Simulation on the Application Minister Agriculture Republic of Indonesia No. 28 the Year 2020 and Its Impact on the PT Pupuk Kujang Performance

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DOI: https://doi.org/10.33258/birci.v5i4.7372

Simulation on the Application Minister Agriculture Republic of Indonesia No. 28 the Year 2020 and Its Impact on the PT Pupuk Kujang Performance

Fulki Fathurrahman¹, Muhammad Dahlan², Sofik Handoyo³

1,2,3Faculty of Economics And Busines, Universitas Padjadjaran, Indonesia

I. Introduction

The government established an agricultural supporting industry in the form of a state-owned enterprise that produces fertilizer to meet fertilizer stocks in Indonesia. In addition, the government also produces subsidized fertilizers, namely fertilizers that are under supervision. Subsidized fertilizers include: Urea Fertilizer, NPK Fertilizer, ZA Fertilizer, SP 36 Fertilizer, and others in accordance with Permendag no: 15 / M-DAG / PER / 4/2013 where the price is set in accordance with the market price reached by farmers.

Indramayu Regency, Karawang Regency and Subang Regency are the largest rice producers in the West Java region of Indonesia. (source: BPS West Java Province). In distributing Subsidized Fertilizer in the West Java region, it is the authority of PT Pupuk Kujang.

To determine subsidy income, it is regulated by the Ministry of Agriculture based on the Regulation of the Minister of Agriculture Number: 01 / Permentan / SR.130 / 1/2012, namely " Subsidized Cost of Goods Sold Component for the Agricultural Sector" regarding what costs can be recognized and included in the component of the Subsidized COGS.

The subsidized HPP component will later be billed to the government as a basis for recognizing the company's subsidy income.

Along with the times, the government issued a Regulation of the Minister of Agriculture of the Republic of Indonesia number 28 of 2020 concerning the Components of hpp subsidized fertilizers in the Agricultural Sector which took effect on October 6, 2020 to increase its effectiveness, efficiency and accountability.

The difference from the old Regulation to the new one is the change in Profit Margin on the Cost of Goods Sold of Organic Fertilizers that are not produced by themselves, from 10% down to 3%, additional costs that cannot be covered in the Cost of Goods Sold of

Abstract

This research was conducted on State-Owned Enterprises in Indonesia. This study aims to analyze the impact of the application of permentan RI number 28 of 2020 on the performance of PT Pupuk Kujang in terms of the company's profit, the company's financial ratio and the company's going concern using the altman Z-Score. Metode the research used is a mix method. The results showed that the implementation of Permentan no. 28 of 2020 has different significant on financial distress. The benefit of this research is that PT Pupuk Kujang should be aware if the altman Z- Score value continues to decline so that whatisnot anticipated will bring the company into bankruptcy (Financial distress). This is due to the high sales of subsidized fertilizers as the main source of income.

Keywords

PT pupuk kujang; altman z- score; bankruptcy

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Budapest International Research and Critics Institute-Journal (BIRCI-Journal) Volume 5, No 4, November 2022, Page: 31516-31528 e-ISSN: 2615-3076 (Online), p-ISSN: 2615-1715 (Print)

www.bircu-journal.com/index.php/birci email: birci.journal@gmail.com

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Subsidized Fertilizers, namely costs that occur during the unscheduled shutdown that exceed the budget value or RKAP of the Company, the cost of shrinking finished goods and employee costs in the form of tantiem, operating services and medical expenses other than BPJS from the subsidy sector of PT Pupuk Kujang can be reduced quite significantly and can cause losses for PT Pupuk Kujang even for certain subsidized products, the sale that should be profitable will actually become a loss and in the future the company can be in the category of bankruptcy.

Table 1. Z-Score

Keterangan 2013 2014 2015 2016 2017 2018 2019 2020

Nilai Z-Score 2,33 2,24 1,70 1,66 1,74 1,89 2,10 2,28

Source: Audited Financial Statements of PT Pupuk Kujang for 2013-2020.

From table 1. above, it can be seen that PT Pupuk Kujang from 2013 to 2020 is included in the Gray Zone category, which is in the range between 1.81 to 2.99 where the company is in the zone prone to financial distress. Even in 2016 and 2017, the company was in the Distress zone, with a score below 1.81.

So it is interesting to examine how the Effect of the Implementation of the Regulation of the Minister of Agriculture of the Republic of Indonesia number 28 of 2020 : Components of The Cost of Goods Sold of Subsidized Fertilizers in the Agricultural Sector on the Sustainability of the Business of PT Pupuk Kujang.

