Page 7 - KRA Annual Report 2020

KRA ANNUAL REPORT Management
2020 Report

Dear Fellow Shareholders and Stakeholders,

Let us give our praise and gratitude to God the Almighty for His blessings and
gifts given to us, with that PT Komatsu Remanufacturing Asia (KRA) can go
through 2020 with a good performance. The Company strives to improve its
performance and competitiveness in the midst of various internal and external
challenges.

On behalf of the Board of Directors and all employees of PT Komatsu
Remanufacturing Asia, let me present a report on the Company’s performance
for the 2020 financial year .

Throughout 2020, the COVID-19 pandemic has affected global economic
conditions. Based on the World Economic Outlook report, the International Monetary Fund (IMF) predicts that
global economic growth in 2020 will contract -3.5% with most countries in the world, including Indonesia, also
experienced negative growth.

Based on data from the Central Statistics Agency (BPS), the growth of Indonesia’s Gross Domestic Product
(GDP) in 2020, shows a significant contraction of -2.07%, compared to the previous year’s GDP of 5.02%.
The government provides various economic stimuli in an effort to save the national economy. the
Government has managed to keep the inflation rate at a low level of 1.68% with a relatively stable Rupiah
exchange rate against the US Dollar from mid to late 2020 .

The decline in global and national economic growth due to the COVID-19 pandemic in 2020 has a significant
impact on the movement of the coal commodity price index. The average Newcastle coal price index (GAR
6,322 kcal/kg) and ICI-3 (GAR5000 kcal/kg) in 2020 were USD60.45 per ton and USD43.11 per ton, down
22% and 14% compared to the same period last year; USD77.77 and USD50.39 per ton. The decreasing
trend in the world coal price index has an impact on Indonesia’s Reference Coal Price (HBA). The Price of
Reference Coal (HBA) released by the Directorate General of Mineral and Coal, Ministry of Energy and
Mineral Resources of the Republic of Indonesia in December 2020 was USD 59.65 per ton, or 10% decrease
from the HBA in December 2019 USD66, 30 per ton.

Covid-19 pandemic hit almost all industrial sectors. The policies of a number of countries that were
implemented to prevent Covid-19 transmission caused a slowdown in the manufacturing industry which
resulted in a significant reduction in energy consumption. As a result, demand for thermal coal in the global
market continued to weaken, there was an over supply that pushed coal prices to their lowest level in the last
4 years. Company business is highly dependent on coal. Fluctuations in coal prices greatly affect the
decisions taken by the customers where the majority are coal mining owners and contractors, in overhauling
components on their heavy equipment units. So we really hope that the economic recovery can be realized
soon, especially in these countries. This condition will be realized in line with the successful handling of the
COVID-19 pandemic, which is increasingly spreading and continues to grow .

The uncertain conditions caused by the pandemic forced company to change the strategies to be more
adaptive and resilient. Company took several strategic policies. One of the main strategies carried out by
KRA in 2020 is to form a COVID-19 task force team to ensure operational readiness to deal with the COVID-
19 pandemic. This special team is responsible for making effective prevention and handling efforts against
the spread of COVID-19 in the work environment. Another strategy implemented is the company reviewing
investment planning and focusing on current conditions to improve process excellence. In addition, the
Company strives to improve efficiency in various fields to reduce costs.

In order to achieve the target cost reduction, KRA has made improvements in all lines, not only focusing on
reducing part costs (salvaging), but also making improvements to processes (Machining / Fabrication),
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