my analysis: GUDANG GARAM TBK

Industry

13 % of total monthly average expenditure

Based on Badan Pusat Statistic the third biggest monthly average expenditure is tobacco and betel commodity which is 13 % of total expenditure. That means many Indonesian people allocate their income to purchase tobacco product such cigarette in large number despite its expensive price. Mean while government tends to increase its excise duty for cigarette product and prevent television to display picture of cigarette either for advertising or another show.

The largest expenditure is prepared food and beverage commodity, the second is cereal such as rice. In conclusion, cigarette industry which produce its product such Machine made clove cigarette, Hand-rolled cigarette and klobot clove cigarette is still promising as the demand of Machine made still grows despite of the decline in demand of Hand Made clove.

10 % of excise duty for Regional cigarette tax

The regional tax for cigarette has been implemented and the industry of cigarette is imposed higher cost in selling their product. The last increase of excise duty cost was at 2013, it is possible that the excise duty will be more expensive at the next year.

Gudang Garam - GGRM

Company established in 1971 in Kediri, east java. But their commercial activity actually has been started since 1958 as proprietorship in Kediri, east java, Indonesia.

The biggest share holder of the company is surya duta investama which owns about 69 % of total share. The company sells their product both to domestic and to abroad. Accordance to annual report their market share in 2013 is 20.06 percent of total market. Although its market share decreases from 30 % in 2005 to 20.6 % in 2013, the total revenue is still increase annually. The market size may expand with larger size in Indonesia and the industry player may grow at every year.

In 2013, revenue increase 13 % up compared to revenue in 2012. The key driver of revenue growth was at Machine made clove cigarette product, which was 88 %of total revenue in 2013. The domestic revenue was still dominated with 95.8 percent of total revenue in 2013.

In 2013 the company could increase its gross margin from about 18.8 % to about 19%. The cost may be reduced by the usage of machine clove and larger economic scale. Compared to HM sampoerna, its margin in the last five years is lower than HM sampoerna.

In 2013 the activity ratios commonly were steady although there were slightly increase in days payable and its day’s inventory.

Another competitor, bentoel, plans to reduce the number of factory and the number of worker. They plan to reduce plants from eleven to about four in order to decrease operating costs as there was an increase in excise duty in 2013.

The market size is smaller than last year as the demand of handmade clove cigarette declined. The trend of consumption in cigarette product is changing, the recent time people preferred to buy Machine Made Clove cigarette than Hand rolled clove cigarette. And the consumer is more care about health.

Links

http://bisnis.liputan6.com/read/2054087/dua-pabrik-rokok-sampoerna-tutup-negara-kehilangan-rp-479-miliar