buyer bargaining power of the relatively weak, because of the company itself will inevitably produce products according to the needs of consumers so much to differentiate the product. From this analysis, we can conclude bargaining power of buyers in the cement industry was moderate.

4. Threat from Substitute Products

Replacement products in the cement industry is a mixture of red bricks with sand. In terms of price performance can be concluded that the pressure from substitute products classified as strong, especially the differentiation about price are quite substantial replacement product. In terms of the transition costs incurred buyers can be concluded that the pressure from substitute products classified as weak, due to the use of this replacement product takes time and additional costs to mix the ingredients beforehand. Heeling in terms of buyers, the pressure from substitute products classified as weak, due to the current buyers will prefer a cement product when compared to replacement products because of its practicality and excellence. From this analysis, we can conclude pressure from substitute products in the cement industry is low.

5. Threat of competition in Between Competitors

In terms of the company's competitors can be concluded that the intensity of competition in the cement industry is relatively strong, especially because of the many newcomers who see opportunities that are still a little amount of competitors. In terms of industrial growth, it can be concluded that the intensity of competition in the cement industry is classified, due to slow industrial growth makes government to encourage the development of the cement industry in country. In terms of product differentiation can be concluded that the intensity of competition in the cement industry is relatively strong, especially cement companies more opportunities to continue to develop products to be better. In terms of the amount of fixed costs can be concluded that the intensity of competition in the cement industry is relatively strong, especially because of the many companies that issue high fixed costs that have to achieve certain sales targets for closing costs. In terms of capacity, the intensity of competition in the cement industry is relatively strong, because the capacity of the cement company given the relatively large number of companies which still included a little cement in Indonesia and increasing consumption. In terms of exit barrier can be concluded that the intensity of competition in the cement industry is relatively strong, because the government itself encouraged the development of the cement industry in Indonesia. In terms of

37

diversity of competitors may be concluded that the intensity of competition in the cement industry is relatively strong, because each company has a specific strategy to attract consumers. From this analysis, we can conclude the intensity of competition among competitors in the cement industry is high.

38

4. INTERNAL ENVIRONMENT

4.1 Corporate Structure

4.2 Corporate Culture

The formation of the Corporate Culture originated from the realization that the Company required a tool to unite the companies within the group, i.e. Semen Padang and Semen Tonasa, with the formulation of a universal corporate culture that accommodates employees’ aspirations. With the formation of a universal corporate culture and the accommodation of employees’ aspirations, this culture has become pervasive and practiced in all employees’ daily activitiesand become an  accelerator for performance growth to achieve the Company’s vision to become the leading cement company in the Asia Pacific region. The corporate culture is a  sourced from company management regulations in all institutions in the organization (software), which has been developed from the philosophy and values to become a guideline and belief for everyone in the Company in carrying out their jobs. The SGG Corporate Culture has been abbreviated with the acronym “CHAMPS” which contains the corporate values:

• C ompete With a Clear & Synergized Vision• H ave a High Spirit for Continuous Learning

39

• A ct with High Accountability• M eet Customer Expectations• P erform ethically with high Integrity• S trengthening Teamwork

The word CHAMPS is an abbreviation of the English word “CHAMPION” which means “winner”. The letter S at the end of the word CHAMPS demonstrates that there is more than one winner, i.e. the employees in all the companies within the Group. These cultural values can be actualized in key behavior. Redefining the Corporate Culture is a part of the efforts to improve the readiness of all ranks of employees to realize the long term plan and to achieve business growth opportunities

4.3. Corporate Resource

a. Finance

The Company successfully manage financial fundamentals remain strong, thus providing greater

opportunity for the Company to expand its production capacity as well as other related business

expansion.

