A proposed expansion plan of a palm oil plantation company for Aras Plantation Group (APG)

Indrasith Arasaradnam, Arasendran (2020) A proposed expansion plan of a palm oil plantation company for Aras Plantation Group (APG). [Dissertation (University of Nottingham only)] (Submitted)

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Abstract

This proposal is to seek the approval from the board to invest in a sum of RM100.2 million through borrowings to expand our plantation business overseas through the acquisition of a 5,000 Ha Greenfield plantation land in Indonesia. This proposal will expand our plantation land bank from 34,000 Ha to 39,000 Ha and give APG a new scope of international presence.

The business plan proposal covers the industry as a whole and Malaysia’s leading presence as a producer of palm oil. The long-term prospects are positive as demand will continue to escalate with global population growth and hence demand. Palm oil remains the most efficient oil to its competitors. With the world population forecasted to reach 9 billion by 2050, planters are expected to produce an additional 56 million MT to meet this population forecast.

Through the competitor analysis, APG is confident that venturing overseas into Indonesia will result better growth in planted areas. Scarcity and suitability of land in Malaysia prompted most companies to venture overseas with Indonesia being the preferred destination for the various reasons elaborated.

Incorporating all the financials, the ROI is forecasted to be 9.1% with conservative assumptions made on CPO prices movements during the period forecasted.

After reviewing the primary and secondary data, I am making this business plan proposal to the Board of Directors for approval to expand APG into Indonesia through the acquisition into the 5,000 Ha Greenfield project based on its merits. APG needs to expand to remain relevant and vegetable oils and bio-fuel will continue to escalate in demand with the world population growth. APG has all the merits to take advantage of this expansion into Indonesia from its healthy cash position, the projected ROI derived from our analysis and the geographical location of the proposed land bank to enjoy economies of scale.

Item Type: Dissertation (University of Nottingham only)
Keywords: palm oil, plantation business, vegetable oils, bio-fuel
Schools/Departments: University of Nottingham, Malaysia > Faculty of Arts and Social Sciences > Nottingham University Business School
Depositing User: Arasaradam, Arasendran
Date Deposited: 06 Aug 2020 07:24
Last Modified: 06 Aug 2020 07:24
URI: http://eprints.nottingham.ac.uk/id/eprint/60001

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