INVESTMENT STRATEGY OF NEW COLORANT PROJECT AT PT. SCI

• Main Author: Fuen ( Fuen - Fuen ), Syuh
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/34066
• Institution: Institut Teknologi Bandung

PT. SCI is one of the paint manufacturers in Indonesia. Based on the company's internal analysis with VRIO and Value Chain, PT. SCI has good quality paint products and innovative advantages of coloring products. All paint products need coloring as the main component for coloring paint. In the external analysis with PEST, Porter's Five and Competitor Analysis, PT. SCI has the opportunity to grow its business. The results of the analysis through the Grand Strategy Matrix show that PT. SCI needs to develop strength by investing in colorant projects. The purpose of this study was to provide a feasibility study of colorant projects through two scenarios of using colorant for their own use or sold to other paint companies. The results of the feasibility study in the first scenario, the project NPV value reaches IDR 10,488,195,197 with an IRR rate of 32.24% greater than the WACC 13.15% project hurdle rate and a return period of 3.99 years less than the 10-year project lifetime, and Profit Index 1.88. The equity NPV value reached IDR 4,500,595,413 with an IRR of 42.97% greater than the equity of the Cost of Equity barrier of 23.16% and the return period reached 4.07 years less than the project age of 10 years, and the Profit Index of 1.98. In the second scenario, the project NPV value reaches IDR 8,833,453,497 with an IRR rate of 27.84% greater than the project hurdle rate of 13.15% and the return period of 4.31 years is less than the project lifetime of 10 years, and the Profit Index 1.66. The equity NPV value reached IDR 2,825,482,438 with an IRR level of 35.65% greater than the equity of the Cost of Equity barrier of 23.16% and the return period reached 4.67 years less than the project age of 10 years, and the Profit Index of 1.62. Based on the results of this financial analysis, the company will be able to invest in the project using a bank loan and will be able to repay the bank loan according to schedule. The use of colorant for PT. SCI in the first scenario will give a high value of NPV, IRR, Payback Period and Profitability Index when compared to the second scenario for selling colorant to other paint companies. Colorant for own use can reduce costs while maintaining innovation excellence. The colorant project has a positive value to run.