Semen Padang causing problems for PT Semen Gresik
The Jakarta Post, Jakarta
PT Semen Padang's failure to file an audited financial report for 2002 is causing problems for its holding company, publicly listed PT Semen Gresik, which as a result of the failure was unable to issue a consolidated financial statement by the March 31 deadline set by the Jakarta Stock Exchange (JSX).
Semen Gresik, which owns 99.99 percent of Semen Padang, must now pay Rp 1 million in fines for each day of the delay until independent auditors Hans Tuanakotta & Mustofa complete an audit of Semen Padang in West Sumatra.
Sources at Semen Gresik said they remained in the dark as to when Semen Padang would be able to submit its audited financial report for 2002, but they acknowledged that the delay was causing severe damage to its corporate image.
There has been conflicting information about why Semen Padang has not yet filed an audited financial statement.
Semen Padang corporate secretary Desri Ayunda said the delay was caused by technical problems in the introduction of its new data processing system, Oracle.
But sources at Semen Gresik in Surabaya alleged the problem was related to the failure of the Semen Padang management to account for Rp 50 billion (US$5.5 million) in spending in 2002.
Ayunda insisted, however, that the company could not yet close its books for 2002 simply because of start-up problems in the application of its Oracle data processing system.
Despite the technical problems in the data processing system, Ayunda nevertheless disclosed to several newspapers in Padang and Jakarta as early as January that Semen Padang's performance had improved significantly last year, with a pretax profit of Rp 145.4 billion, up almost 184 percent from Rp 51.2 billion in 2001.
Analysts in Jakarta who monitor cement stocks asked how Ayunda was able to disclose Semen Padang's financial performance as early as January, while the company still had not completed its 2002 audited financial report by the end of March.
Sources at JSX said the management of Semen Gresik had been called on to explain the delay.
The shareholders of Semen Gresik, the country's largest cement manufacturer with a total capacity of 17.25 million metric tons, have tried, without success, since early last year to replace Semen Padang's management over what they consider to be its dismal performance.
Semen Padang's 2001 annual report showed that the company, with an annual capacity of 5.5 million metric tons, was the worst performing of Semen Gresik's three cement units.
The other two cement units are Semen Gresik, located near Surabaya, which has an annual capacity of 8.2 million tons, and Semen Tonasa in South Sulawesi, with an annual capacity of 3.48 million tons.
Semen Padang directors have clung to their positions, staunchly opposing efforts to replace them through an extraordinary shareholders meeting.
The directors' defiance compelled Semen Gresik early last June to ask for an injunction from the district court in Padang to force the Semen Padang management to convene an extraordinary shareholders meeting.
However, Roeslan Dahlan, chief of the court, rejected Semen Gresik's petition in mid-June, stating that there was no valid reason to replace the management before its term ended in 2005.
Semen Gresik, which is 51 percent owned by the state, 23.46 percent by the public and 25.54 percent by Cemex Asia Holdings Ltd. of Mexico, is now awaiting a ruling on the petition by the Supreme Court.