Product Development and Business Model Plan of Analogue Rice

i

PRODUCT DEVELOPMENT AND BUSINESS MODEL PLAN
OF ANALOGUE RICE

ALDITH NATAKUSUMA

DEPARTMENT OF FOOD SCIENCE AND TECHNOLOGY
FACULTY OF AGRICULTURAL TECHNOLOGY
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2014

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STATEMENT ON BACHELOR THESIS AND
SOURCES OF INFORMATION AND COPYRIGHT
DELEGATION*
I hereby state that all statements inside my bachelor thesis under the title :

Product Development and Business Model Plan of Analogue Rice is solely my
own initiative or my own research under the supervision of the advisory committee,
unless it is clearly stated. This bachelor thesis has never been presented to any
institution or university to obtain certain achievement or degree in similar program.
References of all data and information have been clearly stated and can be varified.
I hereby assign the copyright of my writings to the Bogor Agricultural
University.
Bogor, 26 May 2014

Aldith Natakusuma
NIM F24090089

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ABSTRACT
ALDITH NATAKUSUMA. Product Development and Business Model Plan of
Analogue Rice. Supervised by SLAMET BUDIJANTO
Analogue rice is an artificial rice made from other carbohydrate sources
beside rice. Main purpose of this research was to formulate and plan business
model for analogue rice industry. Analogue rice on this research was mainly made

from sago starch with another complements, such as white corn flour, yellow corn
flour, and cassava. Analogue rice produced was tested using hedonic test and
found that cassava analogue rice was the best one to be developed industrially.
Business model for analogue rice used business canvas, which parameters are
customers relation, key partnership, key activities, key resources, value
propositions, cost structure, revenue streams, channels, and customer segments.
Business feasibility study showed that B/C of analogue rice was 1.0563; NPV
Rp1 061 036 059; IRR 16.53%; payback period 8.82 years; and BEP was 510.17
kg output/day). It can be concluded that analogue rice industry was feasible
economically.
Keywords: analogue rice, business model canvas, business feasibility study

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PRODUCT DEVELOPMENT AND BUSINESS MODEL PLAN
OF ANALOGUE RICE

ALDITH NATAKUSUMA

Bachelor Thesis

Submitted as a fulfillment to obtain
Food Science and Technology Bachelor Degree
in the Undergraduate program of
Department of Food Science and Technology

DEPARTMENT OF FOOD SCIENCE AND TECHNOLOGY
FACULTY OF AGRICULTURAL TECHNOLOGY
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2014

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Thesis Title : Product Development and Business Model Plan of Analogue Rice
Name
: Aldith Natakusuma
NIM
: F24090089

Approved by

Prof Dr Ir Slamet Budijanto, MAgr
Advisor

Acknowledged

Dr Ir Feri Kusnandar, Msc
Head Departement

Graduate Date:

viii

FOREWORD
Praise and gratitude author prayed to Jesus Christ Almighty over all His
grace so that this scientific work is successfully completed. Author would like to
thank his family, especially his parents and sister for their unending love, support,
and encouragement. Author owe his deepest gratitude to his advisor, Prof. Dr. Ir.

Slamet Budijanto, M.Agr, for all support, advice, patience, and guidance during
the research. Special thanks to Mrs. Tintin Sarianti, and Mr. Faleh Setia Budi as
examiners. Writer also thanked Larry Page and Sergey Brin who invented search
engine which helped writer to finish this thesis. Writer also thanked to Gibran,
Alay, Adly, Uset, Bayu, Wal, Ardy Brian (Acin), Ncen, Kyo, Farah, Satrya, Lina
Adju, Yantel, Jodi, Sobich, Brian, Daniel, Agatha, Ryan Stevan, Kak Leo, Mba
Fida, IAAS Family, Trina, and all of my friends who always support whatever I
did.

Bogor, May 2014
Aldith Natakusuma

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TABLE OF CONTENT
TABLE OF CONTENT
TABLES LIST
FIGURES LIST
Introduction
Background

Research Purpose
Methods
Product Development
Determining Optimum Temperature
Determining the Best Formula
Generating Business Model
Result and Discussion
Determining Optimum Temperature and Best Formula
Proximate and Density Analysis
Business Model
Technical Aspect
Business Entity and License
Business Model Identification
Customer segments
Value Propositions
Channels
Customer Relationships
Revenue Streams
Key Resources
Key Activities

Key Partnerships
Cost Structure
Conclusion
Recommendation
Literature
APPENDICES

ix
x
x
1
1
2
2
2
2
3
4
5
5

7
7
7
10
11
11
11
11
11
12
12
12
12
12
14
15
15
18

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TABLES LIST
1. Analogue rice formulation
2. Optimum temperature of each formula
3. Proximate and density analysis of cassava analogue rice
4. Machinery Information
5. Building legend and dimension
6. Investment cost
7. Cost of production for 1 year
8. Financial aspects of analogue rice

2
5
7
9
10
13
14
14

FIGURES LIST

1. Flow chart of analogue rice production
2. Business Model Canvass (Animated)
3. Result of Analogue Rice
4. Hedonic Rate Score of Uncooked Analogue Rice
5. Hedonic Rate Score of Cooked Analogue Rice
6. Reinforced Rice Production Line
7. Building Layout
8. Business Model Canvas

3
4
5
6
7
9
10
13

APPENDICES LIST
1. List of documents needed to apply for PT license
2. List of documents gained after PT registration
3. List of documents needed to apply for IUI
4. Reinforced Rice Production Line (200 kg/hr)
5. Packaging Machine Specification
6. Assumptions
7. Investment cost
8. Overhead cost
9. Variable cost
10. Depreciation cost
11. Profit/Loss
12. Reinvestment
13. Salvage Value
14. Business feasibility
15. Source of Information