II. Review of Literature

There are several components of the cost of goods sold for subsidized fertilizers that change and cannot be charged as in the previous Permentan, namely Permentan number 01 / Permentan / SR.130 / 1/2012, including:

1. The change in profit margin on the cost of goods sold for organic fertilizers from 10%

fell to 3%.

2. Maintenance costs that exceed the budget value (RKAP of the enterprise).

3. The cost of shrinkage of raw materials and finished products.

4. Employee costs in the form of tantiem and operating services.

5. Medical expenses outside BPJS.

6. Cost research and development (R&D).

7. Public relations fees

The explanation of bankruptcy is often associated with the company's failure to manage the company's business activities in order to make a profit.

In 1968 Professor Edward Altman developed the Altman Z-Score bankruptcy Prediction model. The results of the research developed by Altman in his book Corporate Financial Distress and Bankcruptcy, namely:

Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5

Information:

1. X1 = Working Capital (working. capital/. assets) 2. X2 = Net Profit (retained. earnings/. assets) 3. X3=Income Before Interest and Taxes 4. X4 = Book Value of Debt

5. X5 = Sales (sales/. assets) With the following criteria:

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Keterangan Nilai

Kategori "Aman" > 2,99

Kategori "Grey Zone" 1,81 < Z < 2,99

Kategori "Distress" < 1,81

PT Pupuk Kujang in recent years has been in the gray zone so that if the Government issues a new regulation, namely Permentan no. 12 of 2020, it will have a big impact on the company because most of the composition of PT Pupuk Kujang's revenue is from subsidies.

III. Research Method

The research objects to be studied are the Altman Z Score Realization Simulation 2018, 2019, 2020, 2021 and the simulation of the Long-Term Plan for 2022 to 2024 with a subsidy approach using Permentan no. 28 of 2020 at PT Pupuk Kujang Cikampek.

The research method in this study is a mixed method, which combines qualitative research and quantitative research.

In the research, the researcher used 1 free variable, namely Permentan no. 28 of 2020 and 6 bound variables, namely company profit, Working Capital Ratio, Retained Earnings Ratio, Profit Before Interest and Tax (EBIT) Ratio, Stock Market Value Ratio and Sales Ratio and Altman Z-Score value.

The variables in this study are the company's Altman Z-score value from 2018 to 2021 and the 2022-2024 RJP with Permentan no. 28 of 2020.

The data analysis carried out by the author includes descriptive analysis and research methods in the form of numerical simulation.

Descriptive statistical analysis is used to provide an overview of the distribution and behavior of research sample data by looking at the minimum value, maximum value, mean, and standard deviation of each independent variable and dependent variable.

In addition, a hypothesis test of the regression coefficient was also carried out by conducting a t-test.

The data that has been obtained is analyzed using research methods in the form of numerical simulation in the following ways:

1. Make a simulation of the company's performance from 2018 to 2020 and RJP from 2021 to 2024 which consists of subsidized income, profit and loss and a statement of the company's financial position to obtain an altman Z-Score value by applying the Regulation of the Minister of Agriculture of the Republic of Indonesia number 28 of 2020.

2. Simulating pure cost correction by applying the Regulation of the Minister of Agriculture of the Republic of Indonesia number 28 of 2020 so that the HPP Subsidy line IV is obtained.

3. Conducting a Simulation of subsidy income calculations based on subsidy COGS up to line IV simulation results.

4. Calculating the company's profit and loss and position statement based on a simulation of subsidy income obtained

5. Looking at the company's going concern simulation from 2018 to 2024 with the Altman Z-Score bankruptcy prediction model.

The existing data from the Company's Long-Term Plan which has been using the Regulation of the Minister of Agriculture of the Republic of Indonesia number 01 / Permentan / SR.130 / 1/2012 is recalculated using new rules, namely the Regulation of the Minister of Agriculture of the Republic of Indonesia number 28 of 2020. In the new

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regulation, there is a correction of costs (Non Deductable Costs) which in the previous regulation were allowed to be subsidized so that they are not allowed to be taken into account in the calculation

After the Subsidy Income is obtained , it can calculate the company's profit and loss and analyze the odel prediction of bankruptcy Altman Z - Score

Calculating the realization of financial ratios using the Altman Z-Score model and calculating the simulation of financial ratios assuming the application of the Regulation of the Minister of Agriculture of the Republic of Indonesia no. 28 of 2020.

Calculating the comparison of the values of the Altman Z-Score model from the known financial ratios, the formula is: Z-Score = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5

Comparing the interpretation of the value of the calculation result of the Altman Z- Score model Interpretation of the Z-Score value.

