1.

INTRODUCTION

PT Pupuk Sriwijaya (PUSRI) Palembang is an Indonesian national fertilizer company

which has been initiated since 1959 that specialized in industry, trading, fertilizer
services, petrochemicals, agrochemicals, agro-industries and other chemical fields. PT
Pusri Palembang sees biofertilizers as future products that are environmentally
friendly and have a market. Organic agriculture is one of the reason in market
availability for this product.Products that are being developed by PT Pusri Palembang
is a Biological Fertilizer with the trademark Bioripah.

Bioripah is a biological fertilizer which is made from nitrogen fixing bacteria and
potassium and phosphate solubilizing bacteria. The main problem of the Bioripah
production process is the inadequate production capacity and the amount of labor.
Therefore, it is necessary to study whether the product can be produced on a pilot
scale and be able to increase company’s revenue . Nowadays, since the industrial
competition is increasing, production efficiency is being considered as the key to the
success.With the investment in the form of pilot plant layout planning for
biofertilizers, production is expected to be able to reach the target and be able to
overcome these efficiency problems in order to reduce production costs and maximize
the production capacity. Investment projects usually require substantial funds and
affect the company in the long term. Therefore, careful study of these investments is
necessary by using the investment criteria method and related aspects of feasibility
studies. The placement of an efficient production facility is an effort to help minimize
the production costs. Unnecessary activities will cause additional expense, thus in
the factory it is necessary to arrange an efficient layout. The factory will do a
relayout (changing the layout) to reduce costs, not "relocate" (changing the location).

The arrangement of production facilities must be arranged as well as possible and

adjusted to the conditions of the factory, so that production activities can run
efficiently and regularly. In order to produce a quality product, the production process
must be carried out efficiently and effectively. During the research at the PT Pusri
Pilot Plant Research Department, there were still uneffecient production facilities
which caused the distance of material transfer is too far. To overcome this, it is
necessary to rearrange the layout of production facility more effiecienly so that
production activities can run expeditely at lowest costs and a minimum distance of
material transfer. This study aims to obtain analysis results in terms of economic
aspects by knowing the financial projections, feasibility analysis and project
sensitivity analysis. So it can be known whether the project is feasible or not to
continue. In addition, this research also aims to be able to identify the project risk
management plan based on the level of risk and all kinds of causes and risk impacts.
2. RESEARCH METHODOLOGY

2.1 Research Location

This research was conducted at the Research Department of PT Pupuk Sriwidjaja
Palembang located on Jl. Mayor Zen, Palembang 30118, Indonesia with data that
includes scale up production capacity, analysis of feasibility studies and planning of
pilot plant facility layout using the from to chart (FTC) method.

2.2 Planning Diagram (Gantt Chart)

The study was conducted for 6 months in February, March, April, May, June and
July 2016 at PT Pupuk Sriwidjaja Palembang. The research activities schedule can be
seen in Table 1 below:

Table 1
Research Activities Schedule

Source: Reinhart Okta Putra, 2018

2.3 Types of Research and Data Sources

This research was conducted using quantitative and qualitative research methods,
because its implementation includes data, analysis and interpretation of the meaning
of the data. Besides, it also discusses the possibility of solving the actual problems
by describing, recording and analyzing the conditions of the company. Data is
obtained and collected by researchers directly from Research and Development
Division of the PT Pusri Palembang Research Department by conducting interviews
and observations to obtain information data needed in writing this minithesis. The
source of research data is divided into 2, primary data and secondary data. The
explanation for each data source is written below:

1. Primary Data

Primary data is data that is first recorded and collected by researchers (Sanusi, 2011). Data is obtained
and collected by researchers directly from the object of research from Research and Development
Division of PT Pusri Palembang Research Department with interviews and calculation methods about
investment evaluation using the Net Present Value method, Interest Rate Return, Profitability Index
and Payback Period.

