Loan ID 352

Firewood bags stock produce 100K pieces - Firewood factory development

Loan ID 352

Target: 185,000

Loan type: Business

Interest rate: 11% p.a.

Term: 11 months

Location: Latvia

Interest payments: Paid every month

Collateral type: firewood bags stock

LTV: 62%

Low risk project

Project cost: 185,000€

Security: Firewood stock and group guarantee

Country: Latvia
Loan ID: 352
Loan originator: Zs Kazeri
Collateral type: Heavy machinery
Loan type: Business
Interest rate p.a.: 11%
Term: 11 months
NEEDED AMOUNT From investors: 185,000€
Project cost: € 185.000
Loan purpose: To make a stock of firewood bags 100.000 pieces for next spring session
Collateral: Stock of firewood bags 100. 000 pieces of worth 300.000 euros equivalent of 2500 m3 timber.
Pledged collateral amount: 300,000€
Schedule: Interest payments will be paid every month, principal payments will be paid in the end of the loan.
Dear investors we offer to invest in business what is sustainable in Latvia and makes profit. Company which needs investment are offering their services with heavy machinery in Latvia forests, they are carrying out timber like all kinds of pulpwood, lumber and branches for woodchip and they are cutting forest with heavy machinery too. Too expand their business bigger they have need for making a firewood bags stock of 100.000 pieces what is equivalent of 2500 m3 timber 3 meter long. Needed amount of loan is 185,000 euros, interest rate per annum is 11% and loan will be repaid in 11 months. Interest payments will be paid every month and principal payments will be paid in the end of the loan.
This loan is backed by firewood stock 100.000 bags what is equivalent to 2500 m3 timber logs 3 meters long.  The current market value of the pledged firewood stock  is estimated to be 300,000€. The borrower will repay the loan from incoming business revenue.
The borrower will repay the loan from incoming business revenue and subsidy from Latvia rural department. Borrower company name is Zs Kazeri, registration number is 49501000919, address is Cesis district, LV-4116, Latvia , company is registered in 1991 year with already full 32 years of experience in forestry, renewable energy and agriculture production and services.
Projects working phases.
1. Loan originator Zs Kazeri delivers 3 meter firewood with lorry’s from forest stockpiles to firewood produce factory.
2. Zs Kazeri workers with these 3 meter long timber logs doing sawing and choping works with heavy machinery and they make from 3 meter timber logs to 30 cm long firewood and this firewood is getting chopped in the same time with machinery.
3. After then the 30 cm long firewood is left for drying until spring.
4. In the middle of April starts the packaging works. Workers are packing the firewood in 40 liter bags (see in the pictures).
5. In middle of May bags are going in retail sell.
In this project firewood bags are being sold until october 2024. Year and the principle is being paid back to investors.
Of course firewood bags are being sold in winter months too, and this is the first project for firewood bags produce . Their will be a second project for firewood produce in next 2024. Year in May month too where the firewood bags will be sold in winter. Firewood factory is operating all time without stop.

Financials of project

Business project financial background.
Costs to produce 100.000 (one hundred thousand) firewood bags.

1) 1 empty bag container costs 10 cents VAT 21 % excluded, loan originator is VAT payer, so the VAT will be paid back to loan originator by Latvia’s tax department.
100.000 bags x 0.1= 10k euros.

2) 3 meter firewood from what will produce 30 cm long firewood for bags, 1 cubic meter cost with delivery right now 40 euros per 1 m3, for 100k firewood bags will be needed 2500 m3 timber, because from 1 m3 timber can make 40 bags- 40 liter. 
2500 m3 x 40 =100k

3) Firewood processing- sawing and chopping with heavy machinery. Loan originator use only his heavy machinery and his own workers what will be paid wages, will be bought gasoline, oil, chains, ect.
1 m3 processing will cost about 12 euros per 1 m3.
2500 m3 x 12 euros = 30k euros.

4) Firewood packing in bags, loan originators workers are doing this and one packing operator can put in one day about 600 bags for 9-10 hours work. Loan originator pays 0.20 euros per 1 bag packing, it means worker can earn up to 120 euros gross taxes excluded. Its very hard work.
Total expenses will be about 20 k on packing, taxes excluded.

5) Firewood bags delivery. Its expenses what is split between client who orders bags. But loan originator have expenses in diesel, truck maintain ect. Roughly it means that 100 K bags delivering will cost about 22- 28 K euros. This cost is very variable because it depends from driven kilometers, time what is spent in way and different circumstances. 

