RISK FACTORS

In carrying out its business, the Company faces risks that may affect the Company's profits if they are not anticipated and prepared to handle them properly. The risks that will be disclosed in the following description are material risks for the Company and material and general business risk factors have been weighted based on the impact of each risk on the Company's financial performance starting from the Company's main risks.

Several risks that are expected to affect the Company's business can be grouped as follows

MAIN RISKS THAT HAVE A SIGNIFICANT INFLUENCE ON THE COMPANY'S BUSINESS CONTINUITY

Business Competition Risk

In carrying out its business activities, the Company faces competition from imported carbides, especially carbides imported from China. Calcium carbide from China offers a cheaper price than the calcium carbide produced by the Company, so the Company's ability to maintain product quality is very important to maintain the Company's position as the largest calcium carbide producer in Indonesia.

MATERIAL BUSINESS RISKS

• Risk of Raw Material Price Fluctuations
  The main raw materials for the Company's products are limestone and metallurgical coke, both of which are commodities whose prices fluctuate from time to time. The Company cannot completely avoid fluctuations in raw materials and this can have a negative impact on the profit margin obtained by the Company. Apart from raw materials, the Company's production costs also depend heavily on the price of gas, which is one of the energy sources in the Company's production process.
• Risk of Depreciation of the Rupiah Value against Foreign Currencies
  In carrying out its production activities, the Company uses directly imported raw materials around 20% (twenty percent) of total production costs. On the other hand, the majority of the Company's sales are domestic sales. Therefore, depreciation of the Rupiah value against foreign currencies can have a negative impact on the Company's financial performance.
• Risk of Delay in Company Expansion Plans
  In accordance with the plan to use the proceeds from the initial public offering of shares, the Company will use these funds to expand by establishing a high grade carbide desulphuriser and silica alloy factory.<br>The Company's expansion plan has the possibility of facing technical obstacles, such as construction and operational delays. The timeliness of the execution of the Company's expansion plans will depend greatly on the timeliness of matters such as factory construction and procurement and installation of equipment/machinery. If things happen that could hinder the Company's expansion plans, then this could have a negative impact on the Company's business prospects.
• Risk of Dependency from Suppliers
  The availability of raw materials is crucial for companies operating in the manufacturing industry, such as companies operating in the calcium carbide and ferro alloy industries. The company relies on suppliers to provide raw materials such as metallurgical coke and limestone. For this reason, dependence on suppliers is a risk that the Company cannot avoid. As a way to minimize this risk, the Company has established good relationships with more than one supplier. This is expected to reduce the risk of the Company's dependence on suppliers.
• Risk of Failure to Comply with Applicable Legislation
  In carrying out its business activities, the Company is required to comply with applicable laws and regulations in the industry, including regulations imposed by Government Institutions such as the Ministry of Trade, Ministry of Industry, Ministry of Finance, Department of Manpower and Transmigration, including Regional Regulations and regulations imposed by the authorities of the countries to which the Company's products are exported. Failure to comply with these laws and regulations could have a negative impact on the Company's business activities, business prospects and financial performance.
• Raw Material Availability Risk
  Scarcity of resources, in this case raw materials, is one of the material risks faced by the Company. Although since its founding until now the Company has not encountered any significant obstacles in obtaining raw materials, this needs to be categorized as a risk that has the potential to arise along with the Company's growth, especially in connection with future increases in production volumes.

