KI Annual Report 2021

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Company Profile Purpose Komatsu ltd Vision Mission Introduction to PT Komatsu Indonesia Company’s Subsidiaries and Share Capital Ownership Introduction to Affiliate Company Financial Highlights Consolidated Statement of Financial Position Company Performance Consolidation Statement of Financial Position – Parent Entity Only Company Performance – Parent Entity Only President Commissioner Message President Director Message Management Reports Management Policy 2021 Safety, Health, Environment & Compliance Improve Quality Proactively Capture Market & Improve Manufacturing Flexibility Realize Market Requirement quickly & Develop Suitable Product Cost Reduction TQM Implementation Human Resources Development Corporate Social Responsibility Sustainability Report Business Plan FY2022 Audited Financial Statements

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3 PURPOSE OF KLTD Creating value through manufacturing and technology innovation to empower a sustainable future where people, businesses, and our planet thrive together.

PT KOMATSU INDONESIA VISION To become indispensable construction equipment and machinery company which is valuable for the Nation and its Stakeholders (Customer, Business Partner, and Employees).

MISSION 1. Create best value together with customer.

2. Contribute to the nation development.

3. Create highly motivated & capable employee.

INTRODUCTION TO PT KOMATSU INDONESIA The Company, under the global brand of Komatsu, is a leading manufacturer of heavy equipment in Indonesia. Established in 1982 as a joint venture between Komatsu Ltd. and PT United Tractors Tbk., the Company evolved to become a pioneer and prominent player in the heavy equipment industry in Southeast Asia in a relatively short time.

The Company’s site covers an area of 212,455 m2 in Cakung Cilincing Industrial area, operates comprehensive and integrated manufacturing facilities, compromising foundry plant, hydraulic plant, fabrication plant and assembly plant. In Cibitung plant, covering an area of 87,600 m2, consists of the big size fabrication plant, working gear and cylinder reman plant. In Kawasan Berikat Nusantara (Bonded Zone), the Company operates the remanufacturing components for overseas market in 23,570 m2 area.

To strengthen the position as a strategic market for Global Komatsu, all Indonesia operations are consolidated under the control of the Company.

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4 To reinforce organization and competitiveness of Komatsu Group Companies in Indonesia and as part of Indonesia Operation Reform Project. The Company, PT Komatsu Reman Indonesia and PT Komatsu Patria Attachment merged with result the Company becoming a surviving Company effective as of April 1, 2017.

COMPANY’S SUBSIDIARIES AND SHARE CAPITAL

Introduction to Affiliate Company 1. PT KOMATSU UNDERCARRIAGE INDONESIA (KUI) Location: Jl. Jababeka XI Blok H15/16, Jababeka Industrial Estate Cikarang Bekasi, 17832.

KUI established in year 2000. On January 1 st,2012 KUI merged with Komatsu Forging Indonesia (KOFI) that established in 1982.

Current shareholders are consisted of Hokuriku Kogyo

Co.

Ltd,

Neturen

Co.

Ltd,

Nagatsu

Industries Ltd, Komatsu Indonesia and Yayasan Komatsu Indonesia Peduli. The aim is to build the foundation for Komatsu genuine undercarriage

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5 parts supply structure in markets worldwide where Komatsu equipment are in operation.

The product lines include Link, Roller, Idler and related undercarriage components.

2. PT Komatsu Marketing and Support Indonesia Location: PT United Tractors, Jl. Raya Bekasi km. 22, Jakarta 13910.

KMSI, established on July 1st, 2005, when the Jakarta Branch was spun off from Komatsu Asia & Pacific Pte Ltd, started

handling

spare

following year in 2006.

parts

the

Although its

main business is selling these parts and product services, KMSI activities that include marketing new equipment and promoting programs such as the BDF (Bio Diesel Fuel) Project. KMSI plays a part

in

maintaining

a

competitive

presence in the Indonesian market, said to be the most important in Asia, through teamwork with United Tractors, a distributor with a long history and strong capabilities, and Company, a locally incorporated production base.

3. PT Komatsu Remanufacturing Asia (KRA)

Location: Jl. Pulau Balang RT.36 No. 99 Karang

Joang,

Balikpapan

76127

–

Kalimantan Timur.

Established on May 27th, 1997, KRA produces

and

sells

certified

remanufactured products of Komatsu Heavy Equipment major components to support its base of mining company Customers

in

the

domestic

market.

Currently Shareholders are PT Komatsu Indonesia and PT United Tractors.

Currently, KRA products include complete engines, transmissions, power modules, final drives, rear axles, main pumps, travel motors, and swing machineries. To

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6 strengthen & support production, operation of KRA is equipped with machining facilities including a crankshaft grinding machine, metal spray, line boring machine, and crack detector.

4. PT Komatsu Astra Finance (KAF) Location: PT United Tractors Head Office, Wing Area 6th Floor, Jl. Raya Bekasi km. 22, Jakarta 13910.

Established on May 19, 2005, KAF provides financing for Komatsu products in the form of financial leasing to mining companies and contractors that need heavy, super-size equipment for their operations.

Now, the shareholders are consisting of PT Sedaya Multi Investama, a member of the Astra Group, and Komatsu Indonesia.

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FINANCIAL HIGHLIGHTS Financial Highlights Consolidated Statement of Financial Position FY2016

FY2017

in million USD FY2018

FY2019

FY2020

FY2021

Cash and cash equivalents

473.65

529.43

492.09

630.28

800.59

-

Trade and other receivable

182.09

216.04

192.24

110.44

147.02

-

Inventories

300.13

381.02

497.80

369.75

255.90

-

Other current assets

15.81

28.09

38.37

42.88

26.87

-

Total current assets

971.68

1,154.58

1,220.50

1,153.35

1,230.37

-

Fixed assets

141.24

134.90

138.61

148.54

142.12

-

67.39

80.87

103.01

133.34

144.43

-

208.63

215.77

241.62

281.87

286.55

-

1,180.31

1,370.35

1,462.12

1,435.22

1,516.93

-

3.87

5.80

6.50

-

-

-

Trade payable

88.29

124.23

85.73

40.55

64.46

-

Other current liablities

38.52

58.10

46.28

26.62

38.60

-

130.68

188.13

138.52

67.17

103.06

-

51.23

57.20

54.29

48.77

58.78

-

Total Liabilities

181.91

245.33

192.81

115.94

161.84

-

Total Equity

998.41

1,125.02

1,269.31

1,319.28

1,355.09

-

1,180.31

1,370.35

1,462.12

1,435.22

1,516.93

-

Other non-current assets Total Non-Current Assets Total Assets Bank loans

Total Current Liabilities Total Non-Current Liabilities

Total Liabilities and Equity

Consolidated Statement of Comprehensive Income FY2016

FY2017

in million USD

FY2018

FY2019

FY2020

FY2021

Revenue

853.10

1,383.50

1,546.05

1,050.49

601.88

-

Gross profit

199.71

327.32

308.26

200.06

103.22

-

Results from operating activities

154.09

269.71

245.12

106.60

84.46

-

Profit before income tax

157.49

278.88

259.46

124.25

90.58

-

Total comprehensive income

117.15

209.07

193.00

94.78

70.45

-

Financial Ratio FY2016 Current Ratio

FY2017

FY2018

FY2019

FY2020

FY2021

744%

614%

881%

1717%

1194%

0%

Gross Profit Margin

23%

24%

20%

19%

17%

0%

Operating Profit Margin

18%

20%

17%

12%

15%

0%

Net Profit Margin

14%

15%

12%

9%

12%

0%

Return on Equity (ROE)

12%

19%

15%

7%

5%

0%

Return on Assets (ROA)

10%

15%

13%

7%

5%

0%

Return on Invested Capital (ROIC)

28%

47%

35%

25%

19%

0%

Debt to Equity Ratio

0%

1%

1%

0%

0%

0%

Total Debt to Total Asset Ratio

0%

0%

0%

0%

0%

0%

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Company Performance Consolidated

Financial Highlights

Assets

Revenue

in million USD 1,462

1,370

1,435

in million USD 1,517 1,546 1,383

1,180

1,050 853 602

0 FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

0 FY2016

FY2017

Return on Assets (ROA)

FY2018

FY2019

FY2020

FY2021

Return on Equity (ROE) 19%

15% 15%

13% 12%

10%

7%

7%

5%

5%

0% FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

0% FY2016

FY2017

Return on Invested Capital (ROIC)