Income on firewood bags

Loan originator operating in this business many years, because first steps in timber business start 31 year ago, so the price for 1 bag will be at least 3 euros for 40 liter bag. This is the smallest estimate what loan originator bring to table, in 2022 year loan originator sold 1 bag for 4 -4.5 euro for 1 piece. Loan originator will produce 100.000 firewood bags for this project what will be funded by investors. These bags will be sold in Latvia. If we compare then in Sweden and Germany these bags sometimes cost about 6- 10 euros. But for export there would be need bigger volumes.

1) 100.000 bags x 3 euros per 1 bag= 300 K euros.
2) 300.000 – 185.000= 115.000 – investors interest ( 18.655 euros)=96,345 euros profit before company tax.

Loan originator ”Zs Kazeri” is a company what is founded in 1991. year, registration number is 49501000919, this company have a 32 year experience in forestry sector, renewable energy and agriculture, in company works about 50 employees. Zs Kazeri is a family company what were owned by Viesturs Pogulis who is Livonia platform CEO and founder dad, but he gave this company as legacy in 2015. year to Didzis Pogulis who is Livonia platform CEO and founder. Company is offering services in forestry,  energy, producing wood products, and buying and selling forest products for commissions like woodchip buying, selling, producing, and carrying out timber logs from forests, cutting down forests, and with lumber trucks(lorry;s)  transport pulpwood and other timber to Latvian sea ports in Riga, Skulte, Mersrags, Liepaja cities, buying from individuals and legal entity’s forestry products and then selling them further to Sweden and Finland. Considering war in Ukraine Russia and Belarus is not exporting wood produce and all kind of energy so much, that why now the prices is up for renewable fuel , wood production and that way is time to expand for good. This company is in Agriculture sector too, and they are growing many kind of crops, and buying lands and forests to expand in Latvia. By this time the average interest rate is 12.5% for investors and can reach up to 14.5% annually issuing loans on term from 6 months to 36 months. All loans issued will come with security for investors like mortgage on land, or heavy machinery pledge, also this company issued loans offer group guarantee what means that another group company will pay the loan to not force the pledges if it will be needed. Note, this company boasts a flawless record, having never encountered any defaulted loans or loans that have fallen into overdue status.
Zs Kazeri has a plan to become the largest forest producer in Latvia by 2030 and to export pellets, round timber, and briquettes, increasing the turnover to 700 million euros. To achieve this, it is necessary to increase the capacity, purchase machinery for forest development and build 3 pellet factories. Among the Baltic States, Latvia is the most covered with forests, which accounts for 50% of the entire country’s territory, so these goals are achievable and this will also increase Europe’s independence in terms of energy resources. Zs Kazeri has plans to increase the managed forest and agricultural area every year in order to achieve a stable export flow of forest products, and it would not be necessary to rely so much on private forest owners, who are the cornerstone at present, in order to grow the turnover of forest products.
Because of war in Ukraine the prices for energy is raised up and will continue to be steadily up that why energy business will be sustainable for long time now.
The European Union (EU) has set a goal for renewable energy through the Renewable Energy Directive (2009/28/EC). This directive outlines a comprehensive policy to encourage the production and use of energy from renewable sources within EU member countries. The EU aims to generate at least 20% of its total energy from renewables by 2020, with individual countries having specific targets to contribute to this overall goal. Additionally, all EU nations must ensure that at least 10% of their transport fuels are derived from renewable sources by the same deadline.
In December 2018, a revised version of this directive, known as 2018/2001/EU, came into effect as part of the Clean Energy for All Europeans package. This update is designed to maintain the EU’s leadership in renewable energy and, more broadly, support the EU in meeting its emissions reduction commitments under the Paris Agreement. You can find more details about this on the official EU website: https://ec.europa.eu/energy/en/topics/renewable-energy/renewable-energy-directive.
Latvian forests are mostly made up of conifers, however, other species also occupy a significant part. Conifer stands are 53% of all forest stands, birch stands – 30%, white alder – 7% and aspen – 7%.
The forest of 2023 in Latvia occupies an area of ​​3.1 million hectares (ha), or 52% of the land area, the report of the State Forestry Service for the year 2018. In just ten years, the forest area in the country has increased.
The territory of Latvia is 6.46 million hectares (ha), of which 3.35 million ha are forest lands (forest occupies 3.04 million ha). In comparison with other European countries, because in Europe the forest occupies an average of 33% of the land area, while in Latvia the forest land occupies 52%.
1.49 million ha (49%) of forest are under state management, forests of other managers make up 1.55 million ha (51%).
The service states that the annual report for the year 1923, when forest cover in Latvia was 23% of the total territory, by 2018 it has more than doubled. A small, gradual increase in forest areas can also be seen over the past ten years.
In 2008, there were 2.96 million hectares of forests in Latvia, or 50.2% of the entire country’s territory, but last year they were 52%.
Zs Kazeri financial statement of 2022
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