Krakatau Steel's Efforts To Get Out Of The Snare Of Bankruptcy, Can It?

JAKARTA - PT Krakatau Steel Persero (Tbk) made a series of efforts to overcome the debt problems that the company is currently facing. There are at least three main pillars by management to avoid bankruptcy this month.

As is known, Krakatau Steel is said to be likely to go bankrupt in the near future. Bankruptcy could occur if the restructuring steps taken by the Ministry of SOEs to resolve the issue of the issuer coded as KRAS failed to produce results. This was revealed by the Minister of SOEs, Erick Thohir.

Commercial Director of Krakatau Steel, Melati Sarmita said that her party had prepared various transformations to rise from the problems that were being faced by the company. One of them is corporate restructuring.

"Indeed, at the beginning, in 2019 we carried out what is called a rising transformation, Krakatau Bangkit. It was based on three main key pillars that we started running from 2019 with a debt settlement target in 2027 which focused on firstly restructuring the company itself, business turnaround, then empowering resources. human resources (HR)," he said in a virtual discussion, Monday, December 13.

Furthermore, Melati said that in the company's restructuring, the first thing to do was restructuring the company's debt. The debt restructuring was also carried out to reduce unhealthy debt and interest payments.

"For those who are restructuring the company in the wake of the transformation, we focus on debt restructuring. Then we improve our core steel strategy. So we make sure to do partnerships with strategic partners to build 10 million tons of steel in Cilegon with the hope that by 2030 we will have 10 million tons in Cilegon," he said.

Then, continued Melati, is a supporting business. He said that the supporting business could strengthen and develop the subsidiary's supporting business as a sustainable revenue generator.

"For our own supporting business, we have started to strengthen and develop the subsidiary's supporting business, so that the subsidiaries can become sustainable revenue generators for Krakatau Steel as a group," he said.

The second pillar is business turnaround. Melati said that her party is doing various things, first is cost efficiency by reducing operational costs to achieve profitability.

"So we reduce operating costs to achieve profitability by using international benchmarks. So indeed we use cost efficiency with benchmarks at that time in the steel business in Korea and Japan," he said.

Then, continued Melati, in terms of marketing and sales, namely increasing sales volume through key account management and distributor programs.

"We are also doing general business planning in terms of sales and operations by reducing customer lead times and increasing service levels," he explained.

Furthermore, Melati said, her party is also digitizing to improve business processes so that they become very efficient, transparent, fast, and scalable.

"The results are fast and measurable, this is the most important thing. So indeed the KPIs must be precise and measurable. Especially at that time, we are indeed in a very limited cashflow period," he said.

Not only that, Melati explained that her party also carried out product downstreaming. He said, downstream products are the mainstay of KRAS for the future, especially for strengthening the steel industry.

"Because we believe downstreaming of this product must be done to strengthen product variants in the domestic market in order to avoid imports of finished products from abroad," he explained.

The last is the empowerment of human resources (HR). Train explained that his party formed a transformation office to monitor progress and encourage the emergence of new ideas. Melati said, the transformation office is filled with 23 young people who are educated and trained to become agents of change.

"So indeed this change agent is one of the real benchmarks for the success of a transformation. Thank God, after several years the transformation office team has shown very good performance. Some of them have even become GMs of Krakatau Steel," he said.