FY2018

FY2019

FY2020

FY2021

Net Profit Margin in million USD

47% 15% 14%

12%

35% 28%

12% 9%

25% 19%

0% FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

0% FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

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9 Financial Highlights Parent Entity Statement of Financial Position FY2016

FY2017

in million USD FY2018

FY2019

FY2020

FY2021

Cash and cash equivalents

380.92

448.36

402.06

522.28

608.97

679.47

Trade and other receivable

56.01

71.62

55.50

50.91

62.72

94.82

Inventories

80.89

118.69

194.54

141.67

107.38

144.51

6.19

9.16

22.59

22.07

11.08

13.66

Other current assets Total current assets

524.01

647.82

674.69

736.93

790.14

932.45

Fixed assets

77.67

81.88

82.01

81.37

77.02

76.27

Other non-current assets

95.26

92.89

105.03

119.12

112.63

100.12

Total Non-Current Assets

172.93

174.77

187.04

200.49

189.66

176.38

Total Assets

696.94

822.59

861.73

937.42

979.80

1,108.83

-

-

-

-

-

-

Trade payable

25.21

44.98

28.82

15.93

22.74

61.60

Other current liablities

15.86

34.61

13.78

35.70

16.89

28.49

Total Current Liabilities

41.07

79.59

42.59

51.63

39.63

90.09

7.56

9.39

9.25

8.30

9.22

7.46

Bank loans

Total Non-Current Liabilities Total Liabilities

48.63

88.97

51.84

59.93

48.84

97.55

Total Equity

648.31

733.62

809.89

877.49

930.96

1,011.28

Total Liabilities and Equity

696.94

822.59

861.73

937.42

979.80

1,108.83

Parent Entity Statement of Comprehensive Income FY2016 Revenue

FY2017

in million USD

FY2018

FY2019

FY2020

FY2021

207.83

472.38

484.16

280.72

177.61

463.98

Gross profit

34.14

121.09

51.41

13.12

10.40

66.61

Results from operating activities

25.77

105.01

37.80

(8.07)

7.33

58.81

Profit before income tax

133.81

169.20

128.85

103.23

87.13

118.95

Total comprehensive income

126.93

141.82

118.86

103.11

84.36

105.53

Financial Ratio FY2016 Current Ratio

FY2017

FY2018

FY2019

FY2020

FY2021

1276%

814%

1584%

1427%

1994%

1035%

Gross Profit Margin

16%

26%

11%

5%

6%

14%

Operating Profit Margin

64%

36%

27%

37%

49%

26%

Net Profit Margin

61%

30%

25%

37%

47%

23%

Return on Equity (ROE)

20%

19%

15%

12%

9%

10%

Return on Assets (ROA)

18%

17%

14%

11%

9%

10%

Return on Invested Capital (ROIC)

13%

48%

14%

0%

1%

0.6%

Debt to Equity Ratio

0%

0%

0%

0%

0%

0.0%

Total Debt to Total Asset Ratio

0%

0%

0%

0%

0%

0.0%

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Company Performance Parent Entity Only

Financial Highlights

Assets

Revenue

in million USD

in million USD 1,109

937

980

472

484

464

862

823 697

281 208

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

FY2016

178

FY2017

FY2019

FY2020

FY2021

Return on Equity (ROE)

Return on Assets (ROA) 18%

FY2018

17% 20%

19%

14% 15%

11%

9%

10%

12% 10%

9%

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

Net Profit Margin

Return on Invested Capital (ROIC)

in million USD

61%

48%

47% 37% 30% 25%

0.5% FY2016

23%

14%

13%

FY2017

FY2018

FY2019

1%

1%

FY2020

FY2021

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

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PRESIDENT COMMISSIONER MESSAGE Dear Stakeholders, On behalf of the Board of Commissioner of PT Komatsu Indonesia, we would like to express our appreciation to all customers, partners, and shareholders for their continuous support. This year 2021 has been an excellent year for PT Komatsu Indonesia. The Company has reached 161% sales increase compares to last year’s sales. Global economy is recovering by 2021 and will continue growing in 2022. Thermal coal and nickel mining have been increasing because of high domestic and export demand. Agro and forestry sector has been growing slightly. In construction sector, government budget has been focused on pandemic treatment, but government infrastructure project is going to be accelerated after declining Covid-19 impact.

The Company’s financial statement as of 31 March 2022 had reviewed by independent public account office Siddharta Widjaja & Rekan (a member firm of KPMG) with condition: present fairly in all material respects. Based on supervision duties performed to the Company, we recommend Shareholders to accept and approve the said financial report.

The management consistently implements midterm strategy towards TQM Implementation and proactively carry out work in healthy and safely manner The Company has captured the momentum with great cooperation to fulfil increasing demand to meet Customer satisfaction.

On this occasion, allow us to thank and appreciate the Board of Directors, Managements and Employees that had given their best effort to achieve the Company’s Management Policy in FY2021. The Board of Commissioners satisfied with the Company’s overall performance during FY2021. In addition, we thank Stakeholders who have put their trust and confidence to the Company.

In 2022 the company will commemorate the 40th anniversary, with the theme G0 4 0 for Zero Accident, Zero Break Down, Zero Crisis, Zero Defect and Zero Emission & Waste in the face of Industry 4.0. Please continue to obey the Covid-19 protocol from the government. Many challenges will be faced at FY2022. Please continue good activities, prioritizing safety and health in all company activities. We believe that with good cooperation from all stakeholders we can face the challenges in FY222 and can achieve the Target.

May God bless us.

Bambang Haryanto President Commissioner

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PRESIDENT DIRECTOR MESSAGE Dear All Stakeholders,

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13 Year 2021 was very dynamic, despite sluggish business in the beginning fiscal year, we faced twice surge peak and we must adjust our operational protocol with agility. Together we performed actions for healthy work such as restriction on mobility as well as massive vaccination for all employees and family. We also participated to support the surrounding community as our corporate social responsibility.

Regarding safety, last year we could achieve zero accident, however we realize that many potential dangers still exist, and we shall continuously perform proactive activities for safety. It is inevitable that Safety and Health are the preconditions for work.

Thanks to God almighty that we could achieved good business result last year safely.

Our appreciation for all Stakeholders for all the strong support and cooperation.

The Global economy and commodities gradually have been improving and impacted to our business which was in low volume in beginning of Fiscal year, production have been increased gradually in 2nd semester. Not only machine for Indonesia but also components for other Komatsu plants, such as Fabrication, steel casting, hydraulic and reman components. Our strategy: flexible manufacturing is suitable as we adjust speedily our capacity both in-house and supplier.

Our development of machines and attachments also gave positive results and provided a great contribution to the fulfilment of customer demand as can be seen by the increasing of market share in 13-ton and 20-ton hydraulic excavators. We also developed various special machines, working gear components and attachments for mechanization in forestry.

Our aftermarket support operation also plays important aspect in our business such as reman menu expansion as well as Certified Reman Machine as one alternative business model to all over the world to support customer LCC. These will also become one business model in-line with direction in Carbon Neutrality. In addition to that, by utilizing our capability we are also expanding our production of press machines which at the current moment are for export. Through these activities we will create stronger foundations for our future business sustainability.

As we implement Total Quality Management, we firmly believe that one of the key aspects was also the continued development of our Human resources. We are now putting our best efforts to align people development with our strategy deployment.

Last year the 100th anniversary of Komatsu declaring its purpose and slogan “Creating Value together”. We deployed it into our main theme for 2021 activity as “Together we Strive for

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14 sustainable growth safely with Care, Commitment and Consistent”. We are proud to have great engagement from our employees. This year we will celebrate the 40th year KI anniversary (Go-40) and will continue to set up a stronger foundation for sustainability as indispensable and valuable for the nation and all stakeholders.

May God bless us all

Pratjojo Dewi Sridadi President Director

MANAGEMENT REPORT Management Policy 2021 The Company has gone through various dynamics in fiscal year 2020 with low production volumes, safety accident and the Covid 19 virus outbreak. The highest appreciation for all employee’s togetherness to cope with the tough situation by performing their best of challenging activities to

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15 survive. The Indonesian business conditions in fiscal year 2021 has been better than previous year, with some indications of improving demand in mining sector as well as the construction, agro and forestry with severe competition.

However, the Company needs to keep agility to face the fluctuation as one key characteristic of heavy equipment business.

