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Bosowa Group.

The Bosowa Group is a powerful company group for eastern part of the country . The company group is one of the conglomerates surviving the monetary crisis of 1997/1998 and lingering economic malaise in the following several years.

The company group began to expand its wings in 1994 operating in widely diversified business areas from its original core business of motor vehicle trading. When the economic crisis was undermining the country's economy the group managed to continue the construction of its cement factory in Maros, South Sulawesi in 1998. Construction of the factory under PT Semen Bosowa Maros began in 1996.

The company, however, was not entirely unscathed under the impact of the crisis. In April, 2005 PT. Semen Bosowa Maros was reported to have non performing credit of Rp1.44 trillion from state owned Bank Mandiri. The company, however, denied the report saying repayment of the loan has been smooth.

Company's Backgrounds

H. Muhamad Aksa Mahmud, the founder of the company group, is a leading businessman from east Indonesia succeeding in building his business empire to rank among the country's top business leaders. He was once an employee of a company belonging to M. Jusuf Kalla, now the country's vice president, who also shot up to political stature mainly through business ladder. Aksa Mahmud is related to the Kalla family as he is married to Kalla's sister H. Siti Ramlah Aksa.

Aksa Mahmud began to build his business empire in 1973 flying the flag of Bosowa, which an acronym of Bone-Soppeng-Wajo, the names of three regencies in the central part of South Sulawesi.

H. Muhammad Aksa Mahmud laid the foundation of his business by establishing PT. Bosowa Berlian Motor in 1978 in Ujung Pandang (Makasar) in South, Sulawesi. Together with his wife and Hasannudin Hasma established the company with an initial capital of Rp 5 billion. PT. Bosowa Berlian Motor became the backbone of the Bosowa Group. It is a dealer of Mitsubishi cars in Sulawesi, Now it also serves as a dealer for Mercedes Benz cars and the main distributors in eastern Indonesia.

The Bosowa Group continues to expand its business operations to shrimp farming, plantation, financial and insurance industry. The Bosowa Group also has business in the property, construction and infrastructure sector supported by its cement producing subsidiary. Its business becomes more and more integrated.

Until now Mahmud Aksa and his wife Siti Ramlah and two sons Erwin Aksa and Sadikin Aksa assisted by a number of partners never ceased to expand the business empire.

His success in business brought about political success. Aksa was elected deputy speaker of the People's Consultative Assembly (MPR). His political duty forced him to gradually hand over the management of the family business to his sons Erwin Aksa now holding the post of Vice President of the Bosowa group. He formed a team of professionals to make business plans. Earlier planning was fully in the hand of the owners.

Business Development

Automotive Industry

The business of the Bosowa Group in the automotive industry began with the operation of PT Bosowa Berlian Motor, a dealer for Mitsubishi cars in eastern Indonesia, covering South Sulawesi, Central Sulawesi, Southeast Sulawesi, North Sulawesi, East Nusa Tenggara, Maluku and Papua.

The company now has 30 showrooms with workshops and component sales and after sales service units to support marketing.

In 2004, Bosowa Berlian Motor succeeded in selling more than 4,000 units of car, up to 6,000 units in 2005. Its car commodities are mainly Mitsubishi trucks including Fuso and Colt Diesel Mitsubishi trucks. Now the Bosowa Group is also dealer for Merzedez Benz cars in that region.

The Bosowa Group has a car body building factory in Karawang, West Java. The factory has an annual capacity to produce bodies for 6,000 cars of various types including trucks, buses, etc..

Later the Bosowa Group expanded operation to motorcycle industry with a factory coming on line in 1997 under PT. Bosowa Nusantara Motor. The factory is built in Karawang occupying a 50,000 sq.m. plot of land. It has the capacity to produce 30,000 units of sport motor cycle (125cc -150cc), 90,000 units of business motor cycle (100cc-125cc) with an investment of Rp 86,425 million. The motorcycle products use the brand name of Hyosung.

In 1996, the group established a financing firm named PT. Bosowa Multi Finance to support the marketing of its automotive products. The company offer to finance the purchase of Hyosung motorcycles and Mitsubishi cars. PT. Bosowa Multi Finance has 21 branch offices - 10 in Makasar, and the rest in other eastern Indonesian cities such as Kendari, Bone, Palopo, Mamujo, Bulukumba, Parepare, Manado, as well as in western Indonesian cities like Jakarta and Bandung In 1998, the Group established insurance company named PT. Asuransi Bosowa Periskop (ABP). Now PT. ABP has 11 branches in a number of large cities including Surabaya, Makasar, Pekanbaru, Bandung and Semarang with the support of agents.

