General Marketing Framework New Design2

Contents
Overall 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
Overall Business Objectives

ROI (%) 2014 - 2018
Profit (USD) 2014 - 2018

Notes: Shall be determined by KRAKATAU POSCO management
SPECIFIC MARKETING OBJECTIVES
Krakatau Steel Marketing Task-Force Team
Indonesia HRC/P Demand Forecast (2010 - 2015)

800 0
< U
S S
O O
W
700 0 600 0 500 0 400
'C T
S S O
O O
H
C T F M
2010E
2011F
2012F
2013F
2014F
2015F
plate
Coil Total 300
0
2691
1467 4159
2899
1591 4489
3184
1739 4922
3520
1919 5439
3892
2117 6009
4430
2335 6765
(1)
including plate from plate mill and cut-to-size (CTS); Source: PTKS estimates 0 200 0
Indonesia HRC/P Demand Forecast (2010 - 2015): Domestic (Excl. Batam) and Batam
800 0 700
E
o o o
0 600 0 500 0 400
< H
C C
X
2010E 3122 1037 4159
2011F 3385 1105 4489
2012F 3700 1223 4922
2013F 4083 1356 5439
2014F 4505 1505 6009
2015F 4969 1796 6765

Source: PTKS estimates
HR Non Batam HR Batam Total

0
300 0 200 0 100
Indonesia HRC/P Demand Forecast (2010 Per Segment

8000 7000
S O -W U E
6000
5000 4000
e
S
^
O O
3000 x 0 CT 2000
F
2010E
2011F
2012F 2013F year
2014F
2015F
M 1000
year 2010E 2011F 2012F 2013F 2014F 2015F

Source: PTKS estimates
AUT
BPV
M&GST
OGP
P&T
ROL
SHP
Total
57 647 4 727 815 906 1009
7 86 7 98 111 127 | 146
123 1313 1 1427 1576 1646 1847
4 49 6 53 58 163 178
34 370 6 400 438 481 528
79 858 4 932 1020 1115 1219
109 1167 0 1286 1422 1572 1840
415 4489 9 4922 5439 6009 6765
Price Forecast
2010 Plate Price (USD/Ton)
International (East Asia, cfr) Domestic (Landed)
Source : - CRU, 2010 - PTKS Estimates
2011
2012
2013
2014
722 762
2015
713 752
673 710
768 787 757 810 830 799
Market Share
2014 Sales Volume (x 1,000 Ton) Domestic Export Demand (x 1,000 Ton) Domestic Market Share
Notes: - 2014 :70% of Capacity - 2015 : Full Capacity
2015
1,080 300 6,765 20%
870 100 6,009 16%
Revenue (Plate)
2014
Sales Volume (x 1,000 Ton) Domestic Export Price (USD/Ton) Domestic Export Revenue (mil. USD) Domestic Export Total
870 100 762 722
2015
1,080 300 752 713
663 72 735
812 214 1,026
BUSINESS SITUATION
SWOT ANALYSIS
10
BusinessSituation Situation/SWOT Analysis Internal External Situation

Performance Analysis - Product Mix Design - Quality Level/Product Specification - Cost Simulation Resource Availability and Allocation - Marketing organizational structures - Sales force, incentives and budget - Outbound logistics Markets - Economic forecast - Derived demand forecast (downstream industries) - Technological trends/Quality requirement trend - Business Buying Behavior Competitors Value Chain Policies and Regulations in Indonesia - SNI - International trade (import regulation, anti dumping/subsidy, quota) - Competition (KPPU) / Commission for the Supervision of Business Competition Summary SWOT
Krakatau Steel Marketing Task-Force Team - Discussion Paper 11
Internal Situation
12
Product Mix Design

Ratio
Thickness Thin (T<12mm) Middle (12<T<40) Thick (T>40mm) 40.6% 51.4% 8.0%
Width
Narrow (W<1,900)
Middle (W<4,000) Wide (W<4,000)
11.8%
83.6% 4.6% 90.0%
Grade
Medium
High
10.0%
Source: POSCO, March 2010
13
Quality Level/Product Specification_
14
Quality Level/Product Specification (cont'd)

