This document presents a business feasibility study for establishing Besi Profil Baru Ltd, a steel production company in Indonesia. It includes details on company ownership and capitalization, the steel market and demand projections in Indonesia, proposed production levels, required facilities and equipment, management and organizational structure, and projected financials. The key points are that steel consumption in Indonesia is growing at an estimated 6.5% annually, the company plans to produce 43,000-56,400 tons of steel per year, and financial projections estimate the company will be profitable and generate positive cash flows and returns on investment.

1. PROPOSAL
BUSINESS FEASIBILITY STUDY
PROJECT
STEEL IRON
BESI PROFIL BARU LTD
BY
XXX
1994
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 1

2. Exchange Rate US$ 1 = Rp 2,200
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 2

3. CONTENTS
CONTENTS
SUMMARY
CHAPTER I
GENERAL INFORMATION ABOUT THE COMPANY
I,1, Project background I-1
I,2, Company ownership I-1
I,3, Business Legality I-2
I,4, Technology, Licenses and Technical Cooperation I-3
CHAPTER II
ECONOMICAL AND MARKETING ASPECTS
II,1, Preface II-1
II,2, Supplies and Demand Analysis II-2
II,3, Marketing Strategy II-6
CHAPTER III
TECHNICAL AND PRODUCTION ASPECTS
III,1, Project lokation III-1
III,2, Finished Product III-2
III,3, Raw Material III-2
III,4, Know - How III-2
III,5, Production Process III-3
III,6, Facilities III-4
III,7, Production Machines III-6
III,8, Other Facilities III-9
III,9, Utility III-10
III,10, Human Resource III-10
III,11, Project Implementation III-11
CHAPTER IV
COMPANY MANAGEMENT ASPECTS
IV,1, Oraganization IV-1
IV,2, Company Management IV-5
CHAPTER V
FINACIAL ASPECTS
V,1, Total Project Cost V-1
V,2, Fund Source V-5
V,3, Financial Projection Assumptions V-6
V,4, Financial Projection V-10
V,5, Sensitivity Analysis V-17
V,6, Financial Ratio Analysis V-18
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 3

4. Attachments and Financial analysis Forms
CHAPTER I
GENERAL ASPECTS
Attachment-I,1, Company Establishing Certificate
Attachment-I,2, Company Licenses
CHAPTER III
PRODUCTION AND TECHNICAL ASPECTS
Attachment-III,1, Location Map
CHAPTER V
FINANCIAL ASPECTS
Form-A Investment Cost
Form-B Factory Overhead Cost
Form-C Selling Expenses
Form-D General Administrative Expenses
Form-E Production, Raw Material Cost & Selling Price
Attachment V-0 Summary
Attachment V-1 Projected Balance Sheet
Attachment V-2 Cash Flow Projection
Attachment V-3 Profit and Loss Projection
Attachment V-3A Profit and Loss Projection with “Double Declining Balance”
AttachmentV,4, Cost of Goods Sold
Attachment V-5 Production and Sales
Attachment V-6 Structure of Funds, Loan Disbursement and Repayment Schedule
Attachment V-6A Detail of Repayment Schedule
Attachment V-7 Draw Down of Project Cost Schedule
Attachment V-7A Interest during Construction
Attachment V-8 Investment and Reinvestment Schedule
Attachment V-9 Depreciation, Amortization, and Maintenance Schedule
Attachment V-9A Depreciation and Amortization with “Double Declining Balance”
Attachment V-10 Cash Requirement for Operation
Attachment V-11 Estimated Working Capital Needed
Attachment V-12 Financial Ratio
Attachment V-13 Internal Rate of Return
Attachment V-14 Sensitivity Analysis
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 4

5. SUMMARY
I. General Aspects
Besi Profil Baru Ltd. is an Limited company that is established based on the official document of
notary no ……………… date ……………, 1999… in front of public notary ………,,. Master of
Law in Jakarta.
The company basis capital as included in the official document of public notary is Rp,
……………… (,,,,,,,,,,,,rupiah)divided in ,,,,,,,,,,,,, (,,,,,,,,) shares with the nominal price for each is
Rp, ,,,,,,,,,,,,,(……,rupiah).
Total capital that has been deposited at the moment establishing the company is a sum of Rp,
………………,,(Rp,500 million) or ……,,(……) shares with details as follow:
1. M, Dicky Harvinanda : …….shares
2. M, Andhika Harvinanda : ....... shares
3. Sandrina Alya Harvinanda :…….shares
To run this Steel Iron factory that needs lots of capital, that capital is not satisfying yet. Hence,
there is suggested to add the capital minimal as much as amount of equity is needed.
Economical and Marketing Aspects
Recently, there have been 31 companies that produce Steel Iron in Indonesia, among them, 23
companies have joined in Indonesian Steel Iron Producers Association and other 8 companies are
not the member yet. Besides that there have been 2 companies to be going to establish Steel Iron
factory and have obtained agreement of Coordinative Agency for Investment, are: Banung Sarana
Baja Ltd, and Industry Galvealmas Ltd, But Banung Sarana Baja still delays its development,
while, Industry Galvanealmas is going to obtain the agreement letter from Coordinative agency for
investment at 10-02-1994.
Actual and Demand Projection to Steel Iron in1989 –2000
Year Consumption (ton) Growth (%)
Actual
1989 931,914
1990 1,178,277 26.44
1991 1,203,879 0.02
1992 1,197,364 - 0.54
1993 1,198,304 0.08
Projection
1994 1,276,193 6.50
1995 1,359,136 6.50
1996 1,447,490 6.50
1997 1,541,577 6.50
1998 1,641,780 6.50
1999 1,748,496 6.50
2000 1,862,148 6.50
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 5

