Analyst questions Indofarma report

Analyst questions Indofarma report

Evi Mariani, The Jakarta Post, Jakarta

PT Indofarma's explanation of the alleged irregularities in
its unaudited 2002 financial report is still unclear and it
needed to give more deliberations to a number of questions, an
analyst at Bank Negara Indonesia (BNI) Securities said on Friday.

"I, for example, have questions over a Rp 57 billion (US$6.5
million) discrepancy in inventory mistakes in the report," said
Fitri Murniawati of BNI Securities.

She said she needed further details of the fishy part of the
report because the mistakes had caused financial losses.

Indofarma, a publicly listed state-owned pharmaceutical
company, recently reported to the Jakarta Stock Exchange (JSX) a
net loss of more than Rp 20 billion (US$2.3 million) for the year
2002, whereas previously it had reported a net profit of Rp 88.6
billion in the first three quarters of 2002.

On Friday, the company held a public presentation to disclose
its unaudited report, following the JSX decision to suspend the
trading of the company's shares.

Indofarma's president Edy Purnomo and financial director Purwo
Kartiko told reporters that the mistakes in the inventory during
the first three quarters and cost-consuming programs, such as
giving massive discounts to pharmacies, in the fourth quarter had
contributed to more than Rp 108.6 billion in discrepancies.

"Because there were some new competitors, we had to offer
better discounts," said Edy.

Fitri told The Jakarta Post: "I can understand the Rp 16.6
billion loss due to the massive discounts, for it might happen
because the company tried to meet the target in the last
quarter."

However, she raised questions over the Rp 57 billion
discrepancy in the stock inventory. "In the presentation,
Indofarma admitted that it underwent a inventory only once at the
end of the year. It's not enough; the company has to do it at
least twice a year," she said.

She deemed the mistakes in inventory as having been caused by
sloppiness.

However, she appreciated the company's immediate steps to
explain the irregularities to the JSX, the Capital Market
Supervisory Agency (Bapepam) and the public.

Edy said that currently the report was being audited by
Deloitte Touche Tohmatsu and was expected to be ready for another
public presentation in the next two weeks.

Indofarma is about 19 percent owned by the public and 81
percent by the government.