In fiscal year 2021, the Company realize that current mid-term

strategy is still relevant and will be applied consistently by continuing to work safely with health amid the Covid 19 outbreak and keep emphasizing on SLQDC activities.

With the elaboration of the strategy, the Company seizes the good opportunity with a positive attitude and “Together We Strive for Sustainable Growth Safely with Care, Commitment and Consistent”. It is aligned with activities for commemorating 100 years of Komatsu and implementing “Creating Value Together” as the spirit of Komatsu globally.

Safety, Health, Environment & Compliance 1. SAFETY The Company has been continuing the activities

of

the

strengthening

the

previous

year

by

implementation

of

Behaviour Based Safety (BBS) including

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Fig. 1. Cross Patrol Activity – 3H Implementation

16 Hajimete, Henkou, Hisashiburi (3H) and refreshment Kiken Youchi Training (KYT).

Monthly thematic safety patrol is one of activities to ensure BBS Implementation which is focused on refreshment communication from top Management until Operator. The main topic is about leadership in implementation of 3H with Care, Commitment, Consistence (3C) by maintaining health protocol.

The

other

activity

is

strengthening

implementation of Stop-Call-Wait & LOTO procedure and continously Improvement Hazard Identification Risk Assessment and Risk Control (HIRARC) with the guidance from KLTD (HIMI and Ibaraki) safety expert Review handling process at positioner SAW box track frame D85

Fig. 2. Virtual Advice safety experts

by virtual remote checking to observe process

cycle,

procedure,

facility,

and

Operators review.

To support production operational, the company has been conducting training and Certification of Safety Officer for Material handling, Occupational Health and Safety, Firefighting, and First Aider.

Fig. 3. First Aider Training

The surveillance audit by external auditor (SGS)has been carried out implementation of ISO 14001 and ISO 45001. There was no major finding were founded.

In fiscal year 2021, the company could achieve zero accident.

2.

HEALTH

Fig. 4. Audit interview

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17 Covid-19 disease has been continuing in fiscal year 2021 with the peak in June – July 2021 (Delta Virus spreading) and declining in the end of fiscal year. Task force Covid19 has been taking any activities to minimize covid 19 impact by strengthening operational facilities and equipment such as clinic, Isolation room, healthy working area.

Fig. 1. Oxygen provision

528 M3

Fig. 2. Oxygen Tube Handing

As part of support health activities to the nation, the company contributed by providing facilities such as oxygen provision and tube handling to surrounding Community and Government.

Company was set up Central Covid-19 Vaccine facility in Komatsu area for Employees, Family and Subcontractor.

The achievement for vaccines until Third Vaccine shoot (booster) was 96% and continue as scheduled.

Fig. 3. Employee & Subcont

3. ENVIRONMENT vaccination A.

Fig. 4. Family Vaccine

REDUCE, REUSE, AND RECYCLE As the commitment to reduce, reuse and recycle program, the Company installed Biogas plant to utilize organic waste from waste of lunch and kitchen becoming energy for cooking. Organic waste proceeds on this facility are 3.000 Kg/month.

Fig. 5. Biogas plant

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18 B. CO2 EMISSION REDUCTION In related to saving energy activities, the company has been continuing reduce electricity consumption by installing small plant of solar panel near main office. Solar Cell system (Photovoltaics) capacity is 10 kWp completed with Latium ion Battery. The utilization is for lighting and electric charging.

Fig. 1. Solar Cell system 10 KWp

4. COMPLIANCE In term of compliance, Company has been strengthening the commitment by promoting proactively to all working circumstances to comply with applicable regulations creates integrity zone. The Company continues to disseminate Komatsu Worldwide Business Conduct (KWCBC) 11 edition through direct conveying and virtual to all employees.

The Company also conveys this value to all suppliers as business partner by giving an understanding of the importance of them as stakeholders and ask their support to prevent fraud by making report continuously.

The Company continues to promote the importance of compliance by publishing compliance news (Kepatuhan Kita) monthly and submitted to all employees. This compliance news also conveyed and distributed to all subsidiaries.

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Improve Quality Proactively The company continuous to conduct proactive actions to solve problems and enhances build in quality measures to improve quality in our process. To reduce lead time in problem solving of Serious Quality Issue (JUHIN) and minimize claim ratio, Company conducts activities such as (1) enhance inspection process through digitalization and technology improvement, (2) Improve quality sensitiveness and problem-solving lead time, and (3) Improve detection during manufacturing process of Working gear product.

At assembly plant, application of Electronic Check sheet (ECS) in inspection activity to Improve detectability, traceability and prevent data miss-input, has successfully reduced 23% of fault ratio on small and medium

Fig.1. ECS implementation

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20 machine. In fiscal year 2022, this application will be expanded to big machines.

In foundry plant, the 1st step of Moulding Quality Verification System (MQVS) has been implemented to eliminate reject parts that caused by moulding incompleteness. It has already contributed about 0.19% of Foundry’s total reject reduction. In the next 2 years, the MQVS improvement plan has been prepared and targeted reduction accumulation about 0.27%.

Fig.4. Molding line with MQVS

In term of newly launched PC135F-10M0, the company has been conducting evaluation to capture any quality problems and follow up those by taking any countermeasures during first year after launching the product. Detail activities are related to educate customer, follow up machine abnormality that reported by KOMTRAX and KIOSS, also promote all experienced issues to be raised on Service and Quality Information System (SQIS) to achieve quick investigation and countermeasures implementation.

Fig.5. Customer visit and education

In 2021, the company has been strengthening implementation of Design FMEA for Working Gear (WG) product (buckets and front attachments). The drawing review prior to manufacturing process has been conducting to identify possible problems during manufacturing process. This activity has successfully eliminated manufacturing problem of new WG product as well as reducing reject ratio in fiscal year 2021. KI managed to reduce working gear claim ratio from 2.8% in 2020 to 0.1% in 2021.

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21

Capture Market & Improve Manufacturing Flexibility To fulfil global demand of big machines, Company had a lot of activities to increase capacity for its especially for HD785, PC2000 and Component of Blade D155.

KI conducted periodically meeting with KLTD mother plants (Ibaraki Plant and Osaka Plant), improved on capacity of production facility for welding and machining inhouse as well as supplier capacity especially casting machining for HD785.

Improve Manufacturing Process To improve production facility capacity to respond the quick increasing of demand, KI conducted some activities: 1. Introduction for Big RAW machine at Cibitung Plant Enhance process automation in welding from manual to RAW process.

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2. Introduction for New Machining Center at Cilincing Plant To increase capacity of casting machining inhouse for HD785 production.

Realize Market Requirement Quickly and Develop Suitable Product a. Contribute to 20Ton Excavator share by PC200-10M0 CE Special specification In 20ton class Hydraulic Excavator, Komatsu promote 2-model line strategy with PC210-10M0 by high productivity and durable machine (premium class excavator) and PC200-10M0 CE features better fuel economy and lower price (economic class excavator). Taking strategic advantage of PC200-10M0 CE to increase market share on 20ton class excavator, ADC developed special specification of PC200-10M0 CE to meet wide range of customers need in Indonesia.

The Company was finished to develop 4 product variant that is: Logging bucket spec (Agro), Logging Grapple spec (only attachment is different from logging bucket spec), Rotary Log Grapple (RLG), and Super Long Front (SLF). For Harvester specifications is prepared by PC210-10M0 due to customer demanding on productivity (currently on process product development).

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23 PC200-10M0 CE has launched at 30 Aug 2021 and our market share in 20Ton excavator are increased by detaining new customers, swinger, and competitor customers.

Fig.2.Newly developed 20ton Hydraulic Excavator Fig.1.Machine sales of 20ton Hydraulic Product Variant b. CompletingExcavator Development of PC135F-10M0 product variant (Forestry)

PC135F-10M0 are launched in April 2021. The launch on parallel with conducting machine demo in the customer for product new introduction and education by explained the product concept and new features customer site. We received positive response from customer by increasing of demand of this new machine from customer.

Furthermore, it’s important to contribute to realizing the forest management to increase safety and productivity in forestry operation for sustainability forestry. We actively developing PC135F-10M0 product variant to support forestry mechanization at tree harvesting by product of Long Reach spec Fixed Log Grapple (FLG), Harvester and Shear head specification.

c.

