VIII. COMPANY INFORMATION
2. Operational Activities
IX. BUSINESS ACTIVITIES AND PROSPECTS OF THE COMPANY AND SUBSIDIARIES
1. GENERAL
The Company was established in 1983 and its business includes seeding and manufacturing of corn, vegetable and paddy seeds. The head office of the Company is located at Jl. Raya Surabaya- Mojokerto Km. 19, Desa Bringin Bendo, Kecamatan Taman-Sidoarjo with its plant located in Desa Sumber Agung, Kecamatan Ploso Klaten, Kabupaten Kediri, Jawa Timur.
The Company and Subsidiaries focus their operations in several business activities as follows:
(i) Production of primary plant seeds that includes hybrid-field corn and paddy seeds that comes from the superior varieties of cross-breeding.
(ii) Production of vegetable seeds that includes vegetable and fruit seeds such as: chili, cucumber, eggplant, tomato, pumpkin, cabbage, china-cabbage, "paria", water spinach, long bean, spinach, honeydew, watermelon, and others.
(iii) Production of pesticides as well as sales of plant fertilizers.
Hybrid-field corn seed is well-known for its high productivity and quality of the harvested crops.
The type of corn seeds considered as the Company’s superior and pride seed is type F1 BISI-2, which is a corn variety with two corncobs in one plant as introduced by the government in 1995.
The Company has introduced its various superior vegetable seeds in the market, either by own production or by Chia Tai Seeds Co. Ltd., Thailand, a member of Charoen Pokphand Group. All these superior varieties are having approval for sale to the market based on the decision letter from the Ministry of Agriculture of the Republic of Indonesia.
The Company is one of the major plant and vegetable seed producers that is well-known for its research and development facilities. The Company has several domestic and international research facilities with high-technology and bio-technology departments. For developing seeds locally, the Company was awarded by a Satya Lencana Award from the President of the Republic of Indonesia on August 20, 1997. The Company became the first national seed company that received an accreditation from the government for self-labeling on its seeds as awarded by the Institute of Certification on Quality System on March 20, 2000.
In December 2006, in order to strengthen its position in agricultural business, the Company acquired 54.20% equity ownership in TSP and 99.99% equity ownership in MSI. TSP is engaged in the distribution and marketing of the Company’s products and other agriculture production materials, such as fertilizers and pesticides. MSI is engaged in the production of pesticide products, which are distributed by TSP.
The Company and Subsidiaries have produced superior varieties, corn seeds under the trademarks of BISI-2 and BISI-9, vegetable seeds under the trademarks of Timun Hercules and Melon Action, and paddy seeds under the trademark of Intani-2.
understand the plant resistance under various degrees in temperature, resistance against pest attack and plant diseases, degree of rainfall, and land altitude.
In each location of the research and development facility land, they perform research and development tests to come up with superior varieties of seeds that will produce plants that are highly productive, with high resistance against pest attack and plant diseases, and an adapt different weather and land conditions in such areas or have high degree of adaptation capability.
The Company also has a research and bio-technology laboratory that is located in Desa Sumber Agung, Kecamatan Ploso-Klaten, Kabupaten Kediri. This laboratory is equipped with various research and development technology for plant seed production. The facilities of the plant seed technology and development include:
- Plant Protection Laboratory
Its aim is to select plant’s resistance against pest and plant-diseases as well as to monitor the seed’s conditions.
- Molecular Breeding Laboratory
Its aim is to map the genre of the plant that will expedite the plant’s rejuvenation process and to check the purity of the seed.
- Tissue-Culture Laboratory
Its aim is to fertilize the plant through embryo culture or anther in expediting plant’s rejuvenation process.
- Plant Physiology Laboratory
Its aim is to test the plant’s adaptation during a shortage of water, biological-element, level of land acidity and the salinity of the land.
The employees are also the most valuable assets of the Company for its research and development, and production activities. As of 2006, 34% of the total Company’s employees were obtained bachelor, master and doctoral degrees. The Company also hired 3 foreign employees that have intensive expertise and experiences in the field of plant production.
The Company has production facilities located in Desa Sumber Agung, Kecamatan Ploso-Klaten, Kabupaten Kediri, with a production capacity for corn and paddy seeds of 15,000 tons per year and for vegetable seeds of 4,000 tons per year.
In performing research and development activities, the Company always diversifies its plant’s species in each research area. It is done to maintain biotic material on land that was used as media for research and development. The facility of research and development for vegetable seed is in the same area with the facility of research and development for primary plant seed. As one of the Company’s superior products, the vegetable seed has full-support from the laboratory of research and biotechnology which is located in Desa Sumber Agung, Kecamatan Ploso Klaten, Kabupaten Kediri as well as several human resources who have intensive skills and experiences on certain plant species.
The following table shows the total research and development expenses incurred for the past 5 years:
(In million Rupiah)
Year 2002 2003 2004 2005 2006
Research and development expenses 4,135 2,523 3,393 6,746 8,136
The research and development expenses incurred for 2003 decreased as compared with 2002, due to the Company consolidated and reviewed the research program. For the subsequent years, the increase in research and development expenses was consistent with the Company’s operational growth.
The following is the list of the Company and Subsidiaries’ locations of their research and development facilities:
No Location Type of Seed
1. Sumber Agung, Kediri, Jawa Timur Corn, Paddy, Vegetable
2. Kencong, Kediri, Jawa Timur Vegetable
3. Kambingan, Kediri, Jawa Timur Corn, Paddy
4. Gedong Dalam, Lampung Timur, Lampung Corn, Paddy, Vegetable
5. Ngroto, Malang, Jawa Timur Vegetable
6. Semangat, Karo, Sumatera Utara Corn, Paddy, Vegetable
7. Sidogede, Magelang, Jawa Tengah Corn, Paddy, Vegetable
8. Citapen, Bogor, Jawa Barat Vegetable
9. Parigi Mulya, Subang, Jawa Barat Corn, Paddy, Vegetable
10. Ngijo, Malang, Jawa Timur Corn, Paddy, Vegetable
11. Bagikpolak, Lombok Barat, NTB Corn, Paddy, Vegetable
Pesticides and Fertilizers
The Company through MSI, a subsidiary, has pesticide plant located in Desa Lengkong, Kecamatan Mojoanyar, Kab. Mojokerto, Jawa Timur located at a total land area approximately two hectare.
The plant with production capacity of 14,000 tons per year has been producing raw materials for pesticides that are in liquid-chemical substance form.
The fertilizer products that are sold by the Company through TSP, a subsidiary, are mostly imported finished good products from China.
The following table shows the seed production outputs for the last 5 years:
(In ton)
No Production 2002 2003 2004 2005 2006
1 Corn Seed 7,575 6,010 9,562 13,445 15,760
2 Paddy Seed 57 144 65 - 100
3 Vegetable Seed 1,016 993 1,042 1,629 1,878
Total 8,648 7,147 10,669 15,074 17,738
Capacity 12,000 12,000 12,000 19,000 19,000
MSI has started its pesticide production in May 2005. The following table shows the pesticide production outputs for the last 2 years:
(In ton)
No Description 2005 2006
1 Pesticides 1,301 2,729
Capacity 6,750 6,750
3. PRODUCTION PROCESS