Feasibility Study for Investment as Agent (Case Study: PT. Tirta Chemoil)

Abstract

After the financial sector underwent a dramatic transformation in 2020, primarily brought on by the COVID-19 Pandemic, certain areas of the market have recovered while others are still struggling to recover from the financial losses brought on by the pandemic. Despite the drop of sales, and the growth trend was declining. PT. Tirta Chemoil show a good trend of oil sales that shows it is gradually increasing from 2018 which means that oil industry is generating a good revenue to the company. Thus, being told that there is an opportunity to be an agent of brand R, the stakeholder asked me to do the financial feasibility study to see whether their investment are worth it and able to generate a return in 10 years ahead. The research objectives on this study mainly about the feasibility of the company invest in being an agent for the lubricants oil brand. The feasibility study mainly use the indicator on discounted cash flow (DCF) such as net present value (NPV), internal rate of return (IRR), Profitability Index (PI), and payback period. This feasibility study use sensitivity analysis to see the effect on the change of price and quantity to the generated NPV, also use monte carlo analysis to complete with the simulation analysis. Lubricants industry in Indonesia is growing year to year and projected to generate a constant growth on the next few years. The segmentation is all of the industrial oil, targeting West Java market especially industry that use lubricants as the main component for their machinery, and positioning in a premium grade oil. The generated NPV is Rp 5,394,761,715.48, IRR 46%, PI 5,94, and payback period in 4 years. The conclusion is PT. Tirta Chemoil should take the chance to invest in the new product with lowering the initial investment and Capital expenditure so that the payback period can be faster and it can generate more revenue.