Segment General Structur e & Others Application The Steel for general welding structures, bridges, industrial structures has high weldability and is widely used in machines and construction materials. High tension steel the 60kg class is produced after heat treatment process of quenching & tempering. Product Specification (Typical) - JIS : SS330, 400, 490; SM400A, B, C; SM490A, B, C; SM490YA, YB; SM520B, C; SM570 - ASTM : A283 GrA, B, C, D; A36; A283 GrA, B, C, D; A572 Gr42, 50, 60, 65; A633 GrE; A514F; A573 Gr70 - DIN : ST37-2, 3; ST52-3; RST37-2; ST44-2, 3 - BS : 4360 Gr40B, Gr43A, B, C, D, E; EEGr50A, B, C, D - EN10025 : S355J2; S355K2 - JIS : SMA400, 490, 570 - ASTM : A588 GrA, B, C
Atmospheric corrosion resistant elements as Cu, Cr, and Ni are added to structural steel to increase both weather and corrosion resistance. This type of steel is classified into coated and non-coated steels. Steel with lamellar tear resistance is used in oil drilling ships and crude oil production platforms. This type of steel has improved ductility in thickness direction as well as lowtemperature toughness.
- API : API 2H Gr42, 50; API 2W Gr50T; API 2W Gr60 - EN10225 : S355G9+M; S355G10+M
15

Segment Oil & Gas Pipe Application Product Specification (Typical) This steel is used in line pipes that transport - API : API 5L- B; X42; X46; X52; X56; X60; X65; X70; petroleum or natural gas in large quantities. X80; X90; X100; X120 Steel proven with extremely lowtemperature toughness, hydrogen-induced crack(HIC) resistance and stress-corrosion crack(SSC) resistance is produced in order to cope with the worsening environmental situation stemming from exhaustion of our natural resources.
16

Segment Application Classification general steel, high tension steel and TMCP-type hightension steel, with which heat input high-efficiency welding is possible, have all obtained manufacturing approval from overseas classification societies. This steel is widely used in shipbuilding. Product Specification (Typical) - 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; >OSCO PRODUCT SPECIFICATIONS AH40; DH40; EH40; LT60-360, 410 - GL : A32; D32; E32; A36; D36; E36; A40; D40; E40; 490T; 500T
Shipbuilding
Cost Simulation
Shall be discussed in course II
18
Resource Availability and Allocation
19
External Situation
20
Indonesia Economic Forecast

Key indicators
Nominal GDP (tril. IDR) Nominal GDP (bil. USD) Real GDP growth (% change y-o-y) GDP per capita (USD) Population (mil.) Industrial production index (% y-o-y, average) Un-employment (% of labor force)
Source: Business Monitor International, BMI/IMF, July 2010
2007
3951
2008
4952
2009 2010f 2011f 2012f

5613 542 4.5 2285 237.3 1.3 7.0 6213 6950 7829
2013f
8834
2014f
9938
431.1 507.5 6.3 1861 6.1 2165
679 785.4 5.2 2829 5.3 3235
899.9 1033.2 1169.2 5.7 3557 245.4 5.8 6.0 6.1 4164 248.1 6.0 6.0 6.3 4663 250.7 6.0 6.0
231.6 224.5 2.0 9.1 3.1 8.4
240 242.8 4.0 6.8 4.5 6.3
21
Indonesia Real GDP Growth

12000 7.0 10000 6.0
5.0 8000
4.0
6000 3.0 4000 2.0
2000
1.0
0 2007 2008 2009 2010F 2011F 2012F 2013F 2014F Nominal GDP. IDR trily Real GDP growth, % change y-o-y
0.0
22
Derived Demand Forecast (downstream industries)

Automotive
Motorcycle Production Car Production
50 1200 1000 800 600 400 200 0 40 30 12,000 10,000 35.00 30.00 25.00
8,000
20 10 0 -10 2,000 -20 -30 6,000 4,000
20.00
15.00 10.00 5.00 (5.00) (10.00 2007 2008 2009 2010 2011 2012 2013 2014 Motorcycles production, 000 unit Real motorcycles production growth, % y-o-y )
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
23
Derived Demand Forecast (downstream industries) - Cont'd

Automotive
year Car production , 000 unit Total car Car sales, 000 unit production value, USD bil. 5.74 6.98 7.58 9.3 11.03 12.95 14.09 16.93 Car production growth, % y-o-y
2007 2008 2009 2010F

2011F 2012F 2013F 2014F
419 601 464 625

705 792 887 987
435 608 486 680

742 810 884 963
43.44 (22.80) 34.70 12.80 12.34 11.99 11.27
Source: Indonesia auto report, BMI, July 2010
Construction and Infrastructure

Construction Industry
1,200,000 2,500,000 2,000,000 1,500,000 4.0 1,000,000 500,000 3.0 2.0 1.0 2007 2008 2009 2010 2011 2012 2013 2014 2007 2008 2009 2010 2011 2012 2013 2014 Infrastructure Industry Value, IDRbn Infrastructure Real Growth, % y-o-y Construction Industry Value, IDRbn Construction Real Growth, % y-o-y Source: Indonesia infrastructure report, BMI, July 2010 400,000 200,000 8.0 6.0 4.0 2.0 9.0 8.0 7.0 6.0 5.0 1,000,000 800,000 600,000
Infrastructure Industry
14. 0 12. 0 10. 0
25