In 1995, the Bosowa group took over the entire assets of taxi operator PT Taksi Amal, which is the first tax company in Makasar established in 1985. The group also has another taxi company named PT Bosowa Utama, operating Bosowa Taxies.

Taksi Amal once suspended operation but the operation is to be resumed in 2006 by bringing in 300 new cabs. Later the management of Taksi Amal was merged into that of PT Bosowa Utama, which operates Taksi Bosowa.

The old taxies of Taksi Bosowa have already been replaced with 200 new Toyota Limo cars. The new cabs were brought in to replace ones with the brand of Timor operated since 2000. Toyota Soluna cars are also found among the taxies of Taksi Bosowa.

The automotive sector still serves as the backbone of the Bosowa Group contributing 35% to the total income of the group.

Agribusiness Sector

In 1987, Bosowa Group established a company operating in shrimp breeding named PT. Bosowa Isuma. The company has shrimp breeding farms in Poros Boroung, Maros South Sulawasi occupying an area of 50 hectares. Its exported frozen shrimps to a number of countries such as Japan, Singapore, Taiwan and other Asian countries. Exports are handled by a subsidiary PT. Dataran Bosowa.

In 1994, PT. Bosowa Cocoa Industries was established to operate in the trading of coca beans. It exported coca beans to Singapore. However, apparently the company failed to expand and in 2001, it stopped operation.

In 1997, the Bosowa Group acquired two companies PT. Bumi Sawit Permai, which owns an oil palm plantation and PT. Celebes Minahasa Suraya Adira, which operates in tapioca flour processing industry.

Earlier or in 1994, a mineral water processing company PT. Bosowa Citra Waena Ompo was established with an annual production capacity of 3,120,000 liters of bottled drinking water using the brand of ALDA. The product is disposed of only in South Sulawesi.

Cement Industry

In 1995, the Bosowa Group took another big step by building a cement factory under PT. Semen Bosowa Maros, in Maros, South Sulawesi. The factory has an annual production capacity of 1.8 million tons. The completion of construction of the factory was delayed because of the monetary crisis. It started operation only in 1998. The company has assets valued at Rp 3 trillion.

PT. Semen Bosowa Maros disposes of 80% of its production in the country and exported the remaining 20% such as to the Philippines and Africa. A distributor named PT Bosowa Trading International has been established to facilitate the marketing of its cement production in the country and to international market.

PT. Semen Bosowa Maros has its own transportation division to handle cement distribution in the region.

In early 2005, PT. Semen Bosowa Maros increased its investment spending US$ 80 million to expand its capacity from 1.8 million tons to 3.2 million tons a year. The completion of the expansion project is expected to cope with possible shortage in cement supply in that region in 2007-2008 as well as to meet demand from other regions such as Java.

PT. Semen Bosowa Maros has received the quality management certificate of ISO 9000 and environment management certificate of ISO 14000.

In 2005, cement sales recorded by PT Semen Bosowa Maros totaled 998,763 tons, of which 6,400 tons were exported. PT BSM also exports clinker totaling 500,895 tons that year. In 2004, its cement exports totaled 989,872 tons, with exports of only 29,227 ton and its clinker exports totaled 525,637 tons.

Infrastructure Sector

The operation of PT BSM prompted the move of the Bosowa Group the construction and infrastructure sectors. Its subsidiary PT. Tuju Waliwali was established to operate in infrastructure development building and operating toll road. In 2004 it completed the construction of concrete-paved roads in that region including in Papua, East Kalimantan and South Sulawesi totaling 50 kilometers. Earlier PT. Tuju Waliwali built concrete paved roads totaling 24 kilometers in three regencies in South Sulawesi.

Cement Industry

In 1995, the Bosowa Group took another big step by building a cement factory under PT. Semen Bosowa Maros, in Maros, South Sulawesi. The factory has an annual production capacity of 1.8 million tons. The completion of construction of the factory was delayed because of the monetary crisis. It started operation only in 1998. The company has assets valued at Rp 3 trillion.

PT. Semen Bosowa Maros disposes of 80% of its production in the country and exported the remaining 20% such as to the Philippines and Africa. A distributor named PT Bosowa Trading International has been established to facilitate the marketing of its cement production in the country and to international market.

PT. Semen Bosowa Maros has its own transportation division to handle cement distribution in the region.