Fig.3. Machine sales of PC135F10M0

Fig.4.Newly developed PC135F-10M0 Product Variant

Support small excavator specification for Indonesia Spec

In Indonesia, small excavator market is dominated by 7Ton class excavator that mainly working on construction works. Demand trend for small excavator in Indonesia is increasing, but in contrary our excavator model on this class is trending down every year. Customer shift to buy from used machine PC78US-6 to new HEX7ton (SANY SY75) with reason price and warranty.

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24 We carryout survey to visit customer jobsite to get actual customer voice and fact finding on field application. From our survey we found that brand is important factors related with brand image (reliable product, power full, etc) and customers experienced for using the product. Low initial price is helpful for rental business (rental rate (price) is based on tonnage not the brand). Most of HEX7ton project is support job and shortterm contract. HEX7ton machine are used for light works in construction project, so that customers also focused on fuel consumption. Next activity ADC continue to study HEX7ton suitable specification for Indonesia by using base machine KIPL PC71 or PC70-8.

Fig.1.Survey of HEX7ton Fig.2.HEX7ton Economical Fig.3.HEX7ton Performance customers and jobsite Jakarta aspect aspect area d. Develop special specification machine for Asia Market

We carry out SFR from Asian market in cooperation with Asia Product Planning (APP) for 20T high mount cab to increase operator visibility. Opportunity of this machine is 30 unit/ year in Southeast Asian market. This machine will operate for steel scrap factory required CAB increase height 1,2m to see inside truck. Customer request on price competitive high CAB structure compared current high CAB available on the market and easy maintenance structure without additional hydraulic cylinder & electric system. Design concept we decided to increase utilize fixed high CAB structure increase 1,5m. Prototype machine is finished quality confirmation (stress test) with result OK. Development activities are finished, and mass production document already submit to APP for next process on commercialization.

Fig.1.PC210-10M0 fixed CAB design concept

Fig.2.Prototype PC210-10M0 fixed CAB

To develop customer-oriented product for Indonesia and Asia, Working Gear developed products for First Fit Machine, After Market and Special Application Machine.

• First Fit Machine product

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25

• Special Application Machine

• After Market Products

• Industrial Machinery Product

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26 After succeeding in making the first type of Komatsu Small Servo Press H1F200-2 and deliver to KAILLC USA, Komatsu Indonesia continue to develop for the other model of Komatsu Small Servo Press H1F150-2, H1F110-2, and H1F200Q-2

e. Hydraulic Cylinder Develop Suitable Product Inhouse In fiscal year 2021, KI Hydraulic production had some activities to increase production.

We improve capacity by inhouse and outhouse improvement activity which is one of my inhouse improvement is reducing time by change sequence process on bottom Hoist Cylinder HD785.

Improve Bottom HD785 Fig.1.Hoist Cylinder for lift and down vessel

Before: Interpolated process, need to change to chamfer insert

After: Directly chamfer process from boring process, no need change tools

Based on our activities, capacity increased to the level 6000 pcs/month.

Total production volume in fiscal year 2021 increased 84% compared of actual fiscal year 2020.

Fig.2. Hydraulic production

To develop customer-oriented product for Indonesia and Asia market, Hydraulic production continuing activity of localization inhouse cylinder for KI machine product.

For localized this model P135, one of the steps is localization thin tube by new technology. It will increase knowledge and skill manpower in Komatsu Indonesia. This activity still on going and continue into fiscal year 2022. f. Develop Product to Export (PC118-KIM)

Arm Cylinder Boom Cylinder Bucket Cylinder

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27 Hydraulic cylinder in 2021 also develop cylinder to overseas customer KIM (Komatsu Italia Manufacturing). The new cylinder developed to increase quality level & suitable customer need. There are 4 item of cylinder: Boom, Arm, Bucket and Swing Cylinder which have an improvement on seal kit portion that already done in October MAXIMIZE COMPANY RESOURCES CAPABILITY TO BECOME NO 1 STEEL CASTING OUTSIDE JAPAN

2021.

In 2021, sales of Casting Parts were increasing sharply, around 160% compare between BP’21 vs Act’21.

During fiscal year 2021, the main activity is increasing production capacity (by internal & external) and continue expand casting menu for current & new customers, especially to supply global KOMATSU. Detail described on table matrix.

Quadrant of

Casting

Supplier Development Expand menu As the anticipation for significant increase in demand for 2021, KI held a workshop for supporting industry tier 2 at Tegal suppliers in January 2022. This activity to support the achievement of P a g e of: 27 delivery at Tier 1 suppliers. The workshop content consists

1. Welding training 2. Inspection training

28

The purpose of the workshop is not only for who are trained, but also to be able to deliver training to their subordinates. Instead of technical training (welding and inspection), also non-technical training of production planning and control.

This training is to improve delivery achievement.

Weldin g

Inspectio n

1. Reman KIT for HD785-7, PC1250-8/PC2000-8, D275A-5 Continuing Activity of Reman KIT, until fiscal year 2021 we have sold HD785-7, PC1250-8/PC2000-8 to various region. In addition, we also sold Reman KIT D275A-5 as initial activity fiscal year 2022.

HD785-7

PC1250

PC2000

D275A

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29 Starting in fiscal year 2021, KI sales reman product in form of KIT HD785-7 consisting of Engine, Torque Flow, and Rear Axle to the Asian and Oceania markets. These products received a good response from customers because it helps customers shorten overhaul time by shipment all reman component on same time hence reducing waiting time for component.

KI had succeeded in selling 60 sets of reman KIT HD785-7 and reman KIT total 12 sets. Therefore, for FY2022, KI has received a purchase order for Reman KIT HD785-7 is 25 sets, PC1250/PC2000 is 5 sets, D155 is 1 set. Company will continue expand model of Reman KIT for D475A and WA600.

D475A

WA600

2. Expanding Certified Machine Reman to Overseas Market In December 2018, KI launched Certified Machine Reman HD785-7. Company has launched this product because some customers had difficulty buying new machines due to coal prices down. They asked KI to remanufacture their old machines with the target quality is closer to the new machines at more affordable price.

Company already produced reman products for all main component of HD785-7 like engine, transmission, axel, and cylinders. Meanwhile, KI itself has produced a new machine HD785-7. By combining the capabilities of KI Group, finally KI launched a Certified Machine Reman HD785-7 which was first marketed to Indonesian customer. Until FY2021, KI had sold 24 units of Certified Machine Reman HD785-7.

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30 In fiscal year 2021, Company and Group Company are expanding the market of Machine Reman and succeeded in selling 8 units of Certified Machine Reman HD785-7 to PNG customer and Africa. Production of Certified Machines Reman will be continue expand to another model PC2000-8 in FY2022 with the first target market is Domestic customer (SIS).

3. Base Engine Sales Continuing 2019 activities, base engine portion raise significantly compared to regular engine and showing positive trend in total.

Cost Reduction Cost Reduction Activity FY2021 During fiscal year 2021, the Company had made several cost reduction activities by localization and cross-source activity for some component. Actual achievement reduction activity is USD 1.8M. Several Localization components on below:

Cylinder PC135 Fuel & Hyd. Tank PC2000 Muffler PC135

Tube PC2000

Handrail PC2000

Proprietary Parts KIPL & KSC

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31 On the other hand, in October 2021 Komatsu Indonesia was succeeding to localize of raw material Steel plate of Hight tensile from Krakatau Posco. SM570TMC can replace or equalized with SHT60 with range thickness t14-t45. The application can use for Indonesia market such as PC1250 & PC2000 work equipment.

SM570TMC KP

Result test from KI MTC

Announcement to Supplier

TQM Implementation In Fiscal year 2021, Komatsu Indonesia still in the middle of Covid-19 breakout as previous years, but this year, contrary with the previous year, sales, and production drastically increased. This condition requires us to do different things with previous year. Health protocol implemented more strictly, while there was insistence to provide additional new employee to cover production loading increasing. At the other hand, we have responsible to continue systematic and sustainable Human Resources Development (HRD) through TQM implementation as mentioned in our Policy

Management FY2021. This year we were also facing three years after winning Deming prize (post prize evaluation) from JUSE. All of this were challenging.

Deployment of Management Policy through Cross Diagnostic and President Diagnostic To Enforce Fundamental operation of Daily Management and to keep consistency in TQM implementation as well as to ensure alignment between Management Policy, Department Objective and Section Activity and to control target and achievement, we were conducted cross diagnostic, President diagnostic as well as QCC convention by online method.

Fig.1.President Diagnosis by Online meeting

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32 As we have on previous year experience, we do not have any significant obstacle to interaction between auditee and auditor by online method.

