UNIVERSITAS INDONESIA

INTEGRATED RE PRODUCTION AND CACAO POST-HARVEST

OPERATIONS AND PROCESSING

Report Assignment 5

GROUP 17

GROUP PERSONNEL:

ALPHASIUS OMEGA DIXON (1406607975)

ALVER MAHDAPATI (1406607754)
FACHREZA MAULANA (1406643085)
INNE PUSPITA SARI (1406608076)
YOGA WIRANOTO (1506800350)

CHEMICAL ENGINEERING DEPARTMENT

ENGINEERING FACULTY
DEPOK
DESEMBER 2017
 EXECUTIVE SUMMARY

Economic analysis is performed in order to determine whether the cocoa

liquor plant is beneficial and profitable to be built. To do the economic analysis,
certain parameters needs to be determined, which are the costs needed to build the
plant. Costs are divided into two general groups: Capital Expenditure (CAPEX)
and Operational Expenditure (OPEX). CAPEX is the cost needed to build the
plan. Costs which are grouped in CAPEX include equipment cost, site cost,
building cost, offisite facility cost, contingency cost, supporting cost, contractor
fee, etc. To calculate CAPEX we choose to use Guthrie Method which is
acceptable for plant design. Calculating the economic value of this plant, there are
several assumptions:
1. Plant lifetime is 20 year; start from 2019 (including the equipment
purchase and based on the benchmarking).
2. Operating days in a year: 292 days and 24 hours/day.
3. Purchased equipment cost is calculated using CEPCI for converting price
from present price to future price.
Capital expenditure, or Capex, are funds used by a company to acquire or
upgrade physical assets such as property, industrial buildings or equipment. It is
often used to undertake new projects or investments by the firm. This type of
outlay is also made by companies to maintain or increase the scope of their
operations. The index used is the Chemical Engineering Plant Cost Index. The
data is gotten from the CEPCI Online. However, the available data is only for the
range year between 2004 and 2014. Total CAPEX for the cocoa liquor plant is
$2,185,568.64 with 40% is accounted in the equipment cost (calculated with bare
modul factor).
OPEX is the cost needed to run the plant once it has been built per year.
Costs which are grouped in OPEX include raw material cost, labor cost, utility
cost, maintenance cost, insurance cost, distribution cost, tax, and other general
expenses. The cocoa liquor plant OPEX is $802,892 with 78% of it is accounted
in the raw material cost.
To run the cocoa liquor plant it is needed to loan the money form investor
and bank. These loans consist of several investors with the interest rate 10% and
Bank Negara Indonesi with the interest rate 5.71%. The loan will be 70% from
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Bank Negara Indonesia and 30% from investors. The interest will be paid every
year and is estimated by the end of the 10th year all of the loan and interest have
been already paid.
Cashflow of the cocoa liquor plant is made with respect to the revenue
gained, expenses, tax, and depreciation. The plants cashflow is then made into
cumulative cashflow. To make judgement whether the plant is beneficial and
profitable, economic analysis such as IRR, NPV, Payback Period, and ROI is
calculated. The product production from our plat is 262.435 tonne/year for cocoa
liquor. The price of cocoa liquor is $7.08 per kilograms in standard pallet (750
kg) which is same the existing market price. Income from our product per year is
$1,852,791. Based on the calculation, the cocoa liquor plant is categorized as
benefical and profitable because it has of 9.92% IRR (having a margin of 3% with
the Weighted Average Cost of Capital is 6%) and NPV is $1,648,918. The
payback period is 5.821 years with the ROI is 33%.
When running the plant, several parameters can affect the productivity and
the economy of the plant. The parameters may be due to economical conditions,
socio-politic conditions, or any other. These changes can give benefit or even
destruction to a plant. Therefore, the sensitivity analysis against some changes
need to be done to analysis what variables that can affect the stability of
manufacturing. For the economical parameter, there are three parameters that can
affect the economy of the plant: product price fluctuation, raw material
fluctuation, and labor salary fluctuation. In order to see the effect of those
fluctuations, sensitivity analysis on IRR, NPV, and Payback Period is done.
To do the sensitivity analysis of this project, the first thing that has to be
done is to choose the variables. The variable that has been chosen are product
price, raw material price and labor cost. Based on the calculation, it is shown that
product price fluctuation affect the most to the plants economy, followed by raw
material price fluctuation and labor wage fluctuation.

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 LIST OF CONTENT

EXECUTIVE SUMMARY...................................................................................ii
LIST OF FIGURES..............................................................................................vi
LIST OF TABLES................................................................................................vii
CHAPTER 1 CAPITAL ESTIMATE...................................................................1
1.1 Cost Index..................................................................................................1
1.2 Purchase Equipment Cost..........................................................................3
1.3 Total Equipment Cost (CTBM).....................................................................3
1.4 Site Development Cost..............................................................................6
1.5 Building Cost.............................................................................................6
1.6 Offsite Facilities Cost................................................................................7
1.7 Working Capital.........................................................................................7
1.8 Supporting Facilities Cost.........................................................................7
1.9 Additional Cost..........................................................................................9
1.10 Calculation of Total Capital Invesment.....................................................9
CHAPTER 2 OPERATING COST....................................................................11
2.1 Raw Material Cost...................................................................................11
2.2 Utility Cost..............................................................................................12
2.2.1 Electricity Utility..............................................................................12
2.3.2 Water Utility.....................................................................................14
2.3 Labor Cost...............................................................................................14
2.3.1 Direct Labor Cost.............................................................................15
2.3.2 Indirect Labor Cost..........................................................................16
2.4 Maintenance Cost....................................................................................17
2.6 Insurance Cost.........................................................................................18
2.7 Distribution Cost.....................................................................................18
2.8 Marketing and Brand Cost......................................................................19
2.9 Other Cost................................................................................................20
2.10 Depreciation............................................................................................20
CHAPTER 3 ECONOMIC EVALUATION......................................................25
3.1 Capital Loan............................................................................................25
3.2 Cash Flow................................................................................................26
3.3 Profitability Analysis...............................................................................28
3.3.1 IRR...................................................................................................28
3.3.2 NPV..................................................................................................28
3.3.3 Payback Period.................................................................................28
3.3.4 ROR/ROI.........................................................................................29
3.3.5 Break Event Point (BEP).................................................................29
CHAPTER 4 SENSITIVITY ANALYSIS..........................................................31
4.1 IRR Sensitivity Analysis........................................................................32

