general marketing framework new design2

8/4/2019 General Marketing Framework New Design2

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ContentsOverall Business Objectives

Specific Marketing Objectives

Business Situation/SWOT Analysis

Marketing Problems and Opportunities

Identification of target market/market segmentation

Marketing Action Plan

Evaluation Techniques

Budget

Implementation Timetable

Krakatau Steel Marketing Task-Force Team - Discussion Paper 1


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Overall Business Objectives

ROI (%) 2014 - 2018

Profit (USD) 2014 - 2018

Notes:

Shall be determined by KRAKATAU POSCO management



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SPECIFIC MARKETINGOBJECTIVES

Krakatau Steel Marketing Task-Force Team 3


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Indonesia HRC/P Demand Forecast

(2010 - 2015)

OSCO PRODUCT SPECIFICATIONS

- Classification Societies : KR; NK; ABS; GL; LR; NV; RINA; CR;

BV

- NK : KA; KB; KD; KE; KA32; KD32; KA36; KD36; KA40;

KD40; KE40; KL24A; BKL33, 37

- ABS : A, B, C, D; AH32; DH32; EH32; AH40; DH40; EH40; V-60

- NV : A, B, C, D; A27; D27; E27; A32; D32; E32; A36; D36; E36;

A40; D40; E40

- CR : A, B, C, D; A32; D32; E32; A36; D36; E36; A40; D40; E40

- BV : A, B, C, D; A32; D32; E32; A36; D36; E36; A40; D40; E40

- RINA : A, B, C, D; A27; D27; E27; A32; D32; E32; A36; D36;

E36; A40; D40; E40

- LR : AH32; DH32; EH32; AHS34; DHS34; AH36; DH36; EH36;

AH40; DH40; EH40; LT60-360, 410

- GL : A32; D32; E32; A36; D36; E36; A40; D40; E40; 490T; 500T



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Cost Simulation

Shall be discussed in course II



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Resource Availability and Allocation




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External Situation



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Indonesia Economic Forecast

Key indicators 2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Nominal GDP (tril. IDR) 3951 4952 5613 6213 6950 7829 8834 9938

Nominal GDP (bil. USD) 431.1 507.5 542 679 785.4 899.9 1033.2 1169.2

Real GDP growth (% change y-o-y) 6.3 6.1 4.5 5.2 5.3 5.7 6.1 6.3

GDP per capita (USD) 1861 2165 2285 2829 3235 3557 4164 4663

Population (mil.) 231.6 224.5 237.3 240 242.8 245.4 248.1 250.7

Industrial production index (% y-o-y,

average)

2.0 3.1 1.3 4.0 4.5 5.8 6.0 6.0

Un-employment (% of labor force) 9.1 8.4 7.0 6.8 6.3 6.0 6.0 6.0

Source: Business Monitor International, BMI/IMF, July 2010



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Indonesia Real GDP Growth12000

10000

8000

6000

4000

2000

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

20072008 2009 2010F 2011F 2012F 2013F 2014F

Nominal GDP. IDR trily Real GDP growth, % change y-o-y


0


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Derived Demand Forecast (downstreamindustries)

Automotive

Car ProductionMotorcycle Production

1200

1000

800

600

400

200

0

50 12,000

40 10,000

30

8,000

20

10 6,000

0 4,000

-10

2,000

-20

-30 -

2007 2008 2009 2010 2011 2012 2013 2014

Car production, 000 unit Real car production growth, % y-o-y

Source: Indonesia auto report, BMI, July 2010

2007 2008 2009 2010 2011 2012 2013 2014

Motorcycles production, 000 unit

Real motorcycles production growth, % y-o-y

35.00

30.00

25.00

20.00

15.00

10.00

5.00

(5.00)

(10.00)



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Derived Demand Forecast (downstreamindustries) - Cont'd

Automotive

Car

production

, 000 unit

Total car

year Car sales,

000 unit

production

value, USD

bil.

Car production

growth, % y-o-y

2007 419 435 5.74

2008 601 608 6.98 43.44

2009 464 486 7.58 (22.80)

2010F 625 680 9.3 34.70

2011F 705 742 11.03 12.802012F 792 810 12.95 12.34

2013F 887 884 14.09 11.99

2014F 987 963 16.93 11.27Source: Indonesia auto report, BMI, July 2010



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Construction and Infrastructure

2,500,000

2,000,000

1,500,000

1,000,000

500,000

Construction Industry Infrastructure Industry

2007 2008 2009 2010 2011 2012 2013 2014

1,200,0009.0

8.0 1,000,000

7.0 800,000

6.0

5.0 600,000

4.0 400,000

3.0

2.0 200,000

1.0

2007 2008 2009 2010 2011 2012 2013 2014

Construction Industry Value, IDRbn Construction

Real Growth, % y-o-y

Source: Indonesia infrastructure report, BMI, July 2010

Infrastructure Industry Value, IDRbn Infrastructure Real Growth, % y-o-y

14.

0

12.

0

10.

0

8.0

6.0

4.0

2.0



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Derived Demand Forecast(downstream industries) - Cont'd

Energy and Utilities Infrastructure

Energy and Utilities InfrastructurePower Plants and Transmission

350000

300000

250000

200000

150000

100000

50000 0

16

.0

14

.0

12

.0

10

.0

8.

0

6.

0

4.

0

2.