Energy and Utilities Infrastructure
Energy and Utilities Infrastructure
350000 300000 250000 16 .0 14 16000 0 14000 \ \
V \1
Power Plants and Transmission

30.0 -
.0
200000 150000 100000 50000 0 2007 2008 2009 2010 2011 2012 2013 2014 12 .0 10 .0
0
12000 0 10000 0
T
1
25.0
20.0
15.0 H 10.0 5.0
80000 8. 2007 2008 2009 2010 2011 2012 2013 2014 60000 0 Energy and Infrastructure Value, IDRbn Energy and Transmission Value, IDRbn Power Plants and Transmission Real Growth, % y-o-y Power Plants and 40000 6. Source: Indonesia infrastructure report, BMI, July 2010 Infrastructure Real Growth, % y-o-y 20000 0 0 4. 0 2.
26

Oil & Gas Pipeline and Water Infrastructure
Water Oil and Gas Pipelines Infrastructure Industry
30000 50.0 40.0 180000 160000 140000 15.0 10.0 5.0
120000 30.0
20.0 10.0 (10.0) 2007 2008 2009 2010 2011 2012 2013 2014 Oil and Gas Pipelines Value, IDRbn Oil and Gas Pipelines Real Growth, % y-o-y Source: Indonesia infrastructure report, BMI, July 2010 100000 80000 60000 40000 20000 0 2007 2008 2009 2010 2011 2012 2013 2014 Water infrastructure Industry Value, IDRbn . Water infrastructure Industry Real Growth, % y-o-y (10.0) (5.0)
27

Shipbuilding: Ship Repair
Ship Repair Capacity
7,000,000 6,000,00 0 5,000,000 4,000,000
DWT
TOTAL 6,000,000 210 Source: Ministry of Industry, 2009
28

Shipbuilding: New Building
New Shipbuilding Capacity
450,000
DWT
Source: Ministry of Industry, 2009
29

Steel Demand Driver
Steel Demand Driver
AUT 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
Composite Annual Growth (%)
2011 2012 2013 2014 2015
Source: PTKS estimate, November 2010 Average growth 2011-15 (%)
12.8 12.3 12.0 11.3 11.3 12.1
12.4 14.2 13.8 14.3 14.3 13.7
6.6 8.4 10.4 10.8 10.8 9.0
6.2 7.3 9.0 9.0 9.0 7.9
Construction industry, Infrastruct ure industry, Motorcycl es production and Water infrastruct ures industry 6.9 8.1 9.6 9.8 9.8 8.6
Constructio n industry, Car production, Motorcycle s production, and Water infrastructu re s industry 8.1 8.6 9.5 9.3 9.3 8.9
Construction industry, Coal production, Mining industry, and Maritime freight
8.7 8.9 9.3 9.1 9.1 9.0
30
Technological Trends/ Quality Requirement Trend
POSCO will provide future plate end user needs
31
Business Buying Behavior
PTKS will provide the domestic user buying behavior model
32
Competitors - Domestic
PT GUNAWAN DIANJAYA STEEL TBK
PT. Gunawan Dianjaya Steel Tbk (GDS) is an Indonesia-based steel company. The Company is engaged in the manufacture of hot rolled steel plate. It offers steel plates for general use, including low carbon structural steel plates and high strength low alloy structural plates; steel plates for boilers and pressure vessels use, and shipbuilding steel plates, which include hull structural steel plates (mild steels) and high strength hull structural steel plates (high tensile steels). The Company's customers are shipbuilders, international trading company, construction company and manufacturer of heavy equipment. Address Margomulyo Street 29A Surabaya, 60183 Indonesia Phone : +62-31-7490598 Fax : +62-31-7490581
Competitors - Domestic (Cont'd)

PT JAYA PARI STEEL TBK
PT Jaya Pari Steel Tbk is an Indonesia-based company engaged in the manufacturing 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 Company produced 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
Competitors - Domestic (Cont'd)

PT GUNUNG RAJA PAKSI
PT. Gunung Raja Paksi commissioned its first hot rolled steel plate in the last quarter of the year 2000. By the last quarter of the year 2001, their mill reached an operating level of 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 its production and services : - Coil Service Center - Plate Service Cente - Forming Service Center Address Imam Bonjol Street 4, Warung Bongkok, Sukadanau, Cikarang Barat Bekasi 17520 West Java Indonesia. Phone : +62-21-8900111, 8900666 Fax : +62-21-8900555, 8900975-7 Email : gunung@grdsteel.com
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 : 1.2192.500 L : 2.43812.192
T : 8 - 25 W : 9141.524 L : 1.21912.000
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) Krakatau Steel Marketing Task-Force Team 36
PT Gunung Raja Paksi Product Specification - Plate

Mild Steel Plate 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) 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) 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) 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) 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)
Krakatau Steel Marketing Task-Force Team 37
Pressure Vessel Shipbuilding
High Strength Low Alloy High Tensile Plate
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

