Feasability Study Raut - English

Feasibility Study on creation of the Industrial Park on the territory of RAUT JSC in Balti
Beneficiaries: Ministry of Economy of the Republic of Moldova United Nations Development Program in RM
Executor: ProConsulting LLC MD -2004, 23/9 Mitropolit Petru Movila St. Chisinau municipality, Republic of Moldova tel./fax: 21-00-89
Feasibility study on creation of the Industrial Park on the territory of JSC Raut , Balti
CONTENT
ABBREVIATIONS ......................................................................................................................................... 8 EXECUTIVE SUMMARY .............................................................................................................................. 9 1. INTRODUCTION ................................................................................................................................ 11 1.1. DESCRIPTION OF THE PROJECT IDEA AND OF THE INDUSTRIAL PARK CONCEPTION ................................................................................................................................................................ 11 1.2. 1.3. 1.4. 1.5. 2. GOAL AND OBJECTIVES OF THE STUDY ........................................................................................... 12 BRIEF OVERVIEW OF ECONOMIC ENTITY ...................................................................................... 12 OVERVIEW OF THE ELABORATING COMPANY............................................................................. 13 METHODOLOGY ............................................................................................................................................ 13
ANALYSIS OF THE REGION ............................................................................................................ 15 2.1. ANALYSIS OF BUSINESS ENVIRONMENT ......................................................................................... 15

Sectoral analysis ...................................................................................................................15 Analysis of regional business activity ..............................................................................18 Analysis of labour productivity .........................................................................................20
2.1.1. 2.1.2. 2.1.3.
2.2. 2.3. 2.4.
ANALYSIS OF INVESTMENT CLIMATE ............................................................................................... 21 ADMINISTRATIVE AND TERRITORIAL ORGANIZATION ......................................................... 23 ANALYSIS OF THE SOCIAL AND ECONOMIC ENVIRONMENT ................................................ 24
Analysis of the demographic situation .............................................................................24 Analysis of labour force .......................................................................................................25 Analysis of people welfare ..................................................................................................28
2.4.1. 2.4.2. 2.4.3.
2.5.
ANALYSIS OF PHYSICAL INFRASTRUCTURE .................................................................................. 28

Analysis of natural resources .............................................................................................28 Analysis of transport infrastructure.................................................................................29 Analysis of utility infrastructure .......................................................................................30 Analysis of educational institutions .................................................................................31
2.5.1. 2.5.2. 2.5.3. 2.5.4.
3.
ANALYSIS OF LEGAL FRAMEWORK ............................................................................................ 32 3.1. BRIEF ANALYSIS OF LEGAL FRAMEWORK IN THE REPUBLIC OF MOLDOVA .............. 32
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3.2. ANALYSIS OF LEGAL COMPLIANCE FOR GRANTING THE TITLE OF INDUSTRIAL PARK 33 4. OVERVIEW ON THE ECONOMIC ENTITY................................................................................... 36 4.1. COMPANY PROFILE ..................................................................................................................................... 36
Brief history ..........................................................................................................................36 Field of activity. Companys products and services .......................................................36 Companys size ......................................................................................................................37
4.1.1. 4.1.2. 4.1.3.
4.2.
ENTERPRISE POTENTIAL ........................................................................................................................ 38

Diagnosis and localization of infrastructure...................................................................38 Diagnosis and infrastructure of utilities ..........................................................................41 Technical Diagnosis .............................................................................................................45 Operational diagnosis..........................................................................................................49 Human resources and organizational structure ............................................................53
4.2.1. 4.2.2. 4.2.3. 4.2.4. 4.2.5.
4.3.
COMMERCIAL AND MARKETING DIAGNOSIS ................................................................................ 57

Analysis of activity and contracting policy ......................................................................57 Analyses of distribution and marketing activity and policy ........................................60 Analysis of promotion activities and policy ....................................................................61 Pricing policy .........................................................................................................................61
4.3.1. 4.3.2. 4.3.3. 4.3.4.
4.4.
ECONOMIC AND FINANCIAL DIAGNOSIS ......................................................................................... 62

Balance sheet analysis .........................................................................................................62 Analysis of financial results and expenses ......................................................................66 Analysis of financial indicators ..........................................................................................67
4.4.1. 4.4.2. 4.4.3.
4.5. 5.
SWOT ANALYSIS OF RAUT JSC ......................................................................................................... 72
OPTIMAL SCENARIOS FOR INDUSTRIAL PARK DEVELOPMENT ...................................... 74 5.1. 5.2. 5.3. 5.4. DETERMINATION OF INDUSTRIAL PARK DEVELOPMENT SCENARIOS.......................... 74 SELECTION OF OPTIMAL SCENARIO .................................................................................................. 77 IDENTIFICATION OF POTENTIAL RESIDENT COMPANIES .................................................... 83 POTENTIAL RESIDENT ENTERPRISES OF INDUSTRIAL PARK ............................................ 87
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5.5. IDENTIFICATION OF MODELS OF ORGANIZING THE MANAGING COMPANY AND FUNDING MANNERS FOR CREATION OF TECHNICAL AND PRODUCTION INFRASTRUCTURE OF THE INDUSTRIAL PARK ........................................................................................ 88 5.6. 6. BUSINESS PARK INDUSTRIAL ORGANIZATION ......................................................................... 106
ACTION PLAN .................................................................................................................................. 118 6.1. 6.2. LEGAL ACTION PLAN ................................................................................................................................ 118 OPERATIONAL ACTION PLAN .............................................................................................................. 124
7.
INVESTMENT AND FINANCIAL DIAGNOSIS ........................................................................... 128 7.1. 7.2. ESTIMATION OF THE VOLUME OF NECESSARY INVESTMENT........................................... 128 FINANCIAL PLAN ........................................................................................................................................ 129
Forecast of income of the managing company ..............................................................129 Forecast of expenses of the managing company ..........................................................133 Forecast of final results .....................................................................................................134 Forecast of cash flow ..........................................................................................................135 Forecast of the balance sheet ...........................................................................................139 Forecast of financial indicators .......................................................................................142
7.2.1. 7.2.2. 7.2.3. 7.2.4. 7.2.5. 7.2.6.
7.3.
ESTIMATION OF INVESTMENT EFFICIENCY ................................................................................ 145
8. SOCIAL AND ECONOMIC AND ENVIRONMENTAL IMPACT OF THE INDUSTRIAL PARK ON THE REGION ...................................................................................................................................... 148 9. CONCLUSIONS.................................................................................................................................. 150
Figures Figure 1. Scheme of economic sectors location in the NDR, 2010.........................................................15 Figure 2. Structure of investments by sector ............................................................................................22 Figure 3. Geographical location of RAUT JSC in Balti Municipality ..................................................24 Figure 4. Stable population of Balti Municipality .....................................................................................25 Figure 5. Employment structure, 2009 ......................................................................................................26 Figure 6. Geographical demarcation on a radius of 30 km ....................................................................27 Figure 7. Communication routes by road, rail, and river of the NDR ..................................................29 Figure 8. General urban plan ...........................................................................................................................39
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Figure 9. Insurance scheme of energy power .................................................................................................43 Figure 10. Plan of water...................................................................................................................................44 Figure 11. Operational Process of RAUT JSC .........................................................................................50 Figure 12. Organizational chart .......................................................................................................................54 Figure 13. Potential resident enterprises of the industrial park ..........................................................84 Figure 14. Organization of managing company and identification of funding sources ....................90 Figure 15. Organization of the managing company and identification of funding sources .............95 Figure 16. Organization of the managing company and identification of funding sources .............98 Figure 17. Organization of the managing company and identification of funding sources ...........100 Figure 18. Cleaning of buildings in the opinion of RAUT JSC administration ..............................107 Figure 19. Organization of residents ..............................................................................................................109 Figure 20. Organization of resident enterprises activity ......................................................................110 Figure 21. Types of activity of the industrial park residents ...............................................................112 Figure 22. Services of the resident company...........................................................................................113 Figure 23. Structure of organization of the managing company .........................................................114 Figure 24. Interaction of residents activities according to the conglomerate model ....................115 Figure 25. Effects of interaction of resident companies........................................................................116 Figure 26. The ideal model of cooperation between the industrial park residents ........................116 Figure 27. Dynamics of companys financial results ..............................................................................134
Tables Table 1. Description of economic activity. Number of enterprises ......................................................19 Table 2. Description of economic activity. Income from sales ..............................................................20 Table 3. Distribution of employment by type of activity ........................................................................21 Table 4. Structure of population in Balti Municipality, thousand people ...........................................26 Table 5. Availability of the overall population within 30 km of Balti ..................................................27 Table 6. Companys products and services ...............................................................................................37 Table 7. Structure of shareholders .............................................................................................................37 Table 8. Immovable of RAUT JSC .............................................................................................................45
Table 9. Category of machinery of RAUT JSC ........................................................................................48 Table 10. Managers of hierarchical levels of RAUT JSC......................................................................53 Table 11. Number and dynamics of the number of employees, salary fund and salary per employee in 2007-2009 ..............................................................................................................................55 Table 12. Employment structure by age ....................................................................................................55 Table 13. The personnel structure based on qualification level...........................................................56 Table 14. Indicators of labour efficiency at RAUT JSC .........................................................................56 Table 15. Evolution of purchasing raw materials ....................................................................................58 Table 16. Indicators of RAUT JSC balance sheet ...................................................................................62 Table 17. Loan contracting ...........................................................................................................................64 Table 18. Structure of receivables...............................................................................................................65 Table 19. Structure of RAUT JSC debts ...................................................................................................65 Table 20. Profit and loss ratio ......................................................................................................................66 Table 21. Liquidity coefficients ....................................................................................................................67 Table 22. Indicators of profitability ............................................................................................................68 Table 23. Management Indicators ...............................................................................................................69 Table 24. Indicators of financial balance ...................................................................................................70 Table 25. Coefficients of financial stability................................................................................................71 Table 26. Define business scenarios of the industrial park ...................................................................74 Table 27. Comparison of the industrial park business scenarios .........................................................78 Table 28. Ways of overcoming the risk of scenario 2 ..............................................................................81 Table 29. Advantageous of the optimal scenario ....................................................................................82 Table 30. Areas used by RAUT JSC ...........................................................................................................84 Table 31. Structure of RIF-ACVAAPARAT shareholders .........................................................................85 Table 32. Real estate of RIF-ACVAAPARAT Company .............................................................................86 Table 33. Occupied areas by types of activity ...........................................................................................87 Table 34. Performance indicators of the occupied areas .......................................................................88 Table 35. Number of residents of the industrial park .............................................................................88 Table 36. Buildings cleared by RAUT JSC: ............................................................................................106
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Table 37. Legal Action Plan .........................................................................................................................118 Table 38. Features of constructions ..........................................................................................................125 Table 39. Operational Action Plan ............................................................................................................127 Table 40. Structure of investment .............................................................................................................128 Table 41. Forecasted income of the managing company, th. MDL (TVA included) ........................129 Table 42. Evolution of the lease price by types of activities ................................................................130 Table 43. Forecast of financial results over the forecasted period (Annex 7)...................................134 Table 44. Cash flow dynamics, th. MDL (Annex 8. Forecasted cash flow) .............................................136 Table 45. Dynamics of balance sheet, th. MDL ........................................................................................139 Table 46. Structure of assets ......................................................................................................................140 Table 47. Main indicators of profitability ................................................................................................143 Table 48.Main liquidity indicators ............................................................................................................143 Table 49. Main indicators of financial stability ......................................................................................144 Table 50. Main indicators of turnover speed ..........................................................................................145 Table 51. Determination of investment efficiency (Annex 11. Calculation of investment efficiency ) ........................................................................................................................................................................145
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ABBREVIATIONS
RDA Regional Development Agency; LPA Local Public Authority; NBS National Bureau of Statistics; EFC Enterprise with Foreign Capital; IE Individual Enterprise; JV Joint Venture; SME Small and Medium Enterprises; ME Ministry of Economy; UNDP United Nations Development Programme; EDN Electricity Distribution Networks; TER Technical Expert Report; CDR Central Development Region; NDR Northern Development Region; RM Republic of Moldova; JSC Joint-Stock Company; CA Commercial Association; LLC Limited Liability Company; VAT Value Added Tax; EU European Union; UNIDO United Nations Industrial Development Organization; FEZ Free Economic Zone.
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EXECUTIVE SUMMARY This feasibility study was developed based on state-owned company (76,52%) RAUT JSC, directed towards industrial production, with an area of 14,6 ha, located in the northern region of Moldova, Balti Municipality. The regional potential supporting the creation of an industrial park lies in its trends and opportunities. Balti Municipality is the second most developed industrial pole in the country after Chisinau. This allows preconditioning of sustainable industrial activities, which will be carried out within the industrial park. Its industrial attractiveness and developing performance is viewed through the prism of investment in the region, these being 34% in industrial sectors. Based on the sector and region specifics and specialization, industry involves 35% of working-age population, which currently makes up about 70%. Its professional qualification can be reflected in the activities, which will be carried out within the industrial park, being attracted by high work conditions and motivating wages. However, the potential of qualified people in the region and the existence of institutions of higher education with technological and engineering profile support activities in the industrial park involving experts specialized in this field. Commercial interactions between the entrepreneurs of the region are realised due to available communication nodes, particularly the intra-regional transport networks that are part of the municipality roads, including the railways. Geographical proximity to the EU leads to acceleration of the investment process. The results of RAUT JSC analysis emphasise the need to reorganize its operational activities through technical organization. The obtained bivalent effect influences both the creation of the industrial park and residents who will work within the available spaces, as well as RAUT JSC, which will make efficient their production activities with direct impact on costs. At the same time, the ability to organize the companys activity based on bureaucratic management standards do not allow it to undertake activities leading to peripheral value and to consider the company as a system. Therefore, the industrial park should be managed by a legal entity created by RAUT JSC rather then itself. The analysis on the region and of RAUT JSC identified following the direction of the industrial park development was identified: parks activity focused on industrial production with additional services including the activities of a Business Incubator. In order to ensure their successful realization, investments are needed in the park infrastructure. The most appropriate source of funding the industrial park is that one making RAUT JSC to sell a part of its assets to subsequently invest in remodernization of the industrial park area. In this case, the company will found a new legal entity, which will become the manager of the park and its residents shall sign cooperation agreements with it. In this context, the main residents of the park will be RAUT JSC, EFC RIF-ACVAAPARAT JSC (currently operating on the territory of the industrial park). Other potential residents of the industrial park will be both local and foreign companies, due to which managerial and operational practices will be obtained being aimed at minimum defects (Six Sigma principle) but with a maximum value. In order to implement an investment project, there is a need in an investment in amount of 408,837 thousand MDL, which shall be carried out in two stages. The term of investment implementation makes up 23 months. Within the first stage 60% will be invested, the other amount will be invested within the second stage. The period of investment recovery makes up 20 years. At the same time remarkable is the evident trend of the gross profit of over 3,2 times within the 20 years of forecast,
from 24,8 million MDL in the first year of the project launch up to 81,05 million MDL in the 20th year. This is positively appreciated being determined by the growth of sales revenues with a higher rate than the increase in cost of sales in 20 years of forecast. The implementation of the project will generate effects for both RAUT JSC and for industrial park residents, as well as effects on the region and on the country. Creation of the industrial park based on the identified model will have a positive social and economic impact on the region efficiently using the potential of its resources, by obtaining related benefits boosting the economic growth of the country. Finally, it is concluded that the project on creation of an industrial park on the territory of RAUT JSC with a predominant industrial activity, will have the desired effect in conditions of observing the direction of activity scenario, proposed action plan and the amount of investment.
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1.
INTRODUCTION 1.1. DESCRIPTION OF THE PROJECT IDEA AND OF THE INDUSTRIAL PARK CONCEPTION
The project aims to create an industrial park of the territory of RAUT JSC in Balti Municipality, which is currently operating at a minimum production capability, having fixed assets and unused buildings. Balti Municipality is the most developed locality in the Northern region of Moldova, which has a potential of industrial development, including the opportunity to create an industrial park on the territory of RAUT JSC, which most capital is owned by the state. Effects of creating an industrial park on this territory will enhance the development of industrial enterprises in the region. The opportunity of creating industrial parks in the Republic of Moldova consists in the need for industrial development of the economy able to lead to the optimization of production costs, to achieve production and quality competitive on outlets, etc. and to this end the acceleration of investment processes in the country is required. Thus, the industrial park is an effective tool for national and regional economic growth through its impact on development of export-oriented production and development of domestic consumption in the country. According to the Law on industrial parks no.182 of July 15, 2010 the industrial park is a defined territory having technical and production infrastructure, involving economic activities, mainly manufacturing, provision of services, use of scientific researches and/or technological development in a regime of system-specific facilities aimed at using the human and material potential of a region. The decision to create an industrial park on two territories of RAUT JSC, i.e. on an area of 9,8 ha, is taken in accordance with the results of the feasibility study carried out in accordance with the Law on industrial parks. The opportunity of creating the industrial park is based on the social and economic needs of the Republic of Moldova and the need to use state assets. The creation of the industrial park on the territory of RAUT JSC has the following specifics: Creation of an industrial park on a territory whose area allows large-scale industrial activities Existing infrastructure and assets intended for industrial production and storage, facilitate activities within the industrial park. Existence of businesses able to act as resident customers of the industrial park Availability and specialization of personnel in the region allow industrial activities on the territory of the industrial park.
This study presents the analysis of possibilities of creating an industrial park and its development scenarios. However, according to the study specifics, recommendations to re-organize and organize activities of the industrial park, funding models and management schemes are made.
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1.2.
GOAL AND OBJECTIVES OF THE STUDY
The goal of the feasibility study on creation of an industrial park on the territory of RAUT JSC is to argue the technical, economic and legal viability of this project. The objectives of the feasibility study is to confirm the opportunities of creating the park in accordance with the positive social, economic and environmental impacts on region development; the possibility of developing economic activities in the region and attracting residents in the park; the existence of human potential in the region necessary for park activity and the existence of regional infrastructure necessary for park business. They derive from the general purpose and refer to: establishment of the concept of industrial park and indication of the types of the planned activity; assessment of the social, economic and environmental impact of the industrial park on development of the region; description of economic activities of the region and possibility to involve residents in the park as well as human potential of the region necessary for the park activity; diagnosis of the regional infrastructure necessary for the park activity as well as the condition of technical and production infrastructure which shall be connected to the industrial park; delimitation of the site and industrial park configuration; determination of the action plan for industrial park creation; estimation of investment necessary to create the park and funding sources; as well as financial forecasting for activity of the managing company.
The objectives of creating the industrial park attracting domestic and foreign investments; establishing competitive industrial sectors based on modern and innovation technologies; development of economic activities in line with development opportunities specific to the respective zone, including more efficient use of public property; development of small and medium enterprises; creating jobs within the industrial park and ensuring equal access of all citizens to the activity carried out in the park; human resources development by improvement of quality of training within the park; taking over operational practices of foreign companies in manufacturing of mechanical engineering parts.
1.3.
BRIEF OVERVIEW OF ECONOMIC ENTITY
Since the industrial park will be established on the territory of RAUT JSC, it is the subject of analysis of the feasibility study. The company is located in the central sector of Balti Municipality on 3 territories with a total area of 14,77 ha, being a state ownership. The company in terms of form of legal organization is a Joint Stock Company, which authorized capital is mainly owned by the state. According to the incorporation acts, the main types of activity are manufacturing technical products; production and marketing of consumption goods; commercial activity, including external economic relations. It manufactures unique serial products.
The average recorded number of employees as of January 1, 2010 made up 977 people. The feasibility study involves analysis of the following components: Business profile; Study of interior and exterior infrastructure; Description of buildings, machinery and equipment; Technological and operational diagnosis; Companys staff policy; Analysis of marketing policy; Economic and financial diagnosis of the company; Analysis of options for the reorganization of production and administration spaces.
1.4.
OVERVIEW OF THE ELABORATING COMPANY
The feasibility study has been developed by ProConsulting LLC which has operated on the consulting market of the Republic of Moldova since 2003. The company products portfolio refers to: consulting in financial management; consulting in strategic management; consulting in investments and fund-rising; cusiness planning; trainings and workshops; insurance and real estate assessment.
Contact information. MD -2004, 23/9 Mitropolit Petru Movila St., Chisinau municipality, Republic of Moldova. Tel./fax: +(373 22) 21-00-89. office@proconsulting.md Web: www.proconsulting.md Team of consultants involved in the development of the present study: Palade Anatol - Project Manager. Stratan Dumitru- Strategic Management Consultant. Lungu Nicolae Senior Consultant, Financial Management. Vascan Grigore - Consultant in technical issues and restructuring. Utica Oleg - Consultant in legal issues.
1.5.
METHODOLOGY
The feasibility study on creation of the industrial park was developed taking into account the practices of neighbouring countries, in particular Romania, Russia, Hungary, Czech Republic. At the same time, the feasibility study was developed according to the UNIDO Methodology, subsequently adjusted to the specific nature of this project.
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Within the development of this feasibility study, a great number of tools and techniques, depending on the stage of the project sustainability, were used. Data collection. For this stage the team of consultants have developed a diagnostic analysis of the region and of RAUT JSC using the following methods: survey method; interview method; observation; analysis of internal and external reports; investigation of statistical sources: empirical methods, science-based methods. Elaboration of project. Substantiation methods are numerous, among them the most used were: forecasting methods: extrapolation of trends using statistical methods and analytical methods of studying the market, strategic and operational methods of diagnosis; SWOT analysis; financial modelling methods; strategic modelling methods; methods of scenario building.
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2.
ANALYSIS OF THE REGION 2.1. ANALYSIS OF BUSINESS ENVIRONMENT
The proposal to create an industrial park on the territory of RAUT JSC, located in Balti Municipality part of the Northern Development Region (hereinafter NDR) is analyzed in terms of regional trends and the situation in RAUT JSC. 2.1.1. Sectoral analysis
The region has a relatively developed industrial potential. The main industrial agglomerations, according to data of 2007 are: (a) mining, (b) manufacturing of clothes, dressing and dyeing of fur; (c) production and distribution of electric power, gas and hot water, (d) food and beverage; (e) production of medical, precision and optical equipment and tools. Over 50% of the industrial potential is concentrated in Balti Municipality (See Figure. 1).
Figure 1. Scheme of economic sectors location in the NDR, 2010.
Meat processing Oil manufacture Tobacco processing Manufacture of sugar Oil storage Chemical industry Machinery manufacture Asphalt manufacture Manufacture of dairy products Manufacture of ready made clothes
Manufacture of ready made clothes Manufacture of wood and furniture Canning, manufacture of goods and non alcoholic drinks Manufacture of sparkling wines, spirts Manufacture of ceramics Carper manufacture Hide preparation Electro technics Production of poultry meat and eggs Manufacture of glass Heat and electricity meters Manufacture of footwear poligraphy Manufacture of pharmaceutical products Storage of radioactive waste Aircraft services shipbuilding Metallurgical industry Oil extraction Oil processing Waste processing Free economic zone current sitution Free economic zone - forecast Industrial parks - forecast
Source: RDA
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Agriculture - agro-industrial sector. The agro-industrial potential of the region in early 2010, consists of 51 production cooperatives, 25 companies limited by shares, over 530 of limited liability companies and over 90 thousand registered individual farms and enterprises. Although Balti Municipality is an urban locality, it has a small agricultural sector, located in both rural localities of the municipality (Sadovoe and Elizaveta). Their main specialization is cultivation of cereals, especially wheat, and vegetable cultivation, but in recent years for most crops the city gets yields lower than the adjacent districts. The livestock sector is virtually absent, the main part of the total volume of animal products being produced in households. The agricultural sector is poorly integrated in networks of suppliers of food businesses in the municipality relying more on suppliers of adjacent districts.1 Agriculture is not a strategic sector of Balti Municipality. The sown area for the analyzed period January - June 2010 made up 1013 ha, with the lowest share of the region and representing 94% as compared with the same period of the passed year. The highest share of sown area is that one under sunflower, which determined the activity of enterprises in oil production and marketing. Geographically the slow development of agricultural sector is quite unfavourable for economic entities in carrying out economic activity in this area, thus the use of resources will be much more effective. Industry. With good traditions in many branches, industry is the main sector of the economy of Balti Municipality. Although the profile and the capacity of the sector have changed essentially from the Soviet era, the municipality still retains a number of businesses, which previously served as a reference model. Many of them proved to be economically viable, but their management is not necessarily one of the highest levels of performance. The presence of many large industrial enterprises is a good precondition for development of extended value chains, with positive impact on small and medium enterprises sector in the municipality, but also on those of the NDR as a whole. In 2006-2008, industrial production growth in Balti (+4% annual average rate) was much stronger than in the country as a whole (annual average rate of -1.6%). But delays in restructuring many industrial enterprises and in inefficient restructuring of them have said their word, most enterprises operating with a productive capital physically and morally depreciated. In fact, many enterprises do not use even half of the installed production capabilities. Food and beverage is the main industrial sub-sector (represented, for example, by oil production at "Floarea Soarelui" JSC, the production of cognac at "Barza Alba" JSC and dairy products at "Incomlac JSC) and is attractive for investments, showing a number of competitive advantages, including proximity to the raw material, relatively cheap and skilled labour forces. At the same time, the food industry of the municipality tends to diversify in terms of branches. Thus, the sectors of processing and conserving fruits and vegetables and the manufacture of grain mill products in 2004-2008 showed an essential increase in the number of companies from 7 to 20 and, respectively, from 4 to 22. But vertical chains, which previously integrated food industry with suppliers and customers is still far from being perfect. However, economic diversification that takes place other parts of the country as well, with the trade liberalization policy, could weaken some advantages of the municipality. Businesses in other economic sectors of the municipality, such as textile and clothing sectors survived over the past decade changing their economic strategy and renouncing to the production of their own brands, but providing instead services of external processing of raw materials. This allowed preservation of the work
1
Problems and investment solutions in the northern development region, Expert-Group
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collectives of those enterprises, but that led to the fact that the main part of the added value created in light industry does not remain in the municipality, but migrates (i.e. the word "migration" and not "export" of the value added is the right one). In terms of industrial value, over 50% of products of the region are concentrated in Balti Municipality, the industrial production value in January-June 2010 made up 1,300 million MDL. This registered a slight decrease as compared with the same period of the previous year in the context of crisis in Moldova. The industrial output value made up 99,3% as compared with the same period of the previous year. Services. Although the service sector in Balti Municipality is more diversified as compared with adjacent districts, it can be said that in the municipality it is still immature. In the total turnover of services predominant are the services rendered by population, an essential share is constituted by public services (such as utilities). But the sector of public services rendered to population is quite strong and is represented by a large number of companies. A negative side is that for an economic and infrastructural node as important as Balti Municipality is, the sector of services provided to businesses in the municipality is very poor, particularly the logistics, storage, marketing, consulting, information services etc. the number of companies providing services to agricultural households fell from 7 in 2004 to 4 in 2008, reflecting both a difficult situation of the agricultural sector in the NDR, as well as lack of policy incentives for the development of the sector of agricultural extension. By contrast, the number of companies operating in the real estate sector increased from 38 in 2005 to 71 in 2008. However, investments in the services sector is an attractive option, given the fact that in long-term predominant is the trend of increasing citizens' welfare (even very uneven), and manufacturing and agricultural companies will need to purchase more and more services necessary to remain competitive. According to the data presented by the National Bureau of Statistics, the value of services rendered to population in 2008 made up 764,108 million MDL that is 18,7% more than in 2007. Transportation. In January-June 2010, freight transport by road made up 241 thousands tons or 8,1% more than that of the same period of 2009. This increase is mostly due to the level of industrial development and secondly because of the quality of roads in the municipality. Statistics of passenger transport realized with buses and minibuses during January-June 2010 showed 4,119 thousand persons, decreasing by 11% as compared to the same period of the previous year. The report of direct proportionality between transport services and industry growth in localities conforms to the development of business in the industrial sector. Objects of business infrastructure. Currently the Free Economic Zone "Balti" operates in Balti Municipality. It consists of two land lots with an area of 1,5 ha and 10,35 ha respectively. At the moment, the FEZ employed around 1,700 people. FEZ from Balti Municipality already has five resident economic entities. The largest of them is Draexlmaier company, which has about 1,300 employees and manufactures various cables for the German automobile giant BMW. Only 10 percent of employees are from Balti, the rest being brought to by transport from neighbouring villages and districts. Since 2007 the Draexlmaier company rents rooms and production buildings of Claritate JSC. During two years of activity Draexlmaier has invested around 3,7 million EURO in repairs of buildings and infrastructure. The period of operation of
"Balti" FEZ is 25 years (2010-2035). Currently administration plans to extend the zone on the basis of "Moldaeroservice" company for new investment projects. This will give residents spaces with an area of 60,000 m2 for offices, warehouses and production facilities. 2 The main goal of creating "Balti" Free Sub-Zone is to attract investments and advanced technologies, create new jobs, new production capabilities in the field of mechanical engineering and parts thereof, wide the export potential, solve a number of social and economic problems. According to the Government Decision "On the transfer of real estate", No. 983 from October 19, 2010, it is foreseen to transfer a land lot with an area of 136,49 ha to the Administration of "Balti" Free Economic Zone of which 110 ha are used for opening new sub-zones, and 26,49 ha to serve the free zone activities. In general, the business support infrastructure is relatively developed. There are 13 operating branches of commercial banks in the city. Along with these, there is a microfinance organization and a savings and loan association. In 2001 a business incubator ("Impulse") was created, but the services rendered by it are rather logistics (providing space for rent), than small business incubation and extension. Also in Balti Municipality there are 3 business associations and 4 centres for training and consulting. Potential resources for the industrial park Given that the situation in the industrial sector is mainly determined by the activity of manufacturing enterprises, and traditional primary industries are represented by food, light industries, construction machinery, construction materials manufacturing, electrical equipment, development direction of the industrial park through its residents could be economic entities carrying out activities mentioned above. The business support infrastructure in any region increases the likelihood of attracting investment. So, the direction of potential industrial park may be that of creating a business incubator within its territory and provision of an area for potential FEZ status park. Benefits expected for Balti Municipality Use of the above mentioned resources within the industrial park will involve: Increase in the number of local economic entities oriented toward industrial production; Satisfying local demand and customer needs; Diversification of outlets; Job creation, increase in people welfare; Increase in the revenues to the local budget by means of revenues from taxes; Use of the export potential of the region though industrial products, which have distinct advantages on foreign market. 2.1.2. Analysis of regional business activity
Industrial representatives are Basarabia Nord JSC, Floarea Soarelui JSC, Incomlac JSC, Barza Alba JSC, Berermaster JSC, Combinatul de produse alimentare JSC, Produse Cerealiere SE,
2www.miepo.md
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Combinatul de piine din Balti JSC, Moldagrotehnica JSC, Articole din beton armat JSC, CMC Knauf JSC, Flautex JSC, Baltaneasca JSC, Mioara JSC, RAUT JSC. Based on the form of ownership, in 2010 there were 8552 enterprises, of which: Private Property 6010; Public Property 162; Joint ownership without foreign participation 36; Joint participation with foreign ownership 24; Foreign Ownership 97; Other property (collective, public) 2223.
The business environment in Balti Municipality is attractive for foreign companies, fact confirmed by statistics of the first months of 2010, which show that there were 97 companies with foreign capital.
Table 1. Description of economic activity. Number of enterprises
Activity of economic entities per enterprise size and years Balti Municipality, Number of enterprises. (The unit of measurement is indicates in the name of value)
Large enterprises
Medium sized enterprises
Small enterprises
Micro enterprises
National Statistics Bureau Large enterprises National Statistics Bureau Medium sized enterprises Small enterprises Micro enterprises
The analysis of the economic and financial situation of Balti Municipality is as follows. For 2009, local enterprises have achieved an income of 8,115 millions MDL, of which the profit before taxation made up 243 million MDL. The enterprises from the municipality have recorded less sales income in 2009 compared with 2008 (9,833 million MDL). This was influenced by the decrease of the volume of investments in the region. Of the total income obtained from sales, SMEs registered a turnover of 2.609,5 million MDL with a profit before taxation of 125 million MDL. It was noted that SMEs had
higher cost efficiency than large companies in the municipality. So, the 48 large companies recorded sales income in the amount of 5,506 million MDL, obtaining a profit before taxation of 118 million MDL. Compared to 2008 large enterprises had lower sales income in 2009. In 2008 they made up 6,721 million MDL. As noted, both large companies and SMEs had a decrease in income from sales in 2009 compared to 2008.
Table 2. Description of economic activity. Income from sales
Activity of economic entities per enterprise size and years Balti Municipality, Income from sales, th. MDL (The unit of measurement is indicates in the name of value)
Large enterprises
Medium sized enterprises
Micro enterprises
Small enterprises
National Statistics Bureau
The economic landscape of businesses by type of activity shows that few companies carry out their activity in agriculture, forestry, hunting and fishing. The highest percentage of businesses is engaged in wholesale and retail. Potential of resources for the industrial park The analysis of business activity in Balti Municipality is a base for the idea of institutional encourage and support of industrial conglomerates through foreign and local residents.
2.1.3.
Analysis of labour productivity
As of employees, Balti Municipality records a tendency of reduction of the number of employees. Currently the labour market situation is similar to that of 2007, making up 34 346 people. Because of the economic and political crisis in the country, the production capabilities of companies diminished and respectively 1898 people were dismissed from their jobs. Large enterprises concentrated over 50% of the labour force in the region. In 2009 there were 19178 people. The most attractive and most developed sector in the city is industry. In 2009 it occupied 13151 people.
Table 3. Distribution of employment by type of activity

2006 796 13 896 1 758 2 463 4 374 1 799 5 131 5 073 2 322 2007 597 14 615 1 766 2 343 4 192 1 846 4 750 4 808 2 186 2008 572 15 254 1 701 3 346 4 268 1 798 4 679 5 062 2 204 2009 638 13 151 1 607 3 845 4 043 2 094 4 702 5 188 2 243
Agriculture Industry Constructions Trade Transport and communication Public administration Education Healthcare and social assistance Other types of activities
Source: Prepared by authors
The remuneration of employees in Balti Municipality is the highest in the region. In January-June 2010 the average monthly salary made up 3032 MDL with a growth rate of 107 compared with the same period of the last year.
2.2.
ANALYSIS OF INVESTMENT CLIMATE
Balti Municipality enjoys a relatively developed infrastructure compared with other towns. This, along with the status of economic and administrative capital of the north, contributed to attracting investment. During the years 2005-2008 Balti Municipality received a continuous flow of investment both as loans from affiliates, as well as contributions to the authorized capital. The balance of foreign investment per capita in 2008 made up 3154 MDL, well above the regional average of 931 MDL. In Balti Municipality investments per capita decreased by about 47%. The explanation of most acute investment vulnerability of Balti and Chisinau municipalities in 2009 is that the financial crisis has hit especially the residential real estate market, which enjoyed most interest of the main investors in the anti-crisis period. However, by 2008, fixed capital investment in housing construction saw an upward trend from 65,7 million MDL in 2006 to 106,4 million MDL in 2008. In the NDR the largest share in the specific structure of fixed capital investment constitutes were made in machinery and equipment acquisition, the share of this specific investment being maintained at a level more or less constant in recent years, while in other regions the share of these investments declined dramatically. Obviously, this partly reflects the trend of modernization of production equipment at plants and factories in Balti Municipality. In Balti Municipality, foreign investment indicators showed the following situation. Of the total number of enterprises with foreign capital of the northern region, 67 companies were located in Balti Municipality. The authorized capital of enterprises with foreign capital made up 170,995 thousand MDL. The net flow of foreign investment in 2008 made up 35,976 million MDL, while the total stock of foreign investments by 2008 made up 254,872 million MDL. From private sources, the development of financed investment in 2009 made up 3010,8 MDL per capita. In 2007 it made up 48,35 MDL/cap and 5,706 MDL/cap. Also in 2008, the structure of private investment was dominated by manufacturing (34%) and was preceded by commerce (19%), real estate transactions (12%), transport and communications (12%).
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Figure 2. Structure of investments by sector

Healthcare and social assistance
Agriculture
Public administratio n
Real estate transaction
Education
Agriculture Processing industry
Financial activities Transport and communication
Hotels and restaurants Trade Construction s
Energical power, gas and water
Source: National Statistics Bureau
The analysis shows that most investments in Balti Municipality were made in 2008 prior to the crisis which hit the country as a whole. Most attractive sectors for investment are: Food industry; Logistics and International Transport; Sector of services rendered to population; Milk production in some model farms in both villages of the municipality; Import and supply of metal necessary for mechanical engineering; Development by the mechanical engineering of new products based on non-traditional materials (plastic, carbon, etc.).
Potential of resources for the industrial park The facilities provided by the industrial park will stimulate local and foreign investment which will allow capitalization of investment projects. However, investments will directly contribute to creating partnerships between businesses and good management practices. At the same time, in order to encourage investments, provision of tax facilities would be a potential for creating a free economic zone within the potential industrial park on the territory of RAUT JSC. Its creation will revive the economy of the entire region, using the full potential of personnel, production capability of resident enterprises, available industrial equipment, available storage space and territory of RAUT JSC.
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2.3.
ADMINISTRATIVE AND TERRITORIAL ORGANIZATION
From the administrative point of view, Balti Municipality includes 3 localities, with a total area of 79.2 km2.3 The city is located at 138 km to north from Chisinau, and neighbores Falesti, Glodeni, Riscani and Singerei, which are situated at a distance of 20-40 km. Balti Municipality is located on the banks of Raut and Reutel rives, which determine its complicated topography. Raut River crosses the city north-east to south-west, and Reutel River - from southeast to northwest, which has 17 km length. The city is also crossed by Copaceanca and Faminda rivers. All rivers belong to the basin of Nistru River. The development and arrangement of the city is conditioned by water, terraces and roads that connect the sectors of the city and the city with other localities of the country. The repeated floods of water of Reutel and Reut rivers revealed the need to change the direction and the depth of river bed in the city by creating artificial lakes, water - race and recreation zones. The urban area covers 43,5 km2 and includes only Balti. The rural area is divided into two rural communes and covers 35,7 km2. The communes have 2 localities Sadovoe and Elizaveta. The real estate fund of Balti Municipality, which consists of all residential premises, regardless of ownership, including houses, specialized houses (hostels, boarding houses for invalids, houses for veterans, lonely elderly people and others), apartments, service rooms and other residential rooms in other buildings suitable for living, make up 2563,916 m2. The population of Balti Municipality makes up 148156 persons, which indicates the presence of a diverse labour force of various qualifications and specializations. Balti is the third largest city in the country and an important industrial center, which includes national and international companies. The existence of a free economic zone on the territory as well as the potential for expansion of industrial sectors is a factor in attracting strategic investment. The municipality is an important railway junction and has an airport. The legal and territorial existence of RAUT JSC in Balti Municipality, provides the opportunity to enjoy the region's transport links, having a direct connection with those of Balti Municipality (See Figure. 2).
3Law
No. 764 of December 27, 2001 on administartive and territorial organization of the Republic of Moldova Page 23
Figure 3. Geographical location of RAUT JSC in Balti Municipality
Source: www.wikimapia.org
Potential of resources for the industrial park Balti Municipality is the second largest city after Chisinau in terms of population and is the main economic and industrial center in the north of the country, which has a significant production potential and enough storage spaces, a railway junction, enterprise of heavy car transportation. Creation of the industrial park on the territory of RAUT JSC is an opportunity for businesses in the region due to its specificity. The physical and geographical location of Balti and its territorial area, existing facilities, remoteness from Chisinau municipality and from the country's borders is also an opportunity to argue the development of industrial infrastructure through the creation of industrial park and concentration of some industrial business centres. The physical access to different markets and industries enables the creation of a park structure having diversified industrial activity.
2.4. 2.4.1.
ANALYSIS OF THE SOCIAL AND ECONOMIC ENVIRONMENT Analysis of the demographic situation
In Balti Municipality, as of January 1, 2010, 148156 people were registered on an area of 7801 ha. The population density is Balti Municipality made up 1899 inhabitants per km2. Of the total population 68081 were men and 80075 women. 143257 people live in urban area and 4899 people live in rural area. In the total population of Balti Municipality, the share of people below working age (16 years) represents 15% or 22535 persons. People of working age (men 62 years old, women 57 years old) registered a 70% share, or 103194 people. People over the working age made up a 15% share, i.e. 22427 persons. The analysed data show that the share of working-age population is 4,6 times more than the share of people with over the working age, i.e. Balti Municipality has no shortage of people of working age. Current trends show a steady decrease in the first age groups, because of low birth rates compared with mortality, which means that the aging process is still ongoing. According to official data, the year
2009 showed a positive natural growth in Balti Municipality. During the year there were born 1627 people and 1468 people died. There was a positive trend of the population growth rate because for previous years the population growth rate was negative: in 2008 it made up 94 persons, in 2007 - 105 persons, in 2006 - 169 persons. An important indicator of social and economic situation of the municipality is life expectancy at birth. This has seen an upward trend compared to previous years. In 2009 compared with 2008, the average life expectancy at birth was 69 years, while in 2008 - 69 years, and in 2007 68 years.
Figure 4. Stable population of Balti Municipality
Source: National Statistics Bureau
Potential of resources for the industrial park The existence in the region of labour force and its availability allow to create an industrial park, which will be provided with qualified personnel with high labour productivity. Currently in Balti Municipality there is an outlet for industrial products. Given the fact that consumers have different preferences and different needs for different types of products, a diversified business of the potential industrial park will represent a risk in terms of market demand.
2.4.2.
Analysis of labour force
The labour market in Balti Municipality is in a transient process and generates strong structural regional, occupational and professional imbalances. Promoting reforms that took place and continues to make quantitative and qualitative changes in the employment sphere, which is characterized by decreasing the number of employed people in the national economy, increasing the number of persons employed in the informal sector, increasing labour migration, insufficient use of the intellectual capital, determined by the decrease in the demand for qualified labour force. Compared to other regions, Balti Municipality has a highly qualified human potential due to the concentration of a large number of plants and factories which determined the level of qualification of workers. Historically, loss of outlet, bankruptcy of some enterprises and privatization and restructuring process of enterprises, triggered the dismissal of many workers. After the privatization and restructuring of enterprises, 5 -20% kept their jobs. A typical example is RAUT JSC. In late 2009, Balti Municipality occupied the second position by the number of employees, after Chisinau Municipality. The number of employees officially employed was estimated at around 45263 people. Of them, 38143 people were employed in economic entities with 20 and more persons, the rest 7120 were employees hired in economic entities with more then 20 people.
Another indicator showing the degree of stability of employees and their motivation is the index of employee mobility. For the same period, in Balti Municipality 9200 people were employed, which is 24,6% more than the average number of employees in the territory of Moldova. At the end of 2009 12,000 people were dismissed. The employee mobility index recorded a negative result of 2500 persons. In early 2010 the number of unemployed people in Balti made up 3614 people, which was an increase compared to the same period of the previous year (3418 persons). However the number of unemployed people in Balti Municipality, has seen a decrease compared with 2007, when most people were unemployed, amounting to 4218 people. Of the total number of employees, 58,7% of employees work in large enterprises, 1,9% in small enterprises and 13,2% in medium sized enterprises, while the remainder in small enterprises. Large companies are those that contribute to job creation and their maintenance. According to the official information, labour market of Balti Municipality is the most exposed to the risk of accidents in the region. Of 91 victims of work accidents in the Northern region, 45 were recorded in Balti, of which two were fatal. The employment of population in early 2010, in thousands, is presented in the table below:
Table 4. Structure of population in Balti Municipality, thousand people
No. 1. 2. 3. 5.
Indicators Total population Economically active population4 Population employed in economy 5 Inactive population
2006 128 87 44 41
2007 127 86 42 41
2008 127 90 42 37
2009 127 90 45 37
The types of activities of employment are as follows:

Figure 5. Employment structure, 2009
Agriculture Constructions
Transport and communication
Industry Trade Public administration Healthcare and social assistance
Education Other types of activities
unemployed people
5
Economically active population people who are available workforce capable of working, including employed and
Polulation employed in economy persons engaged in economic or social activity producing goods and services to obrain revenues in form of wages or other benefits Developed by ProConsulting LLC, tel./fax: 21-00-89 Page 26
In order to determine the potential workforce available for the industrial park, the alternative of persons existing at a radius of 30 km from the territory of RAUT JSC, which will enable the industrial park:
Figure 6. Geographical demarcation on a radius of 30 km
Source: www.point.md/map. Authors presentation
In this radius five districts were defined: Floresti, Drochia, Riscani, Glodeni, Singerei districts. The geographical demarcation within 30 km from the industrial park, highlights the following strategic priority locations for the region: Singerei, Bilicenii Vechi Village, Alexandreni Village, Elizaveta Village, Sadovoe Village, Floresti, Drochia, Pirlita Village, Recea Village, Grinauti Village, Petreni Village, Corlateni Village, Glodeni, Glinjeni Village, Marandeni Village. These localities were selected due to their location on the national routes of RM. The overall availability of the population is shown in the table below:
Table 5. Availability of the overall population within 30 km of Balti Locality District Singerei Bilicenii Vechi Alexandreni Elizaveta Sadovoe Floresti Drochia Pirlita Recea Crinauti Petreni Corlateni Glodeni Glinjeni Marandeni Singerei Singerei Singerei Balti Balti Floresti Drochia Falesti Riscani Riscani Drochia Riscani Glodeni Falesti Falesti Working age people 9028 2353 4396 2362 884 12113 13162 2325 2027 789 673 3321 9037 1682 2,191 Page 27
Source: NBS. Author's calculations