0

16000

0

14000

0

12000

0

10000

0

80000

60000

40000

20000

0

\

\V

\ 1

1

30.0 -

25.0

20.0

15.0 H

10.0

5.0

2007 2008 2009 2010 2011 2012 2013 2014

Energy and Infrastructure Value, IDRbn Energy and

Infrastructure Real Growth, % y-o-y

2007 2008 2009 2010 2011 2012 2013 2014

Power Plants and Transmission Value, IDRbn Power Plants and Transmission Real Growth, % y-o-y




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Oil & Gas Pipeline and Water Infrastructure

Oil and Gas PipelinesWater Infrastructure Industry

30000

2007 2008 2009 2010 2011 2012 2013 2014

Oil and Gas Pipelines Value, IDRbn Oil and

Gas Pipelines Real Growth, % y-o-y

50.0

40.0

30.0

20.0

10.0

(10.0)

180000

160000140000

120000

100000

80000

60000

40000

20000

0

15.0

10.0

5.0

(5.0)

(10.0)2007 2008 2009 2010 2011 2012 2013 2014

Water infrastructure Industry Value, IDRbn . Water

infrastructure Industry Real Growth, % y-o-y




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Shipbuilding: Ship Repair

Ship Repair Capacity

DWT

7,000,000

6,000,00

0

5,000,000

4,000,000

TOTAL

6,000,000

210

Source: Ministry of Industry, 2009



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Shipbuilding: New Building

New Shipbuilding Capacity

450,000

DWT

Source: Ministry of Industry, 2009



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Derived Demand Forecast (downstreamindustries) - Cont'd

Steel Demand Driver

Steel Demand DriverAUT BPV M&GST OGP P&T ROL SHP

Car

productio

n

Energy

and

utilities

infrastruct

ure, and

Power

plants and

transmissi

on

Constructi

on industry

and

Infrastruct

ure

industry

Oil and

gas

pipelines

Construction

industry,

Infrastruct

ure

industry,

Motorcycl

es

production

and Water

infrastruct

ures

industry

Constructio

n industry,

Car

production,

Motorcycle

s

production,

and Water

infrastructu

re s

industry

Construction

industry, Coal

production,

Mining

industry, and

Maritime

freight

CompositeAnnual

Growth

(%)

2011 12.8 12.4 6.6 6.2 6.9 8.1 8.72012 12.3 14.2 8.4 7.3 8.1 8.6 8.9

2013 12.0 13.8 10.4 9.0 9.6 9.5 9.3

2014 11.3 14.3 10.8 9.0 9.8 9.3 9.1

2015 11.3 14.3 10.8 9.0 9.8 9.3 9.1

Average growth 2011-15 (%) 12.1 13.7 9.0 7.9 8.6 8.9 9.0Source: PTKS estimate, November 2010



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Technological Trends/ Quality Requirement

Trend

POSCO will provide future plate end user needs



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Business Buying Behavior

PTKS will provide the domestic user buying

behavior model



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Competitors - Domestic

PT GUNAWAN DIANJAYA STEEL TBK

PT. Gunawan Dianjaya Steel Tbk (GDS) is an Indonesia-based steelcompany. The Company is engaged in the manufacture of hot rolled steel

plate. It offers steel plates for general use, including low carbon structuralsteel plates and high strength low alloy structural plates; steel plates forboilers and pressure vessels use, and shipbuilding steel plates, whichinclude hull structural steel plates (mild steels) and high strength hullstructural steel plates (high tensile steels). The Company's customers areshipbuilders, international trading company, construction company and

manufacturer of heavy equipment.

Address

Margomulyo Street 29A Surabaya, 60183 IndonesiaPhone : +62-31-7490598

Fax : +62-31-7490581Krakatau Steel Marketing Task-Force Team - Discussion Paper 33


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Competitors - Domestic (Cont'd)

PT JAYA PARI STEEL TBK

PT Jaya Pari Steel Tbk is an Indonesia-based company engaged in themanufacturing of iron and steel. The Company's plate production has an

annual capacity of 66,000 tons. Its products are marketed domestically,including DKI Jakarta, West Java, Central Java, East Java, East Kalimanta,North Sumatera and Bali. The Company's operation is located in Surabaya,Indonesia. During the year ended December 31, 2009, the Companyproduced 30,332 tons of hot-rolled steel products

Address

Margomulyo Street No. 4 Tandes Surabaya, 60186 Indonesia Phone :+62-31-7490940

Fax : +62-31-7491714



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Competitors - Domestic (Cont'd)

PT GUNUNG RAJA PAKSI

PT. Gunung Raja Paksi commissioned its first hot rolled steel plate in the last quarter ofthe year 2000. By the last quarter of the year 2001, their mill reached an operating levelof 82% of the capacity. This outstanding growth distributes to the value that customers

find at PT. Gunung Raja Paksi. GRP has service center divisions that supports itsproduction and services :

- Coil Service Center

- Plate Service Cente

- Forming Service Center

AddressImam Bonjol Street 4, Warung Bongkok, Sukadanau, Cikarang Barat Bekasi 17520West Java Indonesia.

Phone : +62-21-8900111, 8900666

Fax : +62-21-8900555, 8900975-7

Email : [email protected]

mailto:[email protected]:[email protected]:[email protected]


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Mill Capability Competitors - Domestic-HOT ROLLED PLATE

Criteria Gunung Raja Paksi (GRP) Gunawan Dianjaya Steel

(GDS)

Jaya Pari Steel

Production Capacity (MT/Year) Design Capacity :

450.000 MT, Actual

Capacity : 300.000 MT

Design Capacity* : 400.000

MT, Actual Capacity : 360.000

MT

Design Capacity : 100.000 MT,

Actual Capacity : 66.000 MT

Slab Sources Brazil, India,Filipina,

Turki,Ukraina

Brazil, Ukraine, Russia Ukraine, Rusia, China, Brazil

Plate Size (mm) T : 6 - 80 W :

1.219-3.353 L :

1.219-12.192

T : 8 - 80 W : 1.219-

2.500 L : 2.438-

12.192

T : 8 - 25 W : 914-

1.524 L : 1.219-

12.000

Note : PT Gunawan Dianjaya Steel will increase their production capacity up to 35%, the expansion project is to be completed in 2013

increasing its production capacity to 550,000 tons from 400,000 tons a year at present. PT Gunawan Dianjaya Steel Tbk.

announced that it will invest $122 million to expand its capacity (Bloomberg Business Week, Oct 23 2010)



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PT Gunung Raja Paksi

Product Specification - PlateMild SteelPlate

ASTM A36; AS 3678 (Gr. 250); BS 4360 ( Gr. 40A, 40B, 40C, 40D, 43A,

43B, 43C); DIN 17100 (Gr. ST 37.2, ST 44.2); EN 10025 (Gr. S 235 JRG2, S

235 JR, S 235 JO, S 235 J2G3, S 275 JR, S 275 JO, S 275 J2G3); JIS G 3101

(Gr. SS 400); JIS G 3106 (Gr. SM 400A, SM 400B, SM 400C)

