Krakatau Steel

MM 5009

FINANCIAL MANAGEMENT

Created by:

“R45 – Group”

Puput Febrianti Rosmana 29115030

Dania Khairunisa 29115121

Meigi Hanun 29115112

Archie Wijaya 29115429

Fitra Andika 29115099

Argan Yoga 29115191

Oriega Ayudya 2911527

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT

INSTITUT TEKNOLOGI BANDUNG

2016

I. Background

PT Krakatau Steel Tbk is an extremely well known steel company in Indonesia and also the largest steel manufacturer in Southeast Asia. In 2009, the company has become a market leader with domestic market share 57% in HRC (Hot Rolled Coil), 32% in wire rod and 33% in CRC (Cold Rolled Coil). Krakatau steel has ten subsidiaries.

First Initial Public Offering (IPO) of Krakatau in November 2010. PT Krakatau Steel Tbk offers 3.155.000.000 shares to public which is 20% of the paid-up capital in order to expand its production capacity, beside adding more production machine, PT Krakatau Steel Tbk is also planning to use 24,2% of the IPO income to buy the raw materials (iron ore pellet, scrap, billet and slab), 25% to finance maturation of 388 hectares land for integrated steel mills project with POSCO) and 15% to increase the capital investment in two PT Krakatau Steel Tbk subsidiary, PT Krakatau Bandar Samudera and PT Krakatau Daya listrik.

But during the IPO there has been a conflict going on, the share price was claimed too low. At first offering (2-4 November 2010), 3.155.000.000 shares were offered at price Rp 850,- per share. At the same time Ministry of State Owned Enterprises, Mustafa Abubakar and the underwriter denotes the price of its initial public offering of shares (initial public offering / IPO) of PT Krakatau Steel is already optimal. This issue triggers Bambang to do a financial performance measurement of Krakatau Steel compare to other local steel companies. Bambang decides to compare it to the financial performance of PT Gunawan Dianjaya Steel and PT Jaya Pari Steel as the steel...