RAVI CONVENIENCE STORE LIMITED

5211 Retail in non-specialised stores holding an alcohol licence, with food, beverages or tobacco predominating, not elsewhere classified

Funds Requested

£34,020.00

Offered so far

£0.00

Loan term

60 MONTHS

Auction Closed

2017-04-13

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About the Business

Company Name: RAVI CONVENIENCE STORE LIMITED Company Number: 10667622
Business Type: 5211 Retail in non-specialised stores holding an alcohol licence, with food, beverages or tobacco predominating, not elsewhere classified Years Trading: Less than 2 years
Business Location: Diss

About the Risk

Risk rating

B

Default rate

7.10%

Bad debt rate

5.84%

About the Security

Security Offered:

Personal Guarantee - PG from Sayanthini Ravikumar

Est. Equity: 0.00

Personal Guarantee - PG from Thirunavukkarasu Ravikumar

Est. Equity: 0.00

All Assets Debenture - First priority fixed and floating charge over the applicant company

Est. Equity: 3000.00

Risk Indicators Identified:

Business acquisition
This loan is to fund a business acquisition. The experience of the purchasers should be considered.
Below Average Business Credit Rating
A 3rd party credit rating agency has indicated that this business is above average risk.
Low Security Coverage
The security offered on this loan is below desirable levels
Low Operating Margin
This business may not be efficiently converting revenue into profit

Important Files

Who are we?

Husband and wife team, Ravikumar Thirunavukkarasu and Sayanthini Ravikumar are looking to acquire a new 15 year lease of a convenience store premises situated in Diss, Norfolk, close to their residential base. The sale is, effectively, a retirement sale following the death in 2014 of one of the two current owners with the residual owner now looking to move on.

The vehicle for this acquisition is RAVI CONVENIENCE STORE LIMITED.

Neither applicant has run a business before, but both have experience in the retail trade including a full year of hands on experience in this specific convenience store, “learning the ropes”, whilst funding was put in pace for the acquisition and have marshalled their cash resources together with assistance from the family to produce a sizeable deposit towards the purchase price.

Ravikumar has worked within the forecourt operations of the Shell Group at a managerial level and within supermarket chains. Sayanthini has a Masters degree from UEA and has also worked within major supermarkets.

Read more

Loan Offers

What is the loan for?

A purchase price of £99K + SAV of a further £10K has been agreed.

The company seek a loan of £32K plus fees rounding up to £34K approximately over a 5 year term.

A new 15 year lease at £14K per annum will be created embracing the shop premises and a flat above in which the family will live.

In terms of the target business, this has been owned and run by the same owners for 28 years although please note above the comments re the recent demise of the late Mr Patel.

Easy car parking exists for a convenience store selling a full range of household goods as well as cigarettes and alcohol, news and lottery.

The financials are attached for the last 3 years and analysed below and whilst run successfully, there are a number of potential and obvious improvements to be made under new ownership:

1. Cash only currently – extending to card payments will enhance the offering

2. No paypoint service – extending to this will again enhance the offering

3. Short opening hours – currently trading 7am till 8pm, Monday through Saturday and 9am till noon on Sunday – extending hours will increase footfall

4. Old fashioned merchandising and stale product range – to be improved and expanded to widen the attraction to existing and new customers. Diversifying into seasonal products such as coal, logs, charcoal, car care etc

5. “Lazy” attitude to customer care / service – improvements will add to top line performance

6. Wastage levels appear high impacting on margin

7. Additional hours from owners rather than paid for staff will improve profitability

The key objectives, therefore, are:

1. Increase sales to increase gross contribution

2. Improve service and offering to increase customer visits

3. Reduce overhead where appropriate

HISTORIC PERFORMANCE

Accounts are attached per above with the 2016 accounts to 31st August. In terms of key factors:

GPM has fluctuated between 15.7% and 14%, reflecting the way that both the business and the accounts have previously been managed and clearly below what one would normally expect in the sector. EBITDA varies between £19K and £32K, adequate to provide margin to service debt at say £9600 per annum.

Increase in overhead by way of rent charges does impact but labour costs reduce as no staff will be needed. Sales are anticipated to rise and margin improve under dynamic new management.

Why consider investing?

A keen young couple who are putting all that they have into this proposed business and have a logical approach to their plan of action.