18
18
18
19
20
21
22
24
24
25
27
29
30
31
33

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Introduction
Background
Ministry of Agriculture recently conducted strategic plan to solve food
safety and security issue. One of the critical issue was to reduce rice consumption
in Indonesia and promote food diversity consumption. Several researches and acts
have been conducted to overcome food safety and security issue, such as
promoted indigenous food and ministerial regulation regarding food diversity.
Ministry of agriculture also supported funding for UKM (Small and Medium
Enterprises) in Indonesia to run diversity of food consumption program (Ministry
of Agriculture, 2010). Changing people practice in consuming something is not
easy. It is easier to turn carbohydrate sources in Indonesia into rice by applying
science and technology. Rice consumption in Indonesia is massive since it is
Indonesians’ staple food, while on the other hand this country is rich of other
carbohydrate sources. Several resources which are very potential to be consumed
nationally as main source of carbohydrate are sago starch, white corn flour,
yellow corn flour, and cassava. Sago plantation in Indonesia is the biggest in the
world totaled 1.12 million hectares, equal to 51.3% of total sago plantation in the
world (Suswono 2010). As a potential carbohydrate source, sago has not been
consumed nationally as much as rice. Sago has been consuming commonly at
rural area at Papua and Maluku (Ariani 2010).
Besides sago, Indonesia also produced 18.5 million tons of yellow corn and
25.5 million tons of cassava (Statistics Indonesia 2013). There is white corn
variety which is being developed by Ministry of Agriculture as food. Several area
in Indonesia already consumed white corn as main carbohydrate intake such as
NTT and Gorontalo (Ministry of Agriculture 2013). These carbohydrate sources
have not been utilized optimally as daily carbohydrate intake on national scale,
because Indonesians used to eat rice every time they eat. Besides availability, sago
has low glycemic index 28(Haliza in Alfons 2011) which is lower than rice,
ranged between 34-74(Indrasari et al. 2013). One of the most promising solution
to support food diversification is converting sago starch into analogue rice which
is very promising to support government plan on food diversity issue.
Analogue rice is rice imitation, made from another flours besides rice
(Budijanto et al. 2011). Several researches regarding analogue rice have been
done. Research about artificial rice (Kurachi 1995), rice substitute based on
soybean (Kato 2006), sorghum-based analogue rice (Budijanto and Yuliyanti
2012). Analogue rice can be processed through several methods, but one of the
most promising one to develop it as commercial product is hot extrusion (Mishra
et al. 2012). Hot extrusion can be done by using double screw extruder or single
screw extruder.
Problem Formulation
Most research about analogue rice focused on processing (Mishara et al.
2012). Hedonic test and business model has not been done in many researches
before. In this research, the best formula was selected from result of hedonic test
both for cooked and uncooked analogue rice. Besides hedonic test, ingredients
availability was also one of the crucial component in determining the best

2

formula. The business model was constructed for the best formula after it had
been chosen.
Research Purpose
To formulate analogue rice based on selected carbohydrate sources (Sago,
white corn, yellow corn, and cassava) and plan business model for the best
formula of analogue rice.

Methods
Method for this research was differentiated into two parts; product
development and business model plan.
Product Development
Product formulation was done to obtain the best formula for generating
business model and done in several steps. First was determining best temperature
for each formulations, second was sensory evaluation, and the last was nutrition
and density analysis for the best formula.
Determining Optimum Temperature
There were 3 potential formulations to be developed as analogue rice,
showed on table 1.
Table 1. Analogue rice formulation
Formulation
Cassava
Oil
fiber (g) (ml)

Sago
Other
Water
GMS
Jelly
starch Carbohydrates
(ml)
* (%) Powder *
(g)
(g)
(%)
F1
4,000
750a
250
100
2,000
2
0.1
b
F2
4,000
2,150
250
100
600
2
0.1
F3
4,000
750c
250
100
2,000
2
0.1
a
b
c
= Yellow corn flour, = Cassava, = white corn flour, *= % based on total weight
of sago starch + other carbohydrate +cassava fiber
Sago starch cannot be used in 100 % of formulations, because it is needed
as a binder. Analogue rice developed in this research used other carbohydrates,
cassava fiber, oil, water, GMS, and hydrocolloid. Each component has an
important role to develop analogue rice. Fiber was used to increase hardness of
the product (Yanniotis 2007),water was used as dough’s solvent, oil is used as
lubricant during extrusion (Mishra et al. 2012), GMS is used as binder to improve
texture of analogue rice, and hydrocolloids were used as water’s binder to keep
moisture of analogue rice (Mishra et al. 2012). Analogue rice production process
is shown on Figure 1, adopted from Budijanto (2012).

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Temperature used for processing each formula was different because
carbohydrates have its own gelatinization temperature. Gelatinization temperature
of sago starch was varied between 69.4 – 70.10 C (Ahmad et al 1999).
Gelatinization temperature of white corn starch was, 62-740C (Aini and Hariyadi
2010), yellow corn starch on extruder was 950C (Kokic et al. 2013), and
gelatinization temperature of cassava was 68-710C (Uchendu et al. 2013).

Figure 1. Flow chart of analogue rice production (Adopted from Budijanto and
Yuliyanti 2012)
Determining the Best Formula
Best formula was determined by sensory evaluation. Analogue rice was
tested using hedonic rate test by 30 untrained panelists (BSN 2006). The attributes
that tested on the uncooked rice were only color, form, and overall. Meanwhile on
the cooked rice, the attributes tested were color, odor, form, texture, taste, and
overall. Scoring was scaled between 1 (dislike most) to 7 (like most). Data was
tested using univariate all two way analysis using one way Analysis of Variance
(ANOVA). If there was a real difference on 95% scale, Duncan’s Multiple Test