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 4.2 NPV Sensitivity Analysis........................................................................33
4.3 Payback Period Sensitivity Analysis.......................................................33
CHAPTER 5 CONCLUSION.............................................................................35
REFERENCES.....................................................................................................36
APPENDICIES......................................................................................................37

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LIST OF FIGURES

Figure 1. 1 Chemical Engineering Plant Cost Index (CEPCI) Graphic...................2

Figure 2. 1 Basis of Direct Labor Cost..................................................................15
Figure 3. 1 Before and After Tax Cash Flow.........................................................27
Figure 3. 2 Cumulative Cash Flow........................................................................27
Figure 4. 1 Effect of Deviation on IRR..................................................................32
Figure 4. 2 Effect of Deviation on NPV................................................................33
Figure 4. 3 Effect of Deviation on Payback Period...............................................34

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 LIST OF TABLES

Table 1. 1 Chemical Engineerings Plant Cost Index...............................................1

Table 1. 2 Projection of CEPCI until 2019..............................................................2
Table 1. 3 Purchase Equipment Cost.......................................................................3
Table 1. 4 Total Equipment Cost..............................................................................5
Table 1. 5 Building Cost..........................................................................................6
Table 1. 6 Supporting Facilities Cost.......................................................................7
Table 1. 7 Controller cost.........................................................................................9
Table 1. 8 Total Capital Invesment.........................................................................10
Table 2. 1 Raw Material Cost.................................................................................11
Table 2. 2 Main Equipment Electricity Cost..........................................................12
Table 2. 3 Supporting Equipment Electricity Cost................................................13
Table 2. 4 Water Utility Cost..................................................................................14
Table 2. 5 Direct Labor Cost..................................................................................15
Table 2. 6 Minimum Regional Wages in Palu, Central Sulawesi..........................16
Table 2. 7 Indirect Labor Cost...............................................................................16
Table 2. 8 Maintenance Cost..................................................................................18
Table 2. 9 Insurance Cost.......................................................................................18
Table 2. 10 Distribution Cost.................................................................................19
Table 2. 11 Marketing and Brand Cost..................................................................20
Table 2. 12 Other Cost...........................................................................................20
Table 2. 13 Depretiation Cost................................................................................22
Table 3. 1 Bank Payment Scheme..........................................................................25
Table 3. 2 Investment Payment Scheme................................................................26
Table 4. 1 Effect of Product Price Deviation.........................................................31
Table 4. 2 Effect of Raw Material Price Deviation................................................31
Table 4. 3 Effect of Total Labor Cost Deviation....................................................32

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 CHAPTER 1
CAPITAL ESTIMATE

This section will explain the calculation of Total Capital Investment.

Calculating the economic value of this plant, there are several assumptions:
4. Plant lifetime is 20 year; start from 2019 (including the equipment
purchase and based on the benchmarking).
5. Operating days in a year: 292 days and 24 hours/day.
6. Purchased equipment cost is calculated using CEPCI for converting price
from present price to future price.
Capital expenditure, or Capex, are funds used by a company to acquire or
upgrade physical assets such as property, industrial buildings or equipment. It is
often used to undertake new projects or investments by the firm. This type of
outlay is also made by companies to maintain or increase the scope of their
operations. These expenditures can include everything from repairing a roof to
building, to purchasing a piece of a equipment, or building a brand new factory.

1.1 Cost Index

The index used is the Chemical Engineering Plant Cost Index. The data is
gotten from the CEPCI Online. However, the available data is only for the range
year between 2004 and 2014. Table 1.1 below shows the data for cost index from
2004 to 2014:
Table 1. 1 Chemical Engineerings Plant Cost Index

(Source: Chemical Engineering Online, 2017)

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From the data above, it can be projected all the equipment to the
purchasing year of 2019. In making projections, we made it based on cost growth
index. The plot can be seen in Figure 1.1 below:

Figure 1. 1 Chemical Engineering Plant Cost Index (CEPCI) Graphic

By using extrapolating data and graphic, the cost index value can be
determined on 2019 which is 682.739 in the calculation below:

Table 1. 2 Projection of CEPCI until 2019

Those data above are the projection of chemical engineerings plant cost
index will be used for equipment cost prediction because the equipment will be
purchased in 2019. In estimating equipment cost, the index value used to estimate
price at present time. The equation is:

(1.1)

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1.2 Purchase Equipment Cost

The cost of equipment is the item's purchase price, or historical cost, and
other initial costs related to acquisition and asset use. The equipment's cost is
calculated by adding the item's purchase price, or historical cost, to the other costs
related to acquiring the asset. These additional costs can include import duties and
deductible trade discounts and rebates. Purchase equipment cost shows at Table
1.3 below.

Table 1. 3 Purchase Equipment Cost

Equipment Qty. Price/Unit Total Price

(USD) (USD)

Silo 2 1,935.31 3,870.62

Screw 4 57,933.3 231,733.2

Conveyor

Bean Cleaner 1 1000 1000

Steam Dryer 1 39,741.83 39,741.83

Winnower 1 200 200

Grinder 1 1,383.83 1,383.83

Fine Grinder 1 44,657.86 44,657.86

Pump (P-101) 1 12,894.93 12,894.93

Pump (P-102) 1 14,985.95 14,985.95

Electric Cooler 1 1300 1300

1.3 Total Equipment Cost (CTBM)

The calculation of equipment or total bare module cost is begin with the
calculation of FOB itself. FOB (Free On Board) is the bases cost of the
equipment. This is based on the parameter of each equipment. The parameters and
the formula we can see in Process and Product Design Principles by Seider
exactly in the Table 16.32 or based on the vendor (catalog) in the internet. Total
Bare Module Cost can be calculated by summing all Bare Module Cost all tools
used. Bare Module Cost Calculations done by considering:

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Added to the final total cost of material FOB purchase cost by using the
factor in order to obtain the cost of the module, M.
Labor costs (erection and setting), L, added as a factor or calculated from
the ratio L / M; acquired M + L = X (cost module directly)
The indirect cost module (freight, tax, insurance, engineering, and field
expense) is added to (M + L); obtained bare module cost.