Security may be limited to a debenture over the company's assets which will pick up goodwill, the leasehold interest and stock added to unsupported PGs, but comfort will have to derive from the fact that the couple are putting all of their resources into the business bar a marginal cash reserve, clearly evidencing their joint commitment to make this work.

We recognise that this loan could be perceived as being, in effect, unsecured.

We would not be asking for your support if the ratio was the other way around but a loan of £34K against a cash stake of £80K is a lot more attractive than a loan of £80K against a cash stake of £34K. We hope that this convinces the membership of how serious Ravikumar and Sayanthini are to make this work.

ReBS Disclosure

The accounts uploaded to this listing (P&L for the last three years) and inputted on the financials tab pertain to the business being purchased, a non-limited entity, and consequently have not been filed at Companies House.

ReBS Disclosure - Security

This loan is to be secured by way of a Personal Guarantee from both of the directors and a first priority all assets debenture.

The guarantors are not homeowners and as a result the PG can be described as being backed with insufficient realisable assets to be confident of a recovery dividend from bankruptcy. It would be useful mainly as a tool to bring a debtor to the table or by way of an income payment order should we need to proceed to bankruptcy.

The debenture will be first priority and will cover all of the business’ assets, however given the nature of the business, this would be comprised mainly of stock.

DateAmountCapitalInterestReceived
17/05/2017£837.69£367.79£469.90
15/06/2017£837.69£372.87£464.82
15/07/2017£837.69£378.03£459.66
15/08/2017£837.69£383.25£454.44
15/09/2017£837.69£388.54£449.15
15/10/2017£837.69£393.91£443.78
15/11/2017£837.69£399.35£438.34
15/12/2017£837.69£404.87£432.82
15/01/2018£837.69£410.46£427.23
15/02/2018£837.69£416.13£421.56
15/03/2018£837.69£421.88£415.81
15/04/2018£837.69£427.71£409.98
15/05/2018£837.69£433.62£404.07
15/06/2018£837.69£439.61£398.08
15/07/2018£837.69£445.69£392.00
15/08/2018£837.69£451.84£385.85
15/09/2018£837.69£458.08£379.61
15/10/2018£837.69£464.41£373.28
15/11/2018£837.69£470.83£366.86
15/12/2018£837.69£477.33£360.36
15/01/2019£837.69£483.93£353.76
15/02/2019£837.69£490.61£347.08
15/03/2019£837.69£497.39£340.30
15/04/2019£24,474.28£24,140.53£333.75
15/05/2019£0.00£0.00£0.00
15/06/2019£0.00£0.00£0.00
15/07/2019£0.00£0.00£0.00
15/08/2019£0.00£0.00£0.00
15/09/2019£0.00£0.00£0.00
15/10/2019£0.00£0.00£0.00
15/11/2019£0.00£0.00£0.00
15/12/2019£0.00£0.00£0.00
15/01/2020£0.00£0.00£0.00
15/02/2020£0.00£0.00£0.00
15/03/2020£0.00£0.00£0.00
15/04/2020£0.00£0.00£0.00
15/05/2020£0.00£0.00£0.00
15/06/2020£0.00£0.00£0.00
15/07/2020£0.00£0.00£0.00
15/08/2020£0.00£0.00£0.00
15/09/2020£0.00£0.00£0.00
15/10/2020£0.00£0.00£0.00
15/11/2020£0.00£0.00£0.00
15/12/2020£0.00£0.00£0.00
15/01/2021£0.00£0.00£0.00
15/02/2021£0.00£0.00£0.00
15/03/2021£0.00£0.00£0.00
15/04/2021£0.00£0.00£0.00
15/05/2021£0.00£0.00£0.00
15/06/2021£0.00£0.00£0.00
15/07/2021£0.00£0.00£0.00
15/08/2021£0.00£0.00£0.00
15/09/2021£0.00£0.00£0.00
15/10/2021£0.00£0.00£0.00
15/11/2021£0.00£0.00£0.00
15/12/2021£0.00£0.00£0.00
15/01/2022£0.00£0.00£0.00
15/02/2022£0.00£0.00£0.00
15/03/2022£0.00£0.00£0.00
15/04/2022£0.00£0.00£0.00
Total:£34,018.66£9,722.49