Chapter 9

Related Parties

Figures converted from Indonesian rupiah at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged.

Erajaya is 55%-controlled by a founding family, trades at 0.65 times book, and a value buyer's first worry about such a structure is that value leaks to the controller before it reaches minority owners. On the transactional record it does not. In the first half of 2026, purchases from affiliates were 0.8% of the group's purchases and sales to affiliates were 0.01% of sales; the three balances that look new on the June 2026 sheet resolve to a declared dividend, an EV venture now controlled by Xpeng, and a device-insurance joint venture. The last uncovered claim on owner cash is a separate $107.1 million of input-VAT sitting with the tax office.

The transactional footprint is small

For a company that turns over $2.4 billion of goods a half-year, the related-party flows are minor. In the six months to 30 June 2026, Erajaya bought $17.8 million from affiliates — $11.5 million (0.54% of purchases) from PT Era Industri Otomotif and $6.3 million (0.29%) from PT Bolttech Device Protection Indonesia — and sold just $0.2 million to related parties, one hundredth of one percent of turnover [1]. There is no pattern here of revenue routed out to family vehicles at soft prices, or of the company buying its own goods back from an affiliate: the sales line to related parties is effectively empty.

Source: Q2 FY2026 statements, Note 33 — purchases 0.54% + 0.29% of group purchases; sales 0.01% of net sales [1].

The balances tell the same story. Related-party receivables at 30 June 2026 were negligible — $0.04 million of trade and $0.26 million of other receivables, the latter including $0.08 million owed by a subsidiary's minority shareholder [2]. The payables are larger, but three-quarters of the $29.6 million total is a single item that is not a related-party financing at all, as the next section shows.

Source: Q2 FY2026 statements, Note 33 balances [2]; nature of each relationship per Note 33 [3].

The three balances that look new

Three items appear at June 2026 that were absent or small at December 2025, and each resolves into something ordinary once the note is read.

The largest, a $21.4 million "Company's shareholders" other-payable, is the FY2025 cash dividend. The statement of changes in equity charges the identical $21.4 million as "Dividen kas — Perusahaan" against retained earnings in the half [4], and Note 33 classifies the payable as the dividend owed to shareholders under the AGM resolution of 29 June 2026 [3]. It sits under "related parties" only because the controller, Eralink, is one of the shareholders it is owed to; it is a pro-rata payable to the whole register, declared one day before the balance-sheet date and paid shortly after. The $0.46 million "subsidiary minorities" payable alongside it is the mirror item — dividends declared to the minority holders of the listed subsidiary SES.

The $11.5 million purchase from PT Era Industri Otomotif looks like a new affiliate supplier, but it is Erajaya's own venture seen from the far side of a disposal. Erajaya established the company through SES in November 2024 at 99.99%; on 8 May 2026 SES sold the majority of its shares to Xpeng International Holding (Hong Kong) Limited, a third party, and the entity became an associate [5]. The purchases are Erajaya distributing product for a Xpeng-controlled electric-vehicle venture — a partner-financed push into a new category, not a payment to the family. The transaction appears as "related-party" precisely because Erajaya sold control down; while it was wholly owned, the same flow was eliminated on consolidation.

The third, Bolttech, is a device-protection joint venture — the insurtech attached to phone sales. Erajaya bought $6.3 million of protection plans from it in the half (up from $3.5 million a year earlier) and earned $0.5 million of commission income back [1]. It is a genuine adjacency growing with the handset base, not a value transfer.

The channel has narrowed since listing

That the transactional channel is thin today is more reassuring against the record than in isolation. At the 2011 IPO the related-party page read very differently: the company's subsidiaries ESA and TAM bought four Jakarta properties directly from the founder Ardy Hady Wijaya ($0.5 million and $0.11 million apiece), the majority shareholder Eralink assumed $13.7 million of Erajaya's overdue receivables to clean the pre-listing balance sheet, and the family sold Erafone and SES shares into the group ahead of the offering [7]. Those are the classic promoter-entangled dealings of a pre-listing structure. Fifteen years on, the property purchases, receivable transfers and shareholder loans are gone; the affiliate flows are business-driven and under 1% of turnover.

The alignment questions that remain in a 55%-controlled company are not in this note — they are structural, and the report has already put them on the table: Eralink's stake creeping from 54.5% toward 56.6% on the outstanding count, the buybacks executed at the family's option strike, and board pay (Ownership and Pay), together with the growing slice of profit that accrues to the minority partners in the fastest-growing verticals (Minority Interests). The related-party transactions themselves are not where value is leaving.

The honest limit on this read is disclosure depth. Pricing rests on the Board of Directors' assertion that affiliated transactions "comply with the arm's length principle" and are reported to the regulator, with the Audit Committee reviewing them periodically and the FY2025 report recording no material conflict-of-interest transactions for the year [6]. There is no independent transfer-pricing study in the corpus, and the interim note gives no counterparty-level pricing detail. Given how small the flows are — a rounding error against $4.6 billion of annual sales — the exposure to mispricing is bounded even if every affiliate transaction were struck 10% off-market. What would change the read is scale: if purchases from the Xpeng venture or any family-linked supplier grew into the tens of millions of dollars and the pricing basis stayed on assertion, the channel would deserve a harder look.

One more claim on cash: input VAT

Setting the related-party channel aside, one large item on the asset side has not yet been given its own accounting: $107.1 million of prepaid taxes at 30 June 2026, which the filings state is "mainly value added tax — input" [8] [9]. This is a second, separate pile at the tax office, distinct from the Article 22 income-tax refund block that Tax Refund Block dissected. An importer-distributor pays 11% VAT on the goods it brings in and collects VAT on what it sells; when purchases and inventory run ahead of sales — as they have while the book grew — input VAT builds into a net receivable that can only be recovered through restitution on the tax authority's timetable.

Source: input-VAT (prepaid taxes) per Note 31 — Dec-2023 $48.5m and Dec-2024 $70.0m [11]; Dec-2025 $109.4m [10]; Jun-2026 $107.1m [8].

The pile has grown 2.6-fold in rupiah terms in two and a half years — from Rp745.6 billion at the end of 2023 to Rp1,947.2 billion at mid-2026, or $48.5 million to $107.1 million after currency drift — faster than sales, because the business grew and its purchasing is import-heavy [11] [10]. Placed next to the Article 22 income-tax refund claims — $0.7 million current plus $192.5 million non-current, $193.2 million in all [8] — the two together are $300.3 million, about 58% of the $521.4 million of equity attributable to owners [4].

Source: input VAT $107.1m plus income-tax refund claims $193.2m (current + non-current) = $300.3m at 30 June 2026 [8]; against $521.4m owners' equity [4].

For a value buyer weighing margin of safety, the character of this money matters as much as its size. It is recoverable — VAT restitution is a statutory refund, not a doubtful receivable, and the income-tax half has a clean assessment history (Tax Refund Block) — so it is not a solvency question. But it is $107.1 million of owner cash the growth continuously advances to the state, on top of the $193.2 million income-tax block, with no restitution cycle, ageing schedule or assessment history disclosed for the VAT half. The filings never say how long an input-VAT balance takes to come back or whether the group even files for restitution rather than carrying it forward. That silence is the disclosure gap worth pressing: the cash is safe, but the report cannot yet say when it converts.

Taken with the related-party finding, the two remaining places a controlled distributor could be leaking or trapping owner cash come out differently. The affiliate channel is small and, on the record, clean; the tax office holds a large but recoverable balance that the growth keeps feeding. Neither is where the investment case breaks — but the VAT pile is a standing item to watch, and the affiliate flows are worth re-checking if the Xpeng venture scales.