The Company’s business activities are not free from risk factors, which if managed well can not only reduce potential obstacles in doing business but can be a lever in increasing business. Risk management is carried out in line with GCG implementation, and to support this the Company has mapped and managed the following risks:
- Risk of availability of raw materials for rice and rice, with mitigation measures in collaboration with rice collectors and mills. Other actions include strengthening and increasing the supply network of rice and rice raw materials, and maintaining good relations that have been established with quality rice producer centers. The company also has a facility in the form of a warehouse to store the stock of raw materials for rice and rice for later production as needed. In addition, the Company strives to reduce dependence on the availability of raw materials for rice and rice, by seeking a production process that uses raw materials
for rice or grain.
- Risk of rising prices of raw materials for rice and rice, with mitigation measures to maintain the position of raw materials for rice and rice in a safe position to meet the demand for rice from customers. To support the availability of safe rice and always strive to increase storage warehouse capacity. The storage warehouse used by the Company has fulfilled the standards for good rice storage so that the quality of rice stored can be maintained properly. In addition, to seek the availability of raw materials for rice and rice when rice and rice raw materials are
abundant, the Company seeks to prepare adequate working capital from internal cash flows of the company and loans from
- Risk of increase in fuel oil (BBM) prices, with mitigation measures one of which is through the opening of warehouses and production facilities in areas that are the distribution destination and areas that are sources of quality rice. At present the company has opened a warehouse in the Sidoarjo area, East Java to get closer to the distribution channel and it is planned that the Company will open warehouses and production facilities in several areas such as Central Java, Makassar, etc. as an effort to get closer to the center of quality rice procurement. The spread of warehouse facilities and production made the Company able to carry out efficiency in distribution to customers. Another positive thing is the arrangement of schedules and distribution routes to customers can reduce the
distribution burden, especially for shipping costs.
- Business Competition Risk, with mitigation measures always strengthening competitiveness by maximizing the quality of products offered, improving distribution networks, and regulating price levels in order to remain competitive in the market. This will encourage consumers to continue to consume products offered by the Company, so that the Company can maintain and improve its financial performance from year to year.
- Risk of dilution of the Topi Koki brand, with mitigation steps through differentiating the types of rice sold, packaging design and writing the name of the Company on each product sold.
- Risk of unilateral termination of the Topi Koki brand use rights agreement, with mitigation steps making a binding agreement with Sukarta as the brand holder of Topi Koki. In addition, the Company also plans to develop several other brands for various segments for each type of rice.
- Risk of decreasing consumer purchasing power, with mitigation measures not only focusing on the sale of premium branded rice, but the Company also has various brands classified as second brands, such as the Rumah Limas brand and BPS at a more economical price. Thus, if there is a decrease in consumer purchasing power for premium branded rice, the Company has provided a choice of second brand products that can be a substitute for consumers.
- Risk of changes in government regulations, with mitigation measures in the form of anticipating possible regulatory changes, by adjusting the Company’s internal policies to meet applicable regulations, and formulating policies that can still minimize the impact of less favorable external conditions.