CONSULTING SERVICES OF

OPERATIONAL DUE DILIGENCE DME

COMPANY

TECHNICAL PROPOSAL

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 TECHNICAL PROPOSAL

Due Diligence DME Company

DAFTAR ISI
1 INTRODUCTION.............................................................................................................................3
1.1 Background............................................................................................................................3
1.2 Purposes................................................................................................................................3
1.3 Scope Of Work.......................................................................................................................4
1.4 Duration of Work...................................................................................................................4
2 APPROACH AND METHODOLOGY..................................................................................................5
2.1 Preliminary Work...................................................................................................................5
2.1.1 Preparation....................................................................................................................5
2.2 Collect Data and Review........................................................................................................6
2.2.1 Collect Data....................................................................................................................6
2.2.2 Review document and company readiness....................................................................7
2.3 Site Visit and Survey..............................................................................................................8
3 WORK PLAN...................................................................................................................................9
4 WORK SCHEDULE.........................................................................................................................10
5 LIST OF PERSONEL........................................................................................................................11
6 PERSONEL ASSIGNMENT PLANS..................................................................................................12
7 ORGANIZATIONAL STRUCTURE....................................................................................................12
8 OUTPUT DOCUMENT (REPORT)...................................................................................................13
9 CLOSING.......................................................................................................................................14

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1 INTRODUCTION

1.1 Background

DME (CH3OCH3) is a simple ether compound that can be produced from syn-gas or
dehydration of methanol, with various raw material for syn-gas and methanol feedstock
such as natural gas, coal, and biomass. DME has a high cetane number and properties
close to LPG such as viscosity, boiling point and pressure, so it is very important to
study the possibility of using DME to replace or reduce the use of diesel oil and LPG in
Indonesia. DME can be used for diesel oil substitute, with a fuel system specifically
developed to operate on DME, for industry and transportation as well as in power. DME
also has the opportunity to replace LPG as fuel in the household, commercial and
industrial sectors, which currently are mostly imported.

The DME production industry can be a very profitable business opportunities today for
companies to expand their business to a wider market. To do the expansion we need to
know certainty about the prospects, strengths, and weaknesses of the companies that
will join. Then comes the type of audit that can fulfill those special needs, named due
diligence.

Due diligence is an investigation, audit, or review performed to confirm facts or details

of a matter under consideration. In the financial world, due diligence requires an
examination of financial records before entering into a proposed transaction with
another party. The role of operational due diligence is to assess this process and its
future sustainability for the buyer in an M&A transaction. That is the background for
consulting service of operational due diligence DME company

1.2 Purposes

The general purpose of this operational due diligence work aims to assessing synergies
between the acquiring and target companies.
And the specific purpose of this work is following :

 To gets more information about the company‘s target business model

 To gets the study about long- term assets of DME production
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 To identify the risk and mitigating factors of the DME business

 To gests the conclusions and recommendations regarding to the compatibility
between the DME business and the company target.

1.3 Scope Of Work

The scope of work for this operational due diligence consist this following aspect:

A. Study of Business Model Company

a. Collecting documents/data related to business model plan of the company
b. Collecting documents/data like sale and purchase agreements, rights to assets,
tax and financial reports.
c. Collecting secondary data about the common DME company business model
d. Do the analysis of business projects related to existing DME production.
e. Do a feasibility study of the business model based on secondary data from
existing companies
f. Provide an assessment of the readiness of the company's business model
B. Study of assets ownership and management
a. Collecting documents/data related to assets owned by the company
b. Review the ownership of the asset
c. Review assets management
d. Provide an assessment of the company's asset management
C. Risk Investigation and Mitigation
Consultant will identify the potential risk of this business and compiling
recommendations for the mitigation and prevention.

1.4 Duration of Work

The duration of this market research is 3 months, counting since the contact signing

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2 APPROACH AND METHODOLOGY

The methodology of this work is arranged base on the scope of work requested by the
initiator and any other consideration that can simplify and improve the quality of work.
The approach of this work will use the accurate data also with the proper , mesurable
and accountable analysis method to make a right conclusion and the best
recommentadion. This following are the detail activities of market research analysis
work :

1. Preliminary work
 Preparation
 Kick of Meeting
 Preliminary Analysis
2. Document /data collection and review
 Company’s Business Plan
 Company’s Condition
 Company asset Document
 Annual reports of the company
 Organizational structure diagram
 Staff Information
 List of production equipment owned
 etc
3. Site Visit and survey
 Site Observation
 Interview
 Listing the production equipment
4. Risk and Mitigation Study
5. Reporting and Finalization including the preparation of conclusions and
recommendations.
2.1 Preliminary Work