Based on calculated data it was found that on the radius of 30 km from the industrial park there are 66343 available persons that can be used as available capital, bringing value to the industrial park. Potential of resources for the industrial park The existance in the region of an intellectual potencial and of qualified persons in the industrial fields supports the creation of industrial park that is based on a qualified workforce and work experience in large enterprises and plants. Also, due to the fact that most of the unemployed people are qualified individuals who have work experience and have become the result of major restructuring of state enterprises, there are workforce able to bring value to the industrial park. Also the workforce of the industrial park would be organizationally effective, because most employees of the region work in enterprises with a large number of staff whith whom there are systemic management interactions. The trend of employing people in the labor market shows the potential and the development perspective of new businesses, which directly falls within the scenario of creating an industrial park in Balti. The creation of the industrial park will allow essential revive of the entire economy of the region as well as full use of the potential of labour force and its qualifications and experience. 2.4.3. Analysis of people welfare
The average monthly salary of employees of the NDR in 2008 made up 2089 MDL, which represents 82% of the average salary in the republic. The average monthly salary of an employee in Balti Municipality made up about 2760 MDL or 109% of the average salary in the republic. During 20052007 employees labour productivity increased, as well as the nominal salary. In 2007-2008 the productivity had a downward trend and wages continued to grow. Growth of monthly salary in previous period made up 107%. The highest salary was paid in financial activities, and the lowest - in agriculture making up 1336 MDL. In industry, the average salary made up 3039 MDL. Most of the household income consists of salary earnings (30%). A significant (23%) part is made up by the remittances and the income from agriculture (18%). It shall be noted that the average salary of men is over 27% of women's average salary.6 An indicator of the category of social and economic indicators, representing people welfare is the number of large families below the poverty line. When the crisis occurred, in 2008 it recorded the highest share, and 345 families were below the poverty line. In 2009 there were 312 families and in first six months of 2010 - 188 families of this category.
2.5.
ANALYSIS OF PHYSICAL INFRASTRUCTURE
2.5.1.
Analysis of natural resources
The main natural resource of the NDR is soil with high reliability that allows high yield of agricultural technical crops. 701 thousands ha of the total area of the NDR (1 001 394 ha) are agricultural lands, which constitutes 70% of the total area of the region. From the perspective of Balti Municipality, agricultural land occupies 36% (2 878 ha), built lands 41% (3 287 ha), lands with spontaneous vegetation - 20% (528 ha of forests / parks / trees, 592 ha of grassy vegetation, 259 ha mosaic of herbaceous and woody vegetation, 170 ha of wetlands), lands covered by water 2,66% (210 ha) and land stripped - 0.01% (1 ha).
6Powel,l
2009 (Regional Statistical Report)
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In Balti Municipality there are 3 water basins, the largest being Chirpicinoe Lake which covers an area of 40 ha and has a capacity of 1,2 million m3 of water. The other two lakes are for recreational purpose, the first being used for fish breeding. 2.5.2. Analysis of transport infrastructure
The NDR has access to air, road and rail transport. The NDR is the only region that has air access through two airports - Balti International Airport (Ledoveni) and Marculesti International Airport. However, both airports are used to the minimum capabilities offering cargo transport services, being mostly domestic flights, and occasionally external flights. Balti Airport (Ledoveni) is a civil airport, and Marculesti (Floresti District) is a mixed one (military and civilian). Both have an international airport status. Balti airport is certified and opened for passenger and cargo, but now is used only for single non-scheduled flights.7 Intra-regional road network. The distances between the extremes make up about 170 km north-south and about 130 km west-east direction. On average, districts in the NDR are situated at a distance of 55,3 km from Balti. Public roads has a length of about 24,1 km., of which national roads have a length of 24,1 km, of which roads with hard surface make up 24,1 km.8 Also, in Balti Municipality there are 376 streets with a street length of 221 km. Rail transport. The density of railway networks in the NDR is the lowest in the country and makes up 2,1 km per 100 km2 being below the republican average of 3,3 km/100 km2. The main railway nodes of the NDR are situated in Balti Municipality and Ocnita. Through these connections, Moldovan railway routes diverse and include the following destinations: Russia (Moscow and St Petersburg), Belarus (Minsk), Ukraine (Kiev, Chernovtsy, Ivano-Frankovsk, etc.). International railway routes are: Chisinau, Balti-Ocnita-Ungheni (checkpoints and border crossings). Regional routes are the ramifications: BaltiRibnita, BaltiGlodeni, Balti-Slobodca and Balti-Cupcini. The presence of railways in the region has an advantage, since intra-regional rail nodes, Ocnita and Balti has an access route to Ukraine, Russia, Belarus and the EU.9
Figure 7. Communication routes by road, rail, and river of the NDR
Road communications Rail and river communications
Source: RDA
8
9
Northern Development Region. Regional Development Strategie. Northern Development Region. Regional Development Strategie.
www.statistica.md Page 29
Potential of resources for industrial park The advantage of Balti location allows some regional B2B activities. The communication nodes facilitate development of industrial activities based on relations with economic entities in the region, country and abroad. The fact that transport infrastructure is developed and roads are of a relatively high quality as those in the region and even in the country, there is a prospect of different types of vehicles proceeding from the specifics of the trade. The availability of a network of intra-regional and international routes as well as of the physical communication channels such as rail and air access routes, will facilitate connection between business partners. However, the recent commissioning of the bridge and of the customs point Lipcani-Radauti will stimulate economic opening of the municipality and towards the Romanian and European markets and thus will increase attractiveness of the municipality. 2.5.3. Water supply. Water supply in the NDR is provided primarily by groundwater abstraction and Prut and Nistru rivers. In early 2008 the share of localities that had drinking water supply network made up 35,4% showing a slow increase as compared to 2006. 70% of consumed water is extracted from artesian wells. At the same time, 80% of water resources do not meet water quality standards. This is caused by outdated water supply network and outdated standards and technical conditions of water treatment. Balti Municipality has the largest number of networks of aqueducts in the region. The network of aqueducts makes up 320 km/100 km2. The Soroca-Balti aqueduct, operating in the region, delivers water to consumers in Balti Municipality and in the localities of the surrounding area. Sewerage. Sewage systems in the NDR are poorly developed, the situation is similar to the situation in the country. In Balti Municipality this indicator is 9 times higher making up 185 km/100 km2. Currently in Balti Municipality there is a functional state of sewage treatment. Analysis of utility infrastructure
Provision with natural gas. Provision with natural gas of the localities from the NDR is realized by main gas pipelines of high pressure coming from Ukraine: Ananiev-Kotovsk Floresti Drochia Edinet - Alexeevka (Ukraine) and the gas pipeline Mogilev Podolsky Ocnita - Bogorodceni. In 2007 the share of localities in the region connected to the pipeline made up 27,8%, being below the national average of 34,9%. In Balti Municipality, the share of gasified localities makes up 68%. Provision with electricity and heat. In Balti Municipality there is the electric thermal power station "Nord" with a stable electric power of 24Mwt and a power generation capacity of 57,700 thousand kWt /h, but this power station provides power only Balti Municipality. Of all localities of the region, only Balti Municipality is provided with heat from the electric thermal power station "Nord".
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Communications. Fixed telephony in the NDR is provided by the subsidiaries of state enterprise Moldtelecom. The highest degree of telephony is observed in Balti Municipality. In Balti there are 32 telephone stations per 100 inhabitants , that is the largest share of the region. The mobile telephony is represented by "Orange", "Moldcell" and "Unite" networks covering with their services throughout the NDR. While the costs for services are high, according to the data of mobile operators in the past three years there is a steady upward trend in the number of users.
Potential of resources for the park The capability of electric power station from the locality park models the intensity of industrial activities in the industrial sector. However, the availability and provision with natural gas resources, electricity, water and sewerage activities do not create limitations for the industrial park activity, and there is no any risk that its functionality is likely to be interrupted because of lack of resources of the utility category. 2.5.4. Analysis of educational institutions
According to the census of 2004, in Balti Municipality the number of people with generally higher education level (secondary and compulsory) made up 86% (99 736 persons) of all persons aged 10 and over. People with primary education level made up 12% (13 852 persons) and those without primary education 2% (2 076 persons). In Balti Municipality there are 6 colleges with a total number of 3548 pupils. In 2009, colleges registered 831 graduates. Also, in the municipality there are 3 higher education institutions with a total number of 9552 students at the beginning of 2008/2009 academic year. At the same 2237 persons graduated education institutions. Potential of resources for the park The existence in Balti Municipality of an educational infrastructure implies dependence on productivity and quality offered by resident enterprises of the industrial park. The fact that educational institutions have developed professional personnel of physical and technological education, will allow some activities in the industrial park based on rational and optimal design of mechanisms, tools and machining processes and eliminate defects in measured and used technical equipment. Given the fact that most young professionals are graduates with technological specialists, the practice of business incubators in this direction proved to be proactive and successful.
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3.
ANALYSIS OF LEGAL FRAMEWORK 3.1. BRIEF ANALYSIS OF LEGAL FRAMEWORK IN THE REPUBLIC OF MOLDOVA
General overview Moldova's legal system has developed relatively well over the last decade. Moldova moved closer to the standards of European countries and international organizations, which joined (such as the World Trade Organization), although it remains a long way to go before the full harmonization of legislation. Expansion and effectiveness trade of the trade legislation of Moldova has improved but the practical implementation of the Law remains a major problem. Below the most important positive aspects of Moldovan legislation are presented aimed at encouraging investors both local and foreign. Protection of private property Article 1 of the Constitution of the Republic of Moldova stipulates the supremacy of the rule of law. The state guarantees the right to private property (art. 46 of the Constitution) and protects property of Moldovan citizens, foreigners and stateless persons (art. 126-127 of the Constitution). The Constitution provides that both physical and intellectual illegally acquired property may not be confiscated, whether the property is deemed lawful. In 2002, out of the Title V, "Tax Administration" of the Tax Code of the Republic of Moldova a series of articles that infringe the intangible character of the property and the character deemed lawful of the private property was excluded. The Law on privatization provides in article 23 (3), that the state guarantees ownership of privatized property, the right of the citizens of the Republic of Moldova, foreign citizens and stateless persons to participate in privatization . Protection and promotion of investments In accordance with article 126 of the Constitution, the state provides inviolability of investments of individuals and legal entities, including foreign ones. Article 5 of the Law on investments in entrepreneurial activity stipulates that investors can place their investments throughout the country and in all areas of business activity under conditions of observing the laws on anti-monopoly, environment, state security etc. The state provides a full and permanent security and protection of all investments irrespective of their form. Their investments and facilities can not be discriminated on grounds of nationality, residence, place of registration, etc., all investors being given equal rights. Moldovan government provides favourable conditions for the privatization of production entities, including the possibilities to pay in instalments the price of the privatized entity, which is important for attracting investors. If an investor wants to launch a completely new business and wants to acquire land lots being public ownership (except for agricultural and forestry land), the investor must pay the first year at least 25% of the land price, and the remaining payment can be spread over a period of 10 years. The last requirement is 5 years in case of lands belonging to privatized objects. In order to improve the business climate and to promote local and foreign investments, the Government recently adopted the Decision "On control regulations" under which all state institutions, which control activities and conformity assessment shall go through a "guillotine" which will "escape alive" from only those bodies that really control activities really important for consumer safety, public interest, state security, etc. We believe that this is a very welcome measure whose effectiveness will entirely depend on the readiness of control and evaluation bodies to give "powers." Foreign investors With some notable exceptions, foreign investors enjoy the same rights as national ones. Moldova has signed bilateral agreements on investment with over 25 countries, including with countries that are its
main trading partners or with countries that allocated significant investments in Moldova. Our country has also signed 13 international agreements on avoiding double taxation. Foreign investors have the Possibility to control investment and local companies, they are protected by international agreements to protect and insure investments. The government shall adopt the national program of investment promotion. The activity of foreign investors in Moldova falls under the Law on investments in entrepreneurial activity, which establishes equal rights and obligations for domestic and foreign investors. Manifestation of free economic initiative The market, economic initiative and competition are identified as the basic pillars of the economy (art.9 of the Constitution of the Republic of Moldova). The Moldovan Government, local and central public authorities can give instructions to enterprises only within their powers established by law (art.8 of the Law on enterprises and entrepreneurs). Damages, including lost profit, incurred by the enterprise following the fulfilment of illegal provisions shall be repaired from the budget, which funds these authorities. The economic initiative can not be limited under the pretext of its inopportunity and uselessness. Private contracts are freely negotiated, and shall be registered by notary and legally authenticated. Land lease contracts are registered with local administration bodies. Industrial park activity The process of establishing industrial parks and conditions of the residents activity is governed by the Law on industrial parks, no. 182 of July 15, 2010, in force since September 3, 2010. The main objectives of this law (art. 2) are: - attracting domestic and foreign investors; - establishing some industrially competitive sectors based on modern and innovative technologies; - development of economic activities in line with the area specific development opportunities, including more efficient use of public property; - development of small and medium enterprises; - creation of jobs. This Law is completed and its provisions shall apply to a number of other laws and regulations, among which are: - Civil Code of the Republic of Moldova; - Tax Code of the Republic of Moldova; - Law on joint stock companies, no. 1134 of April 2, 1997; - Law on limited liability companies, no.135 of June 14, 2007; - Law on state registration of legal entities and individual entrepreneurs, no.220 of October 19, 2007; - Law on investment in entrepreneurial activity, no.81 of March 18, 2004; - Law on the regulation through licensing of entrepreneurial activity, no.451 of July 30, 2001.
3.2.
ANALYSIS OF LEGAL COMPLIANCE FOR GRANTING THE TITLE OF INDUSTRIAL PARK
The documents provided by the administration of "RAUT" JSC and their analysis shows that this is a: - joint stock company with mostly state-owned authorized capital;
- document of incorporation: Articles of Association of "RAUT" JSC of August 18, 1995; - governing body: a) General Meeting; b) Company Board; c) General Director; d) Audit Commission. - shareholders: a) state (through PPA) 76,521% b) "Mega Prime JSC 9,628% c) VasileRosioru 9,401% d) Individuals 12,946% Representations and branches none Share registry - reflects changes in ownership of shares. They were put on auction and were notapplicants. The shares were put on the BV at least 3 times and were not demanded. No. of simple shares 7 046 577 with nominal value - 8 MDL Mandatory and regulated registries (registry: inventory, journal, ledger, purchasing, sales and control) they exist and are completed. Organization and activity regulation - the activity is organized properly, but management is not effective LITIGATION - insignificant PERSONNEL - 566 permanent staff: written employment contracts - 83 people; higher education 108; secondary education - 168; special secondary education - 267, unqualified personnel - 23. Personal age - young person (up to 30 years) - 0. The lack of young personnel can cause problems companys development. Environmental compliance requirements it was has found that environmental compliance requirements are within the allowable limits. Conclusions: In terms of compliance with all requirements of the Law on industrial parks, the company: is created as a company limited by shares in which the state, by Public Property Agency, holds the majority of shares 76,5%; It has a land lot: with an area of 14,77 ha; category of land designed for constructions, which based on the right of ownership, belongs to the administrative territorial unity of Balti Municipality and was transferred to the enterprise at the time of its foundation for an unlimited period of time; free of charges; is not subject to pending litigation and/or settlement in court or arbitration; has access to the means of transport;
accessible connection to technical and production infrastructure of the park to public utilities.
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4.
OVERVIEW ON THE ECONOMIC ENTITY 4.1. 4.1.1. COMPANY PROFILE Brief history
RAUT JSC 1002602000612 Joint-Stock Company 49 326 039 MDL 77% 13 Decebal St., Balti Municipality Cheaburu Eugen
Name of company Tax Code Organizational Form Authorized capital State share Legal address Director
The company was founded in 1944 as a mechanical plant, in 1951 it was transmitted to the Soviet Ministry of Navy Industry being reorganized in an enterprise specialized in developing and producing hydroacoustic navigation, research, measurement apparatus and other special purpose apparatus (sonar, electronic probes, hydroacoustic buoys), and in 1978 production of consumer goods. In 1976, on the basis of the enterprise and "RIF" scientific research institute, on the basis of projections producing apparatus of hydroacoustic navigation, maritime research, high precision measuremens, RAUT Production Association was organized. In 1995 through the reorganization of RAUT Production Association and RIF Scientific Research Institute, the open joint stock companies RAUT JSC, EFC RIF ACVAAPARAT JSC, "LOT JSC were organized. The company is registered with the State Registration Chamber under the Ministry of Justice of the Republic of Moldova on August 18, 1995 and is entered in the State Registry under registration number no.12103291-7, December 8, 2004 the company was awarded and registered in the State Registry of Enterprises and Organizations under the identification number - tax code IDNO 1002602000612. 4.1.2. Field of activity. Companys products and services
On June 1, 2010 RAUT JSC, according to the extract from the Registry of companies, issued by the State Registration Chamber, is engaged in the following types of activities: Manufacture of technical production; Production and marketing of consumer goods; Scientific research and experimental works; Commercial and mediation activity, including external economic relations.
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Among the basic products and services of the company, there can be listed:
Table 6. Companys products and services Product and services 1. Hydroacoustic navigation apparatus 2. Special hydroacoustic maintenance apparatus 3. Electrical and gas apparatus for household 4. Services: Description of products and services Maritime industry - sonar NEL-M1, NEL-M5, logs LA-4, Samsit -M Aviation industry - RGB-41 buoys, RGB-16-2Mi/15, RGB-75A, RTB-93Mi Consumer products: portable electric heaters EPT 1, EPT-2 , stove PNS-2 RAUT-01", electric oven ESP-1, 5 / 220" RAUT " Repair of antennas of the device NEL-M1, NEL-5, Samsit-, MG-518, Production of parts for the needs of SE "Calea Ferata a Moldovei" Production of equipment for economic entities: cathodic stations for protecting pipelines SKZ3-0, 6, SKZ-1 , 0, network transformers
The largest share of the turnover is represented by hydroacoustic navigation apparatus, having a weight of 80% of sales income. They are sold mainly on the outlets of Russia and India. Consumer goods and services rendered to population make up 20%, the selected market segment is particularly Moldova. Among consumer goods, the enterprise produces electric heaters, electric ovens, gas cookers. In the total sales volume, 65-80% is obtained on foreign markets, particularly on the Russian market. Also, RAUT JSC produces devices for EFC "RIF - ACVAAPARAT" JSC which subsequently are delivered in the composition of the apparatus in China. Conclusions: RAUT JSC product portfolio is dominated by hydroacoustic navigation apparatus, based on the demand for these products. Meanwhile, local market does not need such products. However, given the fact the company produces spare parts for mechanical engineering, engineering technologies and equipment as strategic direction for its development on the local market, this is the practice of respective activities. And the fact that the company's technological capability to produce such portfolio of products can also be provided as work carried out within the industrial park, along with the same specialty companies (production of parts for mechanical engineering). 4.1.3. Companys size
RAUT JSC enterprise is located in the central sector of Balti Municipality on 3 territories with a total area of 14,77 ha, these land lots are leased. On the territory of the enterprise there are independent legal entities, the Joint-Stock Company RIF-ACVAAPARAT" EFC and the Joint Stock Company "Lot" organized under the reorganization balance of distribution of the Production Association "RAUT". RAUT JSC is a joint venture, which most shares are held by the state. The authorized capital of the company makes up 49 326 039 MDL. The number of shares makes up 7 046 577 at a nominal price of 8 MDL per one share. There are 16139 shareholders, of which 6 legal entities and 16133 individuals. The shareholders' structure is presented as follows:
Table 7. Structure of shareholders Structure of shareholders Public Properties Agency (PPA) MEGA PRIM JSC Developed by ProConsulting LLC, tel./fax: 21-00-89 Pieces 5 392 106 67 8450 Share % 76,521 9,628 Page 37
Maghitlas JSC SIGUR ASIGUR LLC CF EUROPA TRUST JSC CF FOND LLC Individuals
5 000 8 810 3 250 46 680 912 281
0,071 0,125 0,046 0,662 12,946
From a historical perspective, in 1995 there were about 10 000 employees working on the territory of the enterprise. Current trends are quite pessimistic because of fewer orders. And the staff is directly proportional to the needs of production. Thus, as of January 1, 2010 the enterprise had 2 500 jobs with an average number of employees of 977 persons including 566 permanent employees.
4.2. 4.2.1.
ENTERPRISE POTENTIAL Diagnosis and localization of infrastructure
Currently RAUT JSC has three major land platforms located in the downtown of Balti on 13 Decebal Str., with a total area of about 10,69 ha and a land platform located on an area located on 1 Moldova Street with an area of 3.99 ha, which are located on a large number of buildings. All buildings on those three land lots are located on an area of about 5,9 ha of the total built area of 14,68 ha and the remaining 8.78 ha is land for construction. It is noted that the buildings are owned by "RAUT" JSC, EFC "RIF ACVAAPARAT JSC and "LOT" JSC, and the land on which they are located is a public property belonging to the local public authority hall of Balti Municipality. The territory is fenced with a fence of 3 256 meters of length, 7 entries and exists.
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Figure 8. General urban plan
General Urban Plan of RAUT JSC Surface 1,2
Page 39
General Urban Plan, RAUT JSC Surface 3
Page 40
Conclusions: The area of constructions and of related land on which RAUT JSC operates is extended and sometimes scattered in terms of its capacity of being used. At the same time, the Law on industrial parks, article 5, point c, states that the land designed for industrial park with buildings and facilities located on it, shall cumulatively fulfil the requirement to have an area of al least 5 ha. Given the fact that the territory of RAUT JSC exceeds this area, the creation of the industrial park is not contrary to legal compliance. Given that the third land lot situated on Moldovita Street is separated from the other two land lots, and its arrangement is difficult and at the same time its potential is not used, the possibility to create an industrial park on this land is excluded. 4.2.2. Diagnosis and infrastructure of utilities
External engineering water, sewage, gas networks require total reconstruction besides those electric, which makes up about 23,20 km of air route and 12 intermediate power stations, of which 8 are basic and 4 reserve ones, which can be repaired, being partially unused, but which constitutes a great potential of about 19 455 kW, which could cover 100% of electricity need within the enterprise. Electric power. The enterprise is provided with electricity through power transmission lines. There are four units of electric power distribution constructed within the enterprise ( 160; - 29; 28; - 31) with a capacity of 10 KW. The electricity distribution units are provided with power from "CETNord JSC, Balti electric power station with a capacity of 330/110/35/10 KW and P 2 RED-Nord JSC. The power distribution units 160; - 29; - 28 are located on the mainland, and - 31 is located on the land lot of transport charge. 160 is connected with - 2 REDNord"JSC through a cable of electric power distribution type 10 - 3x240 mm2 with a length of 39 meters. - 28 is connected with - 29 through two electric power distribution cables 10 - 3x185 mm2, (length of each line being of 3,680 m) and 10 - 3x240 mm2 provided with power from Balti electric power station with a capability 330/110 / 35 / 10 KW. The electric power stations require capital reconstruction. - 31 is provided with energy from Balti electric power station 330/110/35/10 KW through a single distribution cable distribution 10 - 3x240 mm2 with a length of 6,850 m and a second cable 10 - 3x240 mm2 from the -2810 machinery factory, with a length of 540 meters. Thermal power. Provision with thermal power within the company is made from two power distribution units "CET-Nord JSC. Since 1993 the thermal power system does not operate. Pipelines, thermal aggregates, thermal radiators are not operated.
Aqueducts. Provision with water is carried out through a pipe with a diameter of 63 mm, from the Apa-Canal" company through a pumping station of the company from 4 water reservoirs (1000 m3, 2000 m3, 2x200 m3). The system is used at 70%. The sewerage system is in satisfactory condition. Other channels of communication. The company has access to the telephone line, to urban telephone station (24 phones) with access to national and international calls. Internal telephone communication is done via telephone stations, and the total number of internal telephones makes up 248, the dispatch service has 25 telephones. The maximum capacity of the internal station makes up 300 telephone numbers. Currently the enterprise is not gasified. In conclusion, provision of the land of RAUT JSC with utilities supporting industrial activity is subject to wear and some of them are unfunctional. Creation of the industrial park requires investment in remodernization of utilities and solving the problem of their physical wear.
Page 42
Figure 9. Insurance scheme of energy power
Insurance Scheme of Energy Power, JSC RAUT
Page 43
Figure 10. Plan of water
General Plan of water pumping station, of sewerage and electrical power systems
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4.2.3. 4.2.3.1.
Technical Diagnosis Buildings description
The production area of the enterprise makes up 74 490 m2, of which the basic production units cover an area of 66 650 m2, and the auxiliary production divisions cover an area of 7 840 m2. As of December 31, 2009 the net balance of fixed assets made up 97 478 489 MDL, of which buildings had a net balance of 83 027 495 MDL and special constructions made up 2 300 623 MDL. The list of RAUT JSC immovable property are presented in the table below:
Table 8. Immovable of RAUT JSC
no. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Name of Object 2 Building 33, for pressing purpose Building 41, production Building 43 of compressors Building 10 of service Building , mechanized Building Building 13, lot no.2 Building 31, lot no.1 Building 1, auxiliary Building 6 and 6 Building 1 Building 7, lot no.2 Building 9 Building 2, energy Building 3, casting Building 57B Building 57B AC Building 57 Garage for 50 vehicles 2 Building 1, woodworking Building , passage Building 41, service Building 23, -1 Building 25,office of division 116 Administration Building no.5 Speakers for service cars Building 15, pumps Metal storage type "ark" Finnish metal storage Building 50 - 1-28 Building 54, energy Transport and pedestrian crossing Administration Building for reception Boiler House No.of inv. 3 10004 10005 10006 10007 10008 10009 10010 10011 10012 10013 10014 10015 10016 10018 10019 10023 20219 10024 10025 3 10026 20201 20202 20203 20204 20205 20206 20208 20211 20213 20214 20215 20217 20218 20220 0300101.008.07 Cadastral no. 4 Room area / total , m2 5 308,2/368,0 16741,4/27310,4 320,0/273,5 769,5/852,3 1845,4/4130,2 3902,2/8773,8 103,3/75,8 220,2/166,4 792,7/1349,6 1930,3/1572,5 4383,5/3124,7 949,9/858,2 869,2/1084,2 1702,3/1497,1 1522,6/1496,4 629,0/2737,9 1758,1/6612,3 1191,1/1469,1 5 2251,2/5625,2 286,9/903,8 2084,7/2155,7 155,7/140,1 278,8/220,6 747,0/2181,2 198,6/170,8 145,3/123,7 454,2/451,2 815,8/795,7 4238,0/15697,8 1677,1/1824,8 49/48 392,0/609,5 403,5/444,0 Location 6 13 Decebal Str., Balti Mun. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 1 Moldovita Str., Balti Mun. 6 1 Moldovita Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 17 Lapusneanu Str., Balti Mun. 13 Decebal Str. 13 Decebal Str. 1 Moldovita Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. Petruseni Village 1 Moldovita Str. Destination 7 Production Production Production Production Production Production Production Production Production Production Production Production Production Production Production Production Administrative Production 7 Production Administrative Administrative Production Administrative Administrative Production Production Storage Storage Production Production Special Administrative Production
0300207.657.14
0300207.657.09 0300207.657.12,13 0300207.657.11
0300207.658.03 0300207.658.01,02 0300101.008.13 4 0300101.008.01,02,05
0300207.323.02 0300207.658.15 0300101.008.10 0300207.658.05,06,23 0300207.658.04 0300207.658.17
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34 35 36 37 38 39
Oil deposit Sewage and pump station Pump station with 2 lifts Transformer Station Warehouse for packaging storage Metal warehouse building at no.50 / 1 Metal warehouse building at no.50 / 1 Warehouse for construction materials Annex to building B Annex to building 41 Metal warehouse for building 41 Warehouse for containers Warehouse for packaging storage of building 41 Over room Room for vertical furnace Building 1 Annex to Building 3 Warehouse for metal Room for waste pressing
20221 20222 20223 20224 20226 20229
0300101.008.09 0300101.008.03 0300101.008.20 0300101.008.21 0300101.008.08 0300207.658.19
177,2/154,4 88,4/68,0 139,1/111,8 73,4/58,0 459,1/419,2 150,1/149,1
1 Moldovita Str. 1 Moldovita Str. 1 Moldovita Str. 1 Moldovita Str. 1 Moldovita Str. 13 Decebal Str.
Storage Special Special Production Storage Storage
40
20230
0300207.658.20
161,0/159,0
13 Decebal Str.
Storage
41
20231
0300101.008.04
90,3/82,3
1 Moldovita Str.
Storage
42 43 44 45 46
20233 20234 20235 20236 20237
69,3/56,4 59,7/50,3 34,2/33,0 199,2/179,2 72/71
13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str.
Production Production Storage Storage Storage
47 48
20238 20239
70/63 10,9/8,4
13 Decebal Str. 13 Decebal Str.
Storage Production
49 50 51
20240 20241 20242
235,5/198,9 34,2/33,0 84,0/80,0
13 Decebal Str. 13 Decebal Str. 13 Decebal Str.
Production Storage Production
52 53 54
Room for paper pressing Fencing of forbidden area Construction for the cable testing Anti-fire depot with a vehicle
20243 20245 20246 0300207.658.18,21
15,0/13,0 15,5/13,5
Production Special Production
55
20247
0300101.008.11
109,7/87,7
1 Moldovita Str.
Production
56 57 58 59 60 61 62 63 64 1
Warehouse for packaging storage Warehouse for packaging storage Joinery Station Ark-type warehouse Neutralization Station Dewatering station Territorial highways Entry roads Cool water reservoir 2
20248 20249 20252 20264 30001 30002 140501 140506 140507 3
0300101.008.12 0300101.008.18 0300207.657.10 0300101.008.06
27,3/19,8 384,0/598,6 376,9/333,5 380,0/484,4 221,4/386,7 157,5/263,0 1680 264 10
1 Moldovita Str. 1 Moldovita Str. 13 Decebal Str. 1 Moldovita Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 6
Storage Storage Production Storage Production Production Special Special Special 7
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65 66 67 68 69 70 71 72 73 74 75 76 77 78
Hot water reservoir Stone Fence 1 lot no.1 Stone Fence 1 lot no.2 Stone Fence 1 lot no.3 Sidewalk lot no.2 Asphalt area, land lot 2 Asphalt area, land lot 1 Sidewalk on Decebal Str. Asphalt surface, Building 41 Highway Reservoir of 200m3 Reservoir of 200m3 Reservoir of 1000 m2 Cooling water station (Gradirnea) Building no. 43 Water pumping station Hot reservoir, building no.54 Cooling water station (Gradirnea) Building no.54 Purification Station Drinking water well Drinking water well Lot no.3 of compressors Fuel warehouse Dormitory
140508 150706 150707 150708 160751 160752 160753 160754 160755 160756 190907 190908 190914 190915
10 986,5/2959,5 994,4/1988,8 568,9/910,2 273 420 1640 830 290 340 50 50 200 38,4
13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 1 Moldovita Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 13 Decebal Str.
Special Special Special Special Special Special Special Special Special Special Special Special Special Special
79 80 81
190916 190917 190918
12 20 100
Special Special Special
82 83 84 85 86 87
190925 190931 190932 200225 210207 906509 0300101.008.19
280,0/235,0 2 2 160,0/134,0 54 531,1/1567,6
13 Decebal Str. 13 Decebal Str. 13 Decebal Str. 1 Moldovita Str. 1 Moldovita Str. 2A Ceapaev Str., Balti Mun. 32 Ostrovschi Str., Balti Mun. Petruseni Village, Riscani District Petruseni Village Petruseni Village Petruseni Village Petruseni Village Petruseni Village Petruseni Village Petruseni Village
Special Special Special Production Special Living
88
leton Shop
906558
0300208.239.01.021
268,5
Special
89
Children's camp Accommodation building no. 1, 2 Canteen with 320 places Dormitory with 26 places WC with 12 places Territory fencing Entry roads Land arrangement Dormitory no.4
964015
835,1/1175,7
Living
90 91 92 93 94 95 96
964016 964017 964018 964019 964020 964021 964040
721,8/596,2 219,4/292,4 32,5/26,8 L-1019 2835 6165 370,9/561,5
Special Living Special Special Special Special Living
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Conclusions: The potential of the infrastructure of companys buildings oscillates around the idea of their use through the industrial park. The purpose of industrial buildings supposes the existence of advantageous preconditions in terms of available spaces. The operational / technological process of the company could be concentrated in only a few spaces in order to be optimally and efficiently organized, and the remaining buildings shall be used for industrial park residents. The creation of the industrial park will solve the problem of unfavourable spaces by making them available to eventual resident businesses of the industrial park.
4.2.3.2. Description of machinery and equipment Within the enterprise there are installed (mounted) 2201 units of machinery of which 1958 units (97%) have a term of use of over 20 years. As of December 31, 2009 the net balance of machinery and equipment made up 11 930 841 MDL and that of computing technology made up 56 900 MDL. During 2009 the net balance calculated for machinery and equipment of the company made up 138 747 MDL. Currently, the following categories of machinery are involved in the production process:
Table 9. Category of machinery of RAUT JSC
No. Name No. of units, total, pc. 910 189 30 70 74 42 50 136 700 Production year per production years, pc. 19901980till 2009 1990 1980 5 6 4 1 43 309 90 14 32 54 18 29 90 260 596 93 16 38 16 24 21 45 396 Intended Use Need in capital repair* 146 42 8 20 24 16 18 39 213
1. 2. 3. 4. 5. 6. 7. 8. 9.
Machines - tools for metal cutting Press-forging equipment Casting equipment Equipment for producing plastic and rubber parts Welding equipment Winding Machine Woodworking equipment Thermal Equipment Other equipment (lifting, transportation, testing, inspection and measurement, etc.).
Production of parts through the method of mechanical processing Production of parts by stamping Casting of preforms Production of plastic and rubber parts Welding of parts and subassemblies Manufacturing of transformers and other electro-elements Manufacture of wood packaging Drying and thermal processing of parts
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Conclusions: Demounting of equipment subjected to moral and physical wear is imminent in conditions of creating the industrial park. Meanwhile it will reduce negative effects caused by their maintenance and losses caused by wear. The available equipment will allow integration within the economic cycle and making it available for resident enterprises.
4.2.4. Operational diagnosis A quality management system under ISO 9001:2008 international standard requirements operates within the company. In October 2006 the department of metrology was updated as required by the standard SMB-19:2005 SM EN ISO/CEI 17025:2002. Design, technological preparation and manufacture of serial products is carried out in accordance with effective state, interstate and international standards, including: SM SR EN 60335-1:2006, SM STB CEI 60335-2-2:2008, ISO 4287-2:1984 (GOST 27964-88), ISO 3746:1995 (GOST 12.1.028-2002), ISO261-98 (GOST 8724-2002), ISO 965:1998 (GOST 16093-2004), ISO 887:1993 (GOST 28961-91), ISO 5610:1989 (GOST 29132-91), ISO 1463:1982, GOST 9.30288. Also, the 20 Key System was implemented within the company. The technological capability of the enterprise is not fully exploited. The coefficient of use of technological capability in 2009 made up only 11.8% decreasing by 18% compared with 2008 (29,8%) and 29% less than in 2007 (40,8%). Products are sold as a result of the agreement signed with the beneficiary or of companys own initiative. Planning of process of launching all product categories includes the following basic steps: A. Quality requirements. They are specified in contracts, legal documents and internal company documents B. Product design: a. Development of reference terms b. Drawing up construction and technological documents c. Development and testing of product prototypes d. Acceptance of results e. Products planning and manufacturing
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C. Delivery of prototype products in order to manufacture products requested by the customer D. Drawing up technological documents E. Development of technological process of production and its introduction into production F. Organization of technical and economic planning of production G. Planning of workshops H. Control of the technological compliance within production units I. Measurement, control and monitoring of products conformity J. Measurement, control and monitoring of the condition of unfinished and finished products. The process of development, design and manufacturing of products of the company was based on figures indicated below:
Figure 11. Operational Process of RAUT JSC
Development of reference terms
Drawing up construction and technological documents
Development and test products samples
Acceptance of results
Products planning and manufacturing
The reference terms is the basic document for products marketing. It contains product economic and technical requirements, determines its properties from a consumer perspective, a list of documents that require a joint review, the order of delivery and expected deliverables. Development and testing of prototypes. In order to verify the compliance with technical documentation and beneficiaries requirements, prototypes are developed and tested (experimental lots). The need, volume and compliance of products are indicated in the reference terms. The launch of prototyping is carried out based on documentation of project and business management of decisions. Prototypes are developed by meeting the minimum volume of technologies. The minimum volume of technology must be composed of the development of temporary technological processes or of procedures, using companies equipment. Results are accepted by special committees which include the beneficiary and products manufacturer.
The company uses the following processes: a) Mechanical processing of parts

- cutting lathe processing - milling - drilling - drilling with coordination - finishing - electro erosion b) Part stamping - cutting - bending - pressing c) Manufacture of plastic parts - casting parts of thermoplastic materials on automatic machines under pressure - pressing parts of reacto plastic material son hydraulic pressers d) Manufacture of rubber parts e) Manufacture of finished and semi finished parts through casting - casting parts on machines under pressure (aluminium) - casting part son chills (brass steel) - casting in forms of sand (cast iron ) f) Welding parts - manual - semiautomatic - by points g) Manufacture of gears - straight cylindrical - inclined cylindrical - conical h) Manufacture of transformers - toroidal winding - ordinary winding - impregnating i) Manufacture of circuit boards j) Coverage of parts by galvanization - chemical oxidation - anodic oxidation - tin coverage k) Parts painting - oil paint - dust paint in electrostatic field At the same time other technological processes are used at the enterprise: a) Manufacture of hydroacoustic antennas - fixing and adjusting piezoelectric blocks - coverage of devices with rubber - assembly and adjustment of devices - hydraulic, pneumatic and sealing tests - vibro tests
b) Manufacture of radio hydroacoustic buoys - assembly, regulating and adjustment of electronic devices - assembly and adjustment of high frequency radio antennas - assembly and adjustment of hydrophones c) Metrological ensuring of all control and testing processes The production of mechanical processing has machinery of a wide range of sizes, destinations, workpiece with a diameter from 0,6 mm to 2500 mm of steel, titanium alloys, non-ferrous metals. Manufacture through casting allows obtaining casted nonferrous, ferrous parts and their alloys, by casting in earth, under pressure, in chill and casting models. Manufacturing plastic and rubber parts is equipped with thermoplastic automatic machines with injection chamber volume from 63 to 450 cubic cm and press devices for thermo-active and rubber materials with a power of 10 to 2000 tons. The welding manufacture uses different technologies: argon welding, welding with microplasma by autogenous resistance. Department of metallic and non-metallic coatings allow coverage of parts by anodizing, coverage with zinc, nickel, copper and painting, including in electrostatic field. Manufacture of circuit boards includes design and manufacture processes using necessary machinery and technologies. Assembly production is arranged in specialized rooms, equipped with climatic chambers, stands, test-control devices. The division of manufacturing tools produces technological machines (equipment) of different complexity: stances, pressing and casting forms, measuring instruments and special tools for metalworking, technological devices, which manufacture for uses various machinery, including electro-erosions, optical grinding, coordinated lathe. Conclusions: The company's operational process and developed procedures depend on the specific of the demand for them, being variable and different from order to order. Due to the fact that the company specializes in production by order, creation of the industrial park will lead to clotting a new strategic business direction, namely cooperation with resident companies. Catalyse of the organization of operational process and use of efficient procedures in order to realize different types of products, RAUT JSC has the organizational capacity to create the industrial park and vertical and horizontal concentration of resident businesses, to define organized, documented and standardized processes.
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4.2.5. 4.2.5.1.
Human resources and organizational structure Management and organizational process
Top managers are highly qualified. They work in a company for a long time, their average working age is 39 years.
Table 10. Managers of hierarchical levels of RAUT JSC
no. 1. 2. 3. 4. 5. Full name Cheaburu Eugeniu Pascari Victor Mihailenco Petru Stroganov Alexandr Belanov Iurie Year of birth 1947 1947 1941 1951 1959 Position General Director Technical Director Savings Directory Production Director Deputy Director of marketing and sales Work experience, years 38 41 51 33 32
The operational process by hierarchical levels is organized both vertically and horizontally. This type of interaction is influenced by the technological complexity, products pricing. Although managers have a considerable work experience at the company top, however their management approach is less flexible to new environmental threats and opportunities. Therefore, when creating the industrial park, management should be carried out at the expense of RAUT JSC, the risk of ineffective management of the industrial park and appearance of interest groups exists, which will interrupt managing process of the park.
4.2.5.2.
Organizational structure of RAUT JSC
The companys organizational structure is a matrix-type one, which still keeps its form adjusted to the time the company was developed. Many departments present in the structure can be easily excluded or merged.
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Figure 12. Organizational chart
Organizational structure of the JSC RAUT

General Meeting of Shareholders Companys Board General Director
General Accountant
Technical Director
Economy Director
Economy pacification direction
Production Director
Deputy and marketing Director
Accounting
Chief Construction Department
Department technical director
Supply and transport section
Production Dispatch Section
Supply Section Chief
Marketing and Sales Section
Quality Division
Metrology Section
Legal Division Firemen Section
Chief technology Department
Financial Section
House Administration Section Energy mechanical Section Mechanical Reparation Section Energy reparation Section Reparation and Construction Section
HR Division/ Service Division
Tools Bureau
Labor and remuneration section
HR Division/ Chancery
Technical Control Section
Tools Bureau no. 110
Basic Production Section