PressureVessel

ASTM A 283 (Gr. B, C, D); ASTM A 285 (Gr. A, B, C); ASTM A 515 (Gr.60, 65, 70); ASTM A 516 (Gr. 55, 60, 65, 70)

Shipbuilding ABS (Gr. A, B); BKI (Gr.A); LR (Gr. A, B, 360 AR, 410 AR); GL (Gr. A, B, D,

A 32, D 32, A 36, D 36, A 40, D 40); BV (Grade A, B, D); DNV (Gr. A, B, D,

A 34, D 36)

High Strength

Low Alloy

ASTM A 572 (Gr. 42, 50, 55); ASTM A 573 (Gr. 58, 65, 70); BS 4360 (43 D,

50 A, 50 B, 50 C, 50 D); AS 3678 (Gr. 350)

High Tensile

Plate

AS 3678 (Gr. 350); JIS G 3106 (Gr. SM 490 A, SM 490 B, SM 490 C, SM 490

YA, SM 490 YB); DIN 17100 (Gr. ST 52-3); EN 10025 (Gr. S 355 JR, S 355

JO, S 355 J2G3), JIS G 3101 (Gr. SS 490)



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PT Gunawan Dianjaya Steel Tbk. & PT Jaya Pari Steel Tbk.

Product Specification - Plate

General Use Low Carbon Structural Steel : AS 3678 (Gr. 250); ASTM A36; ASTM A 283 (Gr. A, B, C, D);ASTM 573 (Gr. 58); EN 10025 (Gr. S 235 JR, S 235 JO, S 235 J2, S 275 JR, S 275 JO, S 275 J2); JIS G

3101 (Gr. SS 330, SS 400); JIS G3106 (Gr.SM 400 A, SM 400 B, SM 400 C)

High Strength Low Alloy Structural Steel : AS 3678 (Gr. 350); ASTM A 572 (Gr. 42, 50, 55);ASTM A 573 (Gr. 65, 70); CSA G40.21 (Gr. 400 W, 400 W); EN 10025 (Gr. S 355 JR, S 355 JO, S 355

J2, S 355 K2); JIS G 3101 (Gr. SS 490); JIS G 3106 (Gr. SM 490, SM 490 A, SM 490 B, SM 400 C, SM

490 YA, SM 490 YB, SM 520 B, SM 520 C).

Boiler&

Pressure Vessel

ASTM A 285 (Gr. A, B, C); ASTM A 516 (Gr. 55, 60, 65, 70).

Shipbuilding Hull Structural (Mild Steel) : ABS (Gr. A, B, D); BKI (Gr.A, B, D); LR (Gr. A, B, D); GL (Gr. A, B,D); BV (Grade A, B, D); DNV (Gr. A, B, D, A 34, D 36); KR (Gr. A, B, D); NK (Gr. A, B, D); RINA

(Gr. A, B, D).

High Tensile Hull Structural Plate : ABS (Gr. AH 32, DH 32, AH 36, DH 36); BV (Gr. AH 32, DH32, AH 36, DH 36); DNV (Gr. NVA 32, NVD 32, NVA 36, NVD 36); GL (Gr. A 32, D 32, A 36, D 36);

LR (Gr. AH 32, DH 32, AH 36, DH 36); KR (Gr. AH 32, DH 32, AH 36, DH 36); NK (Gr. KA 32, KD

32, KA 36, KD 36); RINA (Gr. AH 32, DH 32, AH 36, DH 36).



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Value Chain

Domestic steel industry structure

PTKS will provide the domestic steel industry

structure report



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Standar Nasional Indonesia (SNI)

Minister of Industry has released a Decree No. 01/M-

IND/1/2009 dated January 6th, 2009 to enforce Standar

Nasional Indonesia (SNI) No 07-0601-2006 for Hot Rolled

Carbon Steel in coil, sheet and plate as mandatory standard.The mandatory SNI is effective on 7 may 2009 for all traded

HRC (local and imported).

Products covered: Hot Rolled Carbon Steel in coil, sheet and

plate of commercial, drawing, deep drawing, and structural

quality.

The company shall apply for SNI certificate (SPPT SNI)

through SNI Certification Body (LSPro) for one or more

specification.



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Indonesia Steel Trade Legislation:

Anti Dumping

Ministry of Finance has issued a regulation No.39.1/PMK.011/2008 about imposition of Anti-

Dumping Duties on Imports of Hot Rolled Coil (HS Code: 7208.10;

7208.25;7208.26;7208.27;7208.36;7208.37; 7208.38; 7208.39 and 7208.90) from China,

India, Rusia, Taiwan, and Thailand; Valid from 28 February 2008 until 28 February 2013.

Name of manufacturer / exporter of goods and the amount of Anti Dumping Duty imposed on

imported goods are as follows :

China India Rusia

Wuhan Iron & Steel 0.00% Essae Steel 12.95% Novolipetsk Steel 8.96%

Angang Steel Company 25.18% JSW Steel 22.25% Magnitogorsk Iron 30.86%

Baoshan Iron & Steel 25.18% Others company 56.51% JSC Severstal 5.58%

Others company 42.58% Others company 49.41%

Taiwan Thailand

Chung Hung Steel 4.24% Sahaviriya 11.23%

China Steel Corporation 0% Nakornthai 12.78%

Shang Shing Steel Ind. 4.74% G Steel 7.58%

Others company 37.02% Others company 27.44%



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Indonesia Steel Trade Legislation: AFTA &ASEAN-CHINA FTA

POS/SUB POS

HEADING/SUB

HEADING

% IMPORT DUTY

NO DESCRIPTION OF GOODS MFN CEPT/AFTA ASEAN-CHINA FTA

2010 2010 2011 2012

1 7208 Flat-rolled products of iron or non-alloy steel, of a

width of less than 600 mm, not clad, plated or coated

(in coil, not in coil, P/O)

5 0 0 0 0

2 7211.13 - 7211.19 Flat-rolled products of iron or non-alloy steel, of a

width of 600 mm or more, hot rolled, not clad, plated

or coated (in coil, not in coil, P/O)

