MM6021

CORPORATE RISK MANAGEMENT

JAKARTA STOCK INDUSTRIAL CLASSIFICATION

Consumer Goods Industry
PT. Unilever Indonesia Tbk

YP 54

Fara Pratiwi 29115545

I Wayan Wahyu 29115597
Dea Yulianti Putri 29115598
Kahfi Giovanni 29115646

MASTER OF BUSINESS ADMINISTRATION

INSTITUT TEKNOLOGI BANDUNG
2017
1. Company Background
PT. Unilever Indonesia is a company that established on 5th December 1933 and this
companies are engaged in consumer goods industry. In Indonesia Unilever Indonesia has grown
to become one of Indonesias leading fast moving consumer goods companies. Unilevers
Indonesias product range includes Pepsodent, Lux, Lifeuoboy, Dove, Sunsilk, Clear, Rexona,
Vaseline, Rinso, Molto, Sunlight, Walls, Blue Band, etc. The companys shares were first offered
to the public in 1981 and have been listed on the Indonesia Stock Exchange since 11 January 1982.
At the end of 2015 Unilever Indonesia was the fourth largest company by market capitalization on
the Indonesia Stock Exchange.

2. Financial Condition
From the financial report September 30, 2016 we can know the financial condition in Unilever.
Based on financial report we know that most of the company transaction are using Foreign
Exchange such as US Dollars and Euro. And the table below show the information of financial
reporting.

Account September 30, 2016 December 31, 2015

Total Current Asset 6,878,563,000,000 6,623,114,000,000
Total Short-term Liabilities 9,565,299,000,000 10,127,542,000,000
Liquidity Ratio 71.91% 65.40%
Total Liabilities 10,405,882,000,000 10,902,585,000,000
Total Equity 6,342,791,000,000 4,827,360,000,000
Solvability Ratio 1.64 2.26
Net Income 4,750,551,000,000 4,183,173,000,000
Revenue 30,101,448,000,000 27,546,680,000,000
Profitability Ratio 15.78% 15.19%
EPS 623 548

The table above shows that PT Unilever Indonesia, Tbk has decrease its short-term liabilities,
this condition means that the ability of the company to pay off its current liabilities is increasing.
Even though the liquidity ratio has increasing but the condition not too good because companys
short-term liabilities is more than its short-term liabilities which is if in the event of an emergency,
the company cant pay all of its short-term debts. So company should prepare the availability fund
to pay interest short term bank loan (fixed cost). From the debt equity ratio, we can see that the
portion of ratio has been decreasing. Even though the ratio has decreasing but the condition not
too good because the total liability that company had should be lower than its equity. But if we
breakdown the total liability that company have, 92% of the total liabilities come from the current
liabilities. From that fact, it gives the same implication in term of risk. So, Unilever has to prepare
the availability fund in order to cover their short term debt.
3. Risk Identification
Effect from
No. Risk Category Mitigation
Mitigation

Currency exposures are managed by the use

of forward foreign exchange contracts. Hedge
Foreign
1. some of our exposures through the use of Hedging Cost
exchange
foreign currency borrowing or forward
Market risk exchange contracts.

Regularly update our forecast of business

External Development
2. results and cash flows and, where necessary,
economic Cost
rebalance investment priorities.

Monitoring and reviewing the business to in

3. Legal line with all relevant laws and legal
obligation.

Maintain a global system for the control and Maintenance

4. Technologies Operational
reporting of access to critical IT systems. cost
risk
Implemented targeted programmed to attract
and retain top talent. Develop career paths Development
5. Human
and identify the key talent and leaders of the cost
future.

Continuously monitor external market trends

Customer Reputational and collate consumer, in order to develop Development
6.
retention risk categories and brand strategies that fits the cost
need of our consumers.

Investing in another liquid asset such as time Fund

7. Liquidity
deposit, derivatives instrument availability

To avoid potential losses due to bad debts,

Financial risk
some customers are required to place bank Risk
8. Credit risk guarantees that can be claimed by the sharing/risk
company in case the customers fail to pay transfer
their debts.
4. Risk Appetite
There are some risk that PT. Unilever Indonesia, Tbk willing to take in order to achieve their
company goals (return) and target.

Foreign Currency
Hedging Cost
Risk

The first is foreign currency risk, because PT. Unilever Indonesia are using foreign currency
for their activities like transaction, saving, and buying raw material from abroad. Those activities
require PT Unilever Indonesia, Tbk always ready to face the foreign currency volatility and
anticipate in order to avoid the impact of that risk. The proper action from PT. Unilever Indonesia
should do to anticipate the impact of foreign currency risk by hedge foreign exchange to limit their
transaction, saving, and buy raw material using US Dollar as their main currency.

Credit Risk Risk Retention

Second risk appetite of PT Unilever Indonesia, Tbk is credit risk, the risk is primarily from
deposits in banks and derivatives entered into with banks and credit given to customers. To avoid
potential losses due to bad debts, some customers are required to place bank guarantees that can
be claimed by the company in case the customers fail to pay their debts.

Liquidity Risk Invest in Treasury

The last one is liquidity risk that will faced by PT Unilever Indonesia, Tbk, to ensure
availability of sufficient cash, the company need to conducts cash forecast and maintains flexibility
of their funding by maintaining adequate credit facilities. One of the activities that the company
can do is increasing current asset without change current liabilities by using; selling the fixed asset,
adding or increasing long-term liabilities and more investing in marketable securities.