Shipbuilding
ASTM A 285 (Gr. A, B, C); ASTM A 516 (Gr. 55, 60, 65, 70).
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, DH 32, 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).
38
Value Chain
Domestic steel industry structure
PTKS will provide the domestic steel industry structure report
39
Standar Nasional Indonesia (SNI)

Minister of Industry has released a Decree No. 01/MIND/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.
Indonesia Steel Trade Legislation: Anti Dumping

Ministry of Finance has issued a regulation No.39.1/PMK.011/2008 about imposition of AntiDumping 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 Wuhan Iron & Steel Angang Steel Company Baoshan Iron & Steel Others company Taiwan Chung Hung Steel China Steel Corporation Shang Shing Steel Ind. Others company 0.00% 25.18% 25.18% 42.58% 4.24% 0% 4.74% 37.02% India Essae Steel JSW Steel Others company Thailand Sahaviriya Nakornthai G Steel Others company 11.23% 12.78% 7.58% 27.44% 12.95% 22.25% 56.51% Rusia Novolipetsk Steel Magnitogorsk Iron JSC Severstal Others company 8.96% 30.86% 5.58% 49.41%
Indonesia Steel Trade Legislation: AFTA & ASEAN-CHINA FTA

POS/SUB POS HEADING/SUB HEADING % IMPORT DUTY DESCRIPTION OF GOODS MFN CEPT/AFTA 2010 ASEAN-CHINA FTA 2010 2011 2012
NO
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)
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)
7211.13 - 7211.19
42
Indonesia Steel Trade Legislation: ASEANKOREA 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
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) 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)
MFN
MFN
MFN
7211.13 - 7211.19
4.85
4.75
4.65
43
Indonesia Steel Trade Legislation: INDONESIA JAPAN - EPA

NO POS/SUB POS HEADING/SU B HEADING DESCRIPTION OF GOODS % IMPORT DUTY IJ-EPA (USDFS)
2008
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) 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)
7211.13 - 7211.19
Note: - USDFS : User Spesific Duty Free Scheme
44
SUMMARY LAW OF THE REPUBLIC OF INDONESIA NUMBER 5 YEAR 1999 CONCERNING PROHIBITION OF MONOPOLISTIC PRACTICES AND UNFAIR BUSINESS COMPETITION
Number
1
Provision
Article 4 Oligopol y
Qualification
- 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% (seventyfive per cent) of the market segment of a certain type of goods or services. - agreements with their business competitors to fix the price of certain goods and or services payable by consumers 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.
Sanctions
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.
Article 5 Price Fixing
shall be subject to the criminal sanction of a 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.
45
Number
3
Provision
Qualification
agreements forcing a buyer to pay a price which is different from that payable by other buyers for the same goods and or services.
Sanctions
shall be subject to the criminal sanction of a 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. shall be subject to the criminal sanction of a 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. shall be subject to the criminal sanction of a 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.
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.
agreements with their business competitors to fix prices below market prices, which may potentially result in unfair business competition.
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 business competition
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.
Article 9 Division of Territory
46
Number
7
Provision
Article 10 Boycott
Qualification
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.
Sanctions
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. 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. 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.
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 result in monopolistic practices and or unfair business competition.
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.
47
Number
10
Provision
Article 13 Oligopsony
Qualification
- 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 the market segment of a certain type of goods or services. 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 the end 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.
Sanctions
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. stipulation of the cancellation agreements
11
Article 14 Vertical Integration
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. order to business actors to stop vertical integration
48
Number
12
Provision
Article 15 clause (1) Closed Agreements
Qualification
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 certain place.
Sanctions
shall be subject to the criminal sanction of a 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. stipulation of the cancellation agreements shall be subject to the criminal sanction of a 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. stipulation of the cancellation agreements shall be subject to the criminal sanction of a 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. stipulation of the cancellation agreements
13
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
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.
49
Number Provision 15 Article 16 Agreements With Foreign Parties
Qualification agreements with foreign parties setting forth conditions that may result in monopolistic practices and or unfair business competition.
Sanctions 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. stipulation of the cancellation agreements 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.
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 unable to 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._
50
Number
17
Provision
Article 19 Market Control
Qualification
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 business 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.
Sanctions
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.
18
Article 20 Market Control
business actors supplying goods and or services by selling while making a loss or by 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.
shall be subject to the criminal sanction of a 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.
51
Number Provision
19 Article 25 Dominant position
Qualification
business actors shall be prohibited from using dominant position either directly or indirectly to:_ a. 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% (seventyfive per cent) of the market segment of a certain type of goods or services.
Sanctions
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.
52
Number
20
Provision
Article 26 Multiple Positions
Qualification
A person concurrently holding a position as a member of the Board of Directors or as a commissioner of a company, shall be 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.
Sanctions
shall be subject to the criminal sanction of a 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.
53
Summary SWOT
Shall be summarize at 3 rd Meeting
54
MARKETING PROBLEMS AND OPPORTUNITIES
55
Marketing Problems and Opportunities