3. Secondary Data

Secondary data is data that is already available and collected by other parties (Sanusi, 2011). The
secondary data sources in this study were obtained from the report of Research and Development
Division of the Research Department such as the history of the company which can be seen at PT
Pupuk Sriwidjaja Palembang annual report, list of marketed goods, list of raw materials and lists
details of operational equipment requirements.

2.4 Data Collection Methods

Data collection methods used by the author in collecting data and information in this research
include:

1. Field Research

This research is using data collection techniques as follows:

a. Interview

Interviews are often referred to as oral questionnaires or dialogue conducted by the interviewer to
obtain information from the interviewed (Arikunto, 2010: 198). Interviews are data collected by the
author that related to the research being carried out. Primary data is obtained through interviews
with related parties. According to Sanusi (2011), interviews are data collection techniques that using
verbal questions to research subjects. It can be said indirectly if the list of questions given can be
answered on other occasions. In this case the author conducted an interview with a Research
Department employee who was responsible for production in the biofertilizer pilot plant to obtain
supporting information.
b. Data Analysis

Data analysis technique being used is calculating method of the Business Feasibility Study, including :
(1) Net Present Value (NPV) (2) Internal Rate of Return (IRR), (3) Profitability Index (PI), (4) Payback
Period (PP).

2. Literature Research

Data collection is done by reading and understanding books, journals (national and international),
reports (thesis, research and resume), and previous research related and containing supporting
information in the conducting of this thesis.

2.5 Research Procedures

The procedure of the research to be carried out is as follows:

1. Field Study

The field study is a deeper learning activity regarding the object of research and the problems. In the
field study the knowledge gained can be in the form of company conditions, production processes,
and other information about the company.

2. Literature Studies

Literature study is a deeper learning activity about theories that can add insight and be used as
references in conducting research.

3. Identifying Problems

Problem identification is the initial stage to observe the real conditions (actual conditions) that occur
in the field to find out how the system is going on in the company (whether it needs to be optimized
or not). Then proceed with understanding the problems that occur based on observations
(observations are made directly and recording of observations are recapitulated periodically)

4. Problem Formulation

Problem formulation is the result of the problem identification process. Research topics and
identification of problems that have been obtained, are used as a reference in determining the
success rate of a study.

5. Determination of Research Objectives

The aim to be achieved from the research. This is very important to do to get a reference in
determining the success rate of a study.

6. Data Collection

The steps taken to obtain the data needed in the study, which supports the success of the study. The
data collected in this study are the feasibility analysis and production facilities lay out in the form of
developing an alternative layout in the biological fertilizer pilot plant.

7. Data Processing
In this stage the data obtained is processed with all feasibility study methods in the form of
calculations: (1) Net Present Value (NPV) (2) Internal Rate of Return (IRR), (3) Profitability Index (PI),
(4) Payback Period (PP). To determine whether the study is feasible or not.

8. Analysis and discussion after doing the data processing, the results of processing the data are then
analyzed. In this study, analysis and discussion were conducted on selected alternative layouts, which
are expected to optimize production with the capacity to be upgraded.

9. Conclusions and Suggestions This stage contains conclusions obtained from the results of the data
collection, processing, and analysis used to answer the pre-determined research objectives.

Source: PT Pusri Research

Departement (2018)
Gambar 1. Diagram Alir Prosedur
Penelitian
Produksi Produk Pupuk
Hayati

Figure 1 is the plot of the research to be conducted. Data collection techniques used are literacy, data
on biological fertilizer associations, mass media, internet, and laboratory research data.

2.6 Feasibility Analysis Methods

Analysis in Feasibility Study aspects

a. Market and Marketing Aspects, discusses market segmentation and targets, number of requests
and offers for products, product quality and specifications, pricing determining methods, and
promotions.

b. Technical, Technology and Operational and Environmental Aspects discuss the product
manufacturing process, location selection, raw materials and products specifications, raw materials
consumption, utilities and waste.

c. Environmental Aspects and Project Implementation, discussing the waste produced by the factory,
identification, funding sources, and project implementation plans.

d. Legal and management aspects, discussing about the organization's legal entity, type of licensing
needed and the organizational structure of the project team.
e. Financial and Economic Aspects, discusses funding costs and sources, general assumptions,
financial projections and feasibility and sensitivity analyzes.

