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Good Corporate Governance

 

Basic Implementation of Corporate Governance

Good Corporate Governance (GCG) is a must for every public company listed on the Indonesia Stock Exchange (IDX). This implementation also plays an important role in achieving PT Indal Aluminium Industry Tbk (Company) Vision and Mission. Every activity within the company must be adjusted to the Corporate Governance policy which is specifically designed to optimize the Company Value.
The Company is committed to always being consistent in the implementation of Corporate Governance in the current business era based on the principles of transparency, fairness, accountability, independence and accountability in all operational activities for the sake of all stakeholders.

Corporate Governance Structure

In accordance with Limited Companies Law No. 40 of 2007, the Company's organs consist of the Shareholders General Meeting (SGM), the Board of Commissioners and the Board of Directors which have clear authorities and responsibilities according to their respective functions as stipulated in the Articles of Association and Laws and Regulations-invitation. The Company believes that a reasonable relationship between the Company's Organs has a significant positive effect on the success of corporate management and the implementation of Corporate Governance. Therefore, the Company encourages fair relations, respects and acts according to their respective functions and roles.

The Company is committed to implementing good corporate governance practices as part of its efforts to achieve the Company's Vision and Mission. The Code of Ethics is prepared as a manifestation of this commitment and describes the values in the Company's work culture into the interpretation of behavior related to business ethics and code of conduct.

The Code of Ethics also serves as a reference for the Board of Commissioners and the Board of Directors in managing the company related to all activities on behalf of the Company. expected to uphold the principles in this Code of Ethics

The code of ethics is regularly disseminated to all parts of the Company, and all new employees who will work will sign this Code of Ethics and will be re-signed as a sign of approval every year.

The Code of Ethics regulates the following behaviors:

  1. General Principles
  2. Child Labor
  3. Forced Labor, Human Trafficking and Slavery
  4. Harassment and Violence
  5. Compensation and Benefits
  6. Working Hours
  7. Health and Safety Working Conditions
  8. Discrimination
  9. Freedom of Association and Bargaining
  10. Environmental Responsibility
  11. Customs Cooperation to Counter Terrorist Activities
  12. Relationship with Subcontract
  13. Ethical Behavior

CORPORATE VALUES
To create a better future for all stakeholders and develop together to serve the community and nation through business development.

Compliance with Laws, Regulations and Regulations
It is expected that every employee will comply with state laws, rules and regulations and become law-abiding citizens to ensure a law-abiding corporation.

Creating Clean and Green Businesses and Products
The best companies must be accountable to society and the larger community. By creating clean and green businesses and products, the Company will be able to serve society in the long term with true purpose.

Loyalty, Capability, Hard Work and Discipline
From the pillars of success and achievement. Every member of the organization must maintain his integrity and be prepared to work hard and smart for the mutual benefit of both the Company and the individual. Organizational behavior must be carried out in a military discipline but still humane approach.

In accordance with the Articles of Association, the honorarium for members of the Board of Directors is determined at the Annual Shareholders General Meeting (AGM). Subsequently, the AGM authorized the Board of Commissioners to determine the amount and distribution of the honorarium between members of the Board of Commissioners and the Board of Directors. The amount of remuneration for each member is determined according to the function and competence of each member. The total remuneration received by the Board of Directors is Rp.4,755,608,000 for 2020.

The Board of Commissioners' Remuneration Policy is determined in the GMS by giving the Board of Commissioners the authority to determine the amount and distribution of the honorarium, through indicators of remuneration determination. The total remuneration received by the Board of Commissioners is Rp.1,506,152,000 for 2020.

Risk management is a set of procedures and methodologies used to identify, measure, monitor and control risks arising from business activities. Effective risk management will allow the Company to have greater control in achieving the right balance between acceptable risk and estimated risk. Indications of risk inherent in the company's business and efforts to reduce the level of risk are as follows:

  1. Production Risk.
    As a company with integrated facilities, which include aluminum smelting furnaces, dies, press machines, surface finishing facilities (anodizing and painting), complete equipment for high-precision products (precision tools), ladder division, trading division and has subsidiaries. which is engaged in construction (applicator), the Company is required to ensure that every process and division produces the best in order to avoid correction and revision costs as well as delays in delivery time. Therefore, a risk and opportunity review is always carried out in every line related to production. Thus, for every risk that occurs, the Company already has a plan for handling it.
  2. Risk of Availability and Quality of Raw Materials.
    To meet the availability of raw materials with quality that is in accordance with what is needed in the production process, there are two vital things that are interrelated to avoid the risk of stopping the production process. Therefore, mitigation is carried out by controlling the stock of the main raw materials originating from 4 foreign suppliers and 1 domestic supplier accompanied by a minimum long-term purchase contract of 1 year for each supplier and ensuring the suitability of the composition of the raw materials ordered by conducting an Incoming Inspection.
  3. Financial Risk.
    The Company has debts to several banks, both in the form of investment credit or working capital as well as Letters of Credit (LC) for the purchase of imported raw materials in foreign currencies at different rates. For this reason, the Company seeks to minimize exposure to foreign exchange differences by conducting Trust Receipt (TR) using the Rupiah value which has reached 80% of the total purchases using the LC Import facility.

The Whistle Blowing System (WBS) is a means of communication to report actions related to acts of violations or alleged violations, both against the law, code of ethics and/or conflicts of interest committed by the company's internal parties. The implementation of WBS is expected to be able to overcome the limitations of the internal control system and provide guarantees for early detection of violations that occur.

Submission of Violation Reports
Submission of violation reports is carried out in 2 ways, namely directly and indirectly. Directly by reporting directly to the Personnel, Security, Supervisor and Plant Manager. Indirectly, namely reporting through other means such as suggestion boxes, emails, telephones and mobile phones.


Protection for Reporters
The Company will ensure the security of the whistleblower and the reporter will receive recognition and appreciation from the Company in the form of a thank you from the management and record the condition of the employee concerned with a separate assessment.


Handling and the Party Managing Complaints
Each complaint or reporting disclosure is carried out by a WBS administrator team formed by the Board of Directors to conduct audits, records and corrective actions as well as imposing sanctions on the reported parties. It is also obligatory to communicate with the local police if things are found that are suspected of being serious and certain violations.

Incoming and Processed Complaints in 2019
In 2020, no complaints or reports were received and handled by the Company.

Social and environmental responsibility (Corporate Social Responsibility - CSR) is the Company's commitment to participate in sustainable economic development in order to improve the quality of life and the environment that is beneficial, both for the Company itself, the local community and society in general by taking into account the expectations of stakeholders, in line with established laws and norms of behavior and integrated with the organization as a whole. The cost of implementing CSR in the Company is carried out centrally by the Group amounting to Rp.3,272,947,899 with the Company's contribution of Rp.482,672,660 for 2020.

Living environment
The Company is committed to complying with laws and regulations and other requirements related to environmental management, preventing environmentalpollution, striving for energy and natural resource efficiency and environmental empowerment, including:

  • The use of natural gas that is more environmentally friendly for the production process of smelting and heating, with the impact of lower pollution levels. With the Regenerative Burner technology, the wasted heat from the chimney can be recovered to help the combustion process by 20%.
  • Get a blue rating for the assessment of waste management correctly, in accordance with the provisions and quality standards required under the law of the Ministry of Environment and Forestry.
  • Inspection of wastewater samples, ambient air samples and air emissions by the Sidoarjo Regency Environmental and Hygiene Service is carried out regularly which is used as a routine UKL-UPL evaluation report.

Employment

  • In 2018, the Company signed a Collective Labor Agreement between the Board of Directors and the Management of the SPSI Work Unit to strengthen the relationship between the Company and employees with a validity period of up to 2020 and has beenregistered with the Manpower and Transmigration Office of East Java Province.
  • The employee turnover rate in 2020 is 2.07% with 3 main reasons, namely retirement, dissatisfaction with compensation provided by the company and family factors.
  • The Company ensures that the health of all employees, their spouses and children is included in the Indonesian government's health program through the Social Security Administering Office.
  • Employee remuneration is provided in the form of salary, annual bonus, THR, gratuities and in kind. For permanent employees, giving in kind is carried out simultaneously with the provision of THR and is given based on years of service with a separate nominal calculation.
  • The work accident rate is 0.38% in 2020 with the most cases occurring in the company's work environment.
  • The Company conducts regular reports every three months to the Head of the Manpower Office of Sidoarjo Regency for Occupational Safety and Health Activities. The activities or training carried out are firefighting training, evacuation exercises, first aid training (First Aid in Accidents), PPE (Personal Protective Equipment) and Chemical Handling.
  • Provide opportunities for employees to attend training or seminars conducted by other parties or organized by the Company itself. The trainings that have been attended or organized by the Company include internal audit webinar based on ISO19011:2018 and socialization on prevention of the impact of domestic waste and socialization of AEO (Authorized Economic Operator).
  • Certified employees who have expertise in operating certain equipment or machines such as forklifts and lifting taps.
  • The mechanism for complaints on labor issues is contained in the Procedure for Submission of Grievances which can be submitted in writing to the direct supervisor or through the suggestion box. Within 5 working days it will be followed up with a meeting of the Personnel and the employees themselves. Furthermore, there will be a meeting with the Plant Manager, if the results of the decision in the meeting have not reached an agreement, it will be followed by a meeting with labor union SPSI. Details of the follow-up will be recorded, including investigations, solutions, implementation and deadlines for completion.