40

41

b. Human Resource

In line with business development plans, changes in the pattern of business as a multinational

company and changes in the corporate structure as Strategic Holding, the Company has

implemented the Human Capital Master Plan (HCMP) The third stage is called excellent

performance. The Company emphasizes management of Human Capital (HC) on the

development of competence, character and integrity. All three refer to one objective, namely the

availability of HC highly competent, strong character and integrity to support the Company's

42

vision and mission. The Company has intensified in implementing HRIS (Human Resource

Information System), Reward Management and the run of results and the formulation of the

active ManpowerPlanning internalize Corporate Culture called CHAMPS. CHAMPS is an

acronym for Corporate Culture with basic values: Compete With a Clear & Synergized Vision,

Have a High Spirit for Continuous Learning, with the High Accountability Act, Meet Customer

Expectations, Perform ethically with high Integrity, and Teamwork Strengthening.

43

Knowledge Management: in line with the initiative of the Center of Knowledge

Management(CKM) in the power house SICC, the Company establishes a framework

Knowledge Management and develop supporting technologies that support activities Knowledge

Management & Collaboration.

.

CHAPTER III

SWOT ANALYSIS

3.1 SWOT Analysis for Strategic factors

1. Strength Analysis

The strategic factory location.

Have a competitive and qualified human resources. The Company has an advantage in

Human Resources (HR) has competence in the field of technical engineering and consultancy

services in the cement and related industries.

It has a range of distribution all over the area of marketing. PT Semen Indonesia has a

distribution advantage which supported by buffer more than 20 units in a number of strategic

areas in various regions in Indonesia, and has a buffer unit (factory) in foreign country in the

State of Vietnam.

44

Means thorough promotion to various media. Promotion policy conducted gresik cement in

order to increase sales, among others: TV on the aircraft, shop signs, billboard, radio, point,

newspapers, magazines, brand events, headbands road, and branding mobile

Have a source of funds from the Government of the Republic of Indonesia. As one of the

state in Indonesia, of course, the government will help fund the company's operations.

2. Weakness Analysis

price policy which still relies on the brain. Where is determined from price movements

every day.

There is a difference of opinion for the pricing of cement per bag for PT. Semen Indonesia

(Persero) is divided into 3 Largest Cement Plant in Indonesia, namely PT. Semen Gresik, PT.

Semen Padang and PT. Semen Tonasa.

3. Opportunity Analysis

Development Plan new warehouse. Construction of a new plant in anticipation of the

growth of the national cement demand and to maintain market share because the company has

maximized its plant utilasi. Development plan the example balls just finished construction of

Cement Plant in the District V Tonasa Pangkajene.

The number of population increases. With the increasing number of people, then it implies

that consumer demand for the necessities of life of a product will increase as well.

The development of technology. With the growing sophistication of technology and can

meet the human needs to the maximum so that the raw material processing makes the

production of higher quantity and better quality.

Market segments from various circles and groups, namely households (> 70%). Industry

regiment, industrial users of cement, and contractors.

4. Threats Analysis

economic growth. Indonesia's economy is improving from year to year and can certainly

affect the company.

unstable political developments. This can lead to reduced Ian foreign investors to invest

and loss of confidence to cooperate with Indonesia.

unstable political developments. This could cause any reduction in foreign investors who

will invest and loss of confidence to cooperate with Indonesia.

45

supply of raw materials from natural limestone limited. Natural greatly affect the supply of

raw material in the production activities of the company.

PT. Semen Indonesia (Persero) has many competitors. Competition occurs in terms of

efforts to achieve the optimum level of production, managerial capacity, sales, production of

cement clinker and itself.

