PROPOSED GROWTH STRATEGY FOR PT TAKA TURBO IN GAS TURBINE REPAIR INDUSTRY USING CAPITAL BUDGETING APPROACH

• Main Author: Qashmal, Luthfan
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/62596
• Institution: Institut Teknologi Bandung

PT. Taka Turbomachinery Indonesia (Taka Turbo) has become the sole distributor and workshop partner for Baker Hughes Company since 2019. This partnership opens up a new market segment for Taka Turbo in the Frame 5 Gas Turbine maintenance, repair, and overhaul (MRO), especially for downstream industry in Indonesia's market. However, Taka Turbo currently lacks the machinery required to perform the special repair for gas turbine components, namely: TBC Robotic Coating; and Fuel Nozzle test machine. Both of these machines are required to repair the gas turbine – hot gas path components, such as transition piece, combustion liner, crossfire tube, and nozzle diaphragms. These components were the most common component repaired along the equipment maintenance cycle. Previously Taka Turbo was performing this repair in subcontractor. However, some issues arose with this process, for example, the price fluctuation, subcontractor unable to support Taka Turbo due to its production load, and the most important is Taka Turbo unable to get complete certification for this capability from the OEM if other companies owned the machine. To overcome these issues, Taka Turbo plans to evaluate two alternatives: (1) direct investment in the machinery; and (2) partnership with their current subcontractor. In this research, an analysis of the financial feasibility of both alternatives will be developed and analyzed. There is three major maintenance cycle for gas turbine power plants: Combustion Inspection (CI), Hot Gas Path Inspection (HGPI), and Major Inspection (MI). Each maintenance cycle will have its component that requires repair using the two machines mentioned previously. The maintenance cycle of the gas turbine power plant has been advised by the original equipment manufacturer, which will be based on its function, either baseload, stand by, or peak load (peaker). This research will analyze the Frame 5 Gas Turbine installed in Indonesia based on the Taka Turbo internal database from 2020. Currently, there are 91 installed units in Indonesia, and we distribute this equipment to four customer segments: Fertilizer, Oil & Gas, Power Generation, and Other market segments. In this analysis, we have developed a process to determine the market size of Frame 5 Gas Turbine repair by applying the maintenance cycle period with several assumptions for the first Major Inspection year and defining the repair price for each maintenance cycle based on the repair needed. Taka Turbo's market share was calculated assuming that Taka Turbo has strong market positioning in the fertilizer and oil & gas downstream business. These two market segments were also falling under the partnership with Baker Hughes We assume in this analysis that Taka Turbo will exploit its competitive advantages to maintain its customers, so for every customer that already performed repair with Taka Turbo, the next repair will also be performed by Taka Turbo. Next, we perform a financial feasibility study using capital budgeting technique and evaluate the output of both alternatives with several investment acceptance criteria. We also perform financial sensitivity and risk analysis to the preferred alternatives that provide a better return to Taka Turbo to determine the highly sensitive financial parameter for this investment project. The output of this analysis is that both alternatives can meet Taka Turbo acceptance criteria, and the preferred alternative is a direct investment because it generates better value in NPV and IRR than the partnership alternative. The project can be accepted and implemented by Taka Turbo because all the investment criteria from the management of Taka Turbo are met: Payback Period in 7.04 years below the maximum ten years criteria; NPV is positive with the value of IDR 28.7 billion; IRR is 21.43% and match the criteria of above WACC 11.74%, and also the profitability index is 1.99 above the expected 1.5. We also found two highly sensitive parameters to the investment projects: total revenue realization and longterm debt interest rates. Taka Turbo is suggested carefully managing these parameters to avoid the project output below the expected value.