Working capital for a chain of Pet Food and Pet Accessories

Need:288 864.41€
Min.:38 864.41€
Interest rate:17.5%
Period:15 months
This loan comes with a Crowdestor buyback guarantee.
Target: 350 000€
Min. taget: 100 000€
Opens: 2020/02/14
Expires: 2020/03/13
Type: Business
Location: Latvia
Investors: 410

 

Summary

Current investment opportunity offers CROWDESTOR investors to make a loan to  operator of a chain of Pet Food and Pet Accessories stores.

The Borrower is SIA “SKS Projekti”, an entity established in 2007, and its main operational activity since foundation was pet food trade.

The Borrower is known in the market with brand “Mājas Mīlulis” (“Household Darling”). The specialization for the Company in pet foods market is premium and super-premium segment with approximately 5 000 stock units. Company manages 16 stores in 14 cities of Latvia.

The Company has developed its strategy for 2020-2022 which foresees the expansion in retail and wholesale segments, it is expected to reach 2 million EUR turnover in 2020, 2.4 million EUR turnover in 2021 and 3 million turnover in 2022. By raising funds, Company would simultaneously solve both strategic goals – acquire a regional retail chains and boost its wholesale segment.

Funds will be used as working capital and expansion capital. EUR 40 000 will be used to cover debts to current suppliers and creditors, the rest of the funds will be used to acquire assets and enarge the stock.

Current investment opportunity offers CROWDESTOR investors to make a loan up to EUR 350 000,00 with 17.5 % annual interest rate and a loan term of 15 months. If project will go according to plan, it is expected to launch Fundraising phase II in mid 2020 up to EUR 250 000,00.

 

Loan

Minimum target: EUR 100 000,00. 

Maximum target: EUR 350 000,00. 

Loan term: 15 months. 

Interest rate: 17.5 % per annum. 

Interest payments: paid monthly starting from 6th month, interests for first 6 months are paid in bullet payment after 12 months.

Loan repayment: in the end of Loan term.

Crowdestor BuyBack fund: Yes. 

Collateral: The loan is secured by first hand commercial pledge on the total stock of the company. And personal guarantee by the owner/management of the Borrower.

Remember - interest rate payments start calculating from the day you make your investment! 

 

About the Borrower

The Borrower is SIA “SKS Projekti”, an entity established in 2007, and its main operational activity since foundation was pet food trade.

Today Company is 100% family owned. Owned and managed by Mr Maris Kaucis and Mrs Sandra Kauce.

The Borrower is known in the market with brand “Mājas Mīlulis” (“Household Darling”). The specialization for the Company in pet foods market is premium and super-premium segment with approximately 5 000 stock units. Company manages 16 stores in 14 cities of Latvia.

http://www.majasmilulis.lv/

Wholesale of pet food that distributes well known European and Canadian brands exclusively in Latvia with annual sales in this segment of EUR 600 k.

The Company owns the largest e-shop for pet food in Latvia www.majasmilulis.lv that acts as a loyalty tool for its customers and has annual sales of approximately EUR 200 k per year.

In the retail segment the Company executed a major acquisition of a regional chain in Latvia during late 2013, in line with this acquisition the Company introduced an integrated management and control system that has resulted in more than 100% sales growth in the acquired stores and more than 120% gross profit increase since acquisition.

The headquarters of the Company is located in Valmiera with 650m2 warehouse space and 200m2 office premises.

Today Company is 100% family owned. Owned and managed by Mr Maris Kaucis and Mrs Sandra Kauce. Company had a financial investor which was bought out by the local management – Mr Maris Kaucis and Mrs Sandra Kauce as a result Company had shortage of working capital since end of 2018 and had Tax debts of 70k EUR which has declined to 39k EUR by beginning of 2020. There is a repayment schedule agreed with Tax authority for payment of taxes during 2020. 

 

History of the Borrower

The Borrower is SIA “SKS Projekti”, an entity established in 2007, and its main operational activity since foundation was pet food trade.

Since formation of the Company its main operational activity has been pet food trade. Initially only pet food trade via e-shop.

In 2010 the Company signs its first exclusive distribution contract with the prestigious Danish pet food producer “Aller Pet Foods” thus starting operations in wholesale segment.

In December 2011 launch their first retail store with “Mājas Mīlulis” brand in Valmiera city.

In 2012 launch the second retail store in Imanta, Riga.

On December 2012 sign the agreement for becoming the exclusive distributor of Canadian PBL International in Latvia.