(1.2)

To get an estimate of the purchase cost at a later date, it is by multiplying

the cost from an earlier date by the ratio called cost index at that date to a base
cost index. From the planning, the equipment purchasing on this plant will be
done on 2019. So, the cost index on the year 2019 which is after extrapolating
about 682.739.

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 Table 1. 4 Total Equipment Cost

Price/ Total
Year Cost Index Cost Index Bare Concrete Piping Electrical Total Bare
Equipment Qty Unit Price
Basis in Year Basis in 2019 Module (USD) (USD) (USD) Modul
(USD) (USD)
Silo 2 1935.31 3870.62 2017 656.977 682.739 3.44 18122.27
Screw
4 57933.3 231733.2 2017 656.977 682.739 2.3 553886.32
Conveyor
Bean
1 1000 1000 2017 656.977 682.739 2.3 2390.18
Cleaner
Steam Dryer 1 39741.83 39741.83 2017 656.977 682.739 2.84 117292.63
Winnower 1 200 200 2017 656.977 682.739 2.46 511.29
Grinder 1 1383.83 1383.83 2017 656.977 682.739 2.3 233.84 3037.5 1130.8 3307.61
Fine Grinder 1 44657.86 44657.86 2017 656.977 682.739 2.3 106740.75
Pump (P-
1 12894.93 12894.93 2017 656.977 682.739 2.82 37789.64
101)
Pump (P-
1 14985.95 14985.95 2017 656.977 682.739 2.82 43917.54
102)
Electric
1 1300 1300 2017 656.977 682.739 2.14 3008.01
Cooler
TBM (USD) 886,966.29

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1.4 Site Development Cost

Cost for site development comprises of grass-root plant (10-20% CTBM) and
expansion (4-6% CTBM). This project will use grass-root plant type thus it will be. Cost of site
consists of some factor parts construction labor, grading, landscaping, parking, railroad track,
security systems, sewers, site preparation, and yard lighting.

(1.3)
The calculation for the site cost is:

1.5 Building Cost

Cost for building is calculated using plant layout from assignment 4. The total
area of the plant is 3150 m2, with details as shown below.

Table 1. 5 Building Cost

Land Cost
Location Palu Industrial Estate
Area (m2) 3150
Price (USD) 162,973.95
Building Cost
Total Price
Description Price (USD/m2) Area (m2)
(USD)
Plant building 207.33 1,240 257,089
Office
259.16 518 134,245
Building
Road 24.36 1,392 33,909
Foundation 15% building cost 58,700
Total Building 3,150 483,943
Total Land and Building Cost 646,917

1.6 Offsite Facilities Cost

Offsite facilities cost is for installing and operating utilities, the cost is shown below :
(1.4)
The calculation for the offsite facility cost is:

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1.7 Working Capital

Working capital is 3 month over 12 month work of operational expenditure, the
equation is:
(1.5)

The calculation for the working capital is:

1.8 Supporting Facilities Cost

These supporting facilities are defined as the equipments in the office. Table
1.6 below is the detail :

Table 1. 6 Supporting Facilities Cost

No Supporting Equipment Quantity Price per piece (USD) Price (USD)

1 Cabinet 2 250.00 500

2 White Board 2 31.34 63
3 Panty utensils 2 261.19 522
4 Dispenser 4 48.51 194
5 Toilet set 4 111.94 448
6 Neon Lamps 60 5.60 336
Table 1.6 Supporting Facilities Cost (continued)
Quan Price per piece
No Supporting Equipment Price (USD)
tity (USD)
7 Generator 2 18,656.72 37,313
8 Recycle Bin 10 2.61 26
9 Air Conditioner 10 223.88 2239
10 Telephone 5 24.25 121
11 Television 3 223.88 672

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12 Laboratory Set 2 485.07 970

13 Safety Helmet 20 5.75 115
14 Safety Shoes 20 16.3 326
15 Safety Googles 20 4.4 88
16 Safety Clothes 20 22.6 452
17 Fire Extinguisher 20 37.31 373
18 Computer 7 351.81 2,462.7
Photocopy, scanner and
19 4 350.75 1,754
printer
20 Office Stationary 20 205.22 4,104
21 Clock 10 5.00 50
22 Table 15 17.6 246
23 Chair 15 10.74 161
24 CCTV 15 45.52 682
25 Meeting room set 3 361.94 1,086
TOTAL 8,628.25

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1.9 Additional Cost

For completing the configuration of the equipment in this plant, using the
following detail on Table 1.7:

Table 1. 7 Controller cost

Type Qty Price/Unit ($) Total Price (USD)

Temperature Control 2 1,700 3,400
Flow Control 1 1,500 1,500
Pressure Control 2 1,700 3,400
Total 8,300

1.10 Calculation of Total Capital Invesment

Calculation of total Capital Investment can use a variety of ways. In this
section, the method used is the method of Guthrie that can be calculated using the
equation:

(1.6)

After calculating each component of total capital investment, the next is

calculating total capital investment of this cocoa liquor plant. Using equation such as
shown before, we can get TCI value, it shown in Table 1.8 below:

Table 1. 8 Total Capital Invesment

Type of Cost Amount (USD)

FC CTBM 886,966.29
Csite development 88,696.63
Cbuilding cost 646,917

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Coffsite facilities 44,348.31

Cadditional 8,300
Csupporting facilities 8,628.25
Total FC 1,683,856.48
Working Capital 198,618
Total TCI 2,185,568.64

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 CHAPTER 2
OPERATING COST

Operating cost is expenses related to the operation of a device, component,

and piece of equipment or facility that used in making the products. Operational cost
is usually paid in every year of production. This operational cost is conducted into
two types which are manufacturing cost and general expense. First is to calculate the
manufacturing cost. Manufacturing cost consits of direct production cost, fixed
charge, and plant overhead cost. For direct production cost is the cost that directly
connected to the cost of production cost, such as raw material, operating labour,
utility, and maintenance.