4

was done as the advanced test. Water content of best formula also tested to
determine as product specification.
Generating Business Model
Market for analogue rice was promising, especially if targeted niche
market. Food diversification program is hard yet possible. Targeting niche market
who really needs this product is the first step to start food diversification program
in Indonesia. One of the most potential market is diabetics. As a diabetics, they
still need carbohydrate source, but the glycemic index must be kept as low as
possible. Cassava has low GI 41(Anonim, 2014) and sago 28 (Haliza in Alfons
2011), which considered as a food with low glycemic index. In this research,
cassava analogue rice has a very potency to be developed as ‘rice’ for diabetics.
Technical and legal aspect should be done before business model is
developed. Technical aspects consist of location, ingredients, production area,
technology, production process, and building layout. Legal aspect consist of
business entity, business license, and building permits (Nurmalina et al. 2010).
Business model is a new concept to plan a business which is different with
business plan. On business plan, there are unchecked hypotheses and hard to be
changed. There are also hypotheses on business model, but they are easily
changed. Hypotheses were written on a ‘canvas’ and if there is unmatched
hypothesis , both business owner and investor can easily adjust it. Therefore,
analogue rice business would use business canvas to generate its business model
(Osterwalder and Pigneur 2010). Components for business canvass are customer
segments, value propositions, channels, customer relationships, revenue streams,
key resources, key activities, key partnership, and cost structure. Cost structure
consists of investment cost, production cost, and overhead cost. Business canvass
points out the important things and explains the whole business in one picture as
shown in figure 2.

Figure 2. Business Model Canvass (Ostelwalder and Pigneur 2010)

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To determine economic feasibility, parameters used were Net Present
Value (NPV), Internal Rate Return (IRR), Payback Period, Break Event Point
(BEP), and Net Benefit Cost Ratio (Net B/C) (Nurmalina et al. 2010). IRR is a
rate of return used in capital budgeting to measure and compare the profitability of
investments. NPV is a time series of cash flows, both incoming and outgoing, is
defined as the sum of the present values (PVs) of the individual cash flows of the
same entity. Net B/C ratio shows how much profit generate per capital
expenditure. Payback period is the time needed get back the initial investment.
BEP is the point of balance between making either a profit or a loss (Nurmalina et
al. 2010).

Result and Discussion
Determining Optimum Temperature and Best Formula
Determining optimum temperature is depended on gelatinization
temperature of starches used which varied widely depending on starch sources. If
the temperature was too low, analogue rice would be crumbly and turned into
paste when cooked. If the temperature was too high, analogue rice would be
colored blackish or too dark. After several trials, optimum temperature for each
formulation is shown on Table 2 and rice produced, both uncooked and cooked is
showed on Figure 2.

Top: uncooked analogue rice; a=yellow corn, b=white corn, c=cassava
Bottom: cooked analogue rice; d=yellow corn, b=white corn, c=cassava
Figure 3. Result of Analogue Rice
Table 2. Optimum temperature of each formula
Formula
F1
F2
F3

T1
95
85
95

Temperature
T2
95
85
95

T3
85
75
85

F1 = yellow corn analogue rice, F2= cassava analogue rice, F3= white corn
analogue rice.

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Best formula was tested using hedonic rate test by 30 panelists for both
uncooked and cooked analogue rice. Figure 3 showed sensory acceptance for
uncooked rice. Shape of all uncooked rice was not significantly different among
samples. Color of the uncooked rice showed that yellow corn analogue rice had
the lowest score in average, significantly different with white corn analogue rice
and cassava analogue rice. Overall acceptance of uncooked yellow corn analogue
rice was the lowest and significantly different with others. These condition for
both color and overall of uncooked analogue rice can be explained by natural
rice’s color. Naturally, rice’s color is white, meanwhile yellow corn analogue rice
colored in yellow. This condition might lead yellow corn analogue rice has the
lowest color and overall acceptance among other formulas.
6
5

Score

4

4.93a

4.63a

4.67a

4.6a

4.97a

4.9a

3.83b
4.57a

3.13b
Cassava

3

Yellow Corn
2
White Corn
1
0
1

2

3

Parameter

Figure 4. Hedonic Rate Score of Uncooked Analogue Rice
a= not significantly different, b=significantly different
Cooked analogue rice hedonic rate test was based on color, form. odor,
taste, texture, and overall. There was no significant difference for odor, form, and
color among samples. They were significantly different on taste, texture, and
overall. Taste score of yellow corn analogue rice was the lowest and different
significantly with white corn analogue rice and not different significantly with
cassava analogue rice. Texture of yellow corn analogue rice was different
significantly with white corn analogue rice and cassava analogue rice. Overall
acceptance showed that yellow corn analogue rice different significantly with
white corn analogue rice and cassava analogue rice. Results of hedonic rate test
can be seen on figure 4 for each parameter.
Cassava and white corn analogue rice scored highest, both for uncooked
and cooked. They were not different significantly. Cassava availability in
industrial scale as ingredients was the highest, meanwhile white corn was the
lowest. Therefore, on the business model, cassava analogue rice going to be
developed commercially.

Score

7

4.70a 4.63a
5
4.33a
4.5 3.97 a 4.00a3.97a
4.00a3.93a,b
4.07a 4.20a
3.97a
3.80b
4
3.70a 3.73a
3.47b
3.73a
3.43b
3.5
3.57a
3
2.5
2
1.5
1
0.5
0
Color
Form
Odor
Taste
Texture Overall

Cassava
Yellow Corn
White Corn

Parameter

a= not significantly different, b=significantly different
Figure 5. Hedonic Rate Score of Cooked Analogue Rice

Proximate and Density Analysis
Best formula, cassava analogue rice was analyzed to identify its nutrient
content and density and shown on Table 3. Density of rice was used to determine
size of packaging. Each pack will be contained 5 kg or analogue rice. Packaging
material used is polyethylene (PE) and sized 30 x 45 cm. Water content was used
as the specification of product to keep it save from spoilage. This product has
lower water content than standard rice that set by Bulog, 14% (Bulog 2014).
Table 3. Proximate and density analysis of cassava analogue rice
Parameter
Water (%)
Density (gr/ml)