Problem:
Product, market and geographical overlapping Opportunities: Import substitution Production push demand ASEAN Market
DOMESTIC DEMAND PROFILE (EXCLUDING BATAM) & PTKS's SUPPLY SNAPSHOT
57
Demand Profile (Excluding Batam)

HR PLATE (INCLUDING CUT TO SIZE) DEMAND PROFILE - BY THICKNESS
HRC DEMAND PROFILE - BY _THICKNESS Demand HR = 4,505 kTon (Excluding Batam

-
3,000 2,500 2,000 1,500 1,000 500 2014 2015
3,000 2,500
-
2,000
-
135 160 1,660
147 175 1,821
1,500 1,000
I
500
2014
Year
2015
58
HR Plate (Including Cut To Size) Demand Profile 2014 - By Strength Level

Demand HR Plate = 2,547 kTon (Excluding Batam)
Low Strength Medium Strength High Strength
Automotive
Boiler & Pressure Vessels
Shipbuilding
General Structure & others
Segment Low Strength Medium Strength High Strength
> 48% OF HR PLATE DEMAND IN 2014 IS LOW STRENGTH MATERIAL (TS < 400 MPA)
HR Plate (Including Cut To Size) Demand Profile 2014 - Automotive Segment

800 700 600 500 400
Demand HR Plate - Segment Automotive = 906 kTon
300 200
100 0
'0
t<6
6 < t < 12 12 < t < 25

Thickness (mm)
t > 25
Low Strength Medium Strength H High Strength
> 76% OF HR Plate demand for automotive is HR Plate with thickness < 6MM (690 kTon) > 72% OF HR Plate demand for automotive is pickled oil supply condition (653 kTon)
HR Plate (Including Cut To Size) Demand Profile 2014 - Boiler & PV Segment
Demand HR Plate - Segment Boiler & PV = 50 kTon
20 18 16 14 12 10
86
42 0
t<6
6 < t < 12 12 < t < 25 Thickness (mm)
t > 25
Low Strength
Medium Strength
High Strength
> EXCEPT GAS CYLINDER, ALL OF B&PV ARE HIGH STRENGTH MATERIAL.
61
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<6
6 < t < 12 12 < t < 25 Thickness (mm)
t > 25
Low Strength
Medium Strength
High Strength
> 74% OF HR Plate demand for GST is low strength material with thickness < 6mm
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<6 6 < t < 12 12 < t < 25 Thickness (mm) t > 25
Low Strength Medium Strength
High Strength
63
PTKS's SUPPLY
PTKS HR PRODUCTION PROFILE
2,00 0 1,80 0 1,60 0 1,40
0
1,20 0 1,00 0 800 2007 up to Sept 2010
2008 2009 Year
2007
2008 2009
Year
up to Sept 2010
600 I CUT TO SIZE (INTERNAL) CUT TO SIZE (AT CUSTOMER) HRC
Cut To Size (Internal) Cut To Size (In Customer) HRC
400
> 62 - 74% OF TOTAL HSM product were Hot Rolled Coil Product. > TOTAL HR CUT TO SIZE PRODUCTION WERE DECREASED i n recent 4 years.
200
64
PTKS HR Cut To Size (Internal) Production Profile (Based on Thickness Group)

450 400 p 350 300 250
*H I 200 +J
| 150 < 100 50 2007 2008 2009 Up to Sept 2010
Year
> Majority falls into thickness range 6 < t < 12 mm (35
10 0% 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 -% 55% 0%
2007
2008
2009
Year
t < 6 6 < t < 12 12 < t < 25
Up to Sept 2010
of total production)
65
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 and export. > Majority falls into thickness range 6 < t < 12 mm
PTKS HR Cut To Size (Internal) Production Profile (Based on Strength Level)

250 200 O 150 O
100
50
Year
> Majority falls into medium strength level (400 < IS < 4SQ MPa)
67
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
Year
> MAJORITY FALLS INTO MEDIUM STRENGTH LEVEL (400 < TS < 490 MPA)
68
PTKS HR Cut To Size (At Customer) For Domestic Market

