The Djarum Group grew from a small company of the Oei Wie Gwan family from Kudus, Central Java. In 1951, Oei Wie Gwan, took over NV Murup, which produced cigarettes with the brand of Djarum. Later the name of the company was changed wth Djarum with only tens of workers. Djarum produced clove flavored cigarettes using the brand of Djarum with market coverage only the area of Kudus
In 1969, Oei Wie Gwan began to transfer the management of the company to his two children--Michael Bambang Hartono and Robert Budi Hartono. After a setback as a result of fire that almost destroyed the entire factory in 1963, Djarum managed to grow and modernize its factory equipment.
Djarum shipped its first exports of cigarettes in 1972 mainly Japan and the Netherlands. Three years later Djarum began the marketing of its filter cigarette with the brand of Djarum Filter, followed in 1981 with the brand of Djarum Super, the best seller among filter clove cigarettes in Indonesia.
PT. Djarum is one of the country's largest cigarette makers. According to the Forbes Magazone in March 2010, the owner of PT Djarum, Michael Bambang Hartono and Robert Budi Hartono were the 258th among 1,000 rchest people in the world, each with a wealth of US$ 1.7 billion or a total of US$3.4 billion. The Hartono family is now preparing the transfer of management of the Djarum Group to the third generation including Arman Budi Hartono, now a director of BCA and Victor Rahmat Hartono, a director of PT. Djarum.
Meanwhile, Martin B Hartono has married Grace L Katuari, a daughter of Katuari of the Wing Group creating a marital bond between people of the third generations of he two larger company groups.
The growing anti smoking campaigns has caused a drag in the expansion of cigarette industry in the country prompting the Djarum Group not to relay any more on cigarette industry as the core business. The group has been aggressive in diversifying business.
Now the business of the Hartono family has expanded. The Djarum Group already has a number of subsidiaries operating in various other business areas such as property, banking, electronic industry, telecommunications, etc.
Cigarette industry the locomotive
PT. Djarum was established in 1951 to start as a clove flavored cigarette maker, producing cigarettes in traditional manual way known as hand-rolled clove cigarettes.
Later the factory in Kudus was modernized to produce machine rolled clove cigarettes. PT. Djarum is known as the first producer filter clove cigarettes in Indonesia using the brand of Djarum Filter in 1976. The product, however, failed to survive and was later replaced with Djarum Super in 1981, which until now has become one of the best sellers in the country.
PT Djarum is the third largest cigarette companies in the country with a market share of 17.2%. It production reaches 20 billion cigarettes a year.
The company has acquired small and medium scale cigarette producers including PT. Prima Tobacco Harum, PT. Wikatama Indah, and PT Filasta.
In the clove flavored cigarette market PT. Djarum is facing PT. Bentoel and PT. HM Sampoerna as the main rivals. In white cigarette market its main rival are PT British American Tobacco (BAT) and PT. Philip Morris Indonesia.
In 2008, PT Djarum launched a new product with the brand of Djarum Black Slimz, a variant of Djarum Black, which already hit the market earlier. Djarum Black Slimz looks slimmer measuring 6.1 mm with a length of 95 mm, in black cigarette paper.
Djarum has supporting units PT. Bukit Muria Jaya, to supply cigarette packing. The Djarum Group has a cigarette factory in Brazil and a distributor PT. Djarum Nekajasa.
PT. Bank Central Asia (BCA) was established in 1957, now the country's largest private bank. It was established and owned first by the Salim Group of tycoon Liem Sioe Liong. In the wake of 1998 monetary crisis, BCA was taken over by the Indonesian Bank Rescue Agency (BPPN) of the government in compensation of the debt of the conglomerate. The agency succeeded in revitalizing the ailing bank and after its reputation was fully recovered. BPPN handed over the bank to Bank Indonesia in 2000. In the same year BCA launched Initial Public Offering selling 22.5% of its shares owned by BPPN. After the IPO BPPN still had the controlling share of 70.30% in BCA. In the second public offer in 2001, BPPN sold 10% more stake.