2.1 Raw Material Cost

This cost is very important, because this production depends on the material
supplier. So, the cost of raw material production summarized in the Table 2.1 below:

Table 2. 1 Raw Material Cost

Total
Price Total
Order / Year Order Delivery
Raw per Delivery
Supplier Location Cost Cost /
Materials Unit Cost per
per Week ($)
($) Year ($)
Amount Unit Year ($)
Kabupaten
Central
Cocoa Beans Parigi 365,000 Kg 1.72 627,800 12.59 529
Sulawesi
Muotong
Farwell
Kerosene Palu 526 Liter 1 526 1.11 47
Industry
Toko Bahan
Deminerilizati
Kimia Palu 876 Liter 0.48 420 1.11 47
on water
Farmasi
Total Raw Material Cost 628,746 622

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From the tables above, the total cost for the raw material is $629,368 per year.
This cost is already including the shipping the materials to the plant. The shipping is
done by the supplier, so the company only needs to facilitate a warehouse and storage
tank. The cost is already with the shipping cost from the supplier. Based on the table,
the total cost of raw materials is high. It means that the plant production is really
depending with this variable. The raw material sensitivity analysis will be explained
in the next chapter.

2.2 Utility Cost

Utility costs are costs that used to finance the main necessities of the
production such as water, electricity, and plant infrastructure. Variable utility costs are
costs for utilities that used for production processes. Those utilities are such as
electricity, water, and fuel for the generator when there is no electricity supply from
PLN or when it is black out.

2.2.1 Electricity Utility

For the electricity based on PT PLN, we categorized our plant as a medium
industry (above 1300 kVA). It is mentioned that the price for the medium industry
since November 2017, is equal to Rp1,100 kWh. Table 2.2 is the electricity cost for
main equipments and Table 2.3 is the electricity cost for supporting equipments.

Table 2. 2 Main Equipment Electricity Cost

Total
Working Total
Power Electricity
Equipments Qty Time/week Cost/year
(kW) / year
(h) ($)
(kWh)
2 4 24 56,064 6,092
Silo
4 0.02 24 560.64 61
Conveyor
1 8 24 56,064 6,092
Bean Cleaner
1 2 24 14,016 1,523
Dryer
1 4 24 28,032 6,092
Winower

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Table 2.2 Main Equipment Electricity Cost (continued)

Total
Working Total
Power Electricity/
Equipments Qty Time/week Cost/year
(kW) year
(h) ($)
(kWh)
1 7.5 24 52,560 3,046
Coarse Grinder
1 15 24 105,120 5,712
Fine Grinder
2 0.3 24 4,204.8 11,423
Pump
1 2 24 14,016 457
Electric Cooler
1 1.5 24 10,512 1,523
Air Compressor
Total Electricity Cost For Main Equipments 37,072

Table 2. 3 Supporting Equipment Electricity Cost

Working Total Total Total

Power
Equipments Qty Time/day Electricity Electricity Cost/year
(kW)
(h) / day (Wh) /year (Wh) ($)
Dispenser
2 0.008 10 0.16 47 5
Office
Toilet Set Office 1 0.1 10 1 292 32
Neon Lamps
20 0.013 10 2.6 759 82
Office
Air Conditioner
7 0.8 10 56 16,352 1,777
Office
Telephone
5 0.008 24 0.96 280 30
Office
Television 3 0.05 6 0.9 263 29
Computer
5 0.05 10 2.5 730 79
Office
Clock 10 0.003 24 0.72 210 23

Table 2.3 Supporting Equipment Electricity Cost (continued)

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CCTV 15 5 24 1.8 526 57

Computer
10 50 24 6 1,752 190
Control Room
Air Conditioner 3 800 24 57.6 16,819 1,828
Dispenser Plant 2 8 24 0.384 112 12
Toilet Set Plant 2 100 240 4.8 1,402 152
Neon
40 13 24 12.48 3,644 396
LampsPlant
Total Electricity Cost For Supporting Equipment 4,693

The total electricity per year is 395,851 kWh. So, the total electricity cost per year is
$41,765.

2.3.2 Water Utility

The water utility is already counted on assignment 2. For the water
requirement, the cocoa liquor plant are going to use water that obtained directly from
the PDAM. The price for water industry is Rp 12,550/m 3. So we can calculate the
water utility cost.

Table 2. 4 Water Utility Cost

Total Utilities Cost

3
Water Needs L/ day m /year for Water / year
($)
Process utility 100 29.2 27
Employee 1400 408.8 380
Total Water Cost Per Year ($) 407

The total water needed per year is 438 m3 and the total water cost per year is $407.

2.3 Labor Cost

There are some parameter to determine the number of labors, first is the shift
scheduling of the cocoa liquor plant. The cost for labor-related operation covered the
direct wages & benefit (DW&B) of operators and direct salaries & benefit (DS&B) of
supervisors and engineering personnel. The DW&B and DS&B can be calculated
from an hourly rate for the labors of a proposed plant. Estimates of all labor-related
operations will include the estimation of number of operators needed for the plant per
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shift (Seider, et al., 2003). The direct operating labor requirements will be estimated
by the basis of plant with 10-100 ton/day of product as seen in Figure below.

Figure 2. 1 Basis of Direct Labor Cost

(Source : Seider, et al., 2003)

2.3.1 Direct Labor Cost

Using the data from Figure 2.1, the cocoa liquor plant need 15 direct workers.
This is such a small plant, so there will be no a lot of people.

Table 2. 5 Direct Labor Cost

Amount Salary per month per person Total Salary

Position
(person) ($) ($)
Operator 6 222 17,327
Quality
2 222 5,776
Controller
Warehouseman 5 185 12,033
Driver 2 185 4,813
Total Direct Labor Cost 35,135

When considering the amount of wages for each worker, we should follow the
standard regulation. The wages for each labor should be greater than the minimum
regional wages (Upah Minimum Kota/ UMK) in the Palu, Central Sulawesi. The
UMK in 2017 is $152.35, because the plant will be running in 2019 extrapolation
need to be done to determine the value of UMK in 2019. The growing rate is 8.25%
per year, the result is below on the Table 2.6.

