Feasibility Study of Cement Plant Production Facility Upgrade Project to Support Export Business
Abstract
Currently Indonesian cement market can be categorized as an excess of supply and cement industry plant utilization dropped to between 50 - 60 % accordingly. To counter this issue, PT Pembangunan Indonesia as reputable cement manufacturer in Indonesia try to study cement export probability to United State of America market by upgrading it’s the cement production facility. The objective of this study is to demonstrate the project's financial feasibility study of cement production plant upgrade by implementing capital budgeting technique, sensitivity analysis and Monte Carlo analysis. The study result shows positive NPV 898 Bio IDR, higher IRR 16.16% compared to WACC 10.57%, acceptable discounted Payback Period 13.2 years, good Profitability Index 1.64. The same conclusion also coming from Monte Carlo analysis by 10.000 times of input variable random generation, this project have positive NPV probability 86.15%, and the probability of IRR more than WACC is 87.93%.
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Al-Ani, Mawih Kareem. 2015. “A Strategic Framework to Use Payback Period in Evaluating the Capital Budgeting in Energy and Oil and Gas Sectors in Oman.” International Journal of Economics and Financial Issues 5 (2): 469–75.
Bihani, Ankita, and Keywords Monte Carlo. 2014. “A New Approach to Monte Carlo Simulation of Operations” 8 (4): 218–22.
Brijlal, Pradeep, and Lemay Quesada. 2009. “The Use of Capital Budgeting Techniques in Businesses: A Perspective from the Western Cape.” Journal of Applied Business Research 25 (4): 37–46. https://doi.org/10.19030/jabr.v25i4.1015.
Brondoni, Silvio M. 2012. “Ouverture de ‘Over-Supply and Global Markets – 2.’” Symphonya. Emerging Issues in Management, no. 2: 1–12. https://doi.org/10.4468/2005.2.01ouverture.
Daryanto, Wiwiek Mardawiyah, and Ezra Natanael Silitonga. 2020. “2020 Analysis of Financial Performance Measurement and Z-Score Assessment of Cement Companies in Indonesia ( Study Case : Pt . Semen” 23 (1): 275–89.
Dilfuza Ilhomovna, Usmonova. 2021. “Using SWOT Analysis in Strategic Planning of the Enterprise.” European Journal of Research Development and Sustainability (EJRDS) 2 (2): 25–27.
Gitman, Lawrence J, and Chad J Zutter. 2002. Principles of Managerial Finance 14th Edition. Pearson Education Limited.
Gurau, Marian Andrei. 2012. “The Use of Profitability Index in Economic Evaluation of Industrial Investment Projects.” Proceedings in Manufacturing Systems 7 (1): 55–58.
H T Amrillah and Widodo. 2021. “A Model for Joint Decision between Production Rate and Clinker Export Proportion Using Cooperative Game Theory Approach A Model for Joint Decision between Production Rate and Clinker Export Proportion Using Cooperative Game Theory Approach.” https://doi.org/10.1088/1757-899X/1072/1/012037.
Imbabi, Mohammed S., Collette Carrigan, and Sean McKenna. 2012. “Trends and Developments in Green Cement and Concrete Technology.” International Journal of Sustainable Built Environment 1 (2): 194–216. https://doi.org/10.1016/j.ijsbe.2013.05.001.
Kumar, Ankur. 2013. “PESTLE Analysis Strategy Skill.” The PESTLE Analysis, 1–26. https://free-management-ebooks.com/.
Liu, Qingyang. 2022. “Sensitivity Analysis and Investment Decision Making Under Uncertainty Based on NPV Method.” Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022) 648 (Icfied): 1861–65. https://doi.org/10.2991/aebmr.k.220307.306.
Mardian and Lukman, Syukri. 2019. “ANALYSIS OF INDONESIA CEMENT INDUSTRY IN THE INCREASING OF MARKET COMPETITION,” 150–64.
Pereira, António, and Robert Broed. 2006. “Methods for Uncertainty and Sensitivity Analysis. Review and Recommendations for Implementation in Ecolego,” no. January. http://www.diva-portal.org/smash/get/diva2:189376/FULLTEXT01.pdf.
Pujiwiyono, Ronny. 2021. ACCELERATING INDUSTRY 4 . 0 FOR PLANT EFFICIENCY CASE OF PT . BANGUN PERKASA FINAL PROJECT by RONNY PUJIWIYONO NIM : 29320027 Master of Business Administration Program School of Business Management Institut Teknologi Bandung.
Saltelli, Andrea, Stefano Tarantola, Francesca Campolongo, and Marco Ratto. 2002. “Global Sensitivity Analysis for Importance Assessment.” Sensitivity Analysis in Practice, no. I: 31–61. https://doi.org/10.1002/0470870958.ch2.
Shaffie, Siti Salihah, and Saiful Hafizah Jaaman. 2016. “Monte Carlo on Net Present Value for Capital Investment in Malaysia.” Procedia - Social and Behavioral Sciences 219: 688–93. https://doi.org/10.1016/j.sbspro.2016.05.052.
Shou, Tianle. 2022. “A Literature Review on the Net Present Value (NPV) Valuation Method.” Proceedings of the 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) 656 (Icemed): 826–30. https://doi.org/10.2991/aebmr.k.220603.135.
Subiyanto, Effnu. 2020. “The Relationship of Cement Consumption and Economic Growth: An Updated Approach.” European Research Studies Journal XXIII (Issue 3): 280–95. https://doi.org/10.35808/ersj/1638.
Taherdoost, Hamed, and Mitra Madanchian. 2021. “Determination of Business Strategies Using SWOT Analysis; Planning and Managing the Organizational Resources to Enhance Growth and Profitability.” Macro Management & Public Policies 3 (1): 19–22. https://doi.org/10.30564/mmpp.v3i1.2748.
U.S. Geological Survey, Mineral Commodity Summaries. 2023. “Cement Statistics and Information (USGS, 2023).” Usgs 2019 (January 2023): 2022–23. https://www.usgs.gov/centers/national-minerals-information-center/cement-statistics-and-information.
Valaskova, K., G. Lazaroiu, J. Olah, A. Siekelova, and B. Lancova. 2019. “How Capital Structure Affects Business Valuation: A Case Study of Slovakia.” Central European Business Review 8 (3): 1–17. https://doi.org/10.18267/j.cebr.218.
Zhang, Yuke. 2022. “The Effectiveness of NPV and IRR Used in Fundamental Financial Markets.” Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022) 648 (Icfied): 1208–12. https://doi.org/10.2991/aebmr.k.220307.200.
Published
2024-07-31
How to Cite
AMIRUDIN, Nurul Aulia; DARMANSYAH, Asep.
Feasibility Study of Cement Plant Production Facility Upgrade Project to Support Export Business.
International Journal of Business and Technology Management, [S.l.], v. 6, n. 2, p. 534-549, july 2024.
ISSN 2682-7646.
Available at: <https://myjms.mohe.gov.my/index.php/ijbtm/article/view/26908>. Date accessed: 19 sep. 2024.
Section
English Section