In 2002, BPPN divested 51% stake it owned in BCA through tender. At that time the Mauritius based Farindo Investment Ltd won the tender at a price of Rp5.3 trillion.
Farindo Invesment is an investment vehicle of Michael Bambang Hartono and Robert Budi Hartono through Alaerka Investment as the shareholder of Farindo Investment Ltd. Other shareholders of Farindo included a US investment company Farallon Capital holding 7.82% of he shares of Farindo. In the beginning, Alaerka owned only 9.36% of Farindo with Farallon having 90.64%, but later, Alaerka Investment took over the majority 92.18% stake in Farindo Investment Ltd.
In 2010, the Djarum Group strengthened its control of BCA through two subsidiaries PT. Tricipta Mandhala Gumilang and PT. Caturguwiratna Sumapala, which are also controlling shareholders of PT Sarana Menara Nusantara Tbk. Through Credit Suisse, the Djarum Group acquires more stakes in BCA from UBS Securities at a price of Rp3.45 trillion. The deal brought the entire share of the Djarum Group to 50.24% in BCA.
Currently BCA has a market capitalization of Rp61.665 trillion in 2010. Its customers reached 8.9. million by June 2010, including 2 million credit card holders in 2009. BCA has 895 branch offices all over Indonesia and two representative offices in Hong Kong and Singapore. It has a network of 6,781 units of ATM, Non Tunai and ATM Setoran Tunai.
Earlier, the Djarum Group had two banks Bank Haga and Bank Hagakita, but in 2006, the two banks were sold to the Netherlands-based Rabbobank Group. Bank Haga and Bank Hagakita combined had assets worth Rp3.97 trillion by 31 December 2005. The two banks had 78 branch offices in Java, Bali and Sumatra with 1,537 employees.
The Djarum Group through PT. Cipta Karya, launched the World Trade Center in Mangga Dua, Jakarta in 2002. The project, according to property consultant Pro Lease, was worth Rp600 billion.
In 2004, the Djarum group through PT Cipta Karya Bumi Indah (CKBI) took control of Hotel Indonesia and Hotel Inna Wisata (Hotel Wisata) from PT Hotel Indonesia Natour, the parent company of state owned hotels. CKBI spent Rp1.3 trillion on renovation of Hotel Indonesia and Hotel Wisata. In compensation, CKBI was given a 30-year operating right. During the build-operate-transfer (BOT) period, the income of Hotel Indonesia and Hotel Wisata will be split 49% for the government and the rest for CKBI.
During the 30-year period, Djarum is estimated to spend Rp390 billion, which means Hotel Indonesia Natour will receive Rp 13 billion in income a year. In addition, both side agreed on an option of 20-year extension. The fee for the extension is at least Rp400 billion or 25% of the selling value of the tax object. Djarum agreed to pay Rp33 billion in severance pay for 1,300 workers of the two hotels or 1.5 times larger than require by the law in 2003.
Currently, the two hotels have been renovated into one hotel and a shopping mall named Grand Indonesia. Grand Indonesia occupies a location of 7 hectares in the prestigious area of Jl MH Thamrin Jakarta. This area is the most expensive business district providing a 250,000 sq.m. Luxurious shopping and entertainment .center in 8-storey building. The shopping mall consists of two blocks, west and east connected with a bridge and a parking area hat could accommodate up to 5,500 cars. The hotel is operated by Kempinski Group, therefore, its name was changed with Hotel Indonesia-Kempinski. The hotel with 280 rooms adopts an international standard in service equivalent to The Raffles of Singapore and The Oriental of Bangkok. Apart from hotel there are 190 units of apartment called Kempinski Residence, in 57 floor building. Djarum also controls the BCA tower, an office building which is just beside the Grand Indonesia shopping mall. The tower has a swimming pool and sport center on the 11th floor.
The Djarum Group has other property buildings including Hotel Padma in Bali, Hotel Malya Bandung, and City Square in Surabaya and Mogot MII in Jakarta.
Starting with PT. Indonesia Electronic and Engineering, which was established in 1975, the Djarum Group expanded business to electronic industry. Its factory occupied an area of 130,000 sq.m. At Sayung, Semarang, Central Java producing electronic goods such as television sets, refrigerators, radio compo, etc.