6. Data Source: CIC
Production Plan of Besi Profil Baru Ltd. and other companies are served in the next table:
(Ton)
P R O D U C TION
TOTAL
Year Existed Industri Besi Profil
PRODUCTION
Companies Galvanealmas Ltd. Baru Ltd.
Actual
1989 1,017,718 0 0 1,017,718
1990 1,189,987 0 0 1,189,987
1991 1,217,424 0 0 1,217,424
1992 1,277,300 0 0 1,277,300
1993 1,379,910 0 0 1,379,910
Projection
1994 1,379,910 0 0 1,379,910
1995 1,379,910 0 0 1,379,910
1996 1,379,910 56,250 43,000 1,479,160
1997 1,379,910 61,875 50,495 1,492,280
1998 1,379,910 67,500 56,135 1,503,545
1999 1,379,910 75,000 56,400 1,511,310
2000 1,379,910 75,000 56,400 1,511,310
Data Source: CIC and proceed
From the result of supplies and demands projection, comparison of 2 matter is obtained, as served
below:
Ton
Supplies Total Demand
Balance
Year Production Import Export Supplies (Consumption)
(A-B)
(A) (B)
1989 1,017,718 303 86,107 931,914 931,914 0
1990 1,189,987 817 12,527 1,178,277 1,178,277 0
1991 1,217,424 429 13,974 1,203,879 1,203,879 0
1992 1,277,300 141 80,077 1,197,364 1,197,364 0
1993 1,379,910 289 181,895 1,198,304 1,198,304 0
Projection
1994 1,379,910 324 193,004 1,187,230 1,276,193 - 88,963
1995 1,379,910 334 204,792 1,175,452 1,359,136 - 183,684
1996 1,479,160 245 217,300 1,262,105 1,447,490 - 185,385
1997 1,492,280 215 230 572 1,261,923 1,541,577 - 279,654
1998 1,503,545 190 244,654 1,259,081 1,641,780 - 382,699
1999 1,511,310 145 259,596 1,251,859 1,748,496 - 496,637
2000 1,511,310 123 275,451 1,235,982 1,862,148 - 626,166
From the projection result above, as seen that the existing demands exceeds the supplies, it is of
production output from domestic or import From the marketing segment can be taken a conclusion
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 6

7. that investments in Steel Iron industry field are possibly to be carried out, in the reason that all
production outputs can be absorbed predictably by existing market
III. Technical and Production Aspects
Steel Iron factory of Besi Profil Baru Ltd. is located in Village …,.Sub District ……Regency
……,,or + 80 Km from ……and entire project area is + 30,000 m2
The planned project shall produce Steel Iron and Profil namely, a product which is used as
constructions to erect building.,
And Steel Iron is produced from the heating process and the forming Billet.
The Steel Iron which is produced by Besi Profil Baru Ltd. has the quality export and as same as
international quality standard.
The production technology of Steel Iron above is the technology from abroad / import; hence, in
order that local oporetors are capable to operate it there are needed firstly know-how trainings, In
this case, the technology providers are prepared to hold trainings for the related operators and bring
about the trainers from the origin factory to train local workers.
IV. Company Management Aspects
The company organization arranging of Besi Profil Baru Ltd. is based on needed functions to get
company’s goal.
The company consists of 3 departments:
1. Financial, General and Administration Department.
2. Technique and Production Department.
3. Sales / Marketing and Purchasing Department.
4. Full organization structure is, as follow:
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 7