Sumber: Reinhart Okta Putra, 2018

Gambar 2. Diagram Alir Penelitian Studi
Kelayakan Pilot Plant Pupuk
Hayati Kapasitas 5000 Metric Ton
Per Year

3. RESULT

3.1 Improvement of Biological Fertilizer Pilot Plant

The biofertilizer pilot plant owned by the PT Pusri Research Department has a pretty large area, but in
terms of equipment and the amount of production is still far from optimal results when viewed from
the space which is able to produce more than is produced from current production.

Tabel 2
Keterangan Kondisi Pilot Plant Pupuk Hayati Sebelum Upgrade

Sumber : Departemen Riset PT Pusri

Table 2 describes the pilot plant condition which is only capable of producing 576 tons of biofertilizers
annually. It is assumed that the space used in the pilot plant room is only 10%. Therefore, it is
necessary to upgrade the production capacity to 5000 Metric Ton Per Year (MTPY).

Tabel 3
Kebutuhan Bahan Aktif Pupuk Hayati

Sumber : Departemen Riset PT Pusri

Table 3 explains that the need for active ingredients (main) in the biological fertilizers manufacture
consists of 4 types of bacteria + carrier.

Tabel 4
Kebutuhan Bahan Aktif Pupuk Hayati

Sumber : Departemen Riset PT Pusri

In table 4, explains the condition of the equipment available in the biofertilizer pilot plant. This
condition is not yet an optimum condition when viewed from the extent of the pilot plant. Therefore,
in Table 5 a proposal is given for the addition of pilot plant equipment.
 Tabel 5
Usulan Penambahan Peralatan Pilot Plant Pupuk Hayati

Sumber : Departemen Riset PT Pusri

Table 5 describes the condition of the equipment in the Laboratory and the Biofertilizer Pilot Plant of
PT Pusri Research Department, therefore it is necessary to review and propose the addition of
equipment so that the optimum production process is held. Thus, in Table 5 it is proposed that it
requires an investment of 2.26 billion for additional equipment.

Sumber : Departemen Riset PT Pusri

Gambar 3. Diagram Alir Proses Produksi Pupuk Hayati

Figure 3 explains that 4 bacteria (A, B, C and D) all went through the same process from a
laboratory-scale fermentor, a small fermentor (large), a large fermentor (large) until finally formed a
bacterial inoculum. All inoculums that have been formed are mixed into a mixer that has previously
been filled with a sterile carrier. Then it is inserted into the product storage tank until the packaging
process is finally conducted.
 Tabel 6
Detail Investasi Sarana dan Prasarana Pilot Plant Pupuk Hayati

Sumber : Departemen Riset PT Pusri

Table 6 describes the facilities and infrastructure investments, liquid biofertilizer equipment and
utilities. The facilities and infrastructure described above are included in repairs to buildings and
warehouses. In addition, it is also included Building Permits Management, Environmental
Management Efforts and Environmental Monitoring Efforts . For liquid biofertilizer equipment
described above is the maximum capacity in space and production processes optimization with
utilities and capacity of 5000 Metric Ton Per Year (MTPY). For utilities is the maximum capacity
needed in the production process.

4.2 Market and Marketing Aspects

Market and marketing aspects discusses supply-demand analysis based on biofertilizer production in
Indonesia and demand for biofertilizers. The discussion on this aspect also reviews the prospects of
the biofertilizer industry based on demand projections, market opportunities and product marketing
plans.

