Gresik upgrades strategies and boosts production

Gresik upgrades strategies and boosts production
Published: 13 January 2011

As part of its preparation for the increased demand, Indonesia’s Semen Gresik has upgraded its sales and marketing strategies, in addition to boosting production.

In an attempt to lower its energy costs, the company has shifted from using expensive, high-calorie coal to a less xpensive, lower-calorie variety. It also plans to increase its use of agricultural waste products as alternative fuels and upgrade operational efficiency with better synergy between subsidiaries.

“Semen Gresik already uses 100 per cent coal as fuel. We only use oil for lighting up the coal for the first time,” Soetjipto said.The Semen Gresik group, which has a 45 per cent share of the Indonesian cement market, includes Semen Gresik, Semen Padang and Semen Tonasa.As part of its upgrades, it has integrated its information and communication systems. Integrating the ICT systems has resulted in increased efficiency and effectiveness for the group, Soetjipto said. Each subsidiary previously had a separate ICT system, he said, so it was difficult to synergise performance.

The company’s focus extends beyond Indonesia, though. Semen Gresik is Southeast Asia’s second-largest cement maker by value, and it hopes to step up exports to complement increased demand at home. “We also export cement, but the exports are in bulk form through a trader, and when the cement is marketed abroad it is wrapped instead of having the Semen Gresik brand,” Soetjipto said. “Henceforth, we want to bring the Semen Gresik name to regional markets.” This year, Semen Gresik plans to purchase a cement company in Southeast Asia as part of its efforts to boost production by 25 per cent, he said, possibly in Malaysia or Vietnam. “The most likely one is in Malaysia. We’re still negotiating so I can’t disclose the names yet, but we’re expecting to complete the acquisition next year,” Soetjipto said in a December 15 interview. Any potential firm would need a production capacity of about 3Mta, he said. Reuters reported last month that Semen Gresik was considering Cement Industries of Malaysia, which has a capacity of 3.4Mta and holds an 18 percent share of its home market.

While it looks overseas for expansion, Semen Gresik wants to push its production capacity to 25Mta beginning this year, and eventually rising to 30Mta by 2014. Soetjipto said in December that the company planned to accomplish its goals by building new factories and
acquisitions. It has earmarked US$400m-500m this year to finance expansion, and US$400m for capital expenditure.