5 0 0 0 0



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Indonesia Steel Trade Legislation: ASEAN-KOREA FTA & ASEAN-INDIA FTA

% IMPORT DUTY

NO POS/SUB POS

HEADING/SU

B HEADING

DESCRIPTION OF GOODS ASEAN-KOREA FTA ASEAN-INDIA FTA

2010 2011 2012 2010 2011 2012

1 7208 Flat-rolled products of iron or non-alloy steel, of a

width of less than 600 mm, not clad, plated or coated

(in coil, not in coil, P/O)

5 5 5 MFN MFN MFN

2 7211.13 - 7211.19 Flat-rolled products of iron or non-alloy steel, of a

width of 600 mm or more, hot rolled, not clad, plated

or coated (in coil, not in coil, P/O)

5 5 5 4.85 4.75 4.65



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Indonesia Steel Trade Legislation:INDONESIA JAPAN - EPA

NO POS/SUB POS

HEADING/SU

B HEADING

DESCRIPTION OF GOODS % IMPORT

DUTY

IJ-EPA (USDFS)

2008

1 7208 Flat-rolled products of iron or non-alloy steel, of a width of less than 600 mm, not

clad, plated or coated (in coil, not in coil, P/O)

0

2 7211.13 - 7211.19 Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot

rolled, not clad, plated or coated (in coil, not in coil, P/O)

0

Note:

- USDFS : User Spesific Duty Free Scheme


SUMMARY LAW OF THE REPUBLIC OF


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SUMMARY LAW OF THE REPUBLIC OF

INDONESIA NUMBER 5 YEAR 1999 CONCERNING PROHIBITION

OF MONOPOLISTIC PRACTICES AND UNFAIR BUSINESS

COMPETITION

Number Provision Qualification Sanctions

1 Article 4

Oligopol

y

- agreements with other business actors for

jointly controlling the production and or

marketing of goods and or services which

may potentially cause the occurrence of

monopolistic practices and or unfair

business competition.

- if 2 (two) or 3 (three) business actors or a

group of business actors control over 75%

(seventy- five per cent) of the market

segment of a certain type of goods or

services.

shall be subject to the criminal sanction of a

fine of minimum Rp. 25,000,000,000,-(Rupiah

twenty-five billion) and maximum Rp.

100,000,000,000,- (Rupiah one hundred

billion), or the criminal sanction of

imprisonment as a replacement of a fine for no

longer than 6 (six) months.

2 Article 5 Price

Fixing

- agreements with their business

competitors to fix the price of certain

goods and or services payable byconsumers or customers on the same

relevant market.

- shall not be applicable to the following:

a. an agreement entered into in the context of

a joint venture; or

b. an agreement entered into based on the

prevailing laws.


fine of minimum Rp. 5,000,000,000,-(Rupiah

five billion) or maximum Rp.25,000,000,000,- (Rupiah twenty-five

billion), or a criminal sanction of

imprisonment as replacement of a fine for no

longer than 5 (five) months.




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3 Article 6

Price Fixing

agreements forcing a buyer to pay a price

which is different from that payable by other

buyers for the same goods and or services.


fine of minimum Rp. 5,000,000,000,-

(Rupiah five billion) or maximum Rp.

25,000,000,000,- (Rupiah twenty-five




4 Article 7

Price Fixing

agreements with their business competitors to

fix prices below market prices, which may

potentially result in unfair business

competition.






imprisonment as replacement of a fine for nolonger than 5 (five) months.

5 Article 8

Price Fixing

agreements with other business actors setting

forth the condition that parties receiving

goods and or services shall not sell or

resupply goods and or services received by

them, at a price lower than the contracted

price, potentially causing unfair businesscompetition






imprisonment as replacement of a fine for nolonger than 5 (five) months.

6 Article 9

Division of

Territory

agreements with their business competitors which have

the purpose of dividing marketing territory or

allocating the market for goods and or services,

potentially resulting in monopolistic practices and or

unfair business competition.

shall be subject to the criminal sanction of a fine of

minimum Rp. 25,000,000,000,- (Rupiah twenty-five

billion) and maximum Rp. 100,000,000,000,-

(Rupiah one hundred billion), or the criminal

sanction of imprisonment as a replacement of a fine

for no longer than 6 (six) months.



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7 Article 10

Boycott

agreements with their competing business

actors which could prevent other business

actors from engaging in the same business,

either for domestic or overseas market

purposes.



(Rupiah twenty-five billion) and maximum

Rp. 100,000,000,000,- (Rupiah one hundred


imprisonment as a replacement of a fine for

no longer than 6 (six) months.

8 Article 11

Cartels

agreements with their competing business

actors, with the intention of influencing prices

by arranging production and or marketing of

certain goods and or services, which may resultin monopolistic practices and or unfair

business competition.




Rp. 100,000,000,000,- (Rupiah one hundredbillion), or the criminal sanction of



9 Article 12

Trusts

agreements with other business actors for

cooperation by establishing a joint company or

a larger company, by keeping and maintaining

the continuity of each company or its member,

with the aim of controlling production and or

marketing of goods and or services, with the

result that monopolistic practices and or unfair

business competition may occur.










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10 Article 13

Oligopsony

- agreements with other business actors

with the aim of jointly controlling the

purchase or acquisition of supplies in

order to control prices of goods and or

services in the relevant market, which

may result in monopolistic practices and

or unfair business competition.

- controlling the purchase or acquisition of

supplies if 2 (two) or 3 (three) business

actors or a group of business actors control

over 75% (seventy-five per cent) of themarket segment of a certain type of goods or

services.







no longer than 6 (six) months. stipulation of

the cancellation agreements

11 Article 14

Vertical

Integration

agreements with other business actors with

the intention of controlling the production of

several goods which are products included in

the production chain of certain related goods

and or services where each product link is theend product of the production process or of

further processing, either in one direct link or

indirect link, which may potentially result in

unfair business competition and or be harmful

to society.





billion), or the criminal sanction ofimprisonment as a replacement of a fine for

no longer than 6 (six) months. order to

business actors to stop vertical integration




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12 Article 15

clause (1)

Closed

Agreements

agreements with other business actors,

stipulating that the party receiving the goods

and or services shall only resupply or not

resupply the aforementioned goods and or

services to certain parties and or at a certainplace.





billion), or a criminal sanction ofimprisonment as replacement of a fine for no

longer than 5 (five) months. stipulation of


13 Article 15

clause (2)

Closed

Agreements

agreements with other parties stipulating that

the party receiving certain goods and or

services must be prepared to buy other goods

and or services of the supplying business actor.









