Risk Management

The Company is exposed to interest rate risk, currency risk, credit risk, liquidity risk and commodity price risk arising in the normal course of business. The management continually monitors the Company’s risk management process to ensure the appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and Company’s activities.


I. Interest Rate Risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.


II. Foreign Exchange Rate Risk
The Company is not exposed to the effects of foreign exchange rate fluctuations. Most of the Company’s revenues and expenses are denominated in Rupiah. The Company manages exposure to foreign currencies by making adjustments to the price applied to the consumer.


III. Credit Risk
Credit risk refers to the risk of counterparties failing to meet its contractual liabilities resulting in losses to the Company.

The Company’s credit risk is primarily attached to accounts receivable and other receivables, and bank deposits. Credit risk on bank deposits is considered minimal because it is placed with trusted financial institutions that have good records. Third party trade receivables are placed on trusted third parties and have good records. The Company’s exposure and counterparties are monitored continuously and the aggregate value of related transactions is spread among counterparties approved by the Board of Directors. The carrying amount of financial assets to the financial statements after deducting the allowance for losses reflects the Company’s exposure to credit risk.


IV. Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Company exposure to liquidity risk arises primarily from mismatch of the maturities of financial assets and liabilities.