Z Score > 2.99 Healthy Indications

Z Score 1,81-2,99 Indikasi Grey Area/ Zona of ignorance Z Score < 1.81Sololation Indication

3.1 Hypothesis Test

Because this research is a simulation, the hypothesis used is only a negative change or not in the application of permentan no. 28 of 2020 to existing variables.

According to Nachrowi (2006), the hypothesis test is useful for testing the signification of the coefficient of the can. In this study, it was carried out by means of t- test.

The T test (Test T) is one of the statistical tests used to test the truth or falsity of the hypothesis which states that between two mean samples taken randomly from the same population, there is no significant difference (Sudijono 2010).

1. The first hypothesis that will be tested is the difference of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Working Capital Ratio

Ho : There is no significant different of permentan RI No. 28 of 2020 on the Company's Working Capital Ratio

H1 : There is a significant different of the Minister of Agriculture of the Republic of Indonesia No. 28 of 2020 on the Company's Working Capital Ratio

2. The second hypothesis that will be tested is the difference of the implementation of the Permentan RI No. 28 of 2020 on the Ratio of the Company's Remaining Retained Earnings

Ho : There is no significant different of permentan RI No. 28 of 2020 on the Ratio of The Company's Remaining Retained Earnings

H1 : There is a significant different of permentan RI No. 28 of 2020 on the ratio of the company's remaining retained earnings

3. The third hypothesis that will be tested is the difference of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Profit Before Interest and Tax (EBIT) Ratio

Ho: There is no significant different of permentan RI No. 28 of 2020 on the Company's Profit Before Interest and Tax (EBIT) Ratio

H1 : There is a significant different of permentan RI No. 28 of 2020 on the ratio of profit before interest and tax (EBIT) of the company

4. The fourth hypothesis that will be tested is the difference of the implementation of permentan RI No. 28 of 2020 on the Market Value Ratio of the Company's Shares

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Ho : There is no significant different of Permentan RI No. 28 of 2020 on the Market Value Ratio of The Company's Shares

H1 : There is a significant different of permentan RI No. 28 of 2020 on the Market Value Ratio of the Company's Shares

5. The fifth hypothesis that will be tested is the difference of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Sales Ratio

Ho : There is no significant different of permentan RI No. 28 of 2020 on the Company's Sales Ratio

H1 : There is a significant different of permentan RI No. 28 of 2020 on the Company's Sales Ratio

6. The sixth hypothesis that will be tested is the difference of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Altman Z-Score value

Ho : There is no significant different of permentan RI No. 28 of 2020 on the value of the Company's Altman Z-Score

H1 : There is a significant different of permentan RI No. 28 of 2020 on the value of the Company's Altman Z-Score

IV. Result and Discussion

4.1 Descriptive Analysis of Data

To assess the company whether it is included in the financial distress or not, it is calculated using the Altman Z-Score equation where the Z-Score results of each company are classified whether they fall into the safe zone, gray area, or distress. The Z-Score value will later be recalculated based on the simulation of the Indonesian Minister of Agriculture Number 28 of 2020 to test the hypothesis whether the Permentan RI Number 28 of 2020 has an effect on the decline in the value of the Altman Z-Score.

Table 2. Combined Descriptive Statistics on the Realization of the Ratio of PT Pupuk Kujang in 2018-2021 Based on Permentan No. 28 of 2022

Variable Max Min Mean StDev

Altman Z-Score 2,358 1,854 2,128 0,221 Source : Based on Financial Statements (Processed Products)

Based on table 1.2 , it can be seen that the results of calculating financial distress using the altman Z-Score formulation for the 2018-2021 realization period using Permentan no. 28 of 2020 have an average Z-Score of 2,128. The figure shows that the Z- Score value of PT Pupuk Kujang for the 2018-2021 period is included in the gray zone, the highest Z-Score value that occurred in 2021 was 2,358 and the lowest Z-Score occurred in 2018 of 1.85

Table 3. Descriptive Statistics of the Combined RJP Ratio of PT Pupuk Kujang in 2022- 2024 Based on Permentan No. 28 of 2022

Variable Max Min Mean StDev

Altman Z-Score 2,214 2,156 2,176 0,033 Source : Based on Financial Statements (Processed Products)

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Based on table 3 , it can be seen that the results of calculating financial distress using the altman Z-Score formulation for the 2022-2024 RJP Projection period using Permentan no. 28 of 2020 have an average Z-Score of 2,176. This figure shows that the Z-Score value of PT Pupuk Kujang for the 2022-2024 RJP Projection period is included in the gray zone, the highest Z-Score value that occurred in 2024 was 2,214 and the lowest Z-Score occurred in 2023 of 2,156.