Situational Analysis (SWOT) :

Matriks SWOT (Strengths, Weakness, Opportunities, Threats)

(Strengths) - S (Weaknesses) – W

S1 distribution

range

W

1

Brand image in

Southeast Asia

S2 raw material W

2

The distribution

has not mastered

Southeast Asia

S4 financial

fundamentals

S5 Competitive and

qualified human

resources

S6 Form a

company that

BUMN

PELUANG

(Opportunities) - OSO Strategy WO Strategy

O1 The existence of

the Master Plan

for the

Acceleration of

Looking for

sources of raw

materials to

meet the needs

46

Indonesian

Economic

Development

(MP3EI)

of cement (S2

O2 Market segments

from various

circles

In cooperation

with the

Government to

make the SI as a

major supplier

MP3EI the need

for cement (S6

Market

penetration for

the Southeast

Asia region (W1,

O2)

(Threats) - T ST Strategy WT Strategy

T1 AEC 2015:

liberalization of

trade between

countries

Open

representative

distributors in

each country (W1

T2 The average

cement

consumption per

capita in

Indonesia

Pursuing a

strategy of

horizontal

integration is

acquiring large-

scale cement

producer in South

East Asia (T2

T3 Availability of

raw materials

Conducted a

survey to some

areas in

Southeast Asia

47

in order to meet

the raw material

limestone (S2,

T3)

T4 The emergence of

new players in the

cement industry

Nusantara

Market

penetration to

parts of Indonesia

and in Southeast

Asia (W1, T2,

T4)

IE Matrix (Internal-Eksternal)

Scores on the matrix EFI showed a value of 3.25 and EFE Matrix 2.9. So it can be

concluded SI is in position IV space. This indicates that the SI should implement the strategy of

"Growing up and build" the alternative - alternative strategies as follows:

- Integration backward, forward integration, horizontal integration

48

Figure 3.4: The position of the Indonesian Cement Matrix IE

Source: David, Fred R. Strategic Management. Jakarta: Four Salemba 2009 and refined his own)

- Market penetration

- Market development

- Product development

1. Strengths and weaknesses by internal factors SI:

a. Its strength includes distribution range, raw material quality, strong financial

fundamentals, competitive and qualified human resources as well as the enterprise, SOE.

b. The disadvantage includes the brand image in Southeast Asia are still not familiar and

distribution of products that have not mastered Southeast Asia

2. Opportunities and threats are owned by external factors SI:

a. The chances covering the MP3EI program and market segments that come from

various backgrounds

b. Threat include the AEC (ASEAN Economic Community) in 2015 which led to the

liberalization of trade between countries in the Southeast Asia region, average consumption -

average cement per capita in Indonesia is still low compared with neighboring countries, limited

availability of raw materials from nature, and the emergence of new players The cement industry

Archipelago.

3. Recommendation / proposed business strategy that should be done by SI in order to

compete in the national and regional Southeast Asia are opening the distributor as a

representative of each country in Southeast Asia

3.2 Strategic Alternative

Analysis BCG Matrix

49

PT. Semen Indonesia (Persero) states that have Market Share of 43.8% in the year 2013

(http://www.kemenperin.go.id/artikel/3839/Semen-Gresik-Kuasai-39,7-Pangsa-Pasar)

PT. Semen Indonesia (Persero) has a Market Growth at 6% per year

(http://www.semenindonesia.com/page/read/semen-indonesia-wujudkan-pertumbuhan-

berkelanjutan-2510)

Based on the above presentation of two PT. Semen Indonesia (Persero) enter into the type of

STARS as having an Market Share is quite high, approximately 43.8% and has a Market Growth

Rate by 6% in the year 2013

At this stage, as the decision-maker to produce alternatives strategies to fill the gaps found in

perbandngan profile opportunities and environmental challenges (ETOP) and profit strategy

profile (SAP) with the objectives of the company. Basically that produce or arrange alternative-

an alternative strategy is the corporate top managers. While the company has several divisions or

units, alternative-alternative strategies olehh composed of top managers at the division and

corporate top managers

Strategy Implementation

50specify and communicate measurable objectives for the company as a whole

Strategy process does not end on election strategies and alternatives, but it should be an

implementation of the strategy formulation, it means that the next step is to run the existing

decision.