14 Article 15

clause (3)

Closed

Agreements

agreements concerning prices or certain price

discounts for goods and or services, stipulating

that the business actor receiving goods and or

services from the supplying business actor:a. must be prepared to buy other goods and or

services from the supplying business actor; or

b. shall not buy the same or similar goods and

or services from other business actors,

competitors of the supplying business actor.




25,000,000,000,- (Rupiah twenty-fivebillion), or a criminal sanction of






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15 Article 16

Agreements

With Foreign

Parties

agreements with foreign parties setting forth

conditions that may result in monopolistic

practices and or unfair business competition.




Rp. 100,000,000,000,- (Rupiah one hundredbillion), or the criminal sanction of


no longer than 6 (six) months. stipulation of


16 Article 17

Monopoly

- controlling the production and or marketing of

goods and or services which may result in

monopolistic practices and or unfair business

competition.

- reasonably suspected or deemed to control the

production and or marketing of goods and or

services as in the following events:

a. there is no substitute available yet for the

goods and or services concerned; or

b. causing other business actors to be unableto enter into business competition for the

same goods and or services; or

c. one business actor or a group of business

actors controls over 50% (fifty per cent) of

the market segment of a certain type of

goods or services._

shall be subject to the criminal sanction of

a fine of minimum Rp. 25,000,000,000,-

(Rupiah twenty-five billion) and

maximum Rp. 100,000,000,000,- (Rupiah

one hundred billion), or the criminal

sanction of imprisonment as a replacement

of a fine for no longer than 6 (six) months.



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17 Article 19 Market

Control

business actors engaging in one or more

activities, either individually or jointly with

other business actors, which may result in

monopolistic practices and or unfair




Rp. 100,000,000,000,- (Rupiah onebusiness competition, in the following

forms :

a.reject and or impede certain other business

actors from conducting the same business

activities in the relevant market; or

b.bar consumers or customers of their

competitors from engaging in a business

relationship with such business competitors; or

c.limit the distribution and or sales of goods

and or services in the relevant market; or

d.engage in discriminatory practices towards

certain business actors.

hundred billion), or the criminal sanction of



18 Article 20 Market

Control

business actors supplying goods and or

services by selling while making a loss orby setting extremely low prices with the

aim of eliminating or ruining the business

of their competitors in the relevant market

which may result in monopolistic practices

and or unfair business competition.


fine of minimum Rp. 5,000,000,000,-(Rupiah five billion) or maximum Rp.







52/105


19 Article 25

Dominant

position

business actors shall be prohibited from

using dominant position either directly or

indirectly to:_



(Rupiah twenty-five billion) and maximuma.determine the conditions of trading with

the intention of preventing and or

barring consumers from obtaining

competitive goods and or services, both

in terms of price and quality; or

b.limiting markets and technology

development;

c.bar other potential business actors from

entering the relevant market.

-have a dominant position in the following

events if:

(I)one business actor or a group of business

actors controls over 50% (fifty per cent) of

the market segment of a certain type of

goods or services; or(ii)two or three business actors or a group of

business actors control over 75% (seventy-

five per cent) of the market segment of a

certain type of goods or services.







53/105


20 Article 26

Multiple

Positions

A person concurrently holding a position as

a member of the Board of Directors or as a

commissioner of a company, shall be



(Rupiah five billion) or maximum Rp.prohibited from simultaneously holding a

position as a member of the Board of

Directors or a commissioner in other

companies, in the event that such

companies:

a.are in the same relevant market; or

b.have a strong bond in the field and or type

of business activities; or

c.are jointly capable of controlling the

market share of certain goods and or

services, which may result in monopolistic

practices and or unfair business

competition.







54/105

Summary SWOT

Shall be summarize at 3 rdMeeting



55/105

MARKETING PROBLEMS

AND OPPORTUNITIES



56/105

Marketing Problems and Opportunities

Problem:

Product, market and geographical overlapping

Opportunities:

Import substitution

Production push demand

ASEAN Market



57/105

DOMESTIC DEMAND PROFILE

(EXCLUDING BATAM) & PTKS'sSUPPLY SNAPSHOT



58/105

Demand Profile (Excluding Batam)

HR PLATE (INCLUDING CUT TO SIZE)

DEMAND PROFILE - BY THICKNESS

3,000

2,500

2,000

1,500

1,000

500

2014

HRC DEMAND PROFILE - BY

_THICKNESS

Demand HR = 4,505 kTon (Excluding Batam

2015

3,000

2,500

2,000

1,500

1,000

500

2014

-

147-

135 175

160-

1,660 1,821

I

2015

Year



59/105

HR Plate (Including Cut To Size)

Demand Profile 2014 - By Strength

LevelDemand HR Plate = 2,547 kTon (Excluding Batam)

Low Strength Medium Strength High Strength Automotive Boiler & Pressure

Vessels

Shipbuilding General Structure &

others

Low Strength

Segment

Medium Strength High Strength

> 48% OF HR PLATEDEMANDIN 2014 ISLOWSTRENGTHMATERIAL (TS < 400 MPA)



60/105


Demand Profile 2014 - Automotive

SegmentDemand HR Plate - Segment Automotive = 906 kTon

800

700 600

500

400

300 200

100 0

t < 6

'0

6 < t < 12 12 < t < 25 t > 25

Low Strength

Thickness (mm)

Medium Strength H High Strength

> 76% OFHR Plate demand for automotive is HR Plate with thickness < 6MM(690 kTon)

> 72% OFHR Plate demand for automotive is pickled oil supply condition (653 kTon)



61/105


Demand Profile 2014 - Boiler & PV Segment

20

18

16

14

12

10

8 6

4 2

0

Demand HR Plate - Segment Boiler & PV = 50 kTon

t < 6 6 < t < 12 12 < t < 25

Thickness (mm)

t > 25

Low Strength Medium Strength High Strength

> EXCEPTGASCYLINDER, ALLOF B&PV AREHIGHSTRENGTHMATERIAL.