4.2 Permentan Simulation no. 28 of 2020 on Working Capital Ratio

Table 4. th Simulation of Working Capital Ratio in 2018 – 2024

Rasio Modal Kerja Perusahaan 2018 2019 2020 2021 2022 2023 2024

Permentan no 1 tahun 2012 30,54% 28,53% 14,92% 18,62% 17,24% 20,18% 22,69%

Selisih 0,30% 0,40% 0,42% 0,00% 0,19% 0,09% 0,00%

Source : The Author's Processed Results

In table 4 shows a tendency to decrease the company's working capital ratio from 2018 to 2024. In 2020, the largest company's working capital ratio decreased by 0.42%.

t-Test: Paired Two Sample for Means

Permentan no 1 tahun 2012 Permentan no 28 tahun 2020 Mean 0,218 0,216 Variance 0,003 0,003 Observations 7,000 7,000 Pearson Correlation 1,000

Hypothesized Mean Difference -

df 6,000

t Stat 2,997

P(T<=t) one-tail 0,012 t Critical one-tail 1,943 P(T<=t) two-tail 0,024 t Critical two-tail 2,447

Figure 1. Results of t-statistics of the Company's Working Capital Ratio

The hypothesis that will be tested is there are differences of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Working Capital Ratio.

Then the significance test for hypothesis is :

-If Significance >0.05 then H0 is accepted, H1 is rejected -If Significance <0.05 then H0 is rejected, H1 is accepted

Based on the calculation of the t-test analysis, the panel data was obtained: 0.024 <

0.05 then, H0 is rejected, H1 is accepted.

This means that with a 95% confidence level, permentan no. 28 of 2020 has a negative effect on the Company's Working Capital Ratio.

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4.3 Simulation of Permentan no. 28 of 2020 on the Ratio of retained earnings

Table 5. Simulation of Retained Earnings Ratio in 2018 – 2024

Rasio Sisa Laba Ditahan Perusahaan 2018 2019 2020 2021 2022 2023 2024 Permentan no 1 tahun 2012 47,49% 53,43% 52,92% 54,95% 54,02% 52,51% 52,17%

Selisih 0,19% 0,18% 0,17% 0,00% 0,07% 0,04% 0,00%

Table 5 shows a tendency to decrease the Company's Retained Earnings Remaining Ratio from 2018 to 2024. In 2018, the largest company's Retained Earnings Ratio decreased by 0.19%.

df 6,000

t Stat 2,870

Figure 2. T-statistical results of the Company's Retained Earnings Ratio

The hypothesis that will be tested is there are differences of the implementation of the Minister of Agriculture of the Republic of Indonesia No. 28 of 2020 on the Ratio of the Company's Remaining Retained Earnings.

Based on the calculation of the analysis of the t test panel data obtained: 0.028 < 0.05 then, H0 is rejected, H1 is accepted.

This means that with a 95% confidence level, permentan no. 28 of 2020 has a significant difference on the Company's Retained Earnings Ratio.

4.4 Permentan Simulation no. 28 of 2020 on EBIT

Table 5. Simulation of Profit Before Interest and Tax in 2018 – 2024

Rasio Laba Sebelum Bunga dan Pajak 2018 2019 2020 2021 2022 2023 2024

Selisih 0,65% 0,82% 0,64% 0,00% 0,32% 0,17% 0,00%

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Table 5 shows a tendency to decrease the Company's Profit Before Interest and Tax (EBIT) Ratio from 2018 to 2024. In 2019, the company's Profit Before Interest and Tax (EBIT) Ratio decreased by 0.82%.

df 6,000

t Stat 2,939

Figure 3. T-statistical results of the Ratio of Earnings Before Interest and Taxes (EBIT)

The hypothesis that will be tested is there are differences of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Profit Before Interest and Tax (EBIT) Ratio.

This means that with a 95% confidence level, permentan no. 28 of 2020 has a significant difference on the Company's Profit Before Interest and Tax (EBIT) Ratio.

4.5 Simulation of Permentan no. 28 of 2020 on Stock Market Ratio

Table 6. Stock Market Ratio Simulation 2018 – 2024

Rasio Pasar Saham 2018 2019 2020 2021 2022 2023 2024

Selisih -0,20% -0,43% -0,49% 0,00% -0,25% -0,12% 0,00%

Source : The Author's Processed Results

Table 6 shows a tendency to increase the Company's Stock market ratio from 2018 to year. In 2020, the largest increase in the Company's Stock Market Ratio was 0.49%.