In the implementation of the necessary details more precise and clear, how such a strategy is

taken, and administrative mechanisms have been established to measure the strategic direction

has been chosen as a guide in taking action. Therefore, a good strategy without the effective

implementation will not be successful. Overcoming the gap between desired outcomes (ideal)

with results expected not only requires the selection of strategies

3.3 Recommendation

Table of Strategy Recommendations for Semen Indonesia

51

Evaluation result

ensure control mechanisms

establishes provisions reward

implement ways to measure achievement

Set the Main Objective

establish the task on each organization

make policy as a working guideline

communicating targets to be achieved

Category Matrix SWOT Matrix IE Grand Strategy

Market

Market

Development

Market

Development

Market penetration

for the Southeast

Asia region (W1,

O2); Market

penetration to parts

of Indonesia and in

Southeast Asia (W1,

T2, T4)

Market

penetration

Market

penetration

Product

product

development

product

development

Related

diversification

Distribution

Open representative

distributors in each

country (W1, W2,

T1)

Forward

integration

Forward

integration

Supplier

Conducted a survey

to some areas in

Southeast Asia in

order to meet the

raw material

limestone (S2, T3);

Looking for sources

of raw materials to

meet the needs of

cement (S2, O1)

Backward

integration

Backward

integration

Horizontal horizontal horizontal

52

Cooperation integration integration

Etc

In cooperation with

the Government to

make the SI as a

major supplier

MP3EI the need for

cement (S6, O1)

1. Markets Category

For this time, the SI should focus first on the market in Southeast Asia that has not possessed. So

it is not possible for the company to target new markets.

2. Categories of products

SI can improve their products by adding new product lines (adjusted to market conditions and

consumer demand).

3. Distribution Category

SI far has 13 distributors in Indonesia and several area managers in Indonesia as well. So it takes

a new distributor's office as a representative of each country in Southeast Asia.

4. Category of supply

Because the main raw material for cement is limestone, lime, etc., that are available only from a

limited nature, so it is not possible for the company to undertake backward integration. However,

the company can increase its supply by conducting a survey in the entire Southeast Asia to find

new potential raw materials.

5. Categories of horizontal cooperation

This category is feasible by SI by acquiring a competitor in the regional class because it can

increase its market in Southeast Asia by increasing its production capacity.

53

6. And others

The strategy is feasible by SI to meet the needs of development in Indonesia, such as the Sunda

Strait bridge construction and supporters region.

Conclusion

SMIG holding formation is a process with the pioneering efforts of corporate restructuring

gradually until finally formed a holding strategy. The formation of an effort to meet the demand

for cement in the country is expected to increase along with economic progress in the future.

Implementation of strategic holding, then the position of "holding" of the subsidiary (ie cement

company and a subsidiary that will come) to be very clear, namely: HoldCo determine the

direction of the group. In the coming period, each additional OpCo will be at the same level as

the existing OpCo. The key to success in the transformation process is to synergize the four

aspects, including employee participation, strength of leadership, the support of the environment

(external and internal), a flexible integrated system

54

REFERENCES

David, Fred R. Strategic Management. Jakarta: Four Salemba 2009.

http://www.worldcement.com/news/cement/articles/

Cement_supply_and_demand_southeast_asia.aspx#.UuIZXLT-LIU

http://www.semenindonesia.com/page/get/profil-perusahaan-9

55

http://www.semenindonesia.com/page/read/semen-indonesia-harus-menjadi-kebanggaan-

indonesia-2322

http://www.semenindonesia.com/page/read/distributor-17

http://www.semenindonesia.com/page/read/area-manager-18

http://www.beritasatu.com/figur/141255-semen-indonesia-sebagai-center-of-engineering-

research.html

Presentation PT Semen Indonesia (Persero) Tbk. The Prospect of Indonesia Cement Industry.

Jakarta: Cement Indonesa, 2013.

P., Dimas Ragin Kinayungan. Thesis: Assessment Company Financial Performance Financial

Ratio Method, Economic Value Added (EVA) and Market Value Added (MVA) - (A Study On

The Go Public Cement Company). Malamg: Faculty of Economics, University of Malang, 2007.

56