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Table 2. 6 Minimum Regional Wages in Palu, Central Sulawesi

UMK 2017 152.35

UMK 2018 165

UMK 2019 178

By the estimation of UMK in 2019, the total direct labor operation cost is $35,135 per
year annually.
2.3.2 Indirect Labor Cost
For the indirect labor is summarized in the Table 2.7 below:
Table 2. 7 Indirect Labor Cost

Total
Amount
Department Position Salary per month per person ($) Salary
(person)
($)
President
1 889 11,551
Director
Directory Secretary of
President 1 222 2,888
Director
Finance
Accounting 1 444 5,776
Finance
Manager
Department
Marketing
1 444 5,776
Manager
Security 6 185 14,439
General
Support &
Receptionist 2 207 5,391
Cleaning
Service 2 185 4,813
Service

Table 2.7 Indirect Labor Cost

Amount Salary per month Total Salary
Department Position
(person) per person ($) ($)
Production
1 444 5,776
Coordinator
Production
Supply Chain
Department
Management 1 444 5,776
Manager

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Human
HRD
Resources 1 444 5,776
Department
Manager
HSE
HSE Manager 1 444 4,813
Department
Electrical
1 333 4,332
Maintenance Engineer
Department Mechanical
1 333 4,332
Engineer

Total Indirect 81,437

For the indirect labors the salary will be $81,437 per year annually. So, the
total salary for direct and indirect labor will be $116,572. The salary hasnt included
insurance costs which will be added every month to the salary.

2.4 Maintenance Cost

Maintenance can be defined as an activity to maintain condition of the
facilities or plant equipment and made repairs or replacement that necessary in order
to obtain a satisfactory state of production operations, as well as planned before.
Maintenance is required both for factories, offices, and supporting equipment so it
can be used continuously and optimal production quality can be assured.
Maintenance process is performed with the three parts, i.e major equipment
maintenance, plant and office building maintenance, and supporting equipment
maintenance. Maintenance cost consists of cost for maintaining and repairing
equipment. The maintenance cost detail can be seen on Table 2.8 below.
Table 2. 8 Maintenance Cost

Cost per Year

Maintenance Amount (percentage)
($)
15 % of Total Bare Module
Main equipments 133,045
Cost
3% of Supporting Facilities
Supporting equipments 1,659
Cost
Land and building 1% of Land and Building 8,947
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Cost

Total Maintenance Cost Per Year ($) 143,651

2.6 Insurance Cost

Insurance is cost that paid by the Cocoa Liquor Plant to the insurance
company. Insurance is a way to protect company assets, both movable and fixed. For
calculating the insurance, there are some assumption based on PP No 84 Year 2010,
that is stated the assumption below:
Table 2. 9 Insurance Cost

Insurance Type Measurement Amount Annual Cost

0.5% of FCI
Plant Insurance 1,683,856 8,419
Cost
Employee's
6% of Salary 116,572 6,994
Insurance
Total Insurance 15,414

2.7 Distribution Cost

The products are going to be sell the product to Cargill Indo Cocoa, Effem
Indonesia, and PT. Davomas Abadi. Distribution service is used to deliver the product
to the client. The distribution cost calculation can be seen on the Table 2.10 below.

Table 2. 10 Distribution Cost

Total
Cost
Solar Cost
Distance per
Route Pathway Frequency Consumption per
(km) Travel
(Lt) Year
($)
($)
Once
Plant to Palu
Land every 7 2 0.30 0.14 12
Harbour
days

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Palu Harbour Once

to Tanjung Sea every 14 2,432 - 741 8,889
Priok days
Once
Plant to Cargill
Land every 7 2 0.40 0.19 16
Indo Cocoa
days
Once
Plant to Effem
Land every 14 854 - 259 5,444
Indonesia
days
Toll Fee 741
Total Distribution Cost 15,102

2.8 Marketing and Brand Cost

The cocoa liquor pant are going to market the product with proposal and
website. The product will bu put on website because by selling the products via
website will increase peoples attention toward cocoa liquor plant. In the website, the
marketing team can put information about the product because people in Indonesia
still acknowledge about cocoa liquor. So, its really important to branding the
products via website or online.
The second one using proposal to promote the product to other industry. This
is a simple method to promote and sell the product. The goals of distribute proposal
to other company or industry is to expand the cocoa liquor business. And last, brand
cost is the cost that have to pay every year to maintenance the brand name of the
plant. This is based on Indonesian law. For marketing cost can be seen on the table
below:

Table 2. 11 Marketing and Brand Cost

Type of Marketing Price (USD/year)
Proposal 370
Website Development 163
Brand 67
Total 600

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 20

2.9 Other Cost

In general expenses, there are plant overhead, communication, and Royalty
for operation cost. Plants overhead are consist of fire hydrant system and first aid kit.
Communication are including mailing, telephone bill and internet on the cocoa liquor
plant. The detail value of each expenses are explained in the Table 2.12.

Table 2. 12 Other Cost

Description Total Cost (USD)
Patent Royalty 2015.92
Plant Overhead 925.60
Communication 667
Total 3,608.19

2.10 Depreciation
Depreciation is the reduction in value of an asset. The method used to
depreciation an asset is a way to account for the decreasing value of the asset to the
owner and to represent the diminishing value of capital funds invested in it. Salvage
value is the estimated trade-in or market value at the end of the assets useful life.
The salvage value, S expressed as an estimated dollar amount or as a
percentage of the first cost, may be positive, zero, or negative due to dismantling and
carry-away costs.. We have equipment and building as our assets. The equation used
in this declining balance method of depreciation is: (Blank & Tarquin: 5th edition.
Ch.16 Authored by Dr. Don Smith, Texas A&M University):

Where :
dmax = maximum depreciation rate
dt = depreciation rate for t-year
BVt = book value for t-year
t = year of depreciation

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 Table 2. 13 Depretiation Cost
Value Main Equipment Supporting Equipment Land and Building Total
Initial Value in 1st year 886,966 55,304 894,667
D 88,697 5,530 89,467 183,694
Year 1
SV 798,270 49,773 805,200
D 79,827 4,977 80,520 165,324
Year 2
SV 718,443 44,796 724,680
D 71,844 4,480 72,468 148,792
Year 3
SV 646,598 40,316 652,212
D 64,660 4,032 65,221 133,913
Year 4
SV 581,939 36,285 586,991
D 58,194 3,628 58,699 120,521
Year 5
SV 523,745 32,656 528,292
D 52,374 3,266 52,829 108,469
Year 6
SV 471,370 29,391 475,462
D 47,137 2,939 47,546 97,622
Year 7
SV 424,233 26,452 427,916
D 42,423 2,645 42,792 87,860
Year 8
SV 381,810 23,806 385,125
D 38,181 2,381 38,512 79,074
Year 9
SV 343,629 21,426 346,612
D 34,363 2,143 34,661 71,167
Year 10
SV 309,266 19,283 311,951
D 30,927 1,928 31,195 64,050
Year 11
SV 278,339 17,355 280,756
Table 2. 13 Depretiation Cost (continued)