In early 2005, PT. Semen Bosowa Maros increased its investment spending US$ 80 million to expand its capacity from 1.8 million tons to 3.2 million tons a year. The completion of the expansion project is expected to cope with possible shortage in cement supply in that region in 2007-2008 as well as to meet demand from other regions such as Java.

PT. Semen Bosowa Maros has received the quality management certificate of ISO 9000 and environment management certificate of ISO 14000.

In 2005, cement sales recorded by PT Semen Bosowa Maros totaled 998,763 tons, of which 6,400 tons were exported. PT BSM also exports clinker totaling 500,895 tons that year. In 2004, its cement exports totaled 989,872 tons, with exports of only 29,227 ton and its clinker exports totaled 525,637 tons.

Infrastructure Sector

The operation of PT BSM prompted the move of the Bosowa Group the construction and infrastructure sectors. Its subsidiary PT. Tuju Waliwali was established to operate in infrastructure development building and operating toll road. In 2004 it completed the construction of concrete-paved roads in that region including in Papua, East Kalimantan and South Sulawesi totaling 50 kilometers. Earlier PT. Tuju Waliwali built concrete paved roads totaling 24 kilometers in three regencies in South Sulawesi.

PT Bosowa Marga Nusantara was established to operate the section I and section II of the Makasar toll road between the port of Makasar and Talo 6 kilometers long since 1998.

Another subsidiary PT. Bosowa Trading Internasional in July, 2005 took over the operation of the 7.2-kilometer Serpong-Pondok Aren toll road in Tangerang after acquiring 89% of PT. Bintaro Serpong Damai at a price of Rp 280 billion. Bosowa beat other bidders PT. Castrate Nusantara (Astra Group), PT. Inpa Energi, and PT. Galaxi Ultra Prima.

In 2005, PT Bosowa Marga Nusantara took part in a tender for the construction of the Depok-Antasari toll road, the section IV of Makasar toll road and the Cinere-Jagorawi toll road. The 22-km Depok- Antasari toll road project will cost trillions of rupiahs. Bosowa will take part in the project with a 5% share in a consortium awarded the project. Other partners in the consortium include PT. Citra Marga Nusantara, PT. Pembangunan Perumahan, Hutama Karya and Waskita Karya In the consortium to build the 18-km Cinere-Jagorawi toll road the Bosowa Group has a 6% share with partners including the Bakrie Group, Citra Marga Nusantara. In the consortium to build the section IV of Makasar toll road, the Bosowa Group holds the majority 90% stake with minority partner PT. Citra Marga Nusantara.

PT Bosowa Marga Nusantara won the tender to build the 11.57- km section IV of he Makasar toll road to cost around Rp 440 billion. It is to be completed in 2007.

The Bosowa group began show interest in starting business in the electric power sector in 2002. It proposed to build a 200-MW power plant in South Sulawesi. The power plant is also needed to supply power for its cement factory. However, it was granted the license only in 2005 to build a coal fired power plant in Jeneponto under PT Bosowa Energi.

The project is now in the final phase of signing a power purchase agreement with PLN. The two have agreed to set the price of electric power at 4.71 U.S. cent per kwh to be paid by PLN to the producer.

Construction is to start this year. In the first phase, the project will be for plant with a capacity of 100 MW. The first phase is to be completed in 1007. The next phase for the same capacity is to follow in 2008 to be completed in 2009.

The Bosowa Group will spend around US$ 200 million for the project. The fund will come as a loan from a syndicate of international banks. Banks from Switzerland and Taiwan have stated commitment. The Bosowa Group is also seeking loans form China and Japan.

The Bosowa Group also has business in the mining sector including in marble industry under PT. Bosowa Mining, which was established in 1985. The company has 25-hectare mining concession in Maros and a stone crusher with production capacity of 2,160,000 tons, 6,000 m3 of block marble and 60,000 m2 of sheet marble a year. Its entire production is exported to Asian and the United States.

Table below showed the major members of company under Bosowa Group.

Financial Highlight

The consolidated income of the group was estimated at Rp 1.6 trillion in 2003, up to Rp 2 trillion in 2004 and to Rp 3 trillion in 2005.

The largest contributor to its income is its automotive division under

PT. Bosowa Berlian Motor. This division accounts for around 35% of the total income of the group.

The second largest contributor is its cement division under PT. Semen Bosowa Maros. In 2005, the cement company reported sales of around 1.5 million tons of cement and clinker.

Other major contributors to the total income of the company group are business in the infrastructure sector such as toll road operation, insurance industry and trading business.