Amount
12.89 + 0.08
0.679 + 0.006

Business Model
Market Aspect
There is 7.3 million of diabetic in Indonesia per 2013 and increasing
(Novo Nordisk 2013). Assuming there is 6,000 targeted people who buy this
product in the establishing stage, a 1 ton production of analogue rice per month is
very possible to establish and sell this product for diabetics.
Technical Aspect
The factory of analogue rice will be located in Sentul industrial area (Bogor,
Indonesia). Building a factory inside industrial area has some beneficial effect

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such as no need of environmental analysis effect, waste water treatment plant, and
building permit (IMB). Ingredients used to produce this analogue rice are cassava
starch, sago starch, cassava fiber, GMS, jelly powder, palm oil, and water. There
is a difference between the real production and preliminary research ingredient. It
is cassava. For economical reason and continuous supply, cassava starch is
preferred to fresh cassava. Source of each ingredients is shown in appendix 15. To
produce 1 ton of analogue rice per day, ingredients needed are cassava fiber 50
kg, sago starch 800 kg, cassava starch 150 kg, GMS 20 kg, palm oil 20 liter, water
0.5 m3, and jelly powder 1 kg. In this location, electricity, communication, and
water piping already existed and developed for industrial function. Total cost to
produce analogue rice in a year can be seen on appendix 9.
There will be 6 rooms within the industry site; production room, office
room, ingredients storage, product storage, garage, and toilet. Each room size is
shown on Table 4 and building layout is shown in Figure 4. Total building area is
376 m2 and land area is 26 m x 19 m (494 m2).
In the production room, there will be reinforced rice machinery, packaging
machine, and temporary rice storage. Detail equipments for reinforced rice
production line is shown on appendix 4 and 5. Layout for installment of
reinforced production line is shown in figure 7, and packaging line is shown in
figure 6.

Figure 6. Reinforced Rice Production Line

Table 4. Machinery Information
No
1
2
3
4
5
6
7
8

Item
Mixer
Screw Conveyor
Twin-screw Extruder
Cooling Conveyor
Pneumatic Conveyor
Seven Layer Oven
Air Conveyor
Polishing Machine
9

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Figure 7. Building Layout
Table 5. Building legend and dimension
Code
A
B
C
D
E
F
G
H

Item
Rice production line
Packaging Machine
Office
Product Storage
Ingredient Storage
Garage
Toilet
QC Room

Dimension (m)
16 x 7
2x2
5x5
8x5
8x5
5x6
2x2
5x5

Business Entity and License
Two different categories of license should be managed. They are business
licenses and production licenses. Business licenses needed are PT license and IUI
(Industrial Permit) license. List of documents needed to obtain PT license and
documents gained after PT registration are shown in appendix 1 and 2. IUI can be
processed after PT license is registered. Contractor usually will take care of IMB
as long as the company already gained PT and IUI license. Documents needed for
IUI is shown in appendix 3. IMB usually need AMDAL (Environmental Impact
Assessment) and HO (Disturbance Permit) but since factory site is going to be
located at Sentul industrial area, HO, IMB, and AMDAL would not be needed.

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Starting production, BPOM registration is a must, where HACCP and Halal
are voluntary. GMP (Good Manufacturing Practice) will be needed for BPOM
certification. GMP created by company itself will be audited by BPOM auditor as
prerequisite for BPOM certification. BPOM certification is compulsory for
medium food industry to ensure food safety and quality to customers (BPOM,
2013).
Business Model Identification
Business model on this research was explained using business model
canvass. Main fields explained on business model canvass were customers, offers,
infrastructure, and cost structure. Contents of business canvass itself was customer
segments, value propositions, channels, customer relationships, revenue streams,
key resources, key activities, key partnership, and cost structure (Osterwalder and
Pigneur, 2010).
Customer segments
Customers comprise the heart of business model. Without customers, a
business cannot generate any profit; no matter how great is the item. Analogue
rice customer segment is the niche market. There are 7.6 million diabetics in
Indonesia (Novo Nordisk 2013). Targeting 6,000 people in this segment is very
possible, especially diabetics are forbidding to eat rice, and cassava analogue rice
can fulfill their desire to eat rice. This product, in the future, is going to be
developed as a ‘vehicle’ for functional ingredients. Middle-upper segment
concern more about food for health. They are mostly willing to pay extra price for
food that combine appetite and health effects.
Value Propositions
Value proposition is the reason why this company differ from others.
Value proposition for analogue rice is functional food that can be eaten as staple
food. First step of functional properties if this product is its low GI so that
diabetics can eat this product. in the future, this product is very promising to be
developed as ‘vehicle’ for other functional ingredients.
Channels
Communication, distribution, and sales channels are the ways of company
to interact with potential customers. Distribution channel for analogue rice can be
divided into two segments. They are direct and indirect selling. Direct selling
targeting high-end supermarket like Serambi Botani, Farmer’s Market, Food
Mart, Food Hall, and Hypermart are very promising as selling place. Indirect
selling is done by partnering with distributors. Relationship with distributors must
be built to ensure this product is available everywhere in Indonesia.
Customer Relationships
Customer relationship describes how company engage with each segment
of customers specifically. Analogue rice should be advertised efficiently. As most
start-up companies did, online media such as Facebook and Twitter are the
cheapest campaign media.