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Value Main Equipment Supporting Equipment Land and Building Total

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 D 27,834 1,735 28,076 57,645
Year 12
SV 250,505 15,619 252,680
D 25,051 1,562 25,268 51,881
Year 13
SV 225,455 14,057 227,412
D 22,545 1,406 22,741 46,692
Year 14
SV 202,909 12,652 204,671
D 20,291 1,265 20,467 42,023
Year 15
SV 182,618 11,387 184,204
D 18,262 1,139 18,420 37,821
Year 16
SV 164,357 10,248 165,784
D 16,436 1,025 16,578 34,039
Year 17
SV 147,921 9,223 149,205
D 14,792 922 14,921 30,635
Year 18
SV 133,129 8,301 134,285
D 13,313 830 13,428 27,571
Year 19
SV 119,816 7,471 120,856
D 11,982 747 12,086 24,814
Year 20
SV 107,834 6,724 108,771 223,329

23 Universitas Indonesia
 CHAPTER 3
ECONOMIC EVALUATION

3.1 Capital Loan

On the first year of cash flow, the plant dont have any capital, so in order
to start the business, need a loan from institution like bank or investor. Bank with
the minimum rate of interest, which is Bank Negara Indonesia with 5.71% of
interest rate. Beside bank, it is also need loan of investor with 10% of interest rate.
The higher the interest, investors will be more interested in investing, but
investors are constrained by the high interest rate bank loan. The 70% of capital
comes from bank and 30% from investors. We try to pay all the loan in 10 years.
The detail scheme of payment is shown below.

Table 3. 1 Bank Payment Scheme

Initial Loan Total Loan after

Payment
Year Loan Interest Payment Payment
(USD)
(USD) (USD) (USD) (USD)
0 1,529,898 - - - 1,529,898
1 1,529,898 87,357 152,990 240,347 1,376,908
2 1,376,908 78,621 152,990 231,611 1,223,918
3 1,223,918 69,886 152,990 222,875 1,070,928
4 1,070,928 61,150 152,990 214,140 917,939
5 917,939 52,414 152,990 205,404 764,949
6 764,949 43,679 152,990 196,668 611,959
7 611,959 34,943 152,990 187,933 458,969
8 458,969 26,207 152,990 179,197 305,980
9 305,980 17,471 152,990 170,461 152,990
10 152,990 8,736 152,990 161,725 0

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 25

Table 3. 2 Investment Payment Scheme

Initial Loan Total Loan after
Payment
Year Loan Interest Payment Payment
(USD)
(USD) (USD) (USD) (USD)
0 655,670 655,670
1 655,670 65,567 65,567 131,134 590,103
2 590,103 59,010 65,567 124,577 524,536
3 524,536 52,454 65,567 118,021 458,969
4 458,969 45,897 65,567 111,464 393,402
5 393,402 39,340 65,567 104,907 327,835
6 327,835 32,784 65,567 98,351 262,268
7 262,268 26,227 65,567 91,794 196,701
8 196,701 19,670 65,567 85,237 131,134
9 131,134 13,113 65,567 78,680 65,567
10 65,567 6,557 65,567 72,124 0

3.2 Cash Flow

Calculation of cash flow involves the income before tax, after taxes, depreciation,
and salvage value of equipment called the after-tax cash flow (ATCF). Revenue in
this factory is the sales from the product cocoa liquor meanwhile the cash flow-
out can be derived from investment, cost, and loans. Percentage of tax is 25%.
The estimation of plant age is 20 years. The cash flow is calculated using
Microsoft Excel. The annual cash flow contains inflow and outflow. Inflow comes
from income before and after taxes and residual value or salvage value. Cash flow
out of which is the cost of investment, and operating. So the figure below is the
cash flow before and after tax. For calculating the cash flow, the design capacity
percentage of first year and second year are 45% and 68%, then 90% for third
year until the end. The target the IRR is 9.58%, so the price of product is 7.06 US
Dollar per kg in standard pallet (750 kg) which is same the existing market price.
The reasons why the cocoa liquor plant has percentage of design capacity to
maintain production from strat-up to safely condition. The graph below is cash
flow diagram.

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 26

Figure 3. 1 Before and After Tax Cash Flow

Figure 3. 2 Cumulative Cash Flow

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 27

3.3 Profitability Analysis

The profitability analysis is done to show whether the business will bring
profit or loss. The profitability analysis consist of Return of Investment, Payback
Period, Break Even Point, Internal Rate of Return, and Net Present Value.

3.3.1 IRR
Internal Rate of Return (IRR) is a measure of the maximum of interest rate
paid on project and still break even at the end of the project life. In other words,
the IRR is the interest rate when NPV = 0, so that the formula is:

(3.1)

The obtained IRR of 9.58%. Therefore, it is a feasible plan to build this plant
since the IRR is greater than WACC, which is 6.00% (calculation in Appendix B).

3.3.2 NPV
Net Present Value (NPV) shows the net benefits received by a project over
the life of the project at a certain interest rate. NPV can also be interpreted as the
present value of the cash flows generated by the investment. In calculating the
NPV, it is necessary to determine the relevant interest rate. A project can be
counted as feasible if the NPV>0, which means the project is profitable or
provides benefits if implemented. If NPV<0, the project is not eligible to run
because it does not generate profit. Cash flow in year-n drawn into present value
with a reasonable interest rate by using the following formula:

(3.2)

The obtained NPV about $1,499,568. Our NPV is positive and high. It
means the project can be implemented.