2.1.1 Preparation
The following are detail activities in the preparation step:

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 Complete contract administration, work plans, and all the document required for
personnel assignment.
 Arrange mobilization plan for collecting primary and secondary data
 Personnel preparation
 Compile preliminary report
2.2 Collect Data and Review

2.2.1 Collect Data

Data is very important in this study. Complete and accurate data will be able to produce
correct analysis and conclusions. On the other hand, incorrect data will result in
incorrect analysis as well.at this stage , the data will be collected mostly from target
company. These are data needed to be collected to complete this work:

 Company’s Business Plan

The definition of business plan is a written document that describes the nature of
your business. This document must contain a detailed sales and marketing
strategy, financial condition, as well as income and expenses while running the
business.
 Company’s Condition
What needs to be considered from the state of the company is the stability of the
company, the company's ability to run its business, the company's ability to
prosper its employees, the company's ability to withstand obstacles in its business,
the company's financial condition, etc.
 Company asset Document
Asset Document is an agreements and documents through which the rights to
conduct the operations of the business and all other rights related to the
development and exploitation of the contract Area are derived, including, but not
limited to, the Contract, the Agreement and the Initial Agreement.
 Annual reports of the company
An annual report is a document that public corporations must provide annually
to shareholders that describes their operations and financial conditions. The front
part of the report often contains an impressive combination of graphics, photos,
and an accompanying narrative, all of which chronicle the company's activities

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over the past year and may also make forecasts about the future of the company.
The back part of the report contains detailed financial and operational information.

 Organizational structure diagram

An organizational structure is a system that outlines how certain activities are
directed in order to achieve the goals of an organization. These activities can
include rules, roles, and responsibilities.The organizational structure also
determines how information flows between levels within the company. For
example, in a centralized structure, decisions flow from the top down, while in a
decentralized structure, decision-making power is distributed among various
levels of the organization.
 Staff Information
Things to note regarding to staff information are skills, experience, length of
service, HR staff reports and information about the area of expertise and
keyresponsibilities in the company, an overview of staff training and
developments, criteria used for personal worker assessment.
 List of production equipment owned
The list of ownership of production equipment is very important to review because
this list will be the basis for determining whether the target company is really
ready to run this DME business. In addition, the complete list of equipment data
will be used as a reference for the effectiveness of DME production in this
company. It will be very beneficial if the aspect of equipment completeness is
fulfilled and in accordance with standards. And it will be an obstacle in the
production process if it turns out that the completeness of the production
equipment has not been fulfilled.

2.2.2 Review document and company readiness

The main objective of the due diligence work is to conduct an assessment of the
company's condition and the business conditions to be acquired so that it can be
concluded whether the company has followed the standards and is mature in terms of
business plans and asset management. The review is carried out by looking at the
suitability of the documents that have been collected with the existing provisions. In
addition to checking the suitability of the document, an analysis of the completeness of
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the document is also carried out. This review step will later issue a conclusion output of
the company's readiness to manage the business and also recommendations for steps
that must be taken if the company is going to do a merger & acquisition.

The method used in carrying out this review is to make a document completeness
checklist, check the document content conformity with applicable standards, and assess
the readiness of the target company to manage this DME business. In addition, a study
was also carried out on the business plan of the DME company that had already
operated, reviewing the DME management process starting from the methanol mining
process to the distribution process of DME products.
2.3 Site Visit and Survey
Site visits and surveys include visits to related companies to conduct interviews or
collect information about the company's operations, make visits to the field to see the
condition of the DME production site. In addition, field visits were carried out to
conduct an assessment of the completeness of production equipment, the DME
management process, the work environment, and the productivity of staff in carrying
out work. It is possible that this activity includes interviews with buyers of DME
products to ensure that the results of the process are in accordance with the wishes of
the customer.
2.4 Risk and Mitigation Analysis
The risk analysis include factors such as risks of material, assets, or tools,
manufacturing quality and capacity, customer satisfaction and financial performance,
also recommendation for the company about the M&A of this business
2.5 Reporting and Finalization
This following are the things presented in the report:
a. Complitness Checklist of documents
b. DME business plan study
c. Company’s business plan assessment report
d. DME company’s assets management study
e. Company’s assets management assessment report
d. List of required equipment
e. Logistics optimization analysis
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f. Conclusions and recommendations

3 WORK PLAN

This work plan is prepared based on the needs of the activities to be carried out by the
consultant in accordance with the scope of the proposed activities and the methodology
used in the implementation of operational due diligence DME company.