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df 6,000

t Stat - 2,895

Figure 4. Results of t-statistical Company Stock Market Ratios

The hypothesis that will be tested is there are differences of the implementation of the Permentan RI No. 28 of 2020 on the Company's Stock Market Ratio.

Based on the calculation of the analysis of the t test panel data obtained: 0.028 < 0.05 then, H0 accepted, H1 rejected.

This means that with a 95% confidence level, permentan no. 28 of 2020 has a significant difference on the Company's Sales Ratio.

4.6 Permentan Simulation no. 28 of 2020 on Sales Ratio

Table 7. Sales Ratio Simulation in 2018 – 2024

Rasio Penjualan 2018 2019 2020 2021 2022 2023 2024

Selisih 0,37% 0,42% 0,18% 0,00% 0,11% 0,06% 0,00%

Table 7 shows a tendency to decrease the Company's Sales Ratio from 2018 to 2024.

In 2019, the company's sales ratio decreased by 0.42%.

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df 6,000

t Stat 2,544

Figure 5. Results of t-statistical Company Sales Ratio

The hypothesis that will be tested is there are differences of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Company's Sales Ratio.

Based on the calculation of the analysis of the t test panel data obtained: 0.044 < 0.05 then, H0 accepted, H1 rejected.

This means that with a 95% confidence level, permentan no. 28 of 2020 has a significant difference on the Company's Sales Ratio.

4.7 Simulation of Permentan no. 28 of 2020 on the Altman Z-Score Value

Table 8. Simulation of Work Altman Z-Score Value in 2018 – 2024

Altman Z Score 2018 2019 2020 2021 2022 2023 2024

Permentan no 1 tahun 2012 1,89 2,10 2,28 2,36 2,17 2,17 2,20 Permentan no 28 tahun 2020 1,85 2,06 2,24 2,36 2,16 2,16 2,20 Selisih 0,03 0,04 0,03 - 0,02 0,02 -

Table 8 shows a downward trend in the Altman Z-Score from 2018 to 2024. In 2019, there was the largest decline in altman Z-Score value of 0.04.

From table 8, it can be seen that the z-score of PT Pupuk Kujang from 2018 to 2024 is consecutively between 1.81 to 2.99, which means that the company is included in the zone prone to financial distress so that the company must improve its financial performance both in terms of management and financial structure.

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df 6,000

t Stat 3,259

Figure 6. Altman Z-Score t-statistical

The hypothesis that will be tested is there are differences of the implementation of the Indonesian Minister of Agriculture Regulation No. 28 of 2020 on the Altman Z-Score Value.

This means that with a 95% confidence level, permentan no. 28 of 2020 has a significant difference on the Altman Z-Score.

IV. Conclusion

Based on the results of data analysis that has been described in the previous chapter, it can be concluded as follows:

1. From the results of simulations carried out on the company's performance of PT Pupuk Kujang, in terms of profit from 2018 to 2024, it tends to decrease, especially when the implementation of the Indonesian Minister of Agriculture number 28 of 2020 has been carried out. This is due to the decrease in production and sales of subsidized fertilizers and the reduction in subsidy income due to the reduction in the cost of goods sold component of subsidized fertilizers in accordance with the Minister of Agriculture of the Republic of Indonesia number 28 of 2020. However, from the decline in profit that occurred, the performance of PT Pupuk Kujang according to the RJPP was supported by a significant increase in the sale of non-subsidized urea fertilizer. This is a potential and opportunity for PT Pupuk Kujang to improve its performance in addition to the decline in production and sales of subsidized fertilizers. In addition to the sale of non- subsidized urea fertilizer, the opportunity to sell non-subsidized NPK fertilizer can also be an option because the market absorption in Indonesia is high.

2. Then from the results of the company's performance simulation, a simulation of the company's condition of PT Pupuk Kujang in 20218 to 2024 was seen from the side of going concern using the Altman Z – Score bankruptcy prediction model. The company's condition shows a tendency to always enter the zone prone to financial

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distress so that the company must improve its financial performance both in terms of management and financial structure.

3. From the results of the performance analysis that has been carried out, it can be concluded that there are several weaknesses that need to be corrected in order to improve the company's performance, namely:

a. The high value of fixed assets in the form of land that tends to be idle and does not contribute to optimizing the company's profit. In order to improve the company's performance, PT Pupuk Kujang can lease land / land to companies and make the land an integrated industrial area.

b. The limited factory capacity due to the fact that there are only 2 factories accompanied by factories that have been long enough so that performance has declined, It would be nice to add a factory back close to the gas source so that the production and sales capacity of the increase and COGS can decrease.

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