3.3.3 Payback Period

Payback Period is the duration (in years) of an investment will be returned.
Here is the formula for calculating payback period taking into account the Time
Value of Money:

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= (
) + ( )/(
/+ /) (3.3)

If the payback period is less than a pre-determined period, the project is

acceptable. If the payback period exceeds the predetermined period, the project is
rejected. The payback period for this plant is 5.961 years, after the calculation in
Microsoft Excel. The payback period is matched with the rule of thumb. The rule
of thumb said that the tolerable payback period is about 10 years and should be
done after all the loan are fully paid.

3.3.4 ROR/ROI
Rate of Return (ROR) is the annual profit generated by one unit of capital
invested. The formula for calculating ROI is as follows:

(3.4)

Annual net profit after tax is $710,048 and the total capital investment is
$2,187,674. So the ROI obtained from this plant was 33%. From the ROI
calculation, we can see that our plant is attractive for investors because it has a
high rate of return.

3.3.5 Break Event Point (BEP)

Breakeven point (BEP) is an analysis to determine and find the amount of
goods or services to be sold to consumers at a given price to cover the costs
incurred and the profit / profit. Calculation to find the BEP is:

(3.5)
The total fixed cost is the fixed cost values tend to be stable and not
influenced by the amount of production and the variable cost is the variable cost
of the value depends on the amount of goods produced. In this case the BEP can
be previously seen from the graph, Payback Period occurs on 5.961 years when
total production reached 1,261,632 kg of cocoa liquor. This analysis is almost the

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same with payback period however this analysis used the number of goods or
package that we sell to get the profit.

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 CHAPTER 4
SENSITIVITY ANALYSIS

In this section is to make a sensitivity analysis from cash flow. The

variable that used to see the effect towards the cash flow is product price, raw
material cost, and total labor cost (direct and indirect labor). Even though there
utility cost is higher than both the raw material and distribution cost, utility price
rarely becomes fluctuated. Parameters used in the sensitivity analysis is NPV,
IRR, and Payback Period. Below is the result:

Table 4. 1 Effect of Product Price Deviation

Product Price
Deviation IRR NPV (USD) PBP (year)
(USD/kg)
36% 9.60 19.26% 6,419,267 3
24% 8.75 16.26% 4,779,367 4
12% 7.91 13.07% 3,139,467 5
0% 7.06 9.58% 1,499,568 6
-12% 6.21 5.63% (140,332) 8
-24% 5.37 1.29% (1,780,232) 13
-36% 4.52 -6.46% (3,420,132) 34

Table 4. 2 Effect of Raw Material Price Deviation

Raw Material
Deviation IRR NPV (US Dollar) PBP (year)
Price (USD)
36% 855,941 5.94% -22,145 8
24% 780,416 7.34% 534,876 7
12% 704,892 8.66% 1,091,897 6
0% 629,368 9.58% 1,499,568 6
-12% 553,844 11.13% 2,205,938 5
-24% 478,320 12.30% 2,762,959 5
-36% 402,796 13.43% 3,319,980 5

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 Table 4. 3 Effect of Total Labor Cost Deviation
Total Labor Cost
Deviation IRR NPV (US Dollar) PBP (year)
(USD)
36% 158,538 9.22% 1,339,402 6
24% 144,549 9.46% 1,442,574 6
12% 130,561 9.69% 1,545,746 6
0% 116,572 9.92% 1,648,918 6
-12% 102,584 10.14% 1,752,089 6
-24% 88,595 10.37% 1,855,261 6
-36% 74,606 10.60% 1,958,433 6

4.1 IRR Sensitivity Analysis

With sensitivity graph we can see the relationship between the deviation of
the selling price of products, the price of raw materials, and the labors salary with
IRR.

Figure 4. 1 Effect of Deviation on IRR

The graph above shows that the IRR is very sensitive when there is a change of
the selling price of products. However, this increase of in raw material prices of
materials and labors salary was not as significant as the selling price of the
product.

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4.2 NPV Sensitivity Analysis
With sensitivity graph we can see the relationship between the deviation of
the selling price of products, the price of raw materials, and the labors salary with
NPV.

Figure 4. 2 Effect of Deviation on NPV

The sensitivity chart NPV above shows that the NPV is very sensitive when there
is a change of the selling price of products. The increase in raw material prices
and labors salary decreases NPV, because the rise of the price of raw materials and
labors salary will shrink the profits

4.3 Payback Period Sensitivity Analysis

With sensitivity graph we can see the relationship between the deviation of
the selling price of products, the price of raw materials, and the labors salary with
Payback period.

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 Figure 4. 3 Effect of Deviation on Payback Period

Based on three figures above, product price is the most important

thing, followed by raw material price and total labor cost respectively since
product price makes the most significant change when it changes.

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 CHAPTER 5
CONCLUSION

From the previous chapters about economic analysis, some conclusions

can be taken regarding capital expenditure, operational cost and the economic
feasibility. The conclusions are :
1. The total of capital invesment in this project is 2,185,568.64 USD
2. The operational cost of this plant is 802,892 USD
3. The 70% of capital comes from bank and 30% from investors.
4. IRR value is 9.92%. Therefore, it is a feasible plan to build this plant
since the IRR is greater than WACC, which is 6.00%
5. The value of NPV is about 1,648,918 US Dollar.
6. Payback Period occurs on 5.821 years when total production reached
1,224,302 kg of cocoa liquor.
7. The ROI obtained from this plant is 33%.
8. Based on sensitivity analysis, the plants economic can be affected the
most by product price, followed by raw material price and total labor
cost respectively.