62/105

HR Plate (Including Cut To Size) Demand Profile

2014 - GST & Others Segment

Demand HR Plate - Segment GST & Others = 1,235 kTon

1200

1000

800

600

400

200 0

t < 66 < t < 12 12 < t < 25 Thickness (mm)

t > 25


> 74% OFHR Plate demand for GST is low strength material with thickness < 6mm



63/105

HR Plate (Including Cut To Size) Demand Profile

2014 - Shipbuilding Segment

Demand HR Plate - Segment Shipbuilding = 354 kTon

250

200

150

100

50

0

t < 66 < t < 12 12 < t < 25 Thickness (mm)

t > 25




64/105

PTKS's SUPPLY

PTKS HR PRODUCTION PROFILE2,00

0

1,80

0

1,60

0

1,40

0

1,20

0

1,00

0

800

600

400

200

20072008 2009

Year

up to Sept 2010 20072008 2009

Year

up to Sept 2010

I CUT

TO

SIZE

(INTERNAL

)

CUT

TO

SIZE

(AT

CUSTOMER

) HRC Cut To Size (Internal) Cut To Size (In Customer) HRC

> 62 - 74% OFTOTAL HSM product were Hot Rolled Coil Product.

> TOTAL HR CUT TO SIZEPRODUCTIONWEREDECREASED i n recent 4 years.



65/105

PTKS HR Cut To Size (Internal) Production

Profile (Based on Thickness Group)

450

400

p

350

300

250*H

I 200 +J

| 150

< 100

502007 2008 2009 Up to Sept

2010

10

0%

90

%

80%

70

%

60

%

50

%

40

%

30

%

20

%

10

%

0%

2007 2008 2009 Up to

Sept

2010Year Year

t < 6 6 < t < 12 12 < t < 25

> Majority falls into thickness range 6 < t < 12 mm (35 - 55% of total production)



66/105

PTKS HR Cut To Size (Internal) Production Profile (Based

on Thickness Group) - By Segment

Year

Automotive EXPORT General Structure & Other Pressure Vessel & Boiler Ship Bulding Specific End Use

> 3 major segment in HR Plate were General Structure & others, Shipbuilding andexport.

> Majority falls into thickness range 6 < t < 12 mm



67/105

PTKS HR Cut To Size (Internal) Production

Profile (Based on Strength Level)

250

200

O 150 O

100

50

Low Strength

Year


> Majority falls into medium strength level (400 < IS < 4SQ MPa)



68/105

PTKS HR Cut To Size (Internal) Production Profile For

Domestic Market (Based on Strength Level)

200 180 160 140 120 100 80 60 40 20

Low Strength

Year


> MAJORITYFALLSINTOMEDIUMSTRENGTHLEVEL (400 < TS < 490 MPA)



69/105

PTKS HR Cut To Size (At Customer) For Domestic

Market

S E G M E N T Year

2007 2008 2009 2010(e)

t < 6 6 < t < 12 12 < t < 25 t < 6 6 < t < 12 12 < t < 25 t < 6 6 < t < 12 12 < t < 25 t < 6 6 < t < 12 12 < t < 25

Automotive 10,090 4,389 - 16,025 13,300 - 6,289 5,250 - 12,529 11,978 -

Export - - - - - - - - - - - -

General Pipe& Tube - - - - - - - - - - - -

General Structure & Other 133,378 14,828 12,482 194,608 63,973 22,603 237,838 11,609 4,478 128,280 5,519 6,574

Oil And Gas Pipe - - - - - - - - - - - -

Pressure Vessel & Boiler - - - - - - - - - - - -

Rerolling - - - - - - - - - - - -

Total 143,468 19,216 12,482 210,633 77,272 22,603 244,127 16,860 4,478 140,809 17,497 6,574

175,166 310,508 265,464 164,879

> ONLYIN GENERAL STRUCTURE & OTHERSAND AUTOMOTIVESEGMENT.



70/105

PTKS HR Cut To Size (At Customer) For

Domestic Market - (Based on Strength Level)

Year

Low Strength MEDIUM Strength High Strength

> Mostly Low strength level (TS < 400 MPA) WITHthickness < 6 mm



71/105

Market Overlapping Potential

in Five SegmentsDomestic HRC/P Shape RequirementSEGMENT STEEL INPUT SHAPE

Automotive HR Cut To SizeVHR Plate2

Boiler & Pressure Vessels HR Plate2/HR Cut To SizeVHRC3

General Structure & Others HR Plate2/HR Cut To SizeVHRC4

OGP HRC/HR Plate2

P&T HRC

Re-rolling HRC

Shipbuilding HR Plate2/HR Cut To Size1

Notes:

1. HR Cut To Size produced by Hot Strip Mill

2. HR Plate produced by Plate Mill

3. HRC for Gas Cylinder

4. HRC for Channel


P d t O l i P t ti l


72/105

Product Overlapping PotentialLimit size

PTKS's HSM vs Krakatau POSCO's Plate Mill

10 15 20

Thickness (mm)

2

5

12

012

50 5



73/105

Product Overlapping PotentialLOW STRENGTH

PRODUCT SPECIFICATION - STRENGTH LEVEL PTKS's HSM VS KRAKATAU POSCO's

PLATE MILL

General Structure: JIS: SPHC/D/E,

Automobile Structure: JIS: SAPH310

General Pipe & Tube: JIS: SPHT1-2,STK290, A252 Boiler & Pressure

Vessels: ASTM: A285Gr.A Rerolling:

SAE 1006 - 1015, AISI 1006 - 1015

General Structure:

JIS: SS490-540, SM490-570, SN490, SPAH; ASTM: A572 Gr.55-65, A573 Gr.36-45, 0, BS: 4360 Gr.50, S355JR/J0; DIN: ST52-3, BS SPAH, BTKC, NAW490 Automobile Structure: JIS:

SPFH490-590 General Pipe & Tube: JIS: STKS490-540 Oil & Gas Pipe: API5L-X52-X70,API5CT-H40-K55 Boiler & Pressure Vessels: SG325, SA/A516Gr.65 - 70 ShipBuilding: Marine

Plate Gr.AH/DH 32, 36



74/105

OPPORTUNITIES



75/105

Import Substitution



76/105

Import Composition per Segment -2009

100%

9

0%

8

0

%

7

0

%

6

0

%5

0

%

4

0

%

3

0

%

2

0%

1

0

%

0

%

0

N C

3

I- 0

06 0)


77/105

Imported HRC/P 2009

2009 Product (X 1000) MT

Segment Coil Plate Total

Automotive 218 7 225

Boiler & PV 6 4 11

General Structure 154 70 225

Pipe & Tube 102 0 102

Rerolling 33 0 33

Shipbuilding 0 23 23

Grand Total 513 105 618



78/105

Distribution Matrix of Imported Plates - 2009

(By Thickness Range)PLATE (X 1000 MT) Thickness Range

Segment t < 6 6 < t < 12 12 < t < 25 t > 25 Grand Total

Automotive 2 5 0 1 7

Boiler & PV 1 0 1 2 4

General Structure 13 14 17 26 70

Shipbuilding 1 13 5 4 23

Grand Total 17 32 24 32 105

PLATE (%) Thickness Range


Automotive 22,53% 68,21% 0,96% 8,31% 100%

Boiler & PV 20,59% 8,12% 30,16% 41,13% 100%

General Structure 18,94% 19,93% 24,46% 36,66% 100%

Shipbuilding 5,56% 56,58% 22,11% 15,75% 100%

Grand Total 15,79% 31,98% 22,59% 29,64% 100%



79/105

Distribution Matrix of Imported Coils -

2009 (By Thickness Range)COIL (X 1000 MT) Thickness Range



Boiler & PV 4 - - 2 6


Pipe & Tube 97 4 0 1 102

Rerolling 27 - - 7 33

Grand Total 470 22 7 15 513

COIL (%) Thickness Range


Automotive 95,73% 3,59% 0,03% 0,65% 100%

Boiler & PV 58,86% 0,00% 0,00% 41,14% 100%


Pipe & Tube 95,56% 3,84% 0,11% 0,49% 100%

Rerolling 80,21% 0,00% 0,00% 19,79% 100%

Grand Total 91,23% 4,07% 1,23% 3,47% 100%



80/105

Import HRC/P 2010

2010 Product (X 1000) MT

Segment Coil Plate Total

Automotive 274 70 343

Boiler & PV 0 2 2

General Structure 119 34 153

Pipe & Tube 82 0 82

Rerolling 13 0 13

Shipbuilding 0 18 18

Grand Total 488 123 611



81/105

Distribution Matrix of Imported Plates - 2010

(By Thickness Range)PLATE (x 1000MT) Thickness Range

Segment t < 6 6 < t < 12 12 < t < 25 t > 25 Total


Boiler & PV 0 0 1 0 2


Shipbuilding 2 13 3 0 18

Total 18 37 38 30 123

PLATE (%) Thickness Range


Automotive 5,61% 27,53% 36,92% 29,94% 100%

Boiler & PV 0,90% 25,95% 56,92% 16,23% 100%


Shipbuilding 10,81% 72,30% 14,59% 2,29% 100%

Total 14,38% 30,20% 31,06% 24,35% 100%



82/105

Distribution Matrix of Imported Coils - 2010

(By Thickness Range)

COIL (x 1000 MT) Thickness Range




Pipe & Tube 66 4 13 0 82

Rerolling 13 0 0 0 13

Total 454 20 13 0 488

COIL (%) Thickness Range


Automotive 94,85% 5,09% 0,00% 0,06% 100%


Pipe & Tube 80,23% 4,43% 15,34% 0,00% 100%

Rerolling 100,00% 0,00% 0,00% 0,00% 100%

Total 93,11% 4,16% 2,70% 0,03% 100%



83/105

Production Push Demand




84/105

HR: ASEAN (5) Market

ASC HR Sheet + Plate

12,000,000

10,000,000

8,000,000O 6,000,000 I-

4,000,000 2,000,000

I Production Export Import Consumption

J . SEASI STATISTICAL YEARBOOK, 2010

5 ASEAN Market : Malaysia, Singapore, Philiphines, Vietnam and Thailand



85/105

IDENTIFICATION OF TARGET

MARKET / MARKETSEGMENTATION


Id ifi i f


86/105

Identification of target

market/market segmentation

General Framework shall be decided in Course IDetailed Marketing Plan will be discussed in course

II



87/105

Product & Market Scope

Priority AssesmentPTKS Krakatau POSCOContinue to maintain thin to medium

gauge market, width up to 2 m. Expand

production to less than 2 mm in

thickness.

Capture dominant position in thicker and

wider medium to high strength plate.

Dominate plate market in Batam area.


Product Scope:


88/105

Product Scope:Market

Segment

PTKS Existing PTKS Future

(2014 onwards)

Krakatau POSCO

(2014 onwards)

Automotive Low, medium and high strength,

typical thickness 3-12 mm, 60%

non P/O.

More P/O plates with thickness 2 -6

mm; increase non P/O materials up

to 12 mm.

Supply plate for heavy equipment

industry, thickness more than 12

mm.

Boiler & Mainly only for small gas cylinder, Maintain small gas cylinder Support boiler & pressure vessel Pressure thickness 2.3 - 3.3 mm;

some market. fabricators with all specification and Vessel thicker plate for large B&PV. thickness range.

General

Structure &

Others

Mainly thinner gauge (thickness 2 -6

mm), low strength level; the rests are

for various application (thickness up

to 12 mm)

Maintain traditional markets of thin

and medium gauge. Capture all

thinner gauge up to 6 mm (mild

steel) and up to 12 mm for mediumand high strength steel.

Focus on medium and thicker gauge

market, medium to high strength level;

penetrate heavy marine construction

industry including very thick plates,weather resistant plates. Thickness

more than 12 mm.