GENERAL RISKS

• Risk of Changes in Government Regulations
  So far, Government Regulations regarding the calcium carbide industry tend to benefit the Company as a local producer where there are several regulations governing carbide import duties and the application of Indonesian National Standard (SNI) certification for imported carbides. Any changes related to Government Regulations regarding the domestic carbide industry could have an impact on the Company's business prospects.
• Legal Compliance Risk
  In carrying out its business activities, the Company is required to always comply with the legal provisions in force in the Republic of Indonesia. The company requires several business permits that must be fulfilled. If the Company is unable to obtain or renew the required permits, this could have a negative impact on the Company's business activities.
• Risks of Technological Change
  In maintaining the continuity of its business activities, the Company must continue to follow technological developments, especially technology in the field of calcium carbide and ferro alloy. If the Company and Subsidiaries are late or unable to keep up with the latest technological developments, this could have a negative impact on the Company's business activities, business prospects and financial performance.
• Risk of Company Dependence on Management and Key Employees
  Since its founding until the time this Prospectus was published, the Company has been led by an experienced senior management team. It can be said that the Company's success to date is the result of the work of the current management. If one of the Company's management decides to resign and the Company cannot find a suitable replacement within a short time, this could have a negative impact on the Company's business activities, which will also impact the Company's business prospects and financial performance.
  The calcium carbide and ferro alloy industry is an industry that requires employees with specific skills. The Company realizes that the need for employees with specific skills is something that cannot be avoided to maintain the continuity of the Company's business activities.
• Risks Related to Safety, Health and Environment
  The Company's production activities and products are activities that require relatively special handling and must be carried out carefully. Carelessness in the production, storage and distribution of calcium carbide can potentially cause work accidents. If any of these things happen, it could have a negative impact on the Company's business activities, business prospects and financial performance.
• Risks of Macro and Global Economic Conditions
  In this era of globalization, global economic conditions have a significant influence on the Indonesian economy and also on domestic companies, including the Company. Whether directly or indirectly, whether the global economy is conducive or not will have a significant influence on the Company's business activities, business prospects and financial performance.
• Risk of Claims or Lawsuits
  In carrying out its business activities, it is possible that the Company may be involved in a legal process. The risk of lawsuits or lawsuits could have a negative impact on the Company, both in terms of finances and reputation. Apart from that, uncertainty regarding the results of this process can also disrupt the Company's performance.
• Risk of Other Country Provisions or International Regulations
  As a company that also exports, the Company needs to continue to follow the regulations that apply in other countries. If the Company fails to follow the regulations imposed by the country to which the Company's products are exported or international regulations, this could have a negative impact on the Company's business activities, business prospects and financial performance.

RISKS FOR INVESTORS

• Risk of Illiquidity of Shares Offered in an Initial Public Offering of Shares
  After the Company lists its shares on the IDX, there is no guarantee that the market for the Company's shares being traded will be active or liquid, because there is a possibility that the majority of shareholders will not trade their shares on the secondary market. In addition, compared to capital markets in other more developed countries, capital markets in Indonesia are illiquid and have different reporting standards. Apart from that, prices in the Indonesian capital market also tend to be more volatile compared to other capital markets. Thus, the Company cannot predict whether the liquidity of the Company's shares will be maintained.
• Risk of Fluctuation in Company Share Prices
  After the Initial Public Offering of the Company's shares, the share price will be completely determined by the level of investor supply and demand on the Indonesian Stock Exchange. The Company cannot predict the level of fluctuation in the Company's share price after the Initial Public Offering. The following are several factors that can influence the movement of the Company's share price after the Initial Public Offering:
  1. The difference between the actual realization of the Company's performance and the expected level of performance expected by investors
  2. Changes in analyst recommendations
  3. Changes in Indonesia's economic conditions
  4. Changes in Indonesian political conditions
  5. Sale of shares by the majority shareholder of the Company or other shareholders who have a significant level of ownership
  6. Other factors that can affect the Company's financial performance and business prospects
  Future sales of substantial amounts of the Company's shares in the market, or the perception that such sales may occur, could have a negative impact on the prevailing market price of its shares or on its ability to raise capital through a public offering of additional equity or equity securities. This could cause the Company's share price to decline and complicate the process of increasing the Company's capital.
• Dividend Policy Risks
  Dividend distribution will be carried out based on the GMS referring to the Company's financial performance, namely taking into account the Company's future income, cash flow, working capital needs and capital expenditure. The need for funding for future business development plans and also the risk of losses recorded in the consolidated financial statements can be reasons that influence the Company's decision not to distribute dividends.

RISK MITIGATION

To achieve the Company's aims and objectives, the Company is fully aware of the importance of risk management for the risks mentioned above. Therefore, the Company has implemented risk management to mitigate potential negative impacts. Information regarding risk management implemented by the Company has been disclosed in Chapter VIII Information about the Company, Business Activities, as well as Business Trends and Prospects in this Prospectus.