At the event of “53rd All Komatsu QC Convention”, which was held by online on November 2021, 1st Gold Prize was won by QCC group “Sembara” from ADC Department (Presenter by Rido F Dewantara) and 1st Global Prize won by QCS Agustinus BM from ME Department.

Fig.2. The Winner of “53rd All Komatsu QC Convention

Fig.3. Gold Prize Global QC AwardAnnouncement to Supplier

Kaizen Competition Achievement

In November 2021, aligned with Policy Management which aim to Develop Human Resources, Komatsu Indonesia succeeded in achieving encouraging achievements in the internal and external kaizen competition.

For the first time, Komatsu Indonesia sent three representatives to participate in the national event “Temu Karya Mutu & Produktivitas Nasional (TKMPN) XXV” and “International Quality & Productivity Convention (IQPC) 2021”, which was held also on

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33 November 2021. On this event we achieved 1st Gold in IQPC won by QCC group “Turn Back Claim 3” from QA Department. While second platinum won

by QCC group “Sembara#2” from Remanufacturing Department and SS (individual) won by Rudi Saputra from Foundry Department.

Fig.3.TKMPN XXV Presentation

This achievement will become motivation and spirit for all Komatsu Indonesia employees as well as QC teams to be consistently carrying out continuous improvement for the progress and development of the company.

Post Prize Deming Examination Three years after received Deming prize, we must conduct post prize evaluation, also

by JUSE. During post prize examination held on November 2021 through online method, examination was divided into three categories as follows: a. Follow-up activities on items pointed out in the on-site examination findings.

In this part we must answer all JUSE’s finding which asked during TQM examination. b. Status of the future presented at the time of the on-site examination. In this part, we must update certain future activity that we have explained during TQM examinations. c. Newly introduced TQM activities after winning the prize. It was explained all new activities introduced after TQM examination period.

Fig.5. Post Price Deming Examination

Explanation held by each section or by each topic, continued by question-andanswer session. After all materials to be presented in front of JUSE Committee, they decided unanimously that Komatsu Indonesia was still considered consistent in carrying out TQM policy.

Thing that makes us proud that mostly of presenter were different with presenter during TQM examination, it was valuable experience for them.

However, our journey does not end here, Komatsu Indonesia must remain consistent in implementing TQM principles in daily operations continuously. We also set up new challenge for the next target to achieve Grand Deming.

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34 INTRODUCING TPQM IMPLEMENTATION With increasing of demand, production control is one of key to achieve as already targeted. TpQM is one of those activity that collaboration between AM (Production side) & PM (Maintenance side) to keep the OEE (Overall Equipment Effectiveness) within the standard. TpQM in Foundry started from Shake Out Moulding Regular Line as Pilot Project & targeted to be implemented on others facility.

Fig.1. Pilot Project Shake Out Moulding Regular Line Foundry Plant

Human Resource Development Company aspires to balance the growth of our company with sustainable employee development. Our Strategy is design and execute to the annual activities of each manager and staff. Concept deployment through assignments is the main tool in employee development.

Company is preparing next generations through New Employee Development Program, which is carried out by combining online and offline methods. The program will be conducted for 6 months consisting various activities, such as induction orientation, department orientation, welding training, OJT 1, Matriculation, OJT 2, and assignment.

Employee Development Corporate University To continue learning best practice (experience) for future business performance, KI enhances the Corporate University. Each Dept/Section is involved to develop a learning program in enhance the primary function and business issue. Managerial and structural are involved teaching [by certified leader as teacher] what their subordinates required. Pilot project was starting in Oct 2021.

Midterm Outlook Webinar As the function of the Corporate University in supporting the company's strategy, from the beginning of making the mid-term strategy, Company conducted a series of seminars related to external factors for the business [politics, business strategy, and economy].

On 21st October 2021, the Advisor of the International Advisory Board Komatsu teach value

Fig.1. Explanation regarding Politic outlook P a g e 34

35 creation [care, consistent, commitment, integrity, and innovative]. It is in line with Company’s three core values which are Care, Commitment, and Consistent.

Seminar and Woman Exhibition: Gender Challenges and Roles for Millennials in the Technology and Industry Sector.

Company recognizes diversity as a significant corporate asset and respects the basic human rights of every employee while striving to offer career development opportunities that enable everyone to fully demonstrate their abilities with a sense of fulfilment and pride.

Company actively promotes female employees to more responsible, such as through seminars by national successful career women which shares experience on Fig.2. Women have same achieving her dream and be professional. opportunity in job

Leadership Development Program Our continuous development leadership in collaboration with educational institutions and subcontractor. MoU Signing event was held related to the Development of an Industrial Vocational Diploma equivalent (D-1 and D-2) Education Program between Komatsu Group Indonesia and BPSDMI part of the Ministry of preindustrial.

Collaboration program will carry out lectures based on a dual system (theory and practice).

Leadership development program series [First line manager, Supervisor, Foreman and Group Leader] continue in fiscal year 2021. As part of Company’s effort to strengthen leadership role at the workplaces, Enhance employee skill with continues development.

Part of our collaboration activity to achieve production, Direct Man Power's [MP] fulfilment is carried out through the New Normal scheme following the health protocol. To ensure the adaptation process of the new MP, TAKUMI Fig.3. Welding Job Process & Crane handling Observation Instructor went directly to the Gemba. They observe and provide guidance in the working process.

Fig.4. Virtual Reality (VR) Basic Unit Operation in AFTC,

AFTC activity for our customer.

Operators & mechanics from customers are the key to the smooth introduction of machines with special/new applications and to increase capable operator to maximize the performance in the Agriculture and Forestry sector.

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36 This training program is designed “APPLICATELY” to complement knowledge and skills in an integrated manner for sub-ordinates in handling and operating heavy equipment efficiently, effectively, and productively to improve safety. Not only in our facility, but instructors also assigned to learn about unit operation especially for Agro in the real area by customers to increase their knowledge and skills.

Nationwide Expansion for the Link & Match of Vocational Schools Since its launch in 2019, the Komatsu Class Program has continued to be implemented in a pandemic by online through Distance Learning (PJJ), starting with a program for teachers (119 people), followed by students (3535 people) from 40 vocational schools.

Business conditions that require flexibility in increasing production level so that it need source candidates in terms of quantity and quality. Our activity adds 10 vocational school, it started with Fig.5. Company’s Expert verify New verification directly to schools to obtain real readiness Vocational School [Work Culture consist of Curriculum, Facilities, and Teachers in Vocational Schools].

Collaboration between Komatsu and “Kampus Merdeka” Collaboration with universities to create value togather [creates more capabilities in improvement].

This program providing opportunities for students to sharpen their abilities by going directly to Gemba.

Our collaboration also in line with Purchasing activity to develop regional Suppliers at Tegal, Central Java.

Students are provided with Monozukuri experience and component drawings to be produced at suppliers in Tegal, they learn to follow the product Fig.6. Participants introduce our trial process until ready to be deliver to Komatsu.

Gemba Assembling area.

Corporate Social Responsibility P a g e 36

37 The Company carried out CSR activities in the health sector as described above. In addition, the company also carried out CSR in other fields as follows: Decompose organic waste with no residue but Black Soldier Fly (BSF) Larva (Maggot Project) The Company cooperates with the Surrounding Community to carry out activities to reduce organic waste such as food waste, house waste and leaves, by maintaining BSF to breed with food intake from the organic waste. BSF larvae are used as fish feed and other livestock that can be sold as community other income. Due to its effectiveness, maggot cultivation is one of the best ways to reduce organic waste Computers for Educational Development In December 2021, The Company trough Komatsu Foundation donated 50 used computers to several educational institutions in remote area of Indonesia. 25 computers were donated to vocational school of Gedong Tataan Lampung, 11 computers were donated to schools (kindergarten, junior and senior high school) in Pandeglang Banten and 10 computers to Baduy Banten, West Java. The purposed to improve their quality of life as expected from this computer donation, educational institutions are expected to be able to in line with technological developments expedited with this computer.

Tree Planting Continuing with the 100th year of Komatsu's Anniversary Celebration, the Company targeted 100 thousand trees. On Earth Day event in April until May 2021, Company have been planted 14.500 trees to complete total target in the previous year in collaboration with Surrounding community (incl.

Employees, vocational School, Outsource dan supplier/subcontractor, Customer, and Government).