Machining of large parts Punching, locksmith Galvanic Coating and Painting
Information Section Houses and utilities Central Labor
Mechanical Casting Manufacture of electric elements
Healthcare services Labor Protection Section
Department of blooming Assembly and adjustment Mechanincs Technical, plastic and rubber articles Assembly and adjustment Assembly and locksmith Assembly and central filling
Senare Camp
Test Laboratory
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Conclusions: The activity of RAUT JSC based on such organizational structure requires additional expenses by corporate administration. Also, given the production volume of the enterprise, many departments are auxiliary. They can be reduced and / or concentrated in complex departments. If the industrial park is established, redesigning the organizational structure is essential. Even so, SA RAUT will have a bulky structure, which will involve additional costs. In order to overcome this impasse, it is suggested that RAUT JSC and / or other contributors to the operation of the industrial park, set up a new legal entity (LLC), which will have as main activity the management of the industrial park, and will involve only people who meet all demands. According to art. 36 of the Articles of Association, the decision to found a new legal entity belongs to the Companys Board. Even if the new legal entity will be legally and financially independent, it will operate in accordance with decisions taken by its founder RAUT JSC.
4.2.5.3.
Ensuring personnel qualification
The analysis of human resources in the 2007-2009 period indicates a decrease in both the average number of employees and personnel at period end.
Table 11. Number and dynamics of the number of employees, salary fund and salary per employee in 2007-2009
Indicator Average registered number of employees Number of personnel at the end of period Salary Fund Monthly salary per employee 2007 1109 1082 16892592 1269 2008 1039 1021 15525351 1245 2009 977 946 12031466 1026 Change 08/07 -70 -61 -1367241 -24 -6,3% 5,6% -8,1% -1.,9% Change 09/08 -62 -75 -3493885 -219 -5,9% 7,3% -22,5% -17,6%
Thus, the average registered number decreased by 62 persons during the analysed period to 977, and the number of personnel at the end of the period was reduced to 946. Also the salary fund decreased by 3,5 million MDL (22,5%) in 2009. Similarly, in 2009 the amount of monthly salary per employee decreased from 1245 MDL in 2008 to 1026 in 2009 (-17,6%). Depending on the age structure of personnel, major shares are held by employees aged over 55 years (51,0%) and 45-55 years (33,5%). The lack of young qualified personnel can create problems for the further development of the company.
Table 12. Employment structure by age
No. Age category No. of persons Share of total personal
1 2 3 4
Till 35 years Between 35-45 years 45-55 years Over 55 years Total
31 56 190 289 566
5,5 10,0 33,5 51,0 100
The personnel structure based on studies shows that about 47% of the company's personnel has upper secondary education (267 persons), and the number of those with secondary education
makes up 31,0% (168 employees). Actually this structure presents the companys activity, and the team must satisfy the requirements of that activity.
Table 13. The personnel structure based on qualification level
No. 1 2 3 4 Qualification Level Higher education Secondary education Upper education secondary No. of persons 108 168 267 23 566 Share of total personal 19,0 31,0 47,0 3 100
Unqualified workers Total
Companys relations with its qualified employees is the opportunity necessary to be used when creating the industrial park and the active involvement of RAUT JSC in potential partnerships with other resident companies. In this regard, the progress of RAUT JSC will depend on the mobilization of human resources in the production process and its organization in order to focus on quality and time.
4.2.5.4.
Policy of personnel remuneration and motivation
RAUT JSC practices a remuneration policy agreed with the staff involved in production. Thus, productive employees salary is directly proportional to top managers ability to establish relations with customers and to sign contacts with them. The level of employee motivation is explained by their departures because of the average monthly salary per employee who fell for the period 2007 - 2009, from 1269 to 1026 MDL. RAUT JSC number of employees is steadily decreasing. As a result of economic and procedural juncture, there is a decrease in sales income and profit. Therefore, indicators of labour efficiency worsned.
Table 14. Indicators of labour efficiency at RAUT JSC
LABOUR EFFICIENCY INDICATOR 2007 2008 2009 Septembe r 30, 2009 Septemb er 30 2010 977 2009 compared to 2007, +/-132 -40 098 179 -10 317 957 -12 472 893 -35 950 -10 516 -12 485 September 30, 2010 compared to September 30, 2009 0 10 668 373 4 953 161 -4 679 292 10 920 5 070 -4 789
Average registered number of employees Income from sales Net profit (loss) Result from operating activities Revenue per employee Profit per employee Result from operating activities per employee
1109 41 797 535 368 686 2 313 327 37 689 332 2 086
1039 25 930 223 26 814 -2 675 731 24 957 26 -2 575
977 1 699 356 -9 949 271 -10 159 566 1 739 -10 183 -10 399
977
1 451 096 12 119 469 -8 645 557 -3 396 576 1 485 -8 849 -3 477 -3 692 396 -8 075 868 12 405 -3 779 -8 266
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The labour efficiency indicators like the income per employee fell by 35950 MDL, from 37689 MDL to 2007-1739 MDL in 2009. The first months of 2010 showed a positive trend of this indicator, which increased by 10920 MDL against the same period of previous year, from 1485 MDL as of September 30, 2009 to 12405 MDL per employee as of September 30, 2010. Given the market factors, other indicators of human resource efficiency has the same trends, decreasing till 2009 and increasing for the management year. The payment of salaries for employees of RAUT JSC is carried out depending on their professional and hierarchical qualification. The minimum salary per employee was as follows: - Support staff 1100 MDL; - Administrative staff 1265 MDL; - Specialist with upper secondary education 1650 MDL; - Specialist with higher secondary education 1980 MDL; - Managers 2200 MDL; - Leading specialists with subordinated personnel, top managers 3300 MDL
Conclusions: The company has a staff motivation system according to professional qualification. Because of a less attractive remuneration system, and reduction of the amount of orders because there is high turnover of qualified staff. In the context when RAUT JSC shall cooperate with resident businesses, qualified personnel will be attracted by its proper motivation.
4.3. 4.3.1.
COMMERCIAL AND MARKETING DIAGNOSIS Analysis of activity and contracting policy
Company's strategic partners are the Russian Federation and India. Thus, exports to these two countries make up 80-90% of total exports. Exports to Russia make up 50-60%. The main customers of the hydroacoustic navigation apparatus are in Russia, Ukraine and India. In 2010 contracts were concluded for the delivery of special-purpose products with the following companies: - JSC, Russia; - Zvezdochka JSC, Russia; - Arctica JSC, Russia; - Amurski sudostroitelinii zavod JSC, Russia;
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- Scientific research institute Kvant Ukraine. The regular customers on the domestic market are: - SE Calea ferata a Republicii Moldova; - Moldovahidromas JSC; - Moldagrotehnica JSC; - Red Nord JSC; - Barza Alba JSC. Currently 37 contracts are concluded with domestic commercial companies for selling RAUT JSC company's products. A marketing and sales department functions within the company, being directly involved in prospecting for clients and business partners. According to the company's value chain, marketing department occupies one of the first positions. As for the policy of contracting, relationship is set up with customers, subsequently the technical offer of companys products portfolio is presented, the price is established and negotiated and at the last stage the marketing department is responsible for signing contracts. The policy of payment for executed orders varies from client to client. If the production process is developed based on outsourcing or the customer is also the supplier of raw materials, than the company usually does not require an advance payment for the order. Otherwise, under the specification that contracts shall be on a long term (more than six months,) an advance of 60% of the contract amount is required. For the manufacture of finished products, raw material is purchased from both domestic and foreign markets. In the years 2007, 2008, the purchases of imported raw materials prevailed within the structure of purchases of raw materials. Increased crisis and the lack of relevant contracts of delivery to customers, has driven the company to procure raw materials and electronics from domestic market. The evolution of purchases of raw materials during the analysed years is as follows:
Table 15. Evolution of purchasing raw materials
No. Name of materials U/M 2007 Import Interna l 2008 Import Interna l 2009 Import Intern al
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
1.FERROUS METALS Steel 3,08,10,20,35,45 (table) Steel GL322 104 (strip) Steel 3,10,20 (round) Steel 3.10 (Square) Steel 3,10,20,40 (hexagonal) Steel 35.45 (round) Steel 3 (angle) Steel 10 (wire) Stainless steel diff. types of sizes and shapes Steel pumps Stainless Pumps Steel Steel reinforcement Electrodes
t t t t t t t t t t Th. m Th. m t t
4.2 1.8 -
52.6 2.1 4.1 0.1 0.9 3.4 1.5 0.9 1.7 2.7 0.4
0.6 0.3 1.0 -
12.7 4.9 0.6 0.8 3.0 0.1 0.3 0.1 0.2 0.1 0.3 0.2
2.3 0.3 0.1 0.4 0.2 0.2 0.1 -
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15. 16.
Blacksmith products (screws, bolts, nuts, washers, nails) Cast iron 2. NON-FERROUS METALS Laminate products: - copper (wheel, sheet, wire, pump, hardware) - brass (wheel, strip) - bronze (hexagon wheel) - aluminium (board, wheel, wire, pump -12) Titanium Alloy Nickel-chromium, tungsten wire Solder Precious Metals 3. CABLE PRODUCTS Wire , , -3, , Cable -75 Cable Cable . , , Cord - 4. RUBBER, PLASTIC, CHEMICAL MATERIALS etc. Rubbers of different models Plastics in range Polyethylene Paints, varnishes Wood (board, chipboard, plywood) Materials of construction Alcohol Oil product Different types of chemical materials Total
t t
0.5 -
0.9 1.1
2.8 -
0.2 7.5
1.
t t t t t t t kg Th. m Th. m Th. m Th. m Th. m
0.6 15.7 1.5 0.1 0.2 0.2 0.6 3.0
0.2 0.1 0.3 0.5 0.2 0.1 14.8 107.1 4.5 0.4
0.9 5.6 0.1 0.3 2.1 22.2 7.6 970.0 0.3 3.0
0.1 1.3 0.1 0.5 0.3 5.4 0.4 -
0.5 2.5 -
0.1 1.5 -
2. 3. 4. 5. 1. 2. 3. 4. 5.
1. 2. 3. 4. 5. 6. 7. 8. 9.
t t t t m3 t t t t Th. MDL
1.1 1.0 0.1 0.4 1,440.6
1.2 1.9 0.9 2.4 35 23.9 1,386 3,120 9.1 4,481.1
2.5 0.2 0.7 0.9 2,024.2
0.3 1.1 0.2 0.6 30 8.8 528 3,232 5.9 1,915.0
0.3 338.7
0.3 0.3 0.2 2.4 0.7 441 1,586 1.6 959.1
5. PURCHASED ELECTRONIC COMPONENTS Total
Th. MDL Th. MDL
4,182.1
891.4
4,808.2
2,907,1
154,3
629,4
Total
5,622. 5,372. 7 5 10,995.2
6,832. 4,822, 4 1 11,654.5
493,0
1,588, 5 2,081.5
In 2009, because of reduced orders, the company purchased the least amount of raw materials until now in the amount of 2,082 million MDL, constituting a decrease of 9573 MDL as compared with 2008. Usually, in order to make costs efficient, the company bought domestic raw materials in a share of 76% of total value of purchased raw materials. The policy of selling products is focused on two ways: - Sale of products based on customers letters or orders on orders execution - Sale based on contracts of supplying goods or finished goods or services Sale based on letters shall be as follows: - Receiving orders and customer requirements analysis; - Analysis of possibilities to satisfy the order. In this case the order is analysed economically and technically;
- Drafting the contract with the customer; - Contract analysis, its negotiation with the client and its modification, if necessary; - If it is accepted, an internal order for manufacturing is set up within the company; Sale based on contracts of supplying goods is executed though the next steps: - Determination of customers needs, pricing and establishing conditions of products sale. This stage ends with the transmission of the draft contract to the client - Contract analysis; - Contract registration and execution. The company uses a clear procedure of contractual relations with the customer, which is developed based on the quality management system. Conclusions: The companys commercial procedures are well defined and developed. However, the company does not have adequate tools to attract new customers, also there is not any clear policy for identifying, prospecting and establishing contacts with potential customers.
4.3.2.
Analyses of distribution and marketing activity and policy
The company had established relationships with local distributors when it was competing on the market of domestic products. It had official distributors on Briceni market. Since the household products market became more competitive in terms of price, the company could not compete. However, currently the company does not have distributors on the local market, but has an official distributor in St.Petersburg market. It is the distributor of the special-purpose products manufactured by RAUT JSC. Also, in 2010 contractual relationships with STE "Piksel" were established for distribution of marketing services and products of RAUT JSC. In accordance with the procedure of quality management of the company, the marketing department is responsible for selling finished products. The company plans the process of sale and supply to the beneficiary on the basis of the procedure of Product sale planning. The process of selling finished products is realized by the marketing department. It ensures the sale of finished products based on the beneficiary order. The Marketing Department concludes the tax bill indicating the type of product. The process of products transport is as follows is realized as follows: with beneficiarys vehicle; own vehicle of company; ordered transport means;
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rail transport the company signs a contract with the Organization of Railways. When transporting containers the following documents shall be submitted: tax bill, account for payment, certificate of origin, customs declaration, phytosanitary certificate; air transport products are loaded after customs clearance and documents check.
After-sales service process. The Marketing Department is responsible for assisting the beneficiary in case of technical problems. After-sales service process is performed under some forms of guarantee, which is based on a period of guarantee for each type of product. Conclusions: The company lacks distribution channels, which weakens its image. It is recommended to find expanded distribution channels both locally and internationally. However, one problem of the company is the maintenance of the division of transport and supply, as well as the car park. It is recommended to restructure the division and to focus on the ordered transportation. As a result, general administrative expenses will be reduced, and the price of products sold will be lower.
4.3.3.
Analysis of promotion activities and policy
The company does not have any well-organized process of product promotion. There no any planned annual expenses for promotion. Companys members participated in some national and international exhibitions. On the Russian market, the company's products are promoted by the official distributor in St. Petersburg (promoted only in the region). On the local market products are not promoted. Daily the company participates in the exhibition "Made in Moldova" in order to promote its products. Conclusions: Given the fact that there are no sufficient resources allocated for the aggressive promotion of enterprise products, they are known in restricted circles of customers. Another argument for this is the marginal approach of the managerial utility to promote products.
4.3.4.
Pricing policy
Sale prices and cost calculation are determined through the method of order "expenses +" (per unit) based on norms of materials, components consumption and the workload of manufactures products. Pricing corresponds to the following processes:
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- The Division of Technical Director develops, based on construction documentation, technological processes to develop details, collect, assemble and adjust the product to define rates of consumption of basic materials, representing a consolidated statement of expenses per unit; - Department of Chief Builder, draws up the record sheet of expenses on component (transistor, resistor, capacitor, etc.) per unit of ordered product; - Material and Technical Supply Division - based on the record sheet of used components, indicates the purchase price for each item; - Department of Employment and Salaries, based on technological processes determines the manpower efficiency for manufacture of parts, components, assembly, adjustment, packing taking into account the amount of fee - salaries of employees involved in the production process - as well as administrative salaries; - Record documents and sheets are transmitted to the division of planning and savings for calculation of product sale price; - Based on calculations, pricing agreement is drafted and forwarded to the beneficiary.
Conclusions: The price set by the enterprise for certain types of products is not competitive because it is calculated based on the cost, i.e. directly depends on the technological process, composition of costs is not based on the principle of fixed and variable costs. It is recommended to reduce costs for different categories of products especially for their design and to take into consideration the competitive position of the company. It is also recommended restructuring costs based on the marginal cost method, namely taking into account fixed and variable costs.
4.4. 4.4.1.
ECONOMIC AND FINANCIAL DIAGNOSIS Balance sheet analysis
Analysis of RAUT JSC balance sheet is made in accordance with the data presented in the table below:
Table 16. Indicators of RAUT JSC balance sheet Balance Sheet Indicators
Total assets Long-term assets Intangible assets # intangible assets # depreciation of intangible assets Long-term tangible assets # tangible assets in progress # fixed assets # wear and depreciation of long-term
2007
154 874 909 108 550 899 132 538 161 286 -28 748 108 320 736 2 053 957 259 110 043 -152 843 264
2008
148 254 844 106 457 237 165 008 187 200 -22 192 106 190 359 2 036 977 258 844 579 -154 691 197
2009
148 555 939 99 755 261 156 269 210 216 -53 947 99 515 466 2 036 977 252 339 813 -154 861 324
September 30,2009
148 038 732 101 524 994 143 900 190 216 - 46 319 101 291 759 2 036 977 254 887 329 - 155 632 547
September 30,2010
148 506 958 98 338 440 138 330 202 604 -64 274 98 115 252 2 036 977 252 477 625 -156 399 350
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tangible assets Other long term assets Short-term assets Stocks of goods and materials # materials # OMVSD # production in progress # products # goods Short-term receivables # trade invoices receivables # paid short-term advances # receivables on settlements with budget # staff receivables # other short-term debts Cash # cash desk # current accounts in national currency # current account in foreign currency # other funds Other current assets Total liabilities Equity Authorized and additional capital # authorized capital Reserves # reserves established by legislation # other reserves Retained earnings # correction of prior period results # undistributed profits of previous years #net profit of the accounting period Long-term debts Long term financial debts # Long term bank loans Calculated long-term debts # received advances # delayed debts on income tax Current liabilities Short-term commercial debts # debts on commercial bills # received advances Calculated short-term debts # debts on remuneration # debts related to personnel on other operations # insurance liabilities # debts on settlements with budget # debt to founders and other participants # debts referred to preliminary expenses and payments
97625 46 324 010 29 536 335 3 751 441 107 970 17 705 354 7 966 987 4 583 5194194 2 596 686 100 429 1 249 815 33 846 1 213 418 11001373 86 890 245 764 483 962 10 184 757 592 108 154 874 909 144 397 293 49 326 039 49 326 039 104856326 133 463 104 856 326 -9918535 -40 317 -10 246 904 368 686 1 613 888
101870 41 797 607 35 938 423 5 571 447 54 926 20 259 365 10 048 102 4 583 4641207 626 954 104 685 2 684 622 14 885 1 210 061 1164256 48 696 81 794 1 017 557 16 209 53 721 148 254 844 144 290 837 49 326 039 49 326 039 94928270 151 897 94 776 373 36528 9 714 0 26 814 1 860
1613888 9 290 1 604 598 8 863 728 8274026 44 406 8 229 620 589702 0 29 283 62 032 135 718 10 299 352 370
1860 1 860 0 3 962 147 1669254 173 266 1 495 988 2292893 1 333 186 13 324 486 403 76 061 7 319 376 600
83526 48 800 678 45 208 648 4 994 924 25 901 21 775 677 18 406 049 6 097 3462142 303 826 60 982 1 864 155 18 623 1 214 556 52199 549 0 30 290 21 360 77 689 148 555 939 134 400 875 49 326 039 49 326 039 94929611 153 238 94 776 373 -9854775 59 310 35 186 -9 949 271 5 583 452 5581790 5581790 1662 1 662 0 8 571 612 3210269 45 245 3 165 024 5361343 4 108 251 99 360 735 235 156 070 7 298 255 129
89 335 46 513 738 42 143 049 5 245 937 39 382 20 166 293 16 684 890 6 097 4 307 909 335 730 434 096 2 302 250 22 655 1 213 178 43 335 13 081 7 399 804 22 051 148 038 732 135 704 589 49 326 039 49 326 039 94 929 611 153 278 94 776 373 - 8 551 061 59 310 35 186 - 8 645 557 5 300 098 5 298 238 5 298 238 1 860 1 860 0 7 034 045 2 296 419 183 109 2 113 910 4 737 626 3 676 835 80 989 576 053 319 269 7 298 77 182
84858 50 168 518 45 165 009 5 868 668 356 25 867 153 13 424 237 4 595 3832440 731 768 1 447 825 399 159 37 474 1 216 214 1094933 3 549 8 271 1 078 684 4 429 76 136 148 506 958 130 813 194 49 326 039 49 326 039 94929611 153 238 94 776 373 -13442456 104 715 -9 854 775 -3 692 396 4 202 187 4200525 4200525 1662 1 662 0 13 491 577 11268351 74 597 11 193 754 2223226 1 221 528 135 920 423 574 201 900 7 298 233 006
At the end of 2009 the company's total assets amounted to 148 555 939 MDL, increasing by 301095 MDL as compared to the previous period. This growth was driven by the increase of current assets, especially stocks of goods and materials. The increase was due to their low numbers and delaying orders because of the financial crisis, which has directly affected the companys customers, which led to the increase in the companys stocks.
For the first nine months of 2010, the total amount of companys assets was 148 506 958 MDL, increasing by 468226 MDL in the similar period last year. This was caused by increased commodities and material stocks and production in progress. This is due to contracting customers and resumption of production for new orders. During the analyzed period the structure of companys assets is dominated by long-term assets, which in 2007 had 70,08% share in 2008 71,8%, in 2009 67,15% and 66,22% as of September 30, 2010. The decrease of rate of long term assets in 2009 compared with 2007 was due to increased wear of long-term tangible asset and by decreased fixed assets within the company. On the other hand the reduction of long term assets on September 30, 2010 compared with the same period of the last year is determined by the increased wear of long-term tangible assets. Short-term assets grew by 16,7% as compared to 2008 and on September 30, 2010 in the same period of the previous year short-term assets increased by about 7,3%. As for the composition of short-term assets over the analyzed years, the dominant position was held by the stocks of goods and materials. The structure of liabilities of the company, major shares are held by equity and short-term debts. In equity the greatest share is held by the authorized capital and other reserves. Also, in 2009 compared with 2008, a significant increase in short-term debts, by 4 609 465 MDL is observed, and during the period September 9, 2010 as compared to the same period of previous year the same debt increased up to 6457532 MDL. Short-term debts increased due to short-term commercial debts. However, on September 9, 2010, a significant reduction in debts on salaries is observed. On July 20, 2009 the company contracted a loan of 500 000 USD from BC "Victoriabank" pledging the Building "A" of the administration building 57 AB.
Table 17. Loan contracting
no. Loan Amount, USD 500 000 Date of receipt July 20, 2009 Maturity Date Amount, USD till 30.07.10 till August 30, 10 till September 30, 10 till October 29, 10 till November 30, 10 till December 31, 10 till January 31, 11 till February 28, 11 till March 31, 11 till April 29, 11 till May 31, 11 till July 20, 11 41,667 41,667 41,667 41,667 41,667 41,667 41,667 41,667 41,667 41,667 41,667 41,663 Credit institution BC Victoriabank SA Pledged objects Remainder to be paid 458,333 416,666 374,999 333,332 291,665 249,998 208,331 166,664 124,997 83,330 41,663
1.
Building of the Administration Building 57 13 Decebal Str., Balti Mun., effective*
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On December 31, 2009 the following components make part of the structure:
Table 18. Structure of receivables
Sold la December 31, 2009, MDL 303 826 5,166 17,072 23,544 23,734 11,071 5,303 14,228 6,647 6,169 9,700 5,786 11,534 9,094 79,172 6,608 11,238 8,061 49,699 60,982 20,597 7,144 5,000 28,241 1,864,155 18,623 1,214,556
company's receivables
Date of apprearence
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
I. Receivables on trade invoices: incl.: "Astra" LLC, Balti "Belsug", Dubasari "Centrul-3" (I, II) JSC, Chisinau "Consumcoop", Rezina "Decostar", Chisinau "FSTV" LLC Soroca "GAGHI" LLC, Criuleni "Angrogoscom" JSC, Chisinau "Melagros" JSC Kahul "Padov-Druta" II, Rezina "Sparja-Melnic" II, Riscani "Universcoop" JSC, Anenii Noi "UCOOP", Calaras "Unic" JSC, Chisinau "UCOOP", Falesti "Universcoop", Leova "Vatra-Mandatar" LLC, Chisinau Others II. Recieveblaes related to advances: incl.: "Agency of material reserves", Chisinau "DSARC", Balti "Autobuses", Balti Others III. Receivables on settlements with budget IV.Personnel receivables V. Other receivables incl.: Onsubmitted and accepted claims "Anamax" LLC, Chisinau (court decision no.111 of April 18, 2003) Valeeva I.V. indiv. - file no.1-98-96 din 05.03.1996 "i" JSC Berdeansk, Ukraine (court decision no.5/3/300 November 20, 2000) Payment of utilities Others Total receivables
October,09 June, 01 October,09 August, 09 September, 09 July, 09 July, 09 September, 09 August, 09 July, 09 July, 09 August, 09 July, 09 October, 09 July, 09 August, 09 October,09 July, 09
current Transnistria Request current current current current current current current current current current current current current current current current
1 2 3 4
November, 09 July, 09 June, 09 December, 08 December, 06
current current current current VAT debit balance settlement
24,833 676,647 477,284 35,102 690 3,462,142
Aprilie 18, 2003 March 5, 1996 November 20, 2000 November, 09 March, 02
Judicial Dispute Judicial Dispute Judicial Dispute
On December 31, 2009 the following components make part of the company's debts structure:
Table 19. Structure of RAUT JSC debts
Balance December 31, 2009, MDL 5,581,790 1,662 1,005 Date of appearence
I. Long-term debt related to bank loans II. Received long-term advances: incl.: "Gorcomdorn" LLC, Balti
June, 06
Refusal to Receive
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"Prut-80" JSC, Falesti III. Calculated long-term debt incl..: "Panelectro" LLC, Chisinau "Tehnoferum", Edinet "Cet-Nord" JSC, Balti "Moldtelecom" JSC, Balti mag. Agricol fil. Galaseni, Riscani Others IV. Received short-term advances: incl.: "Bius" JSC, Severodvisc, Rusia "Rif-Acvaaparat" JSC, Balti LTD "Inros", India "Lot" JSC Balti "Hidrotehnica" JSC, Chisinau Others V. Debts on remuneration VI. Debts towards personnel related to other operations VII. Insurance debts VIII. Debts on budget settlements IX. Liabilities to founders X. Reserves (leaves)
657 45,245 7,177 2,219 23,011 5,582 1,669 5,587 3,165,024 471,344 297,732 2,123,493 252,928 18,300 1,227 4,108,251 99,360 735,235 156,070 7,298 255,129
September, 06
Products
1 2 3 4 5 6
November, 08 December, 08 December,09 December,09 March, 08 July, 09
current current current current current current
1 2 3 4 5 6
August, 08 December, 09 Spetember, 08 February, 09 December, 09 July, 09 May, 09 December, 09 Aprilie, 08 December, 09
Partial prepayment Partial prepayment Partial prepayment Partial prepayment Partial prepayment Partial prepayment
dividends to shareholders (16,132 pers.)
4.4.2.
Analysis of financial results and expenses
Table 20. Profit and loss ratio

Indicators Code row 01 02 03 04 05 06 07 08 09 December 31, 2007 41,797,535 27,962,641 13,834,894 1,083,555 677,922 10,803,090 1,124,410 2,313,027 -674,115 December 31, 2008 25,930,223 16,905,461 9,024,762 996,481 797,555 11,006,574 892,845 -2,675,731 618,391 September 30, 2009 1,451,096 1,192,660 258,436 765,961 570,914 6,630,376 1,898,972 -8,075,865 -744,010 December 31, 2009 1,699,396 1,344,822 354,574 1,170,317 643,140 8,569,682 2,471,635 -10,159,566 301,302 September 30, 2010 12,119,469 7,382,325 4,737,144 958,819 599,080 6,646,757 1,846,702 -3,396,576
1. Net Sales 2. Cost of sales 3. Gross profit (total loss) 4. Other operational income 5.Commercial expenses 6. General and administrative expenses 7.Other operating expenses 8. Result from operating activities: Profit (loss) (3 +4-5-6-7) 9.Result from investing activities: Profit (loss)
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10. Result from financing activities: Profit (loss) 11.Result from financial and economic activities: Profit (loss) (8 9 10) 12.Exceptional result: profit (loss) 13.Profit (loss) before tax (11 +12)
10 11
-1,230,287 408,625
479,556 -1,577,784
174,318 8,645,557
-91,007 -9,949,271
-295,820 -3,692,396
12 13 408,625 -1,577,784 -8,645,557 -9,949,271 -3,692,396
14.Expenes (savings from) on income tax
14
40,239
-1,604,598
15.Net profit (net loss) (13 +14)
15
368,386
26,814
8,645,557
-9,949,271
-3,692,396
Company's sales income in 2009 fell to 1,7 million MDL, with about 24,2 million MDL (93,4%) compared to 2008. The income decrease was caused by cancellation of orders and delaying payments by more customers. At the same time, cost of sales decreased by 1,3 million MDL, about 15,5 million MDL (92,0%). More pronounced decrease in sales income had a negative impact on gross profit, which decreased by 8,7 million MDL (96,1%) to 354 000 MDL. As of September 30, 2010 comported with the same period of the previous year, sales income increased by about 10 668 373 MDL due to resumed orders. At the same time cost of sales increased as well. During 2009, including during the nine months of 2010, companys management has tried to increase efficiency by reducing costs, especially those general and administrative. Also, on September 9, 2010 there has been a significant reduction in other operating expenses, compared with the same period of the previous year. Loss from operating activities as of December 31, 2009 made up 10 159 566 MDL increasing by 288% over the same period of the previous year. Analysing the net profit, in 2009 the company reported losses continuing in nine months of 2010 as well, but with a much lower intensity. Change in the profit trend indicates that company directly depends on market orders and sales.
4.4.3. 4.4.3.1.
Analysis of financial indicators Liquidity indicators
Table 21. Liquidity coefficients

Indicators Calculation formula 2007 2008 2009 September 30,2010
Liquidity ratio Acid test (short-term receivables + cash) / (short-term debts) (Current Assets ) / (short-term debts) (Cash) / (short-term debts) >= 0.7 >= 1.5 >= 0.2 0.6 1.2 0.4 0.3
Current Liquidity Immediate Liquidity
5.2 1.2
10.5 0.3
5.7 0.01
3.7 0.1
Current liquidity represents the most generally and frequently used coefficient that involves comparing current assets to short-term debt. It indicator shows whether the company has current
assets to pay debts in the short term the full amount. For the period of review, this indicator is well above the recommended limit, which indicates that the company has sufficient current assets to pay short-term debts. Intermediate liquidity - this indicator reflects the share of short term debts, which the company is able to pay by mobilizing cash and short-term debts without being forced to sell stocks of goods and materials. The limit of this ratio is between 0,7 and 1. In 2009 this indicator was below the allowable limit because of increased short-term debts, namely of short-term commercial debts. The same value is kept below the allowable limit and the first nine months of 2010. Immediate liquidity (absolute liquidity ratio) in the case of this ratio the most liquid current assets are compared with short-term debts. This indicator characterizes the short-term share of debts the company is only able to pay immediately using the currently available funds. The recommended limit of this ratio is between 0,2 and 0,25. For this analysed period this indicator is continuously decreasing. Only for the first nine months of 2010 it was relaunched in comparison with 2009, but still being below the recommended limit. This indicator shows negative developments following the reduction of the amount of funds available in conditions of increased short-term debts.
4.4.3.2.
Indicators of profitability
Table 22. Indicators of profitability

Indicators Profitability ratios Return on Equity Return on permanent capital Calculation formula 2007 2008 2009 September 30, 2010
(net profit) / (equity) (profit before tax) * 100 / (average amount of permanent capital) (net profit) / (authorized capital) (net profit) / (total assets) (gross profit) / (net sales) (net profit) / (net sales)
ROE ROCE
0.3% 0.3%
0.0% -1.1%
-7.4% -7.1%
-2.8% -2.7%
Return of authorized capital Return on assets Gross Margin (%) Net profit margin
ROI ROE 5-15% < 10%
0.7% 0.2% 33.1% 0.9%
0.1% 0.0% 34.8% 0.1%
-20.2% -6.7% 20.9% -585.5%
-7.5% -2.5% 39.1% -30.5%
Return on Equity - expresses the efficiency with which the capital is used to obtain net profit. This indicator is used by owners or potential donors for making investment decision. This indicator has decreased over the reporting period, with a recovery in the first nine months of 2010. This decrease was caused by the depreciation of the company's net profit. Reviving on September 30, 2010 was due to the company's net profit, to resumption of new orders. Return on permanent capital - it expresses the efficiency with which capital is used continuously to obtain profit or net profit before taxation. Whatever the source of origin is, the value of this ratio was declining by the end of 2009 and the first nine months of this year it showed a tendency to re-launch it. The decrease of this ratio is due to increased long-term debts that the company has. Return on authorized capital - measures profitability, which can be obtained from shareholders and allows taking future investment decisions for the company's development. This indicator is
steadily declining due to lower revenues from the company's main business. The same relaunch is registered for the first nine months of 2010. Return on assets - this indicator measures the efficiency of asset utilization in terms of profit. In other words, this indicator refers to measuring the ability to produce profit with companys available active assets. This figure dropped dramatically from 2007 to 2009 due to lower company profits and indicated the problems related to finding new customers and companys product marketing. Net profit margin - is the best way of diagnosing the company's overall capacity to make profits, given that both the costs and expenses, and taxes paid are taken into account. Thus, in 2009 net profit margin was negative (-585%) compared with low but positive values in 2007 and 2008, 0.9% and 0.1% respectively. Gross profit margin declined in 2009 compared with 2007 from 33,1% to 20,9%, which was viewed negatively as being determined by the highest growth rate of costs versus income sales, due to unfavourable conjuncture of customer deferrals of orders.
4.4.3.3.
Management Indicators
Table 23. Management Indicators

Indicators Rotational speed indicators Asserts turnover Short-term assets turnover Current assets turnover Short-term debt receivables turnover Credit debts turnover Turnover of stocks of goods and materials Credits turnover - suppliers Average balances of assets x n/ net sales Average balances of long term assets x n/ net sales Average balances of current assets x n / net sales Average balances of short-term debt x n / net sales Average debt balances x n / cost of sales Average balances of goods and materials stocks x n / cost of sales Debts to suppliers x n / net sales 2,133.5 1,513.3 620.2 69.2 1.5 460.8 2 31,874.8 22,145.4 9,729.4 870.2 23.5 8,714.5 10 3345.8 2,231.1 1114.7 82.2 2.2 1,671 2 Calculation formula 2008 2009 September 30, 2010
Assets turnover - shows the number of turns made by total assets to obtain a certain level of income from sales. For the analysed period, by the end of 2009 it was increasing indicating that more calendar days were needed for the renewal of total assets. Long term assets turnover - shows the number of turns of long term assets to achieve a certain level of income from sales. Current assets turnover - is declining within the analyzed period, indicating that current assets increased faster than income, so the duration of a turn is growing. One of the reasons that influence this event is due to increased receivables of the company towards the customer.
Stocks turnover is decreasing due to more pronounced increase in the material base, except for the first nine months of 2010. This indicates that it does not effectively organize its relations with suppliers.
4.4.3.4.
Financial stability indicators
Financial stability reflects the company's dependence on external funding sources and describes the company's ability to maintain its ability to meet current and future obligations. Financial stability is determined by the ratio of own financial resources and liabilities and their structure. Financial equilibrium is the totality of correlations that arise between financial resources necessary to achieve certain goals and actions, on the one hand and the possibilities of purchasing these resources on the other part. The situation of the representative indicators in identifying the state of financial equilibrium within RAUT JSC is presented below.
Table 24. Indicators of financial balance

EQUILIBRIUM OF FINANCIAL INDICATORS (All amounts are stated in MDL, unless otherwise indicated) 2007 Net accounting asset (NAA) Working Capital (WC) Need of Working Capital (NWC) Net Treasury (NT) 144,397,293, 37,460,282, 25,866,801, 11,593,481, 2008 144,290,837, 37,835,460, 36,617,483, 1,217,977, 2009 134,400,875, 40,229,066, 40,099,178, 129,888, 2009 compared with 2007, +/(9,996,418) -6.9% 2,768,784, 14,232,377, (11,463,593) 7.4% 55.0% -98.9%
Net accounting asset represents the fundamental equation of balance and presents the net wealth of shareholders, namely assets uninvolved in debt. The companys NAA, according to official data, declined in 2009 compared to 2008 from 144,3 to 134,4 million MDL by 9,9 million MDL (6,7%), largely due to losses reported during management years. Working fund represents the realization of the financial balance within the company regarding observance of the parity maturity principle. According to official data, working capital is characterized by a positive trend, reaching 40,2 million MDL by 2009. During the analyzed period, all indicators of financial stability, both long term and short term trends were increasing (less net treasury), the growth rate of the working fund being lower compared with working capital needs, determining a significant worsening of net cash, which depreciated from the values recorded during the reporting period from 11,6 million MDL in 2007 to 129800 MDL, the company reported a low level of liquidity. The NWC was positive within 2007 2009, which indicated a surplus of short-term resources. Solvency is the ability of the company to honour its obligations to its current business partners. Below is represented the situation of RAUT JSC as for solvency expressed by a set of relevant indicators.
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Table 25. Coefficients of financial stability