This work plan will be used as a guideline as well as a tool to monitor the progress of
the work and the development targets that must be achieved at each stage of the work,
so that its implementation can run efficiently and effectively. The following is a work
plan that will be carried out by the consultant:
The stages of implementing the activities will be divided into 8 stages:
1. Preliminary Work
 Preparation
 Compile the Preliminary report
2. Collect documents
3. Review documents
 Business Model
 Assets Ownership
4. Site Visit and Survey
5. Risk and Mitigation Analysis
6. Progress report
7. Report finishing
8. Final Report and Presentation
All of the stage of activities above can be change and costumized to the needs ,
situations and field conditions. The following is the flowchart of this work:

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4 WORK SCHEDULE

Work schedule is made for each stage of the work activities on this project, work
schedule is made to achieve the goals, in this following are the intended goals:

 The work can be coordinated properly so that it can be completed on time

and meet its objectives. 
 With the coordination of the team leader, each stage of work activities is
endeavored to be mutually sustainable, so that the time of execution of work
will be more effective.

The following is a schedule for the implementation of the work:

Week
Activities
1 2 3 4 5 6 7 8 9 10 11 12
Kick -off Meeting                        
Preparation                        

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Compile the preliminary report                        

Collect Document/data                        
Review document                        
Site visit and survey                        
Risk and mitigation analysis
Progress report                        
Progress report presentation                        
Report finishing                        
Final report presentation                        
Final report                        

5 LIST OF PERSONEL

The experts and the qualification needed to do this project are presented in the
following table:

No. Position Qualification

EXPERTS

S1-Economic/ Management/Business
/Engineering with 15 years Experience
1. Team Leader (preferably experienced to do due diligence)
and have experience as team leader in 5
different projects

S1- Business/Economic/ Industrial

2 Business Expert
Engineering with 5 years experience
S1- Chemical Engineering with 5 yeaars
experience on chemical engineering project,
3 Chemical Engineer
preferably experienced in the field of DME
technology
Asset Management S1- Management with 5 years experience on
4
Expert asset management
S1- Mining Engineering with 5 years
experience on chemical engineering project,
5 Mining Expert
preferably experienced in the field of energy
conversion

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SUPPORTING PERSONEL
D3 – min 3 years experience as Document
1 Document Controller
Controller

6 PERSONEL ASSIGNMENT PLANS

Assignment plans and personnel allocations are prepared based on qualifications and
experience for each field of work. Allocation according to time in the schedule and work
weight of the personnel section is being the reference for the preparation of
remuneration in the implementation of the work and the organization of the
Implementing Consultant.
The duration of allocation planned for the completion of the work Operational Due
Diligence DME Company is 3 (three) months after the Work Start Order (SPMK) is
being signed. The schedule for assigning Experts and Supporting Personnel for this
work is as follows:

No Position Month
1 2 3
1 Team Leader
2 Business Expert
3 Chemical Engineer
4 Asset Management Expert
5 Mining Expert
6 Document Controller

7 ORGANIZATIONAL STRUCTURE
Management structure will always present an organizational structure of each
functional, as well as the implementation of a work, which in it will be explained about
the composition of the team in carrying out a job, so that the management for
implementing the work is created.
The organization of work Operational Due Diligence DME Company , is as follows:

INITIATOR
CONSULTANT

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Team Leader
 EXPERT
TECHNICAL PROPOSAL
Business Expert
Chemical Engineer Due Diligence DME Company
Asset Management Expert
Mining Expert
8 OUTPUT DOCUMENT (REPORT)

Consultant will finish this project for 3 months after the contract have been
SUPPORTING
PERSONEL
signing, and this following are the document that will be submittef by consultant:
Document Controller
a. Preliminary Report
Contains the initial work plan that has been agreed together at the Kick- Off
Meeting along with the work schedule, this document will be submitted not
more than 2 week after the Kick-Off Meeting.
b. Progress Report
Progress Report is include the following:
 Report of company’s target business study
 Report of long term investment study
 Report of potential risk and mitigation

Draft must be submitted not more than 1 (one) week before progress
peresentation, and the revision submitted not more than 1(one) week after
progress presentation.
c. Final Report
Contains the result of operational due diligence DME Company work.

Draft must be submitted not more than 1 (one) week before final report
peresentation, and the revision submitted not more than 1(one) week after
final report presentation.
Consultant must submit 3 (three) set of the original report including the softcopy
(editable and non aditable ) for each report ( preliminary,progress and final
report)

9 CLOSING

Thus we submit this Technical Proposal as a global description of how we carry out the
work of Operational Due Diligence of DME Company including how we will input
data and process it and produce products according to the intended purpose. We hope
that this will be able to represent the condition of our company.

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