FINANCING STRATEGY FOR REJUVENATING PULP PAPER COMPANY (CASE STUDY: PT. XYZ)

• Main Author: Herlina Riz, Sri
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/76110
• Institution: Institut Teknologi Bandung

Global demand growth in the pulp & paper industry showed an increase of 2.1%, signaling significant growth potential. PT XYZ, one of the world's largest pulp mills that has been in operation for 30 years, is currently facing a capital shortage that has resulted in a temporary suspension of operations. Given the opportunity of rising global demand for paper that is out of balance with paper production, PT. XYZ has the opportunity to restart its operations and fill the gap. Therefore, PT XYZ plans to implement a rejuvenation program to revive its business with the support of internal and external funding. An accurate feasibility analysis is required to avoid the risk of financial failure in this project. This research will focus on the feasibility study of business investment from a financial perspective. The research stages include business problem identification, business situation analysis, data collection, financial projections for the next 10 years, financial analysis, and plan implementation. This research uses secondary data from literature studies, PT XYZ financial statements, company historical data, and relevant references. This secondary data will be used to analyze internally and externally to evaluate the company's capabilities and compare them with its capabilities. Quantitative methods, specifically Capital Budgeting analysis, will be used to assess the financial feasibility of the investment. The feasibility parameters used include Net Present Value, Internal Rate of Return, Payback Period, and Profitability Index. This research will also consider sensitivity analysis using the tornado analysis method to evaluate the impact of variable changes on feasibility results. In addition, the research will focus on funding strategies that can be used, such as angel investors, venture capital, bank loans, LBOs, IPOs, and bonds. The research will offer business solutions resulting from the capital budgeting analysis and alternative funding strategy recommended for the company. The solutions are based on investment feasibility parameters such as NPV, IRR, PP, and PI. The results show that the company's rejuvenation project has an NPV of USD 771.160 million, IRR of 36%, PP of 3.42 years, and PI of 3.82. Thus, the rejuvenation project is feasible. The recommended funding is through a combination venture capital & loan strategy which the. In addition, the company should closely monitor the implementation process to achieve the expected.