COEFFICIENTS (RATES) OF SOLVENCY (All values are coefficients unless otherwise indicated) 2007 2008 2009 2009 compared to 2007, +/0.03, 0.03, 0.03, (49.29) 40.8% 45.1% 271.7% -73.4% -3% 88% 0.14 0.12 September 30,2010
Debt ratio (<1) Degree of indebtedness (<=2) Solvency ratio (<=1) Coverage rate of fixed assets Capital adequacy ratio Leverage coefficient (< 2,33) Coefficient of attracting borrowed sources (0 0.5)
0.07, 0.07, 0.01, 67.12, 93% 0.07 0.07
0.03, 0.03, 0.00, 57,091.59, 97% 0.03 0.03
0.10, 0.11, 0.04, 17.82, 90% 0.11 0.10
Debt Ratio is a general indicator of indebtedness. It calculates the proportion within which the total asset is financed by debt. The more debts there are, higher the debt service is and the pressure on cash-flow is more pronounced. According to the data, the rate of group debts is characterized by an increase in 2009 compared to 2007 by 0,03 units (+40.8%) from 0,07 to 0,10 units and the growth is due to increase in both long-term and short-term debts. Another indicator of solvency degree of indebtedness measures the volume of external funding compared to the volume of funding provided by owners. The higher value is, more the business depends more on its creditors, and the greater risk is. Indebtedness, calculated on the basis of official data, increased in 2009 compared to 2007 from 0,07 to 0,11 units by 0,03 units (+45,1%), total debts being still lower than equity, representing the liabilities structure in 2009 90,5 % and 4,5% respectively. Solvency Ratio made up 0,04 units in 2009, following the contraction of bank credit, it is recommended to timely pay of loan instalments in order to avoid paying penalties imposed by the bank and restraint of assets pledged. Fixed Assets Coverage Ratio, which shows how many times the value of net fixed assets covers long-term debts, recorded values of 17,82 units in 2009 due to the long-term debt. Capital Adequacy Ratio, in terms of financial stability, is a major degree of self-financing. During the analyzed period, the capital adequacy ratio was well above the recommended limit of 30%. This means that for the first nine months of 2010 about 88% of the company's assets were financed on the basis of the authorized capital and other reserves. Leverage ratio, this indicator during the analyzed period was perfectly below the recommended limit of 2,33. This shows that there was sufficient equity to fund borrowed resources. This funding may be based on authorized capital and other reserves. Coefficient of attracting borrowed sources, measures the level of indebtedness of the enterprise and determines how the assets of the business are financed by attracted resources. For the analyzed period, this indicator fell within limits.
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4.5. Strengths
SWOT ANALYSIS OF RAUT JSC
a) Existence of buildings and spaces that could be used for profitable purposes, to acquire other operating income such as rent, and their use as potential objects of an industrial park; b) Favourable location near the communication networks national roads, railway junction, close location to the FEZ, etc; c) Existence of professional management personnel with experience in design, development and industrial producers; d) Existence of the practice of creating technological processes and procedures; e) Land free of charges, access to the railway and roads, not need to change the destination and is transmitted to be used for an undetermined term, the Ministry of Economy is also the majority owner of the shares on behalf of the state, which theoretically should facilitate the decision-making process. Weaknesses a) Inability to effectively manage the company with the available assets; b) Inefficient management of the company to establish relationship with suppliers expressed by a low turnover of stocks. In this context, the procurement schedule and the control of the state of stocks is less efficient and the risk of incurring losses is high; c) Management inefficiency to establish contractual relationships with new customers and to come on other markets outside the traditional ones; d) Existence of a very high current liquidity, which is caused by excessive and unnecessary inventory materials, consumers cancelled orders, existence of the stock in the warehouse of finished and unsold products and manufactured goods for beneficiaries of the Russian Federation until 1995 and unsold due to force majeure, consumers receivables; e) Inefficiency of companys marketing makes the lack of tools to promote products, sales, lack of outlets and penetration of the company's products, as well as to attract new customers; f) Human resource management inefficiency caused by the loss of skilled workers and lack of orders to train staff involved in the operation process; g) The organizational structure of the company is too complex and unadjusted to current situation of the company; h) Inefficient use and obtaining of added value on account of fixed assets (buildings) available at the company; i) Lack of young staff, which can create problems in company development, large number of employees, low salaries, which adversely affects the motivation and recruitment of highly qualified staff, insufficient staff and skills to achieve the set goal, missing policies and management practices, human resource development and evaluation. Opportunities a) The possibility that the Government develops and proposes the Parliament to adopt concrete measures on establishing facilities; b) Application by the managing company of the coefficient to decrease up to 0,3 the fee for land rent; c) Free assignment or bailing of goods being public property to the managing company (only in case of observing provisions of art. 12 paragraph 2 of the Law on industrial parks)
d) The right to privatize the state owned land for construction at a normative price of land established when being bailed the managing company or industrial park residents, only after purchasing and commissioning industrial and related facilities and constructions (only in case of observing provisions of art. 12 paragraph 1, letter c, of the Law on industrial parks); e) Optimisation of state controls on the activity of residents by establishing planned, approved by Decision of Government and unexpected controls, made with the consent of the Ministry of Economy; f) Possibility of funding from the state and local budget; g) Possibility of creating public-private partnerships; h) Privatisation of free land or other property or their bailment. Threats a) Deepening negative effects of financial crisis and continuing economic recession; b) Political instability at national level which affect the investment decision of potential investors; c) Energy dependence of the Russian Federation; d) Massive and continuous exodus of brains.
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5.
OPTIMAL SCENARIOS FOR INDUSTRIAL PARK DEVELOPMENT 5.1. DETERMINATION OF INDUSTRIAL PARK DEVELOPMENT SCENARIOS
The proposal to create an industrial park on the territory of RAUT JSC is based on the need for citys economic development by concentrating domestic and foreign investments through the industrial park. The creation of industrial park is based on the following preconditions: 1. High trends of Balti Municipality industrialization; 2. Perspectives to attract foreign investors; 3. Advantage of the geographical location of potential industrial park; 4. High potential of labour force qualification; 5. Infrastructure and utilities corresponding to the industrial park business. Activities to be carried out within the industrial park, is the feasibility study confirms its creation, will be industry specific, given that the region's agricultural activities have reduced development perspective, due to small areas of agricultural land of 2,878 ha, representing 36.31% of the total and a small number of companies, 23 companies (see the region analysis). Meanwhile, norms of utilities and infrastructure existing within RAUT JSC are capabilities allowing deployment of large-scale industrial activities (on the territory of RAUT JSC, who is under consideration to become the subject of the industrial park, there are four power distribution units with a capacity of 10 KW) As a result of performed analysis and the preconditions necessary to create the industrial park (legal, economic, technical), two strategic directions of activity are proposed: Model 1: unidirectional specialized activities. This involves running a single type of activity in the industrial park Model 2: diverse specialized activities. This involves running several types of activities within the industrial park. Defining business scenarios of the potential industrial park is presented in the table below.
Table 26. Define business scenarios of the industrial park Model 1. Unidirectional specialization Goal Achieving competitive advantage through improving product performance and quality. In these circumstances a horizontal integration between residents of the industrial park is pursued. Mechanical engineering activity Model 2. Diversified specialization Widening the range of products and vertical integration to achieve the region's distinctive competencies, to strengthen the economic stability of the region. Option 1. Mechanical engineering industry. Option 2. Processing of building materials. Option 3. Developed by ProConsulting LLC, tel./fax: 21-00-89 Page 74
Specialization
Consulting management services. Option 4. Activities of processing wood and wooden articles Option 5. Activities in technologies Core activities Specialization in one direction of activity of the proposed industrial park supposes focus on development of RAUT JSC business. From this perspective, the possibility to create an industrial park is omitted because it will involve activity of a single resident, which requires a strategic development plan. However, activities carried out in accordance with this model involve developing the following products: - hydroacoustic navigation devices; - special maintenance hydroacoustic devices; - electrical and household appliances.
the
field
of
information
Diversified specialization requires carrying out more types of activities, cooperation both vertically and horizontally between different economic entities. Option 1. This activity will be characterized by three distinct types of production: Production of unique items, characterized by manufacturing a very small number of products of the same kind, or unique ones; Serial production characterized by the fact that parts are manufactured in batches and regularly recurring series after an a time interval; Mass production is characterized by large quantities of products that are continuously manufactured. These activities will include: Activities of manufacturing agricultural machinery parts. This includes manufacture of parts for agricultural tractors and machinery for the production of livestock feed; Manufacture of household appliances. Production of electrical and electronic equipment. Vehicle assembly. Option 2. Processing of building materials includes the following: Metallic materials used in the form of laminated profiles, plates, strips, sanitary installations, covers; aluminium alloys, lead, copper, nickel electrical, plumbing, hardware products, etc. Ceramic materials; Finished iron and steel parts; Plastics for flooring, wallpaper, thermal and noise insulation; Synthetic rubber insulation, treatment of
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foundations, sealing, etc. Option 3. Management consulting services will be management activities targeted specifically to the industrial park residents. This will involve: Assisting in business management; Marketing services; Operational consulting services, consulting on the technological process of resident companies. Option 4. Processing of wood and wooden articles: Planks, beams, floor, parquet, plywood, veneer, boards, furniture, etc. Options 5. Activities related to information technologies. Services related to information and communication technologies; Improvement and creation of electronic communications equipment; IT services. Residents This activity requires the existence, as a resident companies, RAUT JSC, RIFACVAAPARAT JSC and other businesses. In particular it relies on the segment of medium and large enterprises. Small and medium sized enterprises and large enterprises. Large companies (egg. RAUT JSC) will have the kind of activity specified in option 1. Small and medium enterprises (egg. RIFACVAAPARAT JSC) will be involved in the activities specified in the options 2-5. However, foreign companies will carry out their activities in the industrial park indicated in option 5 and option 1, in particular the assembly of vehicles. Creating a network of communication between residents of the industrial park, on the one hand according to the value chain model, on the other hand in terms of complementarity between them, requires the acquisition of quality products and local and regional competitive advantage. Prospects are to develop multiple lines of business, cost optimization of the industrial park residents and obtaining competitive advantage in terms of both the local market and foreign market price.
Future development
The prospects related to this scenario consist in creating products that are predominantly oriented towards foreign markets. There will be a focus on domestic market needs.
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5.2.
SELECTION OF OPTIMAL SCENARIO
Traditionally, planning and selection of optimal scenario is based on forecasts argued by analysis of potential factors influencing the activity of the industrial park. The problem is that this forecast is based on assumptions that the condition of the environment will remain stable environment, but in the moment of loss of environmental stability, forecasts become uncertain. Therefore, they may fail precisely when they are needed, the results can be disastrous. In order to select the optimal scenario the technique comparing alternatives generated was used. The type of planning a developed scenario is built based on the assumptions that the environment in which the environment of the industrial park , in which resident business activities will be held, will change. The selected scenarios suppose the existence of the following critical success factors without which it is impossible to conduct the mentioned activities: Requirements for utilities. The performance of the above mentioned activities imply high energy capacity. This is ensured by four distribution units with a capability of 10 KW, which meets the necessary requirements and standards. Requirements for infrastructure. Administration buildings, production buildings, metal warehouses, garages and storage areas, related buildings and special buildings enables the diverse types of activities (listed above). Qualified personnel. Balti Municipality has specialized personnel for the described types of activity, due to the nature of educational institutions (9552 students in 2008/2009) and industrial specifics of the region. Wide range of production. Both scenarios imply the deployment of a wide range of activities. The scenario of diversified specialization involves diverse activities that interact both vertically and horizontally. And their added value for the region is much greater than the that for undirectionally specialized activities. Equipment and technologies. Modern equipment implies obtaining of competitive products at low cost. Both proposed scenarios imply involving technology. In the first scenario, technology and equipment will involved currently available at RAUT, JSC RIFACVAAPARAT JSC. They have a sufficiently high degree of wear. The realization of the second scenario assumes the use of modern technologies and know-how, due to foreign residents who will work on the potential industrial park. In order to assess the optimal business model of the industrial park, the proposed scenarios shall be compared. For this purpose the following comparative performance indicators shall be considered: Resources (equipment and technologies, production capability, infrastructure and utilities, qualified personnel, organizational systems of raw material resources, transport infrastructure, domestic and regional specialization, etc.); Related industries (industries generating bids for the expected industrial production); Outlet (directions of concentration of products / services of the industrial park and potential of export on domestic market); Competition (competitors in the region);
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Effects (the impact of the industrial park development scenarios on stakeholders in the region)
The table below distinguishes the opportunity of optimal scenario and its directions:
Table 27. Comparison of the industrial park business scenarios Criteria Resources Production and facilities area The existence of spaces allowing industrial activities is sufficiently large. Technically most buildings are in a satisfactory condition. Given that 95% of all buildings have concrete foundations, self-load bearing and load bearing walls of prefabricated concrete slabs or blocks of limestone, monolithic concrete slabs, directly allowing industrial-scale activities and other types of activities. However, the capability of utilities is satisfactory and high (electric capability of 10 KW) for the aforementioned activities. The utilities infrastructure is as follows: Inoperable heating system Water and sewerage system is worn out Existence of equipment and machinery designed to process metal items on the territory of analysed enterprise, which is affected by physical and moral wear and need to be remodernized. The specifics of the equipment of RAUT JSC allows resident businesses to carry out their activities on a value chain model, since the machinery in question manufactures serial products of unique type. The possibility of adapting existing technologies to operational models of the industrial park residents is possible. Destination of property The building is located on the territory of RAUT JSC have a diverse destination, as follows: industrial production, storage, administrative, special. The buildings are not used to their maximum capacity, and some of them are used for other purposes. Diverse destination of the buildings allows diverse types of activities suitable for this scenario, and use of spaces within which resident companies will carry out their activity. Organization of the industrial park activity is possible under the existing buildings destination. Model 1. Unidirectional specialization Model 2. Diversified specialization
Equipment and machinery
Human Resources
Human resources operating on the territory are qualified managing to develop over 2500 technological procedures. Existing human resources of the company are of an older age, and because of the existing incentives are not motivated. Persons need extensive training to manufacture competitive Existence in the region of specialists in engineering and qualified labour force due to developed education infrastructure, allow carrying out two types of activity of the Page 78
products. However, the ability of organizing the staff is less satisfactory because of deducted costs of production. Transport infrastructure
scenario.
Given that transport infrastructure is developed and implies the existence of various communication channels, it enables and facilitates the conduct of activities proposed for both scenarios. However, existing communication channels require horizontal collaboration of various economic units supplies - retailers - consumers - customers. This communication is facilitated by the relatively good infrastructure in the region.
Related Industries Region Specialization Region specialization: industrial specialization of the region, given its history of specialized activity duet o existing plants, and their mission of activity. Mechanical engineering industry is at the stage of maturity of its life cycle, in which companies waive the worst products and focuses on the most profitable and new ones. This industry becomes important on local level and is regarded as an important source of human capital. In Balti, the number of companies dealing with manufacturing of machinery and equipment makes up only 13, but they had an income from sales in the amount of 80,317 th. MDL in2009. And there are only 6 companies engaged in the production of machinery and equipment and generate a sales revenue of 126 149 million MDL in 2009. - Processing of wood and wooden articles: 15 companies operating with 83 employees, 2009; - Manufacture of finished metal products: 25 enterprises with 133 employees, 2009; - Production of electrical machinery and apparatus: 6 enterprises with 1358 employees, 2009; - The construction sector made up 2% of the total industrial output in the region in 2009. It has prospects due to positive demographic trends and trends of industrial development, which require adequate spaces. Buildings with metal structure is an important sector of the construction industry, currently having a wide scope, from one storey building to several storey buildings, with representation in all range of functions (industrial, commercial, residential, etc.). Relationship with suppliers of raw materials and materials are established, both with RAUT JSC - the main resident of the eventual industrial park and with the companies that will carry out other types of specified activities.
Suppliers
Outlets Relations established only markets - Russia and India with foreign Local and foreign outlets. Possibility establishing market relations in the East. of
Outlet only for unique products, especially for military purposes. Decreasing demand for those products Developed by ProConsulting LLC, tel./fax: 21-00-89
Potential of sales on different local and foreign market segments. Growing demand for activities in information Page 79
technology, construction materials, wooden products and articles, products and equipment of the automobile industry. Competition Resources are used in industrial purposes by a large number of competitors, around 258 businesses Geographical location implies comparative advantages and possibility of a competition based on obtaining competitive products Lack of competition for such kind of activity based on operational difficulty and market demand. - High competition for production of wooden articles, finished metal products; - Lack of competition in information technology; - Presence of large companies manufacturing products and equipment in the automobile industry: MOLDAGROTEHNICA JSC PRIM PLONJOR SE ZALIM-GNG LLC ICP LAVIX LLC ALARM-CENTRU LLC
Effects - Lack of qualified personnel; - Risk of reduction of Russian and Indian customers demands; - Inefficient management expenses; - Lack of modern management approach leads to inefficient management capabilities; - Specialization will stop the potential of using resources, both on the territory of the potential park, as well as in the region; - Specialization will determine focusing on quality and, implicitly, the increased need to buy modern technology (mostly imported), therefore the increase in production costs; - Development of administration bureaucracy because of the company's sole control body managing company. - Use of the qualified human potential at their maximum capacity. The focus on diversification will increase the need for different specialists that will be available duet o educational institutions; - Anticipating customers needs and market demands; - Exploiting unused spaces; - Use of entrepreneurial and managerial capabilities of the territory; - Focusing on a wide range of products will allow models of cooperation between residents and the development of a complex chain of competitive business; - Due to diversity of products, related industries will grow and they will be uniformly distributed within the region's economy; - Reduction of the term of attracting new businesses in the park due to their rapid inclusion in the organizational structure and existing collaboration. Developed by ProConsulting LLC, tel./fax: 21-00-89 Page 80
- Reducing the risk of dependence on certain lines of specialization in case of economic failure.
Source: Prepared by author
The comparative analysis of the proposed scenarios for the creation of industrial park determined selection of model 2 of the scenario, which implies diversified specialization of the industrial park and keeping the operational specialization of RAUT JSC to manufacture technical and production products, marketing consumer goods. The scenario of diversified specialization of the industrial park is based on the following arguments: Consistent use of property, infrastructure and utilities on the territory of RAUT JSC with necessary requirements to conduct selected activities; Industrial specialization of the region; Predominance of positive effects as a result of the chosen scenario compared with the other scenario. Even in case of choosing the optimal scenario there are some risks in creating the industrial park, which could be overcome according to the procedures outlined in the table below:
Table 28. Ways of overcoming the risk of scenario 2 Name The risk of incapacity to quickly find investors Ways of overcoming Intense promotion of the need to develop strategic industries in the park and region; Providing facilities to carry out advantageous collaboration within the park; Quick ensuring of the legal framework on the territory of the park; Intensive collaboration with local authorities; Monitoring results of investment made in the industrial park. Promoting investment plan to find funding sources; Intense promotion of the park activities and products in order to attract foreign investors; Concluding agreements with residents on which basis they will individually pay for the creation of utilities, these amounts will be deducted from future rent payments, or reduced from the price of the privatization of buildings and equipment;
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Establishing and maintaining a dialogue between public authorities and local resident businesses in terms of the joint contribution to the development of industry in the region; Monitoring the effectiveness of the industrial park by local industry bodies. Creation of administration business on investors account; Appropriate choice of qualified personnel to manage the park.
Conflicts between the managing company and resident companies - investors
Source: Developed by author
Meanwhile it is also appropriate to indicate the specific benefits of optimal scenario, which are illustrated in the table below (indicated by category of beneficiaries).
Table 29. Advantageous of the optimal scenario Category Managing company Advantages The possibility of the managing company of obtaining revenues both from the resident activity, as well as manager activity; The possibility of establishing a competent management team; The possibility of cooperation with resident companies within the value chain to sustain their own activities; Obtaining of infrastructure facilities and remodernized utilities; Improving conditions of its employees remuneration due to increase in the volume of production of resident enterprises; Reducing the risk of losing their employees; Ability to establish long term partnerships with local and international companies. Maintain existing companies activity on the territory, respectively, maintaining established relationships with customers and suppliers; Ability to train and educate staff due to the facilities, which will be provided through the industrial park status and due to the diversification of products; Use of elements of infrastructure, which will be provided by the managing company; Increase in sales volume due to raising the competitiveness of obtained products and increased local demand; Companies' possibility to collaborate with each other within the park to create synergistic effects at regional level; Possibility to benefit from managerial consulting services; Increasing potential to attract foreign investors, resulting from product diversification; Possibility of obtaining funding support from concerned foreign organizations; Increasing personnel qualification level; Possibility to adopt continuous improvement processes; Monitoring implementation of investment projects within the industrial park by the Council for promotion of investment projects of national importance; Minimizing costs to starting businesses. Page 82
Resident companies (companies currently operating on the territory and newcomers)
Foreign investors and local
Local and central
Consumers enterprises in industrial park
Companies in related industries and businesses interested in partnerships
Legal facilities provided to potential investors with the establishment and operation of industrial park; Increase of investors image on domestic market at regional and national levels; Right to privatize state owned land designed for construction at normative price of land, set upon its transfer to the managing company or upon its leasing to industrial park residents, only after the purchase and / or commissioning of industrial and related construction and facilities, according to the Law on normative price and the way of land sale and purchase, use of regional resources; Possibility of effective collaboration with local authorities. Improving use of public property; Socio-economic benefits; Possibility of implementing regional strategies through the industrial park; Proceeds from the local budget; Improving the image of the state at regional and national level; More advantageous collaboration between business and public sectors; Efficient use of public property; Legal framework will allow monitoring development of industrial park. Improving the quality of manufactured products of industries within the park; Access to a variety of products on local markets, including additional maintenance services; More competitive prices due to the activity of the park of the competitive center; Access to infrastructure facilities created due by reorganization of companies in industrial park (water, sewage, etc.); Possibility of purchasing individual products, adjusted to their needs. Due to products diversification, related industries will develop and be uniformly distributed within the region's economy; Opportunities for development and expansion of activities due to state support provided within the industrial park as required by law; Opportunities for inter-branch collaboration.
5.3.
IDENTIFICATION OF POTENTIAL RESIDENT COMPANIES
Based on selected scenarios, resident of the industrial park will be small, medium and large enterprises. However, they are both local and foreign companies. Thus, residents of the industrial park will be economic entities doing business under a prior contract concluded with the managing company. Their activities will be targeted to industrial products, developing new industrial concepts, conducting various types of services, technological development as well as use of scientific researches. Residents structure for the industrial park structure is shown in the figure below:
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Figure 13. Potential resident enterprises of the industrial park
Resident 1 Rezident 2 Resident 3
RAUT JSC
Industrial Park
EFC RIF ACVAAPARAT JSC LOT JSC
Currently there are three companies operating on the territory of the industrial park: 1. RAUT JSC 2. EFC RIF ACVAAPARAT JSC 3. LOT JSC LOT JSC. LOT JSC is a private company operating on the territory of RAUT JSC, on the 4th floor of Administration Building B1. The entire floor is owned by LOT JSC, which is organized according to the distribution balance upon the reorganization of RAUT production association. Since LOT JSC is a separated entity and is a company owned by a private economic entity, it can not be subjected to the object of reorganization for the industrial park function. RAUT JSC. Analysing the economic and financial potential, of technological and manufacturing capabilities, design and operational capabilities, use of real estate, of technologies and equipment, we conclude that RAUT JSC is one of the potential resident companies of the industrial park. Since RAUT company has large areas in which it operates, but its capability to use them is reduced, the price of manufactured products is not competitive on the market (general and administrative expenses are high), the company will be subjected to a management reorganization in terms of used infrastructure and real estate. Currently RAUT JSC operates in the following areas of production, on a total area as follows:
Table 30. Areas used by RAUT JSC
Destination of buildings Administration buildings, dormitories, household rooms Construction for production Metal warehouses Garages and storage rooms Related and special buildings
Area, m2 37 330 58 777 2 194 3 802 3 256
Of the total occupied area of 108 253 m2, only 58 994 m2 are built areas. These spaces are found in all three areas of RAUT JSC. Given that the degree of use of the third land is very low, it will be sold as a potential source of funding for industrial park infrastructure and utilities. Thus, RAUT JSC shall clear the total area of 3.99 ha of the third territory, including to fully clear buildings located on an area of 1,148 ha. As a result, RAUT JSC will have an area occupied by buildings of 475 134 m2. As a result of the reorganization according to the industrial park specifics, RAUT JSC shall restrict its activity (see 5.5. Organization of the industrial park activity). However, RAUT JSC
shall be one of the key residents who will participate directly in the business operation system within the industrial park, under the principle of industrial clusters. The company will continue to carry out its basic activity on the other hand and will cooperate vertically with other resident enterprises of the industrial park on the other hand. As a result of the operation of the industrial park, RAUT JSC will have the following types of activities: Main activity: - Hydroacoustic navigation devices; - Special maintenance hydroacoustic devices; - Household electrical appliances. Auxiliary activities, according to the industrial park specific: - Electrical appliances and spare parts for cars; - Manufacture of household appliances; - Manufacture of agricultural machinery and livestock equipment; - Manufacture of aluminium, lead, copper, nickel alloys for electrical facilities; - Manufacture of plastic and rubber. RAUT JSC as a resident enterprise is included in the model of financing and managing the industrial park. Along with this, EFC RIF-ACVAAPARAT JSC will act as resident enterprise and will cooperate with RAUT JSC in terms of financing and managing the industrial park. RIF-ACVAAPARAT EFC. The company is organized according to the distribution balance upon the reorganization of RAUT production association. Its administration and production area was transferred into the ownership of EFC RIF-ACVAAPARAT JSC as a result of the distribution balance upon reorganization of the production association RAUT JSC. The authorized capital of the company makes up 1 920 605 (one million nine hundred and twenty thousand six hundred and five) MDL and is fully distributed in 384 139 (three hundred and eighty-four thousand one hundred thirty-nine) shares with a nominal value of 5 (five) MDL each. The structure of company's shareholders is presented in the table below:
Table 31. Structure of RIF-ACVAAPARAT shareholders
Shareholders Public Property Agency of RM, Chisinau municipality, PAMN, 1 Trust Company "urop-Trust Chisinau municipality Gogu Igor, Chisinau, Cuza Voda St. Cuimac Vladimir, Chisinau Municipality
Percentage of shares 92.908 0.0312 7.0602 0.0006
In the context in which the state holds the majority of shares, some unused area of the company will be used by residents of the industrial park.
Regarding the real estate, they are presented in the table below:
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Table 32. Real estate of RIF-ACVAAPARAT Company No. 1 Object Name Building Area 4,435 m2 Location 9 Decebal Str., Balti Mun. Destination I floor production 457 m2 II floor warehose 22 m2 III floor laboratories, administration 3 754 m2 Annexes - laboratories - research III floor - laboratories Production Laboratories
2 3 4
Building 1B Building 33 Building 57
1,837 m2 1,714 m2 598 m2
9 Decebal Str., Balti Mun. 9 Decebal Str., Balti Mun. 9 Decebal Str., Balti Mun.
RIF ACVAAPARAT Company is located on an area of 8 489 m2, of which the production area makes up 2 312 m2. Of this area, company does not use 1 800 m2 and they are clear. As a result of the optimization of the managing company RAUT JSC, the area of 1 800 m2 of the body no. 33 of EFC RIF-ACVAAPARAT JSC shall be used as administration offices for RAUT JSC. However, given that the company does not have hard removable technologies, and a good part of them is used, further activity of the company can be effective only improving the production process by removing out of the circuit the high energy-consuming equipment and replacing them. It shall be noted that currently the company is not involved in any litigation, thus allowing adopting its structure to the model of the industrial park. Its main types of activity are conducting research on manufacturing marine apparatus, acoustic and hydroacoustic systems and devices, new medical technology, new technical and productive products. At the same time scientific, design, manufacture, regulation and operation and other types of services are provided. The institute has 7 laboratories of design subdivisions with an area of 1288 m2. The total area of experimental production makes up 2312 m2. The institute has a special pool (4412)m to perform hydroacoustic measurements of special antennas, equipped with lifting, lowering and rotation devices, it also has a special laboratory with measurement equipment. Since the company does not use laboratories and administration areas to their function capability, 40% of the third floor of Building A of EFC RIF-ACVAAPARAT JSC can be also used by potential residents of the park. So 1000 m2 will therefore be used by resident enterprises doing business in information technology. The company's technological equipment makes up 1201 units, including: personal computers - 36 pc. measuring technique 1,016 pc. experimental production equipment 85 pc. printing, copying and photographic equipment - 64 pc.
The following sectors exist in experimental production: mechanical processing; pressing; welding;
locksmith; assembly mounting; polymer coating and casting; varnishing of printed circuits; technological processes: development and enforcement of construction and technological documentation, mechanical processing, welding, rubber and plastic products pressing, transformers and inductance coils winding, assembly - assembly, coating with varnish, paint and polymer; impregnation and casting with epoxy resins and polyurethane, radio and hydroacoustic measurements, mechanical and climatic tests of reliability. As of January 1, 2010, the average number of registered employees made up 146 people. The companys employees may work in areas that will remain after the organization of their production activity, and a part of the premises will be used by potential residents of the industrial park. As resident of the industrial park, the company will carry out basic activities and activities aimed at economic cooperation with residents of the park, especially with RAUT JSC with which it lost it intensity of historic collaboration (as a result of discussions with the managing company RAUT JSC). These activities will be development of design documentation and manufacture of mechanical and electrical devices. 5.4. POTENTIAL RESIDENT ENTERPRISES OF INDUSTRIAL PARK
Planning the number of residents in selected fields of activity will be undertaken in accordance with the requirements of their activity to infrastructure and production areas. Resident enterprises will carry out the above mentioned types of activities, will occupy the following areas (excluded of the calculations are RAUT JSC and EFC RIF-ACVAAPARAT JSC and areas on which they will work):
Table 33. Occupied areas by types of activity
Type of activity Activities of the mechanical engineering industry Processing of building materials Management consulting services Activities of processing wood and wooden articles Activities in the field of information technologies Other activities in rental spaces
Area, m2 24 708 2 435 221 1 903 1 000 8 615
It is supposed that in order to carry out types of activities, there is a norm of average area, which a customer - resident shall observe. For each type of activity area-related norms are presented in the table below:
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Table 34. Performance indicators of the occupied areas
Area, m2 2,000 800 200 300 200 300
Given the norms and area indicators mentioned above, it is planned that the number of resident customers that will operate within the industrial park, is presented in the table below:
Table 35. Number of residents of the industrial park
Residents 12 3 1 6 5 29
In conclusion, within the industrial park, about 59 residents will operate, including RAUT JSC and EFC RIF-ACVAAPARAT JSC; of which 13 (including RAUT JSC) will practice the basic activity of the park - activities of the mechanical engineering industry. Diverse types of activities will be carried out, especially services providing within leased administration spaces.
5.5. IDENTIFICATION OF MODELS OF ORGANIZING THE MANAGING COMPANY AND FUNDING MANNERS FOR CREATION OF TECHNICAL AND PRODUCTION INFRASTRUCTURE OF THE INDUSTRIAL PARK The organization of the industrial park can take place through several models of organizing the managing company. However, in order to create the technical and production infrastructure of the industrial park, it is required to identify several funding options. Given the existing funding opportunities for creating the technical and production infrastructure of the industrial park, and opportunities of organize the managing company the following models were identified: Model 1. Creation of the managing company based on RAUT JSC. Model 2. Creation of the managing company based on a potential strategic investor. Model 3. Creation of the managing company with the participation of "RAUT JSC, EFC RIFACVAAPARAT JSC and a potential strategic investor (joint venture).
Model 4. Creation of the managing company with the participation of RAUT JSC, EFC RIFACVAAPARAT JSC and the potential strategic investor (merger). Depending on the model of organizing the managing company, the sources of funding the creation of technical and production infrastructure of the industrial park shall be identified. Model 1. Creation of the management company RAUT JSC In this case, RAUT JSC will be organized as an Managing Company of the industrial park, and resident companies will conclude cooperation agreements with it. As a source of funding for creation of technical infrastructure and production of the industrial park, it is expected to be obtained from the sale of unused assets, which are owned by RAUT JSC. The model of organizing the managing company and identification of funding sources are presented in the diagram below:
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Figure 14. Organization of managing company and identification of funding sources
RAUT JSC
Financial sourcs Assets selling
Administrative Compny
Agreements with the residents
RIF ACVAAPARAT JSC
LOT JSC
OTHERS
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Organization of the managing company The ordinary or extraordinary General meeting shall adopt the decision of the founders on the reorganization of RAUT JSC in the industrial park introducing respective completions in the Articles of Association of the company, which is operated by the State Registration Chamber. RAUT JSC will become the Managing Company of IP. Sources of funding for creation of technical and production infrastructure of the industrial park After the award of ID title, sources of funding can be obtained as a result of marketing by the managing company of unused assets available to RAUT JSC, businesses selected as residents of the park. Canteen with a capacity of 320 seats; Children's camp with an area of 1 176 m2; A part of the administration area, which will not be leases; Free areas of rooms intended for production and administration of the territory no. 1 and 2.
Procedure of assets trading. On one hand, the collaboration will be based on conditions of renting land, buildings, infrastructure and other fixed assets owned or used by the managing company established in contracts concluded between resident companies and the managing company of the industrial park. On the other hand, unused assets will be sold. It is necessary to follow the procedures foreseen by the law. Thus, under article 18 of the Law on public property management and privatization, no. 121 from May 4, 2007, unused assets can be sold upon the decision of the state/ Municipal Companys Administrative Board or of the Commercial Board with integral or majority state capital, with prior approval of the central or local public authorities. Unused assets are sold in the manner established by the Government Decision no. 480 for approving Regulations on the manner of determining and trading unused assets of enterprises of March 28, 2008. According to this Regulations marketed may be: buildings, structures, drives, machinery and equipment, computers, equipment of all types, vehicles, work and productive animals, unfinished buildings and other fixed assets. Analysis of RAUT JSC accounting reports allows us to affirm that these assets were not listed in the category of unused assets, thus, in order to apply the law relating to the sale of unused assets, they need to be qualified, documented as such. The Regulations on how to determine and trade unused assets of the enterprises provides for this, respect of the following procedure. In order to determine unused assets by the order of the manager (manager) of the enterprise, the committee for determination of unused assets (hereinafter - Committee), from 5-7 people shell be set up. The committees meetings are deliberative if attended by at least two thirds of its members. Its conclusions and proposals are recorded in minutes signed by all committees members present at the meeting. If the committees members have different opinions, the minutes of the meeting will reflect all views together with their arguments. The Commission shall determine the enterprise's unused assets, according to the criteria specified in these Regulations, and shall submit to the managing bodies of the enterprise proposes argued for their continued use (lease, sale, disposal, transfer to other enterprises or contribution of the state or of the territorial - administration unit in the authorized capital of commercial companies, etc.).
Examining the committees proposals and arguments, the council of the company shall decide on whether the unused assets shall be sold. If the company received (has) requests to purchase unused assets, the council of the enterprise has the right to decide on their marketing opportunity and without committee opinion. Based on the company's council decision, the manager shall submit proposals for marketing unused assets to the public authority for review and obtaining the marketing authorization. Public administration authorities analyse the economic and financial situation of the respective enterprise, estimates the possibility of marketing unused assets of the company, and according to the results of the examination, issue authorizations on their sale or reject the proposes of sale. The authorizations on marketing unused assets of companies included in the list of goods subjected to privatization can be issued only after obtaining the written consent of the Public Property Agency or of the local council. After obtaining the authorization of marketing unused assets, the manager of the enterprise shall ensure their ongoing assessment by a licensed appraiser and shall establish by order a licensing committee. The auction committee shall be composed of the representative of the authority, which has authorized marketing (representative of the state in the commercial company or member of the managing board of this authority) and the representative of the Public Property Agency under the Ministry of Economy or of the local council, in case of exposing to auction the assets of companies included in the list of goods subjected to privatization. The initial price of auctioned assets is determined by the auction committee, taking into account the proposals of the management bodies of those companies, but shall not be lower than the market value of assets, as determined by licensed appraiser. The unused assets of enterprises can be sold to any applicants (regardless of their organizational an legal form and type of property) for cash at open outcry auctions conducted in the manner established by the Government. Under the decision of the council of the enterprise and public administration authority, unused assets, with an estimated value of over 50,000 MDL, except for immovable property, may be sold at open outcry action through the Universal Commodity Exchange of Moldova. Unwanted assets over the past 12 months being exposed to two open outcry auctions, may be exposed to discount actions, as established by the Government or otherwise used in accordance with law (lease, disposal, transfer to the balance of other companies or as increase of the public share of the state or of the administration and territorial units in commercial companies, etc.). In the process of organizing and conducting auctions to sale unused assets, the enterprise shall provide the drawing up of: a) the sets of documents (lot) for assets exposed to the auction, which will consist of: asset evaluation report; b) authorization of public authority; c) extract from the Registry of real estate, if being put on auction of real estate; d) information release on the auction, which shall indicate general information about the exposed assets, their location, how to familiarize potential buyers with exposed assets at auction, the initial marketing price;
e) the contract of sale, which shall be drawn up based on auction results, the model specified in the annex, and the act of acceptance and receipt that serve as the basis for registration of ownership of acquired assets, if the ownership on these assets, by law is subject to state registration. Transmission of assets shall take place based on the act of acceptance and receipt only after full payment of the selling price. Payment shall be made within 7 working days after the adoption by the auction committee the decision on establishing the lot winner. Advantages and disadvantages of model 1
Advantages Possibility to sell assets that are not necessary for the activities of the industrial park; Quick organization of RAUT JSC as managing company of the industrial park; Possibility of RAUT JSC to obtain sources of funding as managing company and from the entrepreneurial activity. Disadvantages - Trading of assets sold by the company may cover a small part of the necessary amount of resources to found technical and production infrastructure of the industrial park. - The sale of assets must be preceded by the founders decision on sale of assets, and on observance of conditions stipulated by the Law on public property management and privatization, no. 121 of May 4, 2007, and GD no.480 for the approval of the Regulations on the manner of determining and marketing the unused assets of the enterprise of March 28, 2008, implicitly identification of these assets, their valuation, which is a long process and involves many risks and expenses; - There is a risk that assets can not be sold due to lack of interested buyers on the one hand and, and on the other hand, because of their high wear; - The value of assets can be reduced and even if they are sold, expenses and related taxes will reduce the anticipated profit; - Inefficient management of the managing company RAUT JSC is a serious risk for the successful functionality of the industrial park and achieving expected results; - the existing disputes with employees or former employees as well as the change of existing team could make difficult the process of transforming into a managing company.
Conclusions: Analysis of advantages and disadvantages allows us to conclude that option is not an optimal for the organization of the managing company and identification of funding sources needed to create the technical and production infrastructure of the industrial park, the main reason being the lack of resources for creating the industrial park infrastructure and the inability of the existing management team. Model 2. Creation of the managing company based on a potential strategic private investor. In this case, the Managing Company of the industrial park will be enterprise created based on a potential private strategic investor selected on the basis of the investment competition in
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accordance with the Law no. 121 of 2007. By investment competition, the state could sell shares of state property and thus ensure the development of the industrial park. Resource of funding for creation of technical and production infrastructure of the industrial park, will be the investor's own resources and those obtained from the sale of assets unneeded to conduct the business of the industrial park, at the discretion of strategic private investor. The model of organizing the managing company and identifying funding sources is illustrated in the diagram below:
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Figure 15. Organization of the managing company and identification of funding sources
RAUT Shareholder s
Private strategic investor
Financial sources Assets selling
Investment Competiton
Financial sources
Administrative Company
Own resources of private strategic investor
Agreements with residents
RIF ACVAAPARAT JSC
LOT JSC
JSC
OTHERS
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Organization of the managing company
The private strategic investor will buy the stake belonging to the state following an investment competition organized by them. For the companys holders of minority shares RAUT JSC, there are two possibilities: 1) if they disagree with the decision taken at the General meeting on the creation of IP, they are entitled to request redemption of shares under article 25 and 79 of the Law on joint stock companies, no. 1134 of April 2, 1997. In this case, to the minutes of the General meeting is attached a list of shareholders entitled to request redemption of shares belonging to them. Redemption of shares is made at their market price; 2) if they agree with the decision of the General meeting on IP creation, they will remain shareholders of RAUT JSC. Rif-Acvaaparat" JSC and "Lot" JSC will be registered as residents of the PI. Transfer of unused assets belonging to "Rif-Acvaaparat" JSC and "Lot" JSC can be achieved in two ways: 1) lease to the Managing Company, and their subleasing by the IA to residents. According to art. 17 of the Law no. 121 on the privatization and management of public property, the lease with right of redemption. 2) lease directly to select residents. In this case IA will carry out only one type of activity that related to serving residents and maintenance of park infrastructure. This second option is more attractive for residents because they may enjoy the right to request and obtain the privatization of land in accordance with the Law on industrial parks. The strategic private investor would have the opportunity to attract residents of the park in attractive conditions to quickly replace their number, which would enable the investor to fully carry out the business of the park and to recover investments. Sources of funding the creation technical and production infrastructure of the industrial park Given the state of technical infrastructure and production, the strategic private investor will bear all costs necessary for creating, upgrading technical and production infrastructure of the industrial park. As potential sources of funding may be strategic private investor's own sources, and secondly these shall be obtained from the sale of assets that are not necessary for the activity of the industrial park, at the discretion of private strategic investor, the procedure is similar to that described in model 1. Advantages and disadvantages of model 2 Advantages Ability to identify and access independent financial sources; Possibility to take decisions on short terms. Disadvantages Risk of not being able to identify and attract potential investors or an investor with sufficient financial resources; Auction of selling state shares is a complex
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procedure which requires time; Conclusions: examination of this option and of the state history related to the attempt to market of the shares belonging to RAUT JSC, as well as the substantial financial resources needed to be invested in upgrading the technical and production infrastructure of the industrial park allows us to conclude that this model has little prospects of being implemented. This model can be implemented only if the value of state shares to be sold is maximum reduced at maximum reduction provided that resources are invested in infrastructure. Model 3. Creation of the managing company with the participation of "RAUT JSC, "RIFACVAAPARAT" JSC and the potential strategic investor (joint venture). This scenario consists of creating a joint venture, which will perform the duties of the managing company, under the legal form of a limited liability company, which authorized capital will be composed by the contributions of each participant: "RAUT JSC and RIF-ACVAAPARAT" JSC with unused assets, and the potential strategic investor with funds for upgrading the technical and production infrastructure and the creation of the industrial park. The Managing Company of the industrial park will conclude with the local hall a land lease contract. The private investor, along with RAUT JSC and RIF-ACVAAPARAT JSC are entitled to carry out entrepreneurial activity within the industrial park. Choosing this option requires that the PI residents have the right to privatize the state owned land to construct at a normative price of land, established when it is bailed, according to art. 12 of the Law on industrial parks. The model of organizing the managing company and identifying sources of funding are shown in the diagram below:
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RIF ACVAAPARAT LLC
Private investor
RUT JSC
foundation
Financial sources
Administrative Company
Own resources of private strategic investor
RIF ACVAAPARAT JSC
LOT JSC
RUT JSC
OTHERS
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Organization of the managing company Advantages and disadvantages of the model 3 Advantages
Financial independence of the managing company; Accruing three sources of funding, which reduces the financial burden for each of the three investors; Possibility of full land short-term coverage of needs for creation of industrial park; Possibility of privatization by legal residents of adjacent land at a normative price according to the Law on industrial parks; Participation of RAUT JSC, "RIFACVAAPARAT" JSC and of a strategic private investor, would generate interest of LPA / LPA to actively participate in creating and developing the industrial park; A part of the existing assets can be adapted to needs, and those unnecessary may be sold, the obtained sources may be used for park development. Existence of at least two resident companies within the industrial park representing the potential cooperation partners of other newly arrived residents.
Disadvantages
The possibility of conflicts of interest of founders of the managing company.
Conclusions: The analysis allows us to identify that model 3 has the greatest prospects of being realized taking into account the advantages compared to other models. Model 4. Creation of the managing company with the participation of RAUT JSC, EFC RIFACVAAPARAT JSC and the potential strategic investor (merger). In this case, as managing company of the industrial park, it is foreseen to create a joint venture with a contribution to the authorized capital contribution of RAUT JSC, EFC RIF-ACVAAPARAT JSC and of a strategic private investor. The model of organizing the managing company and identifying funding sources are illustrated in the diagram below:
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RIF ACVAAPARAT JSC
Private investor
RUT JSC
Fusion (absorbtion)
Administrative Company RAUT JSC
Financial sources Own resources ow private investor
RIF ACVAAPARAT JSC
LOT JSC
RUT JSC
OTHERS
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Organization of managing company This scenario consists in founding a joint venture by RAUT JSC, EFC RIF-ACVAAPARAT JSC and a strategic private investor, who will carry out the functions of the managing company, under legal form of a joint stock company, which authorized capital composed of the contribution of each participant: RAUT JSC and RIF ACVAAPARAT JSC - with assets, and the potential strategic investor with financial resources for modernization and creation of technical and production infrastructure of the industrial park. The managing company the industrial park will conclude with the local hall land lease contracts. The joint venture can be created by merging or absorption. The general rules relating to merging are included in art. 73-78 of the Civil Code. The National Securities Commission, by the Decision No. 43 / 9 of August 3, 2006 developed an instruction on stages of reorganizing a joint stock company and described the steps to be taken to reorganize the merging procedure. Merger has as results termination of legal entities participating in the merger and transfer of their full rights and obligations to the new legal entity. Absorption has the effect of termination of acquired legal entities and transfer of their full rights and obligations to the absorbing legal entity. In case of creating of the industrial park based on the platform RAUT JSC, mingling operation is not the optimal solution, because the same effect can be achieved by using a company's existing stock, thus avoiding the creation of a new business. This can be achieved by means of absorption of "RAUT" JSC, EFC "RIF-ACVAAPARAT" JSC and the Commercial Company of the private investor. Procedure of absorption merger: Reorganization of joint stock companies by merger (absorption) will include the following stages: Drafting documents necessary to adoption decisions of reorganization (the draft of merger agreement, draft of transmission act, consolidated balance sheet); Adoption of decisions related to the reorganization of each company; Disclosure of information on reorganization of companies including to creditors of companies and public authorities; Obtaining the authorization to reorganize the company from the National Commission of Financial Market; Registration of the reorganization in the State Registry of Enterprises and Organizations; Records in the State Securities Registration of related to reorganization; Entering amendments related to the reorganization in the Registry of holders of securities and / or closing of personal accounts as appropriate and completion of reorganization; Drafting the documents necessary for reorganization by merger.
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In case of absorption, in accordance with the acts of transfer, the consolidated balance sheet and merger agreement, all rights and obligations of absorbed companies are transferred to at "RAUT" JSC, absorbing company, which will continue to operate after absorption. In order to adopt decisions relating to the reorganization through merger, the companies involved in this process shall prepare the following draft documents: a) the merger agreement; b) acts of transfer; c) consolidated balance sheet; e) amendments of the articles of association of the absorbing company RAUT JSC or of the Articles of Association in the new version. In case of absorption the amount of increase in the authorised capital of the absorbing company RAUT JSC can not exceed the total (summary) amount of net assets transferred by absorbed companies. The extent of conversion (exchange) of shares outstanding in the authorized capital of RAUT JSC absorbing company, will be determined based on market value of net assets per share of all companies involved in the merger. The share of shareholders in the authorized capital of RAUT JSC will be proportionate to the share previously held by each compared with net assets of the merging company. The draft merger agreement will be drawn up by the authorized managing bodies of the three joint stock companies involved in the merger, along with acts of transfer and the consolidated balance sheet. The Act of transfer is drafted by each of the absorbed joint stock companies after evaluation of their assets compared with their market value. The consolidated balance sheet shall be developed by the absorbed company or by authorized persons of joint stock companies involved in the absorption on the basis of intermediate balance sheets prepared by each participating company separately. The intermediate balance sheet will reflect data on assets and liabilities of the three joint stock companies, the last management company, adjusted to market value in accordance with the assessment acts already made. The acts of transfer and the consolidated balance sheet will contain provisions relating to the heritage of the whole property of the 3 companies to RAUT JSC in respect of all rights and obligations to all debtors and their creditors. Amendments to the status or to the articles of association in the new version will be developed by RAUT JSC - absorbing company, by common agreement of the absorbed companies and will contain appropriate information about changing of the authorized capital, founders and shares held by them, as well as information about the company's reorganization and succession of rights and liabilities of absorbed companies.
Approval of decisions on the reorganization by merger: The decision on reorganization by merger, when RAUT JSC will absorb the other 2 commercial companies, shall be approved by the General meeting of each of the 3 commercial companies, with two thirds of the total number of votes present at the meeting. The merger of the 3 joint stock companies by absorption, SA "RAUT" absorbing company will adopt the decision that will approve: a) the merger agreement; b) acts of transfer; c) proportions of conversion (exchange) of shares outstanding in the additionally issues shares of the absorbing company; d) consolidated balance sheet; e) increase in the authorized capital, if necessary, through additional issuance made in order to convert (exchange) shares of companies that will be absorbed and the day when the list of subscribers will be drawn up; f) amendments and completions of the status or articles of association in the new version of RAUT JSC. Upon the absorption merger, the two absorbed companies will adopt decisions, according to which the following acts will be approved: a) the merger agreement; b) act of transfer; c) consolidated balance sheet; d) proportions for conversion (exchange) of shares outstanding in the additionally issued shares of RAUT JSC. Disclosure of information on the reorganization through merger: The disclosure of information on the reorganization of concerned joint stock companies will take place to notify to creditors and partners of those companies, government bodies that registered them and other public bodies to which companies have certain obligations, and informing about this event the shareholders, who did not participate in the decision-making process related to the reorganization. Executive bodies of the three companies will inform in written all its creditors within 15 days from the adoption of the decision on reorganization, and will publish a notice on reorganization in two consecutive editions of the Gazette Official of the Republic of Moldova. Within three days after the adoption of decisions on reorganization, the territorial office of the State Registration Chamber shall be notified, submitting the required documents. In order to carry out checks on the debts of the three joint stock companies to the State budget and the checks necessary to close bank accounts (for the two companies that will be liquidated after reorganization), necessary documents shall be submitted to and inform the main or territorial tax inspectorate.
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All three joint stock companies, subjected to the reorganization, shall publish in the newspapers specified in the articles of association, the decisions of general meetings of shareholders relating to the reorganization and will present to the National Commission of Financial Market the necessary information (art. 54 of Law no. 199, of November 18, 1998 on the securities market). The creditors will be able, within 2 months from the publication of the last notice, to require the respective joint stock company guarantees to the extent that they can not require payment of receivables. The right to guarantees belongs to creditors provided they prove that though the reorganization the payment of receivables is endangered. Obtaining the authorization on the reorganization by merger of the National Commission of Financial Market In order to obtain the authorization on absorption of the 2 commercial companies by RAUT JSC, all three joint stock companies will submit appropriate applications to the National Commission of Financial Market after the expiration of 2 months from the date of the publication of the latest notice on their reorganization in the Official Gazette of the Republic of Moldova. In order to receive the authorizations on reorganization through merger (absorption), the 3 joint stock companies will present to the National Commission of Financial Market the following documents: A free-form application on the issuance of the authorization indicating the form of reorganization, signed by the chief executive; Minutes of the general meeting of shareholders prepared according to the provisions art. 64 of the Law on joint stock companies, which the following documents are attached to: - the merger agreement; - amendments to the incorporation documents of RAUT JSC absorbing company; - the act of transfer and the consolidated balance sheet; - copies of acts of assets assessment at market prices made by licensed; - copies of the notice on the reorganization of the three joint stock companies published in two consecutive editions of the Official Gazette of the Republic of Moldova; - confirmation of the absence, fulfilment of or guarantee of requirements of companies creditors; - report of assessing securities in cases when shareholders asked their redemption and confirmation of redemption; - copies of the incorporation documents of the three companies involved in reorganization with the amendments made to them before the decision to reorganize; - document certifying compliance with the provisions of art. 11 par. (3) of Law no. 1265 of October 5, 2000 on state registration of enterprises and organizations; - financial reports of the three joint stock companies subjected to reorganization, at the last management time before approving the decision on reorganization; - evidence of disclosure of information on events and actions affecting the economic and financial activity the issuer according to the requirements stipulated in art. 54 of the Law on Securities Market; - copies of certificates of state registration of companies and extracts from the State Registry of enterprises and organizations certifying the legal address of the reorganized companies; - original certificates of state registration of the securities of the absorbed company;
- registration of reorganization in the State Registry of Enterprises and Organizations Registration of reorganization through merger (absorption) in the State Registry of Enterprises and Organizations will take place after fulfilling all claims of creditors or providing guarantees accepted by creditors, carrying out checks by tax authorities, obtaining authorization on reorganization from the National Commission of Financial Market, but not earlier than 3 months after the last publication of the notice on reorganization in the Official Gazette of the Republic of Moldova. Entries in the State Securities Registry related to reorganization: Registration of the increase in the authorized capital of RAUT JSC, absorbing company, by issuing additional shares in order to convert the shares held by shareholders of absorbed companies, is made at the National Commission of Financial Market with the issuance of the authority on reorganization of RAUT JSC. Sources of funding the creation of technical and production infrastructure of the industrial park As a source for funding the technical and production infrastructure of the industrial park, the strategic investor's own sources and sources from sales of unused assets of "RAUT JSC and RIFACVAAPARAT JSC may be. Advantages and disadvantages Advantages
Financial independence of the managing company; Accruing of three funding sources, which reduces the financial burden for each of the three investors; Use of investor's own financial resources.
Disadvantages
Long and complex reorganization through merger; procedure of
Is unlikely that a private strategic investor will accept the merger by absorption through which it will be absorbed by RAUT JSC, so they will lose the management autonomy with the business of the industrial park;
Conclusions: The comparative analysis of all models allows us to identify two optimal models for creating the industrial park, 2 and 3. Given that the model number 2 of creating the managing company based on a potential strategic private investor has a pessimistic history regarding the attempts of marketing the shares held by the state within RAUT JSC, as well as the substantial financial resources needed to be invested in upgrading the technical and production infrastructure of the industrial park, allow us to see that this model has little prospect of being implemented. Therefore we propose to create a managing company base don model 3 with the participation pf RAUT JSC, EFC RIF-ACVAAPARAT JSC and the potential strategic private investor (joint venture).
This option enables the managing company of the industrial park to enjoy a high degree of independence without the involvement of external factors, and the establishment of a legal entity that will manage the industrial park, will exclude the management negative factors that could affect the company. 5.6. BUSINESS PARK INDUSTRIAL ORGANIZATION
The activity of the industrial park will be organized by the managing company. Resident enterprises of the industrial park will carry put their activity on the premises cleared by RAUT JSC. Given that the capability of clean premises will be reduced by the hard removable equipment, they require a specific organization of spaces, which resident enterprises will work in. As a result of the recommendations proposed by managing company RAUT JSC on the organization of the activity of resident companies, including of RAUT JSC, it might restrict its activities as follows: Territory no. 1. On this territory, the company clean only the buildings number 41-1, 41 A (floors 3-5) and building 5 (floors 2-4); Territory no. 2. On this territory, RAUT JSC may entirely clean all buildings except for the experimental laboratory 7; Territory no. 2 a. can be fully clean;
Proceeding of how to organize production and management activity, according to the opinion of managers of RAUT JSC, the buildings listed bellow can be cleared on the following areas:
Table 36. Buildings cleared by RAUT JSC:
Name Building 41-1 Building 50 Building 5 (floors 2 4) Building 41 A (floors 3 5) Building 57 B

Destination Production Assembly Administration household Administration household Administration
Area , m2 8 866 12 253 and 1 635 and 5 493 2 737
The organization of resident enterprises within the industrial park, according to the assumption of RAUTJSC administration, the scheme below is presented:
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Figure 18. Cleaning of buildings in the opinion of RAUT JSC administration
Occupied surfaces by residents Occupied surfaces by RIF ACVAAPARAT JSC Occupied surfaces by LOT LLC Free surfaces
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The activity of RAUT JSC, as a result of technical analysis and of development trends of the potential industrial park, is recommended to be transferred entirely on the territory number 1. In this regard there will be set free administration building 57 A and 57 B with an area of 6 433 m2. And the administration activity of the company will be located on administration areas of the building where the EFC RIF-ACVAAPARAT JSC works. Given that the purpose of production areas of RAUT JSC have a low utilization coefficient, being fully occupied by equipment that requires disassembly, it is recommended to organize on the territory 1 practical activities of the resident enterprises in the industrial park as follows: - Production activity of RAUT JSC will be transferred from the territory number 1 into the building 41; - the administration room 41 A will be partially set up on an area of 9 179 m2; - the administration building 41-1 will be clean (located to the left from the building 41) on an area of 8,866 m2; - the building 1 designed for production of plastics and rubber with and area of 1 350 m2 will be clean; - the building 1A- large industrial facilities will be clean, area 3 133m2; - the building 2 will be clean section of electric drivers repair, on an area of 1 497 m2; - the building C will be clean - metal warehouse, on an area of 559 m2; - the building 3 will be used - unfinished building on an area of 1 326 m2; - the building 31 will be used - ironwork, on an area of 280 m2; - the building number 19 will be clean sector of mechanical processing, on an area of 852 2; m - the building number 25 will be clean - administration and household purpose, on an area of 221 m2; - Building 5 - household and administration rooms, on an area of 2 181 m2; The building 22 will be clean - clean spaces of storage, an area of 246 m2, building no. 7 - the testing laboratory will remain to be managed by RAUT JSC. The remaining buildings shall be used by resident companies of the industrial park. Resident enterprises will carry out commercial activity in the following areas of the territory no. 2: - 6, 6 A buildings to be demolished, spaces for production, area of 1 573 m2; - 9 - mechanical sector, area of 1 084 m2; - 10 sector of wood processing, area of 331 m2; - 50 sector of assembly, area of 12 253 m2; - 57 B - engineering sector, area of 2 737 m2; - 54 - power unit, equipped with removable equipment, unusable, area of 1 825 m2; - 57 B, A - administration building, area of 6 433 m2. As a result of the analysis of EFC RIF-ACVAAPARAT JSC, there will be clean the building no. 33 A rooms of EFC RIF-ACVAAPARAT JSC, on an area 1 800 m2 and 1000 m2 of the third floor of building A. The 1 800 m2 will be used by RAUT JSC as offices for administration. Thus, the territory of the industrial park will be used by resident enterprises in accordance with scheme below:
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Occupied surfaces by residents Occupied surfaces by RIF ACVAAPARAT Occupied surfaces by LOT LLC Free surfaces Source: Developed by author
Figure 19. Organization of residents
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Given that the main activity of the industrial park is predominantly the mechanical engineering industry, the organization of the activity of resident enterprises shall be carried put depending on room area, as follows:
Figure 20. Organization of resident enterprises activity
Type of activity Activities of the mechanical engineering industry
Processing of construction materials
Management consulting services Activities of wood and wooden articles processing Activities in the field of information technologies Other activities, on lease premises Activities of RIF-ACVAAPARAT
Name property Building 1 A Building 50 Building 2 Building 19 Building 3 Building 9 Building 57 B Building 1 Building C Building 22 Building 31 Building 25 Building 6, 6A Building 10 Building A 57 B, A Building 5 Building A Building B Building B2 Building 41 Building 33 A
Area , m2 3 133 12 253 1 497 852 1 326 1 084 2 737 1 350 559 246 280 221 1 573 331
6 433 2 182 5 689
Production activities carried out by RAUT JSC Administration area of RAUT JSC Available area
27 377 1 800
Other activities practiced 45 988 by resident enterprises in the mechanical engineering industry
Free areas of the industrial park shall be subsequently used by potential investors to be built and leased to resident enterprises who will carry out activities in the mechanical engineering industry, especially manufacture of parts for them. According to the concept of the industrial park, its activity must be managed by a company with duties of managing the park such as10: coordination and moniting of the process of creating the technical and production infrastructure, as well as the production activity of the industrial park; organization of competitions for selection of residents of the industrial park; development and promotion of strategies and programs to develop the industrial park;
10Lege
Nr. 182 din 15.07.2010 cu privire la parcurilor industriale, art. 18, pct.2. Page 110
attraction of investors for the development of production activities and provision of services in the industrial park; ensuring normal function of the utilities according to the technical requirements; development of technical and production infrastructure in line with technological requirements; monitoring the compliance of the conditions of contracts concluded with residents of the industrial park; cooperation with central specialized bodies of the public authorities and with local public authorities; bearing responsibility for the rational and appropriate use of resources allocated from the state budget or the budgets of territorial administration units to create the technical and production infrastructure. The activities carried out by resident companies within the industrial park, depending on its territorial organization, are shown in the diagram below:
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Figure 21. Types of activity of the industrial park residents

1. Processing of wood and wooden articles 1. Business Incubator metal material manufacture 1. Manufacture of synthetic rubber
1. Production of motor vehicles, parts and equipment therefor
1.
2.
Manufacture of agricultural tractors and machinery for livestock forage production Production of agricultural and industrial equipment and machinery
1.
Business Incubator manufacture of electronic communications equipment
1. Manufacture of plastics
1. Processing of ceramic materials
1. Management consulting services
1. Manufacture of household appliances 2. Manufacture of hydroacoustic navigation and special maintenance apparatus
1. Production of finished products of iron or steel
1. Vehicle assembly
1. Administrative activity of RAUT JSC and RIF- ACVAAPARAT JSC
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Given that in is foreseen to establish a business incubator within the buildings located within the industrial park, and later a center for professional requalification as well, additional services offered by the managing company will be provided by management assistance services. The figure below provides the list of services to be offered by the managing company to residents of the industrial company:
Figure 22. Services of the resident company
Services provided by the administrative company
Basic services
Additional services
Adjusting production areas according to residents needs
Management consulting
Land subleasig
Secretarial services
Serving territories and spaces
Legal assistance services
Serving infrastructure
Reception services, retrieval and transmission of telephone messages, preparing and printing documents
Maintenance of common areas, easte management
Intermediation services between residents of the industrial park, and between the academic environment
Enduring safety and security system
Servicii de transport i logistic
Providing medical station
Transportation and logistic servbices
Marketing consulting, markets studies and market policies
The set of services offered by the managing company must be as diverse as possible for the proper functionality of the industrial park. Structural units of the industrial park directly depends on the manner of activity organization by its administrator. The elements of the managing company are organized as follows:
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Figure 23. Structure of organization of the managing company
Model of park operation The basic mission of the industrial park will consist in bringing value to resident enterprises with direct effects on social and economic environment. The industrial park, as a model of operation will imply the creation of advantages for its residents. Addressing an insightful strategic thinking puts customers and competition puts in the central place. And the main competence of the industrial park referrers to the combination of knowledge, skills and specific, inherent, integrated and applied attitudes that the enterprises should use as a basis for strategic approaches. Therefore, the characteristics of resident enterprises to operate within the industrial park under the auspices of the industrial conglomerates represent the distinctive competence of the industrial park on the territory of RAUT JSC. The initiative to develop conglomerates represent a new manner of organizing economic development efforts, which goes beyond traditional efforts of reducing business costs and improving overall business environment. Efforts that focus on conglomerate will attract greater interest and a greater involvement by involved companies. In addition, given the diversity of businesses to be developed within the industrial park, it is useful to create a business incubator, which will benefit all interested residents of. The complexity and efficiency of the industrial park activity is also seen in the light of social and economic generated effects. In this regard, in future it is possible to create a center of professional requalification at the expense of the managing company. The model of interaction between residents of the industrial park, according to the specific type of activity to be performed, is presented schematically below:
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Figure 24. Interaction of residents activities according to the conglomerate model

