Risk factors

In running its business, the Company faces risks that may affect the Company's profits if not anticipated and prepared well. The risks that will be disclosed in the following description are material risks for the Company as well as for material risk factors that are material and generally weighted based on the impact of each of these risks on the company's financial performance starting from the company's main risks.

Some of the risks that are expected to affect the company's business can be grouped as follows

The main risk that has a significant influence on the company's business continuity

Business competition risk

In undergoing its business activities, the company faces competition from imported carbide, especially carbides imported from China. Calcium carbide from China offers a cheaper price than the calcium carbide produced by the Company, so that the company's ability to maintain product quality is very important to maintain the company's position as the largest producer of calcium carbite in Indonesia.

Material risk that is material

• Risk of fluctuations in raw material prices
  The main raw material of the company's products is limestone and metallurgical coke, both of which are commodities whose prices fluctuate over time. The Company cannot fully avoid fluctuations in the raw materials and this can have a negative impact on the profit margins obtained by the Company. In addition to raw materials, the company's production costs are also highly dependent on the price of gas which is one of the energy sources in the company's production process.
• Risk of depreciation of the value of rupiah against foreign currencies
  In carrying out its production activities, the Company uses direct import raw materials around 20% (twenty percent) of the total production costs. On the other hand, the majority of the company's sales are domestic sales. Therefore, the depreciation of the value of the rupiah against foreign currencies can have a negative impact on the company's financial performance.
• Risk of Delays in the Company's Expansion Plan
  In accordance with the plan to use the fund results from the initial public offering, the company will use the funds to expand by establishing a carbide desulphuriser and silica alloy high grade factory. construction and operational. The timeliness of the execution of the company's expansion plan will be very dependent on time on time things such as factory construction and procurement and installation of equipment/machinery. If things happen that can hamper the company's expansion plan, then this can have a negative impact on the company's business prospects.
• Risk of dependence from suppliers
  The availability of raw materials is a crucial thing for companies engaged in the manufacturing industry, as well as companies engaged in the calcium carbide and ferro alloy industry. The company relies on suppliers to provide raw materials such as metallurgical coke and limestone. For this reason, dependence on suppliers is a risk that the company cannot avoid. As a way to minimize this risk, the company has established a good relationship with more than one supplier. This is expected to reduce the risk of the Company's dependence on suppliers.
• The risk of failure to meet the applicable laws and regulations
  In undergoing its business activities, the Company is required to comply with the applicable laws and regulations in the industry including regulations imposed by government institutions such as the Ministry of Trade, the Ministry of Industry, the Ministry of Finance, the Department of Manpower and Transmigration, including regional regulations and regulations imposed by the State Authority The Company's Product Export Purpose. Failure to meet these laws and regulations can have a negative impact on business activities, business prospects and financial performance of the Company.
• Risk of Availability of Raw Materials
  The scarcity of resources, in this case raw materials, is one of the material risks faced by the company. Although since its establishment until now the company has not found significant obstacles in obtaining raw materials, this needs to be categorized as a risk that has the potential to appear along with the company's growth, especially in connection with the increase in production volume in the future.

