Project
Establishment of manufacturing
of wood-polymer composite (WPC) products
in Chapayevsk Town, Samara Region

Project brief description:

     The project proposes the building and further usage of an industrial enterprise for manufacture of constructional and finishing materials made of wood-polymer composites (WPC/) that are used in construction, machinery, furniture and other industries. At the initial stage it is planned to manufacture at least three types of products – decking (floor decking), railing (boxlike section products), siding (finishing material for front of buildings and structures). Products made of WPC have an appearance of wood and physical and chemical properties of plasticizer. They are wonderful fabricating materials: they are cut, sawn, drilled, bent (at heat treatment). Unlike wood they do no rot, get moldy, or destroyed by insects and they have a long life.

     The project has innovative elements and creates a multiplicative effect.

Initiator of the project:

     The initiator and beneficiary of the project is a Russian company SanWood, Limited Liability Company («SanWood», LLC), primary state registration number -  1036302940190, taxpayer identification number - 6376011861, industrial enterprise classification code - 637601001, registered on 24.06.1998 by the resolution No 673 of the administrative authority of the Krasnoyarski district, Samara Region and registered in Inter-district Office of Federal Tax Service No.7 in Samara Region.

     SanWood LLC was created as a diversified manufacturing and trade company which it had been earlier for many years. Then the decision was taken to concentrate all efforts of the company for implementation of the investment project, making it to be a special purpose company precisely for the present project. The economic activity of the enterprise was suspended. At present SanWood LLC only works on the promotion of the project. The company's current needs are covered by revenues received from the property rent.

At this moment:

- the feasibility study development and also the business plan, calculations and attachments to it are kept up to date;

- there were conducted negotiations with German companies (a face to face meeting with companies’ managers on the territory of Germany) that manufacture the equipment.

There were defined:

- the production volume of WPC (wood-polymer composite) products.

- there was developed the production process of WPC products’ manufacturing.

- capacities (water, gas, electricity, etc)  of the newly created production.

- a list of the equipment, scope of supply of each company-manufacturer, technical  features, cost.

- separation of the responsibilities of the companies  while installing the equipment  at the newly created areas.

- there was developed  a preliminary design of the enterprise.

- there were held negotiations and reached agreements with raw material suppliers and buyers of products;

- there was studied the subject of the innovative products’ manufacturing: with antibacterial, heat-reflecting and heating properties, there was reached an agreement on the development of appropriate technologies and acquisition of patents;

- there were concluded agreements with Research and Development Center «WPC» (Moscow) for provision of advisory services and certification of the newly created Laboratory and products manufactured in accordance with the standards of GOST and  ISO.

 The Plan of advancement of the innovative products’ manufacturing was developed:

(the result of which is the manufacture patent for the innovative products’ manufacturing) it includes:  

1. The agreement for research and development activity(R&D): 

- Patent applicationfor the utility model and its production technology

- Manufacturing technology of the innovative product

- Method of implementation for a specific process line of the customer

- Designer's technical supervision of the commissioning works on the technology implementation

 2. The agreement for the technical support for products according to the contract:

- Solution of technical problems associated with the production of a particular product

- Development and improvement of the applied technology

- Further patent applications for the improved technologies

 3. Contract for delivery of the innovative products

Competitive advantages of the planned products are the following:

-high quality, due to use of the ISO certified equipment of German manufacturers – in other words, we will arrange the production process according to the rule "We produce certified products on certified equipment".

This equipment is part of the automated technological complex working under the supervision of a single operator with use of software of German company Card Word.

-availability of technology and recipe for WPC products’ manufacturing, tested by equipment manufacturers taking into account peculiarities of local markets’ raw materials.

-availability of own laboratory equipped for testing of input of raw materials quality and manufactured products quality at output.

The products’ innovative features:

     The project goal is to produce innovative goods which have no similar products both in Russian and international markets, which will have demand worldwide and have the following properties:

- antibacterial features, with silver nanoparticles in the composition of the polymer used for interior decoration in hospitals, schools, army, prison system, agricultural enterprises, enterprises of food industry and public catering.

- heat reflecting features, with use of nanoparticles of various metals and of special shapes, with high level of heat reflection factor. The demand for this product is placed in the state innovation policy, the program  "Energy efficiency", this will provide interest from the part of state organizations-buyers

- panel-type radiators – panels with heating elements on their surface (according to the technology of laminating or printing conductors), which can maintain temperature at the required level. Use of a combination of heat-reflecting and heating properties will allow to obtain high-performance low-voltage systems to maintain a comfortable temperature when interior finishing of the premises where it is technically impossible to arrange the heating by any other means.

Conditions for raising funds

     The duration of the investment phase of the project (design, construction works, installation of the equipment,training of personnel and commissioning and startup of the factory) is 24 months.

     The amount of necessary funds: 30.0 million euro (1 830 million rubles). The optimum form of financing is a loan. The terms of participation in the project we are ready to discuss. There may be several lenders or investors, but in total we need 100% financing.

     The loan use period: 5 years from the date of the complete loan granting.

The expectation effect of the funds invested into the project:

     The project investment from the revenue position is equivalent to using the funds on bank deposit at 31,18% per annum without interest capitalization or at 12.04% per annum with annual interest capitalization.

Motivational aspects and security:

     SanWood LLC has been acting in the Russian market for 18 years. The company is a small business that allows to use a number of legal advantages, it does not have and has never had debts towards the budget, banks, or commercial partners. The attraction of external loans is not practiced. The company is stable and has a break-even balance.

  For the purposes of financial instrument’s seeking they provide the consolidated account of LLC "SanWood" and Joint-stock company "Teploenergokompaniya", which is a large company with a complimentary credit history. 

     As security for the lender/investor they provide a municipal guarantee of Chapayevsk Town, Samara region, at the rate of 100 million rubles, the pledge of land plots on the territory of Chapayevsk in the amount of 9 836.1 million €, surety of Joint-stock company " Teploenergokompaniya " in the amount of 9 560.2 million rubles, the pledge of buildings on the territory of Novokuibyshevsk Town, Samara region, owned by the initiator of the project in the amount of 272.13 million €.

The planned number of employees to participate in the project.

     During the investment phase we will keep the existing personnel policy in order to reduce the cost finance load, since the construction works will be conducted with the involvement of the existing General contractor. In the operational phase during the first year it is expected to employ 78 people, from the second year – 168 persons.