Activities in information technology
Repair of electronic equipment Manufacture of electronic equipment IT Services
Activities of processing wood and wooden articles
Planks
Floors
Parquet Other wood products Wooden Furniture
Activities of processing construction materials

Synthetic Rubber
Finished steel and cast iron parts
Plastic materials for floors
Ceramic Materials
Metallic Materials
Activities of the machine building industry
Equipment for manufacturing textile products
Woodworking equipment
Production of electrical and electronic equipment Production of parts for cars, machinery and equipment Production of household appliances Vehicle assembly Technical consulting Management Consulting
Production of agricultural machinery and equipment
Management consulting services
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Figure 25. Effects of interaction of resident companies
Given that the industrial park is a mix of cooperation between the state body, academics, investors and society, its an ideal model will be based on the principle of cooperation between them.
Figure 26. The ideal model of cooperation between the industrial park residents
Science
Education
Government
Service of technical maintennace and operation with real estate of the industrial park
Managing company Resident Companies Innovation-research company
Investors
Consumers
The organization of such activities will be possible due to the specifics of services to be offered by the managing company and due to the result of interaction between the residents of the industrial park.
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Creation of the Free Economic Zone An opportunity to develop the industrial park and the region as a whole, is the possible creation of a Free Economic Zone. FEZ could be created on one side of the industrial park area, where activities will be carried out in particular those of the mechanical engineering industry. The advantages of FEZ creation lies in the Law on free economic zones, no. 440/2001. Thus, both the Law on free economic zones and the Tax Code, etc., offer to the residents of zones: income tax exemption; VAT exemption, excise duty exemption; exemption from duties on goods import and export.
Creation of the free economic zone will contribute to accelerating the industrial park development: a) attracting domestic and foreign investments; b) implementation of modern equipment and technology; c) development of export-oriented production; d) application of advanced experience of production and management; e) creating jobs. In addition, free zones, in order to achieve the agreed objectives, are granted preferential regimes to stimulate entrepreneurial activity. Since the production of FEZ residents is destined for export, this could be created only on a part of the territory of the industrial park. Only residents exclusively interested in export of production will work within the FEZ.
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6.
ACTION PLAN 6.1. LEGAL ACTION PLAN
The legal action plan was developed to create the industrial park, based on the Funding option 3, described in par.5.4. Below the sequence of actions necessary to implement the project is presented:
Table 37. Legal Action Plan Block Period Responsible Deliverables Comments
Block I. Adoption of Decision on creation of industrial park

Development, based on the realized study, of information materials to be presented to general meetings of shareholders of RAUT JSC and "RIF ACVAAPARAT" JSC for adopting the decision on reorganization through division of companies and creation of a joint venture company, priority development directions and creation of industrial park Holding general meetings of shareholders of RAUT JSC and "RIFACVAAPARAT" JSC for adopting the decision on reorganization of the division of companies and creation of a joint venture company, industrial park and development priorities, adoption of the GMS decision. May, 2011 General Directors of both companies Agenda of the General Meeting with enclosed documents It shall contain the introductory part with arguments of the need to create the industrial park. The submission of these materials is compulsory and relates to the full development of the agenda of the ordinary or extraordinary general meeting (article 25, 56 of the Law on joint stock companies, no. 1134 of February 4, 1997).
May, 2011
General Directors of both companies
Decision of the GMS on the adoption of new priority directions of development by creating industrial park.
The proposal may be made to the General Director or to any of the shareholders. In accordance with art. 21 of the Articles of Association, the General Meeting should adopt the Decision on the identification of priority areas for development and creation of industrial park and through a separate item, will grant powers to the General Director and to the Companys Board to take all necessary measures for implementation - making binding decisions for all directors of companies, delegating functions, concluding contracts and establishing priority directions etc., including Page 118
Informing about the Decision of GMS all interested persons, including public local authorities Creation of joint venture
May, 2011
General Directors of both companies
Information provided by stakeholders, including published in media
the creation, if necessary, of a new legal entity, which will act as manager of the industrial park. The General meeting may be convened as an ordinary general meeting (annual), or one extraordinary meeting. If no general meeting will succeed, no decision will be taken on priority directions of development and adoption of the GMS decision and creation of the industrial park, it will be necessary to convene the repeated General Meeting. It is necessary to ensure a quorum at the general meeting. The general meeting of shareholders has quorum if, at the time the registration ends, there were registered and participate in it shareholders holding more than half of the voting outstanding shares of the company. If no quorum will be provided, the meeting will meet again. The adoption of decision depends on achieving the following steps to create the industrial park. This step is optional and is for information only.
MayAugust, 2011
Directors of commercial companies
Certificate of registration of newly created company
RAUT JSC and RifAcvaaparat JSC will participate in creating new company with unused assets, ant the private investor with necessary financial means. The newly created Page 119
Development of materials necessary to create the park and to be submitted to the Local Council
September, 2011
Manager of newly created enterprise
Copies of the GMS Decision, of documents on acts confirming land ownership, extracts from the TCO
Filing the application for creation the park, with attached materials, to the Local Council
September, 2011
The application and related materials filed with the Local Council
Approval of the decision to create the industrial park and to establish a Committee for the creation and operation of the industrial park
September, 2011
Local Council
The Decision of the Local Council approving the application and on the creation of Committee, adopted and published in local press
Submission of the application to the Balti Local Council on the lease of land and adoption of decision concerning the allocation of land to be leased Signing the contract land lease
October, 2011
General Manager
The decision to lease land approved and notified to RAUT JSC, and sent for execution to Balti Municipality Mayor
company will take over the functions and a managing company, and RAUT JSC and RifAcvaaparat" JSC will be residents of the PI These materials are necessary for the Local Council so that the Mayor can establish the Committee on the creation and operation of the industrial park. If the request to create the industrial park are accompanied by such materials, the Local Council will have the right to not include the issue on the agenda and to not establish the Committee. The application is submitted under art. 7 of the Law on industrial parks. This application, along with materials needed to create the park will serve as grounds for establishing the Committee for the creation and operation of the industrial park. If no Decision is adopted, there will be no legal basis for the Mayor to decide over the creation a Committee for the creation and operation of the industrial park, no father step will be made. Approval of the decision is essential to obtain the title of industrial park
October, 2011
General Manager and Mayor of Balti
Tenancy agreement signed, notarized and registered at Balti OCT.
The lease agreement will serve as evidence for submission to the Ministry of Economy of the application for Page 120
Municipality
obtaining the industrial park The order to create the Committee and the created committee
title
of
Establishing the Committee for creation of the industrial park
October, 2011
Mayor
Creation of this Committee is an explicit requirement of the Law on industrial parks, and the decisions of the Committee are targeted to support the process of drawing up the documents necessary to establish and develop the industrial park and to prevent the emergence and / or to remove any impediments to solving problems related to creation and development of the industrial park. These materials are required to be attached to the application for obtaining the title of industrial park. Otherwise the application may not be accepted.
Preparation of materials to be submitted to the Ministry of Economy
October, 2011
Lawyer, department heads, manager of newly created enterprise
Acts according to the Law on industrial parks: a) copies of the incorporation acts of the managing company; b) copies of documents confirming the right of use for at least 30 years or ownership of land and buildings designed for the creation of industrial park; c) plane of location of land designed for the industrial park; d) declaration of the holder or owner of the land on fulfilment of conditions laid down in art. 5 let. a) and b); e) notifications of owners of public utility networks; f) authorization for the construction of the object; g) agreement of the local council in whose jurisdiction the land for industrial park is; h) feasibility study on establishing the
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Submission to the Ministry of Economy of the application for obtaining the title of industrial park Taking prior decision on granting the title of industrial park Obtaining the title of industrial park
November, 2011
November, 2011 December, 2011
Manager of newly created enterprise Ministry of Economy Government of RM
industrial park. The application filed and registered to the ME with the materials described above Draft Decision on granting the title of industrial park
Government Decision on granting the title of industrial park Building II. Foundation of the Managing Legal Entity of the industrial park Development of the May, 2011 Lawyer Annually on the contractual principles of developed procedures collaboration relationship within the newly founded enterprise.
The application is based on the decision-making process to obtain the title of industrial park. The title serves as the basis for the stat if the industrial park business. Otherwise, the industrial park can not exist de jure.
Founding a managing company through division of companies
MaySeptember 2011
Representativ e of founders, Lawyer
Registration Certificate
Selection and approval of the nominal membership of managers of the joint venture
September, 2011
Managers selected and appointed by order of concluded employment contracts
Development of managers duties
Manager of Developed and approved newly job descriptions created enterprise, human resources manager, lawyer Building III. Planning of activity and establishing collaboration relationships Development of business June, 2011 Manager of Developed plan plan. newly created enterprise Adoption of the business June, 2011 Manager of Approved plan plan by the Companys newly Developed by ProConsulting LLC, tel./fax: 21-00-89
September, 2011
The development of these principles pertaining to the establishment of future strategies and tactics of interaction between the founder of newly formed company. Based on the Decision of the General Meeting, the General Director will take steps required by Law to establish a LLC and will registry it with the Registration Chamber. Failure to registry the company will bring impossibility of establishing the industrial park. The efficient activity of the industrial park depends on the qualified management, which, ideally, should be selected on a competitive basis. Tasks clearly described and detailed will contribute to planning activities and achieving the goal.
The efficient activity of the industrial park depends crucially on the planning. Thus, all activities must be developed in detail and Page 122
Board Submission of applications to the Local Council regarding the privatization of land of existing construction (for new buildings, additional applications shall be submitted). Development of procedures of the park business and of the principles of collaboration with residents Drawing up contracts for collaboration with residents Signing contracts residents with July, 2011
created enterprise Manager of newly created enterprise
Recorded application and adopted decision.
JulySeptember, 2011
September, 2011
Lawyer, department heads, newly created enterprise manager Lawyer
Developed and approved procedures textbook.
adopted by the Board of the Company. Also, to ensure business continuity of the industrial park, there will be established and implemented practical and strict procedures regarding the principles of collaboration with residents and contracts will be concluded with them. Signing contracts with residents is a continuous and permanent procedure.
Models of contracts
developed
December, 2011permanent
Manager of the newly created enterprise
Signed contracts
In the following, the legal action plan presented above is presented schematically, for an overview regarding the terms of the project of creation of the industrial park.
May June July August September October
SCHEMATIC PRESENTATION OF THE LEGAL ACTION PLAN
2011
Block I Development, based on the realized study, of information materials to be presented to general meetings of shareholders of RAUT JSC for adopting the decision on reorganization through division of companies and priority development directions Holding general meetings of shareholders of RAUT JSC for adopting the decision on reorganization of the division of companies and development priorities, adoption of the GMS decision on creating the industrial park. Informing about the Decision all interested persons, including public local authorities Preparing presentation materials needed to create the park for submission to the Local Council Filing of the application on creation of the park, with attached materials, to the Local Council Approval of the Decision establishing the industrial park and of establishing the Committee for the creation and operation of industrial park
Filing the application to Balti Local Council on the lease of land and approval of the decision concerning the allocation lease land
Signing the land lease contract Creation of the Committee for the creation of industrial park Preparation materials necessary to be submitted to the Ministry of Economy Submission to the Ministry of Economy, of the application on obtaining the title of Developed by ProConsulting LLC, tel./fax: 21-00-89 Page 123
industrial park Obtaining the title of industrial park Block II Foundation of a limited liability company Development of contractual schemes of cooperation relations of founder and the newly created LLC Selection and approval of the nominal membership of the LLC managers Development of managers tasks Block III Development of business plan. Adoption of the business plan by the Companys Board Submission of applications to the Local Council regarding the privatization of land of existing construction and approval of the decision on privatization. Development of procedures of the park business and of the principles of collaboration with residents Drawing up contracts for collaboration with residents Signing contracts with residents
6.2.
OPERATIONAL ACTION PLAN
Given that most basic buildings were erected between the years 1960 - 1970 and no current repairs were made for proper maintenance about 20 years, almost all buildings need capital repair of roofs, interior and exterior walls with thermal insulation to conserve energy, ceilings and floors, full replacement and reconstruction of interior engineering networks: electricity, water, sewerage, heating. Additional and special buildings which can not be used any more according to the initial destination, are proposed to be reorganized in order to use the newly created spaces, possibly being in the future additional areas or utilities necessary for the production process. Buildings with a high degree of degradation, which can not be used, will be demolished in order to create new buildings on their place, and to provide open spaces that can be used if necessary. External engineering, water, sewage, gas networks require total reconstruction except for those electrical making up 23,20 km of air highway and 12 intermediate power stations, of which 8 are basic ones and 4 reserve ones, which can be repaired, and partially used, but which constitute a great potential of about 19455 kW, which could cover 100% of electricity needs on the territory of the enterprise. Considering that the exact location and the number of economic entities within the proposed technical industrial park on the territory of RAUT JSC are not known, there will be taken into account only the main routes for the remaining engineering networks, which will make up about 2,4 km of water networks, sewerage networks 1,96 km, network of gas supply 2,8 km, as calculated from the closest and possible points of connection of urban networks, and the remaining around 10% of the total works for the constriction of engineering networks, being calculated at the time of developing the project documentation. In order to calculate the estimated value for capital investments needed for reconstruction of RAUT JSC real estate, all buildings shall be classified according their field of use, features and destination, as described in the table below:
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Table 38. Features of constructions
No. 1
Objective Name Administration buildings, dormitories, rooms, household buildings Construction for production Metal warehouses Garages and storage spaces
Total area, m2 37 330
Note Capital repairs of roofs, interior and exterior walls, ceilings, floors, joinery and interior networks Capital repairs of roofs, interior and exterior walls, ceilings, floors, joinery and interior networks Painting walls and ceilings, repairs of floors Capital repairs of roofs, interior and exterior walls, ceilings, floors, joinery and interior networks Capital repairs of roofs, interior and exterior walls, ceilings, floors, joinery and interior networks Building of walls, of roofs, interior and exterior finishing works, installation of interior networks Demolition of existing constructions with subsequent construction of spaces for production
2 3 4
58 777 2 194 3 802
Related and special buildings
3 256
Uncompleted constructions
1 326
Buildings requiring demolition
1 573
Data in table are included in annex on the general cost estimate. Depending on type of constructions and their destination, certain types of construction works will be taken into account for each category of constructions separately, representing the estimated value of necessary works per 1 m2. In order to establish the necessary investment for this project, other categories of expenses will take into account: - demolition of buildings with advanced deterioration technical state; - construction of new space on place of demolished ones; - installation of water supply, sewage, gas, power networks in the main points of connection; - arrangement of territory of constructions which includes cleaning the existing asphalted territory, demolition of unused and temporary constructions, repair of existing roads; - cleaning spaces occupied with unused equipment and removal of heavy equipment to optimize the working process of RAUT JSC. The process of creation of the technical industrial park represents a complex and complicated investment project in terms of study of objectives feasibility and reliability, of the financial potential and expected economic effect, represents an important mechanism as well, regulated based on norms and the legislation in force in order to execute step by step and with a great accuracy the sequence of activities needed to be taken within the correct implementation of the project. Father the main steps and activities that include the entire field from the feasibility study till the project implementation which finally provides commissioning the object to start the production process.
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Activity of rehabilitating constructions and objectives belonging to RAUT JSC, deadline: 1. Development of the feasibility study (in accordance with Moldovan Law on the quality of construction No.721-XIII of February 2, 1996, Monitorul Oficial of the Republic of Moldova nr.25/259 April 25, 1996. Development of documentation of assessing environmental and social impact / DEIMIS (art.13, Law no.721); 2. Performance of the technical expertise of basic buildings according to the technical expertise report - TER (art. 3, p.c.), Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 3. Obtaining urbanism certificate UC (5 necessary preliminary acts, including TER, art. 3, Law 163) which is attached to the land location plan indicating the sizes / boundaries thereof; sanitary approval; environmental approval; fire service approval (art. 6, p.2, Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 4. Base don the UC applicant / beneficiary will obtain (art. 10, p.1, Law on authorazation of execution of construction works no. 163, dated on 09.07.2010): - approvals of connecting urban networks; - plan of tracking networks; - topographical survey; - geotechnical prospecting. 5. Drawing up design documentation (art. 13, Law no.721, Law on the quality of construction No.721-XIII of February 2, 1996); 6. Approval of design documentation by the City's chief architect (art. 11, p.a., Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 7. Verification of design verification by certified project inspectors or authorized institutions in this field (The Government Decision on ensurance of the quality of construction no. 361, dated on 05.06.1996) - the designer is responsible for submitting the technical project for verification (according to the annex to the Government Decision no.361 of June 25, 1996, art. 11); 8. Approval of design documents by the beneficiary. (art. 11, p.5, Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 9. Signing the contract between the beneficiary and the designer on the author supervision (art. 12, p. 1, f), Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 10. Obtaining the authorization for construction (6 necessary preliminary acts, inc. those of p.12 above, art. 12, p.1, Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 11. Registering the contraction authorization from the State Construction Inspectorate (art. 12, p.10, Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 12. Signing between the beneficiary and the technical officer the agreement on checking the execution of all the construction (chap.IV, art. 42 of the annex to the Government Decision no.361 of June 25, 1996); 13. Notification of the State Construction Inspectorate on the commencement of construction (art. 23, p.1 Law on authorazation of execution of construction works no. 163, dated on 09.07.2010); 14. Carrying out the construction process with the drawing up the technical books of construction (chap. III, art. 22, g, Law no.721, Law on the quality of construction No.721-XIII of February 2, 1996); 15. Final reception (Government Decision no. 285 of May 23, 1996).
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Given the entire complex of activities necessary for the representation of the estimated capital investment, a General Cost Estimate is attached, which includes all chapters. All these activities can be grouped into the following main stages with respective terms:
Table 39. Operational Action Plan
Months 2 4 6 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23
No.
Activities
Development of (pre-) feasibility study including determination of economic effects (1-2) Performance of technical expertise and obtaining documents and agreements necessary for designing (3-5) Designing, prospecting works, copyright control, its expertise and obtaining necessary approvals (6-12) Performance of the construction and assembly works (13-15), of which:
3 4 4.1 4.2 4.3 4.4 5
Repairs on production halls Repair of administration + auxiliary buildings Execution of the exterior networks Building of internal roads Acceptance of completed works and drawing up documents
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7.
INVESTMENT AND FINANCIAL DIAGNOSIS 7.1. ESTIMATION OF THE VOLUME OF NECESSARY INVESTMENT Creation of any industrial park provides for the allocation of additional funds to create related facilities or new investments in modernization of infrastructure designed to generate additional income from use and ultimately create added value. The data presented in chapter 2 of the study show that RAUT JSC company has a vast set of buildings that are in relatively good condition. Establishment of a legal entity as manager of the industrial park will own buildings belonging to both companies RAUT JSC and EFC RIF ACVAAPARAT JSC. And on the other hand, the land owned by the local hall will be managed by the managing company. The assets managed by the new managing company will be transferred to it with net balance, and investments to be used in upgrading them will already be reflected as investment expenses of the new managing company of the industrial park. Under these assumptions, a general expenditure estimate was developed (Annex 1. Estimate of expenses for repairs and renovation of infrastructure) that provides for the allocation of 408 837 thousand MDL (including VAT) for reconstruction and renovation of available spaces, equivalent to 25 552 326 EURO. Most of the investments will be targeted to the restructuration of production capabilities based on the optimum scenario of a complex of positive effects with a positive impact on economic and social environment. According to preliminary calculations, the value of renovations should make up about 18.05 million EURO (estimate of expenses is attached to the Annex 1. Estimate of expenses the capital repair and renovation of infrastructure). The amount allocated for utilities will make up over 273 000 EURO, while expenses on arrangement of territory will make up over 1 mln EURO (See Annex 2. Structure of investment).
Table 40. Structure of investment
Investment Objectives Basic investment objects Administration buildings Industrial buildings Warehouses, garages, storage spaces Auxiliary and service objects Civil engineering and external networks (water, sewer, heat, gas) Water supply networks Sewerage networks Gas supply networks Electric power networks Arrangement of territory and green spaces Cleaning machinery spaces Other expenses Maintenance of Directorate (technical supervision) Design work, prospecting, copyright control Reserve funds for unforeseen expenditure 2% Breakdowns in the normative base construction fund (CNB) 0.0% Total investments 18 053 932 6 843 747 10 855 350 354 835 275 869 273 651 35 000 22 458 40 833 175 359 1 006 041 273 438 329 399 202 123 360 938 415 508 102 707
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Value Added Tax (VAT) 20% Total amount
4 258 721 25 552 326
Given the necessary investments to be made and the need to allocate them in a relatively short period of time, it is foreseen that they will be made in stages: Stage I Year I - making all expenses related to obtaining construction and renovation authorization, obtaining technical approval, projects of execution and other documents necessary to carry out activities related to the renovation and restructuring of real estate. In the second half of this year it is already foreseen to start construction works which will lead to the allocation of most of the money needed to purchase building materials and cover other expenses related to starting this process. For this period about 247,6 million MDL or 60% of the total amount investment will be allocated. Phase II Year II - continuation of construction works based on previous estimates and completion with commissioning of all buildings already renovated. During this year it is foreseen to allocate the remaining amount of 161,2 million MDL or 40% of the amount of investments, most of which are construction-oriented remuneration. Since it is a socially oriented project, for two year amounts are expected to be attracted from international, European or cross-border projects that actually require minimum interest charges, often projects are subject to grants, and the period of using the money is over 10 years. 7.2. FINANCIAL PLAN 7.2.1. Forecast of income of the managing company The optimal scenario recommended for the operation of the industrial park involve a direct effect on future activities of the managing company of the industrial park on the territory of RAUT JSC. In accordance with the chosen financial option, funding of infrastructure and of utilities of the industrial park with participation of RAUT JSC, EFC RIF-ACVAAPARAT JSC and the potential strategic investor, both companies and the potential strategic investor are entitled to operate as an enterprise resident in the industrial park. However, the financial plan, including financial forecasts are made for the activities made for the managing company of the industrial park. The income of the managing company will be made up from 2 basic activities: 1. Income from lease of available spaces, including - production spaces - administration areas 2. income from various consulting services
Table 41. Forecasted income of the managing company, th. MDL (TVA included)
Income Lease of available spaces Consulting Services Year I 36 370 9 456 Year II 38 189 9 929 Year III 40 098 10 426 Year IV 42 103 10 947 Year V 44 208 11 494
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Total
45 827
48 118
50 524
53 050
55 703
Income Lease of available spaces Consulting Services Total
Year VI 46 419 12 069 58 488
Year VII 48 740 12 672 61 412
Year VIII 51 177 13 306 64 483
Year IX 53 736 13 971 67 707
Year X 56 422 14 670 71 092
Year XI 59 243 15 403 74 647
Year XII 62 206 16 173 78 379
Year XIII 65 316 16 982 82 298
Year XIV 68 582 17 831 86 413
Year XV 72 011 18 723 90 734
Year XVI 75 611 19 659 95 270
Year XVII 79 392 20 642 100 034
Year XVIII 83 361 21 674 105 035
Year XIX 87 530 22 758 110 287
Year XX 91 906 23 896 115 802
1. Income from lease of real estate (See Annex 3. Income from lease of available spaces) The space available for lease makes up about 69 923 m2. The lease payment for park residents will differentiate on the categories in accordance with the Budget Law (Table 42. Evolution of the lease price for the types of activities and annex 4): Moreover, the companies RAUT JSC and RIF-ACVAAPARAT JSC will operate within the industrial park, whose real estate will be transferred to the new managing company of the industrial park and for which use a surcharge will be paid.
Table 42. Evolution of the lease price by types of activities

Lease area, including: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Year I 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 Year II 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 2 377 m2 Year III 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 Year IV 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 ,689 m2 27 377 m2 Year V 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2
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Administration space Lease price: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Administration space
9 115 m2
9 115 m2
9 115 m2
9 115 m2
9 115 m2
460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 920 MDL
483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 966 MDL
507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 1 015 MDL
Lease area, including: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Administration space Lease price: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Administration space
Year VI 2 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 9 115 m2
Year VII 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 9 115 m2
Year VIII 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 9 115 m2
Year IX 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 9 115 m2
Year X 22 882 m2 2 435 m2 1 204 m2 221 m2 1000 m2 5 689 m2 27 377 m2 9 115 m2
Lease area, including: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC
Year XI 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2
Year XII 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2
Year XIII 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2
Year XIV 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2
Year XV 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2
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Administration space Lease price: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Administration space
9 115 m2
9 115 m2
9 115 m2
9 115 m2
9 115 m2
Lease area, including: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Administration space Lease price: Mechanical engineering Construction materials Wood processing Management consulting Information Technology Activities of Rif-Acvaaparat JSC Production activities of "Raut" JSC Administration space
Year XVI 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2
Year XVII 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2
Year XVIII 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2
Year XIX 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2
Year XX 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2
1 004 MDL 1 004 MDL 1 004 MDL 1 004 MDL 1 004 MDL 1 004 MDL 1 004 MDL 2 009 MDL
Income from lease by types of activities are given in the table above and makes up 74% of total revenues generated by the managing company. The entry to be indicated here refers to the fact that if we were to forecast revenues with no coefficients, then, according to the State Budget Law for 2010 this should make up 615 MDL per one square meter annually for space production and 1227 MDL per one square annually for administration space. Calculations took into account pessimistic forecasts, and prices for 1 year will make up 460 MDL per square meter per year of production space and 920 MDL per meter quarter annually administrative space, a final reduction by 25% from the price fixed by law.
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2. Revenues from consulting services Income from the companys consulting activity focuses on provision of the respective services mainly to industrial park residents. These services are focused on technical consulting services, accounting services, legal or various management services and others al well. A forecast of these services would indicate a sales volume of about 9.4 million MDL per year (Table 41. Forecasted income for the managing company, th. MDL (WATT included)) which will reach 23,89 million MDL at the end of 2020.
7.2.2.
Forecast of expenses of the managing company
Income from the companys consulting activity focuses on provision of the respective services mainly to industrial park residents. These services are focused on technical consulting services, accounting services, legal or various management services. A pessimistic forecast of these services would indicate a sales volume of about 150 000 MDL per year, which will reach 232 700 MDL at the end of 2020.
7.2.2.1.
Forecast of expenses of the managing company
The activity of the managing company is given by its specificity - the company has huge spaces for leasing to the industrial park residents. This activity is crucial and involves a specific assignment of expenses (see ! ..
C. Dir.
C. Indir
Ch. Com.
CGA
Alte. Ch. Op.
4%
49%
Leased available spaces are not liable for additional expenses, the amount of 33% expense is calculated as accumulated 4% 10% physical and moral wear (! . of wear). In this regard, cold store machinery has a service life of 10 years, which explains the fact that indirect consumptions have the largest share of 49% of total output. Direct expenses include expenses related to current operation activity. In relative terms this consumption falls within 4%. The bulk of the salaries represent salaries of operational staff (about 10 people) with an average annual gross salary of 45 000 MDL. Other expenses, incurred by company refer to promotional costs and costs for attracting new residents, amount to 900 thousand MDL per year, which would reflect a 4% share of the total. Expenses related to the administrative body makes up 10%, most of them focus on staff remuneration, mainly reflected for the administrative staff, or its maintenance costs. Thus, out of the total volume of these expenses 70% are expenses for labour remuneration, the others focusing on various categories - maintenance, office supplies, communication expenses, taxes, or similar. In the category of other expenses, there are interest payments related to loan sources that offer for these types of expenses a share of around 33% of total expenses of the managing company.
7.2.3.
Forecast of final results
Financial results of the managing company of the managing company situated on he territory of RAUT JSC, the forecast period, are marked by 2 main areas of activity: space leasing, leasing of refrigerators, activity of provision of various services. In this regard, revenues and expenses have been mentioned in previous paragraphs, further paragraphs present dynamics of net financial results. The data represented in the figure below show a favourable situation.
Figure 27. Dynamics of companys financial results
120 000,0 100 000,0 80 000,0 60 000,0 40 000,0 20 000,0 0,0 VV, mii lei CV, mii lei P.Net, mii lei
I an 38 188,8 13 303,7 12 314,0
V an 46 418,8 13 606,8 18 838,8
X an 59 243,4 14 079,1 34 810,4
XV an 75 611,3 14 682,0 49 238,1
XX an 96 501,3 15 451,4 65 800,0
The data presented in the figure above shows that new investments made in the created industrial park will lead to achieving net sales in constant growth. The activity will start only after renovation of all available spaces according to the developed estimate of expenses. For the first financial year, it is expected to achieve revenues of around 38,19 million MDL a year, with a net profit of 12,3 million MDL which then will increase to 59 2 million MDL in the tenth year, respectively 96,5 million MDL in the year 20 or 34,8 million MDL of net profit and 65,8 million MDL at end of the year 20 respectively. Given that the activity of the company is focused on providing services of leasing of available spaces, all expenses related to electricity consumption, staff and others are passed to residents. In this regard, the cost of sales includes current expenses of maintaining the staff directly employed in the production process or usage of fixed assets and equipment which are leased directly. In terms of factors influencing the net profit, the situation is as follows.
Table 43. Forecast of financial results over the forecasted period (Annex 7)
Breakdown of financial results Gross Profit Result from operating activity Results from investment activity Result from financial activity Result from financial and economic activity Income tax Net profit Year I 24 885,2 13 682,2 0,0 0,0 13 682,2 -1 368,2 12 314,0 Year II 26 724,3 15 364,3 0,0 0,0 15 364,3 -1 536,4 13 827,8 Year III 28 655,3 17 130,4 0,0 0,0 17 130,4 -1 713,0 15 417,4 Year IV 30 683,0 18 984,8 0,0 0,0 18 984,8 -1 898,5 17 086,4 Year V 32 812,0 20 932,0 0,0 0,0 20 932,0 -2 093,2 18 838,8
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Breakdown of financial results Gross Profit Result from operating activity Results from investment activity Result from financial activity Result from financial and economic activity Income tax Net profit
Year, VI 35 047,4 22 976,5 0,0 0,0 22 976,5 -2 297,7 20 678,9
Year, VII 37 394,7 26 735,5 0,0 0,0 26 735,5 -2 673,6 24 062,0
Year, VIII 39 859,2 30 601,9 0,0 0,0 30 601,9 -3 060,2 27 541,7
Year ,IX 42 447,1 34 580,9 0,0 0,0 34 580,9 -3 458,1 31 122,8
Year, X 45 164,3 38 678,3 0,0 0,0 38 678,3 -3 867,8 34 810,4
Year XI 48 017,4 42 899,9 0,0 0,0 42 899,9 -4 290,0 38 609,9
Year XII 51 013,1 45 639,8 0,0 0,0 45 639,8 -4 564,0 41 075,8
Year XIII 54 158,6 48 516,6 0,0 0,0 48 516,6 -4 851,7 43 664,9
Year XIV 57 461,4 51 537,3 0,0 0,0 51 537,3 -5 153,7 46 383,6
Year XV 60 929,3 54 709,0 0,0 0,0 54 709,0 -5 470,9 49 238,1
Year XVI 64 570,6 58 039,3 0,0 0,0 58 039,3 -5 803,9 52 235,4
Year XVII 68 394,0 61 536,2 0,0 0,0 61 536,2 -6 153,6 55 382,5
Year XVIII 72 408,6 65 207,8 0,0 0,0 65 207,8 -6 520,8 58 687,0
Year XIX 76 623,9 69 063,1 0,0 0,0 69 063,1 -6 906,3 62 156,8
Year XX 81 049,9 73 111,1 0,0 0,0 73 111,1 -7 311,1 65 800,0
As shown in the table above, the factors influencing the increase in net profit refers to an obvious increase in gross profit of over 3 .2 times in the 20 years of forecast activity, from 24.8 million MDL in the first year from the start of project up to 81.05 million MDL in 20 years. The operating result of the company, which obviously increases about 8.7 times during the forecast period offering the possibility to cover any losses that may result from differences in exchange rate - a factor that does not dependent of companys management, but of the current situation of the Moldovan economy and national currency instability. An important factor with a less favourable effect is expenses on the income tax from the first year from the start of project. According to the strategy approved by government authorities, the income tax of legal entities would be reintroduced since January 1, 2011. For reasons related to more active support of entrepreneurs, the income tax at an annual level of 10% will be introduced since January 1, 2012, for which financial results also comprise expenses (savings) on income tax, which amounts are also reflected in the cash flow. 7.2.4. Forecast of cash flow
The cash flow forecast for the period of 20 years shows a proper management of stocks and trade receivables able to cover interest payments and loan repayments. The Table below is the summary of cash inflows and outflows.
Table 44. Cash flow dynamics, th. MDL (Annex 8. Forecasted cash flow)
I year-2 II year-1 48 003,4 48 003,4 14 994,5 3 727,3 8 061,2 1 536,4 33 008,9 Year I 50 524,1 50 524,1 15 440,9 3 913,7 8 061,2 1 713,0 35 083,2 Year II 53 056,7 53 056,7 15 909,7 4 109,4 8 061,2 1 898,5 37 147,0 Year III 55 709,9 55 709,9 16 401,9 4 314,8 8 061,2 2 093,2 39 307,9 Year IV 43 535,3 43 535,3 14 569,3 3 549,8 8 061,2 1 368,2 28 966,0 Year V 48 003,4 48 003,4 14 994,5 3 727,3 8 061,2 1 536,4 33 008,9
Operational Activity 1. Total cash earnings earnings from sales 2. Total cash payments - Payments to suppliers and contractors - interest payments - payment of income tax Net flows from operating activities Investment Activity 4. Total cash earnings - earnings from the output of long term assets 5. Total cash payments - payments for purchase of long term assets 6. Net flow from investing activities Financial Activity 7. Total cash earnings - earnings from loans and credits - earnings from the issue of own shares 8. Total payments payments on loans and credits - dividend payment 9. Net flow from financial activities 10. Total Net Flow Exchange differences Cash balance at the beginning of the period Cash balance at the end of the period
43 535,3 43 535,3 14 569,3 3 549,8 8 061,2 1 368,2 28 966,0
28 966,0 28 966,0
33 008,9 33 008,9
35 083,2 35 083,2
37 147,0 37 147,0
39 307,9 39 307,9
28 966,0 28 966,0
33 008,9 33 008,9
5,4 28 971,4
28 971,4 61 980,3
61 980,3 97 063,4
97 063,4 134 210,4
134 210,4 173 518,3
5,4 28 971,4
28 971,4 61 980,3
Year VI
Year VII 61 420,1 61 420,1 16 010,4 4 757,1 6 449,0 2 673,6 45 409,7
Year VIII 64 491,1 64 491,1 15 129,2 4 995,0 4 836,7 3 060,2 49 362,0
Year IX 67 715,7 67 715,7 24 688,3 5 244,7 3 224,5 3 458,1 43 027,4
Year X 71 101,5 71 101,5 24 386,1 5 507,0 1 612,2 3 867,8 46 715,4
Operational Activity 1. Total cash earnings earnings from sales 2. Total cash payments - Payments to suppliers and contractors - interest payments - payment of income tax Net flows from operating activities Investment Activity 4. Total cash earnings - earnings from the output of long term assets 5. Total cash payments - payments for purchase of long term assets 6. Net flow from investing activities Financial Activity 7. Total cash earnings - earnings from loans and credits - earnings from the issue of own shares 8. Total payments payments on loans and credits - dividend payment 9. Net flow from financial activities
58 495,4 58 495,4 16 918,8 4 530,6 8 061,2 2 297,7 41 576,6
42 584,4 32 245,0 10 339,4 (1 007,8)
44 276,0 32 245,0 12 031,0 1 133,8
46 015,8 32 245,0 13 770,8 3 346,1
47 806,4 32 245,0 15 561,4 (4 779,0)
49 650,2 32 245,0 17 405,2 (2 934,8)
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(1 007,8)
1 133,8 172 510,5 173 644,3
3 346,1 173 644,3 176 990,4
(4 779,0) 176 990,4 172 211,5
(2 934,8) 172 211,5 169 276,7
10. Total Net Flow Exchange differences Cash balance at the beginning of the period
173 518,3 172 510,5
Year XI Operational Activity 1. Total cash earnings earnings from sales 2. Total cash payments - Payments to suppliers and contractors - interest payments - payment of income tax Net flows from operating activities Investment Activity 4. Total cash earnings - earnings from the output of long term assets 5. Total cash payments - payments for purchase of long term assets 6. Net flow from investing activities Financial Activity 7. Total cash earnings - earnings from loans and credits - earnings from the issue of own shares 8. Total payments payments on loans and credits - dividend payment 9. Net flow from financial activities 31 210,3 10. Total Net Flow Exchange differences Cash balance at the beginning of the period 169 276,7 200 487,0 19 305,0 19 305,0 31 210,3 74 656,6 74 656,6 24 141,3 5 782,3 4 290,0 50 515,3
Year XII 78 389,4 78 389,4 25 407,8 6 071,4 4 564,0 52 981,6
Year XIII 82 308,9 82 308,9 26 737,7 6 375,0 4 851,7 55 571,2
Year XIV 86 424,3 86 424,3 28 134,1 6 693,7 5 153,7 58 290,2
Year XV 90 745,5 90 745,5 29 600,3 7 028,4 5 470,9 61 145,3
20 537,9 20 537,9 32 443,7 32 443,7 200 487,0 232 930,7
21 832,5 21 832,5 33 738,7 33 738,7 232 930,7 266 669,4
23 191,8 23 191,8 35 098,4 35 098,4 266 669,4 301 767,8
24 619,1 24 619,1 36 526,2 36 526,2 301 767,8 338 294,0
Year XVI
Year XVII 100 046,9 100 046,9 32 756,2 7 748,8 6 153,6 67 290,7
Year XVIII 105 049,3 105 049,3 34 453,5 8 136,3 6 520,8 70 595,7
Year XIX 110 301,7 110 301,7 36 235,7 8 543,1 6 906,3 74 066,0
Year XX 115 816,8 115 816,8 38 107,0 8 970,2 7 311,1 77 709,9
Operational Activity 1. Total cash earnings earnings from sales 2. Total cash payments - Payments to suppliers and contractors - interest payments - payment of income tax Net flows from operating activities Investment Activity 4. Total cash earnings - earnings from the output of long term assets 5. Total cash payments - payments for purchase of long term assets 6. Net flow from investing activities Financial Activity 7. Total cash earnings - earnings from loans and credits - earnings from the issue of own shares 8. Total payments payments on loans and credits - dividend payment
95 282,8 95 282,8 31 139,8 7 379,8 5 803,9 64 143,0
26 117,7 26 117,7
27 691,3 27 691,3
29 343,5 29 343,5
31 078,4 31 078,4
32 900,0 32 900,0
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9. Net flow from financial activities 10. Total Net Flow Exchange differences Cash balance at the beginning of the period Cash balance at the end of the period
38 025,3 38 025,3 338 294,0 376 319,3
39 599,4 39 599,4 376 319,3 415 918,8
41 252,2 41 252,2 415 918,8 457 171,0
42 987,7 42 987,7 457 171,0 500 158,7
44 809,9 44 809,9 500 158,7 544 968,6
The data presented in the table above reflect a situation favourable to the companys activity generating sufficient liquid financial resources to cover its immediate payments. The data outlined above show that during the forecast period the company will finance its activity from internal resources generated by its operating activity, as confirmed by the positive value of the cash flow from operating activities during this period. The specificity of funding is determined by the fact that for the first 2 years only investing in real estate and performing of renovation-reconstruction works are foreseen. At the same time additional funds will be allocated to create and rehabilitate existing facilities, along with investments in creation the road infrastructure. These investments will be covered during the initial period from own resources obtained from sale of various assets, either of RAUT JSC, or of some assets that will be transferred in the ownership of the industrial park. Among the assets to be sold there are: dormitory with an area of 1 567 square meters, canteen with a capacity of 320 seats located at the industrial park, children's camp located outside the industrial park, land for construction with an area of 4,6 ha, a part of the area and administration spaces and the sale of free land from sector 1 and 2. Those revenues will be reflected as capital contributions in the authorized capital of the managing company. For the second stage of project implementation (2 year), the insufficiency of investment resources is expected to be drawn in various projects. The main reason stems from the fact that, besides the economic effect, which can be generated by the creation of industrial park, it also creates a social effect, and clusters and business incubators that will be part of it, will support new business initiatives ultimately creating new jobs, contributing to the improvement of living standards of people. Any projects that can be called for, are those cross-border, which make a direct connection between the partner countries (Romania - Moldova - Ukraine) and, as international funds, they provide funds to contract for a longer period of time, i.e. lowed costs. In this respect, the period of use of the loan makes up 10 years, and its servicing cost makes up 5% annually, which is reflected by interest payments for the period. At the same time the grace period for the amount of the loan was set for 5 years, i.e. within a period of 5 years the amount of loan must be repaid. Since the generated revenues are sufficient, and the coverage of all payments and according to the state fiscal policy, since 2012 the tax on income of 10% of the generated profit will already come into force, theses expenses are reflected in the category of payments. Starting with the VIth year, the company foresees to pay dividends amounting to 50% of the annual profit, for which the investments made by investors will be restored within around 20 years. Finally it is found that the managing company of the industrial park will generate enough resources and funds to cover all current needs, including distribution of dividends to its shareholders .
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7.2.5.
Forecast of the balance sheet
Analysis of the structure of the balance sheet of RAUT JSC during the forecast period of the investment project reflects a favourable situation, which allows a profitable economic and financial activity. The table below shows the dynamics of the balance sheet (! . sheet).
Table 45. Dynamics of balance sheet, th. MDL
Indicators, MDL Total Assets Long-Term Assets - Fixed Assets Short Term Assets - stocks of commodities and materials - short-term receivables - financial resources Total Liabilities Equity - authorized capital - retained earnings Long Term Debt -long-term bank loans Short Term Debt - debts on commercial bills - short-term calculated debt
I Year -2 341 676,2 300 402,1 41 274,1 41 268,7 5,4 341 676,2 341 676,2 341 676,2 II Year-1 502 901,1 434 756,2 68 144,9 68 139,5 5,4 502 901,1 341 676,2 341 676,2 161 224,9 161 224,9 YearI 515 597,0 422 859,0 434 756,2 92 738,0 63 766,6 28 971,4 515 597,0 353 990,3 341 676,2 12 314,0 161 224,9 161 224,9 381,9 381,9 YearII 529 564,6 410 961,9 434 756,2 118 602,7 56 622,4 61 980,3 529 564,6 367 818,1 341 676,2 26 141,9 161 224,9 161 224,9 521,6 521,6 Year III 545 114,9 399 064,7 434 756,2 146 050,2 48 986,7 97 063,4 545 114,9 383 235,5 341 676,2 41 559,2 161 224,9 161 224,9 654,5 654,5 -
Year IV 562 340,1 387 167,5 434 756,2 175 172,5 40 962,1 134 210,4 562 340,1 400 321,8 341 676,2 58 645,6 161 224,9 161 224,9 793,3 793,3 -
Year V 581 324,6 375 270,4 434 756,2 206 054,3 32 535,9 173 518,3 581 324,6 419 160,6 341 676,2 77 484,4 161 224,9 161 224,9 939,1 939,1 -
Year VI 559 572,1 363 373,2 434 756,2 196 198,9 23 688,4 172 510,5 559 572,1 429 500,1 341 676,2 87 823,8 128 979,9 128 979,9 1 092,1 1 092,1 -
Year VII 539 518,8 351 476,0 434 756,2 188 042,8 14 398,5 173 644,3 539 518,8 441 531,1 341 676,2 99 854,8 96 734,9 96 734,9 1 252,8 1 252,8 -
Year VIII 521 213,4 339 578,9 434 756,2 181 634,5 4 644,1 176 990,4 521 213,4 455 301,9 341 676,2 113 625,7 64 490,0 64 490,0 1 421,5 1 421,5 -
Year IX 503 457,2 327 681,7 434 756,2 175 775,4 3 564,0 172 211,5 503 457,2 470 863,3 341 676,2 129 187,1 32 245,0 32 245,0 348,9 348,9 -
Indicators, MDL Total Assets Long-Term Assets - Fixed Assets Short Term Assets - stocks of commodities and materials - short-term receivables - financial resources
Year X 488 803,4 315 784,6 434 756,2 173 018,9 3 742,2 169 276,7
Year XI 508 303,7 303 887,4 434 756,2 204 416,3 3 929,3 200 487,0
XII 529 046,7 291 990,2 434 756,2 237 056,4 4 125,8 232 930,7
XIII 551 094,5 280 093,1 434 756,2 271 001,4 4 332,0 266 669,4
XIV 574 512,4 268 195,9 434 756,2 306 316,5 4 548,6 301 767,8
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Total Liabilities Equity - authorized capital - retained earnings Long Term Debt -long-term bank loans Short Term Debt - debts on commercial bills - short-term calculated debt
488 803,4 488 268,5 341 676,2 146 592,3 534,9 534,9 -
508 303,7 507 573,5 341 676,2 165 897,3 730,2 730,2 -
529 046,7 528 111,4 341 676,2 186 435,1 935,3 935,3 -
551 094,5 549 943,9 341 676,2 208 267,6 1 150,6 1 150,6 -
574 512,4 573 135,6 341 676,2 231 459,4 1 376,7 1 376,7 -
Year XV 599 368,8 256 298,7 434 756,2 343 070,1 4 776,1 338 294,0 599 368,8 597 754,7 341 676,2 256 078,5 1 614,1 1 614,1 -
Year XVI 625 735,8 244 401,6 434 756,2 381 334,2 5 014,9 376 319,3 625 735,8 623 872,4 341 676,2 282 196,2 1 863,4 1 863,4 -
Year XVII 653 688,8 232 504,4 434 756,2 421 184,4 5 265,6 415 918,8 653 688,8 651 563,7 341 676,2 309 887,4 2 125,2 2 125,2 -
Year XVIII 683 307,2 220 607,3 434 756,2 462 699,9 5 528,9 457 171,0 683 307,2 680 907,2 341 676,2 339 230,9 2 400,0 2 400,0 -
Year XIX 714 674,1 208 710,1 434 756,2 505 964,0 5 805,4 500 158,7 714 674,1 711 985,6 341 676,2 370 309,3 2 688,6 2 688,6 -
Year XX 747 877,1 196 812,9 434 756,2 551 064,2 6 095,6 544 968,6 747 877,1 744 885,6 341 676,2 403 209,3 2 991,5 2 991,5 -
During its activity, the managing company of the industrial park will develop a constant growing business, characterized by its specificity and reflected in the data reflected in financial statements. Thus, taking into account the investments made by the managing company in creating infrastructure, utilities, in repair and renovation of buildings, the property increases from 502,9 million MDL at the end of the first year of investment, up to 508,3 million MDL at the end of 2011 and 747,9 million MDL at the end of the 20th forecast year, reflecting an increase of over 1,4 times.
Table 46. Structure of assets
Indicators Total Assets Long-Term Assets - Fixed Assets Short Term Assets - stocks of commodities and materials - short-term receivables - financial resources Total Liabilities Equity - authorized capital - retained earnings Long Term Debt -long-term bank loans Short Term Debt - debts on commercial bills - short-term calculated debt
I Year -2 100,0% 87,9% 0,0% 12,1% 0,0% 12,1% 0,0% 100,0% 100,0% 100,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% II Year-1 100,0% 86,4% 0,0% 13,6% 0,0% 13,5% 0,0% 100,0% 67,9% 67,9% 0,0% 32,1% 32,1% 0,0% 0,0% 0,0% YearI 100,0% 82,0% 84,3% 18,0% 0,0% 12,4% 5,6% 100,0% 68,7% 66,3% 2,4% 31,3% 31,3% 0,1% 0,1% 0,0% YearII 100,0% 77,6% 82,1% 22,4% 0,0% 10,7% 11,7% 100,0% 69,5% 64,5% 4,9% 30,4% 30,4% 0,1% 0,1% 0,0% Year III 100,0% 73,2% 79,8% 26,8% 0,0% 9,0% 17,8% 100,0% 70,3% 62,7% 7,6% 29,6% 29,6% 0,1% 0,1% 0,0%
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Year IV 100,0% 68,8% 77,3% 31,2% 0,0% 7,3% 23,9% 100,0% 71,2% 60,8% 10,4% 28,7% 28,7% 0,1% 0,1% 0,0%
Year V 100,0% 64,6% 74,8% 35,4% 0,0% 5,6% 29,8% 100,0% 72,1% 58,8% 13,3% 27,7% 27,7% 0,2% 0,2% 0,0%
Year VI 100,0% 64,9% 77,7% 35,1% 0,0% 4,2% 30,8% 100,0% 76,8% 61,1% 15,7% 23,0% 23,0% 0,2% 0,2% 0,0%
Year VII 100,0% 65,1% 80,6% 34,9% 0,0% 2,7% 32,2% 100,0% 81,8% 63,3% 18,5% 17,9% 17,9% 0,2% 0,2% 0,0%
Year VIII 100,0% 65,2% 83,4% 34,8% 0,0% 0,9% 34,0% 100,0% 87,4% 65,6% 21,8% 12,4% 12,4% 0,3% 0,3% 0,0%
Year IX 100,0% 65,1% 86,4% 34,9% 0,0% 0,7% 34,2% 100,0% 93,5% 67,9% 25,7% 6,4% 6,4% 0,1% 0,1% 0,0%
Year X 100,0% 64,6% 88,9% 35,4% 0,0% 0,8% 34,6% 100,0% 99,9% 69,9% 30,0% 0,0% 0,0% 0,1% 0,1% 0,0%
Year XI 100,0% 59,8% 85,5% 40,2% 0,0% 0,8% 39,4% 100,0% 99,9% 67,2% 32,6% 0,0% 0,0% 0,1% 0,1% 0,0%
XII 100,0% 55,2% 82,2% 44,8% 0,0% 0,8% 44,0% 100,0% 99,8% 64,6% 35,2% 0,0% 0,0% 0,2% 0,2% 0,0%
XIII 100,0% 50,8% 78,9% 49,2% 0,0% 0,8% 48,4% 100,0% 99,8% 62,0% 37,8% 0,0% 0,0% 0,2% 0,2% 0,0%
XIV 100,0% 46,7% 75,7% 53,3% 0,0% 0,8% 52,5% 100,0% 99,8% 59,5% 40,3% 0,0% 0,0% 0,2% 0,2% 0,0%
Year XV 100,0% 42,8% 72,5% 57,2% 0,0% 0,8% 56,4% 100,0% 99,7% 57,0% 42,7% 0,0% 0,0% 0,3% 0,3% 0,0%
Year XVI 100,0% 39,1% 69,5% 60,9% 0,0% 0,8% 60,1% 100,0% 99,7% 54,6% 45,1% 0,0% 0,0% 0,3% 0,3% 0,0%
Year XVII 100,0% 35,6% 66,5% 64,4% 0,0% 0,8% 63,6% 100,0% 99,7% 52,3% 47,4% 0,0% 0,0% 0,3% 0,3% 0,0%
Year XVIII 100,0% 32,3% 63,6% 67,7% 0,0% 0,8% 66,9% 100,0% 99,6% 50,0% 49,6% 0,0% 0,0% 0,4% 0,4% 0,0%
Year XIX 100,0% 29,2% 60,8% 70,8% 0,0% 0,8% 70,0% 100,0% 99,6% 47,8% 51,8% 0,0% 0,0% 0,4% 0,4% 0,0%
Year XX 100,0% 26,3% 58,1% 73,7% 0,0% 0,8% 72,9% 100,0% 99,6% 45,7% 53,9% 0,0% 0,0% 0,4% 0,4% 0,0%
I. Analysis of assets .
The table above shows the key changes in the structure of assets for the first forecast period year I-XX. For the forecast years, the major changes in the assets of the company are the followings: - Long-term investments in assets made during the first 2 years have an increased share for the first forecast period and, in terms of share in total assets, they are reduced as a result of moral and physical wear calculation; - Short-term assets, which for the first forecast period have an insignificant share, at the end of the forecast period increases considerably. The increase is determined by the accumulation of funds on the settlement account of the company, following a profitable activity. II. Analysis of liabilities . Ownership equity. As a result of investments made from the funds of the managing company, the value of the authorized capital is increased up to 341,676 million. MDL. Further, the profits generated by the company following the activity and accumulated from one period to another determine an increase in net profit, which implies a final value of 744,9 million MDL in the year 20 or 99,6% of the total funding sources. Long term loans. As noted, the investments made by the company in the 2nd year are expected to be made from external sources: external donors and various regional projects. In this respect, at the end of 2012 the total amount of attracted resources is expected to make up 161,2 million MDL, which constitutes 35,1% of total funding sources. Loans are expected to be attracted for a period of 10 years, for which the dynamics of respective loans show a downward trend and will completely disappear in the 10th year with the final instalment payment. Short-term funding sources As noted, the investments made by the company in the 2nd year are expected to be made from external sources: external donors and various regional projects. In this respect, at the end of 2012 the total amount of attracted resources is expected to make up 161,2 million MDL, which constitutes 28,7% of total funding sources. Loans are expected to be attracted for a period of 10 years, for which the dynamics of respective loans show a downward trend and will completely disappear in the 10th year with the final instalment payment. Short-term funding sources Like any economic activity, leasing of available spaces is more or less influenced by various purchases. In this regard, the managing company of the industrial park will have some liabilities that will not affect its paying capacity or significant debt since their weight does not exceed 0.5% of total assets, i.e. the amount of 4,2 million MDL at end of the 20th year.
7.2.6.
Forecast of financial indicators
Evolution of main financial indicators of the company during the analysis period is presented in the ! . of the business plan. 7.2.6.1. Indicators of profitability
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Calculations and forests made for an analysed period shows business profitability and its profitable activity.
Table 47. Main indicators of profitability
Indicators Investment Profitability Return On Equity (ROE) Return On Assets (ROA) Gross Margin (%) Net Profit Margin Indicators Investment Profitability Return On Equity (ROE) Return On Assets (ROA) Gross Margin (%) Net Profit Margin Year I 0% 65% 32% Year XI 9% 8% 8% 77% 62% Year II 3% 4% 3% 67% 34% Year XII 10% 8% 8% 78% 63% Year III 4% 4% 3% 68% 37% Year XIII 11% 8% 8% 79% 64% Year IV 4% 4% 3% 69% 39% Year XIV 11% 8% 8% 80% 64% Year V 5% 5% 3% 71% 41% Year XV 12% 8% 8% 81% 65% Year VI 5% 5% 4% 72% 42% Year XVI 13% 9% 9% 81% 66% Year VII 6% 6% 4% 73% 47% Year XVII 14% 9% 9% 82% 66% Year VIII 7% 6% 5% 74% 51% Year XVIII 14% 9% 9% 83% 67% Year IX 8% 7% 6% 75% 55% Year XIX 15% 9% 9% 83% 68% Year X 9% 7% 7% 76% 59% Year XX 16% 9% 9% 84% 68%
Return on equity (ROE) is one of the most important indicators of efficiency, being used by owners or potential donors in making an investment decision. During the forecast period an uptrend from 4% up to 9%, explains the activity of the company being mainly leasing of spaces. Return on assets (ROA) measures the profitability of the project as relative value of the total engaged assets. The ROA indicator has an uptrend from 3% to 9%, thus confirming that each MDL invested in assets will generate a profit of 0.03-0.09 MDL within a period of 12 months. The table shows that the gross profit margin exceeds 65% throughout the forecast period. This fact is positively appreciated as being determined by the growth of sales revenue with a higher rate than the increase in cost of sales during forecast 20 years. This may arise as a result of favourable price conjuncture, but also by increasing the existing volume of demand. Net profit margin is the best method of diagnosing the overall ability of the company to obtain profit, given that costs, expenses, and paid tax are taken into account, and the value of over 32% increased up to 68% determines the profitability of the company. This value is specific to companies involved in leasing of available spaces. 7.2.6.2. Liquidity indicator
Liquidity is one of the main indicators characterizing the ability of the company to carry out its immediate payments. The indicators characterizing the level of liquidity are the following.
Table 48. Main liquidity indicators
Indicators Year I 242,84 242,84 75,86 92,4 Year XI Year II 227,39 227,39 118,83 118,8 Year XII Year III 223,15 223,15 148,30 145,4 Year XIII Year IV 220,80 220,80 169,17 174,4 Year XIV Year V 219,42 219,42 184,77 205,1 Year XV Year VI 179,65 179,65 157,96 195,1 Year XVI Year VII 150,10 150,10 138,60 186,8 Year XVII Year VIII 127,77 127,77 124,51 180,2 Year XVIII Year IX 503,84 503,84 493,62 175,4 Year XIX Year X 323,47 323,47 316,47 172,5 Year XX
Liquidity Ratio (Coverage) Intermediate Liquidity (Acid Test) Immediate liquidity Working capital (mln, MDL)
Indicators
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Liquidity Ratio (Coverage) Intermediate Liquidity (Acid Test) Immediate liquidity Working capital (mln, MDL)
279,94 279,94 274,56 203,7
253,46 253,46 249,05 236,1
235,53 235,53 231,76 269,9
222,50 222,50 219,19 304,9
212,54 212,54 209,58 341,5
204,64 204,64 201,95 379,5
198,19 198,19 195,71 419,1
192,79 192,79 190,49 460,3
188,19 188,19 186,03 503,3
184,21 184,21 182,17 548,1
As shown in the table above, the overall liquidity (coverage liquidity) for the period 2011-2020 is well above the minimum acceptable threshold (1,5). On the one hand an excessive liquidity is a factor that the company is not able to invest its available resources. On the other hand, the companys specific related to space leasing does not provide any debts to suppliers and the permanence of available cash liquidity reflect indicators much higher than the minimum acceptable values. 7.2.6.3. Indicators of financial stability
In terms of solvency indicators, it can be concluded that for RAUT JSC they are acceptable.
Table 49. Main indicators of financial stability
Indicators Year I 69% 0,31 0,18 Year XI 100% 0,00 0,40 Year II 69% 0,31 0,22 Year XII 100% 0,00 0,45 Year III 70% 0,30 0,27 4,55 5,35 4,4 Year XIII 100% 0,00 0,49 Year IV 71% 0,29 0,31 4,81 5,61 4,6 Year XIV 100% 0,00 0,53 Year V 72% 0,28 0,35 5,07 5,88 4,8 Year XV 100% 0,00 0,57 Year VI 77% 0,23 0,35 5,35 0,97 1,0 Year XVI 100% 0,00 0,61 Year VII 82% 0,18 0,35 6,80 1,03 1,1 Year XVII 100% 0,00 0,64 Year VIII 87% 0,13 0,35 9,24 1,09 1,2 Year XVIII 100% 0,00 0,67 Year IX 94% 0,06 0,35 14,16 0,87 1,3 Year XIX 100% 0,00 0,70 Year X 100% 0,00 0,35 0,91 1,4 Year XX 100% 0,00 0,73
Capital Adequacy Ratio Leverage Ratio Financial Stability Coefficient Interest Coverage Ratio Debt Service Ratio RDD
Indicators Capital adequacy ratio
Leverage Ratio
Financial stability coefficient
If we were to consider the company in terms of financial stability, when it is easy to see that funding of the current activity is made mostly from its own resources. Borrowings contracted in the 2 nd year will cause a temporary increase in borrowing up to the 31% of total funding sources, which would not involve the downside risks to the business. The correct funding relation between assets and their sources, determined by the financial stability coefficient confirms a correct maturity management. Although for the first forecast years the financial stability coefficient has minimum values, further development of the company involves an increase and safety for future periods. The companys ability to pay off the debts of main creditors is determined by the relation exposed through the interest coverage ratio, debt service or RDD. One of the most relevant indicators in this regard is the debt service ratio, which explains the correlation between the generated net profit, and interest and loan payments. Its optimal value makes up 1,2, and the specificity is that the RDD is calculated only for investment projects. In this regard, calculation of the RDD took into account only credit payments related to the investment goals of the company, and its framing within 1,0 to 4,4 confirms once again that credit and interest
payments will not threaten its current activity. 7.2.6.4. Indicators of turnover speed
In terms of revenue generation abilities following the use of each component of companys assets, the values of these indicators are given by the companys specificity - lease of available spaces. Given that the available buildings have considerable values (over 400 million MDL), assents indicators will generate enough negative values, but these are obtained in conditions when during income calculation pessimistic options of development were taken into account.
Table 50. Main indicators of turnover speed

