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LocationSouth Africa, KwaZulu-Natal

Sector - Manufacturing

Asking Price
R6,900,000
Monthly Profit
R 287,939
Asset Value
R 1,380,000
Stock Value
R 0
Yearly Net Profit
R 3,455,271

Summary

Long established manufacturer & brand name, with good equipment & staff. Good client mix, consisting of malls, hygiene Co's, agencies, wholesalers, end-users. A Net Profit of R3.45m off a turnover of some R18.57m (Feb 2022), and similar results being presently experienced & expected into the future.

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Fully describe the business's activities?

This Durban based Tissue paper converter & supplier, has an excellent name & brand, in respect of quality & delivery, over some 19 years. The existing client base & new clients are also attracted by the product range, being : toilet tissue (1-2 ply); dispenser rolls & wipes; serviettes; etc. Virgin raw product is converted by two main machines with 10 competent staff.

How does the business operate on a daily basis?

Raw tissue paper on huge cores is received from SA main manufacturers & offloaded from externally owned flatliners with this Co's hyster placing such in the warehouse & thereby ensuring raw material on hand at bulk prices. Standing & probable orders are utilised to plan the timely conversion of the raw stock via two reducing roller machines, with the product then cut to width requirements via two ban-saws. Stock of completed products (various ply's & dimensions) are also kept on hand for walk-in & immediate demand. Three small Co trucks are used to deliver product around Durban, while some clients collect their orders.

How could the profitability of the business be improved?

Push business development where potential clients are more focused on quality & delivery, than price alone.
Add other product lines that the same existing clients might also require in tandem with tissue paper products (ie acting in a similar way to an Agency that buys in non-in-house produced products).

Premises Detail

Premises are rented within a strategically placed Industrial Estate, which has immediate freeway access.
The total size is some 460 m2 at some R26 000 pm, excl of VAT & utilities of some R 3 700 pm excl VAT; with a 3 year new lease being available, with 10% escalation.

What are the main assets of the business?

2 Tissue converters & 2 Ban-saws & tools - worth R1.1m when purchased around 2012 but depreciated to zero in the AFS, but on a 2nd hand basis some R600 000. They will last at least 10-20 yrs, with really only 3-4 bearing replacements pa & rubberised rollers every 2 yrs.
3 pnuematic compressors
3 x 1.5 ton trucks (backs enclosed) - worth R1.2m when purchased around 2015/2016/2020, with 80k/105k/22k km's on the clock, but depreciated to some R420k in the AFS, while some R600k on a 2nd hand basis.
1 hyster 6 yrs old bought for some R300k but on a 2nd hand basis some R150 000
Also 3 computers & office furniture on a 2nd hand basis of some R30 000
All are in working condition & sufficient for the present turnovers - 5 day 8hr week

Strengths?

Long established Co & brand over 19 yrs
Good assets & staff
Good mix of clients
Good product range

Weaknesses?

No generator, but not really necessary - very few affected days & work a Sat if need be
The product range could be widened further

Opportunities?

Could widen the product range further for certain clientele
Proactive business development could be grown through using testimonials from the top clients serviced efficiently over many years

Threats?

That other virgin tissue converters improve their service delivery
or non-virgin converters switch to virgin inputs

What is the reason for the sale?

The Owner is retiring,
however, there is the option to purchase only 50% of the shares of this business initially, as long as there is clarity on the remaining 50% eventual purchase plan (which either way, will certainly provide comfort & security to a Purchaser).

Location

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Cliff

Cliff Bell

LocationSouth Africa

Preferred method of contact

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