4.3 Technical, Technology and Operational Aspects

In general, the process of making biological fertilizers can be seen in Figure 4

Molases Carrier Product

Molases Sterilizer Mixer Filling
Storage Storage Storage

Demin
Water

Nutrient
Broth
Mixer Packaging

Fermentor Fermentor
Bacteria
Sumber : Departemen Riset PT Pusri
Gambar 4. Blok Diagram Produksi Pupuk Hayati
1. Bacterial starters were obtained from microbial isolation on plant root nodules conducted by the
laboratory of the PT Pusri Research Department in Palembang. The starter consists of four types
of bacteria. The starter is then made inoculant in the biological plant laboratory until it becomes
1 flask in liquid form (1 flask ~ 1 L). .In stage I fermentation, the inoculants of each bacterium are
fermented for the process of biomass growth in a fermenter with a capacity of 50 L for 4 days in
temperature 37 ° C until the number of bacteria reach the standard amount of 1 x 107 cfu / ml
minimum. The total fermenter for 50 L needed was 16. The first stage fermentation that has fulfill
the requirements, is continued to stage II fermentation. In stage II fermentation, the biomass
growth process takes place. Inoculant from fermentation stage I was put into a fermenter with a
capacity of 500 L with the same operating conditions as stage I fermentation. The total 50 L
fermentor needed was 16. Inoculants that had reach the standards were then mixed with a
molasses solution that was sterilized in the mixer unit and slowly stirred until homogeneous for
30 minutes. The stirring results are then stored in storage / vessel, and carried out for two
weeks dormancy. The product is packaged in a 1 liter bottle using a filling machine. The 12 bottle
products are then packaged in a cardboard. In order for production run continuously, the
number of fermenters needed is 16 500 L fermentors and 16 50 L fermentors. Thus, every day
there are 4 fermentors available for harvesting and production. The location of biological
fertilizer plant area is in the the east of the NPK Fusion II Project Area, which is currently used by
the temporary office contractor and the project laydown area. The required area needed is 1,200
m2.

4.4 Project Implementation Aspects

1.Work Plan for Pre-Project Phase

This phase of the project activity is an activity that prepares everything before the construction of a
biological fertilizer factory is conducted, and the activities conducted in the Pre-Project phase are:

1. Preparation of Pre Feasibility Study (internal FS)

2. Supplication for Written Response from the Board of Commissioners

3. The arrangement of the Feasibility Study by an independent consultant

4. Supplication for shareholders Principles licensing

5. Land Preparation
6. Location, Environment, UPL / UKL, BKPM Licensing

7. Tender Process with EPC Contractors

8. Determination of EPC Contractors

2. Work Plan for Project Development Phase

This stage can be carried out after the EPC Contractor has been chosen. In this stage the work is fully
done by the EPC contractor and in general the work is as follows:

1. Making factory design (engineering)

2. Procurement of equipment needed by the factory

3. Carry out construction work on location

4. Carry out commissioning tests or performance tests and / or other processes

5. Carry out hand over projects (so that factory can produce and be operated by factory operational
management)

1. Pabrik berproduksi

3.Work Plan for Post-Project Phase (Operation)

Implementation in the post-project phase, marked by the handover of the work and the factory is
able to produce according to the target described in the technical aspects of this study and the work
to be carried out is:

1. Implementation of factory operational management (the process of formation is done before the
handover of work)

2. Factory can produced

4. Schedule Project Implementation

To carry out all of the above activities is estimated to take 12 months for the project development
phase.

4.5 Legal and Management Aspects

The project is conducted by PT Pusri Palembang's internal team. The project team made project
spects and factory designs, and conducted a tender selection of contractors in charge of building,
procurement of equipment and equipment installation. Equipment vendors are cultivated from
Indonesia. Vendors are responsible for equipment guarantees. The project is carried out on a turn key
basis by the contractor.
3.5 Aspek Keuangan dan Ekonomi
Pabrik Pupuk Hayati yang dibangun diperlukan membutuhkan biaya investasi sebesar Rp
15.260.448.060. Biaya tersebut terdiri dari biaya lahan, biaya pembangunan pabrik (EPC Cost) dan
biaya owner cost control (OCC) dengan rincian seperti terdapat pada Tabel 7.
4.6 Financial and Economic Aspects

The Biofertilizer Plant that was built needed an investment cost of Rp. 15,260,448,060. These costs
consist of land costs, factory construction costs (EPC Cost) and owner cost control (OCC) with details
as shown in Table 7.