A subsidiary of the Bosowa Group PT. Bosowa Cocoa Industri was listed among the debtors of the bank rescue agency BPPN with debt of Rp 6,177,183,880. The debt, however, gas been settled through negotiation with the agency.

In April 2005, PT. Semen Bosowa Maros was reported to have a non performing debt of Rp 1.44 trillion to PT. Bank Mandiri, but the report was denied and the attorney general office stopped investigation of the case in May, 2005 saying it found nothing illegal in the loan issue.

The management of Jakarta Stock Exchange (JSX) has encouraged the Bosowa Group to have its good performing members listed on the JSX.

Key to success

The impressive progress recorded by the Bosowa Group is attributable mainly to the business talent and skills of its managers notably the founder Mahmud Aksa.

The company group was able to soon settle its debt to BPPN following the 1998 crisis. The Group was not as badly hit by the crisis as were many other big companies probably because it was not over ambitious expansive in a relatively short time.

The key to success of Mahmud Aksa in establishing his business empire with 30 companies is that he expands businesses relying more on public fund than on state budget fund. The expansion of the group is also attributable to its success in exploiting the market potentials of the eastern part of the country not yet fully tapped. With strong market foothold it has established especially in trade of automotive products it would not be easy for other rivals to compete the group in that region.

In cement industry, the Group has only PT Semen Tonasa to face in market competition in eastern Indonesia. Semen Tonasa is a subsidiary of state-owned Semen Gresik, also located in South Sulawesi, Other companies would find it difficult to expand operation in that region facing the Bosowa Group, which has strong support from well established marketing networks and distribution and as well as transport affiliates.

Main risks

The Bosowa Group controls widely diversified businesses from trading to manufacturing and service business such as cement industry, financial service and infrastructure development. The main risks faced by the Bosowa group are as follows:

* Economic Condition, The international economic condition that tends to fluctuate will have its effects on the country's economy. Economic slump will affect the manufacturing sector including cement industry. Cement industry, however, is vital and strategic that it will continue to be needed to support the country's economic development especially development of the real sector. The risks to be faced by cement industry, therefore is much smaller than those faced by most other industries.

* Pollution. Cement factories sends dust to the air causing heavy pollution. It will cost a lot to deal with protesting people living near factories.

* Government policy in automotive industry. Although the group is expected to be able to maintain its considerable share of automotive market in eastern Indonesia, there is no guarantee that it would be as successful in automotive industry as long as the government has not issued new policy in automotive industry that might benefit the Group.

* Electric power. Cement industry needs large supply of electric power. Therefore, an increase in the electricity tariff will cause substantial increase in operating cost of a cement factory.

* Competition. The Bosowa Group, which operates in various business areas is almost certain to continue to face strong competition as apparent from the frequent launching of new products to attract consumers and the invention of new technologies. Sharp competition will put pressure on the company group affecting its performance.

* Declining Purchasing Power of the People. The purchasing power of the people should be considered in planning to raise prices that will trigger inflation A decline in the purchasing power will mean a decline in demand for products including those of the group.
Table
Partial List of Company under Bosowa Group

Name of Company Line of Business

PT. Bosowa Berlian Motor Car dealer of Mitsubishi
PT. Bosowa Utama Corporation Transportation Services and
 Investment Holding
PT. Bosowa Nusantara Motor Motorcycle Manufacturing
PT. Bumi Bosowa International Car body manufacture
PT Bosowa Multifinance Multifinance/Leasing Company
PT. Staco Bosowa Finance Leasing Company
PT. Asuransi Bosowa Periscop Insurance Companyi
PT. Bosowa Lloyd Expedition
PT. Semen Bosowa Maros Cement Manufacturing
PT. Bosowa Trading Distributor of Semen Bosowa
 International Maros and Toll road management
PT. Bosowa Plastindo Cement Trading
PT. Bosowa Mining Mining and Marble Industry
PT. Bosowa Marga Nusantara Tool Road Development and
 Management
PT Tuju Waliwali Contractor
PT Bosowa Energi Electric power company
PT. Bosowa Isuma Shrimp Breeding
PT. Dataran Bosowa Trading/Export
PT. Bosowa Cocoa Industries Cocoa Ben Trading
PT. Bosowa Citra Waena Ompo Mineral Water Industry
PT. Celebes Minahasa Suraya Adira Cassava Flour Processing

Source: Data Consult
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Title Annotation:a conglomerate company
Publication:Indonesian Commercial Newsletter
Article Type:Company overview
Geographic Code:9INDO
Date:Apr 1, 2006
Words:3273
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