General risk

• Risk of Changes to Government Regulations
  So far, government regulations related to the calcium carbide industry tend to benefit the Company as a local producer where there are several regulations governing carbide import duties and the application of Indonesian National Standard (SNI) certification for imported carbide. All forms of change related to government regulations related to the domestic carbide industry can have an impact on the company's business prospects.
• Risk of legal obedience
  In carrying out its business activities, the Company is required to always obey the legal provisions in force in the Republic of Indonesia. The company requires several business licenses that must be met. If the Company cannot obtain or renew the permits needed, then this can have a negative impact on the company's business activities.
• Risk of technological change
  In maintaining the continuity of its business activities, the Company must continue to follow technological developments, especially technology in the field of calcium carbide and ferro alloy. If the company and subsidiaries are late or cannot follow the latest technological developments, then this can have a negative impact on business activities, business prospects and financial performance of the Company.
• The risk of the Company's dependence on management and key employees
  Since it was founded until the time the prospectus was issued, the company was led by an experienced senior management team. It can be said that the company's success to date is the work of current management. If there is one of the company's management who decided to stop and the company could not find a substitute that was commensurate in a short time, this could have a negative impact on the company's business activities, which would later have an impact on the business prospects and financial performance of the Company.
  The calcium carbide and ferro alloy industries are industries that require employees with specific skills. The Company realizes that the need for employees with specific skills is something that cannot be avoided to maintain the continuity of the company's business activities.
• Risks related to safety, health and environment
  The Company's production and product activities are relatively requires special handling and must be done carefully. Declaration in the production, storage and distribution of calcium carbide can potentially cause work accidents. If one of these things occurs, it can have a negative impact on business activities, business prospects and financial performance of the Company.
• Risk of macro and global economic conditions
  In this globalization era, the global economic conditions have a significant influence on the Indonesian economy and also on domestic companies, including the Company. Both directly and indirectly, whether or not the global economy will have a significant influence on business activities, business prospects and financial performance of the Company.
• Risk of lawsuits or lawsuits
  In carrying out its business activities, it does not rule out the possibility that the Company can be involved in a legal process. The risk of demands or lawsuits can have a negative impact on the Company, both in terms of financial and reputation. In addition, the uncertainty of the results of the process can also interfere with the company's performance.
• Risk of other countries or international regulations
  As a company that also conducts exports, the company needs to continue to follow the applicable regulations in other countries. If the Company is negligent in following the regulations imposed by the country's export exports of the Company or international regulations, this can have a negative impact on business activities, business prospects and financial performance of the Company.

Risk for investors

• The risk of the non -liquid of the shares offered in the initial public offering
  After the company records its shares on the IDX, there is no guarantee that the market for the shares of the company being traded will be active or liquid, because there is a possibility that the majority of shareholders do not trade their shares in the secondary market. In addition, compared to capital markets in other countries that are more advanced, the capital market in Indonesia is not liquid and has different reporting standards. In addition, prices in the Indonesian capital market also tend to be more unstable compared to other capital markets. Thus, the Company cannot predict whether the company's liquidity will be maintained.
• Risk of fluctuating the company's stock prices
  After the company's initial public offering, the stock price will be fully determined by the level of supply and demand for investors on the Indonesia Stock Exchange. The Company cannot predict the level of fluctuations in the company's stock prices after the inaugural Public Offering. Here are some factors that can affect the company's share price movement after the initial public offering:
  1. The difference in the realization of the company's actual performance and expectations of the level of performance expected by investors
  2. Changes in the recommendations of the analysts
  3. Changes in the condition of the Indonesian economy
  4. Changes in Indonesian political conditions
  5. Sales of shares by the majority of the company's shareholders or other shareholders who have a significant level of ownership
  6. Other factors that can affect the financial performance and business prospects of the Company
  Sales of the Company's shares in the number of substantial in the future in the market, or the perception that the sale can occur, can have a negative impact on the market price that applies to its shares or on its ability to collect capital through additional equity public offers or equity effects. This can result in the company's share price to decline and complicate the company's capital addition process.
• Dividend policy risk
  The distribution of dividends will be carried out based on the GMS referring to the company's financial performance, namely by considering revenue, cash flow, working capital needs and company capital expenditure in the future. The need for funding for future business development plans and also the risk of losses recorded in the consolidated financial statements can be a reason that influences the company's decision not to distribute dividends.

Risk mitigation

To achieve the purpose and purpose of the Company, the Company is fully aware of the importance of risk management of the risks mentioned above. Therefore, the company has implemented risk management to mitigate the potential negative impacts that arise. The information regarding the risk management applied by the Company has been disclosed in Chapter VIII Information about the Company, Business Activities, as well as business tendencies and prospects in this prospectus.