8. ORGANIZATION STRUCTURE of Besi Profil Baru Ltd.
Board of comm.
Director
Fin. Gen & Adm Manager Production Manager Marketing Manager
Fin. Head Gen. & Adm. Marketing Purchasing
Division Head Division Hd. Division Head Division
Warehouse Production
Head Division Head Division
Raw Material Finished Heating Milling
Section Goods Sect. Section Section
Forming Cooling &
Section Finishing
Section
V. Financial Aspect
The Steel Iron factory development project of Besi Profil Baru Ltd. is estimated to absorb the
investment cost a sum of Rp 15,828,195,000.
Costs allocation can be analyzed as follow:
A. Land
o Land buying in 30,000 sqm Rp 1,800,000,000
o Land improvement in 30,000 sqm Rp 75,000,000
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 8

9. B. Machines, Construction and Facilities
Machine and Equipment Stock:
o Building Cost Rp 2,947,500,000
o Inside Battery Limit (ISBL) Rp 7,102,440,000
o Outside Battery Limit (OSBL) Rp 1,128,000,000
o Vehicles Rp 313,000,000
o Tools & Office Equipment Rp 405,500,000
-------------------
Total Fixed Assets Cost Rp 13,771,440,000
C. Pre-Operation Cost
o Office Expenses Rp 250,000,000
o Consultant Fee Rp 100,000,000
o Designing Fee Rp 152,040,000
o Expatriate (one month) Rp 136,836,000
-------------------
Total pre-operation cost Rp 638,876,000
D. Others:
o Interest During Construction Rp 1,226,501,000
o Management Fee Rp 50,436,000
o Commitment Fee Rp 140,942,000
-------------------
Total Others Rp 1,417,879,000
Total Investment Rp 15,828,195,000
V.2. Fund Source
Steel Iron factory development of Besi Profil Baru Ltd. is planned to be funded with Bank Loan
and Private Capital. Project Funding Structure is describable as follow:
1. Fixed Assets investment
Bank Loan
- Investment Loan (70%) Rp 10,087,221,000
- Interest during Construction Rp 1,226,501,000
------------------
Total Bank Loan Rp 11,313,722,000
Private Capital
- Investment (30%) Rp 4,323,095,000
- Management Fee Rp 50,436,000
- Commitment Fee Rp 140,942,000
------------------
Total Private Capital Rp 4,514,473,000
Total Investment Cost Rp 15,828,195,000
2. Addition of Working Capital is needed for 3 years:
Bank Loan:
Year-1 Rp 4,467,005,000
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 9

10. Year-2 Rp 1,517,650,000
Yaer-3 Rp 990,799,000
------------------
Total Working Capital Rp 6,975,454,000
Cost of money
- Interest level for Investment Loan, 14.00%
- Interest level for Working Capital Loan, 16.00%.
Grace Period
Grace period for the projected bank loan installment is needed for + 1 year.
Credit payment
Loan Investment return can be explained as follow:
- Year-1 Rp 1,500,000,000
- Year-2 Rp 2,000,000,000
- Year-3 Rp 2,000,000,000
- Year-4 Rp 2,500,000,000
- Year-5 Rp 3,313,722,000
------------------
Total Loan Return Rp 11,313,722,000
Profit and Loss Projection
In first production year 1997, the company receives profit a sum of Rp, 612,851,000. In second
production year 1997 is a sum of Rp, 2,003,738,000,-. In further years, the company’s net, income
keeps increasing up to the end of the production year. Loss / profit projection can be seen on
Attachment-03.
The company profit accumulation in tenth projection year is a sum of Rp, 30,306,422,000,-
Internal Rate of Return (IRR)
In Intenal Rate of Return analysis of Besi Profil Baru Ltd. is apparently 27.71%. It shows that fund
utilizing for that project is proper.
CONCLUSSION AND SUGGESTION
Conclusion
Based on this study analysis, we come to conclusion that Steel Iron factory development business is
rather proper, either being observed from the legality, marketing, technique, management aspects or
the company financial aspects,
Suggestion
For being able to implement this business in accordance with the development main goal and also
the plan in this study, we hoop that Besi profil Baru Ltd. may pay attention the suggestions as
follow:
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 10

11. 1. This feasibility study is made by some assumptions, For obtaining a business result
appropriately with this study, we suggest Besi Profil Baru Ltd. can refer and analyze every used
assumption.
2. In order that marketing smoothness can be guaranteed for long term. Besi Profil Baru Ltd. still
must keep its quality product, observe market condition and can also distribute safely, quickly
and precisely in time.
3. Supplies and production observing management will give influence much to produced product,
For that reason, it is suggested to Besi Profil Baru Ltd. in order to do it well.
4. The company basis capital as included on the company establishment official document a sum
of Rp……………, And for the equity which needed by Besi Profil Baru Ltd. is Rp,
…………………,. To fulfill the amount of needed equity, we suggest amount of basis capital in
the official document of notary can added appropriately to the amount of equity.
** Steel-SM.Microsoft Word **
Part of Book “A to Z Entrepreneur In Practice” Writer: Harmaizar Zaharuddin 11