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38

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39

CONTENT LIST 1.

Executive Summary

2.

Corporate Governance

3.

Corporate Principle and policy

4.

Sustainability Initiatives

5.

Growing with Society

6.

Fight to Covid-19

7.

Renewable Energy

8.

Corporate University Narratives

9.

Diversity and Gender Equality

10. They Said About Diversity

EXECUTIVE SUMMARY P a g e 39

40 Creating value through manufacturing and technology innovation to empower a sustainable future where people, businesses, and our planet thrive together - Komatsu Develops its Sustainability Policy.

PT Komatsu Indonesia and its subsidiaries, in order to promote sustainability according to the sustainability policy of the stakeholders, especially the founders, where one of the important things besides the philosophy of creates or produces something is developing human resources, and also gaining trust from the community Entering Komatsu's 100th anniversary in 2021, and 39th PT Komatsu Indonesia, a new division has been established, to be more concern and firmed direction of sustainable activity called sustainability promotion which oversees the following sections: Corporate Communications, Corporate Social Responsibility, Diversity and Demining Machine Project. This is done considering the importance of preserving sustainability future for future generations.

The concept of carrying the sustainability future refers to the sustainability development goals (SDG’s) initiated by the United Nations which are outlined in 17 categories of sustainability programs. Komatsu in its journey focuses on carrying out 5 program categories, there are decent

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41 living and economic growth, innovation and infrastructure, sustainable cities and communities, climate change, partnerships.

Komatsu Indonesia has a long history of implementing Community Development Programs which are proven to be able to increase the independence of the community entering its 40th year in 2022. In addition, during the Covid-19 pandemic which has caused a very wide multidimensional crisis from 2022. The flagship community empowerment program is increasingly being improved and intensified to help the community to become resilient economic actors. Through society initiative program in the frame of three major pilar activity are surrounding community development, education concern and humanity aids. Komatsu even encourages the community to be able to create opportunities from the potential and resources they have so far.

CORPPORATE GOVERNANCE P a g e 41

42 The Company implements the Corporate Governance mechanism in an order, where all Corporate Governance organs have their own responsibilities but still carry out Corporate Governance implementation in an integrated manner.

The General Meeting of Shareholders has the highest authority where the shareholders will carefully consider their decisions for the long-term interests of the Company. After the decision is taken, the GMS will then hand over all authority to supervise and implement the decision to the Board of Commissioners and the Board of Directors.

Based on this mechanism, the management of the Company and the implementation of each decision of the GMS is carried out by the Board of Directors. The Board of Commissioners then supervises and provides advice to ensure that the objectives of the Company and the resolutions of the GMS are implemented and achieved.

The Board of Directors who is responsible for the management of the Company will be assisted in carrying out these management tasks by the Internal Audit, Risk Control Committee, Export Control, Compliance Committee, TPQM Promotion Office, and other work units that carry out the management function of the company.

In addition, the Company also conducts an independent audit of the presentation of financial statements by a Public Accountant. This process is important, where financial statements are one of the fundamental information that reflects the Company's performance and the management carried out by management.

CORPORATE PRINCIPLE AND SUSTAINABILITY POLICY According to our management principle we believe:

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43 Our corporate value is the sum of the trust given to us by all our stakeholders and society And the three pillars of CSR, aligned with the founding principles

Founding Principle • • • •

CSR Theme Quality first Technological innovation Employee development Global expansion

In accordance to implement and focus on five initiatives of global Sustainability Future on Environment, Social and Governance (ESG). Komatsu Group Indonesia is trying its best to convey the messages of sustainability in the frame that has been given as an inseparable part of the deployment policy that has been implemented so far.

In 2016, CSR is included in the mid-range management strategy, 17 global Sustainable Development Goals (SDGs) established by United Nations in early 2016, while Komatsu focused on 5 SDG’s.

ESG Solution through three Pillars of Growth Strategies:

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44

Picture: Komatsu Sustainability Policy.

Guidelines for Corporate Activity Basic Stances on Earth Environmental Problems We, at the Komatsu Group, work for sustainable society and earth environment through our global business operations by addressing the following four environmental problems with the stances discussed below.

1. Co2 Reduction 2. Water Conservation 3. Renewable Energy 4. Waste Reduction

Picture: Komatsu Focus Program of Sustainability in 2021.

OUR PURPOSED OF SUSTAINABILITY

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45 •

Our purpose is “creating value through manufacturing and technology innovation to empower a sustainable future where people, businesses and our planet thrive together”.

•

By applying the principles set forth in the Sustainability Policy to our work and taking action, we can do more to help realize a sustainable society and achieve business growth.

•

Let us work together as One Komatsu to bring our purpose to life and create a more sustainable future for all.

SUSTAINABILITY P a g e 45

46

INNITIATIVES

For almost four decades in Indonesia, Komatsu Indonesia and its subsidiaries has been active in main business of Heavy Equipment especially in construction, mining, agro and forestry machinery sectors. The company continues to grow and advance to face every challenge ahead by trying its best to provide benefits to the community and environmental sustainability. The company understands and realizes that the sustainability of Komatsu Indonesia is not only measured by the economic value that has been achieved, but also through the company's efforts for the community around the company to improve their quality of life and how the company fulfills its obligations to participate in preserving the environment as a legacy for future generations.

Our System to Promote Sustainability In April last year, for the occasion of our 100th anniversary, we defined our corporate identity, and articulated our purpose as “Creating value through manufacturing and technology innovation to empower a sustainable future where people, businesses, and our planet thrive together.” Based on the purpose, the development of our Sustainability Policy is designed to clearly demonstrate our earnest stance of responding to climate change and social demands as part of our purpose of existence and further propel our sustainability management.

In April 2022, Komatsu Indonesia established the Sustainability Promotion Section under Administration Department to supervise activities relating to the promotion of the Komatsu Indonesia Group’s sustainability-oriented management. The Sustainability Promotion Section enhances the commitment of the entire Komatsu Group to ESGoriented management with the goal of building an environment for formulating policies and plans regarding two major areas of ESG management, the environment and society, to ensure the Section and companies of the Group are able to maintain their commitment to sustainability. The Sustainability Promotion Section, consist of four sub-sections are Industrial Relation, Corporate Communication, Corporate Social Responsibility and Environment.

To promote sustainability and celebrate Earth Day, we at Komatsu Group Indonesia and all other companies within the Komatsu Group have made joint efforts around the

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47 world. We have cleaned up nearby areas, we have conducted maggot breeding for waste organic conversion, planted trees, donated to charity - among many other things. Well done to all our employees volunteering!

GROWING P a g e 47

48

WITH SOCIETY

Illustration: Komatsu hand in hand to grow with society in the matters of providing education facility in Donggala in cooperation with Education office of Donggala – Central Sulawesi as rehabilitation program for elementary school to obtain basic education.

Komatsu Group Indonesian (KGI) is fully aware of the impact on the economic sector not only for the company but also for the local environment of Komatsu Group Indonesia. As a form of this concern, Komatsu Group Indonesia (KGI) takes on the following roles: a. Provide direct teaching on how to make and sew masks to local people in the surrounding environment that can be used for local communities to increase economic income. b. Provide some basic food items for communities around Komatsu Group Indonesia and for community health centers in the vicinity. c. Processing organic waste to become livestock feed so that it can be sold by residents d. Provide job opportunities for local women community (Dasawisma) to support make food and clothing for employees at Komatsu Group Indonesia. e. Inviting the local community to jointly raise livestock that are developed and can be used to help the local family economy. f. Support an education concern of both online and offline format during pandemic covid-19 like donation and computers.

Waste Banks: Green to Food Security

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49 Since 2015, the waste bank itself has succeeded in reducing non-organic waste by up to 50 tons in 2021. Not only focusing on waste management, Komatsu Indonesia is also working with community waste bank to create green alleys in the area around the company. The goal is to reduce air pollution (zero carbon) around the company. The plants that will be planted are not only plants that can only reduce pollution, but also plants that can produce edible fruit or vegetables, thus providing an opportunity for people to do urban farming so that they can get economic benefits.

Through the waste bank, Komatsu Indonesia is also developing catfish cultivation as a circular economic.

They have harvested several times since its beginning in March 2021. The cultivation results have even provided food independence for the surrounding community and have produced new SMEs, called frozen catfish or ready-to-eat catfish which are then frozen after being seasoned.