In 2013 take over a regional retail chain thus adding 4 more stores to “Mājas Mīlulis” concept.

Dienas Bizness announced SIA SKS Projekti to be one of the fastest growing enterprises of 2013 in the Northern part of Latvia. This statement was based on the data of the NETO turnover growth in the time period from 2010 to 2012 (the turnover growth of SKS Projekti in this period was +349.10 %) 

In Year 2014 company add to chain more 14 retail shops and sales increase was for 70%

Since year 2018 market policy has been changed – all biggest competitors start import they own brands. This point includes 2 possibilities – GM increase, smaller price for customer.

 

Some of the Brands sold in “Majas Milulis” chain:

  • Aller Aqua
  • BEFOOD ITALI
  • Denzel
  • Hill
  • Kormotech
  • LOLOPET
  • Mājas mīlulis
  • Royal Canin
  • Scholtus
  • Triera
  • Zeocem
  • Zolux

 

Coming steps:

  • To organize centralized procurement process for 250 – 300 stores. There is no such practice in pet food industry yet. 
    Develop Private label. This will increase amount of gross margin up to 20% and sales till 30%.
  • To buy goods with advance payment increasing gross profit margin for 5-7%.

Development plan:

By investing 350 000 EUR and 250 000 EUR by mid 2020, Borrower plans to:

  • Become leader in e-commerce of pet food sales of the Latvian market till the end of Year 2020.
  • Become leader in e-commerce of pet food sales of the Baltic states (Latvia, Estonia, Lithuania) market till the end of Year 2022.
  • Become Top3 player in pet food sales in Latvia.
  • Reach Turnover of 2 million eur in 2020, 2.4 million EUR in 2021 and 3 million EUR in 2022. 

TURNOVER DURING 2014 - 2019, EUR

Profit and loss accounts, 2014 - 2019, EUR

FINANCIAL FORECAST, 2020-2022, EUR

Biggest market participants/competitors

Dino Zoo

(SIA Zoo Centrs)

Zoocentrs

(SIA Kila)

- DinoZoo was founded in 2003 by 4 private local individuals

- This company is involved in pet foods retail sector since inception

- In the beginning of 2007 Czech private individual Dusan Placek becomes the holder of 3% of shares, this person also holds shares in Czech pet food trade company

- In December 2009 Placek Holding increases their ownership to 58% by buying out the shares from 2 intiial owners and investing EUR 380k in the company:

- 2009 is a critical year for DinoZoo as it experiences the most dramatic sales drop in its history from EUR 7,1 mln in 2008 to EUR 5,4 mln in 2009 and net loss of more than EUR 300k

- In 2011 Placek Holding becomes 100% shareholder in DinoZoo

-  DinoZoo expands its number of stores specifically fast after its acquisition by Czech investor as in 2009 they had 26 stores, but by 2013 - 35

- This strategy can be explained by the bad performance of the stores originally in the Company – mainly their stagnating sales results: in 2008 sales per store was EUR 270k annually, but in 2013 it was EUR 208k even though the number of stores was increased by 9

- This company is being financed in large part by its mother company

- Placek Holding is the largest pet foods wholesale company in the Czech Republic

- The holding has grown from a family company to a multinational company with operations in Latvia, Slovakia, Russia and Ukraine. In total the holding has 73 retail stores in Europe (35 of which in Latvia – major exposition)

 

- Zoocentrs was founded in 1996 and is involved in retail of pet food

- The same group includes company Zooserviss that is a pet food wholesaler

- The retail operations:

§   Owned by private local

§   45 stores in Latvian cities

§   Approx.70% of goods are delivered by their related supplier Zooserviss (see below)

§   Sales per store amounted to EUR 77k per year or EUR 6 400 per month

§   Until after year 2010 the sales have been stagnating even with adding new stores

§   2012 was the first year with positive EBITDA, the previous years were all operatied with losses

§   More financial data in the following slide

§   The operations have been financed by loans from related company Zooserviss that by the end of 2012 reached EUR 680k in long-term liabilities

- Zooserviss (wholesale):

§   Founded in 2000 and owned by the husband of Zoocetrs owner

§   Closed year 2012 with sales of EUR 3,4 mln of which 95% was from wholesale and 5% from retail activities

§   95% of sales were generated in Latvia, the rest – in Estonia and Poland

§   On EBITDA level this company operated with the EBITDA of EUR 453k, in the previous years also this seems to be the company where all the profit was accumulated

- The group’s retail operations are being fully supported and maintained above water by its retail company. 

       

 

 

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