Logistics and supply chain company PT AKR Corporindo Tbk (AKRA) has injected capital of IDR 22.6 billion (US$ 1.5 million) to one of its subsidiaries, PT Anugerah Krida Retailindo (Akrida), to increase its authorization capital.
Established in 1978, AKRA focuses on the distribution of refined petroleum and chemical products (such as sodium hydroxide, sodium sulphate, PVC resin and soda ash), warehouse lease, transportation, tank and other logistics.
Increasing ownership in Akrida
AKRA’s capital injection to Akrida resulted in the increase of the placed capital from IDR 677.995 billion to IDR 700.595 billion.
“On February 17, 2023, PT Anugerah Krida Retailindo, a subsidiary of the company, signed a deed of increasing authorized capital as well as issued and paid-up capital,” AKRA Director and Corporate Secretary, Suresh Vembu, said in a press statement on February 21, 2023.
The company will use the capital injection to support and facilitate its subsidiary’s business in trading and distribution of fuel oil.
“Akrida will use the funds to support its business activities and/or for the capital of its subsidiaries,” Vembu added.
The capital injection will change the shareholding portion of AKRA in Akrida to 99.99% ownership. Meanwhile, PT AKR Niaga Indonesia owns the minority of 0.01% shares.
“This transaction is not a material transaction as referred to in [the Financial Services Authority
Regulation] POJK No. 17/POJK.04/2020,” Vembu said.
In 2023, AKRA has seen a good working rate even though in the midst of economic uncertainty. The company’s trade and distribution saw an improvement with the increasing demand in mining and power generation sectors, explained AKRA President Director Haryanto Adikoesoemo.
“We are able to manage commodity and exchange rate risk effectively,” he said.
The company complies with the Ministry of Energy and Mineral Resources policy on using biodiesel content of 20% (B20) for all industry players.
Risks in AKRA’s business
There are 3 significant business risks for AKR Corporindo as a chemical distribution and logistics company:
- Market risk: AKR Corporindo’s operations are closely tied to the Indonesian economy, which is subject to volatility due to political instability, changes in government policies and global economic conditions. The company’s revenue and profitability may be affected by fluctuating demand for its products and services, changes in market prices and competition from other players in the industry.
- Operational risk: The company’s operations involve the handling, transportation and storage of hazardous chemicals, which is prone to accidents and may damage its facilities, equipment and reputation. It must ensure that its safety procedures are up-to-date and that its employees are trained to handle emergencies effectively. Any incidents or disruptions in its operations could result in financial losses, legal liabilities and reputational damage.
- Financial risk: AKR Corporindo requires significant capital expenditures to maintain and expand its infrastructure and inventory. The company’s ability to raise capital through debt or equity financing could be affected by changes in interest rates, credit ratings and market conditions. In addition, AKR Corporindo is exposed to foreign exchange risk, as it imports most of its products and sells them in Indonesian rupiah. Any significant fluctuations in exchange rates could affect the company’s revenue and profitability.