SEGMENT t<6 10,090 133,378 143,468 2007 6 < t < 12 4,389 14,828 19,216 12 < t < 25 12,482 12,482 175,166 t<6 16,025 194,608 210,633 Automotive Export General Pipe& Tube General Structure & Other Oil And Gas Pipe Pressure Vessel & Boiler Rerolling Total Year 2008 6 < t < 12 12 < t < 25 13,300 63,973 22,603 77,272 22,603 310,508 t<6 6,289 237,838 244,127 2009 6 < t < 12 5,250 11,609 16,860 12 < t < 25 4,478 4,478 265,464 t<6 12,529 128,280 140,809 2010(e) 6 < t < 12 12 < t < 25 11,978 5,519 6,574 17,497 6,574 164,879
> ONLY IN GENERAL STRUCTURE & OTHERS AND AUTOMOTIVE SEGMENT.
69
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) WITH thickness < 6 mm
Market Overlapping Potential in Five Segments

Domestic HRC/P Shape Requirement SEGMENT Automotive Boiler & Pressure Vessels General Structure & Others OGP P&T Re-rolling Shipbuilding
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 Krakatau Steel Marketing Task-Force Team - Discussion Paper 71
STEEL INPUT SHAPE HR Cut To SizeVHR Plate2 HR Plate2/HR Cut To SizeVHRC3 HR Plate2/HR Cut To SizeVHRC4 HRC/HR Plate2 HRC HRC HR Plate2/HR Cut To Size1
Product Overlapping Potential

Limit size PTKS's HSM vs Krakatau POSCO's Plate Mill
10 15 20 Thickness (mm)
2 5
12 0
12 5 72
Product Overlapping Potential

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
LOW STRENGTH
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
73
OPPORTUNITIES
74
Import Substitution
75
Import Composition per Segment 2009

10 0% 9 0 % 8 0 % 7 0 % 6 0 % 5 0 % 4 0 % 3 0 % 2 0 % 1 0 % 0 %
0 N 3 I-
06 Segme 2009 Coil D2009 Plate nt <D

A.
0 0 )
Import Composition per Segment 2010

1 0 0 % 9 0 % 8 0
0 .
a.
%
7 0 % 6 0 % 5 0 Segment
2010 Coil 2010 Plate
Krakatau Steel Marketing Task-Force Team -4Discussion Paper
76
Imported HRC/P 2009

2009
Segment Automotive Boiler & PV Coil 218 6
Product (X 1000) MT
Plate 7 4 Total 225 11
General Structure
Pipe & Tube Rerolling Shipbuilding Grand Total
154
102 33 0 513
70
0 0 23 105
225
102 33 23 618
77
Distribution Matrix of Imported Plates - 2009 (By Thickness Range)

PLATE (X 1000 MT) Segment Automotive Boiler & PV General Structure Shipbuilding Grand Total t<6 2 1 13 1 17 6 < t < 12 5 0 14 13 32 Thickness Range 12 < t < 25 0 1 17 5 24 t > 25 1 2 26 4 32 Grand Total 7 4 70 23 105
PLATE (%) Segment Automotive Boiler & PV General Structure Shipbuilding Grand Total t<6 22,53% 20,59% 18,94% 5,56% 15,79% 6 < t < 12 68,21% 8,12% 19,93% 56,58% 31,98%
Thickness Range 12 < t < 25 0,96% 30,16% 24,46% 22,11% 22,59% t > 25 8,31% 41,13% 36,66% 15,75% 29,64% Grand Total 100% 100% 100% 100% 100%
78
Distribution Matrix of Imported Coils 2009 (By Thickness Range)

COIL (X 1000 MT) Segment Automotive Boiler & PV General Structure Pipe & Tube t<6 209 4 134 97 6 < t < 12 8 10 4 Thickness Range 12 < t < 25 0 7 0 t > 25 1 2 4 1 Grand Total 218 6 154 102
Rerolling
Grand Total
27
470
22
7
15
33
513
COIL (%) Segment Automotive Boiler & PV General Structure Pipe & Tube Rerolling Grand Total t<6 95,73% 58,86% 86,43% 95,56% 80,21% 91,23% 6 < t < 12 3,59% 0,00% 6,64% 3,84% 0,00% 4,07%
Thickness Range 12 < t < 25 0,03% 0,00% 4,47% 0,11% 0,00% 1,23% t > 25 0,65% 41,14% 2,46% 0,49% 19,79% 3,47% Grand Total 100% 100% 100% 100% 100% 100% 79
Import HRC/P 2010

2010
Segment Automotive Boiler & PV Coil 274 0
Product (X 1000) MT
Plate 70 2 Total 343 2
General Structure
Pipe & Tube Rerolling Shipbuilding Grand Total
119
82 13 0 488
34
0 0 18 123
153
82 13 18 611
80
Distribution Matrix of Imported Plates - 2010 (By Thickness Range)