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50

FIGHT TO COVID-19

"KEEP OUR SPIRIT AND DETERMINATION TOGETHER TO FACE COVID-19" Corona Virus Disease 2019 or commonly abbreviated as COVID-19 is an infectious disease caused by SARS-CoV-2, a type of coronavirus. People with COVID-19 may symptoms like fever, dry cough, and difficulty breathing.

The Indonesian government has made various efforts to deal with the Covid-19 pandemic. In the health sector, the Indonesian government has made efforts to accelerate the implementation of tracing, testing, and treatment (3T), fulfilling antiviral drugs for the treatment of Covid-19 patients and met oxygen needs.

Komatsu Group Indonesia (KGI) also feels the impact of the pandemic experienced by Indonesia, especially employees and their families. This impact can be felt from various aspects, starting from the health of employees and their families, export and import processes and many other aspects.

The number of cases of illness and death that continues to threaten the health of employees and their families as well as the company makes the company realize a great responsibility to have the opportunity to help each other.

Several social actions that were successfully carried out by Komatsu Group Indonesia (KGI) were carried out both directly and indirectly (online). Specifically addressing the impact of Covid 19 on the health sector for employees, families and the environment are: Providing education on matters related to Covid 19 through online webinar (online education) for employees and their families.

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51 1. Aid with basic food, medicines and oxygen measuring devices for employees and families who are confirmed to be COVID-19 who cannot leave the house during the isolation period.

2. Directly involved in monitoring the health of employees and their families to ensure any health conditions of sick employees.

3. Together to help find a hospital and help donate blood (convalescent plasma).

4. Assist and support Research and Development Ventilators for Hospitals through the Salman Foundation, Bandung Institute of Technology.

5. Provide loan assistance for medical assistance devices (HFNC) to network hospitals, around KGI and the Covid 19 Wisma Atlet Emergency Hospital center, to support the needs of medical equipment needed not only for employees and their families, but also for anyone.

Vaccine Covid-19 Program

Starting in the early months of 2021, the Indonesian government has taken the initial step to anticipate the needs for mass vaccination of its vast population by issuing the MoH Regulation No. 10 of 2021 on the Implementation of Vaccination to Mitigate the Corona Virus Disease 2019 ("MoH Regulation 10/2021"). This regulation serves as the umbrella and guideline on how COVID-19 vaccination programs will be carried out in Indonesia.

Komatsu Group Indonesia started to vaccine in June 2021 in cooperation with Community Health Center of Sukapura and Cilincing that held in Bonded Zone and community canter near to the company then continue in company own facility for several batch where finally continue for booster that reach over 90% recipient of employees.

The Company support the government program to accelerate COVID-19 booster vaccination especially in Industrial Sector. On February 24th, 2022, KI became the host for the booster vaccination kick off for industrial sector and was attended by the President of Indonesia, Mr. Joko Widodo, along with the Minister of Industry, Mr. Agus P a g e 51

52 Gumiwang Kartasasmita, and Minister of Health, Mr. Budi Gunawan Sadikin, at Komatsu Indonesia Cakung Plant.

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53

RENEWABLE ENERGY

In response to the issue of climate change and the form of commitment in reducing CO2 emissions referring to the KLTD guideline targeted at FY2030 can reduce CO2 emissions by 50% to CO2 emissions in FY2010, the Company made several efforts including reducing GHG emissions, developing renewable energy, and clean and environmentally friendly production.

The Company in collaboration with Government Research BRIN and University supports the development of renewable energy by building Biogas and Solar Panel System facilities. It is hoped that by developing renewable energy, PT Komatsu Indonesia can reduce the use of energy from fossil energy to environmentally friendly energy.

BIOGAS SYSTEM Every month the Company produces domestic waste of 7-12 tons per month consisting of organic waste and un organic waste. The Company built a biogas system facility by utilizing organic waste as its raw material. The biogas result is used in the central kitchen for cooking. By utilizing biogas, it reduced and replaced the use of LPG fuel.

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54

STEP 1

STEP 2

STEP 3

Organic waste from the kitchen and canteen transported to destruction room/ burial room in area biogas.

Organic waste pulverized for speed up or shorten residence time.

Two stage system is made to make the process more stable, consisting of a hydrolysis process and the main process (biogas process): - Hydrolysis reactor to facilitate the process of hydrolysis and acidification - Biogas reactor to facilitate the further process of biogas formation

Waste dregs from biogas reactor treated in effluent treatment with main goal for separating liquid and solids.

• Liquid returned to hydrolysis reactor mixed with ingredients fresh organic from dissolving • Solid become compost

SOLAR PANEL SYSTEM 1. Solar Panel Cibitung Plant

Komatsu Indonesia has installed solar panels in the Cibitung Fabrication Plant with Solar Panel capacity 320 kWp. Output from solar panel connect to LV Panel at Cibitung Powerhouse then direct to utilize without battery for Fabrication Cibitung Plant. We start the project from April 2020 and finish in April 2021. and then we already start energizing from April 2021 until now. This solar panel is able to reduce CO2 emissions by 283.67 Ton CO2/ year.

2. Solar Panel with Lithium Battery System Komatsu Indonesia in collaboration with the BATAN laboratory developed a solar panel with lithium battery system. We utilize the solar electric power for Plaza

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55 Inspiration, PJU Lamp and to charge electric vehicles such as electric cars and electric golf cars.

WORLD EARTH DAY The celebration of Earth Day in 2021, the first time Komatsu Group Indonesia was held together with global komatsu in order to carry out the promotion of sustainability and the agenda was attended by all Komatsu employees simultaneously in various countries.

In the Indonesian region, it was held in three main places, namely Gunung Dahu, Bogor, EduForest, Cikarang, Bekasi, and at the Botanical Gardens of Balikpapan, East Kalimantan. On this Earth Day, it is planned to plant 100 thousand trees together in addition to employees, suppliers, distributors and the community around the company such as schools, government offices and others.

In addition to planting trees in three places, this also involves the involvement of employees' families to voluntarily plant in their respective homes and document them and include them in the one world one komatsu platform.

Komatsu Group Indonesia employees also participated in the One World One Komatsu global contest in 10 competition categories. and participate in photography competitions and coloring competitions for children. In the global contest, KGI won 2 categories of winners namely Rustam Wiyadi and Sri Lestari both from Komatsu Undercarriage Indonesia (KUI), and the first winner for the global photo contest was won by Adi Susatyo from Komatsu Reman Asia (KRA) Balikpapan, while for the

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56 coloring contest the son of Whisnu Haryadi from Komatsu Marketing and Support Indonesia (KMSI).

Corporate University Narrative Changes in the dynamic business environment, require Purpose-Vision-Mission which will be the company's guidance to continue adapting. This adaptation effort is stated in the midterm strategy and activity plan every year. The learning culture must be an important factor in achieving the company's strategies and activities. On the other hand, the company's activities must be based on the corporate values, so importance learn from current competency.

Komatsu Indonesia carries out one of the implementations of Corporate University through learning to employees as part of CSR with the theme "Education Aid". Learning programs are developed by combining the concept of structured education through diploma programs in collaboration with universities and teaching by internal instructors and silver experts [experienced ex Komatsu employees]. This program teaches Heavy Equipment manufacturing knowledge based on our experience.

This program is expected to place employees as the core of improvement and part of regeneration to achieve sustainable business activities.

Link and Match To improve vocational student capabilities by collaborating with vocational schools and government make national standard of competence and implementing Link & Match Program in vocational schools.

Human resource development through our knowhow for our vocational school. This activity part of industrial revitalization through employee development. Student in vocational school teach based on national standard. Komatsu also support standard education facility and train teacher based on our manufacturing value while student get their benefit of experience On Job Training (OJT) in Company Concepting Human resource development through “how to know” has been done through On the Job Training and Link & Match Program 50 Vocational school.

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DIVERSITY AND GENDER EQUALITY

Encourage diverse perspectives to drive individual and team performance and eliminate impediments to create an inclusive workplace where employees feel that their endeavors are valued. Foster a culture of inclusion where employees feel respected, and their perspectives and contributions valued.

Having a working environment filled with employees of different backgrounds, skills, experiences, and knowledge means that there will be an increase in innovative and creative ideas. Employees will feel more comfortable to share their ideas with others with unique ideas being shared amongst a diverse environment.

Purpose: •

Gender equality is a part of the Sustainable Development Goals (SDGs). This is important because half of the world’s population is female and therefore that empowering women is a must if we want to reach our full potential.

