Why Not Invest in a Profitable Automotive Fuel Distributor?

Hello Deal Closers,

Automotive Fuels: You Know We Can’t Live Without Them Today. Next to Water & Electricity, they are the ‘Staff of Life’. Today I Offer You the Chance to Invest in a Profitable Fuel Distributor that is in Long-Term Expansion Mode.

My client, Sughdneft LLC, was incorporated and registered in Tajikistan on 21st November, 2012 as a wholesaler and retailer of petroleum, oil and automotive lubricants, including various types of petrol, diesel and LPG. At present, Sughdneft operates an oil delivery terminal, two active petrol retailing stations and owns ten land lots where construction of six petrol retailing stations has already begun or is planned. Most of the new petrol retailing stations will be operationally launched in 2015-2016. This is an operating company with a substantial and increasing cash flow.

As a wholesaler, Sughdneft delivers fuel to partner petrol retailing stations, and as a retailer, the company services its own petrol retailing station network. The Company’s business objective is to substantially grow the petrol retailing stations network sales volume. To that end, the Company is seeking investors to invest $USD 3 million dollars to implement a two phase development program.

Firstly, Sughdneft needs $USD 1.5 million to invest in the construction and commissioning of six new Petrol Retailing Stations in the Sughd region and secondly, the Company requires $USD 1.5 million for working capital to facilitate the exploitation of emerging market opportunities.

The management’s vision of the company’s development perspectives is based on Sughdneft LLC becoming one of the top three fuel sellers in Sughd Region of Tajikistan by 2019. To achieve this vision, the company plans to build a network of six petrol retail stations in Sughd Region in 2015/2016.

The Local Tajikistan Market

The retail market in Tajikistan for petroleum, oil and automotive lubricants products is highly attractive, as the demand for petroleum, oil and automotive lubricants is growing rapidly. Tajikistan has overseen substantial private sector investment in this industry segment in recent years, with many new petrol retail stations being built, despite the reality that there are still many locations where fuel is sold using glass jars and canisters.

The market for petroleum, oil and automotive lubricants is therefore specific, and has a variety of participants that range from large national retail chains to smaller independent companies. This wide spectrum of industry participants simply reflects the fact that the petroleum, oil and automotive lubricants market in Tajikistan is currently undergoing rapid transformation, and moving to a new quality level. This industry reality endorses and enhances the decision by Sughdneft to substantially increase the size of its own petrol retailing stations network in the Sughd Region of Tajikistan, based on increasing sales projections, both in the wholesale and retail segments of the market.

The Sughdneft Business

The overall cost of Sughdneft’s business project implementation is $USD 9.838 million US dollars, of which the Company itself has already invested $USD 6,838,000 of its own money into equipment, construction, purchases of fuel and working capital (as recorded in the end-of-year 2014 balance sheet). As explained earlier, Sughdneft is seeking investors to invest a further $USD 3 million to build further upon its own self-help activities.

$USD 4.92 million of the $USD 6.838 million earlier own funds investment was used for purchasing equipment, buildings and facilities, and working capital (in the form of business inputs and warehouse inventory). The Company wishes to disclose that it has a relatively small loan from the Eskhata Bank. The outstanding balance of this loan as at December 31, 2014 was $USD1.4 million.

In accordance with its longer-term operational plans for 2015–2018, Sughdneft intends to open a chain of fifteen petrol retail stations of different capacities and functionalities. Each station will have between one and three 8-nozzle petrol pumps offering three types of petrol (AI-80, AI-92, AI-95) and one 2-nozzlepump selling LPG

The sites for the petrol retail stations were chosen so as to make them as convenient as possible for customers. The sites are located along major roads with busy traffic. Building each petrol retail station takes up to six months, after which the station can start selling fuel to customers. Each station therefore is expected to reach maximum capacity for volume sales within its first three to six months of operations. The description, location, specifics and capacity of each proposed petrol retail station, is set out in the Company’s business plan. Each station will be run by one manager and three staff.

