INVESTMENT ANALYSIS OF SOIL FERTILIZER BUSINESS EXPANSION PROJECT (CASE STUDY: PT. ABC)

• Main Author: FARANANDI ANGESTI - Nim: 29115614 , BAYU
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26041
• Institution: Institut Teknologi Bandung

<p align="justify">The potential of non-subsidized NPK fertilizer market in Indonesia is very high, as seen from the data of non-subsidized NPK fertilizer consumption which increases up to 10% per year. PT. ABC is a fertilizer producer company located in Sapan Bandung focusing on nonsubsidized NPK type of fertilizer product. With the quality of fertilizer and competitive fertilizer price, PT. ABC cannot meet the growing market demand every year.PT. ABC plans to expand its two expansion strategies by buying competitor fertilizer factories in Central Java or expanding its factory in West Java. The purpose of this research is to analyze the business environment of PT. ABC, calculating feasibility study for PT. ABC uses the NPV, IRR, payback period, and profitability index for the two investment strategy options as well as calculates the best funding structure using the WACC approach for the investment strategy. To analyze the business environment, this research uses resource based view analysis and ratio analysis for internal analysis. Meanwhile, for external analysis using analysis of PEST analysis, competitor analysis, and Porter's five forces. To solve the root cause of the problem, this research uses 5 why's method. To formulate a solution, this research will use three main parts of the strategy, first is financial modeling, the second is to create an investment project analysis, and after that, this research uses Monte Carlo simulation to assess the risk of calculation. The result of this research is the expansion project by buying competitor fertilizer factory in Central Java area, feasible to do. With a total investment of Rp4,600,000,000, - Just like this project is seen from the NPV value (Rp1.896.779.217 to Rp3.539.783.327), IRR (25% to 35%), Payback Period (2 years 9 months to 3 year 3 months) and Profitability Index (1.41 to 1.77). The optimal funding structure for the strategy to buy and revitalize the competitor's factory is 40% loan, 60% capital for pessimistic scenario, 50% loan 50% Capital for most scenarios will occur, and 60% 40% loan capital for optimistic scenario. The project implementation plan takes about 4 months starting from January to April 2018. <p align="justify">