The Role of Borusan Holding

In order to accomplish its mission Borusan Holding has positioned itself within the Group as a Strategic Holding, calling for a balanced concentration on the two roles that exist within Borusan Holding: the investor role and the enabler role. As a consequence, it has adopted the mission of developing a portfolio which will create the maximum value for its partners.

In bringing this mission to life, Borusan Holding has adopted a strategic and tactical approach to management. The implementation of this management role involves taking on a pioneer role in terms of leadership and control, monitoring relations with shareholders and other social partners, ensuring the effective utilization of resources, as well as forming a corporate identity and culture and creating efficient communication channels. Accordingly, priority is given to the formation of a Company culture which is in line with this perspective, the establishment of a simple and flexible style to compensate for an adverse business environment and the development of effective leadership and crisis management capabilities.

The management of priorities with regard to items on the agenda takes shape according to the prevailing environment and circumstances, competitive conditions and risk analyses. While the investor role is accentuated by focusing on active portfolio management to maximize the value created for the shareholders, the guidance and supportive roles can be seen as the Holding works to guarantee the success of the Group’s companies. Borusan Holding’s various duties and responsibilities in both roles is always balanced by, and based on, its concern for the long-term strategic priorities of the Group. These main concerns, called strategic themes, enable the Holding to assist the Group companies in focusing on and attaining their annual goals and objectives. They provide focus and guidance to the companies to ensure alignment throughout the Group. The strategic themes of Borusan Holding are:

Creating Value

The companies in the Borusan Group play a crucial role in the implementation phase of the strategies designed to create value. The Group utilizes PBT and ROIC measures to enhance both sales revenue and company value maximization. Besides sales and profitability initiatives, cash debt management and operating capital were also given priority throughout the economic crisis. The issues of effective cost and asset management were given precedence in order to attain the profitability targets.

In this regard, the main tasks of the Strategic Holding involve the establishment of the general strategic direction and primary targets, as well as the support of Group companies according to Borusan’s business guidelines and methodologies. It also involves helping to create advantages of scale and the possibilities of consolidation due to Borusan’s large size and strength. Beyond this, the Holding is also concerned with providing leadership in the important process of implementing applications designed to create financial and operational discipline, as well as monitoring business results and evaluating the performances of the Group companies. Finally, it is also responsible for corporate risk management and the effective utilization of resources.

Strategic Market Positioning

The primary purpose of the Borusan Group is to influence market dynamics through the strategic methods it has chosen to employ. The Group has strong brands and sustaining this powerful brand image is among its priorities. Consequently, the Holding takes overall responsibility for the Borusan brand, as well as reputation management. As a key strength of the Borusan Group, excelling in partnership management by building long-term and healthy relations with partners is another important responsibility of the Holding. A vital part of strategic positioning in the market is international growth and investments, which is especially critical in process of diversifying risks and expanding the geographical scope of the business.

Business Excellence

Business excellence is achieved by channeling all intangible and tangible assets (human capital, IT capital, organizational capital and financial resources) to ensure that the right competencies, tools and processes are in place to accomplish the challenging vision of the Borusan Group. Developing leadership skills, lean organization and process management through Six Sigma deployment and making strategy execution a core competency are key aspects within this strategic theme.

Borusan Holding is responsible for setting a group-wide management and performance framework and guidelines to ensure the best-in-class governance. The Holding also supports value creating initiatives and the best practices sharing platforms across the Group companies. In this area, the Borusan Academy should be highlighted as one of the best examples.

Active Portfolio Management

The only strategic theme that is not deployed to Group companies is that of Active Portfolio Management. Borusan Holding, on behalf of the entire Group, sets targets and determines strategies to adapt to changing market conditions and contractions which can occur as a result of shifting global or local circumstances. In this sense, active portfolio management covers not only diversification, as well as control and effective management of portfolio risk, but also the continuous monitoring of the performance of the portfolio for scale and value creation, which emphasizes effective allocation and prioritization of the Group’s financial resources for investments.

The investor role in the Holding is predominantly deployed in active portfolio management, whereas the enabler role is emphasized in profitable growth, business excellence and strategic market positioning through setting Group-wide guidelines to ensure the Group companies’ success and best-in-class governance. In view of this, after assessing future risks and possible actions, the stock levels in the companies were brought under control.

With this long term perspective Borusan Holding will continue to implement its roles within the Group’s strategic themes to ensure that each of its companies meets its specified targets.

Strategic Moves

We anticipate a domestic market contraction on the order of 30% in 2009. We have based our targets taking this expectation into account and with the aims of countering the impact of this contraction and increasing our own market share.

We are refining our capabilities through such processes as the evaluation of our way of doing business, self assessment and learning from our mistakes.

By properly assessing high inventory levels and risks, we formulated an “inventory-order” relationship. Consequently, we have switched over to an inventory management system which is able to compensate for momentary needs and forecast probable future inventory levels.

Besides continuing to make annual plans for all our purchasing and sales activities, the Holding has developed the ability to make rapid revisions because of its proactive approach to market dynamics.

We revaluated the relations between costs and efficiency, as well as centralized our finance management. Finally, we better utilized the synergy created by the advantages of the Group because of the increase in our ratios of monitoring and control.