FINANCING STRATEGY TO SUPPORT THE IMPLEMENTATION OF PIGGING SYSTEM

Abstract

As COVID-19 pandemic has been raising in the recent months, many restrictions came up to the surface towards a country. Without exceptions, the impacts also have an influence on the companies, especially manufacturers. To sustain a company's stability, the companies have attempted to strike a balance by minimizing the cost and generating income. In PT. YI, they have an opportunity to minimize the production cost that mainly comes from bulk losses on transfer pipe by implementing the pigging system. According to internal benchmarking with other affiliated Plant, pigging system is the only alternative to have the highest successful rate by 90%. Therefore, the Company are required to invest 3 billion IDR to implement this system. There are four funding options available to finance this project, such as leasing, bank loan, capital injection, and initial public offering (IPO). The methodology of this research is financial feasibility study by using Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), Payback Period (PP), Return on Investment (ROI), and Return on Equity (ROE). In summary, results suggest that bank loan is the most appropriate funding option to the Company.