In 1977, the factory in Kudus imported components from Belgium to start the process of technology transfer from Philips-MBLE Belgia. It launched its first product of television with the brand of Polytron. However, the first television product of HIE failed to win a foothold in the market. Electronic stores refused to sell Polytron products.
Later the European technology of HIE was changed with Hong Kong technology. With components imported form Hong Kong they launched a 20 inches black and white TV sets. They opened and developed own research center hat since then they produce electronic goods with own design. They also gained transfer of technology through cooperation with Salora television producer from Finland (now Nokia).
In 2000, the name of the company was changed wth PT. Hartono Istana Eletronics, and later it was changed again with PT. Hartono Istana Teknologi (HIT). The company has succeeded in producing energy saving (40 watts) color TV sets with sizes of 17,20 and 26 inches. The company even has succeeded in producing lower wattage TV sets of 20 watts, which they claimed as the first in the world.
Now, HIT already exports electronic products with the brand of Polytron. Polytron has been quite competitive facing other major global brands like Samsung, Sony, Sanyo and LG.
Early 2010 HIT opened a showroom in Guangzhou, China with target of boosting exports by 15%-20% in 2011. Exported products vary including TV sets for exports to Vietnam, Bahrain, Pakistan, Thailand, and the Philippines and audio products to be exported to Middle East and the United States. In Thailand all airports use TV sets with the brand of Polytron.
Currently, Polytron brands are used not only for audio video products but also Home Appliances (Refrigerator, Air Conditioner, Washing Machine, Chest Freezer, Freezer, Water Dispenser, and Show Case).
According to the Polytron marketing director Chris Iwan the company set a growth target of 25% for the sales of electronic products to Rp2.5 trillion in 2010 from Rp2 trillion in 2009. In 2009, Polytron cathode ray tube TV sets accounted for 40% of the sale sin 2009 and audio products accounted for 25% with other products such as refrigerator, AC and washing machines combined contributing 35%.
PT Sarana Menara Nusantara Tbk (SMN), which is investment holding posted Rp877 billion in income by 31 October 2009, with net profit of Rp 535 billion. In 2008, it still suffered a loss of Rp471 billion.
In March 2010, SMN launched Initial Public Offering listing 112,232,500 of its shares a price of Rp1,050 per share. The IPO, therefore, was valued at Rp117.844 billion. The IPO fund was used to strengthen the paid up capital of its subsidiary PT Protelindo and to repay a debt of Rp40 billion. Protelindo still has a debt of US$ 360 million and Rp 1.18 trillion.
SMN is a 99.99% shareholder of PT Profesional Telecommunications Indonesia (Protelindo), with other shareholders including PT Tricipta Mandhala Gumilang and PT Caturguwiratna Sumapala.
PT Protelindo operates in telecommunications sector offering telecommunication towers. The towers are leased out under master lease agreement to a number of telecommunication companies like Bakrie Telecom, Sampoerna Telecom, Hutchinson, Indosat, Telkomsel, Fren, and Axis.
In 2008, Protelindo agreed to acquire 1,000 units of towers from Hutchinson. CP Telecommunications (HCPT) at a price of US$ 110,000 each or a total price of US$ 110 million. The acquisition was financed with a bank loan and internal cash. Hutchison, a cellular phone operator with the brand of Three, then used the towers on 10-year lease from Protelindo. The two side hoped to complete the process of transferring ownership of the towers in 2012.
In 2010 Protelindo had 3,639 units of telecommunication towers with target to increase the number to 5,000 more units by the end of 2010 through acquisition.
In 2001, the Djarum Group and the consortium of the Wings Group, acquired PT. Salim Oleochemicals, which was known as a producer of palm & coconut oil for shampoo.
Through PT. Hartono Plantations Indonesia (HPI), the Djarum Group expanded its wings to the CPO business in Pontianak, West Kalimantan and Sumatra. HPI owned around 100,000 hectares of oil palm plantations in 2009 and to be expanded to 500,000 hectares in 2011. In this business, the Djarum Group invested Rp15 trillion or around Rp35 million per hectare. The Djarum Group plans to build a number of CPO plants.
