Short description of VITA LLP

/IRBIS, Dec.7, 00/ - Below is a brief description of VITA LLP made using reports of KASE listing commission. The description is published due to inclusion of the company's bonds into category "B" of KASE securities. VITA LLP is responsible for reliability of information submitted to Listing Commission. MAJOR ACTIVITIES, MEMBERSHIP, REWARDS The major activities of the company are processing, production and selling of fat-and-oil products. The major products are unrefined, refined and sweet sunflower oil (Extra), butter oil (Irtish) and Kretsyanskoye. VITA LLP is a member of "Kazakhstan food-stuff producers association." On Feb 25, the company registered its trademark for Irtish oil of the National Patent Bureau. The goods of Irtish have following rewards: golden medals on "Food-stuff market-99" exhibition and "FOODEXPO KAZAKSTAN-99" international exhibition. It also received the award for faultless business for year 2000. LICENSES The legislation does not stipulate any government regulation for VITA LLP. The activity is not regulated by licenses and anti trust government bodies. GENERAL INFORMATION The date of initial government registration is Dec 04, 1991. The legal form is limited liability partnership. The company is held by private entity. Legal and actual addresses of the head office - 93 Bekmakhanov st., Almaty 480030, Kazakhstan. The company was created in December 1991. On Feb 26, 2000 VITA LLP increased its authorized capital to KZT100.0 mln. Correspondingly, the company has registered its new regulation. The registration number is 3998-1910-LLP. As of July 1, 2000 staff of the company equaled 109 people. About 60% of employees are university graduates including two science candidates, and eight patent holders. There are currently 5 founders of the company. As of Oct 01, 2000 the announced authorized capital amounted to KZT100.0 mln and paid-up part was KZT54,432,500. INVESTMENTS In June 2000, VITA LLP acquired 34% stake in Montajmalikmunai LLP. The latter develops Chingiz-Telsu oil field located in Karatobe district of the Western region. Besides, VITA LLP is a founder of Irtish OJSC (100% stake) registered on Nov 05, 1998. Presently, Irtish OJSC does not conduct financial activity. BRIEF CHARACTERISTIC OF ACTIVITY VITA LLP was initially created to conduct activity in processing, production and selling of fat-and-oil products. IRTISH trade mark is distributed all over Kazakhstan. The company produces vegetable and butter oil. The share of vegetable oil in Almaty and Almaty region is 30% the corresponding figure for butter oil is 10%. In 1999, due to low sunflower harvest prices for raw materials increased substantially. Despite this, VITA LLP increased sales of oil keeping the price of processed oil on the same level. This led to some fall in profitability. Supply of raw materials. The major providers of raw materials are Russian and Ukrainian producers. The packaging materials are produced by the company itself using foreign technologies. For production of butter oil, the company exclusively relies on import materials from Lithuania, New Zealand and Australia. Production facilities. The main production and storing facility located in Almaty (93 Bekmakhanov st.). The total capacity exceeds 1,200 tons. The location allows to unload raw materials directly from rail-road (the structure ahs its own branch line). Distribution. The company has nine branches in Astana, Karaganda, Zhezkazgan, Taraz, Taldikorgan, Kostanai, Pavlodar and Semipolatinsk. The distribution is conducted among organized and unorganized segments of the market. The company 's distribution is based on sale contracts and order system. Presently, there are 600 shops distributing goods of the company in Almaty. Sales volume. Annual average growth of sales is 7-15%. In 1999 there were sold 3,340 tons of vegetable and 1,760 tons of butter oil. For 9 months of 2000 corresponding figures equal to 3,982 and 1,303 tons. The company plans to produce 12,500 and 2,900 tons of oil in year 2003. Considerable growth could be achieved in the next year as the company will shift to chemical refinement method (current method is mechanical). New programs. Investments into production for last three years totaled $1,640,000. For the same period, company launched bottling facility for vegetable oil. VITA LLP also innovated production of soybean products such as milk, cheese and yogurt. It is reported that the profitability of these goods equals to 100% even in case of high prices. For instance, 1 kilo of soybean (KZT25) gives 1 kg of cheese or 7.5 liters of milk. The installation of packaging facilities substantially decreased the cost of final goods. DEVELOPMENT STRATEGY. Long term strategy of VITA LLP is made up of following directions: - full processing of oil-bearing crops with production of final goods (oil, oilcake); - production of new butter oil; - processing of soybeans with extraction of oil, soybean meal, milk powder, textures; - new markets development. Considering growth in world consumption and production of soybean products (consumption of soybean oil increased by 29% whereas, sunflower oil - 19%) the company plans to set industrial scale facilities for soybean production. Besides, residuals of soybean processing are in high demand among poultry farms because of protein richness. CAPITAL EXPENDITURES PLAN The plan stipulates three stages. In the first year investments will reach $1,575 th. This stage includes launching of deodorization facility for vegetable oil and setting of light oils facility. These projects are short-term but profitability is high. About three months after financing would be needed to launch facility. Besides, company plans to start construction of oil-extraction workshops with capacity of 100 tons of seeds per day. The major contractor is "Potential" construction company. The cost of work is $615 th. The equipment for the workshops is produced in Kazakhstan, CIS countries and the rest of the world. The plant will be launched by Spring 2001. Second year. Completion of oil-extraction plant. Investments would be executed using reinvested earnings from received by results of the first stage ($1,095 th). Third year. It is planned to increase capacity of oil-extraction plant to 400 tons. About 2,430 th dollars ( reinvested earnings) planned to invest in the project. According to the manager of VITA LLP, net profit for next five years could reach $2,448,288. CREDITS RECEIVED CenterCredit Bank OJSC (Almaty). The agreement on credit limits was signed on Sep 21, 1999 for a total of $2.0 mln the contract stipulates following conditions: credits will be granted on renewal basis, each allocation will be agreed by separate credit contract. The limit for the credit was prolonged till year 2004. Credit's aim is a filling up of working capital. ABN AMRO BANK CJSC (Almaty). Credit contract dated July 26, 2000 for a total of $470 th, maturity date - July 26m 2001, interest rate - LIBOR + 6%. The present contract has limitless time maturity if both parties agree to prolong it. Credit's aim is a filling up of working capital.