Products Available to Customers. The main products presently sold by Sughdneft ti customers are:

  • Petrol (AI-80, AI-92, AI-95);
  • Diesel;
  • Liquefied petroleum gas

The petrol retail stations will be used to retail fuel from the pumps to cars, trucks, buses and other vehicles; however, the main sales will be to wholesale customers directly from the Company’s oil delivery terminal.

The LPG fuel market is currently growing rapidly in Tajikistan, for several reasons:

  1. It is eco-friendly;
  2. It is more affordable to consumers from a price point-of-view;
  3. Many vehicles have already been converted to this type of fuel to date and this conversion process is continuing unabated.

In response to this high demand for LPG, all existing and future petrol stations will be equipped with LPG pumps. LPG gas, factions of propane and normal butane are shipped to Tajikistan from Kazakhstan, by railroad and trucks.

The oil products sold by Sughdneft are compliant with the European norms Euro-2, Euro-3 and Euro-4, and are produced in accordance with the respective regulations:

Once the petrol retail stations and the wholesale commercial operations reach full capacity, expected to be by the end of 2018, the company will further expand by procuring LPG transport trucks with 10-ton capacity. The Company’s industry growth projections show that the petrol and diesel market is gradually becoming saturated and it is no longer enough to just offer these fuels – it is vital to provide high quality LPG fuel. And high quality can be achieved only if a company has a vertically integrated structure, that is, everything from oil delivery terminals, through wholesale facilities to the petrol retail stations as customer outlets. This objective is not only a valuable asset for Sughdneft, but it is a pre-requisite for market entry.

In essence therefore, this project is about launching a chain of petrol retail stations with the necessary oil delivery terminals and wholesale facilities infrastructure to provide the basis for the Company to reach full operational capacity and commercial profitability.

For interest, the Company’s oil delivery terminal has four storage reservoirs, 8 tanks for storing oil products and 10 tanks for storing LPG with the following capacities:

Petrol: 3,500 tons
Diesel: 1,500 tons
LPG: 1,000 tons

The terminal has an access railroad and is equipped with railroad scales and truck scales, along with a ramp for fuel loading/unloading operations.

Sughdneft Funding Offer

Sughdneft is seeking $USD $3,000,000 United States’ dollars.

While the Company is primarily seeking loan funds, the company is prepared to consider reasonable offers to invest capital based on the following broad investment criteria.

The offer for sale and purchase is for 15,000,000 Ordinary Shares at an issue price of $USD 0.20 cents per share which, when sold, will raise the required $USD $3,000,000 United States’ dollars. Investment of $USD $3,000,000 United States’ dollars will represent a 40% equity stake in the Company.

Alternatively, lenders offering interest rates less than 5% per annum will be considered. Lenders offering interest only loans at interest rates less than 5% will be more favourably considered.

Future Action: the next move is up to you

If this investment is of interest to you and you would like a copy of the project business plan, or you simply require further information about this opportunity to invest, please contact me on chiron@chiron.itsonline.com.au or Skype me at graham.segal1. I am in Queensland, Australia, in the Australian Eastern Standard Time Zone, GMT+10 hours.

Later, if you require more detailed information, I will introduce you to representatives of the Company.

If you know of colleagues and friends who also may like to invest, please ask them to contact me.

Sincerely,

​Graham Segal
Graham is Chiron! the business doctor.™

Telephone (International): 61 405 702 644
Telephone (Australia): 0405 702 644
Telephone (Skype): graham.segal1
Web: http://chironthebusinessdoctor.com/

Graham is the Author of:
‘The Venture Capital MasterClass:
everything you always wanted to know about raising
equity capital … but until now, you had no one to ask
‘.

Buy your PDF copy at http://chironthebusinessdoctor.com/downloads/the-venture-capital-masterclass-ebook/: $USD 49.50

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