Investment proposal:
- Sale of production line + client base - $125 000
- Sale of production line, client base + shop floor and warehouse in Dnepropetrovsk city 1500 sq,m, in area - $275 000
Financial and economic performance indicators:
Gross profit
2012 – 2 200 000 UAH
2013 – 2 900 000 UAH
2014 – 1 500 000 UAH
Net profit
2012 - 1 160 000 UAH
2013 – 1 720 000 UAH
2014 – 1 000 000 UAH
Short description of the business: Production and distribution of peat buckets for plant cultivation. In ownership – a shop floor, equipment, warehouse facilities. Distribution in Ukraine. Has a potential of entering the European and Asian markets. Clients in Ukraine – the largest retail chains, which has “Dom.Sad.Ogorod” products in the assortment (“ATB”, “Epicenter”, “Novaya Liniya”, “Fozzy”, “Velyka Kyshenya” and etc).
Production and suppliers. Production consists of the fully equipped line of production of two standard size peat buckets F80 mm and F110 mm. Productive capacity allows to produce 1 200 000 F80 mm buckets per month and 600 000 F110 mm buckets/month, which are packaged in 20 and 10 pc in each and implement without packing. Annual production capacity in the procurement prices of retail-operators for 2015 – is more than 18 000 000 UAH with expanses equal to 4 800 00 UAH. Business co-worked only with huge retailors of Ukraine. Utilization of capacity didn`t exceed 25%. Raw materials in % from prime cost – peat (10%), waste paper (5%), electrical energy (205), gas (30%). There are no imported raw materials. Suppliers of the raw material - in excess.
Equipment description: Equipment for production of peat buckets (if the press-forms are going to be replaced, this equipment will be able to produce egg trays in number of 2x1400 pc\hour – 1080000 pc/month). Equipment includes: hydrobrushing pulper with a capacity of 3 m3 for production of compound , 2 vacuum-forming machines, drying room and gas generator, compressor package of 30 kW. The equipment was collected from Russian industrial centers, 2006 year built, fully operational.
For example, the Chinese analogue of the similar line with half as much capacity is estimated in $150 000 without customs clearance and installation.
On the equipment with the available press-forms it is possible to produce two standard size peat buckets – 80x80 and 110x110.
Simultaneously during the continuous performance it is possible to produce 1 200 000 buckets 80x80 mm and 600 000 buckets 110x110 mm. In case of replacement of the press press-form 110x110 mm with the 80x80, the production capacity of all equipment will be equal to 2 400 000 buckets 80x80 per month.
Information about the product. The single manufacturer of this kind of production in Ukraine. During the last 5 years the annual growth of demand on the product exceed 10-25%. The rivals – are foreign analogues from Europev and Russia, which costs 100-200% more. This buckets are making the process of cultivation of plants in the soil much easier, and improve the % of germination ability, enrich soil.
Competitive position of the product. Doesn`t have a dependence on the import, namely investments in the working capital, advantage in the price among the imported analogues, lack of competitors in Ukraine, export potential along with the reserve in equipment capacity.
Market and competitive environment: In Ukraine because of the crisis in the Eastern region and Crimea annexation, there was a 25-30% decline on the market, and the importers of the rivals also have left. The export potential became more attractive.
Distribution and promotion. The company is engaged in distribution of its product and directly co-works with retail chains. Concluded contracts with the biggest retailers are available.
Finances. Due to the absence of competitor it is possible to keep 250-350% markups on products, depending on the requirements of the contract. Ukrainian demand capacity is achieved in 2-3 month of equipment working with maximum performance. The product has a seasonal character. Ukraine season is from January to March. The enterprise is on the general tax system.
Opportunities and risks. The most perspective opportunity is the entrance into the external market. Gross procurement prices on the external markets is 80-150% higher and demanded quantity is larger than in Ukraine. During the season of 2015-2016, according to the experts of retail chains,it is expected the demand on this segment of the market. On this equipment other standard sizes of the similar products can be produced.
Risks are concentrated in Ukraine. The market reacts badly on the economic downturn, but demand on this product doesn`t decrease in direct proportion to dwindling revenue sources of population.
Management and personnel. Business provides 3-4 shifts of 5 people each - equipment operators, packers, storekeepers. The work of the personnel is paid by the job, depending on the performance. There is also positions of technical administrator, who is responsible for the smooth operation of the equipment, sourcing and distribution managers (2 people), accountant.
History of judgment proceedings. None
Success factors of the business. These products are used by gardeners and vegetable growers throughout the world, the market is exceeding from year to year, and for the last 15-20 years it has been increasing 5-15% per year. There are no analogues in Ukraine, and the price of work force and utility products is the lowest in the region. Affordability of raw material. Convinient infrastructure. Availability of sourcing agreement with all leading retail chains in Ukraine.
Current status of the business. The production had been put on hold at the beginning of 2014, because of the change of owner and absence of operational administration .