Indicators Year I
-
Year II
4 278,9 3 904,7 374,2 22,0 8,0 0,0
Year III
4 148,5 3 541,2 607,3 22,5 10,3 0,0
Year IV
4 045,6 3 213,2 832,4 22,5 12,7 0,0
Year V
3 957,2 2 908,4 1 048,8 22,5 15,1 0,0
Year VI
3 745,3 2 632,5 1 112,8 22,6 17,7 0,0
Year VII
3 397,9 2 362,6 1 035,4 22,5 20,3 0,0
Year VIII
3 096,5 2 118,9 977,6 22,5 23,0 0,0
Year IX
2 827,8 1 893,2 934,7 22,5 25,9 0,0
Year X
2 596,4 1 688,7 907,7 22,6 28,9 0,0
Time of turnover of assets (days) Time of turnover of long term assets (days) Time of turnover of current assets Time of turnover of short-term receivables (days) Time of turnover of loan debt (days) Time of turnover of stocks of commodities and materials (days)
Indicators
XI an
2 470,3 1 490,6 979,8 22,5 31,9 0,0
XII an
2 453,5 1 311,7 1 141,8 22,5 35,1 0,0
XIII an
2 439,8 1 146,5 1 293,3 22,5 38,5 0,0
XIV an
2 435,6 996,8 1 438,9 22,6 42,1 0,0
XV an
2 420,7 853,5 1 567,2 22,5 45,5 0,0
XVI an
2 414,9 724,1 1 690,8 22,5 49,3 0,0
XVII an
2 411,2 605,1 1 806,1 22,5 53,1 0,0
XVIII an
2 416,2 497,1 1 919,0 22,6 57,3 0,0
XIX an
2 409,7 395,5 2 014,2 22,5 61,3 0,0
XX an
2 411,4 303,6 2 107,8 22,5 65,6 0,0
Time of turnover of assets (days) Time of turnover of long term assets (days) Time of turnover of current assets Time of turnover of short-term receivables (days) Time of turnover of loan debt (days) Time of turnover of stocks of commodities and materials (days)
During the forecast period, in terms of turnover speed indicators, an increase in the business dynamics is observed, while most of the indicators indicate decreased duration of turnover. For companies leasing real estate, it is specific that the indicators of the turnover period are relatively high. The main reason is that generated revenues, compared to the balance of available assets, have rather big discrepancy, which is explained by the need of moral and physical wear of buildings within 30 years. 7.3. ESTIMATION OF INVESTMENT EFFICIENCY
In any activity, a key factor of the decision to invest or not is given by the future flows generated by the investment. In this respect, it is necessary to analyze the efficiency of investment thought the net present value method NPV (Net Present Value)
Table 51. Determination of investment efficiency (! .)
Investment Value
340 697 681 MDL Page 145
Discount Rate Period of Recoverability Net Present Value Rates of Return Profitability Index
R T NPV IRR (IP)
9% 18,4 years 28 876 320 MDL 9,92% 1,08
Net Present Value (NPV) is a fundamental criterion for economic and financial evaluation of investment projects. NPV represents the capital surplus for a certain period of investment life. Given the fact that the positive value of NPV is a necessary prerequisite for investment projects, a higher value as it would lead to greater profitability of the project. For the activity of the industrial park formed on the territory of RAUT JSC of Balti the total value of investment falls within 25 552 326 Euro (408 837 218 MDL), including VAT (amount without VAT of 340 697 681 MDL) distributed by components in accordance with the annexes presented in this study. In determining the value of VAN, the following mathematical formula was taken into account:
VAN
VV - sales revenue r discount rate at a level of 10% n number of periods
VV CT I , where t 1 t 0 r
n
CT total costs t considered year
Calculations determine the net value of the NPV in the amount of 28 876 320 MDL. This is an intrinsic value, which confirms the profitability of the business, but does not involve a final decision since there is no any predetermined level of comparison. The value over 28,8 million MDL indicates that the investment will now generate a positive final value within the considered period (20 years). Internal Rate of Return (IRR), expresses the level of income equalizing the cost of capital, which equals the updated income with undated expenses, making the amount of income to be equal to zero. IRR is the minimum threshold of profitability of a project, below which it is not effective. The estimated value, calculated depending on the considered marginal criteria, shows for the managing company a level of 9,92%. The period of recovery of investments, given the above assumptions is estimated at 18,4 years and reflects the conditions when the discount rate would be similar to internal rate of discount, the period during which the company would cover all investment costs made of the profits generated from making investment data. The profitability index of the investment is estimated at 1,08 and shows the value of the updated surplus capital per every reinvested MDL. The investment requirement for any investment project is that this amount should be greater than the unit. Given that investments in constructions have periods of recovery of over 20 years and that within the financial calculations the most pessimistic forecasts were taken into account, a 19,9-year recoverability is acceptable for the companys investments, when in the VIth year dividends are already paid. Mathematically the value of PI (IP) is expressed by the expression:
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1 r IP
t 0
VV CT
t
with the same meanings of indicators as those mentioned above
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8.
SOCIAL AND ECONOMIC AND ENVIRONMENTAL IMPACT OF THE INDUSTRIAL PARK ON THE REGION Creation of the industrial park aims social and economic improvement and the development of the North of the Republic of Moldova and the efficient use of its resources. The activity of the industrial park residents have a relatively small impact on the environment, which relates to the maintenance of specialized equipment and the use of raw materials for production of agricultural machinery and automobile parts, wooden articles, machinery of electronic communications and eventual wastes caused by their production, processing of wooden articles, textiles and clothes. Therefore, the activity can be classified in category B of environmental risk provided that the company will closely monitor the storage and operation of refrigeration machinery with freon. In order to reduce environmental impact, to minimize the risks of pollution of the atmosphere, soil or groundwater, the company will regularly monitor: - waste management - methods and sites of collection and storage of all kinds of wastes form storage of fruits and vegetables are identified. In this activity the managing company will be directly involved providing sanitation of the industrial park. - will update sanitary permits related to methods of waste management; The implementation of this project will be conducted in the context of the economic crisis facing the country, which will enable: Decreasing crisis and its social effects, through: Stimulation of economic activities through development of infrastructure and modernization of utilities of the industrial park; Creation of jobs in terms of infrastructure modernization and as a result of the activity carried out by residents of the industrial park. Modernization of industrial infrastructure, warehousing and offices for potential investors and residents of the industrial park. Efficiency of the industrial park in Balti Municipality will be possible to measure through monitoring the following indicators: 1. Number of registered patents. 2. Number of sold patents. 3. Market value of resident companies (value of capitalization indicators of value of equity) 4. Number of qualified workers with higher technological education. 5. Average level of salary. 6. Level of foreign investments. The performance of these indicators can be obtained only on medium and long term. Therefore it is premature to forecast trends. However, the social and economic impact of the industrial park will be directed towards recovery and development indicators mentioned above. The obtained outcome of successful implementation of the industrial park project directly impacts the country, region, resident companies of the industrial park and the company on which territory the industrial park is established (in this case RAUT JSC).
Social and economic impact on the Republic of Moldova: Attracting foreign residents will also allow to attract know-hows, managerial skills and operational capabilities and skills in the field of mechanical engineering industry. Thus, involvement in the activity of innovative technologies will allow taking over foreign practices by local residents. Decrease in macroeconomic indicators, namely unemployment. Improving the image of the country as a result of export of competitive products in terms of quality. Social and economic impact on the region: Increase in direct investments in infrastructure and utilities by about 25 million EURO. Attracting economic entities generating added value as residents of the industrial park of Balti. Given that the functionality of the industrial park will be based on the model of conglomerates, the products following their interaction will be competitive at regional level and thus will increase the export potential of the region. Formation of capital in private sector to support the process of setting up new jobs established in compliance with labour law. Due to the successful creation of resident companies, activities in mechanical engineering industry will create 572 jobs; enterprises of processing construction materials will create about 122 jobs; the company, which will provide consulting services, will employ around 17 people; companies processing wood and wooden products will create about 95 jobs; companies carrying out their activity in the field of information technology, will employ about 125 people, mostly young specialists graduates of A. RUSSO State University; companies producing textiles and clothing will employ about 86 persons, companies, which will carry put their activities in administration spaces will employ about 344 employees. Along with these newly created jobs, 566 specialists of RAUT JSC will be also attracted. Keeping jobs of EFC RIF-ACVAAPARAT JSC for 46 people in not excluded. As a result the industrial park, which human capital will be directly involved in production and administration activities, will make up about 2073 people. This industrial park will create about 1361 new jobs, especially for young specialists. Due to the activity of a business incubator within the industrial park, it will have direct impact on the development of small and medium enterprises; it will by particularly oriented towards young specialists with engineering and technical profile. The specifics of the business incubator in the region is based on creating and sustaining an entrepreneurial environment in the community. The creation of an incubator provides an environment where private and public resources satisfy the needs of small businesses in critical stages of development. The start-up companies cooperation, which will carry out their activities within the business incubator, will achieve success due to research and development policy implemented thanks to such residents like RIF-ACVAAPARAT JSC and the company providing management services. Creating the industrial park will stimulate attracting foreign investment and innovative technologies available to them. Due to this, the following effect will be obtained: economic growth due to the creation of a new production capability, additional jobs, new consumers and taxpayers; stimulation of domestic investment, as domestic producers will be interested in increasing business efficiency and improving quality results, either to face competition due to the presence of foreign investors, or to become suppliers of foreign investment. In addition local businesses and residents of the industrial park will be able to gain access to distribution channels of foreign investor, and will be also interested in increasing
production and quality of sold goods. At the same time, foreign investment attracted due to the industrial park will generate positive effects on the trade balance, if they are exportoriented products. Due to attracted investments, the growth of state budget revenues will be supported. Social insurance contribution is estimated to be of about 3,2 million MDL annually, taking into account the fact that the average salary for employees will make up 3500 MDL; Also, active involvement of young specialists from professional institutions as well as students of universities carrying out their industrial practice within the industrial park residents. The long-term collaboration between the park administration and educational institutions is possible allowing students to carry out specialized practice.
Economic effects of RAUT JSC From the perspective of RAUT JSC and RIF-ACVAAPARAT JSC., creation of the industrial park will allow reduction of general and administrative expenses, which will allow to provide more competitive prices for them. In this respect, companies activity will be focused on the local market as well. Also, the database of their customers will increase, having among them consumers and companies residents of the industrial park. As a result of the implementation of the industrial park project, RAUT JSC is expected to sell some of inefficient technologies, thus obtaining spaces for residents, and on the other hand lower expenses for their repair and maintenance. On the other hand, the specialized human capital of the company will be retained and attracted, fact that will imply increase in their welfare and productivity growth as well. Benefits obtained by RAUT JSC as a result of the operation of the industrial park are as follows: Efficient management of assets, which will be available; Organization of relations with raw material suppliers and customers for obtained products; Decrease in turnover of stocks, which will lead to lower risk of products aging and of the coefficient of innovativeness of these products; Possibility of adjusting the potential of technological lines for obtaining large number of different products, particularly parts for mechanical engineering industry; Making efficient the organizational process and making simply the organizational structure; Obtaining added values from available fixed assets. Increase in business efficiency.
9.
CONCLUSIONS
The feasibility study on establishing an industrial park based on RAUT JSC is an opportunity for the region on the one hand, due to its social and economic benefits, and on the other hand for RAUT JSC and RIF-ACVAAPARAT JSC due to managerial and organizational impacts, which will be a post project implementation outcome.
Page 150
The concept of creating an industrial park based on technical reorganization of RAUT JSC and carrying out activities by residents of the park mainly in the mechanical engineering industry, is considered to be feasible. This conclusions arise from the following: From a legal perspective, there are no impediments to this project implementation. Key issues to be addressed are: Creation of legal entity acting as managing company of the industrial park; Transfer to the authorized capital of assets necessary to conduct activities of the managing company and concession or lease of land. From the economic and financial perspective, funding sources will be obtained as a result of the alienation of existing buildings and constructions, which potential investors are interested in. Also, the viability of the project, benefits from increasing economic results of the managing company, current businesses acting on the territory, but also economic benefits of potential resident companies were proved. Meanwhile it is noted that attracting a strategic investor is possible and represents a crucial opportunity to develop industrial park. From the technical and operational perspective the positive impact on reorganization of the production activity of RAUT JSC, and the positive impact on the region and industry were proved. From the market perspective, there seems to be positive interests of potential private investors and potential resident companies of industrial park. From the organizational perspective, the manner to organize the activity of the industrial park is independent of RAUT JSC, which shows a totally different aspect of the founding company, which will prove an aspect absolutely different from that of the managing company, fact that will allow efficient management of the industrial park. The model of designing the industrial park based on the analysed optimal scenario, represents the framework on which basis one can organize the best professional, organizational, managerial and operational practices.
Annex 1. General estimate of expenses on the creation of the industrial park on the territory of RAUT JSC
Drawn up in current prices: quar. IV, year 2010 No. esti m. 2 Amount, th. MDL Name of expenses chapters and of objectives Construction works 4 Mounting works 5 Equipment, furniture, inventory 6 Other works 7 Total amount, th. MDL 8
No.
3 Preparation of the land lot for construction of object
Chapter 1
Page 151
Total Chapter 1 Chapter 2 1 2 3 Objects of basic investments Administration buildings Industrial buildings Warehouses, garages, storage spaces Total Chapter 2 Chapter 3 Auxiliary and service objects Related buildings and constructions Total Chapter 3 Chapter 4 Energy Objects
0.00
0.00
0.00
0.00
109,499.95 173,685.60 5,677.37 288,862.92 0.00 0.00 0.00
109,500 173,686 5,677 288,863
4,413.91 0.00 0.00 0.00 0.00
4,414 4,414
Total Chapter 4 Chapter 5 Communications and transport objects Total Chapter 5 Civil engineering and external networks (water, sewer, heat, gas) Water supply networks Sewerage systems Gas supply networks Electric power networks Total Chapter 6 Chapter 7 Arrangement of territory and green spaces Arrangement of territory and green spaces Total Chapter 7 Total Chapter 1-7 Chapter 8 NCML March 1, 2001 4.1. an. 1 pag.5 Site organization Cleaning machinery spaces Total Chapter 8 including the amount of reimbursement Total Chapter 1-8 including the amount of reimbursement Chapter 9 NCML April 1, 2001 an.A pag.5 CPL January 1, 2001. an.B pag.31; calcul. Other expenses Additional expenses for construction and mounting works in cold weather 0.8%
0.00
0.00
0.00
0.00
0 0
0.00
0.00
0.00
0.00
Chapter 6
560.00 359.33 653.33 2,805.75 4,378.41 0.00 0.00 0.00
560 359 653 2,806 4,378
16,096.66 16,096.66 309,337.99 0.00 0.00 0.00 0.00 0.00 0.00
16,097 16,097 313 752
4 ,375,00 4,375.00 , 313,712.99 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4,375 4 375 0 318 127 0
2 509,70
0.00
2,510
Payment for electricity Total Chapter 9 Total Chapter 1-9
2 760,67 5,270.38 318,983.37
0.00 0.00 0.00 0.00 0.00 0.00 0.00
2,761 5,270 323 397
Page 152
Repayment amount including temporary objects Maintenance Directorate (technical supervision) Technical Supervision - 1,0% Total Chapter 10 Chapter 11 Training of operating staff Total Chapter 11 Chapter 12 Contract Min.Ecol.RM 1306-01-07 of June 13, 2003 p.2 Min.Ecol.RM 1306-01-07 of June 13, 2003 p.1 par. 5 Design works, prospecting, copyright control Design works Copyright control
0.00 0.00
Chapter 10 CPL January 1, 2001. an.C pag.31.
3,233.97 3,233.97 0.00 0.00
3,234 3,234 0 0
5,250 0
Performance of expertise
525
Total Chapter 12 Total Chapter 1-12 including the amount of reimbursement CPL January 1, 2001. p.6 11 pag 17 CPL January 1, 2001. p.6.12 pag 17 CPL January 1, 2001. p.6 14 Reserve funds for unforeseen expenses 2% Total including reserve Breakdowns in the fund of construction normative base (CNB) 0,0% Total inc. CNB Value added tax (VAT) 20% Total inc. VAT including the amount of reimbursement 318,983.37 0.00 0.00 0.00 0.00 3,233.97
5,775 332,406 0
6,379.67 325,363.03 1,626.82 326,989.85 65,397.97 392,387.82 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
64.68 3,298.65 16.49 3,315.15 663.03 3,978.17
6,648 339,054 1,643 340,698 68,140 408,837 0
Page 153
Anenx 2. Investment structure
Investment item Objects of basic investment Administrative buildings Industrial buildings Warehouses, garages, storage spaces Auxiliary and service objects Engineering and external networks (water, sewer, heat, gas) Water supply networks Sewerage systems Gas supply networks Electric power networks Arrangement of territory and green spaces Cleaning machinery spaces Other expenses Maintenance (technical supervision) Design works, prospecting, copyright control Reserve funds for unforeseen expenses 2% Breakdowns in the fund of construction normative base (CNB) 0,0% Value added tax (VAT) 20% Total amount Total % Currency Eur = Currency Usd =
Amount 18 053 932 6 843 747 10 855 350 354 835 275 869 273 651 35 000 22 458 40 833 175 359 1 006 041 273 438 329 399 202 123 360 938 415 508 102 707 4 258 721 25 552 326 100% 16,00 12,00
Annex 3. Income from leas of spaces
Operational income 1. Income from lease of available spaces, including Machinery construction Building materials Wood Processing Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative spaces 2. Incomes from consulting services Total VAT from Sales Net sales
I year Amount
II year Amount
III year Amount
IV year Amount
V year Amount
VI year Amount
VII year Amount
VIII year Amount
IX year Amount
X year Amount
36 370 324 38 188 840 40 098 282 42 103 196 44 208 356 46 418 774 48 739 712 51 176 698 53 735 533 56 422 309 10 529 438 1 120 496 554 036 101 696 460 163 2 617 864 12 597 869 8 388 762 9 456 284 11 055 910 1 176 520 581 737 106 781 483 171 2 748 758 13 227 762 8 808 200 9 929 098 11 608 706 1 235 346 610 824 112 120 507 329 2 886 196 13 889 150 9 248 611 12 189 141 1 297 114 641 366 117 726 532 696 3 030 505 14 583 608 9 711 041 12 798 598 1 361 970 673 434 123 612 559 330 3 182 031 15 312 788 10 196 593 13 438 528 1 430 068 707 105 129 793 587 297 3 341 132 16 078 428 10 706 423 14 110 454 1 501 571 742 461 136 282 616 662 3 508 189 16 882 349 11 241 744 14 815 977 1 576 650 779 584 143 096 647 495 3 683 598 17 726 466 11 803 831 15 556 776 1 655 482 818 563 150 251 679 870 3 867 778 18 612 790 12 394 023 16 334 615 1 738 257 859 491 157 764 713 863 4 061 167 19 543 429 13 013 724
10 425 553 10 946 831 11 494 172 12 068 881 12 672 325 13 305 941 13 971 239 14 669 800
45 826 608 48 117 938 50 523 835 53 050 027 55 702 528 58 487 655 61 412 037 64 482 639 67 706 771 71 092 110 7 637 768 8 019 656 8 420 639 8 841 671 9 283 755 9 747 942 10 235 340 10 747 107 11 284 462 11 848 685 38 188 840 40 098 282 42 103 196 44 208 356 46 418 774 48 739 712 51 176 698 53 735 533 56 422 309 59 243 425
Anenx 3. Income from leas of spaces
Operational income 1. Income from lease of available spaces, including Machinery construction Building materials Wood Processing Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative spaces 2. Incomes from consulting services Total 0 VAT from Sales Net sales
XI year Amount
XII year Amount
XIII year Amount
XIV year Amount
XV year Amount
XVI year Amount
XVII year Amount 79 391 855 22 984 443 2 445 902 1 209 390 221 989 1 004 477 5 714 470 27 499 568 18 311 616 20 641 882 100 033 738 16 672 290 83 361 448
XVIII year Amount 83 361 448 24 133 666 2 568 197 1 269 860 233 089 1 054 701 6 000 193 28 874 546 19 227 197 21 673 977 105 035 425 17 505 904 87 529 520
XIX year Amount 87 529 520 25 340 349 2 696 606 1 333 353 244 743 1 107 436 6 300 203 30 318 273 20 188 557 22 757 675 110 287 196 18 381 199 91 905 997
XX year Amount 91 905 997 26 607 366 2 831 437 1 400 020 256 981 1 162 808 6 615 213 31 834 187 21 197 985 23 895 559 115 801 556 19 300 259 96 501 296
59 243 425 62 205 596 65 315 876 68 581 670 72 010 753 75 611 291 17 151 346 1 825 169 902 466 165 652 749 556 4 264 225 20 520 601 13 664 410 18 008 913 1 916 428 947 589 173 935 787 034 4 477 437 21 546 631 14 347 630 18 909 358 2 012 249 994 968 182 631 826 386 4 701 308 22 623 962 15 065 012 19 854 826 2 112 862 1 044 717 191 763 867 705 4 936 374 23 755 160 15 818 263 20 847 568 2 218 505 1 096 953 201 351 911 090 5 183 193 24 942 918 16 609 176 21 889 946 2 329 430 1 151 800 211 418 956 645 5 442 352 26 190 064 17 439 634
15 403 290 16 173 455 16 982 128 17 831 234 18 722 796 19 658 936 74 646 715 78 379 051 82 298 004 86 412 904 90 733 549 95 270 226 12 441 119 13 063 175 13 716 334 14 402 151 15 122 258 15 878 371 62 205 596 65 315 876 68 581 670 72 010 753 75 611 291 79 391 855
Annex 4. Forecasted income from lease of available spaces
Type of activities Activities of construction machinery industry Processing of construction materials Management consulting services Wood and wood parts production Leased space for business incubator Activities of informational technologies Other activities, in leased spaces Leased space for business incubator Activities conducted by RifAcvaaparat Production activities conducted by Raut JSC RAUT administrative space Assumptions: I year of forecast Leased spaces, including: Machinery construction Construction materials Wood processind Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative surface Rental price: Machinery construction Construction materials Wood processind Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative surface Staffing average salary per month Year Machinery construction Construction materials Wood processind Production activities conducted by Raut Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative surface Total income
Surface m 2 22 882 2 435 221 1 904 700 1 000 8 615 1 300 5 689 27 377 1 800 I year
Pai = Tb x (1 + K1 + K2 + K3) x K4 x S, 460 460 460 460 0 460 920 0 460 460 920 II year
Tb 175,30 175,30 175,30 175,30 0,00 175,30 175,30 0,00 175,30 175,30 175,30 III year
K1 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 IV year
K2 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 V year
K3 1,50 1,50 1,50 1,50 0,00 1,50 1,50 0,00 1,50 1,50 1,50 VI year
K4 0,75 0,75 0,75 0,75 0,00 0,75 1,50 0,00 0,75 0,75 1,50 VII year
S, 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 VIII year IX year X year
69 923 m2 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 920 MDL 25 4 800 MDL 2011 10 529 438 1 120 496 554 036 101 696 460 163 2 617 864 12 597 869 8 388 762 36 370 324
69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 966 MDL 25 5 040 MDL 2012 11 055 910 1 176 520 581 737 106 781 483 171 2 748 758 13 227 762 8 808 200 38 188 840 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 1 015 MDL 25 5 292 MDL 533 MDL 533 MDL 533 MDL 533 MDL 533 MDL 533 MDL 533 MDL 1 065 MDL 25 5 557 MDL 559 MDL 559 MDL 559 MDL 559 MDL 559 MDL 559 MDL 559 MDL 1 119 MDL 25 5 834 MDL 587 MDL 587 MDL 587 MDL 587 MDL 587 MDL 587 MDL 587 MDL 1 175 MDL 25 6 126 MDL 617 MDL 617 MDL 617 MDL 617 MDL 617 MDL 617 MDL 617 MDL 1 233 MDL 25 6 432 MDL 647 MDL 647 MDL 647 MDL 647 MDL 647 MDL 647 MDL 647 MDL 1 295 MDL 25 6 754 MDL 680 MDL 680 MDL 680 MDL 680 MDL 680 MDL 680 MDL 680 MDL 1 360 MDL 25 7 092 MDL
69 923 m2 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2 714 MDL 714 MDL 714 MDL 714 MDL 714 MDL 714 MDL 714 MDL 1 428 MDL 25 7 446 MDL 2020 16 334 615 1 738 257 859 491 157 764 713 863 4 061 167 19 543 429 13 013 724 56 422 309
2013 2014 2015 2016 2017 2018 2019 11 608 706 12 189 141 12 798 598 13 438 528 14 110 454 14 815 977 15 556 776 1 235 346 1 297 114 1 361 970 1 430 068 1 501 571 1 576 650 1 655 482 610 824 641 366 673 434 707 105 742 461 779 584 818 563 112 120 117 726 123 612 129 793 136 282 143 096 150 251 507 329 532 696 559 330 587 297 616 662 647 495 679 870 2 886 196 3 030 505 3 182 031 3 341 132 3 508 189 3 683 598 3 867 778 13 889 150 14 583 608 15 312 788 16 078 428 16 882 349 17 726 466 18 612 790 9 248 611 9 711 041 10 196 593 10 706 423 11 241 744 11 803 831 12 394 023 40 098 282 42 103 196 44 208 356 46 418 774 48 739 712 51 176 698 53 735 533
Type of activities Activities of construction machinery industry Processing of construction materials Management consulting services Wood and wood parts production Leased space for business incubator Activities of informational technologies Other activities, in leased spaces Leased space for business incubator Activities conducted by RifAcvaaparat Production activities conducted by Raut JSC RAUT administrative space Assumptions: I year of forecast Leased spaces, including:
Surface m2 22 882 2 435 221 1 904 700 1 000 8 615 1 300 5 689 27 377 1 800 XI year
Pai = Tb x (1 + K1 + K2 + K3) x K4 x S, 460 460 460 460 0 460 920 0 460 460 920 XII year
Tb 175,30 175,30 175,30 175,30 0,00 175,30 175,30 0,00 175,30 175,30 175,30 XIII year
K1 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 XIV year
K2 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 XV year
K3 1,50 1,50 1,50 1,50 0,00 1,50 1,50 0,00 1,50 1,50 1,50 XVI year
K4 0,75 0,75 0,75 0,75 0,00 0,75 1,50 0,00 0,75 0,75 1,50 XVII year
S, 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 XVIII year XIX year XX year
69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 Machinery construction 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 Construction materials Wood processind 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 Management consulting 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 Informational technologies 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 Activities conducted by RifAcvaaparat 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 Production activities conducted by Raut 27 377 m2 Administrative surface 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 Rental price: Machinery construction 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Construction materials 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Wood processind 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Management consulting 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Informational technologies 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Activities conducted by RifAcvaaparat 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Production activities conducted by Raut Administrative surface 1 499 MDL 1 574 MDL 1 653 MDL 1 735 MDL 1 822 MDL 1 913 MDL 2 009 MDL 2 109 MDL 2 215 MDL 2 326 MDL Staffing 25 25 25 25 25 25 25 25 25 25 7 819 MDL 8 210 MDL 8 620 MDL 9 051 MDL 9 504 MDL 9 979 MDL 10 478 MDL 11 002 MDL 11 552 MDL 12 129 MDL average salary per month 0 Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Machinery construction 17 151 346 18 008 913 18 909 358 19 854 826 20 847 568 21 889 946 22 984 443 24 133 666 25 340 349 26 607 366 Construction materials 1 825 169 1 916 428 2 012 249 2 112 862 2 218 505 2 329 430 2 445 902 2 568 197 2 696 606 2 831 437 Wood processind 902 466 947 589 994 968 1 044 717 1 096 953 1 151 800 1 209 390 1 269 860 1 333 353 1 400 020 Production activities conducted by Raut 165 652 173 935 182 631 191 763 201 351 211 418 221 989 233 089 244 743 256 981 Informational technologies 749 556 787 034 826 386 867 705 911 090 956 645 1 004 477 1 054 701 1 107 436 1 162 808 Activities conducted by RifAcvaaparat 4 264 225 4 477 437 4 701 308 4 936 374 5 183 193 5 442 352 5 714 470 6 000 193 6 300 203 6 615 213 21 546 631 22 623 962 23 755 160 24 942 918 26 190 064 27 499 568 28 874 546 30 318 273 31 834 187 Production activities conducted by Raut 20 520 601 Administrative surface 13 664 410 14 347 630 15 065 012 15 818 263 16 609 176 17 439 634 18 311 616 19 227 197 20 188 557 21 197 985 Total income 59 243 425 62 205 596 65 315 876 68 581 670 72 010 753 75 611 291 79 391 855 83 361 448 87 529 520 91 905 997
Annex 5. Forecast consumption and expenses (VAT including)

I year Direct Consumptions Raw material Electrical power Salary Other costs subtotal Total direct consumptions Amount 75 000 145 000 540 000 106 000 866 000 866 000 II year Amount 78 750 152 250 567 000 111 300 909 300 909 300
III year
Amount 82 688 159 863 595 350 116 865 954 765 954 765
IV year
Amount 86 822 167 856 625 118 122 708 1 002 503 1 002 503
V year
Amount 91 163 176 248 656 373 128 844 1 052 628 1 052 628
VI year
Amount 95 721 185 061 689 192 135 286 1 105 260 1 105 260
VII year
Amount 100 507 194 314 723 652 142 050 1 160 523 1 160 523
VIII year
Amount 105 533 204 030 759 834 149 153 1 218 549 1 218 549
IX year
Amount 110 809 214 231 797 826 156 610 1 279 476 1 279 476
X year
Amount 116 350 224 943 837 717 164 441 1 343 450 1 343 450
I year Indirect consumptions Reparation and maintenance of fixed assets fixed assets depreciation subtotal Total indirect consumptions Amount 713 830 11 897 163 12 610 993 12 610 993
II year Amount 749 521 11 897 163 12 646 684 12 646 684
III year Amount 786 997 11 897 163 12 684 160 12 684 160
IV year Amount 826 347 11 897 163 12 723 510 12 723 510
V year Amount 867 665 11 897 163 12 764 828 12 764 828
VI year Amount 911 048 11 897 163 12 808 211 12 808 211
VII year Amount 956 600 11 897 163 12 853 763 12 853 763
VIII year Amount 1 004 430 11 897 163 12 901 593 12 901 593
IX year Amount 1 054 652 11 897 163 12 951 815 12 951 815
X year Amount 1 107 384 11 897 163 13 004 547 13 004 547
I year Operational expenses Commercial expenses Marketing, promotion Others subtotal General & administrative expenses Salary & social insurance Transporation Banking and telephone expenses Administrative mainenance Taxes Other subtotal Other operational expenses Interest rate Other subtotal 8 061 244 250 000 8 311 244 11 621 244 25 098 237 900 000 260 000 150 000 800 000 150 000 150 000 2 410 000 150 000 750 000 900 000 Amount
II year Amount
III year Amount
IV year Amount
V year Amount
VI year Amount
VII year Amount
VIII year Amount
IX year Amount
X year Amount
157 500 787 500 945 000 945 000 273 000 157 500 840 000 157 500 157 500 2 530 500 8 061 244 262 500 8 323 744 11 799 244 25 355 229
165 375 826 875 992 250 992 250 286 650 165 375 882 000 165 375 165 375 2 657 025 8 061 244 275 625 8 336 869 11 986 144 25 625 070
173 644 868 219 1 041 863 1 041 863 300 983 173 644 926 100 173 644 173 644 2 789 876 8 061 244 289 406 8 350 651 12 182 389 25 908 403
182 326 911 630 1 093 956 1 093 956 316 032 182 326 972 405 182 326 182 326 2 929 370 8 061 244 303 877 8 365 121 12 388 447 26 205 903
191 442 957 211 1 148 653 1 148 653 331 833 191 442 1 021 025 191 442 191 442 3 075 839 8 061 244 319 070 8 380 315 12 604 807 26 518 277
201 014 1 005 072 1 206 086 1 206 086 348 425 201 014 1 072 077 201 014 201 014 3 229 630 6 448 995 335 024 6 784 019 11 219 736 25 234 022
211 065 1 055 325 1 266 390 1 266 390 365 846 211 065 1 125 680 211 065 211 065 3 391 112 4 836 747 351 775 5 188 522 9 846 024 23 966 166
221 618 1 108 092 1 329 710 1 329 710 384 138 221 618 1 181 964 221 618 221 618 3 560 668 3 224 498 369 364 3 593 862 8 484 239 22 715 530
232 699 1 163 496 1 396 195 1 396 195 403 345 232 699 1 241 063 232 699 232 699 3 738 701 1 612 249 387 832 2 000 081 7 134 977 21 482 975
Total
Total expenses

