Project Idea

MB 13 Group is a Lithuanian company operating in the feld of supply chain services. It delivers various natural and biological materials, chemicals and provides warehousing and transportation services. MB GV 13 group started operations in February 2021 and has since been successfully providing services, achieving a four-fold sales increase by 2022. In 2023, the sales for six months already exceeded total sales in 2022. During 2021-2023 the company generated a large amount of operating profit and a high volume of customer requests. In 2023 the company recorded an increase in revenue by 60% compared to the year 2022.

MB GV 13 group strategic plan is to start the manufacturing of acetate flters on a plant close to Klaipeda. Currently in the EU market there is an increase in demand for acetate flters which are used in diferent industries, primarily in cigarette flter manufacturing. The acetate flter market is growing every year, and the current market condition yields prospects for a new profitable business niche. The set-up of the factory requires EUR 2.5 million: EUR 1.5 million is required for flter manufacturing equipment purchase and the rest EUR 1 mln is required for various consumables. Calculations of profit margin have shown that acetate flter manufacturing is a highly profitable business (profit margin - 40%) and contributes to a ROI of 500%.

The supplied goods are used in various industries, like food, feed, household and chemistry industries in various EU countries. MB GV 13 Group cooperates closely with qualifed and reliable certifed suppliers (mainly within the EU) of raw materials from all over the world. Through having a network of reliable and fexible suppliers the company is able to ofer products of highest quality and excellent service to its customers. Convenient strategic location ensures fast and efcient supply of raw materials by means of sea, land and air transportation. As a supplier with years of experience and extensive knowledge in this feld, MB GV 13 Group offers raw materials at competitive market prices and ensures fast delivery worldwide. Additionally, MB GV 13 Group can provide financial mediation by helping to obtain more competitive prices for raw materials.

Market description and size

Currently in the EU market there is a huge drop of acetate flters supplies due to the increase of demand and a ban on sourcing raw material from Russia. Currently the key suppliers of raw materials are China, Turkey and the UAE. Acetate flters are used in diferent industries and the market is growing every year. On account of the fltration properties of cellulose acetate, it is a preferred flter material. It further is biodegradable.

Acetate flters are mainly used in the tobacco industry as cigarette flters. Cigarette flters are designed to absorb the vapors and accumulate the particulate smoke components. Filters also prevent tobacco from entering a smoker’s mouth. Most of the cigarette flters in the market are made of cellulose acetate, and some are made from paper and rayon. The cellulose acetate two fbers are very thin and are packed tightly together to create a flter that can look like cotton. The growth in the number of smokers across developing economies such as India and China is anticipated to drive the growth of the segment. However, the rising awareness regarding the negative efects of smoking on health is anticipated to hinder the growth of the segment.

Success factors that contribute to sustainable and profitable business in the feld of acetate flter production:

• Demand increases the supplies, shortage of suppliers
• Global market trends and forecasts
• Company experience in logistics and supply chain services
• Network of suppliers and customers to start-up such business
• Agreements with future employees
• Long-term contracts with customers and suppliers
• Calculations of profit margin have shown that acetate flter manufacturing is a highly profitable business. Profit margin - 40% even when operating in one shift

The global cellulose acetate market was valued at USD 5.07 billion in 2021 and is expected to grow at a CAGR of 5.0% during the forecasted period. Cellulose acetate is used as a substitute for plastic across various industries as it is biodegradable. The COVID-19 negatively impacted the market in 2020. The COVID-19 pandemic afected the cellulose acetate market because of disruption in the supply chain. During the pandemic, many factories were shut down, leading to a decline in production. However, the market is returning to pre-COVID levels. Over the short term, the growing demand for cellulose acetate from the textile industry and the continued tobacco usage are some driving factors stimulating the market demand. The stringent government regulations regarding tobacco usage and the declining demand for cellulose acetate for photographic flms hinder the market growth. The increasing use of cellulose acetate for water treatment will likely create opportunities for the market in the coming years. The Asia-Pacifc region is expected to dominate the market and will also witness the highest CAGR during the forecast period.

Most of the cigarette flters in the market are made of cellulose acetate, and a few are made from paper and rayon. The largest tobacco manufacturing companies in the world are China National Tobacco Company, British American Tobacco, Philip Morris International, Imperial Brands, Altria Group, and Japan Tobacco International. Major players are investing in R&D to ofer better products to customers. Furthermore, innovations such as new favored cigarette flters such as methanol, clove chocolate, and others are expected to increase the demand for cigarettes and drive the demand for cellulose acetate.

Executive summary (Business plan and financial model)

MB GV 13 Group is launching the current funding in order to purchase a flter manufacturing unit that will be ready to operate starting from 01.03.2024. In addition to that it intends to hire multifunctional operators/warehouse assistants and an engineer to ensure production volumes in time and good quality. The company requires a loan of EUR 2.5 million for the following purposes:

EUR 1.5 million is required for flter manufacturing equipment purchase
EUR 1 million is required for various consumables

All these steps will result in a successful start-up of the production in one shift. By the end of the year MB GV Group would be able to achieve profitability of 40%

MB GV 13 Group intends to split the fundraising into several rounds: as part of the frst round it seeks to raise EUR 300,000.

Key financials

• The company is seeking a loan with an interest rate of 12.5 percent with a repayment term of 12 months
• In 2021, MB GV 13 Group recorded EUR 37,926 in gross profit
• In 2022, MB GV 13 Group recorded EUR 39, 456 in gross profit.
• As of 2022, MB GV 13 Group has EUR 150,604 in current assets
• MB GV 13 Group projects a revenue of EUR 6,875,000 in 2024
• The company expects a cash flow of EUR 2,624,000 by the end of 2023
• MB GV 13 Group exhibits a healthy working capital ratio > 1.0 calculated based on its most recent annual financial statements for 2022
• MB GV 13 Group has a healthy credit history ranking according to Creditinfo, an independent aggregator of credit history information

Collateral and guarantees

The loan is backed by a collateral that would cover the entire sum of the desired loan. As part of the collateral, MB GV 13 Group would provide the equipment it intends to purchase, the company’s share capital as well as land appraised by an independent third party.