34 Universitas Indonesia
 REFERENCES

Asselstine, Mack; Mollo, Joseph M.; Morales, Jesus M.; and Papanikolopoulos.
2016. Vasiliki, "Cocoa Liquor, Butter, & Powder Production". Senior Design
Reports (CBE). Paper 88.
Daz del Castillo, Bernal (2005) [1632]. Historia verdadera de la conquista de la
Nueva Espaa. Felipe Castro Gutirrez (Introduction). Mexico: Editores
Mexicanos Unidos, S.A. ISBN 968-15-0863-7. OCLC 34997012
Miller, Kenneth B.; Jeffery Hurst, William; Payne, Mark J.; Stuart, David A.;
Apgar, Joan; Sweigart, Daniel S.; Ou, Boxin (2008). "Impact of Alkalization
on the Antioxidant and Flavanol Content of Commercial Cocoa
Powders". Journal of Agricultural and Food Chemistry. 56 (18): 8527
8533.
Spadaccini, Jim. "The Sweet Lure of Chocolate". The Exploratorium.
Steinberg, F. M.; Bearden, M. N.; Keen, C. L. (2003). "Cocoa and chocolate
flavonoids: Implications for cardiovascular health". Journal of the
American Dietetic Association. 103 (2): 215223.
Stevens, Molly. "Sorting Out Chocolate - Fine Cooking Recipes, Techniques and
Tips". Taunton.com. Retrieved 2011-11-13.
Syamsiro, M; H. Saptoadi; B.H. Tambunan; N.A. Pambudi. 2011. A preliminary
study on use of cocoa pod husk as a renewable source of energy in
Indonesia. Energy for Sustainable Development. 16 (2012): 74-77
Winnowing | Chocolate Making | Chocolate-Making Process. 2017. Winnowing |
Chocolate Making | Chocolate-Making Process. [ONLINE] Available
at: https://viderichocolatefactory.com/chocolate-making/chocolate-
winnowing. [Accessed 08 September 2017].
Wolke, Robert L. (2005). What Einstein Told His Cook 2, The Sequel: Further
Adventures in Kitchen Science (Hardcover). New York: W. W. Norton &
Company. p. 433. ISBN 0-393-05869-7.
Wood, G. A. R.; Lass, R. A. (2001). Cocoa (4th ed.). Oxford: Blackwell Science.
p. 2. ISBN 063206398X.

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36 Universitas Indonesia
 Appendix A. Cash Flow

Year Percentage of Production Capital Operational Fixed Cash All Gross

Year Action Sales Depreciation
Number Design Capacity Capacity Costs Cost Cost Expenses Expenses Profit
2017 Design 0% - - - - - - - - -
0 2018 Construction 0% - - (2,185,568) - - - - - -
1 2019 Production 45% 118,102 533,634 (361,302) (167,341) (183,694) (528,642) (712,336) 4,991
2 2020 Production 68% 178,466 806,380 (545,967) (167,341) (165,324) (713,308) (878,632) 93,072
3 2021 Production 90% 236,205 1,067,267 (722,603) (167,341) (148,792) (889,944) (1,038,736) 177,323
4 2022 Production 90% 236,205 1,067,267 (722,603) (167,341) (133,913) (889,944) (1,023,857) 177,323
5 2023 Production 90% 236,205 1,067,267 (722,603) (167,341) (120,521) (889,944) (1,010,465) 177,323
6 2024 Production 90% 236,205 1,067,267 (722,603) (167,341) (108,469) (889,944) (998,413) 177,323
7 2025 Production 90% 236,205 1,067,267 (722,603) (167,341) (97,622) (889,944) (987,566) 177,323
8 2026 Production 90% 236,205 1,067,267 (722,603) (167,341) (87,860) (889,944) (977,804) 177,323
9 2027 Production 90% 236,205 1,067,267 (722,603) (167,341) (79,074) (889,944) (969,018) 177,323
10 2028 Production 90% 236,205 1,067,267 (722,603) (167,341) (71,167) (889,944) (961,111) 177,323
11 2029 Production 90% 236,205 1,067,267 (722,603) (167,341) (64,050) (889,944) (953,994) 177,323
12 2030 Production 90% 236,205 1,067,267 (722,603) (167,341) (57,645) (889,944) (947,589) 177,323
13 2031 Production 90% 236,205 1,067,267 (722,603) (167,341) (51,881) (889,944) (941,824) 177,323
14 2032 Production 90% 236,205 1,067,267 (722,603) (167,341) (46,692) (889,944) (936,636) 177,323
15 2033 Production 90% 236,205 1,067,267 (722,603) (167,341) (42,023) (889,944) (931,967) 177,323
16 2034 Production 90% 236,205 1,067,267 (722,603) (167,341) (37,821) (889,944) (927,765) 177,323
17 2035 Production 90% 236,205 1,067,267 (722,603) (167,341) (34,039) (889,944) (923,983) 177,323
18 2036 Production 90% 236,205 1,067,267 (722,603) (167,341) (30,635) (889,944) (920,579) 177,323
19 2037 Production 90% 236,205 1,067,267 (722,603) (167,341) (27,571) (889,944) (917,515) 177,323

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 20 2038 Production 90% 236,205 1,067,267 (722,603) (167,341) (24,814) (889,944) (914,758) 177,323
TOTAL 4,548,252 (18,874,547)

Appendix A. Cash Flow (continued)

NPBT NPAT BTCF ATCF Cash Flow Cumulative Cash Flow

- - - - - -
- - (2,185,568) (2,185,568) (2,185,568) (2,185,568)
(178,702) (134,027) 188,685 141,514 (40,293) (2,225,861)
(72,252) (54,189) 258,396 193,797 31,057 (2,194,804)
28,531 21,399 326,115 244,586 99,056 (2,095,749)
43,411 32,558 311,236 233,427 102,627 (1,993,122)
56,802 42,601 297,845 223,383 105,841 (1,887,282)
68,854 51,640 285,792 214,344 108,733 (1,778,548)
79,701 59,776 274,946 206,209 111,336 (1,667,212)
89,463 67,097 265,183 198,887 113,679 (1,553,533)
98,249 73,687 256,397 192,298 115,788 (1,437,745)
106,157 79,617 248,490 186,367 117,686 (1,320,059)
113,273 84,955 241,373 181,030 119,394 (1,200,666)
119,678 89,759 234,968 176,226 120,931 (1,079,735)
125,443 94,082 229,204 171,903 122,314 (957,421)
130,631 97,973 224,016 168,012 123,559 (833,861)
135,300 101,475 219,346 164,510 124,680 (709,181)
139,502 104,627 215,144 161,358 125,689 (583,493)
143,284 107,463 211,362 158,522 126,596 (456,896)
146,688 110,016 207,958 155,969 127,413 (329,483)
149,752 112,314 204,895 153,671 128,149 (201,334)
152,509 114,382 202,138 151,603 128,810 (72,524)

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 Appendix B. WACC Calculation
=( (1)) +( )

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