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Revenue Streams
Main revenue of this company is product sales. Revenue streams for
analogue rice comes from selling the product. Within one year, estimated product
sales is 261 ton and sold at Rp 12,600/kg. So that, within 1 year, this company can
generate revenue Rp 3,288,600,000.
Key Resources
Key resources allow an enterprise to create and offer value propositions,
reach markets, maintain relationship with customer, and generate revenue. Key
resources can be physical, intellectual, human, and financial. Key resources for
this business are product development and formula of each product. Formula of
each product is must be kept secretly to ensure investors that no other companies
will be able to produce the same product illegally. In the future, addition of
functional ingredients are very promising to develop this product as functional
food.
Key Activities
As an enterprise, a lot activities should be done to ensure that business is
running well. Among those activities, there will be key activities which play
important roles to grow and run the business in the future. As a new enterprise
which sells new product, analogue rice, building network with local and national
retails is very important. Promotion in social media is needed to introduce this
product to customers. Product development is also important to reduce its
production cost and formulate new products with functional ingredients.
Key Partnerships
Partnerships are becoming a cornerstone for many business models.
Companies create alliances to optimize and maximize their business model. Key
partners for this enterprise will be suppliers of ingredients, distributors, investors,
and researchers. Suppliers of ingredients are ensuring production availability. The
suppliers selected were based on availability, economic efficiency, and portfolio
of the suppliers. Produced products need strong wide distribution chain. This
enterprise will not focus on distribution, so that distributors are needed.
Advantage of developing partnership with distributors is: they already have
distribution channel widely. Researchers are needed to synchronize between
product development, functional ingredients, and how to put these ingredients into
analogue rice. Partners for analogue rice production is can be seen in appendix 15.
Cost Structure
Cost structure of this enterprise will be differentiated into investment cost,
production cost, and overhead cost. These costs were used to construct business
feasibility and generate IRR, NPV, and B/C ratio. Overall business canvas is
showed on Figure 6.

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Figure 8. Business Model Canvas (Osterwalder and Pigneur, 2010)

Initial investment needed to build cassava analogue rice factory is for
building, equipments, and licenses. Main equipment for producing analogue rice
is reinforced rice production line which is ordered from Jinan Saibainuo
Technology Development Co., Ltd, China. Sentul industrial area is selected and
cost for building is obtained from direct correspondent with architect. Summary
for investment cost is shown on table 5, and detailed investment cost is shown on
appendix 10.
Table 6. Investment cost
Item
Equipments
Building
Licenses
Others
Total

Total
Rp1 086 237 000
Rp1 730 400 000
Rp26 680 000
Rp53 957 000
Rp2 897 274 000

The cost for analogue rice production is divided into three parts, variable
cost, overhead cost, and depreciation cost. On the variable cost, cassava fiber,
sago starch, cassava starch, GMS, packaging, palm oil, and jelly powder are
obtained from distributors and producers directly.
Total cost to process 1.541 ton of analogue rice ingredients is shown on
table 6. Detailed for overhead cost is shown in appendix 8, variable cost in
appendix 9, and depreciation cost in appendix 10.

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Table 7. Cost of production for 1 year
Component
Overhead Cost
Variable Cost
Depreciation Cost
Total Cost

Cost
Rp482 927 602
Rp2 073 449 250
Rp137 007 000
Rp2 693 383 852

Total output was not same with input because there will be defect. From
production line, total yield is assumed 65% due to drying and loss. Therefore,
from 1.541 ton of ingredient, total output is 1000 kg for each day production.
Constructing business feasibility need some assumptions, so that analogue rice
can be determined its economical feasibility. Main assumptions used were: In one
year (261 working days) there will be 261 ton of analogue rice produced. Price of
production for each kg is Rp 10 319.48. Price of production is obtained from total
cost (Table 6) divided by total analogue rice produced per year. Economical age
of this business was 10 years. Total workers are 7 people, where 4 people
responsible for production, 1 manager, 1 QC staff, and 1 purchasing staff.
Detailed information about the assumptions used is shown on appendix 6.
Financial aspects observed for business feasibility are IRR, NPV, and B/C ratio.
These number were obtained from appendices 7-14.
There were assumptions used to calculate financial aspects of analogue rice
and they were shown on appendix 6. Based on calculation, this company could
generate net profit Rp520 814 129 per year. Indicators of feasible business are:
IRR > Discount rate; NPV (+), and B/C ratio is >1. IRR >Discount rate means
that this business has 0 NPV when discount rate is 16.53% (more that Discount
rate itself, 10.25%). NPV (+) means that this business could generate profit on its
financial age. Benefit/cost ratio >1 means every 1 resources spent, it could
generate profit because the output is bigger than the resource itself. BEP is the
minimum production needed to balance the financial condition of this company.
Financial aspects of analogue rice is shown on table 8.
Table 8. Financial aspects of analogue rice
Parameter
NPV
Benefit/Cost Ratio
IRR
Payback period (Year)
BEP (kg output/day)

Value
Rp1 061 036 059
1.0563
16.53%
8.82
510.17

Conclusion
Based on the research conducted, cassava analogue rice is the most
promising to be produced in industrial scale. Best temperature for cassava

15

analogue rice was T1 = 850C, T2 = 850C, T3 = 750C. Uncooked cassava analogue
rice overall acceptance and color were significantly different from yellow corn
analogue rice and not significantly different with white corn analogue rice.
Texture and overall parameter of cassava analogue rice were significantly
different with yellow corn analogue rice and not significantly different from white
corn analogue rice. Business feasibility of cassava analogue rice was fulfill each
parameters where IRR was 16.53% (more than discount rate) ; Rp1 061 036 059
(+); and B/C ratio was 1.0563 (>1). Payback period of analogue rice industry was
8.82 years, and its break event point is 510.17 kg of output per day. It can be
concluded that analogue rice business is feasible economically.

Recommendation
Business canvass of cassava analogue rice can be tested after investors
were found. For the first time, this business can focus on introduction to
customers, especially middle-upper segment. In the future, analogue rice is also
promising to be developed as a ‘vehicle’ for specific consumer, i.e. diabetic and
anti-cancer. In vitro experiment also needed to obtain the real GI of cassava
analogue rice in this research. Further research is needed to develop this product
and also market research should be conducted.