Tabel 7
Perkiraan Biaya Investasi

Sumber : Departemen Riset PT Pusri

4.6.1 Source of Investment Funds

Project funding comes from 100% equity.

4.6.2 General assumptions

1. Sales Volume

The sales volume of these biological products is at a rate of 80% and 90% in the first and second year,
then at a rate of 100% (5,000 TPY) in the following year.

2. Selling Prices

The selling price of each biofertilizer product produced is Rp. 15,000,000 / ton.

3. Assumptions of Consumption and Raw Materials Price

The composition of raw material consumption per ton of biofertilizer products produced as shown in
Table 19. Based on data obtained from the market and internal companies, the cost of biological
fertilizer raw materials can also be seen in Table 21. The price listed is the price projection in
2019.Prices are assumed to increase by 2% per year.

3.5.1 Analisa Kelayakan

Kriteria kelayakan yang digunakan dalam studi terdiri dari net present value (NPV), internal rate
of return (IRR), profitabilitas index (PI), dan payback periode (PBP). Berdasarkan analisa, hasil kriteria
kelayakan yang dimaksud dengan syarat minimum 13,75% ditampilkan dalam Tabel 8.
4.6.3 Feasibility Analysis

The feasibility criteria used in the study consisted of net present value (NPV), internal rate of return
(IRR), profitability index (PI), and payback period (PBP). Based on the analysis, the results of the
feasibility criteria is required with minimum requirement of 13.75% are shown in Table 8.

Tabel 8
Hasil Perhitungan Parameter Kelayakan

Sumber : Departemen Riset PT Pusri

Based on the results of feasibility criteria above, the biological fertilizer factory development project
can be concluded "feasible" to realized, due to:

1. NPV greater than 0 (zero)

2. IRR Project is greater than 13.75%.

3.PI is greater than 1 (one)

4.7 Analysis of Sensitivity

3.6 Analisa Sensitifitas

3.7 Analisa Sensitifitas

Sensitivity analysis in this study is intended to determine the variables that have the most influence
on project feasibility. The variables examined in the sensitivity analysis are the value of EPC
investments, product selling prices, and the price of raw materials (molasses). The EPC value is made
in a range of 80% -120% with a base of Rp 12,982,225,509. The selling price of the product is made
with a range of 95% -115% with a base of Rp. 15,000,000 / ton. The simulation of raw material prices
is limited for dominant use of raw materials, molasses, with basis price Rp 6,970,680 which is made in
the range of 80% -120%. Sensitivity analysis simulation can be seen in Figure 5 and Figure 6

Sumber: Departemen Riset PT Pusri

Gambar 5. Analisis Sensitivitas Nilai EPC dan Harga
Jual Terhadap IRR
Based on Figure 8, the results of the sensitivity analysis of the EPC value and the selling price to IRR is,
the higher the EPC value at the same selling price, the lower the IRR, inversely proportional to the
selling price. The higher the selling price at the same EPC value the higher the IRR obtained. The lower
IRR limit that is still accepted is at the selling price of 95% (base -5%) and the EPC value is in the range
of 80% -90% (base -10% to -20%) in term the IRR is greater than the WACC value of 13 , 75%.

Based on Figure 9, the results of the sensitivity analysis of EPC values and the price of molasses to IRR
is the higher the EPC value at the same price of molasses, the lower the IRR, proportional to the price
of molasses. The higher the price of molasses at the same EPC value, the lower the IRR obtained. The
price of molasses and the value of EPC shows 120% of the base, the project is still declared feasible.
There is no visible effect of an increase in raw material prices on the change in the feasibility status of
the project in the evaluation range (+ 20% of the base).

Sumber: Departemen Riset PT Pusri

Gambar 6. Analisa Sensitivitas Nilai EPC dan Harga
Molase Terhadap IRR

Based on the analysis within a predetermined range, the price of selling biological fertilizer is the most
sensitive variable to the feasibility of the project.