PT. HPI has a subsidiary PT Peniti Sungai Purun (PSP) which has 5,321 hectares of plantations including plasma estates in Purun Selatan, Pontianak. It also has around 800,000 oil palm seeds ready for planting.
BCA showed good performance in 2009 reorting Rp31.6 trillion in income with net profit of Rp6.1 trillion.
In the first nine months of 2010, BCA recorded growth in credits and third party funds it held. It assets rose 16.6% to Rp310.2 trillion by September 2010, from Rp 273.3 trillion a year earlier. In the nine month period BCA posted net profit at Rp7.8 trillion, up 27.8% from Rp6.1 trillion in the same period in the previous year.
Its third party funds grew 16.2% on-year to Rp255 trillion by June 2010. Giro fund held by the bank rose 22.1% on-year to Rp59.1 trillion and savings increased 12.8% yoy to Rp127.9 trillion, and deposits rose 18.1% yoy to Rp68 trillion. Cheap funds or savings and giro made up 73.3% of its third party fund. Its secondary reserves reached Rp 76.7 trillion by June 2010.
Details of the Group Parent Company : Djarum, PT Address : Jl. KS. Tubun II-C No. 57, Tanah Abang City : Jakarta Phone(s) : (021) 5346892, 5346893 Fax(s) : (021) 5346905 Web : www.djarum.com Number of Companies : 24 Companies * Cigarette industry --Banking --Property Line of business : * Investment company : --Plantation --Wood-based industry --Electronics industry --Telecommunication industry Chairman : --Mr. Michael Bambang Hartono Others Key Person : --Mr. Robert Budi Hartono List of the Group Member --Djarum, PT Leading Members : (Cigarette Manufacturing) --Filasta Indonesia, PT (Cigarette Manufacturing) --Wikatama Indah Sigaret Indonesia, PT (Cigarette Manufacturing) --Prima Tobacco Harum Industry, PT (Cigarette Manufacturing) --Stevania Ultra Tobacco, PT (Cigarette Manufacturing) --Victory Suprasigaret Company, PT. (Cigarette Manufacturing) --Purizuqni, PT (Padma Hotel) --Cipta Karya Bumi Indah, PT (Hotel and Shopping Mall) --Bukit Muria Jaya Estate, PT (Property) --Hartono Istana Teknologi, PT (Electronics Industry) --Bank Central Asia, PT (Bank) --Allaerka Investment (Investment holding) Other Members : --Tricipta Mandhala Gumilang, PT (Investment holding) --Caturguwiratna Sumapala, PT (Investment holding) -- PT Peniti Sungai Purun (Plantation) --Hartono Plantations Indonesia, PT (Plantation) --Kudus Istana Furniture, PT (Woodbased industry), --Busana Rama Textile and Garment, PT (Textile industry) --Ardi Jaya Karya, PT (Plastic industry), --Supra Visi Optic, PT (Optical) --Istana Busana Mahkota, PT (Textile industry) --Perada Communications, PT --Supra Visi Rama Optic Manufacturing, PT --Petrolindo, PT (Telecommunication Tower Rental) Table--1 Summary financial report of PT. Bank Central Asia and subsidiaries , 2009 and June 2010 (Rp million) Description Sept 2009 Sept 2010 Assets Current assets 259.184.275 294.741.193 Non current assets 8.387.371 5.895.192 Total fixed assets 2.707.078 3.742.589 Other assets 1.347.642 5.811.262 Total assets 273.289.707 Liabilities and equity Current liabilities 239.157.281 268.430.239 Non current liabilities 7.084.862 9.334.644 Other liabilities -- -- Total liabilities Equity 27.047.564 32.431.353 Minority interest Total liabilities and equity 273.289.707 310.196.236 Profit/loss Income 31.688.394 37.036.416 Net profit 6.121.876 7.817.254 Source : PT. Bank Central Asia
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|Title Annotation:||COMPANY PROFILE|
|Publication:||Indonesian Commercial Newsletter|
|Article Type:||Company overview|
|Date:||Nov 1, 2010|
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