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17

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18

APPENDICES
Appendix 1. List of documents needed to apply for PT license
Item
Copy of ID card of founders (minimum 2 people)
Copy of CEO's NPWP
Photo of CEO 3x4 2 pcs (colored)
Name of Company
http://aria.bapepam.go.id/reksadana/files/regulasi/UU%2040%202007%20Persero
an%20Terbatas.pdf

Appendix 2. List of documents gained after PT registration
Item
Name of Company
Certificate of incorporation
Domicile of the company
NPWP of company
SKT
Endorsment certificate issued by ministry of law
SIUP
TDP
BNRI
http://aria.bapepam.go.id/reksadana/files/regulasi/UU%2040%202007%20Persero
an%20Terbatas.pdf
Appendix 3. List of documents needed to apply for IUI
Item
Application form for IUI
Copy of BOD and commisioners ID
Copy of NPWP
Copy certificate of company
Certificate of company domicile
Recommendation from headman
Copy of SIUP and TDP
Source:http://www.satulayanan.net/layanan/mendapatkan-izin-usahaindustri/prosedur-pembuatan

19

Appendix 4. Reinforced Rice Production Line (200 kg/hr)
Component
Mixer BFJI/3(one set)
Screw
conveyor
LXSL- I
(one set)
Twin-screw
Extruder
SLG70-II
(one set)

Detail
Capacity: 30KG/6minutes
Power:3.0 KW
Real power:2.0KW
Dimension(m):
0.95×0.5×1.2
Power(KW): 0.75
Real power(KW): 0.5
Dimension(m):
2.5×0.5×2.0
Capacity(KG/h):200kg/h
Total power(KW): 45
Real power(KW):30
Dimension(m):
2.7×0.9×1.9

Cooling
conveyer
LQS-I
(one set)

Power(KW): 0.72kw
Real power(KW): 0.5
Dimension(m):
5×0.55×3.5

Air conveyor
FSJ-0.75
(one set)

Power(KW): 1.1
Real power(KW):1.1
Dimension(m):
0.7×0.55×3.5

Five—layer
oven
KX-5-8
(one set)

Power(KW): 60
Real power(KW): 50
Dimension(m):
8.0×1.3×1.8

Air conveyor
FSJ-0.75
(one set)

Power(KW): 1.1
Real power(KW):1.1
Dimension(m):
0.7×0.55×1.8

Polishing
Machine
PGJ-II
(one set)

Power(KW): 1.5
Real power(KW):1.5
Dimension(m):
1.7×0.8×1.6

Picture

20

Appendix 5. Packaging Machine Specification
Type
Filling System
Volume
Accuracy
Packing Speed
Electric Power
Container Type
Dimension

: WP – AW5
: Digital Weighing System
: 1,00-5,000 gr
: +0.5-2%
: 500 – 700 bags/hour
: 3,500 watt, 220/380 V, 50 Hz
: AL=PE, OPP+PE, NY+PE and other sealable paper
: 0.4 x 0.7 x 1.99 m

21

Appendix 6. Assumptions
Assumption
1. Each day, total material processes 1,541 kg.
2. Product lost is 35.11% due to drying and defect.
3. On the first year, product sales is 80% of total production due to trial and
error.
4. Discount rate is 10.25% (Bank Central Asia, 2014).
5. Ingredients price is stagnant year to year.
6. Selling price of analogue rice is Rp 63.000/ pack.
7. The weight of each pack analogue rice is 5 kg.
8. Labor cost is Rp 2,500,000 per month.
9. Manager cost is Rp 3,500,000 per month
10. Tax is 12.5% of profit (Directorate General of Taxes, 2014).
11. 1 USD = Rp 12,500.
12. Selling price of analogue rice is stagnant.
13. Number of analogue rice production per year is stagnant.
14. Payback period is based on NPV.
15. There is reinvestment on every year for trademark license and on the sixth
year, there is another reinvestment.
16. Total working days within 1 year is 261 days.

22
22

Appendix 7. Investment cost
Item
Equipments
Reinforced rice production line
Conveyor belt
Warehouse Storage Steel Trolley
Freight production line + Conveyor Belt
Insurance (5% of total cargo price)
Import tax and Local transportation
Freight Packaging Machine
Digital scale 3 kg
Digital scale 50 kg
Measuring Cylinder Pyrex 1 liter
Small Saucepan 2 liter
Rice Storage
Packaging machine
Stainless Steel Pot Capacity 50 liter
Hyno truck 110 SL
Samsung AC split 3/4 pk
Computer
HP Deskjet 1050 All-in-One
Office Desk + Table
Fax Machine Panasonic KX-FT981
Oven

Quantity Unit
1
3
2
67.5
1
1
1
1
1
10
10
1
1
10
1
1
1
1
1
1
1

set
set
unit
m3
unit
unit
unit
unit
unit
unit
unit
unit
set
unit
unit
unit
set
unit
set
unit
unit

Price/unit
$38 500.00
$800.00
$41
$50.00
$1 965.00
Rp120 000 000
Rp4 000 000
Rp999 000
Rp1 700 000
Rp454 000
Rp235 000
Rp3 000 000
Rp165 000 000
Rp579 500
Rp186 300 000
Rp4 659 000
Rp5 000 000
Rp619 000
Rp1 000 000
Rp1 050 000
Rp500 000

Total
Rp481 250 000
Rp30 000 000
Rp1 025 000
Rp42 187 500
Rp24 562 500
Rp120 000 000
Rp4 000 000
Rp999 000
Rp1 700 000
Rp4 540 000
Rp2 350 000
Rp3 000 000
Rp165 000 000
Rp5 795 000
Rp186 300 000
Rp4 659 000
Rp5 000 000
Rp619 000
Rp1 000 000
Rp1 050 000
Rp500 000

23

Digital Scale 100 gram

1 unit

Rp700 000
Sub Total

Rp700 000
Rp1 086 237 000

494 m2
376 m2

Rp1 600 000
Rp2 500 000
Sub Total

Rp790 400 000
Rp940 000 000
Rp1 730 400 000

Building
Land
Building
Licenses
Trademark License
BPOM Registration
BPOM Analytical
GMP registration
PT License