Social and Community

  • Donated a total of 240,000 masks, 130 tons of rice, 19,000 bars of hand soap, 70 pairs of medical shoes, 250,000 instant noodle seeds, 100 water barrels and 8000 rapid test kits to the East Java Provincial Government, Surabaya Police, Gresik Regency, Government City of Surabaya and Kodam V Brawijaya to be distributed to people in suburban areas such as Gresik, Ngawi, Pacitan, Trenggalek andMadura whose distribution is assisted by Babinsa, so that it can be distributed to people who really need it.
  • Providing material donation assistance for the construction of state-owned public facilities that have lift access which is intended for people with special needs (disabled).
  • Conducting regular blood donations, so that it won an award as one of the best voluntary blood donor companies. Due to the pandemic situation, for the 2020 period new blood donations were held in August and November with a total number of 193 participants.
  • Mr.Alim Markus as the President Director, was a speaker at a public lecture at Ma Chung University in Malang with the theme "The Future Challenges of Indonesia's Millennial Generation in Global Competition".

Product Responsibility

The focal point of responsibility to consumers related to sales transactions for aluminum products carried out by the Company is to ensure that these products are sold with applicable composition and manufacturing standards, according to the specifications desired by consumers and do not have a negative impact on consumers' health.

Technical
The Company works closely with consumers even before the work starts to ensure that consumers' wishes in ideas and designs can be met. For the accuracy of each work the Company uses AutoCAD technology.

Dies Manufacturing
The Company's product development team is able to help consumers to design special dies that can improve the quality of the products produced, one of which is by using a new Vertical CNC machine that is capable of making specifications and high tolerance levels. In addition, the Company also uses CNC machines such as CNC Wire Cut and CNC EDM to produce precise dies.

Extrusion Division
The extrusion division provides both standard and specialized extrusion facilities. Advanced automatic measuring equipment is also used with the ability to accurately measure profile dimensions up to 0.001mm. This level of precision will give consumers the quality they need.

Fabrication Division
This division has received certificates from TUV and Kite Mark for various series of ladders. TUV and Kite Mark are safety standards for metal footstools for household use.

Surface Finishing
The Company is a certified PVDF wet paint applicator manufactured by PPG and Valspar for compliance with the required quality assurance and AAMA specifications in the painting process. This high quality paint comes with a 10-15 year warranty, for both standard and custom colors, and ensures long lasting durability for interior or exterior use. In addition to wet paint, PT INAI is also a certified powder coatings applicator produced by leading suppliers, such as Akzo Noble, Jotun and Dupont.

Establishing Relationships with Customers
During 2020, the Company has made several efforts to maintain good relations while realizing the Company's social and environmental responsibility to customers.

Efforts implemented include:

  1. Best Of The Best Event: An appreciation activity in the form of awards to partners who have made excellent contributions.
  2. Loyalty Program: Providing special discounts for customers who have reached a certain quantity purchase value according to the contract.
  3. Plant Visit: An activity to invite customers to see firsthand the Company's production process.

Measurement of customer satisfaction
The Company is always oriented towards customer satisfaction, therefore the Company conducts periodic surveys to determine the level of customer satisfaction as part of the process to improve service and especially the quality of products received by customers. A customer satisfaction survey for 2020 has been carried out, with the results of a satisfaction level on a scale of 3.7, the same as in 2019. There are several points that have improved significantly compared to last year, namely the frequency of on-time deliveries in accordance with the schedule and more efficient billing procedures systematic. However, there are also those who get a lower rating, one of which is the price policy, where there is a pandemic period, customers hope to get a price reduction or discount, but the Company cannot fulfill it, due to production costs that have not decreased.

Consumer Complaints
The Company provides access to customers to submit complaints or other matters relating to products and services through direct marketing staff, telephone, email, fax or the Company's website. During 2020 the number of claims received was 0.24% of the total shipments for a year, a decrease of 0.06% compared to 2019 of 0.30%. With three issues, namely dimensions, damage and defects on the surface. All claims, 100% have been properly resolved by the relevant department.

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