Oil & Gas Mainly medium and high strength, Meet all market demand for ERW Supply only UO Pipe manufacturer. Pipe API5L-Series,

typical thickness 3 - and spiral pipe, penetrate casing 20 mm and tubing.

Pipe & Tube Mainly small water and general use

pipe (thickness 2 - 6 mm), somelarger pipe for construction (thickness

6 - 20 mm).

Maintain existing ERW and Spiral

pipe market for all end users.

Rerolling SAE grades, thickness up to 4 mm. Supply all domestic Cold Rolling -

Mill needs.

Shipbuilding Thickness 6 - 22 mm, mainly A and B

grades.

Only for small ships and repairs,

width up to 6 feet.

Supply full-scale shipyard.



89/105

Market Scope (Geographical):PTKS Existing PTKS Future Krakatau POSCO

Domestic

Main destination: Greater

Jakarta (Jabodetabek) Other

destinations: Surabaya,

Semarang, Medan, Semarang ,Medan, Makassar

Maintain traditional

markets, penetrate East

Kalimantan, South

Sumatra, Sulawesi.

- Dominate Batam market

(shipyards and fabricators)

- Large shipyards (Jakarta,

Surabaya, Semarang)- UO Pipe (Lampung)

- Large Fabricators (Java,

Sumatra)

- Heavy Equipments (Greater

Jakarta/Jabodetabek)

Export

Japan, Australia, Malaysia,

Europe

ASEAN, Japan ASEAN, Australia, Europe


k


90/105

Target Market/

Market Segmentation-Summary

HSM-

PTKS

PLATEMILLKRAKATAU

POSCO



91/105

MARKETING ACTION PLAN



92/105

SALES PLAN 2014 (domestic excluding batam)BY SEGMENT

1,600 -

1,400 -


AUTOMOTIVE (Excluding Batam) SALES PLAN 2014


93/105

AUTOMOTIVE (Excluding Batam) SALES PLAN 2014(x 1,000 mt)

TOTAL DEMAND : 906PTKS

181

_20%

OTHERS

70578%

KRAKATAU-

POSCO 20 2%

BOILER & PV (Excluding Batam)OTHERS 21

19% _

(x 1,000 mt)

KRAKATAU-POSCO 30 27%

PTK

S 6054%

TOTAL DEMAND : 111


SALES PLAN 2014


94/105

TOTAL DEMAND : 1,375

GENERAL STRUCTURE &

OTHERS (Excluding Batam)(x 1,000 mt)

SALES PLAN 2014

-

PTKS

278

OTHERS

957

70%

20%

KRAKATAU-

POSCO 140 10%

OIL & GAS PIPE (Excluding Batam)(x 1,000 mt)OTHERS

33

20%

PTKS

50

31

%

KRAKATAU-POSCO 80 49%

TOTAL DEMAND : 163


PIPE & TUBE (Excluding Batam)SALES PLAN 2014


95/105

( g )(x 1,000 mt)

TOTAL DEMAND : 481

SALES PLAN 2014

OTHERS 240

50% .

PTK

S

240

50%

REROLLING (Excluding Batam)

OTHERS

115

10%

(x 1,000 mt)

TOTAL DEMAND :

1,115

PTKS

1,000

90%


SALES PLAN 2014


96/105

SALES PLAN 2014

SHIPBUILDING (Exluding Batam)(x 1,000 mt)

OTHERS 154 44% PTKS

50

14%

KRAKATAU-

POSCO 150 42%

TOTAL DEMAND : 354



97/105

SALES PLAN 2014 (BATAM)

BY SEGMENT

BPV GS T &

Others

S HP Total

OTHERS 12 190 8533 51.055

KRAKATAU PO SC O 3 82 365 450

DEMAND 15 272 1.2 18 51.505

- -


98/105

SALES PLAN

2014 (PLATE

TOTAL)Segment BATAM NON BATAM TOTAL

AUT - 20 20

BPV 3 30 33

GST & Others 82 140 222

OGP - 80 80

P&T - - -

ROL - - -

SHP 365 150 515

TOTAL 450 420 870



99/105

SALES PLAN 2015 (domestic excluding batam)BY SEGMENT

SALES PLAN 2014


100/105

PIPE & TUBE (Excluding Batam)(x 1,000 mt)

SALES PLAN 2014

TOTALDEMAND : 1,009PTK

S

303

.30

%

OTHER

S.

68368%

KRAKATA

U-POSCO

23

2

%

BOILER & PV (Excluding Batam)THER

S 23

18% _

(x 1,000 mt)

KRAKATAU

POSCO 34

27%

PTKS

70

55

%

TOTALDEMAND : 127


GENERAL STRUCTURE & OTHERS SALES PLAN 2014


101/105

(Excluding Batam)SALES PLAN 2014

TOTALDEMAND : 1,523(x 1,000 mt)

PTK

S

46831

%

OTHER

S.

895

59%

KRAKATAU-

POSCO 160

10%

OIL & GAS PIPE (Excluding Batam)

OTHER

S 24

13%

(x 1,000 mt)

PT

KS

62

35%

KRAKATAU-

POSCO 91

52%

TOTALDEMAND : 178


PIPE & TUBE (Excluding Batam) SALES PLAN 2014


102/105

OTHE

RS

211

40%

( g )(x 1,000 mt)

SALES PLAN 2014

TOTALDEMAND : 528

PT

KS

31

7

60

%

REROLLING (Excluding Batam)

OTHERS.

119

10%

(x 1,000 mt)

PTKS

1,100

90%


SALES PLAN 2015


103/105

SALES PLAN 2015

SHIPBUILDING (Exluding Batam)OTHERS (x 1,000 mt)

135




104/105


BY SEGMENT


SALES PLAN


105/105

SALES PLAN

2015 (PLATE

TOTAL)Segment BATAM NON BATAM TOTAL

AUT - 23 23

BPV 4 34 38

GST & Others 109 160 269

OGP - 91 91

P&T - - -

ROL - - -

SHP 487 171 659

TOTAL 600 480 1 080

general marketing framework new design2

Documents