XI year Direct Consumptions Raw material Electrical power Salary Other costs subtotal Total direct consumptions Amount 122 167 236 190 879 603 172 663 1 410 623 1 410 623 XII year Amount 128 275 247 999 923 583 181 296 1 481 154 1 481 154 XIII year Amount 134 689 260 399 969 762 190 361 1 555 212 1 555 212 XIV year Amount 141 424 273 419 1 018 251 199 879 1 632 972 1 632 972 XV year Amount 148 495 287 090 1 069 163 209 873 1 714 621 1 714 621 XVI year Amount 155 920 301 445 1 122 621 220 366 1 800 352 1 800 352 XVII year Amount 163 716 316 517 1 178 752 231 385 1 890 369 1 890 369 XVIII year Amount 171 901 332 343 1 237 690 242 954 1 984 888 1 984 888 XIX year Amount 180 496 348 960 1 299 574 255 102 2 084 132 2 084 132 XX year Amount 189 521 366 408 1 364 553 267 857 2 188 339 2 188 339
XI year Indirect consumptions Reparation and maintenance of fixed assets fixed assets depreciation subtotal Total indirect consumptions Amount 1 162 753 11 897 163 13 059 917 13 059 917
XII year Amount 1 220 891 11 897 163 13 118 054 13 118 054
XIII year Amount 1 281 936 11 897 163 13 179 099 13 179 099
XIV year Amount 1 346 033 11 897 163 13 243 196 13 243 196
XV year Amount 1 413 334 11 897 163 13 310 497 13 310 497
XVI year Amount 1 484 001 11 897 163 13 381 164 13 381 164
XVII year Amount 1 558 201 11 897 163 13 455 364 13 455 364
XVIII year Amount 1 636 111 11 897 163 13 533 274 13 533 274
XIX year Amount 1 717 916 11 897 163 13 615 080 13 615 080
XX year Amount 1 803 812 11 897 163 13 700 975 13 700 975
XI year Operational expenses Commercial expenses Marketing, promotion Others subtotal General & administrative expenses Salary & social insurance Transporation Banking and telephone expenses Administrative mainenance Taxes Other subtotal Other operational expenses Interest rate Other subtotal Total Total expenses 0 407 224 407 224 5 798 865 20 269 404 1 466 005 423 513 244 334 1 303 116 244 334 244 334 3 925 636 244 334 1 221 671 1 466 005 Amount
XII year Amount
XIII year Amount
XIV year Amount
XV year Amount
XVI year Amount
XVII year Amount
XVIII year Amount
XIX year Amount
XX year Amount
256 551 1 282 755 1 539 305 1 539 305 444 688 256 551 1 368 271 256 551 256 551 4 121 918 0 427 585 427 585 6 088 808 20 688 016
269 378 1 346 892 1 616 271 1 616 271 466 923 269 378 1 436 685 269 378 269 378 4 328 014 0 448 964 448 964 6 393 249 21 127 559
282 847 1 414 237 1 697 084 1 697 084 490 269 282 847 1 508 519 282 847 282 847 4 544 414 0 471 412 471 412 6 712 911 21 589 079
296 990 1 484 949 1 781 938 1 781 938 514 782 296 990 1 583 945 296 990 296 990 4 771 635 0 494 983 494 983 7 048 556 22 073 674
311 839 1 559 196 1 871 035 1 871 035 540 521 311 839 1 663 143 311 839 311 839 5 010 217 0 519 732 519 732 7 400 984 22 582 500
327 431 1 637 156 1 964 587 1 964 587 567 547 327 431 1 746 300 327 431 327 431 5 260 728 0 545 719 545 719 7 771 034 23 116 767
343 803 1 719 014 2 062 816 2 062 816 595 925 343 803 1 833 615 343 803 343 803 5 523 764 0 573 005 573 005 8 159 585 23 677 747
360 993 1 804 964 2 165 957 2 165 957 625 721 360 993 1 925 295 360 993 360 993 5 799 952 0 601 655 601 655 8 567 564 24 266 776
379 043 1 895 213 2 274 255 2 274 255 657 007 379 043 2 021 560 379 043 379 043 6 089 950 0 631 738 631 738 8 995 943 24 885 257
Annex 6. Calculation of wear
Initial cost
lei
Depreciation ratio
(%)
Residual value
lei
Value of annual depreciation

lei
Existing fixed assets New investments in reparation Total
94 058 509 408 837 218
3% 3%
2 821 755 12 265 117
2 737 103 11 897 163 14 634 266
Annex 7. Forecast financial results
Indicators 1. Net Sales 2. Cost of sales 3. Gross Profit 4. Other operational income 5.Commercial expenses 6. General & administrative expenses 7.Other operational expenses 8. Results from operating activities (3+4567) 9.Results from investment activity 10. Results from financial activity 11.Results of financial and economic activity (8+9+10) 12.Results from exceptional activity 13.Profit before taxes (11+12) 14.Income tax 15.Net profit (13+14)
No row 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
I year 38 188 840 13 303 688 24 885 152 750 000 2 183 333 8 269 578 13 682 241
II year 40 098 282 13 374 014 26 724 268 787 500 2 292 500 8 279 994 15 364 273
III year 42 103 196 13 447 857 28 655 339 826 875 2 407 125 8 290 932 17 130 407
IV year 44 208 356 13 525 391 30 682 964 868 219 2 527 481 8 302 416 18 984 848
V year 46 418 774 13 606 803 32 811 971 911 630 2 653 855 8 314 475 20 932 011
VI year 48 739 712 13 692 285 35 047 427 957 211 2 786 548 8 327 136 22 976 532
VII year 51 176 698 13 782 041 37 394 657 1 005 072 2 925 875 6 728 182 26 735 528
VIII year 53 735 533 13 876 285 39 859 248 1 055 325 3 072 169 5 129 893 30 601 861
IX year 56 422 309 13 975 241 42 447 069 1 108 092 3 225 778 3 532 301 34 580 898
X year 59 243 425 14 079 145 45 164 280 1 163 496 3 387 067 1 935 442 38 678 275
13 682 241
15 364 273
17 130 407
18 984 848
20 932 011
22 976 532
26 735 528
30 601 861
34 580 898
38 678 275
13 682 241
15 364 273
17 130 407
18 984 848
20 932 011
22 976 532
26 735 528
30 601 861
34 580 898
38 678 275
(1 368 224) (1 536 427) (1 713 041) (1 898 485) (2 093 201) (2 297 653) (2 673 553) (3 060 186) (3 458 090) (3 867 828) 12 314 017 13 827 846 15 417 367 17 086 363 18 838 810 20 678 879 24 061 975 27 541 675 31 122 808 34 810 448
No row 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
XI year 62 205 596 14 188 244 48 017 352 0 1 221 671 3 556 420 339 353 42 899 908 42 899 908 0 42 899 908
XII year 65 315 876 14 302 798 51 013 078 0 1 282 755 3 734 241 356 321 45 639 762 45 639 762 0 45 639 762
XIII year 68 581 670 14 423 080 54 158 590 0 1 346 892 3 920 953 374 137 48 516 608 48 516 608 0 48 516 608
XIV year 72 010 753 14 549 375 57 461 378 0 1 414 237 4 117 001 392 844 51 537 297 51 537 297 0 51 537 297
XV year 75 611 291 14 681 986 60 929 305 0 1 484 949 4 322 851 412 486 54 709 020 54 709 020 0 54 709 020
XVI year 79 391 855 14 821 227 64 570 628 0 1 559 196 4 538 993 433 110 58 039 329 58 039 329 0 58 039 329
XVII year 83 361 448 14 967 430 68 394 018 0 1 637 156 4 765 943 454 766 61 536 153 61 536 153 0 61 536 153
XVIII year 87 529 520 15 120 944 72 408 577 0 1 719 014 5 004 240 477 504 65 207 819 65 207 819 0 65 207 819
XIX year 91 905 997 15 282 133 76 623 864 0 1 804 964 5 254 452 501 379 69 063 068 69 063 068 0 69 063 068
XX year 96 501 296 15 451 381 81 049 915 0 1 895 213 5 517 175 526 448 73 111 080 73 111 080 0 73 111 080
(4 289 991) (4 563 976) (4 851 661) (5 153 730) (5 470 902) (5 803 933) (6 153 615) (6 520 782) (6 906 307) (7 311 108) 38 609 918 41 075 786 43 664 947 46 383 567 49 238 118 52 235 396 55 382 538 58 687 037 62 156 762 65 799 972
Annex 8. Forecast cash flow

Total I an2 I A Operational Activity cash earnings earnings from sales earnings from space leasing earnings from leasing of administrative spaces earnings from consulting earnings from receivables other earnings Total earnings cash payments Payments to suppliers and contractors Salary and social insrance payments interest payments payment of income tax other payments (including VAT) Taxes VAT Others Total payments NET FLOW from OPERATIONAL ACTIVITY C Investment Activity earnings from the output of long term assets payments for purchase of long term assets Feasibility study elaboration technical expertise and obtainance of documents and agreements needed for design Design work, prospectings, copyright control, it's expertise and obtainance of necessary acts Completion of the construction and assembly activities Reception of the completed activities and documents preparation other assets purchaisings Interest received Dividends received others NET FLOW from INVESTMENT ACTIVITY D Financial Activity earnings from loans and credits earnings from the issue of own shares others Subtotal payments for loans and credits dividend payment payments for purchasing of own shares others Subtotal NET FLOW from FINANCIAL ACTIVITY NET FLOW from economic activity Exceptional earnings (payments) H TOTAL NET FLOW Exchange differences I J Cash balance at the beginning of the period Cash balance at the end of the period 5 400 5 400 5 400 5 400 5 400 28 971 379 28 971 379 61 980 258 61 980 258 97 063 447 97 063 447 134 210 413 134 210 413 173 518 332 173 518 332 172 510 517 172 510 517 173 644 280 173 644 280 176 990 422 176 990 422 172 211 455 28 965 979 33 008 879 35 083 189 37 146 966 39 307 919 (1 007 815) 1 133 763 3 346 142 (4 778 967) 43 535 277 26 582 483 7 969 324 8 983 470 48 003 372 27 911 607 8 367 790 9 432 643 2 291 330 48 003 372 3 727 321 1 512 000 8 061 244 1 536 427 157 500 157 500 14 994 493 33 008 879 50 524 137 29 307 188 8 786 180 9 904 276 2 526 493 50 524 137 3 913 687 1 587 600 8 061 244 1 713 041 165 375 165 375 15 440 947 35 083 189 53 056 691 30 772 547 9 225 489 10 399 489 2 659 165 53 056 691 4 109 372 1 666 980 8 061 244 1 898 485 173 644 173 644 15 909 725 37 146 966 55 709 859 32 311 175 9 686 763 10 919 464 2 792 457 55 709 859 4 314 840 1 750 329 8 061 244 2 093 201 182 326 182 326 16 401 941 39 307 919 58 495 370 33 926 733 10 171 102 11 465 437 2 932 098 58 495 370 4 530 582 1 837 845 8 061 244 2 297 653 191 442 191 442 16 918 768 41 576 602 61 420 139 35 623 070 10 679 657 12 038 709 3 078 704 61 420 139 4 757 111 1 929 738 6 448 995 2 673 553 201 014 201 014 16 010 412 45 409 727 64 491 146 37 404 223 11 213 640 12 640 644 3 232 639 64 491 146 4 994 967 2 026 225 4 836 747 3 060 186 211 065 211 065 15 129 189 49 361 957 67 715 704 39 274 435 11 774 322 13 272 677 3 394 271 67 715 704 5 244 715 2 127 536 3 224 498 3 458 090 10 633 450 221 618 10 411 831 24 688 288 43 027 415 Total II year1 Total I year Total II year Total III year Total IV year Total V year Total VI year Total VII year Total VIII year Total IX year
43 535 277 3 549 830 1 440 000 8 061 244 1 368 224 150 000 150 000 14 569 298 28 965 979
247 612 331 866 250 577 500 4 331 250 241 837 331
161 224 887
149 133 021 12 091 867
(247 612 331) (161 224 887) 247 612 331 247 612 331 161 224 887
32 244 977 10 339 439
32 244 977 12 030 987
32 244 977 13 770 837
32 244 977 15 561 404
161 224 887
247 612 331
161 224 887
28 965 979
33 008 879
35 083 189
37 146 966
39 307 919
42 584 417
44 275 965
46 015 815
47 806 382
(42 584 417) (44 275 965) (46 015 815) (47 806 382) (1 007 815) 1 133 763 3 346 142 (4 778 967)

Total X year 71 101 489 41 238 156 12 363 038 13 936 310 3 563 984 71 101 489 5 506 951 2 233 913 1 612 249 3 867 828 11 165 122 232 699 10 932 423 24 386 062 46 715 426 32 244 977 17 405 224 49 650 201 Total XI year 74 656 563 43 300 064 12 981 189 14 633 126 3 742 184 74 656 563 5 782 299 2 345 608 4 289 991 11 723 378 244 334 11 479 044 24 141 276 50 515 287 19 304 959 19 304 959 Total XII year 78 389 391 45 465 067 13 630 249 15 364 782 3 929 293 78 389 391 6 071 414 2 462 889 4 563 976 12 309 547 256 551 12 052 996 25 407 826 52 981 566 20 537 893 20 537 893 Total XIII year 82 308 861 47 738 321 14 311 761 16 133 021 4 125 757 82 308 861 6 374 984 2 586 033 4 851 661 12 925 025 269 378 12 655 646 26 737 703 55 571 158 21 832 474 21 832 474 Total XIV year 86 424 304 50 125 237 15 027 349 16 939 672 4 332 045 86 424 304 6 693 733 2 715 335 5 153 730 13 571 276 282 847 13 288 428 28 134 074 58 290 230 23 191 784 23 191 784 Total XV year 90 745 519 52 631 499 15 778 717 17 786 656 4 548 648 90 745 519 7 028 420 2 851 102 5 470 902 14 249 840 296 990 13 952 850 29 600 263 61 145 256 24 619 059 24 619 059 Total XVI year 95 282 795 55 263 073 16 567 653 18 675 989 4 776 080 95 282 795 7 379 841 2 993 657 5 803 933 14 962 332 311 839 14 650 492 31 139 762 64 143 033 26 117 698 26 117 698 Total XVII year 100 046 935 58 026 227 17 396 035 19 609 788 5 014 884 100 046 935 7 748 833 3 143 339 6 153 615 15 710 448 327 431 15 383 017 32 756 236 67 290 699 27 691 269 27 691 269 Total XVIII year 105 049 282 60 927 539 18 265 837 20 590 278 5 265 628 105 049 282 8 136 275 3 300 506 6 520 782 16 495 971 343 803 16 152 168 34 453 534 70 595 748 29 343 519 29 343 519 Total XIX year 110 301 746 63 973 915 19 179 129 21 619 792 5 528 910 110 301 746 8 543 089 3 465 532 6 906 307 17 320 769 360 993 16 959 776 36 235 696 74 066 049 31 078 381 31 078 381 Total XX year 115 816 833 67 172 611 20 138 085 22 700 781 5 805 355 115 816 833 8 970 243 3 638 808 7 311 108 18 186 807 379 043 17 807 765 38 106 967 77 709 866 32 899 986 32 899 986
Operational Activity cash earnings earnings from sales earnings from space leasing earnings from leasing of administrative spaces earnings from consulting earnings from receivables other earnings Total earnings cash payments Payments to suppliers and contractors Salary and social insrance payments interest payments payment of income tax other payments (including VAT) Taxes VAT Others Total payments NET FLOW from OPERATIONAL ACTIVITY Investment Activity earnings from the output of long term assets payments for purchase of long term assets Feasibility study elaboration technical expertise and obtainance of documents and agreements needed for design Design work, prospectings, copyright control, it's expertise and obtainance of necessary acts Completion of the construction and assembly activities Reception of the completed activities and documents preparation other assets purchaisings Interest received Dividends received others NET FLOW from INVESTMENT ACTIVITY Financial Activity earnings from loans and credits earnings from the issue of own shares others Subtotal payments for loans and credits dividend payment payments for purchasing of own shares others Subtotal NET FLOW from FINANCIAL ACTIVITY NET FLOW from economic activity Exceptional earnings (payments) TOTAL NET FLOW Exchange differences Cash balance at the beginning of the period Cash balance at the end of the period
(49 650 201) (19 304 959) (20 537 893) (21 832 474) (23 191 784) (24 619 059) (26 117 698) (27 691 269) (29 343 519) (31 078 381) (32 899 986) (2 934 775) 31 210 328 32 443 673 32 443 673 200 487 009 232 930 681 33 738 684 33 738 684 232 930 681 266 669 366 35 098 447 35 098 447 266 669 366 301 767 813 36 526 197 36 526 197 301 767 813 338 294 010 38 025 335 38 025 335 338 294 010 376 319 344 39 599 430 39 599 430 376 319 344 415 918 774 41 252 229 41 252 229 415 918 774 457 171 003 42 987 669 42 987 669 457 171 003 500 158 672 44 809 880 44 809 880 500 158 672 544 968 552
(2 934 775) 31 210 328 172 211 455 169 276 680 169 276 680 200 487 009
Annex 9. Forecast balance sheet
ASSETS LongTerm Assets Intangible 1 assets Intangible assets 1.1 (111,112) Intangible assets amortization (113) Intangible assets ( 010020) LongTerm material Assets working 1,2 material assets (121) Land(122) Fixed assets (123) Natural ressources (125) Depreciation of fixed assets (124,126) LongTerm material Assets (040+050+ 060+070 080) LongTerm financial Assets Long 1,3 term investments unrelated parties (131)
row
2010
I an 2 300 402 118
II an1 434 756 190 434 756 190
I year
II year
III year
IV year
V year
VI year
VII year
VIII year
IX year
010 020 030
040 050 060 070 080 090 149 810 512
434 756 190 434 756 190 434 756 190
434 756 190
434 756 190
434 756 190
434 756 190
434 756 190
434 756 190
(55 752 003) 94 058 509 300 402 118
(11 897 163) (23 794 326) (35 691 489) (47 588 652) (59 485 815) (71 382 978) (83 280 141) (95 177 304) (107 074 467) 422 859 027 410 961 864 399 064 701 387 167 538 375 270 375 363 373 212 351 476 049 339 578 886 327 681 723
100 110 120 130 140 150 160 170 180 94 058 509 190 200 210 220 230 240 250
410 961 864
399 064 701
387 167 538
375 270 375
363 373 212
351 476 049
339 578 886
327 681 723
Longterm investments related parties (132) Change of Longterm investments (133) Longterm receivables (134) Deffered income tax (135) expenses paid in advance (136) Total 1.3 (100+110+120+ +130+140+150) 1,4 Other Longterm assets (141,142) Total chapter 1 (030+090+160+170) 2 2.1 CURRENT ASSETS Raw materials&components stocks Materials (211) Animal rearing and fattening (212) Work in progress inventory(213214) Production in progress (215) Finished goods (216) Shipped goods(217) Total 2.1 (190+200+210 + +220+140+150)
300 402 118
434 756 190
422 859 027
Accounts receivable 2,2 Accounts receivable from customers (221) Adjustments on doubtful debts (222) Receivables from related parties (223) expenses paid in advance (224) Receivables from budget(225) Preliminary Claims (226) Receivables from personnel (227) Shortterm receivables on income calculated (228) Other receivables(229) Total 2.2 (260270+280+ 290+300+310+320+ 330+340) Current financial investment 2,3 Current financial investment in unrelated parties (231) Current financial investment in related parties (232) Decrease of shortterm investments (233) Total 2.3 (360+370+380) 2,4 Cash Cash (241)
260 270 280 290 300 310 320 330 340 350
41 268 722 41 268 722 5 400 5 400 68 139 536 68 139 536 5 400 5 400
2 291 330 61 475 295 63 766 625 2 897 138 26 074 241 28 971 379
2 526 493 54 095 953 56 622 446 6 198 026 55 782 232 61 980 258 118 602 704 529 564 569
2 659 165 46 327 545 48 986 710 9 706 345 87 357 102 97 063 447 146 050 157 545 114 858
2 792 457 38 169 659 40 962 116 13 421 041 120 789 372 134 210 413 175 172 529 562 340 067
2 932 098 29 603 822 32 535 920 17 351 833 156 166 499 173 518 332 206 054 252 581 324 627
3 078 704
3 232 639
3 394 271 1 249 823 4 644 094 17 699 042 159 291 380 176 990 422 181 634 516 521 213 402
3 563 984 3 563 984 17 221 146 154 990 310 172 211 455 175 775 440 503 457 163
20 609 691 23 688 394 17 251 052 155 259 465 172 510 517 196 198 912 559 572 124
11 165 853 14 398 492 17 364 428 156 279 852 173 644 280 188 042 772 539 518 821
360 370 380 390 400 5 400 5 400
Current accounts in local currency(242) Current accounts in foreign currency (243) Other cash (244, 245, 246) Total 2.4 (400+410+ 420+430) 2,5 Other current assets (251, 252) TOTAL chapter 2 (250+ 350+390+440+450) TOTAL ASSETS (180+460)
410 420 430 440 450 460 470
5 400 94 063 909
41 274 122 341 676 240
68 144 936 502 901 127
92 738 005 515 597 032
Nr. LIABILITIES n.s. 3 3.1 EQUITY Share and additional capital Share capital (311) Additional capital (312) Unpaid capital (313) Capital withdraw (314) Total.3.1 (480+490500510) Reserves 3,2 Reserves according to law (321) Reserves according to statutory doc. (322) Others (323) Total 3.2 (530+540+550) Profit and loss surplus (331) 3,3
Cod
2010 94 063 909
I an 2 341 676 240 341 676 240
II an1 341 676 240 341 676 240
I year 341 676 240 341 676 240 12 314 017
II year 341 676 240 341 676 240 12 314 017 13 827 846
III year 341 676 240 341 676 240 26 141 863 15 417 367
IV year 341 676 240 341 676 240 41 559 230 17 086 363
V year 341 676 240 341 676 240 58 645 593 18 838 810
VI year 341 676 240 341 676 240 67 144 964 20 678 879
VII year 341 676 240 341 676 240 75 792 855 24 061 975
VIII year 341 676 240 341 676 240 86 083 992 27 541 675
IX year 341 676 240 341 676 240 98 064 263 31 122 808
480 490 500 510 520 94 063 909 570
530 540 550 560
Retained earnings (uncovered loss) of previous years (332) Net profit (loss) (333) Used profit (334) Total 3.3 ( 570580 590600) Secondary capital Differences 3,4 from revaluation of long term assets (341) Grants (342) Total 3.4 (620630) TOTAL chapter 3 (520+560610640) 4. 4.1 Long term liabilities Financial Long term liabilities Bank credits (411,412) Loans (413) Others (414) Total 4.1 (660+670+680) Accounted Long term liabilities Lease 4,2 Long term liabilities (421) Anticipated longterm revenue (422) Special revenues (423) Revenues received in advance (424) Deffered tax(425) Others (426) Total 4.2 (700+710+720+ 730+740+750)
580 590 600 610 620 630 640 650 660 670 680 690 700 710 720 730 740 750 760
94 063 909
341 676 240
341 676 240 161 224 887 161 224 887
12 314 017 353 990 256 161 224 887 161 224 887
26 141 863 367 818 103 161 224 887 161 224 887
41 559 230 383 235 469 161 224 887 161 224 887
58 645 593 400 321 833 161 224 887 161 224 887
77 484 403 419 160 642 161 224 887 161 224 887
87 823 842 429 500 082 128 979 910 128 979 910
99 854 830 441 531 069 96 734 932 96 734 932
113 625 667 455 301 907 64 489 955 64 489 955
129 187 071 470 863 311 32 244 977 32 244 977
Total chapter 4 (690+760) 5 5.1 Short term liabilities Financial short term liabilities Bank credits (511,512) Loans (513) Current share of longterm liabilities (514) Others (515, 516) Total.5.1 (780+790+800+810) Short term commercial liabilities 5,2 Short term commercial liabilities (521) Short term liabilities to related parties (522) Revenues received in advance(523) Total 5.2 (830+840+850) 5,3 Acconted Short term liabilities Accounted salary (531) Other accounted liabilities to personnel (532) Accounted Social insurance (533) Taxes payable (534) Preliminary liabilities (535) Extrabudget liabilities (536) Shareholders payable (537) future expenses and payments provisions (538) Others (539) Total 5.3 (870+880+890+ 900+910+920+930+940+950) TOTAL chapter 5 (820+860+960) TOTAL LIABILITIES (650+770+970)
770 780 790 800 810 820 830 840 850 860 870 880 890 900 910 920 930 940 950 960 970 980
94 063 909
341 676 240
161 224 887 502 901 127
161 224 887 381 888 381 888 381 888 515 597 032
161 224 887 521 579 521 579 521 579 529 564 569
161 224 887 654 502 654 502 654 502 545 114 858
161 224 887 793 348 793 348 793 348 562 340 067
161 224 887 939 097 939 097 939 097 581 324 627
128 979 910 1 092 132 1 092 132 1 092 132 559 572 124
96 734 932 1 252 819 1 252 819 1 252 819 539 518 821
64 489 955 1 421 540 1 421 540 1 421 540 521 213 402
32 244 977 348 874 348 874 348 874 503 457 163
Nr. n.s.
ASSETS
row
X year
XI year 434 756 190
XII year 434 756 190
XIII year 434 756 190
XIV year 434 756 190
XV year 434 756 190
XVI year 434 756 190
XVII year 434 756 190
XVIII year 434 756 190
XIX year 434 756 190
XX year 434 756 190
LongTerm Assets Intangible 1 assets Intangible assets 1.1 (111,112) Intangible assets amortization (113) Intangible assets ( 010020) LongTerm material Assets working 1,2 material assets (121) Land(122) Fixed assets (123) Natural ressources (125) Depreciation of fixed assets (124,126) LongTerm material Assets (040+050+ 060+070 080) LongTerm financial Assets Long 1,3 term investments unrelated parties (131)
010 020 030 434 756 190
040 050 060 070 080 090
(118 971 630) (130 868 793) (142 765 956) (154 663 119) (166 560 282) (178 457 445) (190 354 609) (202 251 772) (214 148 935) (226 046 098) (237 943 261) 315 784 560 303 887 397 291 990 234 280 093 071 268 195 908 256 298 745 244 401 582 232 504 419 220 607 256 208 710 093 196 812 930
100 110 120 130 140 150 160 170 180 315 784 560 190 200 210 220 230 240 250
303 887 397
291 990 234
280 093 071
268 195 908
256 298 745
244 401 582
232 504 419
220 607 256
208 710 093
196 812 930
260 270 280 290 300 310 320 330 340 350
3 742 184 3 742 184
3 929 293 3 929 293 20 048 701 180 438 308 200 487 009 204 416 302 508 303 698
4 125 757 4 125 757 23 293 068 209 637 613 232 930 681 237 056 439 529 046 673
4 332 045 4 332 045 26 666 937 240 002 429 266 669 366 271 001 411 551 094 482
4 548 648 4 548 648 30 176 781 271 591 031 301 767 813 306 316 460 574 512 368
4 776 080 4 776 080 33 829 401 304 464 609 338 294 010 343 070 090 599 368 834
5 014 884 5 014 884 37 631 934 338 687 410 376 319 344 381 334 228 625 735 810
5 265 628 5 265 628 41 591 877 374 326 897 415 918 774 421 184 402 653 688 821
5 528 910 5 528 910 45 717 100 411 453 903 457 171 003 462 699 913 683 307 168
5 805 355 5 805 355 50 015 867 450 142 805 500 158 672 505 964 027 714 674 120
6 095 623 6 095 623 54 496 855 490 471 697 544 968 552 551 064 175 747 877 104
360 370 380 390 400 16 927 668 152 349 012 169 276 680 173 018 864 488 803 424
410 420 430 440 450 460 470
Cod
X year 341 676 240
XI year 341 676 240 341 676 240 127 287 336 38 609 918 165 897 254 507 573 493
XII year 341 676 240 341 676 240 145 359 361 41 075 786 186 435 147 528 111 386
XIII year 341 676 240 341 676 240 164 602 673 43 664 947 208 267 620 549 943 860
XIV year 341 676 240 341 676 240 185 075 837 46 383 567 231 459 404 573 135 644
XV year 341 676 240 341 676 240 206 840 345 49 238 118 256 078 463 597 754 702
XVI year 341 676 240 341 676 240 229 960 765 52 235 396 282 196 161 623 872 400
XVII year 341 676 240 341 676 240 254 504 892 55 382 538 309 887 430 651 563 669
XVIII year 341 676 240 341 676 240 280 543 911 58 687 037 339 230 949 680 907 188
XIX year 341 676 240 341 676 240 308 152 568 62 156 762 370 309 329 711 985 569
XX year 341 676 240 341 676 240 337 409 343 65 799 972 403 209 315 744 885 555
480 490 500 510 520 341 676 240 570
530 540 550 560
Retained earnings (uncovered loss) of previous years (332) Net profit (loss) (333) Used profit (334) Total 3.3 ( 570580 590600) Secondary capital Differences 3,4 from revaluation of long term assets (341) Grants (342) Total 3.4 (620630) TOTAL chapter 3 (520+560610640) 4. 4.1 Long term liabilities Financial Long term liabilities Bank credits (411,412) Loans (413) Others (414) Total 4.1 (660+670+680) Accounted Long term liabilities Lease 4,2 Long term liabilities (421) Anticipated longterm revenue (422) Special revenues (423) Revenues received in advance (424) Deffered tax(425) Others (426) Total 4.2 (700+710+720+ 730+740+750) Total chapter 4 (690+760)
580 590 600 610 620 630 640 650 660 670 680 690 700 710 720 730 740 750 760 770
111 781 848 34 810 448 146 592 295 488 268 535
5 5.1 Short term liabilities Financial short term liabilities Bank credits (511,512) Loans (513) Current share of longterm liabilities (514) Others (515, 516) Total.5.1 (780+790+800+810) Short term commercial liabilities 5,2 Short term commercial liabilities (521) Short term liabilities to related parties (522) Revenues received in advance(523) Total 5.2 (830+840+850) 5,3 Acconted Short term liabilities Accounted salary (531) Other accounted liabilities to personnel (532) Accounted Social insurance (533) Taxes payable (534) Preliminary liabilities (535) Extrabudget liabilities (536) Shareholders payable (537) future expenses and payments provisions (538) Others (539) Total 5.3 (870+880+890+ 900+910+920+930+940+950) TOTAL chapter 5 (820+860+960) TOTAL LIABILITIES (650+770+970)
780 790 800 810 820 830 840 850 860 870 880 890 900 910 920 930 940 950 960 970 980
534 889 534 889 534 889 488 803 424
730 205 730 205 730 205 508 303 698
935 287 935 287 935 287 529 046 673
1 150 622 1 150 622 1 150 622 551 094 482
1 376 724 1 376 724 1 376 724 574 512 368
1 614 132 1 614 132 1 614 132 599 368 834
1 863 410 1 863 410 1 863 410 625 735 810
2 125 152 2 125 152 2 125 152 653 688 821
2 399 980 2 399 980 2 399 980 683 307 168
2 688 551 2 688 551 2 688 551 714 674 120
2 991 549 2 991 549 2 991 549 747 877 104
Annex 10. Financial indicators
Indicators
Optimal values
Indicators forecasts I year II year III year IV year V year VI year VII year VIII year IX year X year
liquidity indicators
Liquidity Ratio (Coverage) Intermediate Liquidity (Acid Test) Immediate liquidity Working capital (thousand, MDL) >1,5 >0,7 >0,1
242,84 242,84 75,86 92 356,1
227,39 227,39 118,83 118 081,1
223,15 223,15 148,30 145 395,7
220,80 220,80 169,17 174 379,2
219,42 219,42 184,77 205 115,2
179,65 179,65 157,96 195 106,8
150,10 150,10 138,60 186 790,0
127,77 127,77 124,51 180 213,0
503,84 503,84 493,62 175 426,6
323,47 323,47 316,47 172 484,0
financial stability
Capital Adequacy Ratio Leverage Ratio Financial Stability Coefficient Interest Coverage Ratio Debt Service Ratio debt service rate >1,2 >30% <2,33
69% 0,31 0,18
69% 0,31 0,22
70% 0,30 0,27 4,55 5,35 4,4
71% 0,29 0,31 4,81 5,61 4,6
72% 0,28 0,35 5,07 5,88 4,8
77% 0,23 0,35 5,35 0,97 1,0
82% 0,18 0,35 6,80 1,03 1,1
87% 0,13 0,35 9,24 1,09 1,2
94% 0,06 0,35 14,16 0,87 1,3
100% 0,00 0,35 0,91 1,4
turnover speed
Time of turnover of assets (days) Time of turnover of long term assets (days) Time of turnover of current assets Time of turnover of shortterm receivables (days) Time of turnover of loan debt (days) Time of turnover of stocks of commodities and materials (days) Number of days per period, days
365
4 769,9 3 805,4 964,5 549,4 12,4 0,0 366
4 658,3 3 511,1 1 147,2 457,8 16,0 0,0 365
4 571,8 3 245,7 1 326,1 371,3 19,5 0,0 365
4 496,4 2 997,6 1 498,8 289,0 23,2 0,0 365
4 283,7 2 773,3 1 510,3 211,1 27,1 0,0 366
3 919,4 2 549,2 1 370,2 135,8 31,1 0,0 365
3 602,5 2 347,0 1 255,5 64,7 35,2 0,0 365
3 314,3 2 158,3 1 156,1 26,5 23,1 0,0 365
3 065,0 1 987,6 1 077,4 22,6 11,5 0,0 366
profitability
Investment Profitability Return On Equity (ROE) Return On Assets (ROA) Gross Margin (%) Net Profit Margin * Permanent Capital = Equity + Long Term Debt
0% 65% 32%
3% 4% 3% 67% 34%
4% 4% 3% 68% 37%
4% 4% 3% 69% 39%
5% 5% 3% 71% 41%
5% 5% 4% 72% 42%
6% 6% 4% 73% 47%
7% 6% 5% 74% 51%
8% 7% 6% 75% 55%
9% 7% 7% 76% 59%
Indicators
Optimal values
Indicators forecasts XI year XII year XIII year XIV year XV year XVI year XVII year XVIII year XIX year XX year
279,94 279,94 274,56 203 686,1
253,46 253,46 249,05 236 121,2
235,53 235,53 231,76 269 850,8
222,50 222,50 219,19 304 939,7
212,54 212,54 209,58 341 456,0
204,64 204,64 201,95 379 470,8
198,19 198,19 195,71 419 059,3
192,79 192,79 190,49 460 299,9
188,19 188,19 186,03 503 275,5
184,21 184,21 182,17 548 072,6
financial stability
100% 0,00 0,40
100% 0,00 0,45
100% 0,00 0,49
100% 0,00 0,53
100% 0,00 0,57
100% 0,00 0,61
100% 0,00 0,64
100% 0,00 0,67
100% 0,00 0,70
100% 0,00 0,73
turnover speed
2 925,3 1 818,0 1 107,3 22,5 16,3 0,0 365
2 898,5 1 665,0 1 233,5 22,5 21,3 0,0 365
2 874,3 1 522,3 1 352,0 22,5 26,4 0,0 365
2 860,5 1 393,4 1 467,1 22,6 31,8 0,0 366
2 833,4 1 266,0 1 567,4 22,5 37,2 0,0 365
2 816,2 1 151,0 1 665,2 22,5 42,8 0,0 365
2 801,0 1 044,1 1 756,9 22,5 48,6 0,0 365
2 795,3 947,3 1 848,0 22,6 54,8 0,0 366
2 776,0 852,5 1 923,5 22,5 60,8 0,0 365
2 765,9 766,9 1 999,0 22,5 67,1 0,0 365
profitability
9% 8% 8% 77% 62%
10% 8% 8% 78% 63%
11% 8% 8% 79% 64%
11% 8% 8% 80% 64%
12% 8% 8% 81% 65%
13% 9% 9% 81% 66%
14% 9% 9% 82% 66%
14% 9% 9% 83% 67%
15% 9% 9% 83% 68%
16% 9% 9% 84% 68%
Annex 11. Calculation of investment efficiency
Indicators Capital investment Inputs ratio of Actualization Updated flow Treasury flow Accumulated flow 0 340 697 681 340 697 681 9% 340 697 681
I year
II year
III year
IV year
V year
VI year
VII year
VIII year
IX year
X year
24 211 180 1,09 22 212 092 24 211 180 318 485 590
25 725 009 1,19 21 652 225 25 725 009 296 833 364
27 314 530 1,30 21 091 829 27 314 530 275 741 535
28 983 526 1,41 20 532 661 28 983 526 255 208 875
30 735 973 1,54 19 976 273 30 735 973 235 232 601
32 576 042 1,68 19 424 029 32 576 042 215 808 572
35 959 138 1,83 19 670 880 35 959 138 196 137 692
39 438 838 1,99 19 793 023 39 438 838 176 344 669
43 019 972 2,17 19 807 590 43 019 972 156 537 079
46 707 611 2,37 19 729 800 46 707 611 136 807 280
Period of Recoverability Net Present Value Rates of Return Profitability Index
T VNA RIR (PI)
18,4 ani 28 876 320 MDL 9,92% 1,08
Indicators Capital investment Inputs ratio of Actualization Updated flow Treasury flow Accumulated flow 340 697 681 340 697 681 9% 340 697 681
XI year
XII year
XIII year
XIV year
XV year
XVI year
XVII year
XVIII year
XIX year
XX year
50 507 081 2,58 19 573 153 50 507 081 117 234 127
52 972 949 2,81 18 833 723 52 972 949 98 400 404
55 562 110 3,07 18 123 174 55 562 110 80 277 230
58 280 730 3,34 17 440 302 58 280 730 62 836 928
61 135 281 3,64 16 783 960 61 135 281 46 052 967
64 132 559 3,97 16 153 052 64 132 559 29 899 915
67 279 701 4,33 15 546 534 67 279 701 14 353 381
70 584 200 4,72 14 963 409 70 584 200 610 028
74 053 925 5,14 14 402 723 74 053 925 15 012 751
77 697 135 5,60 13 863 569 77 697 135 28 876 320
T VNA RIR (PI)
18,4 ani 28 876 320 MDL 9,92% 1,08
Anenx 2. Investment structure
Investment item Objects of basic investment Administrative buildings Industrial buildings Warehouses, garages, storage spaces Auxiliary and service objects Engineering and external networks (water, sewer, heat, gas) Water supply networks Sewerage systems Gas supply networks Electric power networks Arrangement of territory and green spaces Cleaning machinery spaces Other expenses Maintenance (technical supervision) Design works, prospecting, copyright control Reserve funds for unforeseen expenses 2% Breakdowns in the fund of construction normative base (CNB) 0,0% Value added tax (VAT) 20% Total amount Total % Currency Eur = Currency Usd =
Amount 18 053 932 6 843 747 10 855 350 354 835 275 869 273 651 35 000 22 458 40 833 175 359 1 006 041 273 438 329 399 202 123 360 938 415 508 102 707 4 258 721 25 552 326 100% 16,00 12,00
Annex 3. Income from leas of spaces
Operational income 1. Income from lease of available spaces, including Machinery construction Building materials Wood Processing Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative spaces 2. Incomes from consulting services Total VAT from Sales Net sales
I year Amount
II year Amount
III year Amount
IV year Amount
V year Amount
VI year Amount
VII year Amount
VIII year Amount
IX year Amount
X year Amount
36 370 324 38 188 840 40 098 282 42 103 196 44 208 356 46 418 774 48 739 712 51 176 698 53 735 533 56 422 309 10 529 438 1 120 496 554 036 101 696 460 163 2 617 864 12 597 869 8 388 762 9 456 284 11 055 910 1 176 520 581 737 106 781 483 171 2 748 758 13 227 762 8 808 200 9 929 098 11 608 706 1 235 346 610 824 112 120 507 329 2 886 196 13 889 150 9 248 611 12 189 141 1 297 114 641 366 117 726 532 696 3 030 505 14 583 608 9 711 041 12 798 598 1 361 970 673 434 123 612 559 330 3 182 031 15 312 788 10 196 593 13 438 528 1 430 068 707 105 129 793 587 297 3 341 132 16 078 428 10 706 423 14 110 454 1 501 571 742 461 136 282 616 662 3 508 189 16 882 349 11 241 744 14 815 977 1 576 650 779 584 143 096 647 495 3 683 598 17 726 466 11 803 831 15 556 776 1 655 482 818 563 150 251 679 870 3 867 778 18 612 790 12 394 023 16 334 615 1 738 257 859 491 157 764 713 863 4 061 167 19 543 429 13 013 724
10 425 553 10 946 831 11 494 172 12 068 881 12 672 325 13 305 941 13 971 239 14 669 800
45 826 608 48 117 938 50 523 835 53 050 027 55 702 528 58 487 655 61 412 037 64 482 639 67 706 771 71 092 110 7 637 768 8 019 656 8 420 639 8 841 671 9 283 755 9 747 942 10 235 340 10 747 107 11 284 462 11 848 685 38 188 840 40 098 282 42 103 196 44 208 356 46 418 774 48 739 712 51 176 698 53 735 533 56 422 309 59 243 425
Anenx 3. Income from leas of spaces
Operational income 1. Income from lease of available spaces, including Machinery construction Building materials Wood Processing Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative spaces 2. Incomes from consulting services Total 0 VAT from Sales Net sales
XI year Amount
XII year Amount
XIII year Amount
XIV year Amount
XV year Amount
XVI year Amount
XVII year Amount 79 391 855 22 984 443 2 445 902 1 209 390 221 989 1 004 477 5 714 470 27 499 568 18 311 616 20 641 882 100 033 738 16 672 290 83 361 448
XVIII year Amount 83 361 448 24 133 666 2 568 197 1 269 860 233 089 1 054 701 6 000 193 28 874 546 19 227 197 21 673 977 105 035 425 17 505 904 87 529 520
XIX year Amount 87 529 520 25 340 349 2 696 606 1 333 353 244 743 1 107 436 6 300 203 30 318 273 20 188 557 22 757 675 110 287 196 18 381 199 91 905 997
XX year Amount 91 905 997 26 607 366 2 831 437 1 400 020 256 981 1 162 808 6 615 213 31 834 187 21 197 985 23 895 559 115 801 556 19 300 259 96 501 296
59 243 425 62 205 596 65 315 876 68 581 670 72 010 753 75 611 291 17 151 346 1 825 169 902 466 165 652 749 556 4 264 225 20 520 601 13 664 410 18 008 913 1 916 428 947 589 173 935 787 034 4 477 437 21 546 631 14 347 630 18 909 358 2 012 249 994 968 182 631 826 386 4 701 308 22 623 962 15 065 012 19 854 826 2 112 862 1 044 717 191 763 867 705 4 936 374 23 755 160 15 818 263 20 847 568 2 218 505 1 096 953 201 351 911 090 5 183 193 24 942 918 16 609 176 21 889 946 2 329 430 1 151 800 211 418 956 645 5 442 352 26 190 064 17 439 634
15 403 290 16 173 455 16 982 128 17 831 234 18 722 796 19 658 936 74 646 715 78 379 051 82 298 004 86 412 904 90 733 549 95 270 226 12 441 119 13 063 175 13 716 334 14 402 151 15 122 258 15 878 371 62 205 596 65 315 876 68 581 670 72 010 753 75 611 291 79 391 855
Type of activities Activities of construction machinery industry Processing of construction materials Management consulting services Wood and wood parts production Leased space for business incubator Activities of informational technologies Other activities, in leased spaces Leased space for business incubator Activities conducted by RifAcvaaparat Production activities conducted by Raut JSC RAUT administrative space Assumptions: I year of forecast Leased spaces, including: Machinery construction Construction materials Wood processind Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative surface Rental price: Machinery construction Construction materials Wood processind Management consulting Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative surface Staffing average salary per month Year Machinery construction Construction materials Wood processind Production activities conducted by Raut Informational technologies Activities conducted by RifAcvaaparat Production activities conducted by Raut Administrative surface Total income
Surface m 2 22 882 2 435 221 1 904 700 1 000 8 615 1 300 5 689 27 377 1 800 I year
Pai = Tb x (1 + K1 + K2 + K3) x K4 x S, 460 460 460 460 0 460 920 0 460 460 920 II year
Tb 175,30 175,30 175,30 175,30 0,00 175,30 175,30 0,00 175,30 175,30 175,30 III year
K1 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 IV year
K2 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 V year
K3 1,50 1,50 1,50 1,50 0,00 1,50 1,50 0,00 1,50 1,50 1,50 VI year
K4 0,75 0,75 0,75 0,75 0,00 0,75 1,50 0,00 0,75 0,75 1,50 VII year
S, 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 VIII year IX year X year
69 923 m2 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 460 MDL 920 MDL 25 4 800 MDL 2011 10 529 438 1 120 496 554 036 101 696 460 163 2 617 864 12 597 869 8 388 762 36 370 324
69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 483 MDL 966 MDL 25 5 040 MDL 2012 11 055 910 1 176 520 581 737 106 781 483 171 2 748 758 13 227 762 8 808 200 38 188 840 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 507 MDL 1 015 MDL 25 5 292 MDL 533 MDL 533 MDL 533 MDL 533 MDL 533 MDL 533 MDL 533 MDL 1 065 MDL 25 5 557 MDL 559 MDL 559 MDL 559 MDL 559 MDL 559 MDL 559 MDL 559 MDL 1 119 MDL 25 5 834 MDL 587 MDL 587 MDL 587 MDL 587 MDL 587 MDL 587 MDL 587 MDL 1 175 MDL 25 6 126 MDL 617 MDL 617 MDL 617 MDL 617 MDL 617 MDL 617 MDL 617 MDL 1 233 MDL 25 6 432 MDL 647 MDL 647 MDL 647 MDL 647 MDL 647 MDL 647 MDL 647 MDL 1 295 MDL 25 6 754 MDL 680 MDL 680 MDL 680 MDL 680 MDL 680 MDL 680 MDL 680 MDL 1 360 MDL 25 7 092 MDL
69 923 m2 22 882 m2 2 435 m2 1 204 m2 221 m2 1 000 m2 5 689 m2 27 377 m2 9 115 m2 714 MDL 714 MDL 714 MDL 714 MDL 714 MDL 714 MDL 714 MDL 1 428 MDL 25 7 446 MDL 2020 16 334 615 1 738 257 859 491 157 764 713 863 4 061 167 19 543 429 13 013 724 56 422 309
2013 2014 2015 2016 2017 2018 2019 11 608 706 12 189 141 12 798 598 13 438 528 14 110 454 14 815 977 15 556 776 1 235 346 1 297 114 1 361 970 1 430 068 1 501 571 1 576 650 1 655 482 610 824 641 366 673 434 707 105 742 461 779 584 818 563 112 120 117 726 123 612 129 793 136 282 143 096 150 251 507 329 532 696 559 330 587 297 616 662 647 495 679 870 2 886 196 3 030 505 3 182 031 3 341 132 3 508 189 3 683 598 3 867 778 13 889 150 14 583 608 15 312 788 16 078 428 16 882 349 17 726 466 18 612 790 9 248 611 9 711 041 10 196 593 10 706 423 11 241 744 11 803 831 12 394 023 40 098 282 42 103 196 44 208 356 46 418 774 48 739 712 51 176 698 53 735 533
Type of activities Activities of construction machinery industry Processing of construction materials Management consulting services Wood and wood parts production Leased space for business incubator Activities of informational technologies Other activities, in leased spaces Leased space for business incubator Activities conducted by RifAcvaaparat Production activities conducted by Raut JSC RAUT administrative space Assumptions: I year of forecast Leased spaces, including:
Surface m2 22 882 2 435 221 1 904 700 1 000 8 615 1 300 5 689 27 377 1 800 XI year
Pai = Tb x (1 + K1 + K2 + K3) x K4 x S, 460 460 460 460 0 460 920 0 460 460 920 XII year
Tb 175,30 175,30 175,30 175,30 0,00 175,30 175,30 0,00 175,30 175,30 175,30 XIII year
K1 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 XIV year
K2 0,50 0,50 0,50 0,50 0,00 0,50 0,50 0,00 0,50 0,50 0,50 XV year
K3 1,50 1,50 1,50 1,50 0,00 1,50 1,50 0,00 1,50 1,50 1,50 XVI year
K4 0,75 0,75 0,75 0,75 0,00 0,75 1,50 0,00 0,75 0,75 1,50 XVII year
S, 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 XVIII year XIX year XX year
69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 69 923 m2 Machinery construction 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 22 882 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 2 435 m2 Construction materials Wood processind 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 1 204 m2 Management consulting 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 221 m2 Informational technologies 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 1 000 m2 Activities conducted by RifAcvaaparat 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 5 689 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 27 377 m2 Production activities conducted by Raut 27 377 m2 Administrative surface 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 9 115 m2 Rental price: Machinery construction 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Construction materials 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Wood processind 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Management consulting 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Informational technologies 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Activities conducted by RifAcvaaparat 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL 750 MDL 787 MDL 826 MDL 868 MDL 911 MDL 957 MDL 1 004 MDL 1 055 MDL 1 107 MDL 1 163 MDL Production activities conducted by Raut Administrative surface 1 499 MDL 1 574 MDL 1 653 MDL 1 735 MDL 1 822 MDL 1 913 MDL 2 009 MDL 2 109 MDL 2 215 MDL 2 326 MDL Staffing 25 25 25 25 25 25 25 25 25 25 7 819 MDL 8 210 MDL 8 620 MDL 9 051 MDL 9 504 MDL 9 979 MDL 10 478 MDL 11 002 MDL 11 552 MDL 12 129 MDL average salary per month 0 Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Machinery construction 17 151 346 18 008 913 18 909 358 19 854 826 20 847 568 21 889 946 22 984 443 24 133 666 25 340 349 26 607 366 Construction materials 1 825 169 1 916 428 2 012 249 2 112 862 2 218 505 2 329 430 2 445 902 2 568 197 2 696 606 2 831 437 Wood processind 902 466 947 589 994 968 1 044 717 1 096 953 1 151 800 1 209 390 1 269 860 1 333 353 1 400 020 Production activities conducted by Raut 165 652 173 935 182 631 191 763 201 351 211 418 221 989 233 089 244 743 256 981 Informational technologies 749 556 787 034 826 386 867 705 911 090 956 645 1 004 477 1 054 701 1 107 436 1 162 808 Activities conducted by RifAcvaaparat 4 264 225 4 477 437 4 701 308 4 936 374 5 183 193 5 442 352 5 714 470 6 000 193 6 300 203 6 615 213 21 546 631 22 623 962 23 755 160 24 942 918 26 190 064 27 499 568 28 874 546 30 318 273 31 834 187 Production activities conducted by Raut 20 520 601 Administrative surface 13 664 410 14 347 630 15 065 012 15 818 263 16 609 176 17 439 634 18 311 616 19 227 197 20 188 557 21 197 985 Total income 59 243 425 62 205 596 65 315 876 68 581 670 72 010 753 75 611 291 79 391 855 83 361 448 87 529 520 91 905 997