1
1
4
1
1

unit
unit
unit
unit
unit

Rp600 000
Rp3 000 000
Rp1 820 000
Rp5 000 000
Rp10 800 000
Sub Total

Rp600 000
Rp3 000 000
Rp7 280 000
Rp5 000 000
Rp10 800 000
Rp26 680 000

Others
Wall hung basin kris wht jd0018
Basin tap kris CHR 19001KS-E5
Toilet kris siphon one piece wht
Exhaust fan KDK 40 AAS
Installment Cost

1
1
1
6
3

unit
unit
unit
unit
person

Rp525 000
Rp439 000
Rp925 000
Rp553 000
$1 300
Sub Total
Total

Rp525 000
Rp439 000
Rp925 000
Rp3 318 000
Rp48 750 000
Rp53 957 000
Rp2 897 274 000

23

24
24

Appendix 8. Overhead cost
Component
Electricity
Labor
Manager
Solar
Telephone and internet
Stationary
Marketing and Promotion
Water

Quantity
801.76
6
1
200
1
1
1
30

Unit
Price/unit
Total/year
kWh/day
Rp972 Rp194 827 602
People/month
Rp2 500 000 Rp180 000 000
People/month Rp35 000 000
Rp35 000 000
litre/month
Rp5 500
Rp13 200 000
unit/month
Rp250 000
Rp3 000 000
set/month
Rp50 000
Rp600 000
unit
Rp50 000 000
Rp50 000 000
m3/month
17500
Rp6 300 000
Total
Rp482 927 602

Appendix 9. Variable cost
Item
Cassava fiber
Sago starch
Cassava starch
GMS
Palm oil
Water
Packaging
Jelly Powder

Quantity
13050
208800
39150
5220
5220
130.5
52200
261

Unit
kg
kg
kg
kg
liter
m3
pack
kg

Price/unit
Rp 1 250
Rp 7 600
Rp 5 000
Rp 30 500
Rp 10 000
Rp 17 500
Rp 750
Rp 83 000
Total

Total/year
Rp 16 312 500
Rp 1 586 880 000
Rp 195 750 000
Rp 159 210 000
Rp 52 200 000
Rp 2 283 750
Rp 39 150 000
Rp 21 663 000
Rp 2 073 449 250

25

Appendix 10. Depreciation cost
Item
Production Room
Reinforced rice production line
Conveyor belt
Warehouse Storage Steel Trolley
Digital scale 3 kg
Digital scale 50 kg
Measuring Cylinder Pyrex 1 liter
Small Saucepan 2 liter
Rice Storage
Packaging machine
Stainless Steel Pot Capacity 50
liter
Oven
Digital Scale 100 gram

Quantity Unit
1
3
2
1
1
10
10
1
1

Price/unit

Total

Economical Age
(year)

Depreciation
Cost/Year

set
set
unit
unit
unit
unit
unit
unit
set

$38 500.00
$800.00
$41
Rp999 000
Rp1 700 000
Rp454 000
Rp235 000
Rp3 000 000
Rp165 000 000

Rp481 250 000
Rp30 000 000
Rp1 025 000
Rp999 000
Rp1 700 000
Rp4 540 000
Rp2 350 000
Rp3 000 000
Rp165 000 000

10
10
5
5
5
2
5
5
10

Rp48 125 000
Rp3 000 000
Rp205 000
Rp199 800
Rp340 000
Rp2 270 000
Rp470 000
Rp600 000
Rp16 500 000

10 unit
1 unit
1 unit

Rp579 500
Rp500 000
Rp700 000

Rp5 795 000
Rp500 000
Rp700 000

5
5
5

Rp1 159 000
Rp100 000
Rp140 000
Rp73 108 800

10
10
10

Rp52 500
Rp43 900
Rp92 500
Rp188 900

Sub Total
Toilet
Wall hung basin kris wht jd0018
Basin tap kris CHR 19001KS-E5
Toilet kris siphon one piece wht

1 unit
1 unit
1 unit

Rp525 000
Rp439 000
Rp925 000

Rp525 000
Rp439 000
Rp925 000
Sub Total

25

26

Storages
Exhaust fan KDK 40 AAS

6 unit

Rp553 000

Rp3 318 000

5

Rp663 600
Rp663 600

Sub Total
Office
Samsung AC split 3/4 pk
Computer
HP Deskjet 1050 All-in-One
Office Desk + Table
Fax Machine Panasonic KXFT981

1
1
1
1

unit
set
unit
set

Rp4 659 000
Rp5 000 000
Rp619 000
Rp1 000 000

Rp4 659 000
Rp5 000 000
Rp619 000
Rp1 000 000

10
5
5
5

Rp465 900
Rp1 000 000
Rp123 800
Rp200 000

1 unit

Rp1 050 000

Rp1 050 000

5

Rp210 000
Rp1 999 700

1
5
5
5

Rp600 000
Rp600 000
Rp1 456 000
Rp2 160 000
Rp4 816 000

10

Rp18 630 000
Rp18 630 000

25

Rp37 600 000
Rp37 600 000
Rp137 007 000

Sub Total
Licenses
Trademark License
BPOM Registration
BPOM Analytical
PT License

1
1
4
1

unit
unit
unit
unit

Rp600 000
Rp3 000 000
Rp1 820 000
Rp10 800 000

Rp600 000
Rp3 000 000
Rp7 280 000
Rp10 800 000
Sub Total

Garage
Hyno 110 SL

1 unit

Rp186 300 000

Rp186 300 000
Sub Total

Others
Building

376 m2

Rp2 500 000

Rp940 000 000
Sub Total
TOTAL

27

Appendix 11. Profit/Loss
Year
Component
Inflow
Sales
Total Inflow
Outflow
Overhead Cost
Variable Cost
Depreciation Cost
Total Outflow
EBT
Tax
Net Profit

