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How can P.T Godwin Austen Indonesia raise capital/funds for growth into the shipping and logistics sectors?

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Introduction

´╗┐Saahil Khemnani 12G Business and Management Internal Assessment- First Draft Introduction The P.T Godwin Austen group, Indonesia was first established in 1994 through its predecessor company, P.T Salil Agung Imexcorp. The company is a 100% Indonesian owned international commodity trading company focused on the exports of Indonesian agricultural commodities, such as Coconut bye products, palm bye products, cashew nuts and spices. The company had come from humble and early beginnings as an importer of HPS ground kernel nuts in 1994, and went on to become Indonesia?s largest buyers of copra expellers in an average volume of 100,00 to 120,000mt per annum. By 1998/1999, P.T Godwin Austen had become the country?s leading importer of the Indonesian agricultural commodities. However, soon after, the financial crisis which had begun in 1998 slowed down a lot of importing opportunities for the company, and soon, importing seemed to become unsustainable option for the business, Hence the company has decided to move into exports of the related agricultural products including palm kernel. The company now wishes to expand the business and focus on exporting of wheat flour and groundnut kernel. To achieve this, the company plans to diversify its business model and move into logistics and shipping sectors to support and consolidate its agricultural export business. For such a venture, the company lacks funds or capital for growth in distribution for the commodities. This had therefore led me to the following research question, ?How can P.T Godwin Austen Indonesia raise capital/funds for growth into ...read more.

Middle

can see from the table above, P.T Godwin Austen is at a relatively strong market position and is the leading local exporter of palm oils for Indonesia. Growth in the company is foreseeable because the palm oil industry is advancing in Indonesia, and Indonesia has now become the world?s leading producers of palm oil. Since palm oil agriculture producers prefer supplying their products to local exporters, P.T Godwin Austen receives an advantage from its main foreign competitors in receiving the products earlier and thereby yielding more profit. Financial Liquidity and Cash flow A company is said to have more liquidity if most of its assets can be converted to cash easily. A deposit account at a bank or stock is the most liquid while buildings are the least. Below is a collection of the Current as well as fixed assets of P.T Godwin Austen. ASSETS 2011 (Rp.) 2010 (Rp.) Current Assets Cash and Cash equivalents 3.679.544.246 1,578,133,325 Accounts receivable trade 34.760.295.828 - Inventories 27.722.851.637 27.481.654.864 . . Total Current Assets 97.223.202.057 50.681.392.896 Total Non Current Assets 119.098.374.241 59.561.962.029 FIXED ASSETS Activity in 2011 Beginning Balance (Rp.) Additions (Rp.) Disposals (Rp.) Ending Balance (Rp.) Acquisitions Warehouse 4.975.000.000 4.198.500.000 - 9.173.500.000 Office & Renovation 139.285.000 2.500.000.000 - 2.639.285.000 . . . Total 6.837.429.791 15.047.886.711 236.820.000 21.648.496.502 Accumulated Deprectations Office and renovation 30.178.416 6.964.250 - 37.142.666 . . . Total 785.724.094 616.590.585 101.883.600 1.300.431.079 Book Value 6.051.705.697 20.348.065.423 Activity in 2010 Beginning Balance (Rp.) ...read more.

Conclusion

That is an above 80% increase in operational expenses in one year. A majority of these expenses come from maintenance and repair of the offices, as well as vehicles, specifically road vehicles. A recommendation that can be made to the company would be to move to a smaller office space, which will reduce maintenance costs. Since the company is also moving to the shipping sector, it will have to purchase ships, hence road vehicles will not be of much use. Therefore, the company can reduce the amount of vehicles in possession to further reduce the repair and maintenance costs of those vehicles. SWOT Analysis: Strengths: 1. Niche players in the local market, hence strong, competitive market position 2. 12 years of experience in the business, an excessive knowledge of both the industry and the main product Weaknesses: 1. Competitors have been in businesses longer and have established themselves quite well, so P.T Godwin Austen Indonesia is still a bit behind 2. Less funding for expanding the business to shipping and logistics sectors Opportunities: 1. Climatic changes that favor the company may cause the company to receive products faster and when prices rise, yield much more profit in the same time-frame 2. Expansion could result in a joint venture with port facilities in Kalimantan, which will integrate the business better. Threats: 1. Market is very volatile due to unpredictable climatic changes that could reduce stock for the company and in turn reduce profit ...read more.

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