I year Direct Consumptions Raw material Electrical power Salary Other costs subtotal Total direct consumptions Amount 75 000 145 000 540 000 106 000 866 000 866 000 II year Amount 78 750 152 250 567 000 111 300 909 300 909 300
III year
Amount 82 688 159 863 595 350 116 865 954 765 954 765
IV year
Amount 86 822 167 856 625 118 122 708 1 002 503 1 002 503
V year
Amount 91 163 176 248 656 373 128 844 1 052 628 1 052 628
VI year
Amount 95 721 185 061 689 192 135 286 1 105 260 1 105 260
VII year
Amount 100 507 194 314 723 652 142 050 1 160 523 1 160 523
VIII year
Amount 105 533 204 030 759 834 149 153 1 218 549 1 218 549
IX year
Amount 110 809 214 231 797 826 156 610 1 279 476 1 279 476
X year
Amount 116 350 224 943 837 717 164 441 1 343 450 1 343 450
I year Indirect consumptions Reparation and maintenance of fixed assets fixed assets depreciation subtotal Total indirect consumptions Amount 713 830 11 897 163 12 610 993 12 610 993
II year Amount 749 521 11 897 163 12 646 684 12 646 684
III year Amount 786 997 11 897 163 12 684 160 12 684 160
IV year Amount 826 347 11 897 163 12 723 510 12 723 510
V year Amount 867 665 11 897 163 12 764 828 12 764 828
VI year Amount 911 048 11 897 163 12 808 211 12 808 211
VII year Amount 956 600 11 897 163 12 853 763 12 853 763
VIII year Amount 1 004 430 11 897 163 12 901 593 12 901 593
IX year Amount 1 054 652 11 897 163 12 951 815 12 951 815
X year Amount 1 107 384 11 897 163 13 004 547 13 004 547
I year Operational expenses Commercial expenses Marketing, promotion Others subtotal General & administrative expenses Salary & social insurance Transporation Banking and telephone expenses Administrative mainenance Taxes Other subtotal Other operational expenses Interest rate Other subtotal 8 061 244 250 000 8 311 244 11 621 244 25 098 237 900 000 260 000 150 000 800 000 150 000 150 000 2 410 000 150 000 750 000 900 000 Amount
II year Amount
III year Amount
IV year Amount
V year Amount
VI year Amount
VII year Amount
VIII year Amount
IX year Amount
X year Amount
157 500 787 500 945 000 945 000 273 000 157 500 840 000 157 500 157 500 2 530 500 8 061 244 262 500 8 323 744 11 799 244 25 355 229
165 375 826 875 992 250 992 250 286 650 165 375 882 000 165 375 165 375 2 657 025 8 061 244 275 625 8 336 869 11 986 144 25 625 070
173 644 868 219 1 041 863 1 041 863 300 983 173 644 926 100 173 644 173 644 2 789 876 8 061 244 289 406 8 350 651 12 182 389 25 908 403
182 326 911 630 1 093 956 1 093 956 316 032 182 326 972 405 182 326 182 326 2 929 370 8 061 244 303 877 8 365 121 12 388 447 26 205 903
191 442 957 211 1 148 653 1 148 653 331 833 191 442 1 021 025 191 442 191 442 3 075 839 8 061 244 319 070 8 380 315 12 604 807 26 518 277
201 014 1 005 072 1 206 086 1 206 086 348 425 201 014 1 072 077 201 014 201 014 3 229 630 6 448 995 335 024 6 784 019 11 219 736 25 234 022
211 065 1 055 325 1 266 390 1 266 390 365 846 211 065 1 125 680 211 065 211 065 3 391 112 4 836 747 351 775 5 188 522 9 846 024 23 966 166
221 618 1 108 092 1 329 710 1 329 710 384 138 221 618 1 181 964 221 618 221 618 3 560 668 3 224 498 369 364 3 593 862 8 484 239 22 715 530
232 699 1 163 496 1 396 195 1 396 195 403 345 232 699 1 241 063 232 699 232 699 3 738 701 1 612 249 387 832 2 000 081 7 134 977 21 482 975
Total
Total expenses

XI year Direct Consumptions Raw material Electrical power Salary Other costs subtotal Total direct consumptions Amount 122 167 236 190 879 603 172 663 1 410 623 1 410 623 XII year Amount 128 275 247 999 923 583 181 296 1 481 154 1 481 154 XIII year Amount 134 689 260 399 969 762 190 361 1 555 212 1 555 212 XIV year Amount 141 424 273 419 1 018 251 199 879 1 632 972 1 632 972 XV year Amount 148 495 287 090 1 069 163 209 873 1 714 621 1 714 621 XVI year Amount 155 920 301 445 1 122 621 220 366 1 800 352 1 800 352 XVII year Amount 163 716 316 517 1 178 752 231 385 1 890 369 1 890 369 XVIII year Amount 171 901 332 343 1 237 690 242 954 1 984 888 1 984 888 XIX year Amount 180 496 348 960 1 299 574 255 102 2 084 132 2 084 132 XX year Amount 189 521 366 408 1 364 553 267 857 2 188 339 2 188 339
XI year Indirect consumptions Reparation and maintenance of fixed assets fixed assets depreciation subtotal Total indirect consumptions Amount 1 162 753 11 897 163 13 059 917 13 059 917
XII year Amount 1 220 891 11 897 163 13 118 054 13 118 054
XIII year Amount 1 281 936 11 897 163 13 179 099 13 179 099
XIV year Amount 1 346 033 11 897 163 13 243 196 13 243 196
XV year Amount 1 413 334 11 897 163 13 310 497 13 310 497
XVI year Amount 1 484 001 11 897 163 13 381 164 13 381 164
XVII year Amount 1 558 201 11 897 163 13 455 364 13 455 364
XVIII year Amount 1 636 111 11 897 163 13 533 274 13 533 274
XIX year Amount 1 717 916 11 897 163 13 615 080 13 615 080
XX year Amount 1 803 812 11 897 163 13 700 975 13 700 975
XI year Operational expenses Commercial expenses Marketing, promotion Others subtotal General & administrative expenses Salary & social insurance Transporation Banking and telephone expenses Administrative mainenance Taxes Other subtotal Other operational expenses Interest rate Other subtotal Total Total expenses 0 407 224 407 224 5 798 865 20 269 404 1 466 005 423 513 244 334 1 303 116 244 334 244 334 3 925 636 244 334 1 221 671 1 466 005 Amount
XII year Amount
XIII year Amount
XIV year Amount
XV year Amount
XVI year Amount
XVII year Amount
XVIII year Amount
XIX year Amount
XX year Amount
256 551 1 282 755 1 539 305 1 539 305 444 688 256 551 1 368 271 256 551 256 551 4 121 918 0 427 585 427 585 6 088 808 20 688 016
269 378 1 346 892 1 616 271 1 616 271 466 923 269 378 1 436 685 269 378 269 378 4 328 014 0 448 964 448 964 6 393 249 21 127 559
282 847 1 414 237 1 697 084 1 697 084 490 269 282 847 1 508 519 282 847 282 847 4 544 414 0 471 412 471 412 6 712 911 21 589 079
296 990 1 484 949 1 781 938 1 781 938 514 782 296 990 1 583 945 296 990 296 990 4 771 635 0 494 983 494 983 7 048 556 22 073 674
311 839 1 559 196 1 871 035 1 871 035 540 521 311 839 1 663 143 311 839 311 839 5 010 217 0 519 732 519 732 7 400 984 22 582 500
327 431 1 637 156 1 964 587 1 964 587 567 547 327 431 1 746 300 327 431 327 431 5 260 728 0 545 719 545 719 7 771 034 23 116 767
343 803 1 719 014 2 062 816 2 062 816 595 925 343 803 1 833 615 343 803 343 803 5 523 764 0 573 005 573 005 8 159 585 23 677 747
360 993 1 804 964 2 165 957 2 165 957 625 721 360 993 1 925 295 360 993 360 993 5 799 952 0 601 655 601 655 8 567 564 24 266 776
379 043 1 895 213 2 274 255 2 274 255 657 007 379 043 2 021 560 379 043 379 043 6 089 950 0 631 738 631 738 8 995 943 24 885 257
Annex 6. Calculation of wear
Initial cost
lei
Depreciation ratio
(%)
Residual value
lei
Value of annual depreciation

lei
Existing fixed assets New investments in reparation Total
94 058 509 408 837 218
3% 3%
2 821 755 12 265 117
2 737 103 11 897 163 14 634 266
No row 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
I year 38 188 840 13 303 688 24 885 152 750 000 2 183 333 8 269 578 13 682 241
II year 40 098 282 13 374 014 26 724 268 787 500 2 292 500 8 279 994 15 364 273
III year 42 103 196 13 447 857 28 655 339 826 875 2 407 125 8 290 932 17 130 407
IV year 44 208 356 13 525 391 30 682 964 868 219 2 527 481 8 302 416 18 984 848
V year 46 418 774 13 606 803 32 811 971 911 630 2 653 855 8 314 475 20 932 011
VI year 48 739 712 13 692 285 35 047 427 957 211 2 786 548 8 327 136 22 976 532
VII year 51 176 698 13 782 041 37 394 657 1 005 072 2 925 875 6 728 182 26 735 528
VIII year 53 735 533 13 876 285 39 859 248 1 055 325 3 072 169 5 129 893 30 601 861
IX year 56 422 309 13 975 241 42 447 069 1 108 092 3 225 778 3 532 301 34 580 898
X year 59 243 425 14 079 145 45 164 280 1 163 496 3 387 067 1 935 442 38 678 275
13 682 241
15 364 273
17 130 407
18 984 848
20 932 011
22 976 532
26 735 528
30 601 861
34 580 898
38 678 275
13 682 241
15 364 273
17 130 407
18 984 848
20 932 011
22 976 532
26 735 528
30 601 861
34 580 898
38 678 275
(1 368 224) (1 536 427) (1 713 041) (1 898 485) (2 093 201) (2 297 653) (2 673 553) (3 060 186) (3 458 090) (3 867 828) 12 314 017 13 827 846 15 417 367 17 086 363 18 838 810 20 678 879 24 061 975 27 541 675 31 122 808 34 810 448
No row 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
XI year 62 205 596 14 188 244 48 017 352 0 1 221 671 3 556 420 339 353 42 899 908 42 899 908 0 42 899 908
XII year 65 315 876 14 302 798 51 013 078 0 1 282 755 3 734 241 356 321 45 639 762 45 639 762 0 45 639 762
XIII year 68 581 670 14 423 080 54 158 590 0 1 346 892 3 920 953 374 137 48 516 608 48 516 608 0 48 516 608
XIV year 72 010 753 14 549 375 57 461 378 0 1 414 237 4 117 001 392 844 51 537 297 51 537 297 0 51 537 297
XV year 75 611 291 14 681 986 60 929 305 0 1 484 949 4 322 851 412 486 54 709 020 54 709 020 0 54 709 020
XVI year 79 391 855 14 821 227 64 570 628 0 1 559 196 4 538 993 433 110 58 039 329 58 039 329 0 58 039 329
XVII year 83 361 448 14 967 430 68 394 018 0 1 637 156 4 765 943 454 766 61 536 153 61 536 153 0 61 536 153
XVIII year 87 529 520 15 120 944 72 408 577 0 1 719 014 5 004 240 477 504 65 207 819 65 207 819 0 65 207 819
XIX year 91 905 997 15 282 133 76 623 864 0 1 804 964 5 254 452 501 379 69 063 068 69 063 068 0 69 063 068
XX year 96 501 296 15 451 381 81 049 915 0 1 895 213 5 517 175 526 448 73 111 080 73 111 080 0 73 111 080
(4 289 991) (4 563 976) (4 851 661) (5 153 730) (5 470 902) (5 803 933) (6 153 615) (6 520 782) (6 906 307) (7 311 108) 38 609 918 41 075 786 43 664 947 46 383 567 49 238 118 52 235 396 55 382 538 58 687 037 62 156 762 65 799 972

Total I an2 I A Operational Activity cash earnings earnings from sales earnings from space leasing earnings from leasing of administrative spaces earnings from consulting earnings from receivables other earnings Total earnings cash payments Payments to suppliers and contractors Salary and social insrance payments interest payments payment of income tax other payments (including VAT) Taxes VAT Others Total payments NET FLOW from OPERATIONAL ACTIVITY C Investment Activity earnings from the output of long term assets payments for purchase of long term assets Feasibility study elaboration technical expertise and obtainance of documents and agreements needed for design Design work, prospectings, copyright control, it's expertise and obtainance of necessary acts Completion of the construction and assembly activities Reception of the completed activities and documents preparation other assets purchaisings Interest received Dividends received others NET FLOW from INVESTMENT ACTIVITY D Financial Activity earnings from loans and credits earnings from the issue of own shares others Subtotal payments for loans and credits dividend payment payments for purchasing of own shares others Subtotal NET FLOW from FINANCIAL ACTIVITY NET FLOW from economic activity Exceptional earnings (payments) H TOTAL NET FLOW Exchange differences I J Cash balance at the beginning of the period Cash balance at the end of the period 5 400 5 400 5 400 5 400 5 400 28 971 379 28 971 379 61 980 258 61 980 258 97 063 447 97 063 447 134 210 413 134 210 413 173 518 332 173 518 332 172 510 517 172 510 517 173 644 280 173 644 280 176 990 422 176 990 422 172 211 455 28 965 979 33 008 879 35 083 189 37 146 966 39 307 919 (1 007 815) 1 133 763 3 346 142 (4 778 967) 43 535 277 26 582 483 7 969 324 8 983 470 48 003 372 27 911 607 8 367 790 9 432 643 2 291 330 48 003 372 3 727 321 1 512 000 8 061 244 1 536 427 157 500 157 500 14 994 493 33 008 879 50 524 137 29 307 188 8 786 180 9 904 276 2 526 493 50 524 137 3 913 687 1 587 600 8 061 244 1 713 041 165 375 165 375 15 440 947 35 083 189 53 056 691 30 772 547 9 225 489 10 399 489 2 659 165 53 056 691 4 109 372 1 666 980 8 061 244 1 898 485 173 644 173 644 15 909 725 37 146 966 55 709 859 32 311 175 9 686 763 10 919 464 2 792 457 55 709 859 4 314 840 1 750 329 8 061 244 2 093 201 182 326 182 326 16 401 941 39 307 919 58 495 370 33 926 733 10 171 102 11 465 437 2 932 098 58 495 370 4 530 582 1 837 845 8 061 244 2 297 653 191 442 191 442 16 918 768 41 576 602 61 420 139 35 623 070 10 679 657 12 038 709 3 078 704 61 420 139 4 757 111 1 929 738 6 448 995 2 673 553 201 014 201 014 16 010 412 45 409 727 64 491 146 37 404 223 11 213 640 12 640 644 3 232 639 64 491 146 4 994 967 2 026 225 4 836 747 3 060 186 211 065 211 065 15 129 189 49 361 957 67 715 704 39 274 435 11 774 322 13 272 677 3 394 271 67 715 704 5 244 715 2 127 536 3 224 498 3 458 090 10 633 450 221 618 10 411 831 24 688 288 43 027 415 Total II year1 Total I year Total II year Total III year Total IV year Total V year Total VI year Total VII year Total VIII year Total IX year
43 535 277 3 549 830 1 440 000 8 061 244 1 368 224 150 000 150 000 14 569 298 28 965 979
247 612 331 866 250 577 500 4 331 250 241 837 331
161 224 887
149 133 021 12 091 867
(247 612 331) (161 224 887) 247 612 331 247 612 331 161 224 887
32 244 977 10 339 439
32 244 977 12 030 987
32 244 977 13 770 837
32 244 977 15 561 404
161 224 887
247 612 331
161 224 887
28 965 979
33 008 879
35 083 189
37 146 966
39 307 919
42 584 417
44 275 965
46 015 815
47 806 382
(42 584 417) (44 275 965) (46 015 815) (47 806 382) (1 007 815) 1 133 763 3 346 142 (4 778 967)

Total X year 71 101 489 41 238 156 12 363 038 13 936 310 3 563 984 71 101 489 5 506 951 2 233 913 1 612 249 3 867 828 11 165 122 232 699 10 932 423 24 386 062 46 715 426 32 244 977 17 405 224 49 650 201 Total XI year 74 656 563 43 300 064 12 981 189 14 633 126 3 742 184 74 656 563 5 782 299 2 345 608 4 289 991 11 723 378 244 334 11 479 044 24 141 276 50 515 287 19 304 959 19 304 959 Total XII year 78 389 391 45 465 067 13 630 249 15 364 782 3 929 293 78 389 391 6 071 414 2 462 889 4 563 976 12 309 547 256 551 12 052 996 25 407 826 52 981 566 20 537 893 20 537 893 Total XIII year 82 308 861 47 738 321 14 311 761 16 133 021 4 125 757 82 308 861 6 374 984 2 586 033 4 851 661 12 925 025 269 378 12 655 646 26 737 703 55 571 158 21 832 474 21 832 474 Total XIV year 86 424 304 50 125 237 15 027 349 16 939 672 4 332 045 86 424 304 6 693 733 2 715 335 5 153 730 13 571 276 282 847 13 288 428 28 134 074 58 290 230 23 191 784 23 191 784 Total XV year 90 745 519 52 631 499 15 778 717 17 786 656 4 548 648 90 745 519 7 028 420 2 851 102 5 470 902 14 249 840 296 990 13 952 850 29 600 263 61 145 256 24 619 059 24 619 059 Total XVI year 95 282 795 55 263 073 16 567 653 18 675 989 4 776 080 95 282 795 7 379 841 2 993 657 5 803 933 14 962 332 311 839 14 650 492 31 139 762 64 143 033 26 117 698 26 117 698 Total XVII year 100 046 935 58 026 227 17 396 035 19 609 788 5 014 884 100 046 935 7 748 833 3 143 339 6 153 615 15 710 448 327 431 15 383 017 32 756 236 67 290 699 27 691 269 27 691 269 Total XVIII year 105 049 282 60 927 539 18 265 837 20 590 278 5 265 628 105 049 282 8 136 275 3 300 506 6 520 782 16 495 971 343 803 16 152 168 34 453 534 70 595 748 29 343 519 29 343 519 Total XIX year 110 301 746 63 973 915 19 179 129 21 619 792 5 528 910 110 301 746 8 543 089 3 465 532 6 906 307 17 320 769 360 993 16 959 776 36 235 696 74 066 049 31 078 381 31 078 381 Total XX year 115 816 833 67 172 611 20 138 085 22 700 781 5 805 355 115 816 833 8 970 243 3 638 808 7 311 108 18 186 807 379 043 17 807 765 38 106 967 77 709 866 32 899 986 32 899 986
Operational Activity cash earnings earnings from sales earnings from space leasing earnings from leasing of administrative spaces earnings from consulting earnings from receivables other earnings Total earnings cash payments Payments to suppliers and contractors Salary and social insrance payments interest payments payment of income tax other payments (including VAT) Taxes VAT Others Total payments NET FLOW from OPERATIONAL ACTIVITY Investment Activity earnings from the output of long term assets payments for purchase of long term assets Feasibility study elaboration technical expertise and obtainance of documents and agreements needed for design Design work, prospectings, copyright control, it's expertise and obtainance of necessary acts Completion of the construction and assembly activities Reception of the completed activities and documents preparation other assets purchaisings Interest received Dividends received others NET FLOW from INVESTMENT ACTIVITY Financial Activity earnings from loans and credits earnings from the issue of own shares others Subtotal payments for loans and credits dividend payment payments for purchasing of own shares others Subtotal NET FLOW from FINANCIAL ACTIVITY NET FLOW from economic activity Exceptional earnings (payments) TOTAL NET FLOW Exchange differences Cash balance at the beginning of the period Cash balance at the end of the period
(49 650 201) (19 304 959) (20 537 893) (21 832 474) (23 191 784) (24 619 059) (26 117 698) (27 691 269) (29 343 519) (31 078 381) (32 899 986) (2 934 775) 31 210 328 32 443 673 32 443 673 200 487 009 232 930 681 33 738 684 33 738 684 232 930 681 266 669 366 35 098 447 35 098 447 266 669 366 301 767 813 36 526 197 36 526 197 301 767 813 338 294 010 38 025 335 38 025 335 338 294 010 376 319 344 39 599 430 39 599 430 376 319 344 415 918 774 41 252 229 41 252 229 415 918 774 457 171 003 42 987 669 42 987 669 457 171 003 500 158 672 44 809 880 44 809 880 500 158 672 544 968 552
(2 934 775) 31 210 328 172 211 455 169 276 680 169 276 680 200 487 009
ASSETS LongTerm Assets Intangible 1 assets Intangible assets 1.1 (111,112) Intangible assets amortization (113) Intangible assets ( 010020) LongTerm material Assets working 1,2 material assets (121) Land(122) Fixed assets (123) Natural ressources (125) Depreciation of fixed assets (124,126) LongTerm material Assets (040+050+ 060+070 080) LongTerm financial Assets Long 1,3 term investments unrelated parties (131)
row
2010
I an 2 300 402 118
II an1 434 756 190 434 756 190
I year
II year
III year
IV year
V year
VI year
VII year
VIII year
IX year
010 020 030
040 050 060 070 080 090 149 810 512
434 756 190 434 756 190 434 756 190
434 756 190
434 756 190
434 756 190
434 756 190
434 756 190
434 756 190
(55 752 003) 94 058 509 300 402 118
(11 897 163) (23 794 326) (35 691 489) (47 588 652) (59 485 815) (71 382 978) (83 280 141) (95 177 304) (107 074 467) 422 859 027 410 961 864 399 064 701 387 167 538 375 270 375 363 373 212 351 476 049 339 578 886 327 681 723
100 110 120 130 140 150 160 170 180 94 058 509 190 200 210 220 230 240 250
410 961 864
399 064 701
387 167 538
375 270 375
363 373 212
351 476 049
339 578 886
327 681 723
300 402 118
434 756 190
422 859 027
260 270 280 290 300 310 320 330 340 350
41 268 722 41 268 722 5 400 5 400 68 139 536 68 139 536 5 400 5 400
2 291 330 61 475 295 63 766 625 2 897 138 26 074 241 28 971 379
2 526 493 54 095 953 56 622 446 6 198 026 55 782 232 61 980 258 118 602 704 529 564 569
2 659 165 46 327 545 48 986 710 9 706 345 87 357 102 97 063 447 146 050 157 545 114 858
2 792 457 38 169 659 40 962 116 13 421 041 120 789 372 134 210 413 175 172 529 562 340 067
2 932 098 29 603 822 32 535 920 17 351 833 156 166 499 173 518 332 206 054 252 581 324 627
3 078 704
3 232 639
3 394 271 1 249 823 4 644 094 17 699 042 159 291 380 176 990 422 181 634 516 521 213 402
3 563 984 3 563 984 17 221 146 154 990 310 172 211 455 175 775 440 503 457 163
20 609 691 23 688 394 17 251 052 155 259 465 172 510 517 196 198 912 559 572 124
11 165 853 14 398 492 17 364 428 156 279 852 173 644 280 188 042 772 539 518 821
360 370 380 390 400 5 400 5 400
410 420 430 440 450 460 470
5 400 94 063 909
41 274 122 341 676 240
68 144 936 502 901 127
92 738 005 515 597 032
Cod
2010 94 063 909
I an 2 341 676 240 341 676 240
II an1 341 676 240 341 676 240
I year 341 676 240 341 676 240 12 314 017
II year 341 676 240 341 676 240 12 314 017 13 827 846
III year 341 676 240 341 676 240 26 141 863 15 417 367
IV year 341 676 240 341 676 240 41 559 230 17 086 363
V year 341 676 240 341 676 240 58 645 593 18 838 810
VI year 341 676 240 341 676 240 67 144 964 20 678 879
VII year 341 676 240 341 676 240 75 792 855 24 061 975
VIII year 341 676 240 341 676 240 86 083 992 27 541 675
IX year 341 676 240 341 676 240 98 064 263 31 122 808
480 490 500 510 520 94 063 909 570
530 540 550 560
Retained earnings (uncovered loss) of previous years (332) Net profit (loss) (333) Used profit (334) Total 3.3 ( 570580 590600) Secondary capital Differences 3,4 from revaluation of long term assets (341) Grants (342) Total 3.4 (620630) TOTAL chapter 3 (520+560610640) 4. 4.1 Long term liabilities Financial Long term liabilities Bank credits (411,412) Loans (413) Others (414) Total 4.1 (660+670+680) Accounted Long term liabilities Lease 4,2 Long term liabilities (421) Anticipated longterm revenue (422) Special revenues (423) Revenues received in advance (424) Deffered tax(425) Others (426) Total 4.2 (700+710+720+ 730+740+750)
580 590 600 610 620 630 640 650 660 670 680 690 700 710 720 730 740 750 760
94 063 909
341 676 240
341 676 240 161 224 887 161 224 887
12 314 017 353 990 256 161 224 887 161 224 887
26 141 863 367 818 103 161 224 887 161 224 887
41 559 230 383 235 469 161 224 887 161 224 887
58 645 593 400 321 833 161 224 887 161 224 887
77 484 403 419 160 642 161 224 887 161 224 887
87 823 842 429 500 082 128 979 910 128 979 910
99 854 830 441 531 069 96 734 932 96 734 932
113 625 667 455 301 907 64 489 955 64 489 955
129 187 071 470 863 311 32 244 977 32 244 977
Total chapter 4 (690+760) 5 5.1 Short term liabilities Financial short term liabilities Bank credits (511,512) Loans (513) Current share of longterm liabilities (514) Others (515, 516) Total.5.1 (780+790+800+810) Short term commercial liabilities 5,2 Short term commercial liabilities (521) Short term liabilities to related parties (522) Revenues received in advance(523) Total 5.2 (830+840+850) 5,3 Acconted Short term liabilities Accounted salary (531) Other accounted liabilities to personnel (532) Accounted Social insurance (533) Taxes payable (534) Preliminary liabilities (535) Extrabudget liabilities (536) Shareholders payable (537) future expenses and payments provisions (538) Others (539) Total 5.3 (870+880+890+ 900+910+920+930+940+950) TOTAL chapter 5 (820+860+960) TOTAL LIABILITIES (650+770+970)
770 780 790 800 810 820 830 840 850 860 870 880 890 900 910 920 930 940 950 960 970 980
94 063 909
341 676 240
161 224 887 502 901 127
161 224 887 381 888 381 888 381 888 515 597 032
161 224 887 521 579 521 579 521 579 529 564 569
161 224 887 654 502 654 502 654 502 545 114 858
161 224 887 793 348 793 348 793 348 562 340 067
161 224 887 939 097 939 097 939 097 581 324 627
128 979 910 1 092 132 1 092 132 1 092 132 559 572 124
96 734 932 1 252 819 1 252 819 1 252 819 539 518 821
64 489 955 1 421 540 1 421 540 1 421 540 521 213 402
32 244 977 348 874 348 874 348 874 503 457 163
Nr. n.s.
ASSETS
row
X year
XI year 434 756 190
XII year 434 756 190
XIII year 434 756 190
XIV year 434 756 190
XV year 434 756 190
XVI year 434 756 190
XVII year 434 756 190
XVIII year 434 756 190
XIX year 434 756 190
XX year 434 756 190
LongTerm Assets Intangible 1 assets Intangible assets 1.1 (111,112) Intangible assets amortization (113) Intangible assets ( 010020) LongTerm material Assets working 1,2 material assets (121) Land(122) Fixed assets (123) Natural ressources (125) Depreciation of fixed assets (124,126) LongTerm material Assets (040+050+ 060+070 080) LongTerm financial Assets Long 1,3 term investments unrelated parties (131)
010 020 030 434 756 190
040 050 060 070 080 090
(118 971 630) (130 868 793) (142 765 956) (154 663 119) (166 560 282) (178 457 445) (190 354 609) (202 251 772) (214 148 935) (226 046 098) (237 943 261) 315 784 560 303 887 397 291 990 234 280 093 071 268 195 908 256 298 745 244 401 582 232 504 419 220 607 256 208 710 093 196 812 930
100 110 120 130 140 150 160 170 180 315 784 560 190 200 210 220 230 240 250
303 887 397
291 990 234
280 093 071
268 195 908
256 298 745
244 401 582
232 504 419
220 607 256
208 710 093
196 812 930
260 270 280 290 300 310 320 330 340 350
3 742 184 3 742 184
3 929 293 3 929 293 20 048 701 180 438 308 200 487 009 204 416 302 508 303 698
4 125 757 4 125 757 23 293 068 209 637 613 232 930 681 237 056 439 529 046 673
4 332 045 4 332 045 26 666 937 240 002 429 266 669 366 271 001 411 551 094 482
4 548 648 4 548 648 30 176 781 271 591 031 301 767 813 306 316 460 574 512 368
4 776 080 4 776 080 33 829 401 304 464 609 338 294 010 343 070 090 599 368 834
5 014 884 5 014 884 37 631 934 338 687 410 376 319 344 381 334 228 625 735 810
5 265 628 5 265 628 41 591 877 374 326 897 415 918 774 421 184 402 653 688 821
5 528 910 5 528 910 45 717 100 411 453 903 457 171 003 462 699 913 683 307 168
5 805 355 5 805 355 50 015 867 450 142 805 500 158 672 505 964 027 714 674 120
6 095 623 6 095 623 54 496 855 490 471 697 544 968 552 551 064 175 747 877 104
360 370 380 390 400 16 927 668 152 349 012 169 276 680 173 018 864 488 803 424
410 420 430 440 450 460 470
Cod
X year 341 676 240
XI year 341 676 240 341 676 240 127 287 336 38 609 918 165 897 254 507 573 493
XII year 341 676 240 341 676 240 145 359 361 41 075 786 186 435 147 528 111 386
XIII year 341 676 240 341 676 240 164 602 673 43 664 947 208 267 620 549 943 860
XIV year 341 676 240 341 676 240 185 075 837 46 383 567 231 459 404 573 135 644
XV year 341 676 240 341 676 240 206 840 345 49 238 118 256 078 463 597 754 702
XVI year 341 676 240 341 676 240 229 960 765 52 235 396 282 196 161 623 872 400
XVII year 341 676 240 341 676 240 254 504 892 55 382 538 309 887 430 651 563 669
XVIII year 341 676 240 341 676 240 280 543 911 58 687 037 339 230 949 680 907 188
XIX year 341 676 240 341 676 240 308 152 568 62 156 762 370 309 329 711 985 569
XX year 341 676 240 341 676 240 337 409 343 65 799 972 403 209 315 744 885 555
480 490 500 510 520 341 676 240 570
530 540 550 560
Retained earnings (uncovered loss) of previous years (332) Net profit (loss) (333) Used profit (334) Total 3.3 ( 570580 590600) Secondary capital Differences 3,4 from revaluation of long term assets (341) Grants (342) Total 3.4 (620630) TOTAL chapter 3 (520+560610640) 4. 4.1 Long term liabilities Financial Long term liabilities Bank credits (411,412) Loans (413) Others (414) Total 4.1 (660+670+680) Accounted Long term liabilities Lease 4,2 Long term liabilities (421) Anticipated longterm revenue (422) Special revenues (423) Revenues received in advance (424) Deffered tax(425) Others (426) Total 4.2 (700+710+720+ 730+740+750) Total chapter 4 (690+760)
580 590 600 610 620 630 640 650 660 670 680 690 700 710 720 730 740 750 760 770
111 781 848 34 810 448 146 592 295 488 268 535
5 5.1 Short term liabilities Financial short term liabilities Bank credits (511,512) Loans (513) Current share of longterm liabilities (514) Others (515, 516) Total.5.1 (780+790+800+810) Short term commercial liabilities 5,2 Short term commercial liabilities (521) Short term liabilities to related parties (522) Revenues received in advance(523) Total 5.2 (830+840+850) 5,3 Acconted Short term liabilities Accounted salary (531) Other accounted liabilities to personnel (532) Accounted Social insurance (533) Taxes payable (534) Preliminary liabilities (535) Extrabudget liabilities (536) Shareholders payable (537) future expenses and payments provisions (538) Others (539) Total 5.3 (870+880+890+ 900+910+920+930+940+950) TOTAL chapter 5 (820+860+960) TOTAL LIABILITIES (650+770+970)
780 790 800 810 820 830 840 850 860 870 880 890 900 910 920 930 940 950 960 970 980
534 889 534 889 534 889 488 803 424
730 205 730 205 730 205 508 303 698
935 287 935 287 935 287 529 046 673
1 150 622 1 150 622 1 150 622 551 094 482
1 376 724 1 376 724 1 376 724 574 512 368
1 614 132 1 614 132 1 614 132 599 368 834
1 863 410 1 863 410 1 863 410 625 735 810
2 125 152 2 125 152 2 125 152 653 688 821
2 399 980 2 399 980 2 399 980 683 307 168
2 688 551 2 688 551 2 688 551 714 674 120
2 991 549 2 991 549 2 991 549 747 877 104
Indicators
Optimal values
Indicators forecasts I year II year III year IV year V year VI year VII year VIII year IX year X year
242,84 242,84 75,86 92 356,1
227,39 227,39 118,83 118 081,1
223,15 223,15 148,30 145 395,7
220,80 220,80 169,17 174 379,2
219,42 219,42 184,77 205 115,2
179,65 179,65 157,96 195 106,8
150,10 150,10 138,60 186 790,0
127,77 127,77 124,51 180 213,0
503,84 503,84 493,62 175 426,6
323,47 323,47 316,47 172 484,0
financial stability
69% 0,31 0,18
69% 0,31 0,22
70% 0,30 0,27 4,55 5,35 4,4
71% 0,29 0,31 4,81 5,61 4,6
72% 0,28 0,35 5,07 5,88 4,8
77% 0,23 0,35 5,35 0,97 1,0
82% 0,18 0,35 6,80 1,03 1,1
87% 0,13 0,35 9,24 1,09 1,2
94% 0,06 0,35 14,16 0,87 1,3
100% 0,00 0,35 0,91 1,4
turnover speed
365
4 769,9 3 805,4 964,5 549,4 12,4 0,0 366
4 658,3 3 511,1 1 147,2 457,8 16,0 0,0 365
4 571,8 3 245,7 1 326,1 371,3 19,5 0,0 365
4 496,4 2 997,6 1 498,8 289,0 23,2 0,0 365
4 283,7 2 773,3 1 510,3 211,1 27,1 0,0 366
3 919,4 2 549,2 1 370,2 135,8 31,1 0,0 365
3 602,5 2 347,0 1 255,5 64,7 35,2 0,0 365
3 314,3 2 158,3 1 156,1 26,5 23,1 0,0 365
3 065,0 1 987,6 1 077,4 22,6 11,5 0,0 366
profitability
0% 65% 32%
3% 4% 3% 67% 34%
4% 4% 3% 68% 37%
4% 4% 3% 69% 39%
5% 5% 3% 71% 41%
5% 5% 4% 72% 42%
6% 6% 4% 73% 47%
7% 6% 5% 74% 51%
8% 7% 6% 75% 55%
9% 7% 7% 76% 59%
Indicators
Optimal values
Indicators forecasts XI year XII year XIII year XIV year XV year XVI year XVII year XVIII year XIX year XX year
279,94 279,94 274,56 203 686,1
253,46 253,46 249,05 236 121,2
235,53 235,53 231,76 269 850,8
222,50 222,50 219,19 304 939,7
212,54 212,54 209,58 341 456,0
204,64 204,64 201,95 379 470,8
198,19 198,19 195,71 419 059,3
192,79 192,79 190,49 460 299,9
188,19 188,19 186,03 503 275,5
184,21 184,21 182,17 548 072,6
financial stability
100% 0,00 0,40
100% 0,00 0,45
100% 0,00 0,49
100% 0,00 0,53
100% 0,00 0,57
100% 0,00 0,61
100% 0,00 0,64
100% 0,00 0,67
100% 0,00 0,70
100% 0,00 0,73
turnover speed
2 925,3 1 818,0 1 107,3 22,5 16,3 0,0 365
2 898,5 1 665,0 1 233,5 22,5 21,3 0,0 365
2 874,3 1 522,3 1 352,0 22,5 26,4 0,0 365
2 860,5 1 393,4 1 467,1 22,6 31,8 0,0 366
2 833,4 1 266,0 1 567,4 22,5 37,2 0,0 365
2 816,2 1 151,0 1 665,2 22,5 42,8 0,0 365
2 801,0 1 044,1 1 756,9 22,5 48,6 0,0 365
2 795,3 947,3 1 848,0 22,6 54,8 0,0 366
2 776,0 852,5 1 923,5 22,5 60,8 0,0 365
2 765,9 766,9 1 999,0 22,5 67,1 0,0 365
profitability
9% 8% 8% 77% 62%
10% 8% 8% 78% 63%
11% 8% 8% 79% 64%
11% 8% 8% 80% 64%
12% 8% 8% 81% 65%
13% 9% 9% 81% 66%
14% 9% 9% 82% 66%
14% 9% 9% 83% 67%
15% 9% 9% 83% 68%
16% 9% 9% 84% 68%
Indicators Capital investment Inputs ratio of Actualization Updated flow Treasury flow Accumulated flow 0 340 697 681 340 697 681 9% 340 697 681
I year
II year
III year
IV year
V year
VI year
VII year
VIII year
IX year
X year
24 211 180 1,09 22 212 092 24 211 180 318 485 590
25 725 009 1,19 21 652 225 25 725 009 296 833 364
27 314 530 1,30 21 091 829 27 314 530 275 741 535
28 983 526 1,41 20 532 661 28 983 526 255 208 875
30 735 973 1,54 19 976 273 30 735 973 235 232 601
32 576 042 1,68 19 424 029 32 576 042 215 808 572
35 959 138 1,83 19 670 880 35 959 138 196 137 692
39 438 838 1,99 19 793 023 39 438 838 176 344 669
43 019 972 2,17 19 807 590 43 019 972 156 537 079
46 707 611 2,37 19 729 800 46 707 611 136 807 280
T VNA RIR (PI)
18,4 ani 28 876 320 MDL 9,92% 1,08
Indicators Capital investment Inputs ratio of Actualization Updated flow Treasury flow Accumulated flow 340 697 681 340 697 681 9% 340 697 681
XI year
XII year
XIII year
XIV year
XV year
XVI year
XVII year
XVIII year
XIX year
XX year
50 507 081 2,58 19 573 153 50 507 081 117 234 127
52 972 949 2,81 18 833 723 52 972 949 98 400 404
55 562 110 3,07 18 123 174 55 562 110 80 277 230
58 280 730 3,34 17 440 302 58 280 730 62 836 928
61 135 281 3,64 16 783 960 61 135 281 46 052 967
64 132 559 3,97 16 153 052 64 132 559 29 899 915
67 279 701 4,33 15 546 534 67 279 701 14 353 381
70 584 200 4,72 14 963 409 70 584 200 610 028
74 053 925 5,14 14 402 723 74 053 925 15 012 751
77 697 135 5,60 13 863 569 77 697 135 28 876 320
T VNA RIR (PI)
18,4 ani 28 876 320 MDL 9,92% 1,08

Feasability Study Raut - English

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Feasibility Study on creation of the Industrial Park on the territory of RAUT JSC in Balti

ANALYSIS OF THE REGION ............................................................................................................ 15 2.1. ANALYSIS OF BUSINESS ENVIRONMENT ......................................................................................... 15

2.1.1. 2.1.2. 2.1.3.

2.2. 2.3. 2.4.

2.4.1. 2.4.2. 2.4.3.

ANALYSIS OF PHYSICAL INFRASTRUCTURE .................................................................................. 28

2.5.1. 2.5.2. 2.5.3. 2.5.4.

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4.1.1. 4.1.2. 4.1.3.

ENTERPRISE POTENTIAL ........................................................................................................................ 38

4.2.1. 4.2.2. 4.2.3. 4.2.4. 4.2.5.

COMMERCIAL AND MARKETING DIAGNOSIS ................................................................................ 57

4.3.1. 4.3.2. 4.3.3. 4.3.4.

ECONOMIC AND FINANCIAL DIAGNOSIS ......................................................................................... 62

4.4.1. 4.4.2. 4.4.3.

SWOT ANALYSIS OF RAUT JSC ......................................................................................................... 72

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7.2.1. 7.2.2. 7.2.3. 7.2.4. 7.2.5. 7.2.6.

ESTIMATION OF INVESTMENT EFFICIENCY ................................................................................ 145

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GOAL AND OBJECTIVES OF THE STUDY

BRIEF OVERVIEW OF ECONOMIC ENTITY

OVERVIEW OF THE ELABORATING COMPANY

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ANALYSIS OF THE REGION 2.1. ANALYSIS OF BUSINESS ENVIRONMENT

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Problems and investment solutions in the northern development region, Expert-Group

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Medium sized enterprises

Medium sized enterprises

National Statistics Bureau

Analysis of labour productivity

Table 3. Distribution of employment by type of activity

Source: Prepared by authors

ANALYSIS OF INVESTMENT CLIMATE

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Figure 2. Structure of investments by sector

Agriculture Processing industry

Financial activities Transport and communication

Hotels and restaurants Trade Construction s

Energical power, gas and water

Source: National Statistics Bureau

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ADMINISTRATIVE AND TERRITORIAL ORGANIZATION

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Figure 3. Geographical location of RAUT JSC in Balti Municipality

Source: National Statistics Bureau

Analysis of labour force

The types of activities of employment are as follows:

Industry Trade Public administration Healthcare and social assistance

Education Other types of activities

Source: www.point.md/map. Authors presentation

Source: NBS. Author's calculations

ANALYSIS OF PHYSICAL INFRASTRUCTURE

Analysis of natural resources

2009 (Regional Statistical Report)