Mini-Plant to be Built for Production of Base Paper in Stavropol

Opportunity Snapshot

  • Country: Russia Russia
  • Industry: Manufacturing
  • Stage: Start-up
  • Investment size: $700,000 / min. $700,000
  • Type of investment: Debt

Investment Opportunity

Production of base paper for use in making toilet paper and napkins in Stavropol Territory, in the Caucasus region, southern Russia.

To start production, an investment of about $700,000 is required for premises, equipment and materials. Payback period: 6 months after start of production.

Business plan for the production of base paper for sanitary use:
We plan to open a mini-factory manufacturing base paper (cellulose material) used in the production of toilet paper, paper towels, napkins and paper handkerchiefs.
Organization and legal form of business: a limited liability company. The ownership of the company will be divided equally between the investor and the project owner (50/50).
The project is expected to have a high probability of success as the demand for our product shows a steady growth of 15-20% per year since 2007.

Market analysis
In the Southern Federal District only one factory makes base paper and is located in Rostov region, in the village of Chaltyr. However, there are many plants for production of napkins and toilet paper in the Southern Federal District. They all buy base paper mainly from two dealer companies because of the fact that it is uneconomical to do it themselves (18 t paper are used by one machine per month. In an 8 hour shift, a single worker will process 170 kg of raw paper, or 4.5 t per month). Middlemen buy the base paper they trade with from the Syassky pulp and paper mill (St. Petersburg), Intercession (Moscow region), and from the Rostov plant. To date, the base paper supplied from these factories is not enough. As a result, paper-processing plants in the whole country are partly idle.

Production plan
The first step in the implementation of our business plan for creating our own paper production is identifying and selecting the small premises necessary to conduct this business. We need a 1,500+ sq m facility with three sections:
-first section: where the paper will be boiled
-second section: a warehouse where finished goods will be stored, and
-third section: for office use
The next step will be to purchase equipment. At the moment the producers of equipment for the paper industry are represented by both domestic and foreign manufacturers. The price of a complete production line ranges from $30,000 to $5.0 million.

Marketing plan
This business plan provides the following customers who will buy the finished product: workshops and factories for the production of toilet paper, paper napkins and towels, located in South Russia. The plants in Stavropol Region and the republics of the Caucasus need more than 500 t. per month for napkins, and more than 1,500 t. per month for toilet paper.

Financial plan
- Premises for workshop and warehouse: rent 150,000 RUB per month (1,500 sq.m.)
- Office space 9,000 RUB per month
- Equipment 10 mln. RUB
- Raw materials 7 mln. RUB
- Staff salaries about 400,000 RUB per month
Total: about 18 million RUB are needed to start production

Revenues and Profit:
- Manufacture of base paper from recycled paper: 98,496,000 RUB a year. Profit: 42,768,000 RUB.
- Manufacture of base paper made from cellulose: 137,376,000 RUB a year. Profit: 50,588,064 RUB.
As can be seen from the calculations, the minimum payback period for the production of paper is about half a year. The period for manufacturing of the equipment is from 2 to 6 months, while installation and commissioning takes 1 month.
Investors can contact us on Merar.

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