30 January 2019

JAKARTA — PT Mahkota Group, Tbk. may be considered as one of the new players among palm oil companies that are listed on the stock exchange. By offering its initial shares to the public on July 12, 2018, the company continues to develop the downstream palm oil business. Bisnis had the opportunity to talk about the company strategy in the downstream palm oil business with the President Director of Mahkota Group, Usli Sarsi recently. Here are the excerpts.

What are the plans for this year after the IPO?

​Our capital expenditure is targeted at IDR 200 billion for refinery completion. In 2018, we have spent more than IDR 100 billion on the refinery. The total project was around IDR 330 billion. This year [there is an additional] IDR 200 billion including the stockpile tank. We are focusing on the completion of this refinery. Other projects are still being acquired, just initial talks. This year's plan focuses on refinery kernel crushing plant, processed products from palm oil as well. Furthermore, we will launch cooking oil products in August.

Any expectations on the market share of the cooking oil business post-launch?

We just flow. To [determine the target] market [share] is difficult. The market decides. We have how to improve performance from year to year. [We have already mentioned our profit target for this year. [In 2019 we are targeting IDR 123 billion. Hopefully it can be achieved as the refinery runs. Meanwhile, [the target] turnover is IDR 5 trillion.

How long did it take for the business to mature?

Last year was the IPO and this year is the product launch. If we look at similar companies, it takes a few years... [for] cooking oil to be recognized, but we hope it can be faster.

Nowadays, there are many new technologies that can make products environmentally friendly and healthier because of technology. We don't feel competed because our customers are won over.

They [customers] are prioritized, how to consume, [the products] are more hygienic, healthy, one of which is cheaper, affordable prices and better packaging. I think Mahkota Group has that vision.

We have a vision of zero waste but we need further investment. However, we are heading in that direction. In addition, our vision is 3P, profit, planet, people. We save the planet but we also win all stakeholders including our customers. We have the thought that both for the company, profit, and everyone, must be considered while minimizing the negative impact. However, we can maximize the positive.

Who are some of your role models in the business world?

Many. Actually, the mecca is more Jack Ma. Jack Ma has a far-sighted vision that I like. For example, how people can benefit from what they do related to technology. Until he doesn't just [care about] business...They [Alibaba] make technology and get a lot of people to market it. His philosophy towards education is also very extraordinary. Warren Buffett is also inspiring.

What are the important lessons to be learned from these great people?

We also hope that in Indonesia we can be one of the inspirers. I am also active in organizations, foundations and schools. We tell them that children need to be not only smart but also wise, creative, and able to cooperate with others. Many companies don't pay attention to that.

We've made fertilizers, made all kinds of things. So, we have a view that if we want our business to be long term, all stakeholders must be considered. In the palm oil field that we chose, it is very appropriate because this is where our strengths are.

How to manage such great power in the face of competition?

Actually, Indonesia has great potential [in palm oil]. If in a field where China is big, don't try to enter. China can't [develop] palm oil. They can't grow palm oil. China is planting in Africa. In China, only 1%-2% of the land can be planted with palm oil.

The products that are needed in China are what we make, such as sugar and palm oil. If not, we [Indonesia] are just users. Electric cars, we are only users, we also hope that in Indonesia we can be one of the inspirers. I am also active in organizations, foundations, and schools. We tell them that children should not only be smart but also wise, creative, and able to work together with others. Many companies don't pay attention to that.

We could have started from scratch but we lost time. So, it's good that we focus from palm oil to its derivatives. That will maximize logistics. China and India dare to spend big [money] [to build factories] but their raw materials are from Indonesia. If we invest here [in downstream palm oil], we can cut the logistics cost.

How to develop the downstream palm oil industry?

Perfume is imported from outside even though the raw material is from kernel oil [palm derivative]. There are five links in the downstream industry chain from palm oil to biodiesel, oleochemicals. It is true that in Indonesia there is already a downstream industry, but only cooking oil.

Oleochemical, acid, alcohol to chocolate substitute, the chain is still outside. We [Indonesia] still send raw materials. So, if five downstream palm oil industries [materialize] in Indonesia, we can cut a lot of logistics [costs]. Downstream industries that can add more value. So that our [Indonesia's] independence must exist.

When can you realize the development of the downstream palm oil industry?

We will slowly enter the downstream industry. It is also possible to go there [export]. If our products are exported to China, it is very possible, also India. Not to mention biodiesel [products].

They [India] want to reduce gas emissions and pollution. So, again, if profit is okay, they think about the planet and people. Pollution not only damages the planet but also the people.

Is there a difference in culture after the company does an IPO?

I was not shocked, but I needed a little adjustment from never appearing in public before, to now having to appear in public. I'm personally happy too because this is an opportunity for me to convey my way of thinking to our investors.

​The sense of ownership is there and we will invite them to think together about the principle thing, which is our vision and mission. They can provide advice, criticism and support, of course by buying our shares so that we can grow, and can do more.

What is the company's plan for the next 5 years?

We already have a masterplan of what we will do in five years. For example, we want to have a bigger plantation of 5,000 hectares (ha) to 20,000 ha. Then we want to have a port and industrial area. Then, with that [infrastructure], we can build downstream industries. There will be surprises every year.

Our vision and mission is to be a palm oil company that is arguably not the 10th largest but the best. Best is thinking about many other things, not just profit, market cap or land size.

The ten best [companies] are those that think about the environment, sustainability, healthier products, more hygienic and points that are morally accountable.