PLATE (x 1000MT) Segment Automotive Boiler & PV General Structure Shipbuilding Total t<6 4 0 12 2 18 6 < t < 12 19 0 5 13 37 Thickness Range 12 < t < 25 26 1 9 3 38 t > 25 21 0 8 0 30 Total 70 2 34 18 123
PLATE (%) Segment t<6 6 < t < 12
Thickness Range 12 < t < 25 t > 25 Total
Automotive
Boiler & PV General Structure Shipbuilding Total
5,61%
0,90% 35,02% 10,81% 14,38%
27,53%
25,95% 13,88% 72,30% 30,20%
36,92%
56,92% 26,24% 14,59% 31,06%
29,94%
16,23% 24,87% 2,29% 24,35%
100%
100% 100% 100% 100%
81
Distribution Matrix of Imported Coils - 2010 (By Thickness Range)

COIL (x 1000 MT)
Segment Automotive General Structure Pipe & Tube t<6 260 116 66 6 < t < 12 14 3 4
Thickness Range
12 < t < 25 0 1 13 t > 25 0 0 0 Total 274 119 82
Rerolling
Total
13
454
0
20
0
13
0
0
13
488
COIL (%) Segment Automotive General Structure Pipe & Tube Rerolling Total t<6 94,85% 97,25% 80,23% 100,00% 93,11% 6 < t < 12
Thickness Range 12 < t < 25 0,00% 0,49% 15,34% 0,00% 2,70% t > 25 0,06% 0,00% 0,00% 0,00% 0,03% Total 100% 100% 100% 100% 100%
5,09% 2,26% 4,43% 0,00% 4,16%
82
Production Push Demand
83
HR: ASEAN (5) Market

ASC HR Sheet + Plate
12,000,000 10,000,000 8,000,000 O 6,000,000 I4,000,000 2,000,000
Production Export Import Consumption
J . SEASI STATISTICAL YEARBOOK, 2010
5 ASEAN Market : Malaysia, Singapore, Philiphines, Vietnam and Thailand

IDENTIFICATION OF TARGET MARKET / MARKET SEGMENTATION
85
Identification of target market/market segmentation

General Framework shall be decided in Course I Detailed Marketing Plan will be discussed in course II
86
Product & Market Scope Priority Assesment

PTKS
Continue to maintain thin to medium gauge market, width up to 2 m. Expand production to less than 2 mm in thickness.
Krakatau POSCO
Capture dominant position in thicker and wider medium to high strength plate. Dominate plate market in Batam area.
87
Market Segment
Product Scope:
PTKS Existing Low, medium and high strength, typical thickness 3-12 mm, 60% non P/O.
PTKS Future (2014 onwards) More P/O plates with thickness 2 -6 mm; increase non P/O materials up to 12 mm.
Krakatau POSCO (2014 onwards) Supply plate for heavy equipment industry, thickness more than 12 mm.
Automotive
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 medium and 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), some larger 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.
88
Market Scope (Geographical):

PTKS Existing Main destination: Greater Jakarta (Jabodetabek) Other destinations: Surabaya, Semarang, Medan, Semarang , Medan, Makassar PTKS Future Krakatau POSCO
Domestic
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
89
Target Market/
Market Segmentation-Summary
HSMPTKS
PLATE MILL KRAKATAU POSCO
90
MARKETING ACTION PLAN
91
SALES PLAN 2014

BY SEGMENT
1,600 1,400 -
(domestic excluding batam)
92
AUTOMOTIVE (Excluding Batam)

(x 1,000 mt) TOTAL DEMAND : 906
PTKS 181 _20%
SALES PLAN 2014
KRAKATAUPOSCO 20 2%
OTHERS 705 78%
BOILER & PV (Excluding Batam)

(x 1,000 mt)
OTHERS 21 19% _
PTK S 60 54%
KRAKATAU-POSCO 30 27%
TOTAL DEMAND : 111
93
GENERAL STRUCTURE & OTHERS (Excluding Batam)

TOTAL DEMAND : 1,375 (x 1,000 mt)
PTK S 20% 278 KRAKATAUPOSCO 140 10%
SALES PLAN 2014
OTHERS 957 70%
OIL & GAS PIPE (Excluding Batam)

(x 1,000 mt)
OTHERS 33 20% PTKS 50 31 %
KRAKATAU-POSCO 80 49%
TOTAL DEMAND : 163
94
PIPE & TUBE (Excluding Batam)

(x 1,000 mt) TOTAL DEMAND : 481
OTHERS 240 50% .
SALES PLAN 2014
PTK S 240 50%
REROLLING (Excluding Batam)

OTHERS 115 10%
(x 1,000 mt) TOTAL DEMAND : 1,115
PTKS 1,000 90%
95
SALES PLAN 2014
SHIPBUILDING (Exluding Batam)

(x 1,000 mt)
OTHERS 154 44% PTKS 50 14%
KRAKATAUPOSCO 150 42%
TOTAL DEMAND : 354
96
SALES PLAN 2014 (BATAM)