•

Encourage women’s labor force participation in industrial manufacturing is still low in many countries, including Indonesia.

Diversity and Gender Equality

Diversity and Inclusion Promotion in Komatsu Group Indonesia (KGI)

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58 • • • •

Paid parental leave (3 months) Provide the facilities to woman employees such as nursing room Promote Diversity and Inclusion through employee engagement, by held Woman Exhibition Day. Enhance gender diversity program, KGI held the one-day seminar about “Tantangan dan Peran Gender Pada Kaum Milenial di Sektor Teknologi dan Industri” that presented by one of the inspiring women, Prof Dr.rer.nat Evvy Kartini M.sc founder of National Battery Research Institute (NBRI).

LIZA MULYADIANA

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59 Foreman (Fabrication Plant) PT Komatsu Indonesia

Komatsu Indonesia, under the global Komatsu brand, is a leading heavy equipment industry in Indonesia that strives to support gender equality where 3.6% of its 3,343 employees are women. In the manufacturing industry, the leadership of a group on a small to large scale is played by men, especially in the production area. While women work in the field of administration.

Therefore, it has been almost 1 year since Komatsu has started to promote gender equality (diversity) for women. Several events that were held were also related to understanding the importance of gender equality (diversity), such as WOMAN EXHIBITION which described the role of Komatsu women (Srikandi) in carrying out and understanding the knowledge and skills that support the production process.

So that women feel more confident about their strengths in their careers. Komatsu also provides opportunities for women to be directly involved in handling and managing the production process both in terms of improvement and directly communicating with colleagues in the GENBA. Not only that, but the female population in production is also increasing. With the role of women in the production process, companies can identify and recognize a woman's potential and eliminate prejudices that hinder women's achievements. Now female workers have the confidence to play more actively in the company.

I support this movement and hope that all the facilities and stigma that exist in the field regarding women can be appreciated and fully supported by all stakeholders, both management and colleagues.

ERIKA WINDYASARI Finance Manager PT Komatsu Marketing and Support Indonesia

As we all know that Komatsu is a global world-wide company which offering very ranging products and solutions to the industries such as Mining, Construction, Quarry, Forestry, Agriculture, Industry Machineries and so on.

Which is such kind of industries have historically been dominated by male almost in all levels, from leadership roles until worker in mines and jobsites. Position of women employee in such kind of industries is very small by almost 5% in percentage or even less. That condition made me think that is impossible for me and other female employees to develop our career in this kind of company industries.

To be honest, I haven’t much expectation to the company to increase or develop our career in the future rather than stays on staff position or clerical work when join to Komatsu several years ago.

However, I sincerely appreciate and surprised when Komatsu started to promote the Diversity and Inclusion, especially for gender diversity which is gender equality is quite rare in this kind of industries, due to perceptive of women’s role and unconscious gender bias.

It has been 3 years since Komatsu started to conduct some training and seminar for female employees, increase the number and percentage of female employee, level up female employee to the higher level also builds some facilities to support female’s activities.

Refer to this program, I realized that is not only gender diversity, but Komatsu also value other diversity, and this motivated me more and I believe that all employees also have same feeling with me, which is our differences has been valued by Komatsu and its encourage us to contribute more to the our company, Komatsu.

SRI LESTARI Industrial Relation and General Affair Manager PT Komatsu Undercarriage Indonesia

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60 PT Komatsu Undercarriage Indonesia as a global world-wide company dominated by male employees have 2% female employee from 1.120 total person as end of May 2022.

Female employee at Komatsu Group Indonesia we usually call “Srikandi”, Illustrations of Srikandi is a woman puppet characters in Java who firm, brave and agile like a chosen male soldier.

I think communication is the most important thing in any process as tools for conveying intentions from the company to employees or vice versa. Komatsu Group Indonesia maximizes it by strengthen developing people and build the facilities example lactation rooms, ladies parking area and by maximizing office 365 which can be accessed from anywhere, anytime due our double role (office and home) makes us easy to complete the task and make deep communication with our teams for completing the job properly.

During Covid-19 pandemic, management along with company doctors and the local government provided online learning to employees' wives regarding health, protocols, really helping them to deepen their knowledge update and finally they can maintain the health of their children and husbands so they can work well.

Various opportunities are given to us both in the scope of carrier, leadership and other company activities, experience abroad same as the male which gives great knowledge and make us confidence.

Recently, there were several synergistic events from Srikandi Komatsu such as seminars and talk shows about challenges and gender roles for millennials in the technology and industrial sector by one of the inspirational women who really inspired us to continue to work smart and efficiently.

Business Plan/Management Policy FY2022 In previous year we have been through various business situations with a drastic increase in the trend of production volume while Covid-19 is still threatening. Our highest appreciation to all employees for the effort in togetherness to face this situation and finally we close this year safely.

Business conditions in fiscal year 2022 are predicted to increase. Global trends and domestic demand also predicted to continue to increase driven by the increasing of mining, construction, and agro-forestry sectors with tighter and severe competition, however we must keep alert of risk amid the recent geopolitical tension. Our main task this year is to fulfill demand cautiously and continuously improve quality to pursue customer satisfaction.

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61 Welcoming fiscal year 2022, we refine our mid-term strategy for 2022-2024 which will guide us through new challenges by accelerating & strengthen our action to be faster, more flexible, and agile and will implement it by continuing to work healthy and safely. The strategy and emphasis of the affirmation are as follows: 1. Create Healthier, Safer & more comfortable working environment through implementing HIRARC, ISO 45001, Compliance and Carbon Neutrality. a. Strengthen to implement Behavior Based Safety including “3H” & “Stop- Call- Wait”. b. Continue environment preservation by CO2 reduction, 3R and Carbon Offset. c. Proactive approach to compliance (CoC) & ethics.

2. Develop customer-oriented product for Indonesia and Southeast Asia. a. Enhancement position of small to medium Hydraulic excavator b. Development of special application machine for SE Asia c. Reinforce development of working gear and special attachment 3. Maximize company resources capability to meet customer demand and secure opportunity. a. Improvement of Hanseizai and ensure daily operation by optimizing Komtrax and strategic inventory. b. Synergizing manufacturing capacity & capability to support global demands. c. Strengthen supply chain by reinforce supplier capability 4. Commitment to improve reliability of products quality by proactive problem solving & Built in Quality. a. Reduce claim ratio by improve quality with strengthen detectability & traceability through advanced digitalization b. Maximize SQIS and FTA database utilization c. Strengthen defect preventive implementation by improving FMEA level.

5. Cost reduction and productivity improvement. a. Expand localization, cross sourcing & innovative process improvement. b. Improve manufacturing efficiency and performance by Industry 4.0; factory automation & visualization, expand Dantotsu line, production line reform and ICT enhancement as well as TpQM enforcement. c. Effective investments, improve operational efficiency and productivity of indirect work by workstyle improvement and synergize group’s resources of Komatsu in Indonesia.

6. Expansion of Aftermarket business. a. Continue to penetrate new market and new reman menu, hydraulic production as pillar of global supply, attachment, and spare part business. b. Expand market/model for Certified Reman.

7. Systematic and sustainable Human resource development through TQM implementation. a. Continue to strengthen Learning center to develop employee capabilities in line with business objectives. b. Enhance & broaden Link & Match program (Vocational school & University) collaborate with other parties c. Develop a diverse workforce, enhance employee’s engagement values in company voluntary activities, and instill pride as part of Komatsu Global d. Reach the highest achievements in quality improvement (QCC & QC Staff) conventions and skill competitions at the national and global Komatsu.

With the elaboration of this strategy, let us seize this good opportunity with a positive attitude and “Together We Strive for Sustainable Growth Safely with Care, Commitment and Consistent” and let

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62 us align our activities to commemorate 40 years anniversary Komatsu Indonesia (Go 4 0) by implementing “Creating Value Together” as the spirit of global Komatsu. May the Almighty God bless all of us.

We would like to express our gratitude to Shareholders, Board of Commissioners, all of employees, supplier, and distributor of Komatsu Indonesia, for all the efforts made in Fiscal Year 2021.

Jakarta, June 17, 2022 The Board of Directors PT KOMATSU INDONESIA

Pratjojo Dewo Sridadi President Director

Shinichi Semba Vice President Director

Risdhianto B. Irawan Director

Jamalludin Director

Rudi Kurnianto Director

Hideki Watai Director

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Audited Financial Statement

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