Prudent management lead firms to excellence

Prudent management lead firms to excellence

It may come as a surprise to some that this year's two
recipients of the Asian Management Awards from Indonesia in the
category of Financial Management do not hail from the world of
finance or banking.

PT Dankos Laboratories, a pharmaceuticals company
manufacturing products for both over-the-counter and prescription
purposes, and PT Charoen Pokphand, one of the leading agri-
industrial companies in Indonesia, were both cited by the panel
of judges for their individual approaches to strategic and
prudent financial management.

They provide further proof that the judges of the annual
awards are not solely concerned with the biggest companies in
their fields, or the huge profit margins they generate, but
rather look for those businesses that have carved out their own
successful plans for financial management through careful
measures which work successfully for them.

Dankos

"We have not done anything revolutionary here," says Dr. Paul
Harianto, president director of Dankos. "Our efforts to improve
financial management have come over a period of three to four
years."

He said the motto of Dankos--"Quality in Health and Life"--is
also applied to management and creating the most efficient
management structure for the company.

"As a public company, one of the most important things for us
is to satisfy our shareholders and this of course has connections
with dividend payments. Another important factor is our ability
to grow and diversify."

In the past few years, Dankos has moved to diversify by
acquiring Bintang Toedjoe, a producer of local health care
products for low and middle level consumers, in 1990 and in 1993
taking 100 percent ownership of Hexpharm Jaya company, which
produces health care and pharmaceutical products.

The strategic positioning has paid off dividends for the
company.

"The key to success is measuring net sales," Harianto says.
"It provides for better revenues. We are seeing growth of 25
percent per year, compared to the growth of the market of 18
percent."

Net profits also average around 50 percent per year.

Harianto says a number of different methods are being used to
improve financial performance.

"Although we make a lot of investments our net profits
continue to increase at a high rate," he says. "We also use
better marketing methods while at the same time controlling
marketing expenses and having a cost reduction program overall."

He emphasizes that it is not enough to be interested in
gaining big profits. "It is not positive to be concerned only
about profits. You must set goals to be achieved, and profits
will come with these achievements."

Charoen

Eddy Zaoputra, senior vice president director of Charoen
Pokphand Indonesia, outlines his company's approach to financial
management as one which is flexible and adaptable to changes in
the financial market.

"We weigh all the factors when considering seeking funding
from banks, be they foreign or local. We have to think about all
risk factors for banks, including the political situation in each
country."

He acknowledges that the company has "old friends" within the
banking industry who have been with it since its founding in
1971, but that does not prevent it from seeking new partners in
the banking industry.

"We give all the banks the same opportunities in providing
loans. We believe that the more banks that are involved the
better it is for us. I look at banking consultants as a great
asset which can be used to provide free advice on financing."

When a project is showing poor performance, the company takes
immediate measures to improve the situation.

"If there are reports of projects which are underperforming,
we always have alternatives which we can put into practice to
correct the situation by the executive committee. This may entail
increasing sales, increasing prices, lowering costs and other
measures."

In 1993, the company gained substantial growth. Total revenue
from sales of company products since Charoen Pokphand's initial
listing on the Jakarta Stock Exchange in 1991 have increased
consistently to reach a level of Rp 548.3 billion. The company's
profits rose in tandem with increased revenues, growing to Rp
28.7 billion, an increase of 31 percent from 1992.

Zaoputra stresses that quality human resources and strong
management support must be present if a company's financial
management plan is to succeed.

"Our founders, the Jiaravanon family, always gives us full
support in our operations," he says. "This provides us with the
moral support to go forward in our duties. And this is combined
with the very good teamwork of our workers, around 50 to 60
percent of whom have been with us for 10 years or more."