BY SEGMENT
BPV
OTHERS KRAKATAU PO SC O DEMAND 12 3 15
GS T & Others 190

82 272
S HP
8533 365 1.2 18
Total
51.055 450 51.505
SALES PLAN 2014 (PLATE Segment TOTAL)

AUT BPV
BATAM 3
NON BATAM 20 30
TOTAL 20 33
GST & Others

OGP P&T - - -
82
-
140
80
222
80
ROL - - SHP TOTAL 365 450 150 420 515 870
98
SALES PLAN 2015 (domestic excluding batam)

BY SEGMENT

(x 1,000 mt) TOTALDEMAND : 1,009 PTK S 303 .30 %
SALES PLAN 2014
OTHER S. 683 68%
KRAKATA U-POSCO 2 3 BOILER 2 THER % S 23 18% _
& PV (Excluding Batam)

(x 1,000 mt)
KRAKATAU POSCO 34 27%
PT KS 70 55 %
TOTALDEMAND : 127 Krakatau Steel Marketing Task-Force Team - Discussion Paper 100
GENERAL STRUCTURE & OTHERS (Excluding Batam)

(x 1,000 mt) TOTALDEMAND : 1,523 PTK S 468 31 %
SALES PLAN 2014
OTHER S. 895 59%
KRAKATAUPOSCO 160 10%
OIL & GAS PIPE (Excluding Batam)

OTHER S 24 13% (x 1,000 mt) PT KS 62 35%
KRAKATAUPOSCO 91 52% TOTALDEMAND : 178 Krakatau Steel Marketing Task-Force Team - Discussion Paper 101

OTHE RS 211 40% (x 1,000 mt) TOTALDEMAND : 528
SALES PLAN 2014
PT KS 31 7 60 %
REROLLING (Excluding Batam)

OTHERS. 119 10% (x 1,000 mt)
PTKS 1,100 90% Krakatau Steel Marketing Task-Force Team - Discussion Paper 102
SALES PLAN 2015
SHIPBUILDING (Exluding Batam)

OTHERS (x 1,000 mt) 135
103
SALES PLAN 2015 (BATAM)

BY SEGMENT
104
SALES PLAN 2015 (PLATE Segment TOTAL)

AUT BPV
BATAM 4
NON BATAM 23 34
TOTAL 23 38
GST & Others

OGP P&T - - -
109
-
160
91
269
91
ROL - - SHP TOTAL 487 600 171 480 659 1,080
105

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General Marketing Framework New Design2

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Contents

Overall Business Objectives

Specific Marketing Objectives

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Overall Business Objectives

Profit (USD) 2014 - 2018

Krakatau Steel Marketing Task-Force Team - Discussion Paper

SPECIFIC MARKETING OBJECTIVES

Krakatau Steel Marketing Task-Force Team

Indonesia HRC/P Demand Forecast (2010 - 2015)

700 0 600 0 500 0 400

Krakatau Steel Marketing Task-Force Team - Discussion Paper

0 600 0 500 0 400

2010E 3122 1037 4159

2011F 3385 1105 4489

2012F 3700 1223 4922

2013F 4083 1356 5439

2014F 4505 1505 6009

2015F 4969 1796 6765

HR Non Batam HR Batam Total

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Indonesia HRC/P Demand Forecast (2010 Per Segment

2012F 2013F year

year 2010E 2011F 2012F 2013F 2014F 2015F

57 647 4 727 815 906 1009

7 86 7 98 111 127 | 146

123 1313 1 1427 1576 1646 1847

34 370 6 400 438 481 528

79 858 4 932 1020 1115 1219

109 1167 0 1286 1422 1572 1840

415 4489 9 4922 5439 6009 6765

Krakatau Steel Marketing Task-Force Team - Discussion Paper

768 787 757 810 830 799

Krakatau Steel Marketing Task-Force Team - Discussion Paper

870 100 6,009 16%

Krakatau Steel Marketing Task-Force Team - Discussion Paper

812 214 1,026

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Krakatau Steel Marketing Task-Force Team

BusinessSituation Situation/SWOT Analysis Internal External Situation

Krakatau Steel Marketing Task-Force Team - Discussion Paper 11

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Product Mix Design

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Quality Level/Product Specification_

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Quality Level/Product Specification (cont'd)

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Quality Level/Product Specification (cont'd)

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Quality Level/Product Specification (cont'd)

Krakatau Steel Marketing Task-Force Team - Discussion Paper 17

Shall be discussed in course II

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Resource Availability and Allocation

Shall be discussed in course II

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Krakatau Steel Marketing Task-Force Team - Discussion Paper

Indonesia Economic Forecast

2009 2010f 2011f 2012f

431.1 507.5 6.3 1861 6.1 2165

679 785.4 5.2 2829 5.3 3235

231.6 224.5 2.0 9.1 3.1 8.4