1

2

3

4

5

Rp2 630 880 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp2 630 880 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp482 927 602
Rp2 073 449 250
Rp137 007 000
Rp2 693 383 852
-Rp62 503 852
-Rp7 812 982
-Rp54 690 871

Rp482 927 602
Rp2 073 449 250
Rp137 007 000
Rp2 693 383 852
Rp595 216 148
Rp74 402 018
Rp520 814 129

Rp482 927 602
Rp2 073 449 250
Rp137 007 000
Rp2 693 383 852
Rp595 216 148
Rp74 402 018
Rp520 814 129

Rp482 927 602
Rp2 073 449 250
Rp137 007 000
Rp2 693 383 852
Rp595 216 148
Rp74 402 018
Rp520 814 129

Rp482 927 602
Rp2 073 449 250
Rp137 007 000
Rp2 693 383 852
Rp595 216 148
Rp74 402 018
Rp520 814 129

27

28

Year
Component
Inflow
Sales
Total Inflow
Outflow
Overhead Cost
Variable Cost
Depreciation
Cost
Total Outflow
EBT
Tax
Net Profit

6

7

8

9

10

Rp3 288 600 000 Rp3 288 600 000 Rp3 288 600 000 Rp3 288 600 000 Rp3 288 600 000
Rp3 288 600 000 Rp3 288 600 000 Rp3 288 600 000 Rp3 288 600 000 Rp3 288 600 000
Rp482 927 602
Rp482 927 602
Rp482 927 602
Rp482 927 602
Rp482 927 602
Rp2 073 449 250 Rp2 073 449 250 Rp2 073 449 250 Rp2 073 449 250 Rp2 073 449 250
Rp137 007 000
Rp137 007 000
Rp137 007 000
Rp137 007 000
Rp137 007 000
Rp2 693 383 852 Rp2 693 383 852 Rp2 693 383 852 Rp2 693 383 852 Rp2 693 383 852
Rp595 216 148
Rp595 216 148
Rp595 216 148
Rp595 216 148
Rp595 216 148
Rp74 402 018
Rp74 402 018
Rp74 402 018
Rp74 402 018
Rp74 402 018
Rp520 814 129
Rp520 814 129
Rp520 814 129
Rp520 814 129
Rp520 814 129

29

Appendix 12. Reinvestment
Economical Age
(year)

Item
Equipments
Reinforced rice production line
Conveyor belt
Warehouse Storage Steel Trolley
Digital scale 3 kg
Digital scale 50 kg
Measuring Cylinder Pyrex 1 liter
Small Saucepan 2 liter
Rice Storage
Packaging machine
Stainless Steel Pot Capacity 50 liter
Hyno truck 110 SL
Samsung AC split 3/4 pk
Computer
HP Deskjet 1050 All-in-One
Office Desk + Table
Fax Machine Panasonic KX-FT981

Reinvestment
(Year 5)

10
10
5
5
5
5
5
5
10
5
10
10
5
5
5
5
Sub Total

Rp 1 025 000
Rp 999 000
Rp 1 700 000
Rp 4 540 000
Rp 2 350 000
Rp 600 000
Rp 5 795 000
Rp 5 000 000
Rp 619 000
Rp 1 000 000
Rp 1 050 000
Rp 24 678 000

Licenses
BPOM Registration
PT License
Trademark License

5
5
1

Rp 3 000 000
Rp 10 800 000
Rp 600 000
29

30
30

BPOM Analytical

5

Rp 7 280 000
Rp 21 680 000

Sub Total
Others
Wall hung basin kris wht jd0018
Basin tap kris CHR 19001KS-E5
Toilet kris siphon one piece wht
Exhaust fan KDK 40 AAS

10
10
10
10

-

Total

Rp 46 358 000

Appendix 13. Salvage Value
Item
Land
Building

Economical Age (year)
25

Depreciation Cost/Year
Rp 35 100 000
Total

Salvage Value
Rp 790 400 000
Rp 564 000 000
Rp 1 354 400 000

31

Appendix 14. Business feasibility
Year
Component
Inflow
1. Sales
2. Salvage Value
Total Inflow
Outflow
1. Overhead Cost
2. Production
3. Investment
4. Tax
Total Outflow
Net Benefit
Discount Rate
Discount Factor
PV Net Benefit

0

1

2

3

4

5

Rp0

Rp2 630 880 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp0

Rp2 630 880 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp482 927 602
Rp2 073 449 250
Rp600 000
-Rp7 812 982
Rp2 549 163 871
Rp81 716 129
10.25%
0.907029478
Rp74 118 938

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.822702475
Rp540 697 450

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.746215397
Rp490 428 526

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.676839362
Rp444 833 130

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.613913254
Rp403 476 762

Rp2 897 274 000
Rp2 897 274 000
-Rp2 897 274 000
10.25%
1
-Rp2 897 274 000

31

32
32

Contd.

Year
Component
Inflow
1. Sales
2. Salvage Value
Total Inflow
Outflow
1. Overhead Cost
2. Production
3. Investment
4. Tax
Total Outflow
Net Benefit
Discount Rate
Discount Factor
PV Net Benefit
NPV
Benefit/Cost Ratio
IRR
Payback period (Year)
BEP (kg output/day)

6

7

8

9

10

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000

Rp3 288 600 000
Rp1 354 400 000
Rp4 643 000 000

Rp482 927 602
Rp2 073 449 250
Rp46 358 000
Rp74 402 018
Rp2 677 136 871
Rp611 463 129
10.25%
0.556837418
Rp340 485 550
Rp1 061 036 059
1.0563
16.53%
8.82
510.17

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.505067953
Rp331 941 330

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.458111522
Rp301 080 572

Rp482 927 602
Rp2 073 449 250
Rp600 000
Rp74 402 018
Rp2 631 378 871
Rp657 221 129
10.25%
0.415520655
Rp273 088 954

Rp482 927 602
Rp2 073 449