Diversifying, expanding and sharing

Diversifying, expanding and sharing

Debuting as an oil drilling contractor about two decades ago,
Medco Group has since that time expanded its reach into different
businesses in the land and water of Sumatra, Kalimantan, Java,
Bali and Sulawesi.

When one discusses the Medco Group, one is talking about a
pioneer among locally owned companies in the country's oil and
gas industry.

Starting with one oil drilling rig in 1980, Medco Group has
expanded into numerous oil and gas-related activities, such as
exploration, production, onshore and offshore drilling, and
pipeline construction, as well as other non-related businesses
(see graph A).

"But our core business is still the oil and gas sector," said
Yani Panigoro, a member of Medco Group's board of directors. And
Yani promised the group would continue to focus on its core
competence in the future.

In the oil and gas sector, the group has PT Medco Energi
Internasional, which has been publicly listed since Oct. 12,
1994. This company supervises three other subsidiaries, namely PT
Apexindo Pratama Duta (offshore and onshore drilling), PT Exspan
Nusantara (oil and gas exploration and production) and PT Medco
Methanol Bunyu (petrochemical industry).

Early in 1988, the Medco Group took its first steps into the
pipeline manufacturing and construction business, founding PT
Citra Panji Manunggal, which today is widely known as a leading
underwater pipeline construction firm.

Five years earlier, PT Multifabrindo Gemilang was founded to
support the core business activities of the group. The firm
specializes in fabricating pressure vessels, which are very much
needed by companies in the oil and power industries.

In 1992, Medco expanded into the banking sector by taking over
the Bandung-based Bank Himpunan Saudara 1906, known as Bank HS
1906, which specializes in providing financing to small and
medium-scale businesses (SMEs). Two years later, the group
founded PT Sarana Jabar Ventura, also in Bandung, with the same
goal of helping SMEs by providing venture capital.

In the food industry, Medco Group set up PT Sentrafood
Indonusa in 1994, with its factory in Karawang, West Java,
producing instant noodles under the brand names of Salam Mie and
Cinta Mie, as well as Planet crackers. To fulfill the unexpected
market demand, Sentrafood set up a subsidiary, PT Sentraboga
Intiselera, which has a production plant in Pandaan, East Java.

In the agribusiness sector, the group established PT Medco
Agro in 1993. The company manages a 50,000-hectare palm oil
plantation in Central Kalimantan. At the end of this year, the
subsidiary will complete work on a crude palm oil (CPO) plant in
the area, which will allow it to meet the growing domestic and
overseas demand for CPO.

The country's unique geographical situation, with its
thousands of scattered islands, led the Medco Group to found PT
Metrix Indonesia to distribute goods. Currently, Metrix owns some
70,000 outlets with a distribution network stretching from
Greater Jakarta to other major towns in Java, Sumatra, Bali and
Sulawesi.

Together with competent partners in the hotel industry, Medco
founded PT Meta Archipelago Hotels, which currently oversees
publicly listed PT Grahamas Citrawisata (which co-owns Novotel
Bukittinggi in West Sumatra), PT Satria Balitama (Hotel Bali
Imperial in Bali) and PT Bina Inti Dinamika (Hotel Preanger in
Bandung).

In the construction and management industry, the group owns a
share at PT Graha Niaga Tata Utama, which is developing the Graha
Niaga tower on Jl. Sudirman in Jakarta.

Sharing the light

While busily diversifying and expanding its businesses, Medco
Group remains highly committed to sharing a percentage of its
revenues with the local communities and administrations near its
areas of business operations.

Since its founding, owners and management of the group have
been committed to making significant contributions to the
improvement of the social welfare of local communities, and the
development of facilities and infrastructure badly required by
local administrations.

In general, the community development programs of Medco and
all its subsidiaries are carried out in different ways, such as
through recruitment, scholarships, medical aid, food aid and
financial support, such as providing low-interest loans to local
SMEs.

"So far this year we have spent Rp ..... for our community
development programs," Yani explained. On average, she added, the
group spends Rp ... per annum and plans to continue increasing
this amount gradually.

"The public might not know very much about Medco's community
development programs because we prefer to keep a low profile in
the work we do with local communities," she said.

These community development programs, while numerous, are only
a small portion of the grand and noble aspirations inherent in
the establishment of Medco Group as "a bridge toward better
national welfare".

And as for the group's strong management team, the journey of
success for Medco will never have an end. Just like life, every
day is a challenge. And Medco's strong workforce and management
team dare to take on any and all challenges that lie ahead.